1) Electronic data interchange (EDI) is an online collaboration model that brings
manufacturers, distributors, value-added retailers, and customers together to execute
trading transactions.
2) Many products’ location of production will shift internationally as the products go
through their life cycle.
3) The three major responsibilities of the European Parliament are legislative power,
control over the budget, and supervision of executive decisions.
4) In a concentration strategy for international expansion, a company goes first to one
or a few countries and builds up fast there before going to other countries.
5) Seasonal differences around the world enable MNEs to distribute weather-related
sales, such as winter clothing, more evenly throughout the year.
6) Trade creation allows consumers access to more goods at a lower price than would
have been possible without integration.
7) In response to the global credit crisis, the United States government took actions that
increased economic freedom.
8) Another source of financing, in which an investor takes an ownership position in
return for shares of stock in the company and the promises of capital gains, is called
debt financing.
9) The make-or-buy decision applies only to domestic firms.
10) According to U.S. GAAP, companies recognize transaction gains and losses in the
income statement.
11) Producers are affected by exchange rate changes because goods manufactured in a
country with a weak currency will be relatively cheap in world markets.
12) Profit figures for individual country operations may obscure the real impact those
operations have on total global performance.
13) In a global supply chain, suppliers must be part of the manufacturer’s organizational
structure.
14) A company starting out with a global focus, usually because of the international
experience of its founders, is called a ________
A) multinational enterprise
B) transnational company
C) strategically allied company
D) born-global company
15) Skinner Electronics plans to expand into foreign markets. Top executives want the
firm to focus only on locations where the rule of law prevails. Which of the following
should most likely be considered by Skinner?
A) wealthier, westernized countries
B) developing, non-Western countries
C) emerging economies experiencing rapid growth
D) countries inclined toward totalitarian-style government
16) In most cases, which type of government protection assistance is most
controversial?
A) business development services
B) foreign business contacts
C) trade expositions
D) tariffs
17) An investor sells Japanese yen which is yielding a low interest rate and uses the
proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes
the investor’s actions?
A) forward discount spread
B) interbank transaction
C) strike price option
D) carry trade
18) Assume the following conditions: In the United States it takes 5 units of resources
to produce a ton of potatoes and 10 to produce a ton of coal. In Canada it takes 6 units
of resources to produce a ton of potatoes and 9 to produce a ton of coal. According to
the theory of absolute advantage, ________.
A) the United States should export potatoes to Canada and import coal from Canada
B) the United States should export coal to Canada and import potatoes from Canada
C) the United States should import both potatoes and coal from Canada, while
concentrating on production of more valuable goods
D) there would be no basis for trade
19) The goal of a ________ is to abolish all tariffs among member countries.
A) customs union
B) common market
C) free trade agreement
D) common internal tariff
20) No matter the country or culture, money has three fundamental features that
motivate consumers around the world to maximize purchasing power by buying the
highest possible quality product for the lowest possible price. These three features
include all of the following EXCEPT which one?
A) scarcity
B) difficulty of acquisition
C) difficulty of allocation
D) difficulty of saving
21) Firms with global strategies versus those implementing multidomestic strategies are
more likely to use ________.
A) expatriate managers
B) host-country nationals in top management positions abroad
C) local managers
D) home-country nationals in corporate positions
22) The recent global economic crisis has led to which of the following?
A) governments seeking to impose more constraints on capitalism
B) governments seeking to eliminate constraints on capitalism
C) governments seeking to increase the interdependence of developing economies
D) governments seeking to eliminate the interdependence of developing economies
23) A differentiation strategy works well when ________.
A) a company designs a universal product for a broad market
B) buyers believe minor product differences are irrelevant to price
C) buyers are highly sensitive to price shifts and quality control
D) a company can continually develop products that have unique features
24) A(n) ________ staffing policy framework assumes that the practices and procedures
that work at headquarters will work in foreign operations; as such, executive slots are
filled by home-country nationals.
A) polycentric
B) intercentric
C) ethnocentric
D) geocentric
25) Why is countertrade considered inefficient?
26) What is an offshore financial center? What are the main characteristics of OFCs?
27) What is the relationship between a company’s international market and its
production location decisions? How do firms benefit from the use of scanning
techniques when making location decisions?
28) What are common reasons that governments enact export restrictions? What are the
possible negative consequences of such restrictions?
29) How has intellectual property theft affected China’s economy? What is the
relationship between China’s legal environment and intellectual property theft?
30) What is political risk? What is the relationship between political environment and
political risk?
31) Explain the major types of classical organization structures and the advantages and
disadvantages of each for international operations.
32) How might centralization of decision making adversely affect local managers in an
MNE?