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Name:
Class:
Date:
chapter 1
Indicate whether the statement is true or false.
1. George and John are both managers at Routen Plan Inc. based in Washington, but only George receives a significant
international premium compensation as he is an expatriate manager of Routen Plan, Germany.
a.
True
b.
False
2. Croulene Corp, an American company, starts its operations in China. Croulene has an inherent disadvantage in China
because of its nonnative status. This is an example of a liability of foreignness.
a.
True
b.
False
3. Semiglobalization is the perfect balance of total isolation and total globalization, offering a single, right way of doing
business around the globe.
a.
True
b.
False
4. If the largest MNE, Walmart, were an independent country, it would be the 27th largest economy in the world.
a.
True
b.
False
5. After WWII, major Western nations committed to global trade and investment. Between the 1950s and 1970s most non-
western countries followed suit by adopting the view of a globalized world economy.
a.
True
b.
False
6. Business leaders should focus on the top two tiers of the global economic pyramid because the base of the pyramid
(BoP) does not offer many economic opportunities.
a.
True
b.
False
7. LindaLoel Corp. extensively uses the technique of scenario planning. Scenario planning is the identification and
assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events.
a.
True
b.
False
8. According to the Pendulum view on globalization, globalization is very recent and one-directional.
a.
True
b.
False
9. Individuals who make less than $2000 a year comprise the base of the pyramid (BoP).
a.
True
b.
False
10. Formal institutions include culture, ethics, and values.
a.
True
b.
False
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chapter 1
11. An Ecuadorian firm doing business in a neighboring, Spanish speaking, Latin American country faces a lower liability
of foreignness than a Dutch firm doing business in the same country.
a.
True
b.
False
12. Semiglobalization suggests that barriers to market integration at borders are high, but not high enough to insulate
countries from each other completely.
a.
True
b.
False
13. SchulzRobb Inc., a company based in England, engages in foreign direct investment in other countries such as India,
Japan, and Brazil. SchulzRobb is a multinational enterprise.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
14. According to one of the three views of globalization, globalization is _____.
a.
recent
b.
the disintegration of countries and peoples of the world
c.
one-directional
d.
a process similar to the swing of a pendulum
15. BRIC is an acronym for the emerging economies of _____.
a.
Britain, Russia, India, and China
b.
Brazil, Romania, India, and Chile
c.
Belgium, Romania, Indonesia, and Chile
d.
Brazil, Russia, India, and China
16. Which of the following is true of the Great Transformation?
a.
It does not take purchasing power parity (PPP) into account.
b.
It is the linear story of the high speed economic growth of the developed world.
c.
It refers to emerging economies struggling to compete with developed nations.
d.
It refers to the shift in economic weight and engines of growth toward emerging economies.
17. The Four Tigers refers to ____.
a.
The Triad of developed economies (North America, Western Europe, and Japan) plus China
b.
The noncommunist countries (Argentina, Brazil, India, and Mexico) that focused on fostering and protecting
domestic industries in the aftermath of WWII
c.
The economies of Hong-Kong, Singapore, South Korea, and Taiwan that achieved developed (high income)
status and inspired more countries to join the world economy.
d.
The emerging economies of Brazil, Russia, India and China
18. Which of the following statements is true of institutions?
a.
They generate 40 percent foreign direct investment (FDI) outflows.
b.
They mean the formal and informal rules of the game.
c.
They are also called emerging economies.
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d.
They are firms engaging in foreign direct investment.
19. _____ is the inherent disadvantage that firms from other countries experience in host countries because of their
nonnative status.
a.
Foreign premium
b.
Liability of foreignness
c.
Liability of localization
d.
International premium
20. MaltHanks Inc., a leading American firm, starts its operations in China. It incurs a lot of additional costs in
comparison to the local firms. These costs originate in limited local knowledge and local stakeholders’ discriminatory
attitudes. Which of the following best describes the problem faced by MaltHanks?
a.
Foreign premium
b.
Liability of foreignness
c.
Liability of localization
d.
International premium
21. Which of the following is an economic example of the emergence of BRIC(S) during the Great Transformation?
a.
China doubled its per capita income in about ten years.
b.
From 2007-2017 Brazil accomplished an annual economic growth rate of 6%.
c.
Managers in emerging economies command higher international premiums than managers in developed
economies.
d.
Japan has experienced uniform, high speed growth for the past 10 years.
22. Which of the following statements is true of the rapid globalization in the 1990s and the 2000s?
a.
It suggested that barriers to market integration at borders are high.
b.
It led to the historically accurate view that globalization is new.
c.
It created fear among many people in developed economies that they would lose jobs.
d.
It decreased the foreign direct investment (FDI) inflows and outflows.
23. More than 25 percent of global gross domestic product (on a PPP basis) in recent years comes from _____.
a.
African economies
b.
Latin America
c.
Central and Eastern Europe
d.
emerging economies, such as BRICS (Brazil, Russia, India, China, and South Africa)
24. Which of the following expression does the author use to describe globalization in the recent times?
a.
Global localization
b.
Total globalization
c.
Semiglobalization
d.
Global standardization
25. Which of the following statements is true of foreign direct investment?
a.
It is the act of buying an ownership stake within a country that provides capital.
b.
It is the process of investing in, controlling, and managing value-added activities in other countries.
c.
It is the process of tracking an index or measuring of a foreign market.
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chapter 1
d.
It is the act of investing in a foreign-owned company within a country.
26. Which of the following is true of The Great Recession of 2008-2009?
a.
The crisis showed, for better or worse, how isolated the global economy had become.
b.
Globalization was widely regarded as a minor factor in causing the crisis.
c.
Global output, trade, and investment plummeted, while unemployment skyrocketed.
d.
The crisis led to massive government bailouts of failed firms in the United States but not elsewhere in the
world.
27. Which of the following statements is true of the second tier of the global economy pyramid?
a.
It consists of a billion people making $2,000 to $20,000 a year.
b.
It mostly consists of people who live in the developed economies.
c.
It mostly consists of people who live in North America, Western Europe, and Japan.
d.
It consists of the vast majority of the people who make less than $2,000 a year.
28. Which of the following statements is true of expatriate managers?
a.
They are managers who work abroad.
b.
They are managers who work in domestic firms.
c.
They are managers who work for the emerging economies they are a part of.
d.
They are managers who work for local businesses in developed countries.
29. Which of the following is a difference between risk management and scenario planning?
a.
Risk management plans for either high risk or low risk, whereas scenario planning prepares to minimize the
impact of only high-risk events.
b.
Risk management is the identification and assessment of risks, whereas scenario planning is a technique to
prepare and plan for multiple situations.
c.
Risk management is a new phenomenon beginning in the late 20th century, whereas scenario planning started
2,000 or 8,000 years ago.
d.
Risk management is driven by recent technological innovations, whereas scenario planning is driven by a
Western ideology.
30. Which of the following statements is true of purchasing power parity (PPP)?
a.
It is the sum of value added by residents and households operating in an economy.
b.
It is the management of value-added activities in other countries.
c.
It is an investment made by firms within an industry in other countries.
d.
It is an adjustment to reflect the differences in cost of living among different countries.
31. According to the pendulum view on globalization, which of the following statements is true of globalization?
a.
It is not one-directional.
b.
It is a fairly new concept.
c.
It refers to multinational enterprises.
d.
It refers to the identification and assessment of risks.
32. Which of the following describes international business?
a.
Firms collaborating with domestic entrants
b.
Firms selling their businesses completely to foreign companies
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c.
Firms engaging in business abroad
d.
Firms belonging to and doing business in emerging economies
33. Which of the following statements is true of semiglobalization?
a.
It is more complex than extremes of total isolation and total globalization.
b.
It is a measure used for assessing and classifying risks.
c.
It is about limiting oneself to one’s home country.
d.
It is recent and one-directional.
34. Which of the following statements is true of international premium?
a.
It is a pay raise for domestic employees.
b.
It is the money paid to domestic firms by foreign firms.
c.
It is the amount of money paid by international firms to government.
d.
It is a significant pay raise a manager gets when working overseas.
35. Which of the following is true of emerging economies?
a.
They grow only their absolute gross domestic product (GDP).
b.
Collectively, they command 48 percent of world trade.
c.
They have uniform high-speed growth.
d.
Collectively, they contribute approximately 90 percent of the global gross domestic product.
36. Ashestate Inc. recently set up a risk management department. What is a task the risk management department is likely
taking on?
a.
addressing interdepartmental conflict
b.
setting expatriate manager pay scales
c.
planning protests of globalization
d.
engaging in extensive scenario planning
37. Which of the following was a consequence of rapid globalization in the 1990s and 2000s?
a.
It led to the historically accurate view that globalization is ancient.
b.
It caused some factions in emerging economies to complain against the onslaught of multinational enterprises
(MNEs).
c.
It was widely accepted by developed countries as a way of increasing the number of jobs.
d.
It helped nurture local companies in emerging economies and also preserve their cultures and values.
38. Which of the following statements is true of the base of the pyramid?
a.
It consists of a billion people making $2,000 to $20,000 a year.
b.
It comprises people who live in the developed economies.
c.
It refers to the people who live in North America and Western Europe.
d.
It is ignored by most of the multinational enterprises.
39. According to the pendulum view on globalization, _____ existed for more than two millennia, with earliest traces
discovered in Phoenician, Assyrian, and Roman times.
a.
multinational enterprises
b.
liability of foreignness
c.
international premium
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d.
scenario planning
40. Which of the following statements is true of the study of global business?
a.
It is very interdisciplinary.
b.
It has no unified framework.
c.
It has five core perspectives.
d.
It draws on only two business disciplines, finance and strategy.
41. Which of the following statements is true of foreign firms?
a.
They easily adjust to laws, regulations, and rules of host nations.
b.
They focus only on a firm’s internal environment.
c.
They do not dominate nonnative markets.
d.
They are a close integration of countries and peoples of the world.
42. The _____ consists of North America, Western Europe, and Japan.
a.
base of the pyramid
b.
Triad
c.
top tier of the pyramid
d.
triplex
43. Most emerging economies have experienced:
a.
some significant slow down recently.
b.
uniform high-speed growth.
c.
a doubling of their per capita incomes within five years.
d.
an increase in the number of employees.
44. Which of the following statements is true of the emerging economies?
a.
They grow only their absolute gross domestic product (GDP).
b.
They attract 60 percent of foreign direct investment (FDI) inflows and generate 40 percent FDI outflows.
c.
They always manage to repeat their extraordinary growth sprint.
d.
They contribute approximately 90 percent of the global gross domestic product.
45. Which of the following statements is true of semiglobalization?
a.
It is to be engaged.
b.
It is to be opposed as a menace.
c.
It is about limiting oneself to one’s home country.
d.
It is recent and one-directional.
46. A(n) _____ is a leading perspective in global business that suggests that firm performance is, at least in part,
determined by its internal capital and capabilities.
a.
product-based view
b.
institution-based view
c.
resource-based view
d.
profit-based view
47. _____ is the sum of value added by residents, households, and government operating in an economy.
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chapter 1
a.
Foreign direct investment
b.
Purchasing power parity
c.
Gross domestic product
d.
Intermediate consumption
48. Explain the correlation between the success and failure of global firms and the institution- and resource-based views.
49. How does a country’s gross domestic product (GDP) change after adjusting for purchasing power parity (PPP)?
50. Explain how the pendulum view attempts to describe globalization as a cyclical phenomenon with many difficulties.
51. The global economy may be viewed as a pyramid. The growing number of opportunities at the base of the pyramid
highlights the role this bottom tier will play in the years to come. How would an individual take advantage of this often-
ignored level if he or she was occupying a top management position at a prominent MNE?
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chapter 1
Answer Key
Name:
Class:
Date:
chapter 1
Name:
Class:
Date:
chapter 1
