Book Title
International Business: The Challenge of Global Competition 13th Edition

ECO 11583

February 28, 2019
The EU is a supranational body that has become, essentially, a regional government.
There is reverse culture shock when an expatriate returns to the home country and
Porter's diamond can be used to explain the importance of the environment and natural
In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the
cost of the goods, insurance, and all transportation and miscellaneous charges to the
named foreign port in the country of final destination.
Some nations, especially in Asia, follow the Carlos Calvo doctrine, which protects them
against fraud.
The first step in finding a foreign market for a product is to determine whether a market
exists for a firm's products.
Foreign business refers to the operations of a company outside its home or domestic
Cultures that tolerate high levels of ambiguity, such as Japan and Germany, are likely to
be more change-friendly.
The book value, or the value of the total outstanding stock, of all foreign direct
investment worldwide was $19 trillion at the beginning of 2010.
According to the text, when a company offshores activities, it relocates those activities
to the facilities of another company that is located in a foreign location.
CIBERs are international business research and education efforts located at U.S.
Sir Isaac Newton established the price of gold in 1717 and de facto put England on the
gold standard.
Leadership involves organizing a group of people in order to achieve a common
purpose or goal.
An analysis of the forces controlled by the firm will include a situational analysis and
control analysis.
As exemplified by companies such as Campbell's, international firms seldom have to
change name, labels, or colors due to cultural differences.
The effectiveness of supply chain management efforts is strongly influenced by how a
company manages the interface of logistics with sourcing and manufacturing.
Expatriate children who lived in a foreign country for a period of time while in their
impressionable adolescent years often have attributes of "third-world kids."
International trade theory shows that nations will attain a higher level of living by
specializing in goods for which they possess a comparative advantage and importing
those for which they have a comparative disadvantage.
If a nation is continuing to receive appreciable amounts of foreign investment, its
investment climate must be favorable.
Employees hired in the host country are sometimes called flexpatriates.
Organizational structure deals with how an international business should be organized
in order to ensure that its worldwide business activities are integrated.
Decisions that work to the detriment of the subsidiary may be beneficial to the
A compound duty is a combination of specific and variable duties.
Worldwide, nearly 50 percent of expatriate positions are held by women.
Examples of informal, normative institutions would include local town/city
governments and the U.S. government.
A company headquartered in another country is known as a foreign business.
A sales company is established to market goods or services, not to produce them.
CFR (cost and freight, foreign port) is similar to CIF except that the buyer purchases
the insurance because it can obtain it at lower cost or because its government, to save
foreign exchange, insists that it use a local insurance company.
In exposure netting, a risk management technique similar to multilateral netting, the
firm runs a centralized clearing account that matches and nets out FX exposure across
currencies or currency families.
The international standardization of the sales promotion function is not difficult,
because experience has shown that what is successful in the United States generally
proves effective overseas.
After setting corporate objectives, the company management must define the company's
vision and mission.
According to the text, the international environment is all of the uncontrollable forces
originating outside the home country that surround and influence the firm.
Computer-integrated manufacturing reduces the economic batch quantity to one and
facilitates the potential for mass customizaton.
Virtual communication:
A. is more efficient than face-to-face communication.
B. allows a focus on tasks and less on social needs.
C. lacks the richness of face-to-face communication.
D. supports higher levels of trust than face-to-face communication.
E. allows for integrated global team development.
Patents are government grants that give the owner:
A. exclusive rights to use, sell, manufacture, or exploit the invention or process.
B. the exclusive right to use the fundamental ideas on which the invention is based.
C. the right to sell the invention, but only beyond the patent-granter's borders.
D. rights to the invention but do not prevent others from copying the invention.
E. two of the above.
The centerpiece of Cognizant Technology Solution's operations is the company's
innovative ________________ business model.
A. global-local
B. foreign-domestic
C. offshore-onshore
D. insource-outsource
E. none of the above
In the area of shipment risk, ocean vessels assume:
A. all the risk for the safety of their cargo.
B. none of the risk for the safety of their cargo, except for negligence.
C. exporters or importers will have bought adequate insurance.
D. marine environments are usually safe.
Quality control in foreign affiliates from the home office is less difficult when:
A. the quality inspectors are trained in the home office.
B. separate standards are used in each plant.
C. production equipment is similar.
D. the quality reports are sent to the home office at the same time.
Unlike antitrust or competition proceedings in the EU, in the United States such
A. may involve civil and criminal penalties.
B. are heard at the local level.
C. involve the top management team.
D. are headed by a three-judge panel.
E. two of the above.
An example of environmental dumping can be found in the:
A. maquiladora plants of Mexico, located near the U.S. border and operating at lower
environmental standards than would be required in the United States.
B. nuclear waste shipments to developing nations.
C. garbage shipments from New Jersey to developing nations.
D. all of the above.
If a student wants to become a global leader, she or he might:
A. study abroad and live with host families.
B. build language and cultural fluency.
C. take international internships.
D. travel as much as possible.
Two basic ways to understand the role of leadership are as providing direction for a
collection of individuals and as:
A. limiting the freedom of individual group members.
B. integrating a group.
C. linking top management with workers.
D. organizing workers for production.
Social dumping occurs when an exporting country:
A. imposes an export tax on domestic businesses that export, to compensate for the
opportunity cost to the domestic market.
B. creates unfair competition based on lower costs, which undermines social support
systems to the worker.
C. target-markets to specific vulnerable groups in the importing country.
D. exports goods that are not sellable in the domestic environment due to hazards and
safety issues.
E. two of the above.
The United States is moving toward convergence with IASB standards:
A. and is the only major economy that does not follow them now.
B. and expects to be harmonized by 2015.
C. although the goal is long term, over 50 years.
D. A and B.
Which of the following is true about trend analysis?
A. None of the following.
B. It is appropriate for use with the introduction of new products.
C. It is based on the assumption that past conditions are not an accurate predictor of the
D. It accounts for the impact of entry by competitors.
E. B, C, and D
Cultural dumping is found in:
A. Japan's past refusal to import American skis because Japanese snow is different, so
the skis should meet different standards.
B. Saudi Arabia's refusal to import Playboy magazine.
C. The small town of Orleans, Massachusetts, decision to prohibit franchised stores
from operating in the town.
D. two of the above.
Under the country screening process, in what order is the selection of foreign markets
process presented in the textbook?
A. Basic needs, sociocultural, economic/financial, political, and competitive
B. Basic needs, economic/financial, political, sociocultural, and competitive
C. Basic needs, political, economic/financial, competitive, and sociocultural
D. Basic needs, competitive, political, economic/financial, and sociocultural
E. None of the above
Why are rare earths a concern in industrialized economies?
A. Although they are relatively common, they do not occur in concentrated form often.
B. They are very rare.
C. They are used in the smelting process.
D. They are not a concern, except for political reasons.
In a personal interview or phone survey situation, some respondents want to help the
interviewer out of politeness or just to please the interviewer. This is known as:
A. market research.
B. response bias.
C. interviewer bias.
D. social desirability bias.
E. none of the above.
Market screening is divided into:
A. environmental screening and country screening.
B. region screening and segment screening.
C. segment screening and environmental screening.
D. region screening and environmental screening.
E. country screening and segment screening.
Nonquantitative nontariff barriers:
A. are seen by many to be the most significant nontariff barrier.
B. often involve government participation in trade, especially in customs and other
administrative procedures.
C. often involve standards.
D. all of the above.
If the Japanese yen is strengthening against the U.S. dollar, and the Japanese
government wanted to boost exports, the central bank of Japan might well:
A. sell U.S. dollars in large amounts in the currency markets.
B. buy massive amounts of Japanese yen in the FX markets.
C. sell massive amounts of Japanese yen in the FX markets.
D. buy massive amounts of other hard currencies, such as the British pound sterling and
the euro, to deflect the focus on dollars.
It has been estimated that at least ____________ percent of products currently on the
market were not available five years ago, creating additional pressure to locate suppliers
worldwide that can provide inputs at competitive prices and quality and with quick
responsiveness to market changes.
A. 30
B. 45
C. 50
D. 55
E. 60
A middle ground between an ad campaign that is standardized worldwide and an
entirely local ad campaign is called a:
A. hybrid advertising campaign.
B. programmed-management approach.
C. computerized-management approach.
D. shared-management approach.
E. none of the above.
Credit availability, paying habits of customers, and rates of return are considered in the:
A. first screening.
B. second screening.
C. third screening.
D. fourth screening.
E. none of the above.
An assessment conducted on the chain of interlinked activities of an organization or set
of interconnected organizations and intended to determine where and to what extent
value is added to the final product or service is known as:
A. economic value added.
B. internal analysis.
C. value chain analysis.
D. SWOT analysis.
E. none of the above.
Gift-giving in many cultures is marked by:
A. specific etiquette and meaning that may be markedly different from what the
international manager knows in the home culture.
B. graft and corruption; for example, a way to launder money.
C. humility not fitting an international manager.
D. drinking and late parties.
In order to strengthen the U.S. dollar, the Federal Reserve might sell yen and buy
dollars, in which case the yen functions as:
A. a stronger currency than the dollar.
B. an intervention currency.
C. an arbitrage currency.
D. none of the above.
Uncertainty avoidance describes man's search for Truth, according to Hofstede,
A. Truth is primary to our human value system; everything else depends upon it.
B. it describes how comfortable the culture's members feel in an unstructured situation.
C. once you have Truth, you can avoid change, which is always disruptive.
D. All of the above.
Home leave is:
A. a standard allowance.
B. a bonus standard for every employee.
C. a periodic trip back to the home country made by employees and their families.
D. an encouragement for the employee to travel outside the home country.
E. two of the above.
The largest portion of the world's proven oil reserves is located in:
A. low-risk areas.
B. high-risk areas.
C. climate-challenging areas.
D. developed nations' oil fields.
Of all the promotional mix elements, __________ is the one with the greatest
similarities worldwide.
A. public relations
B. personal selling
C. advertising
D. sales promotion
E. none of the above
A regiocentric staffing policy:
A. involves human resource policies that are created at the local level for the specific
context in which the local operations operate.
B. may send TCNs to fill management posts, to avoid problems from using PCNs or
C. selects the best person for each job, without considering national origin.
D. two of the above.
Knowledge that an individual has but that is difficult to express clearly in words,
pictures, or formulae, and therefore difficult to transmit to others, is known as:
A. explicit.
B. none of A, C, D, or E.
C. tacit.
D. intangible.
___________ is(are) economic data that serve as yardsticks for measuring the relative
market strengths of various geographic areas.
A. Market factors
B. Trend analysis
C. Cluster analysis
D. Market indicators
E. None of the above
According to the text, management contracts usually stipulate that a fee of __________
be paid to the firm providing the management expertise.
A. 2 to 5 percent of sales
B. 30 to 50 percent of sales
C. 2 to 5 percent of profits
D. 30 to 50 percent of profits
E. 5 to 7 percent of profits
International firms employ contract manufacturing:
A. as a means of entering a foreign market without investing in plant facilities.
B. to subcontract assembly work or the production of parts to independent companies
C. A and B.
D. as a means of direct foreign investment.

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