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1) Knowledge that can be written down and transferred without losing much of its
richness is known as:
a. Explicit c. Valid
b. Implicit d. Legible
2) ____ are defined as "fundamental and comprehensive changes introduced to the
formal and informal rules of the game that affect organizations as players."
a. Opportunities c. Institutional transitions
b. Transaction costs d. Costs of doing business
3) Political risk is associated with political changes that may negatively impact
domestic and foreign firms. Which statement about political risk is correct?
a. Political risk only exists in communist countries
b. Firms operating in democracies never confront political risk
c. Firms operating in democracies are subject to political risk
d. Political risk is a myth
4) Which of the following is the largest religion in the world based on number of
adherents?
a. Islam c. Hinduism
b. Christianity d. Buddhism
5) If a country's interest rate is high relative to other countries, the country will:
a. Develop a trade deficit
b. Attract foreign funds
c. Experience depreciation in its home currency
d. Discourage foreign investing
6) According to the text, most MNEs are ____ the base of the pyramid.
a. Focusing on
b. Ignoring
c. Aware of countless opportunities of
d. Considering FDI in the economies at
7) An examination as to whether a firm has the resources and capabilities to perform a
particular activity in a manner superior to competitors is:
a. Resources and capabilities test c. Asset appraisal
b. Performance test d. Benchmarking
8) Which of the following best describes the strength and weakness of the geographic
area structure?
a. Cost of business c.
b. Cost of equity d. Management control
9) Which of the following set of clusters includes ALL countries?
a. GLOBE c. Ronen and Shenkar
b. Hofstede d. Huntington
10) One advantage of exports is:
a. Marketing distance from customers
b. Concentration of resources on production
c. Trade barriers and protectionism
d. High transportation cost for bulky products
11) FDI may be viewed as a reflection of firm motivation to extend firm-specific
capabilities abroad and their responses to overcome imperfections and failures.
12) While theories on PPP, interest rates, and money supply give often-accurate
predictions about long-term movements, investor psychology is regarded as the
determinant behind short-term movements.
13) The theory of absolute advantage was advocated by French statesman Jean Baptist
Colbert.
14) Only managers in financial firms have to worry about foreign exchange issues
because non-financial firms are immune to risks of changing currencies.
15) Equity-based alliances include co-marketing, research and development, contracts,
turnkey products, strategic suppliers, strategic distributors, and licensing/franchising.
16) Managers in low uncertainty avoidance countries rely more on experience and
training than managers in high uncertainty avoidance countries who rely more on rules.
17) A psychological contract is hard to violate.
18) A type of FDI in which the firm moves upstream or downstream in different value
chain stages in a host country is called horizontal FDI.
19) Co-marketing refers to outsourcing agreements in R&D between firms.
