Book Title
International Business: The Challenge of Global Competition 13th Edition

BUS 91962

February 28, 2019
Although international firms maintain manufacturing facilities in countries at various
levels of development, manufacturing systems should not vary significantly within the
same company.
There are four main types of FX risk: transaction, translation, economic, and arbitrage
Multilateral netting is an approach to debt management in which subsidiaries aggregate
their debt service.
A multidomestic strategy tends to be used when a company simultaneously confronts
pressures for cost effectiveness and local adaptation.
Knowledge that an individual has but that is difficult to express clearly in words,
pictures, or formulae, and therefore difficult to transmit to others, is called explicit
The Bank for International Settlements is like a central bank for central bankers.
Of all the promotional mix elements, personal selling has the greatest similarities
Virtual communication is more effective than face-to-face communication.
In larger, older organizations more decisions are made at the subsidiaries.
Responding to any demand rather than executing a planned growth strategy is not a
mistake new exporters tend to make.
The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in
U.S. companies operating abroad is an example of extraterritoriality.
Internalization theory suggests that what an organization is good at should not be
outsourced without very careful consideration.
Lack of control is one of the strongest arguments against a joint venture.
In Hall's use, context is the irrelevant environment in a communication act.
The export marketing plan does not include product characteristics, promotional plans,
and details on arrangements with foreign representatives.
Policy continuity and government stability are more important to a business than the
type of political system.
Effective supply chain management can enhance a company's ability to manage
regulatory, social, and other environmental pressures, both within a nation and globally.
Operating in more than five local currencies is unusual for the international firm.
Tariffs are categorized as financial and political forces, but they are usually not seen as
legal forces.
A culture's aesthetics is the sense of moral behavior taught to the young.
The matrix overlay organizational form attempts to eliminate some of the problems of
the matrix organization.
For a company interested in entering a foreign market, a report analyzing in detail all
five screening forces listed in the book is sufficient information.
Tax law is exempt from extraterritoriality.
People from cultures with high power distance will feel most comfortable with top
managers' making decisions and issuing directives.
In environmental scanning the firm scans the world for environmental forces that might
affect it.
The Bretton Woods meeting in 1944 established a fixed-rate exchange system among
Allied governments that was imposed on the Axis governments.
Nuisance tariffs require importers to go through the administrative paperwork
connected to paying tariffs, even though the payment itself might be quite small.
Effective bridging in a team situation is a substitute for integration.
The World Bank funds infrastructure projects in developed countries.
Family adjustment is not critical in the job performance of expats.
The sales agreement should not address where disputes will be resolved and by what
legal system. That belongs in a side document.
Recruiting salespeople in foreign countries is less difficult than recruiting them in the
home country.
U.S. pavilions are located in every country around the world and provide background
information and displays on foreign companies.
Market indicators and market factors measure market demand.
The means of supplying overseas markets—exporting to and production in those
markets—depend on nonequity modes of entry.
Saudi Arabia and Canada have the largest proven oil reserves.
Generally mergers and acquisitions are considered alliances.
Many U.S. laws affect activities of international firms, and their impacts have been
In many companies, the purchasing function has been viewed as a prime candidate for
outsourcing to other firms, a trend encouraged by rapid developments in e-procurement.
More than half of the exports from developing nations go to developed nations, and:
A. this proportion has been declining over the past 35 years.
B. approximately 70 percent of exports from developed economies also go to other
industrialized nations.
C. the proportion of world trade accounted for by members of regional trade
agreements has grown to nearly 50 percent.
D. all of the above.
Transshipping is used to:
A. reduce shipping costs, like consolidation.
B. avoid import administration.
C. evade allocated quotas.
D. all of the above.
All of the following are part of the e-commerce readiness index except:
A. mobile phones per 1,000.
B. number of PCs per 1,000.
C. electricity consumption.
D. Internet hosts per million people.
When a new plant can be built that is a duplicate of others already functioning:
A. labor trainers experienced in the operation of the machinery can be sent to the new
locations without undergoing any training.
B. costs will be the same as in existing locations.
C. vendors will be requested to furnish equipment that they have supplied previously.
D. all of the above.
Included in the differences between a traditional team and a global team is the
difference between:
A. one economic condition and many dissimilar economic conditions.
B. virtual and actual relationships.
C. hierarchy and flat structures.
D. individual and group goals.
E. assertive and aggressive goal setting.
Interface, the producer of Flor carpeting, has a solid record in sustainable business
practice and:
A. makes impressive contributions to sustainable development in developing
B. is committed to triple-bottom-line accounting.
C. spins its products from petroleum.
D. sources its raw materials from recycled plastic bottles.
Although it pollutes heavily, this energy source is on the rise everywhere, especially in
A. natural gas.
B. coal.
C. nuclear.
D. diesel.
Which of the following are not identified in the text as being elements of the
competitive forces that an analyst uses to examine markets?
A. Competitors' market shares
B. Competitors' marketing strategies
C. Competitors' staffing levels
D. Competitors' levels of after-sales service
E. None of the above (All are identified as elements of the competitive forces used by
When nonexporting firms are asked why they do not export, they generally list the
following as problems:
A. locating foreign markets.
B. payment and finance procedures.
C. export procedures.
D. lack of foreign language expertise.
World Bank studies have shown that underdevelopment is often due to:
A. factors such as parasites and viruses that are a part of tropical climates and expand
unchecked because of the lack of winter temperatures.
B. mental slowness in people of the climates around the equator.
C. socialist political regimes.
D. lack of government investment in education.
For cost-of-living allowances, the U.S. State Department index:
A. is suitable for all locations.
B. is adjusted frequently.
C. neither A, B, nor D.
D. accounts adequately for inflation and currency value changes.
E. two of A, B, and D.
If an international manager runs afoul of a miscellaneous law while working abroad,
calling the embassy:
A. will ensure that the charges are dropped.
B. to let an official know of the situation may be a good idea, but usually the embassy
cannot help much.
C. will lead to meetings that will arrange for everything.
D. to explain the various cultural values in your homeland to the foreign government
official is a reasonable approach.
E. will result in the application of American law to the resolution of the problem.
International business differs from domestic business in that a firm operating across
borders must deal with:
A. all of C, D, and E.
B. two of C, D, and E.
C. the foreign environment.
D. the international environment.
E. the domestic environment.
The main source(s) of international law is(are):
A. the UN International Court of Justice.
B. the U.S. Supreme Court and the EU Court of Justice.
C. bilateral and multilateral treaties, along with customary law.
D. nonexistent.
E. the WIPO.
Accounting controls directly relate to a culture's assumptions about:
A. the basic nature of people.
B. inventory policy.
C. efficiency.
D. leadership.
Legal uncertainties have affected international business, and:
A. they have prevented IB growth.
B. they have not, though, slowed down the growth of IB; instead, they have made it
more complex.
C. prices and insurance costs have risen.
D. fewer large businesses want to be involved across national borders due to the
uncertainties of the legal environment.
E. none of the above.
The level of service exports worldwide increased more than _______ between 1980 and
A. 4-fold
B. 6-fold
C. 10-fold
D. 12-fold
E. 17-fold
Dunning's eclectic theory of international production states that if a firm is going to
invest in production facilities abroad, it must have the following kinds of advantages:
A. ownership specific, location specific, and internationalization.
B. strategic, organizational, and technological.
C. political, technological, and human resource.
D. technological, financial, and human resource.
Global teams are characterized by:
A. their virtuality and use of many media.
B. their geographic dispersion.
C. their diversity.
D. their differing member contexts.
E. all of the above.
Bodies of water that provide inexpensive access to interior markets are known as:
A. inland waterways
B. seaway outlets.
C. river systems.
D. inland oceans.
Elkington suggests that the drivers for triple-bottom-line accounting can be:
A. corporate profits and growth.
B. markets, values, transparency, life-cycle technology, partnerships, time, and
corporate governance.
D. the SEC.
Mercantilists believed that:
A. merchants should import goods to raise the level of living.
B. governments should lower import duties.
C. a nation should have an export surplus in order to accumulate precious metals.
D. a nation should produce goods for which there is a comparative advantage.
According to the text, which of the following is true regarding "corporate
A. It involves ethnographic research techniques.
B. It involves extensive use of surveys.
C. It involves extensive use of focus groups.
D. All of the above.
Offshore financial centers are appealing to the international firm because they:
A. outsource all of the administrative details.
B. are in Switzerland, the Cayman Islands, the Bahamas.
C. offer reduced regulations and lower taxes than in the home country.
D. have lower labor costs.
Theory based on ____________________ states that international and interregional
differences in production costs occur because of differences in the supply of production
A. comparative advantage
B. absolute advantage
C. mercantilist advantage
D. resource endowments
E. none of the above
Regarding repatriation:
A. expatriates often struggle with the higher autonomy of their work context when they
return home.
B. planning for an expat's return should start while the employee is abroad.
C. 49 percent of expatriates report that they do not have any guaranteed position in their
IC after the end of their international assignment.
D. two of the above.
Exporters of a turnkey project may include which of the following?
A. A contractor that specializes in designing and erecting plants in a particular industry
B. A producer of a factory
C. A sales company
D. All of the above
E. Two of A, B, and C
In a small power distance culture:
A. people will want direction, so top-down leadership styles are appropriate.
B. seniority, rank, and title are important.
C. first names are likely to be used in the office because the ideal is equality.
D. A and C.
Anyone studying legal forces affecting international business soon realizes that:
A. there is a remarkable level of coordination among legal systems in the developed
B. most laws are predictable, and that, although there is variance, what constitutes
illegal behavior is commonly shared.
C. the variety of these forces complicates the task of understanding the laws.
D. thanks to the World Court, officials in most legal systems are open to collaborating
with their international colleagues.
E. none of the above.
Chouinard, the founder of Patagonia, observed that:
A. triple-bottom-line accounting is the way to build sustainability.
B. compassion is the first step in sustainability.
C. our approach to fossil fuel consumption is clearly unsustainable.
D. no business can be done on a dead planet.
Franchising is a form of:
A. contract management.
B. licensing.
C. contract manufacturing.
D. joint venture.
According to the theory of comparative advantage:
A. a nation should produce those goods which it is more efficient at producing than are
other nations.
B. a nation can gain from trade if it is equally inefficient in producing two goods.
C. a nation must have an absolute advantage in at least one good to gain from trade.
D. all of the above.
A reason that outsourcing has become an increasingly common option for companies is:
A. the cost of communications is plummeting.
B. more automation of a company's operational activities.
C. more companies are competing for outsourcing business.
D. two of the above.
To avoid translation errors, the experienced advertising manager will use:
A. plenty of illustrations with short copy.
B. local translators.
C. back translation.
D. all of the above.

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