Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
Test File: Chapter 16: Globalization and International Business
Multiple Choice
1. __________ is the process of growing interdependence among elements of the global
economy.
a) Nationalization
b) Industrialism
c) Globalization
d) Internationalism
2. The creation of domestic jobs by foreign employers is called __________.
a) insourcing
b) outsourcing
c) international operation
d) strategic alliance
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
3. A(n) __________ economy is one in which resources, markets, and competition are
worldwide in scope.
a) foreign
b) domestic
c) outsourced
d) global
4. A company that conducts business across national boundaries is called a(n) __________.
a) global industry
b) international business
c) trade association
d) conglomerate
5. ABC Manufacturers conducts commercial transactions across national boundaries. ABC
Manufacturers would be classified as a(n) __________.
a) large business
b) franchise
c) international business
d) foreign licensed company
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
6. The reasons why businesses go global include all of the following EXCEPT:
a) expanding profit potential.
b) gaining access to more customers.
c) reducing access to capital.
d) lowering the cost of materials and supplies.
7. __________ takes advantage of international wage gaps by contracting for low-cost goods and
services in foreign locations.
a) Insourcing
b) Exporting
c) Global sourcing
d) Reshoring
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
8. A __________ is a network of a firm’s outsourcing suppliers and contractors.
a) franchise
b) global supply chain
c) joint venture
d) partnership
9. __________ moves foreign production and jobs back to domestic locations.
a) Outsourcing
b) Insourcing
c) Reshoring
d) Offshoring
10. Which of the following terms is used to describe the selling of locally made products in
foreign markets?
a) Importing
b) Greenfield venturing
c) Outsourcing
d) Exporting
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
11. ABC Manufacturing, a company based in the United States, buys products from China and
sells them in U.S. markets. This practice refers to __________.
a) importing
b) insourcing
c) exporting
d) franchising
12. Businesses go global for all of the following reasons EXCEPT:
a) to minimize domestic customers.
b) to increase profits through expanded operations.
c) to increase access to low-cost, talented workers.
d) to increase access to products, services, and materials.
13. Which of the following is a direct investment strategy?
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
a) Global sourcing
b) Joint ventures
c) Exporting
d) Licensing
14. Anna has purchased the rights to make and sell another company’s products. Which of the
following market entry approaches to international business has Anna used?
a) Exporting
b) Importing
c) Franchising
d) Licensing
15. Global sourcing primarily involves:
a) exporting products for sale.
b) purchasing materials, manufacturing, or services from around the world for local use.
c) selling a foreign firm the right to make your products.
d) building a plant to produce goods for sale in foreign countries.
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
16. When a firm grants licenses internationally, it is giving foreign companies access to its:
a) technologies, patents, or trademarks.
b) facility designs and equipment.
c) product ingredients.
d) management systems.
17. One of the business risks of licensing is:
a) corruption.
b) franchising.
c) counterfeiting.
d) terrorism.
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18. When a firm grants franchising rights to a foreign firm, it is giving the foreign firm access to
its:
a) unique manufacturing technology.
b) special patent.
c) trademark.
d) management systems.
19. The payment of a fee to use another firm’s name and operating methods is called
__________.
a) licensing
b) franchising
c) importing
d) leasing
20. Which of the following operates through co-ownership with local partners?
a) Franchise
b) Wholly owned subsidiary
c) Joint venture
d) Licensed venture
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
21. ABC Co. wants to market their products in Brazil. Armed with the design and manufacturing
capability, ABC looks for a company with the distribution channels and knowledge of the
Brazilian culture necessary to market their products. After conducting research, ABC decides
to form a partnership with XYZ Inc. in Brazil. The company will be jointly owned and
operated. In this scenario, ABC Co. forms a(n) __________ with XYZ Inc.
a) franchise
b) joint venture
c) licensing agreement
d) operating subsidiary
22. A joint venture arrangement usually involves all of the following EXCEPT:
a) pooling resources.
b) sharing risks.
c) jointly operating the venture.
d) one firm buying out the other firm.
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23. A __________ establishes a foreign subsidiary by building an entirely new operation in a
foreign country.
a) joint venture
b) strategic alliance
c) greenfield venture
d) franchise
24. International joint ventures are types of __________ in which foreign and domestic partners
cooperate for mutual gains.
a) foreign subsidiaries
b) global strategic alliances
c) greenfield ventures
d) global sourcing
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
25. A __________ is a local operation completely owned by a foreign firm.
a) foreign partnership
b) franchise
c) foreign subsidiary
d) licensee
26. The __________ is a global institution established to promote free trade and open markets
around the world.
a) International Monetary Fund
b) World Bank
c) World Trade Organization
d) U.S. Chamber of Commerce
27. If Japan receives the most favorable treatment for imports and exports with other countries,
Japan will be said to have a(n) ___________ status.
a) international
b) outsourced
c) greenfield venture
d) most favored nation
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28. When an American business gets being mistreated in a foreign country, the U.S. government
can help by appealing to the __________.
a) European Union
b) World Trade Organization
c) World Bank
d) United Nations
29. If Brazil applies for tariffs and favorable treatment for protecting local firms from foreign
competition, it will be known as:
a) idealism.
b) internationalism.
c) globalism.
d) protectionism.
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30. Which of the following is a nontariff barrier that discourages imports?
a) Taxes
b) Ad valorem duty
c) Quotas
d) Customs duty
31. The __________ creates a trade zone that frees the flows of goods and services, workers, and
investments among the United States, Canada, and Mexico.
a) Asia-Pacific Economic Cooperation
b) North American Free Trade Agreement
c) Central America Free Trade Agreement
d) Southern United States Trade Association
32. The __________ is both a regional economic and political alliance.
a) European Union
b) World Trade Organization
c) Asia-Pacific Economic Cooperation
d) Southern Africa Development Community
Schermerhorn & Bachrach / Exploring Management, 5th Edition Test Bank
33. The European Union has __________ members.
a) 25
b) 28
c) 30
d) 35
34. The __________ links 14 southern African countries in trade and economic development
efforts to improve prosperity and living standards for their citizens.
a) African Union
b) Southern African Customs Union
c) Trade Union Council of South Africa
d) Southern Africa Development Community
35. A __________ has extensive international business dealings in many foreign countries.
a) conglomerate
b) wholly owned subsidiary
c) partnership
d) multinational corporation
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36. When large global firms gain disproportionately from the global economy versus smaller
firms, it creates a __________.
a) most favored nations status
b) currency risk
c) nontariff barrier
d) globalization gap
37. All of the following are MNC complaints about host countries EXCEPT:
a) profit transfer limitations.
b) overpriced local resources.
c) below–cost prices.
d) restrictive government rules.