The theory of absolute advantage holds that there are advantages to trade because
different countries can produce different goods more efficiently than others.
When entering foreign countries, many franchisors encounter difficulty in transferring
the domestic success factors of product and service standardization.
A mixed economy is a system where economic decisions are largely market driven and
ownership is largely private, but the government intervenes in many private economic
decisions.
Both the form and content of financial statements are currently the same in most
countries due to the convergence of accounting implemented by the International
Accounting Standards Board.
Using a concentrated configuration, an MNE performs value activities in different
countries.
Exporting is usually more feasible when transportation costs are high rather than low in
relation to production costs.
Antidumping regulations of the WTO allow countries to establish restrictions against
any exports that fail to meet quality standards.
Practical predeparture training for the expatriate is often geared toward developing his
or her sensitivities to overcome culture fright.
Countertrade refers to any one of several different arrangements that parties negotiate
so that they can trade goods and services with limited or no use of currency.
An irrevocable letter of credit is the basis for multilateral netting.
The use of JIT does not depend on the quality of incoming parts or the time of their
arrival.
The Japanese yen is an example of a soft currency.
Trade creation allows consumers access to more goods at a lower price than would have
been possible without integration.
Agreements on international product standards are hampered by all the following
factors EXCEPT ________.
A) the fact that standardization increases production costs
B) consumer reluctance to change
C) the cost of redesigning and retooling
D) governments’ desires to protect investments
Which of the following statements is important to companies in order for them to gain
contracts with foreign distributors?
A) Convince the distributors that the product and company are viable.
B) Offer high margins so distributors will compete to get the account.
C) Determine the distribution gap before signing a contract.
D) Establish in-house distribution to demonstrate what is desired.
Terms of trade refers to ________.
A) the quantity of imports that a given quantity of a country’s exports can buy
B) specific requirements placed on imports and exports at the port of entry or exit
C) requirements agreed upon by two countries to regulate bilateral trade
D) an account statement showing a country’s annual imports and exports
Historically, the most important criterion in selecting individuals for posting to an
expatriate slot has been ________.
A) foreign language abilities
B) technical competence
C) leadership skills
D) flexibility
Which of the following is the LEAST likely result of outward migration?
A) Emigrants remit capital used to start businesses in their home countries.
B) Nations receive more foreign aid.
C) Nations lose highly educated and productive workers.
D) Countries receive remittances from emigrants.
Which of the following is a reason for an MNE to base its standards for ethical behavior
on a country’s laws?
A) The law embodies many of a country’s moral beliefs but is an inadequate guide for
proper conduct.
B) The law contains unenforceable rules that are impossible for society to follow.
C) The law represents a consensus derived from significant deliberation.
D) The law is based on precisely defined moral concepts.
In a command economy, the goods and services that a country produces, the quantity in
which they are produced, and the prices at which they are sold are planned by
________.
A) government officials
B) private industries
C) individual entrepreneurs
D) local trade associations
Which of the following is NOT one of the three personality traits that specifically affect
international marketing?
A) globalism
B) materialism
C) ethnocentrism
D) cosmopolitanism
Which of the following is true concerning countries’ distribution systems?
A) They reflect the economic levels of countries, so countries at similar economic
levels have similar distribution systems.
B) They are difficult to change because they have evolved over time, reflecting
countries’ cultural, economic, and legal environments.
C) They are more similar among countries than pricing and promotional systems are.
D) When standardized, they offer more cost savings for international companies than
when products are standardized.
Which of the following is NOT affected by the Foreign Corrupt Practices Act?
A) companies registered in the United States
B) foreign firms operating in U.S. territory
C) foreign firms quoted on a U.S. stock exchange
D) foreign companies managed by U.S. expatriates
Nontradable goods are BEST defined as ________.
A) products and services for which exporting costs are excessive
B) factors of production that exceed safety regulations
C) goods used for national defense
D) products that comprise a portion of the inputs for finished products
________ is a preferential trade agreement that was organized in 1967 and comprises
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
Thailand, and Vietnam.
A) APEC
B) OAU
C) ASEAN
D) CAFTA
Which of the following elements is often overlooked when firms estimate the costs of
outsourcing to low-wage countries?
A) language barriers
B) overabundance of skilled and educated workers
C) lack of inventory
D) long distances
When a large company and a small company enter a collaborative arrangement,
________.
A) the large company is expected to contribute more to the arrangement
B) the large company is likely to be more active in the venture
C) the small company is more likely to view the collaboration’s expansion as
competition to itself
D) the small company is likely to be disadvantaged if legal action is necessary to solve
a dispute
Which of the following BEST depicts a push strategy for a U.S. company selling in
Mexico?
A) Tupperware selling through parties in homes
B) Gillette selling razor blades through supermarkets
C) KFC selling chicken dinners at its franchises
D) Google advertising on television
The United Nations’ ________ measures life expectancy, educational attainment, and
the standard of living in a given country.
A) Human Development Index
B) Emerging Economic Stability
C) Genuine Progress Indicator
D) Net National Product
The ________ is the number of years it will take a firm to recover from its initial
investment.
A) rate of return
B) accumulated translation adjustment
C) remittance period
D) payback period
Deciding whether to establish production facilities in many different countries or in one
centralized location is part of the ________.
A) cultural matrix
B) Six Sigma process
C) manufacturing configuration
D) innovation matrix
Which of the following best explains why the experience of countries such as Taiwan
and South Korea are used to support export-led development policies?
A) their low inflation
B) their increased FDI
C) their industry diversity
D) their rapid economic growth
Hudson Manufacturing is an MNE based in the United States with operations in Asia.
The firm is considering expansion into the European Union. Executives at the firm are
debating whether central Europe or Eastern Europe would be best for the firm. Which
of the following best supports a decision to establish operations in Eastern Europe?
A) Hudson wants to implement a high-performance work system.
B) Hudson plans to staff the foreign facility with local managers.
C) Hudson wants to minimize costs by keeping wages low.
D) Hudson recently lost money in a joint venture.
All of the following would be examples of international joint ventures EXCEPT
________.
A) two Japanese companies sharing ownership of a company in Canada
B) a Danish company sharing ownership with a South African company in South Africa
C) a government-owned company from China sharing ownership with an Australian
company in Panama
D) two Venezuelan companies sharing ownership of a company in Venezuela
A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a
________ legal system.
A) civil
B) common
C) customary
D) mixed
Which of the following begins with a company defining critical success factors and
specifying objective targets and hard deadlines?
A) coordination by standardization
B) coordination by consensus
C) coordination by plan
D) coordination by intervention
Gap analysis can be used by companies to gain synergy among countries. Which of the
following is a benefit of this synergy?
A) It allows companies to determine the allocation of marketing budgets among
countries.
B) It can be used to prevent sales via the gray market.
C) By seeing the combined market potential among several countries, companies can
determine whether there is sufficient demand to justify new product development costs.
D) By analyzing the distribution gap, companies can better determine whether to handle
other companies’ imported products along with their own.
Managers at Morrison Manufacturing are considering expanding the firm’s production
overseas and want to ensure that the firm is located in a country with a high degree of
economic freedom. Presently, which of the following locations would most likely offer
Morrison the highest economic freedom?
A) Bolivia
B) Hong Kong
C) Venezuela
D) North Korea
When a company successfully responds to foreign production and market opportunities,
________.
A) other companies will likely emulate its successful practices
B) it likely has a long-term advantage over competitors
C) it will downsize its domestic operations
D) its home government likely raises taxes on the company
It is sometimes contended that by imposing import controls a country might be able to
increase its exports. This contention is premised on ________.
A) the country’s simultaneous currency depreciation, which decreases the price of its
exports
B) using the import taxes to institute efficiency measures in potential export industries
C) raising domestic prices in one industry so that the excess domestic profits in that
industry can compensate for the cost of dumping products from another industry into
foreign markets
D) getting other countries to maintain or relax their current import restrictions instead
of escalating restrictions in a trade war
The fundamental limitation of a matrix structure is that it ________.
A) creates a poor organizational culture
B) isolates upper management from operational levels
C) institutes a dual hierarchy that violates the unity-of-command principle
D) introduces more errors in the decision-making process due to the speed of the
process
Countries with a ________ legal system tend to encourage precise, detailed contracts,
whereas countries with a ________ legal system tend to encourage shorter and less
specific contracts.
A) theocratic; mixed
B) common; civil
C) civil; customary
D) customary; common
Which of the following is an indication of the increased globalization of business since
the end of World War II?
A) Foreign trade has largely replaced foreign ownership as a means of conducting
international business.
B) World trade has grown more rapidly than world production.
C) Globally, consumers now depend on foreign output for more than half their
consumption.
D) Countries have increased their import restrictions to counter the rising tide of
imports.
Brooke buys shares of stock in a small bakery in a foreign country in return for an
ownership position and promised capital gains. This is an example of ________.
A) equity securities
B) debt financing
C) playing the stock market
D) investing in Euroequities
Dawson Manufacturing produces and sells DVD players and is planning to expand
sales internationally. Dawson has narrowed down the list of potential countries to India
and Guatemala. A Dawson manager has the task of obtaining data regarding the number
of DVD players sold annually in India and Guatemala. If unable to locate this
information, she might most likely estimate the sales potential of these two countries by
________.
A) determining average wages
B) calculating future inflation rates
C) reviewing the countries’ dependence on steel imports
D) examining the sales history of flat-screen televisions
Governments use a multiple exchange rate system to ________.
A) increase their budget surplus
B) reduce exports
C) control foreign-exchange convertibility
D) limit deposit requirements
