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

ECO 48201

February 28, 2019
College students may make good interviewers for firms doing market research in
foreign countries.
Once in export markets, new exporters tend to maintain their focus on them, despite
what is happening in the home market.
Product standards ostensibly set to protect a nation's citizens can be effective in
protecting local industry from foreign competitors.
A nation's relative ability to design, produce, distribute, or service products within an
international trading context, while earning increasing returns on its resources, is known
as national competitiveness.
The effectiveness of every organization is totally controlled by the effectiveness of its
Your neighbor's business is cutting down an acre of first-growth, virgin forest and
planting a lawn and garden beds at its HQ. You are likely to be in an Anglo culture,
where domination of nature seems normal.
Logistics refers to managerial functions associated with the movement of raw materials
and work in progress, but not finished goods.
Advantages of the virtual corporation concept include that it allows a company to build
competence from the ground up and to increase management's control over the
corporation's activities.
It is possible to hide profits with transfer prices.
Cultural attitudes toward change can influence the acceptance of new production
Dynamism means that the leader must be dynamic.
Private brands are responsible for a shift in power from manufacturers to retailers.
The forces in the international environment are the same as those in the domestic
environment except that they occur in foreign nations.
For purchases of capital goods such as manufacturing equipment, many U.S. buying
organizations now use "business-cycle costing" to analyze purchasing decisions.
Accounting standard convergence is unlikely, given the complexities of the systems, all
of which would require harmonization.
Switzerland, China, and Colombia are nations that present topographic challenges to
marketers because their markets are divided by mountain ranges.
Coaching is not important in a diverse team if the norms are strong.
In cases where the product serves the same function but must be adapted to different
conditions, the product may be left unchanged but a different message is required.
In high-context cultures, people tend to form long-lasting relationships that endure over
Foreign national pricing is the use of the home-country price in foreign markets.
With convergence of accounting standards, accounting statements will still need to be
adjusted to be directly comparable due to varying legal requirements.
The Bretton Woods system worked until the late 1960s.
An expatriate is a person living outside his or her country of birth.
Hofstede's framework is based on social science theory.
As the term is used in the text, foreign business is business whose activities are carried
out across national borders.
Because of the importance of the workforce to the effectiveness of organizational
operations, a company's approach to international human resource management should
drive its competitive strategy.
Sources of successful managers for IC activities include the home country, the host
country, and a third country.
Accounting is an objective, fact-based discipline and is not influenced by culture.
Some think that renewed focus on exchange rates would be a good path forward for the
IMF, which is struggling with core issues related to its purpose.
In POB accounting, a deficit in the current account is always accompanied by a surplus
in the capital account.
That free trade is the best strategy for advancing the world's economic development is
one of the few propositions on which almost all economists agree.
If a company feels that it probably will send parent-country nationals abroad, it will
frequently encourage them to study the language and culture of the country to which
they are going.
The licensee generally pays a fixed sum when signing a license agreement and then
royalties of 5 to 7 percent of sales over the life of the contract.
Britain was the world's leading manufacturing country for about 1,800 years, until it
was replaced by the United States at the end of the 1800s.
One way in which contract manufacturing is used is for a company to contract with a
local manufacturer to produce products for the company, according to the company's
The purpose of all accounting is to provide internal and external decision makers with
the financial data they need to make their decisions.
Often small exporters don't consider the use of an export management company when
they should.
The Big Mac index is an example of purchasing power parity, an international measure
of junk-food consumption.
Contingency-fee cases are limited to the United States.
Dissimilar cultural patterns generally necessitate changes in food and other:
A. industrial products.
B. consumer goods.
C. luxury products.
D. basic consumer staples.
E. all of the above.
A polycentric 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. results in the company hiring local managers who are familiar with the home country
of the IC and with its corporate culture, policies, and practices.
C. may confront the problem of having the best people pirated away by local firms or
other IC subsidiaries.
D. two of the above.
Incoterms are developed and maintained by:
A. the U.S. Chamber of Commerce.
B. the International Chamber of Commerce.
C. the WTO.
D. the UN.
E. a committee of major global companies.
The analyst is mostly concerned with which of the following during the second
A. Trends in inflation
B. Interest rates
C. Exchange rates
D. All of the above
E. A and C
Translation exposure would not occur with firms that:
A. do not have foreign operations.
B. operate in the same currency, their home market currency, everywhere.
C. use their home market language in all foreign operations.
D. A and B.
Companies that adopted the global organizational form felt that this organization
A. permit them to obtain cheaper labor.
B. be more capable of developing strategies to confront new global competition.
C. enable them to get lower interest rates to finance expansion.
D. all of the above.
The inflation rate determines:
A. the capital structure of the firm.
B. the growth rate of sales.
C. the real cost of borrowing in capital markets.
D. the equilibrium point.
Management would prefer global standardization of the marketing mix:
A. because each market demands it.
B. for cost savings.
C. to meet local conditions.
D. two of the above.
When host-county nationals are employed:
A. training costs are a minimum.
B. they are familiar with local customs, culture, and language.
C. they are already familiar with the home country.
D. any conflict of interest is removed.
E. two of the above.
Marketers everywhere need to be able to:
A. price the products or services so they are acceptable.
B. produce products that satisfy customers' needs.
C. inform potential customers.
D. two of the above.
According to the text, recruitment of salespeople in foreign countries is at times more
difficult than recruiting them at home because:
A. of the stigma attached to selling that exists in some areas.
B. the salaries and benefits are more expensive.
C. of the need to hire people who are culturally acceptable to customers and channel
D. all of the above.
Companies controlled by other companies through ownership of enough voting stock to
elect board-of-director majorities are known as:
A. affiliates.
B. joint ventures.
C. subsidiaries.
D. strategic alliances.
E. two of the above.
Nations whose mountains divide them into smaller regional areas include:
A. the United States, Mexico, and Canada.
B. Switzerland, Afghanistan, China, and Colombia.
C. Luxembourg, France, and Romania.
D. Estonia, Latvia, and Lithuania.
According to the text, companies are now accepting:
A. two of B, C, and D.
B. the need for frequent reorganization.
C. the need for reducing the size of middle management.
D. the use of pagers and mobile phones for faster communication.
E. all of B, C, and D.
The dollar value of total world exports in 2010 was greater than the gross national
product of every nation in the world except China.
With privatization:
A. assets are transferred from the public sector to the private sector.
B. stock is bought back so that the company no longer has public shareholders.
C. state activities are moved into private management through contracts.
D. all of the above.
According to the text, the tendency toward an international integration of goods,
technology, information, labor, and capital, or the process of making this integration
happen, is called:
A. internationalization.
B. international business.
C. economic globalization.
D. multinationalization.
E. global integration.
Between 1980 and 2010, the level of merchandise exports from Africa:
A. doubled as a proportion of overall world merchandise exports.
B. increased by 250 percent.
C. declined by half.
D. grew more rapidly as a proportion of world merchandise exports than did the
European Union.
E. two of the above.
Privately owned companies sometimes complain that government-owned companies
have the following unfair advantages:
A. higher-cost financing.
B. ability to charge higher prices.
C. access to government contracts.
D. all of the above.
According to the text, about ____ percent of medium and large-sized companies have
employees working abroad.
A. 23
B. 47
C. 55
D. 76
E. 80
___________ is(are) economic data that correlate highly with market demand for a
A. Market factors
B. Trend analysis
C. Cluster analysis
D. Market indicators
E. None of the above
Informal institutions are composed of sets of:
A. mandatory agreements, a bit like the mind's software.
B. orthodox accords whose goal is to establish rigor.
C. agreements that are for the most part written and taken for granted.
D. voluntary agreements.
The most serious recent challenge to the EU has been:
A. the recent financial crisis.
B. the arrest of the IMF's Strauss-Kahn.
C. immigration-provoked social unrest.
D. weather changes that have resulted in rising sea levels and warmer temperatures.
An international company is:
A. a global company.
B. amultidomestic company.
C. an affiliated company.
D. all of the above.
An argument against using trade restrictions to punish an offending nation is that:
A. sanctions seldom achieve their goal of forcing change in the offending country.
B. sanctions are relatively harmful to the citizens of the offending country.
C. sanctions are not condoned by the UN.
D. sanctions decrease the cost of doing business.
E. two of the above.
Regardless of the functional currency, retained earnings are translated at:
A. their market value based on recent stock price.
B. the rate in effect when the earnings were posted.
C. the rate in effect the day of consolidation.
D. a reasonable rate of the company's choice.
Companies in the United States, Canada, and the United Kingdom tend to:
A. rely on equity more than do companies in most other countries.
B. depend on debt more than do companies in other countries.
C. divide their equity and debt almost evenly.
D. rely on retained earnings more than do companies in most other countries.
(p. 139)-Renewable energy sources:
A. will replace fossil fuels, due to price, depletion, or carbon emissions.
B. are growing at greater rates than the nonrenewables in the United States and Europe.
C. A and B.
D. are all available everywhere.
Examples of the kinds of uncontrollable forces listed in the text are:
A. competitive.
B. technological.
C. personnel.
D. two of the above.
Whether the functional currency is local or the parent company's currency, owner's
equity is always translated at:
A. the rate in effect when the stock was issued.
B. the rate in effect the day of the consolidation.
C. the rate in effect the day of the journal entry.
D. the method of the company's choice, but consistency is required.
The UN's International Court of Justice (ICJ) is also known as:
A. the Court of Europe.
B. the Court of International Law and Regulations (CILR).
C. the International Court of Peace.
D. the World Court.
If you already have a job, you can enhance your opportunities for international
experience by:
A. making your boss and the human resource management department personnel aware
of your interest.
B. meeting people in the home office who work with the company's foreign
C. taking additional international business courses and making sure that people in your
company know what you are doing.
D. all of the above.
Trading companies are privately owned firms that develop international trade and serve
as intermediaries between foreign buyers and domestic sellers, and vice versa.