Viewed from an Asian or European perspective, Vernon’s argument that most new
products are developed and introduced in the United States seems ethnocentric and
increasingly dated.
Answer:
As a result of international trade, the economies of the world’s nation-states are
becoming less intertwined.
Answer:
Under the gold standard, a country in balance-of-trade equilibrium will experience a net
inflow of gold from other countries.
Answer:
Predatory pricing exists whenever consumers in different countries are charged
different prices for the same product, or for slightly different variations of the product.
Answer:
Pressures for local responsiveness imply that it may not be possible to leverage skills
and products associated with a firm’s core competencies wholesale from one nation to
another.
Answer:
According to Milton Friedman, businesses should undertake social expenditures beyond
those mandated by the law and required for the efficient running of a business.
Answer:
In theory, the World Trade Organization rules should ensure that a free trade agreement
results in trade diversion.
Answer:
The first theory of international trade that emerged in England asserted that gold and
silver were the mainstays of national wealth and essential to vigorous commerce.
Answer:
Intellectual property laws stimulate innovation and creative work.
Answer:
A strategy that focuses primarily on increasing the attractiveness of a product is referred
to as a low-cost strategy.
Answer:
The emphasis of the European Free Trade Association has been on free trade in
consumer goods.
Answer:
Mercantilism, propagated in the sixteenth and seventeenth centuries, advocated that
countries should simultaneously encourage both imports and exports.
Answer:
Since March 1973, currency exchange rates have become less volatile and more
predictable than they were between 1945 and 1973.
Answer:
When a firm’s competitive advantage is based on technological competence, a joint
venture is the preferred mode of entry into a foreign market because it reduces the risk
of losing control over that competence.
Answer:
Flexible manufacturing technologies allow a company to produce a wider variety of end
products at a unit cost that at one time could be achieved only through the mass
production of a standardized output.
Answer:
Although a foreign exchange transaction can involve any two currencies, most
transactions involve dollars on one side.
Answer:
The globalization of the world economy is having a negative effect on the volume of
FDI.
Answer:
A concern of organized labor is that an international business keeps highly skilled tasks
in its home country and farms out low-skilled tasks to foreign plants.
Answer:
The lowering of trade and investment barriers allows firms to base production at the
optimal location for that activity.
Answer:
The action that produces the greatest good for the greatest number of people can result
in the unjustified treatment of a minority.
Answer:
Historically, most international businesses have been more concerned with management
development than with training.
Answer:
Raymond Vernon’s product life-cycle theory was based on the observation that for most
of the twentieth century a very large proportion of the world’s new products were
developed by the firms situated in Germany and sold first in the German market.
Answer:
The main tenet of mercantilism was that it was in a country’s best interests to maintain a
trade surplus.
Answer:
According to Adam Smith, countries should specialize in the production of goods for
which they have an absolute advantage and then trade these for goods produced by
other countries.
Answer:
Judges under a civil law system have less flexibility than those under a common law
system.
Answer:
The term organizational structure refers to the totality of a firm’s organization, including
organization architecture, control systems and incentives, organizational culture,
processes, and people.
Answer:
To strengthen the moral courage of employees, companies should not retaliate against
those employees who complain about unethical actions.
Answer:
Transnational firm managers need not be able to detect pressures for local
responsiveness because it is not part of their skill set.
Answer:
Porter’s theory suggests that it is in the best interest of business for a firm to invest in
upgrading advanced factors of production.
Answer:
The late Influential political scientist Samuel Huntington predicted that the
universalization of Western liberal democracy will be the final form of human
government.
Answer:
When the impact of differences of technology on productivity is controlled for,
Heckscher-Ohlin theory gains predictive power.
Answer:
John Rawls argues that all economic goods and services should be distributed equally
except when an unequal distribution would work to everyone’s advantage.
Answer:
The forward exchange rate refers to the rate at which a foreign exchange dealer
converts one currency into another currency on a particular day.
Answer:
In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been
accompanied by a rise in tariff barriers.
Answer:
A critical competitive feature of an oligopoly is independence of the major players.
Answer:
Since World War II, the United States has been the largest source country for FDI.
Answer:
Contracting out manufacturing may be more appropriate for high-value-added
manufacturing.
Answer:
An expatriate’s base salary is normally lower than the base salary for a similar position
in the home country.
Answer:
Which of the following refers to choices about product attributes, distribution strategy,
communication strategy, and pricing strategy that a firm offers its targeted markets?
A.Market imperfections
B.Marketing mix
C.Marketing intermediaries
D.Marketing objectives
E.Marketing plan
Answer:
Which of the following was an announcement made by U.S. President Nixon to enable
the devaluation of the dollar during the increase in inflation in 1971 in the United
States?
A.The IMF member countries would adopt the gold standard to fix exchange rates.
B.The United States would no longer support the World Bank.
C.A new 15 percent tax would be charged on U.S. exports.
D.The dollar would no longer be convertible into gold.
E.German deutsche marks would be the new reference currency.
Answer:
A boom in product liability suits and awards in the United States resulted in a dramatic
increase in the cost of liability insurance. Many business executives argue that this:
A.makes American businesses less competitive in the global marketplace.
B.offers American businesses greater protection from foreign competitors.
C.exposes consumers to greater product risks.
D.eventually makes it cheaper for foreign companies to do business in the United
States.
E.discourages American companies from outsourcing jobs to less developed countries.
Answer:
If a firm favors a push strategy, using direct selling to educate potential consumers
about the features of its products, what kind of products would it most likely sell?
A.Professional services
B.Food grains
C.Consumer products
D.Industrial products
E.Standardized products
Answer:
Direct effects of FDI on employment in the host country arise when a foreign MNE:
A.brings in managers trained in the latest management techniques from the home
country.
B.creates jobs because of increased local spending by employees of the MNE.
C.employs a number of host country citizens.
D.causes local suppliers to hire more people.
E.creates jobs in the supporting industries.
Answer:
Which of the following helps a firm to preempt available demand, gain cost advantages
related to volume, and build an enduring brand ahead of later competitors?
A.Monopolistic practices
B.Comparative advantages
C.Absolute advantages
D.First-mover advantages
E.Mercantilism
Answer:
A righteous moralist is most likely to claim that:
A.a multinational’s home-country standards of ethics are the appropriate ones for
companies to follow in foreign countries.
B.a firm should adopt the ethics of the culture in which it is operating.
C.people should be treated as ends and never purely as means to the ends of others.
D.human beings have fundamental rights and privileges that transcend national
boundaries and cultures.
E.inequalities are justified if they benefit the position of the least-advantaged person.
Answer:
Which of the following is most likely an explanation for the Leontief paradox observed
in the case of the United States?
A.The United States imports goods that heavily use skilled labor and innovative
entrepreneurship.
B.The United States has a special advantage in producing new products made with
innovative technologies.
C.The United States exports heavy manufacturing products that use large amounts of
capital.
D.The United States has a strong absolute advantage over other nations because of its
advantageous factor endowments.
E.The United States imports goods that make intensive use of factors that are locally
abundant.
Answer:
Which of the following is a factor that has contributed to greater retail concentration in
developed countries?
A.A tradition of established local neighborhood stores
B.An increase in car ownership
C.A retail system that encourages long channel length
D.An increase in the number of single-income households
E.An increase in the population density
Answer:
Governments impose quotas to limit:
A.FDI.
B.importing.
C.franchising.
D.outsourcing.
E.licensing.
Answer:
During inflation, an increase in the amount of currency available leads to:
A.overheating of the economy thereby reducing the production levels in the economy.
B.changes in the relative demand-and-supply conditions in the foreign exchange
market.
C.a reduction in the rate of inflation thus leading to an appreciation of the currency.
D.decreased lending by banks thereby resulting in more savings.
E.a decrease in the demand for goods and services, which drives currency value higher.
Answer:
A range of barterlike agreements by which goods and services are traded for other
goods and services when they cannot be traded for money is known as:
A.countertrade.
B.carry trade.
C.free trade.
D.counter sale.
E.countervailing duty.
Answer:
Which of the following has caused proprietary software solutions to implement
electronic data interchange systems become obsolete?
A.Just-in-time inventory system
B.Flexible machine technology
C.The Internet
D.Dynamic capabilities
E.Social Networking
Answer:
In 2012, if the PPP per capita of China was $9,040 and the PPP per capita of the United
States was $52,340, this means that the:
A.GNI per capita was greater in China.
B.percent of goods and services consumed in the United States was lower.
C.standard of living in China was better.
D.cost of living was lower in China.
E.annual average GDP growth rate was lower in China.
Answer:
Which of the following is an argument in favor of standardized advertising?
A.Consumer tastes and preferences are universal.
B.A message that works in one nation will invariably work in every other country.
C.Advertising regulations always promote standardized advertising.
D.Many brand names are global.
E.The costs of value creation may be increased by standardized advertising.
Answer:
In international business, an advantage of being a late entrant in a foreign market is the
ability to:
A.create switching costs that tie customers into products or services.
B.capture demand by establishing a strong brand name.
C.build sales volume and ride down the experience curve before early entrants.
D.ride on an early entrant’s investments in learning and customer education.
E.create a cost advantage over first movers.
Answer:
Indirect effects of FDI on employment in a host country arise when:
A.a foreign MNE employs a number of host-country citizens.
B.jobs are created because of increased local spending by employees of an MNE.
C.an MNE brings in managers from the home country for its operations in the host
country.
D.an MNE recruits people from the host country for research and development.
E.an MNE sends home country employees to host countries for training.
Answer:
Which of the following is the reason for the failure of purchasing power parity theory
and international Fisher effect in predicting short-term movements in exchange rates?
A.The impact of investor psychology on short-run exchange rate movements
B.The strong relationship between inflation rates and interest rates
C.The impact of interest rates and short-term exchange rate movements
D.The strong relationship between interest rate differentials and subsequent changes in
spot exchange rates
E.Government intervention in cross-border trade that violates the assumption of
efficient markets
Answer:
Which of the following is true of products with high value-to-weight ratios?
A.They are expensive to transport.
B.They tend to increase in weight after processing.
C.They tend to be restricted under trade barriers.
D.They are expensive and do not weigh very much.
E.They have a low inventory turnover.
Answer:
Describe the three broad types of financial crises that have occurred in the post-Bretton
Woods era.
Answer:
Globalization critics argue that the decline in unskilled wage rates in advanced
economies is due to the:
A.migration of low-wage manufacturing jobs offshore.
B.technology-induced shift toward jobs that require significant education and skills.
C.increased supply of highly skilled workers.
D.decreasing demand for unskilled workers in developing nations.
E.reducing national differences in the cost of labor between developed and developing
nations.
Answer:
The process of ethical decision-making or ethical algorithm typically begins with:
A.identifying which stakeholders a decision would affect and in what ways.
B.judging the ethics of the proposed strategic decision.
C.managers establishing a moral intent.
D.auditing a decision to check for its consistency with ethical principles.
E.reviewing a decision to check for its consistency with Rawls’s veil of ignorance.
Answer:
Which of the following is a characteristic of the floating exchange rate regime?
A.It allows for automatic trade balance adjustments.
B.The use of monetary policy by the government is restricted.
C.It allows for greater monetary discipline.
D.It limits the destabilizing effects of exchange rate speculation.
E.It eliminates volatility and uncertainty associated with exchange rates.
Answer:
Which of the following is true of the Andean Pact of 1969?
A.Political and economic problems seem to have hindered cooperation among member
countries of the Andean Pact.
B.By the mid-1980s, the Andean Pact achieved most of its stated objectives.
C.The dominant political ideology in many of the Andean countries tended toward the
democratic end of the political spectrum.
D.The Galpagos Declaration effectively replaced the Andean Pact in 1997.
E.The Andean Pact sought to remove a common external tariff.
Answer:
In which kind of retail system do a few retailers supply most of the market?
A.Fragmented
B.Dispersed
C.Isolated
D.Concentrated
E.Exclusive
Answer:
Which of the following staffing policies is concerned with the need for a cadre of
international managers that may include many different nationalities?
A.Polycentric
B.Geocentric
C.Ethnocentric
D.Regiocentric
E.Localized
Answer:
Which of the following statements is true with regard to Geert Hofstede’s cultural
dimensions?
A.In societies where collectivism was emphasized, the ties between individuals were
loose.
B.Low power distance cultures were found in countries that let inequalities grow over
time into inequalities of power and wealth.
C.Members of high uncertainty avoidance cultures had a strong need for rules and
regulations.
D.In masculine cultures, little differentiation was made between men and women in the
same job.
E.Members of low uncertainty avoidance cultures placed a premium on job security,
career patterns, and retirement benefits.
Answer:
The pragmatic nationalist view is that:
A.FDI benefits only the host country.
B.FDI does not make any positive contribution to the host economy.
C.every country should adopt the free market view.
D.FDI should not be allowed by any country as it is an instrument of economic
domination rather than economic development.
E.FDI has both benefits and costs.
Answer:
The norms and value systems of an organization constitute its:
A.corporate social responsibility.
B.cultural toughness.
C.cultural sensitivity.
D.corporate culture.
E.perceptual ability.
Answer:
The CEO of Gold Chip Software engages in corruption and uses his power in the
company to enrich himself and his family members. Consequently, his employees also
engage in the same behavior. In this case, the roots of unethical behavior can be traced
to:
A.unrealistic performance expectations.
B.organizational leadership.
C.noblesse oblige and social responsibility.
D.varying ethical standards in different cultures.
E.geographical distance between employees and the parent company.
Answer:
When Galaxy Ventures, a real estate company, entered the low cost housing business,
the market was already saturated with other players. Thus, the company was forced to
exit the market due to lack of customer loyalty and substantial dividends. Which of the
following is a term used to described the situation faced by the company?
A.First-mover disadvantages
B.Last-mover disadvantages
C.Last-in first-out disadvantages
D.Comparative disadvantages
E.Absolute disadvantages
Answer:
Richard purchased a computer for $600 in 2014. Compared to the $900 computer that
he had purchased way back in 2010, the new one seems to be more efficient in terms of
the price he has paid and the power of the microprocessor technology. This is best
explained by:
A.product liability.
B.property rights.
C.Moore’s law.
D.purchasing power parity.
E.sustainable strategies.
Answer:
A decade ago the government of Weinsland decided to liberalize the country’s economy.
As a result, today the country is experiencing rapid economic advancement and societal
changes that are favorable for international business. Which of the following changes is
most likely to occur in Weinsland?
A.The country will exhibit more need for social and material support structures built on
collectives.
B.As the country gets richer, there will be a shift in the society from “traditional” to
‘secular rational” values.
C.As the country gets richer, there will be a shift in the society from “well-being” to
‘survival” values.
D.The people in the country will give more importance to collectivism than to
individualism.
E.The country, to further facilitate globalization, will commit to authoritarian
ideologies.
Answer:
What are the various reasons for economic stagnation in many of the world’s poorest
countries?
Answer:
Describe the philosophy of total quality management.
Answer:
Describe how pressures for cost reductions affect the choice of entry mode.
Answer:
Describe the differences in distribution systems in various countries in terms of channel
exclusivity.
Answer:
Discuss the arguments that are for and against the payment of bribes and speed money.
Answer:
Briefly describe the tactics and strategies that organizations should use to minimize
foreign exchange exposure.
Answer:
Briefly describe the strategic steps that novice exporters can take to increase the
probability of exporting successfully.
Answer:
Differentiate between a floating exchange rate and a pegged exchange rate.
Answer:
Discuss John Rawls’s principles of justice.
Answer:
Describe the advantages and disadvantages of acquisitions.
Answer:
Discuss the policy implications of Porter’s theory of national competitive advantage.
Answer:
What are the different types of industries for which licensing is not a good option?
Answer:
Describe in brief the different forms of totalitarianism.
Answer:
With regard to communication strategies, what is the difference between a push and a
pull strategy?
Answer:
What are some of the challenges faced by managers of an international business?
Answer:
Briefly trace the history of the G20 and describe its current role in international
business.
Answer:
Identify and briefly describe the four broad attributes that constitute Porter’s diamond.
Answer:
Describe the differences between the distribution systems of various countries in terms
of channel length.
Answer:
Discuss Jeffrey Sachs’s conception of geography, education, and economic
development.
Answer:
Describe the gold standard and a balance-of-trade equilibrium.
Answer: