True / False
1. Global sourcing is the term commonly used to describe the process by which a firm attempts to locate and purchase
goods or services on a worldwide basis.
a. True
b. False
2. Customs brokers are government inspection officials who have the responsibilities of inspecting and regulating the
shipment of goods and services imported into the United States.
a. True
b. False
3. Non tariff barriers such as technical standards do not have a significant influence on how firms make their trade and
investment decisions.
a. True
b. False
4. Small and medium-size companies lack the competitive advantage to compete with large multinational corporations
and therefore have little to contribute to the international marketplace.
a. True
b. False
5. Intellectual property rights are valuable assets that can be licensed to a foreign licensee as a means to penetrate a
foreign market rather than establish a wholly owned subsidiary.
a. True
b. False
6. Trade consists of the import and export of goods or services.
a. True
b. False
7. Exporting is the shipment of goods or rendering of services to a foreign buyer located in a foreign country.
a. True
b. False
8. The three forms of international business are exporting, importing, and licensing.
a. True
b. False
9. Indirect exporters commonly employ the services of export trading companies and export management companies.
a. True
b. False
10. Indirect exporting but not direct exporting involves sales through sales agents or to foreign distributors.
a. True
b. False
11. International licensing agreements are contracts by which the holder of intellectual property grants certain rights in
that property to a foreign firm for a specified period of time.
a. True
b. False
12. A potential negative aspect of the transfer of technology is that the licensee could be your competitor in the future.
a. True
b. False
13. A host country refers to the country under whose laws the investing corporation was created or is headquartered.
a. True
b. False
14. A home country refers to the country under whose laws the investing corporation was created or is incorporated.
a. True
b. False
15. Currency exchange risk cannot be managed because the fluctuations of currencies cannot be predicted.
a. True
b. False
16. A sovereign nation has the power to nationalize a foreign private enterprise without compensation.
a. True
b. False
17. Freight forwarders are regulated by the Department of State and arrange the transportation of goods for the
importer and represent the importer with customs.
a. True
b. False
18. Freight forwarders act as the seller’s or exporter’s agent.
a. True
b. False
19. The World Intellectual Property Organization defines intellectual property rights as “legal rights which result from
intellectual activity in the industrial, scientific, literary, and artistic fields.”
a. True
b. False
20. A company that makes unauthorized copies of a movie and sells the copies on DVDs is infringing on the movie
owner’s intellectual property rights.
a. True
b. False
21. In Dayan v. McDonald’s Corporation, the court ruled that:
a. McDonald’s quality standards were inadequate under French law.
b. The McDonald’s franchise contract was illegal under French law.
c. McDonald’s had fulfilled its responsibility to the franchisee in France under U.S. law.
d. The French do not like hamburgers.
22. The type of risk that includes controls on exports, imports, controls on the movement of currency, restrictions on
licensing and investment, and controls over physical property located in a country is:
a. Legal risk.
b. Political risk.
c. Economic risk.
d. Currency risk.
23. Tariffs on imported products are imposed for which of the following reasons:
a. Collection of revenue.
b. Protection of domestic industries.
c. To assert political objectives.
d. All of the above.
24. Two examples of nontariff barriers that refer to quantitative restrictions on importing and a total or near total ban on
trade respectively are:
a. Partial embargoes, embargoes.
b. Trade seizures, limits.
c. Embargoes, quotas.
d. Quotas, embargoes.
25. The shipment of goods or rendering of services to a foreign buyer located in a foreign country is:
a. Importing.
b. Exporting.
c. Foreign exchange.
d. A and B.
26. The process of buying goods from a foreign supplier and entering them into the customs territory of a different
country is:
a. Exporting.
b. International exchange.
c. Trade by design.
d. None of the above.
27. The two types of exporting are:
a. Impartial; partial.
b. Direct; indirect.
c. Foreign; domestic.
d. Individual; joint.
28. Export management companies assist indirect exporters by serving as:
a. Consultants.
b. Attorneys.
c. Foreign currency traders.
d. Accountants.
29. Firms that assist indirect exporters and are licensed to operate under the antitrust laws of the U.S. are:
a. Export management companies.
b. Indirect exporter merchants.
c. Export trading companies.
d. None of the above.
30. International licensing agreements pertain to forms of intellectual property such as:
a. Books, songs, inventions.
b. Trademarks, copyrights, patents.
c. Real estate, personal property.
d. Contracts.
31. International franchising allows the franchisee the right to use a(n):
a. Export management company.
b. Export trading company.
c. Copyright.
d. None of the above.
32. International business may be classified into which of the following three categories:
a. Trade, import/export, foreign exchange.
b. International licensing agreements, investments, law.
c. Trade, international licensing agreements, investment.
d. International licensing agreements, trade, franchising.
33. A cooperative business arrangement between two or more companies may be a:
a. Partnership.
b. Joint venture.
c. Corporation.
d. All of the above.
34. The concept of local participation refers to:
a. A portion of the employees of the business in the host country will be nationals of the home country.
b. Employees of the business contribute a certain number of hours to community service.
c. A portion of the business must be owned by nationals of the host country.
d. The host country retains mineral rights.
35. If a party does not fulfill their obligations as set forth in a sales contract, it is known as:
a. Non-payment.
b. Termination.
c. Non-performance.
d. All of the above.
36. An independent firm that purchases goods for resale directly from the exporter, assumes credit risks in the local
market, and provides product service and support is known as:
a. A foreign sales representative.
b. A sales agent.
c. A foreign distributor.
d. A freight forwarder.
e. A customs broker.
37. Which of the following statements most accurately describes the traditional economic climate in developing
countries:
a. They are largely communist countries.
b. They have well-developed free market mechanisms.
c. They have mixed economies with strong central planning features.
d. The economies of developing countries make them practically unsuitable for Western companies to do
business there.
38. Which of the following is not a characteristic of multinational corporations:
a. The United States is usually their home nation.
b. They derive capital resources worldwide.
c. They operate facilities of production in more than one country.
d. They move production, technology, and capital to those countries with the most hospitable environment.
39. In the case In re Union Carbide Corporation Gas Plant Disaster at Bhopal, the U.S. court ruled:
a. That Union Carbide was criminally responsible for the deaths at the Indian plant.
b. That Union Carbide was liable to the plaintiffs under Indian law.
c. That Union Carbide was not responsible for the negligent acts of its subsidiary in India.
d. That the case brought in U.S. courts should be transferred to the courts of India.
40. In Gaskin v. Stumm Handel GmbH, the District Court ruled:
a. That employment contracts must be in writing.
b. That the plaintiff was excused from performing a contract written in German because he understood only
English.
c. That the contract was unconscionable because it was written in a language foreign to the plaintiff.
d. That the plaintiff‘s signing of a jural document makes the signatory conclusively bound
41. Which of the following does not generally characterize foreign distributors?
a. They are independent firms.
b. They are usually located in the country from which the goods are exported.
c. They assume the risks of warehousing the goods.
d. The often trail end users of the product.
42. Which of the following does not accurately characterize export management companies?
a. They act as advisors or consultants.
b. They engage in foreign market research.
c. They exhibit goods at foreign trade shows.
d. They use their extensive sales contracts to market the products of other companies.
43. The Arab Spring transformation that has taken shape in Egypt is an example of negative deterrence to foreign direct
investment
a. The legal environment
b. Global financial crisis
c. Economic recession
d. Political risk
44. The World Intellectual Property Organization, or WIPO, is a specialized agency of the:
a. United Nations.
b. World Trade Organization.
c. World Customs Organization.
d. International Chamber of Commerce.
45. Which of the following is NOT an example of the transfer of technology?
a. Medical researchers at a university providing research data to a pharmaceutical company as part of an effort
to find a cure for cancer.
b. A computer programmer sharing her source code with the public via the Internet.
c. A website designer downloading a copy of a photograph for use on a website, without the photographer’s
knowledge or permission.
d. A franchisor teaching a new franchise owner how to set up and run his franchise, using the franchisor’s
methods and materials.
46. As a form of foreign direct investment, a foreign branch is a business presence by the investor in the
country.
a. home
b. host
c. neighboring
d. local
47. Compare and contrast the three basic forms of international business or market entry strategies.
48. Weigh the risks and benefits of entering the international market with those of entering or doing business in the
domestic market.
49. Why do the risks to the firm increase as the penetration of the foreign market increases?
50. In what ways is doing business in the developing nations of Eastern Europe both similar and different from doing
business in the United States? Western Europe?
51. Compare and contrast the benefits and risks of direct and indirect exporting.
52. Weigh the relative benefits and risks of a medium-sized American firm licensing technology to a developed nation?
A developing nation?
53. How do you feel doing business in the Middle East would differ from doing business elsewhere? What special
factors (e.g. religious differences, cultural variables, Arab-Israeli relations) bear on your answer?
54. Compare and contrast the ethical and strategic aspects of providing contract interpretation services to foreign
business partners.
55. Compare and contrast possible methods of managing currency risk.
56. Choose a product and a country to which you wish to export that product. Prepare an export plan, identifying in
particular the factors that would need to be addressed in order to ensure a successful venture.
57. Identify a domestic franchise. Craft a franchising agreement that addresses standards/quality or service (in the
manner of McDonald‘s).
58. Devise “managerial guidelines” or “Troubleshooter’s Guide” to which a U.S. franchise representative should refer in
supervising or consulting with a new, foreign franchisee.
59. Design a business plan for doing business in the Middle East, addressing religious and cultural differences.