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

ECO 16026

February 28, 2019
In some cases, an international company legally can keep more profit after taxes by
allocating work and prices.
Corporate anthropology refers to the process of obtaining market research data through
focus groups and surveys.
According to the text, any activity in the value chain can be outsourced except for
strategy and management.
The main argument against 3BL is that business is concerned with generating profit, not
with social and ecological issues, except where the law requires it to be.
The term international company refers to both global and multidomestic companies.
Generally, the host government will understand that a third-country national is better for
the parent company than a local executive would be.
The central idea of mercantilism is that there should be an export surplus so a nation
can accumulate precious metals.
According to the text, an organization that coordinates economic activity to deliver
value to customers using resources outside its traditional boundaries is an integrated
The specific-diffuse dimension has to do with social patterns for child rearing.
The production organization in an overseas subsidiary is commonly a scaled-down
version of that found in the parent company.
Subsidies from the United States to its sugar industry have been critical in helping to
prevent a loss of jobs from American companies that are high users of sugar.
There is one main organization that offers IP protection, the UN.
Material culture includes all human-made objects.
New types of dumping include tax dumping.
Unanticipated shifts in exchange rates present risk to the international firm.
Exchange rate forecasting is an advanced science; with the correct data, we can predict
with accuracy exchange rate movements.
Leadership is synonymous with management.
In 2009, the top 10 exporting and importing nations collectively accounted for over half
of all exports and imports of merchandise and services worldwide.
Because inventory is carried at each stage in the supply chain, and because inventory
ties up money, it has been argued that the ultimate goal of effective supply chain
management systems is to reduce inventory.
The EU has been unsuccessful at harmonizing customs and tax formalities within
member nations' borders.
Value chain analysis is an assessment conducted on the chain of interlinked activities of
an organization or set of interconnected organizations, intended to determine where and
to what extent value is added to the final product or service.
In a typical matrix organization based on area and product dimensions, country
managers will be responsible to both the area managers and the product line managers.
The local manufacturing organization is usually integrated vertically to a greater extent
than the parent company is.
There are five major kinds of globalization drivers, all based on changes that are
leading international firms to the globalization of their operations.
It is not possible for foreign investors to control a joint venture if the host country's law
prevents foreign investors from having more than 49 percent ownership.
When government-owned companies compete with private companies, the private
companies have the advantage.
The goal of international strategy is to achieve and maintain a unique and valuable
competitive position both within a nation and globally, a position that has been termed
comparative advantage.
Generally, trade missions consist of 5 to 12 business professors.
(p. 18)-Globalization has produced uneven results across nations and people.
To protect an infant industry, trade restrictions might be effective.
According to the World Health Organization, about one-quarter of all drugs sold
through "questionable" Internet pharmacies are estimated to be counterfeit.
Analysis of the paying habits of customers is studied as part of the sociocultural forces
An important consideration in design is the extent to which the international company's
products and services will be standardized across nations or regions.
A choice-of-law clause specifies where a dispute will be settled.
Policies are broad guidelines issued by upper management for the purpose of assisting
lower-level managers in handling recurring problems.
China's vast and mountainous terrain leads to:
A. many languages and dialects.
B. political unity, as in Switzerland.
C. economic disparities.
D. population disparities.
When there is strong pressure for a company to adapt its products or services for local
markets, it should tend to use a:
A. global strategy.
B. multidomestic strategy.
C. regional strategy.
D. differentiation strategy.
E. home replication strategy.
The need to change the color of packages when selling a product in a new market is
generally a result of the influence of:
A. distributive forces.
B. competitive forces.
C. political conflicts.
D. cultural differences.
E. economic forces.
The total product:
A. all of B, C, and D.
B. includes the accessories, and after-sales service.
C. includes after-sales service.
D. includes warranty and instructions for use.
Currency exchange controls are found most frequently in:
A. developing countries.
B. developed countries.
C. countries with pegged exchange rates.
D. nondemocratic countries.
In more dense populations, international managers can expect:
A. increased political discord.
B. markets that respond well to word-of-mouth promotion.
C. contrasting topographical features.
D. lower marketing and distribution costs.
A way to measure a company's success in sustainable business practices is:
A. to examine the return on investment.
B. triple-bottom-line accounting.
C. to monitor the company in a social context.
D. to review the marketing materials.
According to the text, licensing agreements usually stipulate that a royalty of
__________ be paid to the licensor.
A. 2 to 5 percent of profits
B. 2 to 5 percent of sales
C. 5 to 7 percent of profits
D. 5 to 7 percent of sales
E. none of the above
The Treaty of Rome, signed in 1957, established a common market for coal and steel
A. West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
B. England, Ireland, Northern Ireland, Scotland, Wales, and France.
C. Finland, Sweden, Norway, West Germany, Denmark, and Switzerland.
D. Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.
When a company faces strong pressures for both reducing costs and adapting products
for local markets, it should tend to use a:
A. global strategy.
B. multidomestic strategy.
C. transnational strategy.
D. differentiation strategy.
E. home replication strategy.
The theory of resource endowment:
A. explains why France exports cosmetics, wine, commercial aircraft, and clothing.
B. states that a nation will trade goods that can be produced with the production factor
that is most abundant.
C. explains why an automobile can be made either by hand or by a capital-intensive
D. explains why transportation costs may be ignored when calculating the costs of
E. none of the above.
According to the text, data on imports may not completely measure market potential
A. these data are not available for most countries and products.
B. foreign competitors will not report export data accurately.
C. transportation costs impact prices.
D. all of the above.
Foreign exchange risks—transaction, translation, or economic—are caused most
directly by:
A. unanticipated political actions by foreign governments.
B. anticipated movements in interest rates in foreign economies.
C. trade-related distribution risks such as weather, the price of fuel, and transport
D. unanticipated movements in exchange rates.
Government stability is a characteristic of a government that:
A. makes sudden radical policy changes.
B. readily shifts alliances to maintain power.
C. maintains predictability in fiscal, monetary and political policies.
D. two of the above.
An ethnocentric staffing policy:
A. utilizes host-country nationals in key foreign management and technical positions.
B. assigns expatriates who have learned the language and culture of the country of their
C. is required in order to prepare home-country citizens for high-level managerial
positions at headquarters.
D. two of the above.
A pioneering firm stands the best chance for long-term success in market-share
leadership and profitability when:
A. there are few cultural barriers to entry.
B. the firm has sufficient size, resources, and competencies.
C. there is high potential for imitation.
D. all of the above.
The capital structure of the firm can be raised externally through:
A. leveraging and bonds.
B. debt and equity.
C. debt and retained earnings.
D. retained earnings and bonds.
These countries prefer debt to equity by large margins:
A. France, Italy, and Japan.
B. United Kingdom, Italy, and United States.
C. United States, Canada, and United Kingdom.
D. Japan, United States, and United Kingdom.
In order to really understand another culture:
A. living in it is important, but you don't need to know the spoken language.
B. both the spoken and unspoken languages are important to understand.
C. the unspoken language is enough because it allows you access to the culture.
D. A and C.
The Panama Canal:
A. has to be enlarged for larger ship sizes.
B. increases shipping costs from New York to Los Angeles.
C. can handle Panamax-size ships.
D. makes shipping competitive with air freight.
E. reduces travel time between the U.S. West Coast and Europe by 21 days.
On a consignment sale, the payment risk is:
A. assumed by the buyer.
B. assumed to be equally shared.
C. carried by the seller.
D. covered by insurance.
Trade names are protected under:
A. national laws in all UN member countries.
B. the International Convention for the Protection of Industrial Property.
C. many local laws in most countries, so illegal trademark use is a local issue.
D. long-standing convention, but no legal agreements.
E. the UN's Office of Harmonization.
Investigation of export and import data shows:
A. there is a strong relationship between global sourcing and ownership of the foreign
B. there is no relationship between global sourcing and ownership of the foreign
C. American firms, but not Japanese firms, buy from their U.S. subsidiaries.
D. American firms import twice as much from their overseas subsidiaries as foreign
firms import from their U.S. affiliates.
E. two of the above.
Market size, market growth rate, and e-commerce indexes are all part of:
A. market factors.
B. trend analysis.
C. cluster analysis.
D. market indicators.
E. none of the above.
A specific example of a sustainable business is Patagonia, as evidenced in its:
A. Footprint Chronicles program that addresses the trade-offs global sourcing creates
and evaluates the impact of sourcing decisions.
B. ecosystem model of sustainability that relies on the synergies between financial,
environmental, and social elements.
C. product lines and credit policies.
D. A and B.
Electronic procurement exchanges:
A. can facilitate efforts to obtain letters of credit.
B. can permit bid/quote systems for buyers and suppliers.
C. protect companies from potential loss of proprietary data.
D. two of the above.
__________ permits a firm to set up an export program with a minimum of cash outlay
and little special expertise.
A. A joint venture
B. Direct exporting
C. Franchising
D. Indirect exporting
E. Licensing
In some countries people are relatively loosely connected and tend to focus on
themselves and their immediate family. Hofstede would describe these countries as:
A. myopic.
B. xenophobic.
C. self-referential.
D. individualistic.
Whereas Trompenaars was trained as an economist, Hofstede and Hall were trained as:
A. anthropologists.
B. business scholars.
C. accountants.
D. strategic planners.
Studies conducted by the World Bank indicate that tropical climates allow for:
A. the unimpeded reproduction and growth of weeds, viruses, birds, insects, and
B. lack of the need to provide heat and shelter that is present in northern climates.
C. unparalleled trade.
D. cultivation of citrus and four crops per year.
Generally, __________ products require greater modification to meet local market
requirements worldwide.
A. low-priced
B. maintenance
C. consumer
D. industrial
E. none of the above
The Multi-Fiber Arrangement (MFA) was an orderly marketing arrangement to regulate
textiles and clothing exports.
Hiring others to perform some of the noncore activities and decision making in a
company's value chain, rather than having the company and its employees continue to
perform these tasks, is:
A. offshoring.
B. outsourcing.
C. supply chain management.
D. subcontracting.
E. all of the above.

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