Money management decisions attempt to manage a firm’s _____.
A. equity capital
B. fixed costs
C. working capital
D. equipment costs
Which of the following, in a business setting, is taken to mean benevolent behavior that
is the responsibility of successful enterprises?
A. Sullivan’s principles
B. Ethical dilemma
C. Tragedy of the commons
D. Noblesse oblige
A firm facing low pressures for cost reductions and low pressures for local
responsiveness, is most likely to follow a(n) _____ strategy.
A. global standardization
B. localization
C. international
D. transnational
Which of the following persons believed that people should be treated as ends and
never purely as means to the ends of others?
A. John Stuart Mill
B. Immanuel Kant
C. Milton Friedman
D. David Hume
Firms pursuing global standardization or transnational strategies tend to prefer _____
arrangements.
A. wholly owned subsidiary
B. franchising
C. joint-venture
D. licensing
The social organization of Western society tends to emphasize on:
A. a group orientation.
B. collectivist values.
C. individual achievement.
D. work groups.
Identify the INCORRECT statement about environmental regulations.
A. Environmental regulations are often lacking in developing nations.
B. Environmental regulations are similar across developed and developing nations.
C. Developed nations have substantial regulations governing the emission of pollutants,
the dumping of toxic chemicals, and so on.
D. Inferior environmental regulations in host nations, as compared to home nation, can
lead to ethical issues.
For privatization to work, it must also be accompanied by:
A. an increase in trade barriers and tariffs.
B. an increase in government subsidies.
C. stronger barriers to foreign competition.
D. a general deregulation of the economy.
The Foreign Credit Insurance Association provides coverage:
A. to insure products during shipment.
B. against commercial risks and political risks faced by exporters.
C. to insure that products are delivered that have already been paid for.
D. against political risks faced by importers.
A citizen of France who moves to the United States to work at Ford is a(n) _____.
A. host-country national
B. local
C. inpatriate
D. acquired citizen
The rise of mini-multinationals means that:
A. small businesses are becoming increasingly involved in international trade and
investment.
B. it is increasingly difficult to enter the large multinational market.
C. countries are working together to minimize MNE influence.
D. there is greater state involvement in industry.
The likelihood that a trading partner will opportunistically break a contract or
expropriate property rights is called a(n) _____.
A. economic risk
B. legal risk
C. cultural risk
D. political risk
The person or business initiating a draft is known as the ____.
A. beneficiary
B. drawee
C. maker
D. trustee
Hofstede’s uncertainty avoidance dimension considered:
A. the extent to which different cultures socialized their members into accepting
ambiguous situations and tolerating uncertainty.
B. the relationship between gender and work roles.
C. how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
D. the relationship between the individual and his or her fellows.
In 2009, the financial crisis in the United States was triggered by:
A. the global hike in the price of crude oil
B. the slowdown in U.S. imports
C. the problems in the U.S. subprime mortgage lending market
D. the artificial fixing of currency rate by China
Which of the following situations would lead a firm to choose to decentralize
production?
A. The product serves universal needs.
B. The production technology has high fixed costs and high minimum efficient scale
relative to global demand or flexible manufacturing technology exists.
C. Trade barriers are low.
D. The production technology has low fixed costs and low minimum efficient scale, and
flexible manufacturing technology is not available.
An advantage of engaging in in-house production of products and components is that:
A. the firm will have fewer subunits to control by making products in-house.
B. it will help the firm capture more orders from other countries.
C. it enables a firm to protect the proprietary technologies that it has.
D. firms can make better use of the location advantages of certain countries.
The worldwide product division structure:
A. is weak in local responsiveness.
B. inhibits the realization of location economies.
C. inhibits the realization of experience curve economies.
D. limits the transfer of core competencies between areas.
A firm that needs greater flexibility should choose _____ for its decision-making.
A. horizontal differentiation
B. decentralization
C. localization strategy
D. control systems
The extent to which the income from individual transactions is affected by fluctuations
in foreign exchange values is known as _____.
A. economic exposure
B. financial exposure
C. translation exposure
D. transaction exposure
Which of the following occurs when the quantity of money in circulation in a country
rises faster than the country’s stock of goods and services?
A. Inflation
B. Credit squeeze
C. Deflation
D. Production surplus
According to the Friedman doctrine:
A. ethics are nothing more than the reflection of culture.
B. a multinational’s home-country standards of ethics are inappropriate to follow in
foreign countries.
C. businesses should not undertake social expenditures beyond those mandated by the
law and required for the efficient running of a business.
D. if a manager of a multinational sees that firms from other nations are not following
environmental legislation in a host nation, that manager should not either.
Hofstede’s dimension of Confucian dynamism:
A. captures attitudes toward time, persistence, ordering by status, protection of face,
respect for tradition, and reciprocation of gifts and favors.
B. focuses on how a society deals with the fact that people are unequal in physical and
intellectual capabilities.
C. explores the relationship between the individual and his/her fellows.
D. looks at the relationship between gender and the ability to accept ambiguous
situations.
Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of _____.
A. Mercosur
B. NAFTA
C. APEC
D. the Andean Pact
An aspect of _____ is the tendency to aggressively court FDI believed to be in the
national interest by, for example, offering subsidies to foreign MNEs in the form of tax
breaks or grants.
A. the radical view
B. the noninterventionist principle
C. the free market view
D. pragmatic nationalism An aspect of pragmatic nationalism is the tendency to
aggressively court FDI believed to be in the national interest by, for example, offering
subsidies to foreign MNEs in the form of tax breaks or grants.
From the perspective of a firm negotiating the terms of an investment with a host
government, the firm’s bargaining power is high when the:
A. firm has a short time in which to complete the negotiations.
B. host government places a high value on what the firm has to offer.
C. number of comparable alternatives open to the firm is low.
D. host government does not places a high value on the firm’s offering. From the
perspective of a firm negotiating the terms of an investment with a host government, the
firm’s bargaining power is high when the host government places a high value on what
the firm has to offer, the number of comparable alternatives open to the firm is greater,
and the firm has a long time in which to complete the negotiations.
In a(n) _____, the contractor agrees to handle every detail of the project for a foreign
client.
A. joint venture
B. exporting agreement
C. turnkey project
D. licensing agreement
Entering into a forward contract will:
A. increase the risk involved in a transaction.
B. lower the borrower’s cost of capital.
C. benefit the borrower because their interest rate will be lower.
D. raise the borrower’s cost of capital.
_____ are exchange rates governing some specific future date foreign exchange
transactions.
A. Spot exchange rates
B. Forward exchange rates
C. Future exchange rates
D. Currency swaps
Which of the following statements about small-scale entry is true?
A. The commitment associated with a small-scale entry makes it possible for the
small-scale entrant to capture first-mover advantages.
B. Small-scale entry is a way to gather information about a foreign market before
deciding whether to enter on a significant scale.
C. By giving a firm time to collect information, small-scale entry increases the risks
associated with a subsequent large-scale entry.
D. Small-scale entry limits a firm’s ability to learn about a foreign market thereby also
limiting the firm’s exposure to that market.
Hofstede’s concept of power distance focused on:
A. the extent to which different cultures socialized their members into tolerating
uncertainty.
B. how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
C. attitudes toward time, persistence, protection of face, and respect for tradition.
D. the relationship between gender and work roles.
_____ in agriculture could jump-start economic growth among the world’s poorer
nations and alleviate global poverty.
A. Quota rents
B. Free trade
C. Strategic trade policy
D. Subsidies
According to researchers Bartlett and Ghoshal, for transnational enterprises to be
successful, they must focus on:
A. selling a product that serves universal needs.
B. leveraging the skills found at their subsidiaries around the world.
C. increasing profitability by customizing the firm’s goods or services so that they
provide a good match to tastes and preferences in different national markets.
D. ensuring that the flow of skills from the home country to the foreign subsidiaries is
one way and uninterrupted.
According to the naive immoralist,
A. a multinational’s home-country standards of ethics are the appropriate ones for
companies to follow in foreign countries.
B. the social responsibility of business is to increase profits, so long as the company
stays within the rules of law.
C. ethics are nothing more than the reflection of a culture.
D. if firms in a host nation do not follow ethical norms then the manager of a
multinational should also not follow ethical norms there.
Which of the following is a valid observation of the cost of capital?
A. The cost of capital is typically higher in the global capital market.
B. Domestic capital markets have more liquidity than global markets.
C. Local debt financing raises the cost of capital if liquidity is limited.
D. A local sale of equity is preferred to global sale by international firms.