1) One advantage of importing is that an importer can diversify its operating risks by
developing alternative suppliers.
2) A Eurocurrency is any currency that is banked outside its country of origin.
3) Governments sometimes prohibit foreign acquisitions because they fear market
dominance by foreign enterprises.
4) The European Commission is the European Union’s ultimate decision-making body
and is composed of the different ministers of the member countries.
5) When the currency value in the location where a company produces becomes
stronger, the company most likely needs to adjust its margins downward to be
competitive in export markets.
6) Assume a U.S. company purchases equipment from a German supplier for 37,500
when the exchange rate at the time of the transaction is $1.5 per euro, or 0.667 per
dollar. The U.S. company doesn’t have to pay the German supplier until the end of the
month, at which time the euro is now worth only $1.49 per euro or 0.671 per dollar.
According to U.S. GAAP, the equipment would be valued at ________.
A) $25,167
B) $25,000
C) $56,250
D) $55,875
7) In this example, assume that both trade and production factors are internationally
mobile. Using domestic labor, the labor cost per silicon chip is $.10 in Japan and $.20 in
the United States. Using domestic capital, the capital cost per chip is $.10 in Japan and
$.05 in the United States. Chip transportation in either direction is $.10. Japanese labor
is willing to work in the United States for $.15 per chip including the workers’ transport
cost. U.S. capital will go to Japan at a cost of $.08 per chip including transaction costs.
Which silicon chips will the United States buy?
A) those made in Japan with Japanese labor and capital
B) those made in the United States with U.S. labor and capital
C) those made in Japan with Japanese labor and U.S. capital
D) those made in the United States with Japanese labor and U.S. capital
8) A U.S. firm owns 100% of its production facility in Brazil; thus it is most likely
using a(n) ________ strategy.
A) comprehensive ownership
B) vertical integration
C) appropriability
D) internalization
9) ________ is the process of a firm having inputs supplied to it for the production
process.
A) Sourcing
B) Subcontracting
C) External production
D) Offshoring
10) Which of the following is most likely true regarding options?
A) An option can only be purchased from a commercial bank
B) Options are never used with foreign currency
C) An option is a right to sell foreign currency
D) Options do not provide firms with flexibility
11) The most internationally mobile factor of production is ________.
A) labor
B) management
C) long-term capital
D) short-term capital
12) The largest percentage of nations, within a contiguous geographic region, that
adhere to the rule of man are located in ________.
A) Central Africa
B) Northern Africa
C) Eastern Europe
D) Central America
13) An exporter that implements a(n) ________ strategy does so with the intent to
develop its own international marketing capability.
A) indirect selling
B) freight forwarding
C) direct exporting
D) export intermediation
14) What is typically the most difficult aspect of an export plan for SMEs?
A) finding a freight forwarder
B) identifying core competencies
C) creating countertrade activities
D) targeting the right foreign market
15) According to the theory of success and reward expectation, the greatest enthusiasm
for work generally occurs when there is a ________ certainty of success combined with
a ________ reward for success compared to the reward for failure.
A) high; high
B) high; low
C) low; high
D) low; low
16) Fidelity Manufacturing is considering expanding its operations into the Philippines.
A manager at Fidelity has the task of predicting political risk in the Philippines. Which
of the following approaches should the manager LEAST use to accomplish the task?
A) analyzing the market share of competitors in the country
B) analyzing the country’s past political patterns and trends
C) seeking and analyzing opinions of influential people in the country
D) examining social and economic conditions within the country
17) Which of the following transactions refers to the sale of goods or services produced
by a company based in one country to customers that reside in a different country?
A) importing
B) countertrading
C) exporting
D) freight forwarding
18) When Sistema, a Russian company, issued a U.S. dollar stock offering in London,
its shares were classified as a(n) ________.
A) Global Depositary Receipt
B) American Depositary Receipt
C) European Depositary Receipt
D) International Depositary Receipt
19) The Japanese approach to quality is total quality management (TQM), which
stresses which of the following principles?
A) employee involvement, commitment to international standards, and customer
satisfaction
B) customer satisfaction, continuous improvements, and warranties
C) customer satisfaction, employee involvement, and continuous improvements
D) employee involvement, continuous improvements, and commitment to international
quality standards
20) All of the following are types of products that are usually exceptions to what is
predicted by the product life cycle theory EXCEPT ________.
A) trendy clothing
B) luxury items
C) differentiated products
D) consumer durables
21) Which of the following is NOT one of the three personality traits that specifically
affect international marketing?
A) globalism
B) materialism
C) ethnocentrism
D) cosmopolitanism
22) Gap analysis can be used by companies to gain synergy among countries. Which of
the following is a benefit of this synergy?
A) It allows companies to determine the allocation of marketing budgets among
countries
B) It can be used to prevent sales via the gray market
C) By seeing the combined market potential among several countries, companies can
determine whether there is sufficient demand to justify new product development costs
D) By analyzing the distribution gap, companies can better determine whether to handle
other companies’ imported products along with their own
23) Escalation of commitment is best described as the ________.
A) strategy of first entering a country on a small scale
B) process of entering a country because “everyone else is going there”
C) expectation of a higher return in more politically risky environments
D) increased likelihood of investing in a country because of having spent considerable
time and money in examining it
24) A culture that prefers to first settle general principles rather than small issues is
most accurately characterized as ________.
A) idealist
B) polychronic
C) high-context
D) pragmatist
25) In a short essay, discuss gap analysis.
26) What factors influence cultural stability and cultural change? What factors influence
how much cultural adjustment organizations must make in foreign countries?
27) What types of employees are increasingly being chosen for expatriate assignments?
What characteristics are firms seeking when selecting expatriates?
28) What is the difference between a low-context culture and a high-context culture?
How do these differences affect communication in international business dealings?
29) Many companies and industries argue that they should have the same access to
foreign markets as foreign industries and companies have to their markets. In a short
essay, discuss this issue of “comparable access,” or “fairness.”
30) What factors influence international accounting practices? What forces are leading
to the global convergence of accounting practices?
31) Which stakeholders must companies satisfy? What role should stakeholders play in
a firm’s internal code of conduct?
32) Briefly discuss the four noneconomic rationales for governmental intervention in
the free movement of trade: maintaining essential industries, preventing shipments to
unfriendly countries, maintaining or extending spheres of influence, and preserving
national identity.