The process by which a company extends its control over additional stages of
production is called vertical integration.
The international bond market consists of all bonds sold by issuing companies outside
their own countries.
When one World Trade Organization member files a complaint against another,
decisions are to be rendered in less than one year.
Governments bar international companies from entering economic sectors like energy
exploration for security reasons.
The single greatest disadvantage of survey research is that it provides access to only a
small amount of data in a single sweep.
The KOF Index measures the ________.
A) distribution of the global workforce
B) extent of globalization
C) gross regional product of an area
D) extent of technological innovation in a nation
Deciding the sequence of operations a company will use to create its product is called
________.
A) product planning
B) capacity planning
C) location economies
D) process planning
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
Country X advocates the greatest level of integration possible for the member nations of
the Moonland Union. Which of the following is Country X most likely to support?
A) political union
B) free trade area
C) customs union
D) economic union
Critics of globalization say that global consumer-goods companies destroy ________.
A) the homogenization of markets
B) societal conformity
C) free trade areas
D) cultural diversity
Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products.
Recently the company launched an innovative mousetrap with a unique design that has
been selling well in the U.S. market. Senior Vice President Marc Wallace, even
recommended expanding sales overseas in order to increase company revenues.
National competitive advantage theory states that a nation’s competitiveness in an
industry depends on ________.
A) the capacity of companies to create barriers to entry
B) the capacity of the industry to innovate and upgrade
C) the availability of government subsidies for industry development
D) the availability of cheap factors of production in the nation
Scenario: Cleanshot USA in Russia
When Cleanshot USA, a photography products company, decided to enter the
international arena, it chose Russia as its main market. Although Russia has been in
transition for years, Cleanshot managers believe their company has tremendous
opportunities there. Which of the following challenges is Cleanshot most likely to face
in Russia?
A) organized crime
B) too many competitors
C) low demand for the products of non-Russian companies
D) fading underground economy
Which of the following is true about economic development of a nation?
A) The purchasing power parity is a poor indicator of a people’s total well-being.
B) GDP is a larger figure and includes a nation’s income generated from exports,
imports, and international operations.
C) Illegal activities such as gambling and black market transactions are considered in
GDP and GNP.
D) Using gross product figures to compare production across countries accounts for
different cost of living in each country.
Scenario: Scooters Inc.
Scooters Inc. is a producer of pricey scooters. The company’s profits come mostly from
the sales of its luxury line that caters to the esteem needs of the rich population. Ben
Driven, vice president of marketing for Scooters Inc., has been asked to review the
company’s pricing strategy.
Ben knows that a pricing policy in which one selling price is established for all
international markets is called ________.
A) worldwide pricing
B) value-based pricing
C) dual pricing
D) arm’s length pricing
Which of the following training approaches involve employees visiting another culture,
walking the streets of its cities and villages, and becoming absorbed by the culture for a
short time?
A) language training
B) field experience
C) sensitivity training
D) cultural orientation
Scenario: Konesia Joins the World
Konesia, a former totalitarian economy and pariah state, is taking steps toward a free
market economy. The government wants to encourage trade but also wants to find a
balance so that local businesses and industries are not harmed.
Konesia has created a hybrid form of trade restriction-a lower tariff rate for a certain
quantity of imports and a higher rate for quantities that exceed the quota. This is an
example of a(n) ________.
A) compound tariff
B) export quota
C) ad valorem tariff
D) tariff-quota
Scenario: Color-Me-Green Inc.
Color-Me-Green Inc., a U.S.-based clothing merchant, has started doing business
internationally. Having subsidiaries in several countries, the company must integrate
financial information from all its subsidiaries with the U.S. home office at the end of
the year.
Suppose Country A has a currency called the Pulse (P). At the beginning of the year, the
exchange rate between the Pulse and the U.S. dollar was P150/$. The inflation rate in
Country A is running at an annual rate of 250 percent, whereas inflation in the U.S. is
running at 2 percent. Which of the following would most likely be the new exchange
rate that Color-Me-Green can expect at the end of the year?
A) P525/$
B) P514.70/$
C) P43.71/$
D) $43.71/P
Which of the following stipulates that an identical product must have an identical price
in all countries when the price is expressed in a common currency?
A) purchasing power parity
B) the law of one price
C) the comparative advantage theory
D) the efficient market view
Which of the following countries is seen as a threat to national cultures around the
world?
A) United States
B) India
C) Russia
D) France