For international firms, an ethnocentric staffing approach is compatible with a
localization strategy.
Answer:
When the Bretton Woods participants established the World Bank, the need to lend
money to third-world nations was foremost in their minds.
Answer:
New information and communication technologies have increased a state’s ability to
control access to uncensored information.
Answer:
Transaction exposure, a category of foreign exchange risk, refers to the impact of
currency exchange rate changes on the reported financial statements of a company.
Answer:
Some countries argue that government intervention to protect certain domestic
industries can compromise national security.
Answer:
In international business, a strategic commitment has a short-term impact and is easily
reversible.
Answer:
Consumers in the most developed countries are often willing to sacrifice their preferred
product attributes for lower priced products.
Answer:
A global marketing strategy that views the world’s consumers as similar in their
preferences is consistent with the mass production of a standardized output.
Answer:
The European Commission is the ultimate controlling authority within the European
Union because draft legislation from the commission can become EU law only if the
council agrees.
Answer:
Max Weber argued that the Catholic promise of salvation in the next world, rather than
this world, fostered “a spirit of capitalism.”
Answer:
Values provide the context within which a society’s norms are established and justified.
Answer:
Lack of trust in international trade is exacerbated by the distance between the two
parties in space, language, and culture.
Answer:
An impediment to cooperation between national unions is the wide variation in union
structure.
Answer:
According to Christopher Bartlett and Sumantra Ghoshal, firms from developing
countries cannot succeed in foreign markets in the presence of other established global
competitors.
Answer:
A common kind of currency swap is spot against forward.
Answer:
Franchising, a mode of entry into a foreign market, helps firms exert greater quality
control over franchises in foreign locations.
Answer:
An expatriate manager is a citizen of one country who is working abroad in one of the
firm’s subsidiaries.
Answer:
The Bretton Woods system could work only as long as the U.S. inflation rate remained
low and the United States did not run a balance-of-payments deficit.
Answer:
Industrial products have few national differences in consumer taste and preference,
hence the need for local responsiveness is reduced for such products.
Answer:
Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic policies and free market economies.
Answer:
A risk-averse international firm that enters a foreign market on a small scale will
increase its potential losses.
Answer:
Flexible machine cells cannot be used for mass customization.
Answer:
In a joint venture, a firm benefits from a local partner’s knowledge of the host country’s
competitive conditions, culture, language, political systems, and business systems.
Answer:
Only large companies have benefited significantly from the moneymaking opportunities
of exporting.
Answer:
If more dollars are needed to buy an ounce of gold than before, the implication is that
the dollar is worth more.
Answer:
Although upward social mobility was possible in Britain, it could not normally be
achieved in one generation.
Answer:
When residents and nonresidents rush to convert their holdings of domestic currency
into a foreign currency, the phenomenon is generally referred to as capital flight.
Answer:
According to Michael Porter, government can influence each of the four components of
Porter’s diamondeither positively or negatively.
Answer:
An acquisition does not result in a net increase in the number of players in a market.
Answer:
Establishing a wholly owned subsidiary gives an international firm a 100 percent share
in the profits generated in a foreign market.
Answer:
Which of the following was established by organized labor in 1960s to provide
worldwide links for national unions in particular industries?
A.HR watchdog groups
B.International trade secretariats
C.Unorganized labor organizations
D.International orientation resources
E.Reciprocal tax treaties
Answer:
Consider two countries Daria and Atlantis. Daria is a major producer of wheat and rice
while Atlantis specializes in the production of fertilizers and manufacturing equipment.
Engaging in free trade benefits both countries since Daria is an agrarian nation and
Atlantis lacks arable land. This follows the theory of comparative advantage, and we
can say that engaging in free trade benefits all countries that participate in it. Which of
the following is an inaccurate assumption on which this conclusion is based?
A.We have assumed a simple world in which there are only two countries.
B.We have assumed the prices of resources and exchange rates in the two countries are
dynamic.
C.We have assumed there are barriers to the movement of resources from the
production of one good to another within the same country.
D.We have assumed that agrarian nations do not specialize in producing fertilizers.
E.We have assumed diminishing returns to specialization.
Answer:
The influential Peruvian development economist Hernando de Soto has argued that
much of the developing world will fail to reap the benefits of capitalism:
A.until they adopt communism.
B.until property rights are better defined and protected.
C.if they adopt free market economies.
D.until their governments monopolize all means of production in their countries.
E.if they encourage innovation and entrepreneurship.
Answer:
Which of the following statements is true about the changes in the world monetary
system since March 1973?
A.The value of the U.S. dollar has never seen a fall ever since.
B.Exchange rates have become much more volatile.
C.Exchange rates have become more predictable.
D.The fixed rate system was adopted to calculate exchange rates.
E.The European Monetary System as an institution has gained more prominence.
Answer:
The argument that firms prefer FDI over licensing to retain control over know-how,
manufacturing, marketing, and strategy or because some firm capabilities are not
amenable to licensing constitutes the:
A.comparative advantage theory.
B.distribution theory.
C.new trade theory.
D.internalization theory.
E.licensing theory.
Answer:
The market imperfections approach seeks to explain:
A.the disadvantages associated with the adoption of a completely free market view.
B.why different nations import goods from other countries even when they are more
capable of producing them efficiently.
C.the preference for FDI over licensing by firms as a strategy to enter foreign markets.
D.the benefits of exercising protectionism coupled with partial adoption of free market
approach.
E.the pattern of sale of products from one country to another.
Answer:
Adoption of which of the following ethical approaches is most likely to cause a
company to use tools such as cost-benefit analysis and risk assessment to weigh all of
the social benefits and costs of a business action?
A.Naive immoralism
B.Friedman doctrine
C.Ethnocentrism
D.Utilitarianism
E.Righteous moralism
Answer:
Which of the following is true of exporting?
A.Many foreign customers require face-to-face negotiations on their home turf.
B.Large firms tend to wait for the world to come to them, rather than going out into the
world to seek opportunities.
C.Exporters have the advantage of reduced paperwork and fewer formalities.
D.Medium-sized and small firms are proactive about seeking opportunities for
profitable exporting.
E.Firms that focus only on exporting often lose out on significant opportunities for
growth and cost reduction.
Answer:
Which of the following concepts helps explain how location factors affect the direction
of FDI?
A.The eclectic paradigm
B.The protectionism argument
C.The product life-cycle theory
D.The new trade theory
E.The infant industry argument
Answer:
Which of the following is a disadvantage of small-scale entry for an international firm
considering foreign expansion?
A.The possibility of escalating commitment leading to major financial losses
B.The limited availability of resources for use in other markets
C.The lack of flexibility associated with strategic commitments
D.The increase in economic exposure due to minimal time spent in evaluating a foreign
market
E.The difficulty of building market share and capturing first-mover advantages
Answer:
Neo-mercantilists equate political power with economic power and economic power
with:
A.corruption.
B.a balance-of-trade surplus.
C.regional dominance.
D.a trade monopoly.
E.capitalism.
Answer:
The difference between Internalization theory and imitative theory is that:
A.internalization theory does not explain why the first firm in an oligopoly decides to
undertake FDI rather than to export or license.
B.imitative theory addresses the issue of whether FDI is more efficient than exporting
or licensing for expanding abroad.
C.most economists favor imitative theory as an explanation for FDI.
D.no important aspect of FDI is explained by imitative theory.
E.internalization theory addresses the issue of efficiency of FDI over exporting or
licensing.
Answer:
Which of the following establishes a uniform set of rules governing certain aspects of
the making and performance of everyday commercial contracts between sellers and
buyers who have their places of business in different nations?
A.Contracts for the International Sale of Goods
B.Bill of Exchange
C.United Nations Charter
D.International Forwarding Agent Contract
E.International Promissory Note
Answer:
The rate of return that a firm makes on its invested capital is referred to as:
A.stakeholder return.
B.profitability.
C.profit growth.
D.process value.
E.strategic fit.
Answer:
Which of the following increases when a company achieves mass customization via
flexible manufacturing technologies?
A.Cost structure
B.Waste
C.Customer responsiveness
D.Learning effects
E.Externalities
Answer:
In the United States, export credit insurance is provided by the:
A.Export-Import Bank.
B.Bank of New York.
C.Foreign Credit Insurance Association.
D.Federal Deposit Insurance Corporation.
E.Federal Reserve Bank.
Answer:
According to Mendenhall and Oddou, which of the following dimensions refers to the
relationship between the country of assignment and how well an expatriate adjusts to a
particular posting?
A.Self-orientation
B.Perceptual ability
C.Cultural toughness
D.Others-orientation
E.Willingness to communicate
Answer:
An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:
A.the volume of a country’s imports increases as an indirect consequence of
mercantilism.
B.the exclusion of government influence in matters pertaining to trade is not ideal.
C.in the long run, no country could sustain a surplus on the balance of trade.
D.it was not backed by either sound political principles or social ideologies.
E.trade is a zero-sum game rather than a positive-sum game as postulated by the theory.
Answer:
When a time draft is drawn on and accepted by a business firm, it is known as a(n):
A.trade acceptance.
B.in-transit bill.
C.banker’s acceptance.
D.bill of lading.
E.letter of credit.
Answer:
Which of the following statements is most likely to be true regarding the adverse effects
of FDI on the host country?
A.It decreases the level of competition in the host country.
B.It tends to increase the prices of the products.
C.It leads to a high rate of unemployment in the long run.
D.When a foreign subsidiary imports a substantial number of its inputs from abroad, it
results in a debit on the current account of the host country’s balance of payments.
E.When a foreign subsidiary sends its profits to its home country, it results in the
depletion of gold reserves of the host country.
Answer:
Article 23 of the Universal Declaration of Human Rights implies that it is unethical to
employ child labor in sweatshop settings and pay less than subsistence wages, even if
that happens to be common practice in some countries. This is in contrast to:
A.Kantian ethics.
B.cultural relativism.
C.rights theories.
D.Marxism.
E.justice theories.
Answer:
The interdependence between firms in an oligopoly leads to:
A.trade wars.
B.a decrease in the supply.
C.imitative behavior.
D.higher demand.
E.increased domestic consumption.
Answer:
How is a geocentric staffing policy beneficial to a firm?
A.It requires the firm to provide little or no documentation to hire a foreign national.
B.It is inexpensive to implement.
C.It helps the firm follow a localization strategy.
D.It allows all key management positions to be filled by parent-country nationals.
E.It enables the firm to make the best use of its human resources.
Answer:
Which of the following of the Cold War era has vanished?
A.Multipolar world
B.Democratic system
C.Free market system
D.Bipolar world
E.Widespread belief in Western ideology
Answer:
If a firm possesses proprietary product technology, the best option for that firm would
be to:
A.manufacture the product in-house so that it does not lose its competitive advantage.
B.outsource the production activities to independent suppliers in order to realize
economies of scale.
C.merge with competitors to reduce investments on technology.
D.share the technology to make the industry more competitive.
E.transfer the technology to less developed countries.
Answer:
Firms for which licensing is not a good option include those in:
A.low-technology industries.
B.global oligopolies.
C.industries characterized by low cost pressures.
D.industries where transportation costs are high.
E.industries which need to have low control over foreign operations.
Answer:
Which of the following describes a country when the income its residents earn from
exports is equal to the money its residents pay to other countries for imports?
A.A currency crisis
B.Balance-of-trade equilibrium
C.Balance-of-payments deficit
D.Balance-of-trade surplus
E.Fiscal deficit
Answer:
Which of the following theories supports government intervention and strategic trade
policy?
A.Theory of absolute advantage
B.Theory of comparative advantage
C.Heckscher-Ohlin theory
D.New trade theory
E.Poduct life-cycle theory
Answer:
International businesses differ in terms of their approaches to international labor
relations, mainly in the degree to which:
A.labor relations activities are centralized or decentralized.
B.labor relations are formal or informal.
C.labor relations are given a high priority or a low priority.
D.labor relations are internally or externally managed.
E.firms follow a polycentric or geocentric staffing policy.
Answer:
Which of the following terms best represents the systematic reductions in production
costs that have been observed to occur over the life of a product?
A.Global web
B.Dispersion linkage
C.Economies of scale
D.Experience curve
E.Efficiency frontier
Answer:
Other things being equal, the rate of new-product development seems to be greater in
countries where:
A.more money is spent on marketing instead of applied research.
B.consumers demand cheaper products since they are not affluent.
C.competition between firms is intense.
D.pioneering costs outweigh the disadvantages of being a second mover.
E.a large change in prices of a product only produces a small change in demand.
Answer:
Which of the following staffing policies has the drawback of forming a gap between
host-country managers and parent-country managers?
A.Global
B.Geocentric
C.Polycentric
D.Ethnocentric
E.Transnational
Answer:
Which of the following statements reflects the trend in the changing nature of
multinational enterprises?
A.Global business activity is increasingly being dominated by large U.S. multinational
corporations.
B.The number of medium-size and small multinationals is decreasing continuously.
C.The ranks of the world’s largest 100 multinationals are dominated by firms from
developing economies.
D.The Internet is increasing the barriers that small firms face in building international
sales.
E.International business is conducted not just by large firms but also by medium-size
and small enterprises.
Answer:
Briefly describe the different forms of government-backed assistance that help potential
U.S. exporters finance their export programs.
Answer:
Discuss the significance of value creation. According to Michael Porter, what are the
two primary strategies for creating value?
Answer:
What are the different ways in which a firm can benefit from global expansion?
Answer:
Differentiate between spot exchange rates and forward exchange rates.
Answer:
What are first-mover advantages? Describe three first-mover advantages for
international businesses.
Answer:
Briefly discuss the ways in which technological change has affected globalization.
Answer:
What are grease payments?
Answer:
When does the process of privatization fail to deliver predicted benefits? What
economic conditions are required for privatization to work?
Answer:
Describe the disadvantages of a polycentric staffing policy.
Answer:
Describe briefly, with examples, the use of trade policies by governments to support
their foreign policy objectives.
Answer:
What are the disadvantages of strategic alliances?
Answer:
Discuss the arguments for and against standardized advertising.
Answer:
What are the seven things that an international business and its managers can do to
make sure ethical issues are considered in business decisions?
Answer:
Briefly describe the five cultural dimensions in Hofstede’s model.
Answer:
Briefly describe the Association of Southeast Asian Nations.
Answer:
What was the drawback of the Bretton Woods system?
Answer:
Briefly describe the various financial devices that help exporters solve the problem of a
lack of trust in international trade.
Answer: