Which of the following best characterizes the concept of global integration?
A) Effective global competition requires that products be specialized based on the
market.
B) Making adjustments for unique markets is an essential element of international
business.
C) Creating variations of the same product for different markets is an unnecessary
expense.
D) The differences in market-to-market distribution channels must be accommodated.
In which of the following industries is standardization more likely to be pursued?
A) local industries
B) furniture
C) publishing
D) credit cards
Transfer pricing is defined as ________.
A) methods for transferring funds exclusively from foreign subsidiaries to parent
corporations
B) compensation paid to owners of intellectual property
C) the means by which subsidiaries and affiliates charge each other as they exchange
goods and services
D) the process through which a parent deposits a large sum in a foreign bank, which
transfers it to a subsidiary as a loan
Which of the following was the analysis revealed by the “Leontief paradox”?
A) that despite having an abundant pool of labor, the U.S. was exporting
capital-intensive goods
B) that the U.S. often exported labor-intensive goods and imported more
capital-intensive goods
C) that international trade was simpler than perceived
D) that contrary to the popular belief, new products are more likely to originate in
developing economies
________ is the belief that national prosperity is the result of a positive balance of
trade, achieved by maximizing exports and minimizing imports.
A) Positivism
B) Imperialism
C) Communism
D) Mercantilism
In an informal economy ________.
A) market value of all officially recognized final goods and services produced within a
country is substantially lowered
B) economic transactions are not officially recorded and are therefore left out of
national GDP calculations
C) exchange rates are low
D) the household income is substantially larger than that in a formal economy
Maximus Motor Company (Scenario)
Maximus Motor Company is a British automobile manufacturer that builds high-end
luxury cars for sale around the world. Maximus managers recognize they are missing
opportunities in emerging markets, such as India, which have an increasing number of
middle-class people ready to purchase affordable cars. Competitors that entered the
Indian market experienced significant profits over the last two years. Maximus
managers have been assigned the task of determining the best strategy for Maximus to
do business in India.
Which of the following is likely to be the most beneficial to Maximus if it builds a
manufacturing facility in India?
A) legal precedents
B) low-cost labor pool
C) government regulations
D) solid infrastructure
Family conglomerates (FCs) might pose a challenge to firms trying to enter emerging
markets because ________.
A) FCs have no more knowledge in manufacturing and distribution than other private
players
B) FCs are not required to pay taxes
C) the owners of FCs are often overly sympathetic to the bureaucratic state machinery
D) FCs enjoy substantial competitive advantages that overwhelm late entrants
Businesses that directly initiate international business transactions are known as
________.
A) focal firms
B) fiscal enterprises
C) fiduciary trusts
D) business affiliates
Firms with a strong social interest ________.
A) openly support the use of sweatshops
B) aim to optimize work conditions and diversity in hiring
C) are reluctant to provide health insurance to employees
D) engage in deceptive marketing
International human resource management is usually more complex than domestic
human resource management because ________.
A) IHRM managers usually encounter routine situations akin to those present at home
B) IHRM managers typically have a low exposure to risks
C) IHRM managers are required to both hire and retain talent
D) IHRM managers are required to demonstrate greater involvement in employees’
personal lives
Which of the following types of risk is also known as political risk?
A) currency risk
B) cross-cultural risk
C) commercial risk
D) country risk
Which of the following characterizes a multidomestic strategy?
A) Subsidiary managers adapt products and services to meet local needs.
B) Management practices are universal across local businesses.
C) Firm executives control all subsidiaries to maximize efficiency.
D) The firm allows subsidiaries to standardize products and services across countries.
According to the Emerging Market Potential Indicators index, ________ is an indicator
of market size.
A) real GDP growth rate
B) telephones per 100 habitants
C) population per retail outlet
D) urban population
Which of the following countries is considered a mixed economy?
A) Norway
B) Russia
C) Vietnam
D) China
For which of the following activities would parent-country nationals most likely be
employed?
A) marketing
B) creating a global culture
C) research and development
D) sales
Which of the following is true about franchising as an entry strategy?
A) It provides firms with minimum control over foreign operations.
B) It is an ownership-based international business activity.
C) It restricts a firm’s ability to expand more rapidly abroad.
D) It is typically characterized as an unstable, short-term entry strategy.
Which of the following makes it difficult to completely duplicate a food franchise in
every global market?
A) different local ingredients
B) differences in language
C) low bargaining power
D) need to invest substantial capital
ABC Appliance (Scenario)
The ABC Appliance Corporation is a Florida-based manufacturer of refrigerators,
dishwashers, and other large household appliances. ABC takes advantage of NAFTA,
and as a result, the firm has loyal customers across North America. ABC managers
would like to expand into the Asian market, but are unsure of the best way to do so.
ABC managers are meeting to discuss various possibilities for entering the Asian
market.
Which of the following most likely supports a decision to enter the Asian market by
building a factory near Tokyo?
A) Executives at ABC want the firm to have the flexibility to reconfigure operations at
the Japanese plant.
B) The Japanese yen has been fluctuating over the last year and analysts do not
anticipate it settling down.
C) ABC managers want to delegate responsibility of much of the Japanese plant to local
intermediaries.
D) The CEO of ABC is willing to invest a large amount of capital and other assets to
ensure success in Japan.
Which of the following is true about absolute advantage principle?
A) According to this approach, enhanced product specialization adversely affects
communal welfare.
B) This approach allows the nation to consume more than it otherwise could, generally
at lower cost.
C) This is the only approach that can be used to explain why nations attempt to run a
trade surplus.
D) This approach explains the process by which firms acquire and retain one or more
value-chain activities inside the firm.
Freedom Energy Group (Scenario)
Freedom Energy Group (FEG) is a major American energy services group based in
Oklahoma. FEG manufactures products to facilitate oil and gas exploration and is
involved in the construction of oil refineries and gas pipelines around the world. FEG
managers are considering the purchase of a Canadian energy firm, Maple Leaf Energy,
which manufactures pipeline stabilization products. The financial management division
of FEG is considering the risks and benefits of purchasing Maple Leaf.
Which of the following questions would be more important for FEG financial managers
to evaluate before the firm purchases Maple Leaf?
A) What is the anticipated impact of hybrid technology and alternative fuel sources on
the gas and oil industry?
B) Should FEG continue to employ Maple Leaf personnel after the acquisition, or
should they be given severance packages?
C) What type of global marketing package should be created to inform potential
customers about FEG’s purchase of Maple Leaf?
D) What mix of debt and equity financing should FEG employ in the purchase and
ownership of Maple Leaf?
Reduction in trade barriers is associated with the emergence of ________.
A) fragmentary monetary and fiscal policies across the borders
B) regional economic integration blocs
C) widespread violation of intellectual property rights law
D) violation of GATT provisions
In which of the following stages of the internationalization process is a firm
preoccupied with business in its home market?
A) domestic focus
B) experimental involvement
C) active involvement
D) pre-export
Competitive advantage refers to the ________.
A) belief that national prosperity is the result of a positive balance of trade, achieved by
maximizing exports and minimizing imports
B) superior features of a country that provide unique benefits in global competition,
typically derived from either natural endowments or deliberate national policies
C) distinctive assets or competencies of a firm that are difficult for competitors to
imitate and are typically derived from specific knowledge, capabilities, skills, or
superior strategies
D) relative absence of restrictions to the flow of goods and services between nations
Which of the following challenges is applicable to the franchisee in a franchising
agreement?
A) The franchisee must make their own arrangements to acquire initial training and
know-how.
B) The franchisor holds much power, including superior bargaining power.
C) There is no scope to operate an independent business.
D) There is decreased likelihood of business success.
Freedom Shoes (Scenario)
Freedom Shoes Inc., a sports shoe company, is considering entering into a contract with
an overseas vendor to expand its production capacity. The company investigated several
suppliers and found one vendor to be the most attractive in terms of cost and
manufacturing efficiency. However, Freedom’s managers have heard reports that the
vendor operates factories with sweatshop conditions.
Sean, a senior manager in Freedom, adheres to the relativist view regarding ethical
standards. He goes by the rule, “When in Rome, do as the Romans do.” Sean is most
likely to agree strongly with which of the following views?
A) Freedom should not partner with foreign business entities.
B) Freedom should passively accept the practices that prevail in countries where it does
business.
C) Freedom should not hire foreign managers.
D) Freedom should institute a single global code of conduct for all its employees and
suppliers.
Which of the following acts makes it illegal for U.S. firms to offer bribes to foreign
parties in order to secure or retain business?
A) the U.S. Foreign Corrupt Practices Act
B) the Robinson-Patman Act
C) the U.S. Securities Exchange Act
D) the Sherman Antitrust Act
Which of the following is an example of an industrial cluster?
A) the proliferation of counterfeit goods in the global marketspace
B) the elite community of industrialists in the United States
C) high productivity of workers in South Korea
D) the consumer electronics industry in Japan
If a computer contains a microprocessor from Costa Rica and a hard disk drive from the
Philippines, the computer manufacturer, who is based in Texas and operates across
Europe and West Asia, most likely uses ________ as an entry strategy.
A) exporting
B) franchising
C) global sourcing
D) licensing
Which of the following terms refers to the existence of a legal system based on clear
rules and fair enforcement?
A) conciliation
B) arbitration
C) culture of law
D) rule of law
________ is the seizure of corporate assets without compensation.
A) Confiscation
B) Expropriation
C) Embargo
D) Sanction
Which of the following refers to an often-used form of nontariff trade barrier?
A) premium
B) subsidy
C) quota
D) grant
________ is the strategic reduction of cash transfers within the MNE family through the
elimination of offsetting cash flows.
A) Herding
B) Multilateral netting
C) Hedging
D) Currency swap