Studies of repatriated employees regularly report that most knew what their company
position would be when they returned home but were uncertain about their likely new
workplace practices.
In collaborative arrangements, when one partner cedes control to another partner, it is
no longer responsible for problems.
An agreement for the use of a trademark and assistance with business operations is
known as a cross-licensing agreement.
Micro-multinationals are firms that globalize immediately and enter countries with
numerous customers, productive workers, and attractive industries.
The balance of trade is a record of a country’s international transactions that take place
among companies, governments, or individuals.
Fundamental forecasters assume that if current exchange rates reflect all facts in the
market, then under similar circumstances, future rates will follow the same patterns.
The growth of small-scale production technology will most likely enable small
countries to produce products efficiently for their own consumption.
Managers who take an active approach to political risk management are likely to rely
on statistical modeling to quantify the precise degree of political risk.
The term protectionism, when applied to international trade, refers to governmental
restrictions and incentives to affect trade flows.
Helping a struggling domestic company through import restrictions frequently causes
other countries to retaliate.
Gap analysis may show that the combined market potential among several countries
may justify product development costs.
The Eurocurrency market is limited to exchanges that include the euro.
Licenses are often given to companies owned in whole or in part by the licensor.
Adopting a market control system requires that the MNE uses external market
mechanisms to establish internal performance benchmarks and standards.
The Human Development Index measures the average achievements in a country on
three basic dimensions of human development: mortality, knowledge, and standard of
living.
If a brand name becomes generic in one country, it becomes generic in other countries
as well.
A typical U.S. company uses the following balance sheet format: assets = liabilities +
shareholders’ equity.
Ericsson, the Swedish MNE, was required as of 2005 to adopt both Swedish and U.S.
GAAP since it lists it securities in both the United States and Sweden.
The goal of a free trade agreement is to abolish all tariffs among member countries.
Agricultural subsidies by developed countries impede the competitiveness of
agricultural exports by developing countries.
English-speaking peoples account for a larger portion of global output than people who
speak any other language.
Ethnocentric firms typically use the same business practices in all cultures and markets.
Profit figures for individual country operations may obscure the real impact those
operations have on total global performance.
A currency that is pegged to another currency is usually changed on a
supply-and-demand basis.
In a licensing arrangement, it is rare for companies to agree to a front-end payment to
cover technology transfer costs.
The primary duty of the customs agency of a government is the assessment and
collection of all duties, taxes, and fees on imported merchandise.
It is important when setting up a collaborative arrangement to agree on mutual goals
and expectations.
An important business objective for pursuing ethical behavior is to create a better
relationship with corrupt politicians and customers.
Markets are not always perfectly competitive and some firms consistently outperform
industry averages. This suggests that firm performance is also influenced by the
presence of bright, motivated managers and their keen sense of innovative products or
processes.
An ADR is a negotiable certificate issued by a U.S. bank in the United States to
represent the underlying shares of a foreign corporation’s stock held at a custodian bank
in the foreign country.
Configuration is the linking or integrating of activities into a unified system.
The calculation of GNI per capita takes into account the differences in the cost of living
from one country to another.
Ownership advantages refer to a firm’s specific assets, international experience, and the
ability to develop either low-cost or highly differentiated products within the context of
its particular value chain.
Seasonal differences around the world enable MNEs to distribute weather-related sales,
such as winter clothing, more evenly throughout the year.
Most MNEs generate a large portion of their revenues in their home regions.
Current approaches to designing an organization see the task of building
knowledge-generating and decision-making relationships as less important than
specifying the best structural arrangement.
A freight forwarder performs which of the following functions?
A) arranging the fastest and cheapest transportation of products to and from foreign
suppliers
B) taking title to the goods it exports and imports from country to country
C) acting as a sales representative in a foreign market
D) valuing products that qualify for favorable tariffs
Gross national income (GNI), the broadest measure of economic activity for a country,
is defined as the ________.
A) total of all consumption and investment that takes place in a national economy
B) income generated in one country, regardless of who owns the productive assets
C) total of all economic activity in one country less services, such as government
administration, health services, and education
D) income generated by both total domestic production and the international production
activities of national companies
Studies indicate a strong correlation between the intensity of religious belief and
________.
A) a desire to convert productivity gains into more leisure time
B) an adherence to some attributes that lead to economic growth
C) the belief that material success is related to salvation
D) the degree of ethnocentrism exhibited in a culture
What is the gray market?
A) sales targeted to elderly consumers
B) selling goods through unofficial distributors
C) a legal black market run by governments
D) selling counterfeit merchandise
Which of the following BEST explains how a firm reduces risk by operating
internationally?
A) taking advantage of business-cycle differences among countries
B) buying competitive risk insurance unavailable domestically
C) preventing competitors from operating in the countries it has entered
D) operating in less competitive environments than those at home
In order to join the IMF, a country must contribute a certain sum of money, called a
________.
A) special drawing right
B) trade balance
C) monetary reserve
D) quota
Managers should understand the effect of trade protectionism because ________.
A) trade protectionism may limit the number of people permitted to practice a specific
profession
B) trade protectionism requires the payment of high insurance rates to transport goods
internationally
C) trade protectionism may prevent companies’ enactment of merger and acquisition
agreements
D) trade protectionism may make it difficult for a company to buy what it needs from
foreign suppliers
Which of the following is most typical of a command economy?
A) Consumers have choices of many substitutes for any given product.
B) Quality of products and services tends to be consistent.
C) The prices of goods and services frequently change.
D) Many products are usually in short supply.
Why should managers have an understanding of trade protectionism?
A) Trade protectionism targets factor endowments, thus affecting the best country to
locate production.
B) Trade protectionism affects a company’s ability to sell abroad and ability to compete
at home.
C) Trade protectionism affects the number of people permitted to practice a specific
profession.
D) Trade protectionism prevents companies’ enactment of merger and acquisition
agreements.
Johnson & Johnson embodies its organizational culture in “The Credo,” which is the
firm’s ________.
A) code of conduct
B) vision statement
C) strategic plan
D) mission statement
Raj, an engineer, works long hours and takes full responsibility for both his good and
bad work performance. Raj most likely believes in ________.
A) self-determination
B) low power distance
C) collectivism
D) fatalism
The concept of liquidity preference in international operations refers to ________.
A) a company’s willingness to accept a lower rate of return on investments in countries
where it can more easily sell them and convert the proceeds at a favorable rate
B) a company’s willingness to accept lower rates of return in poor countries that really
need the investments
C) management’s need to maintain sufficient funds, preferably in local currency, in each
country of operation to ensure meeting daily cash needs
D) investors’ preference for foreign stocks over foreign bonds because of the larger
market for them
The idea of ________ involves how a company specifies organizational tasks; divides
those tasks into jobs, departments, subsidiaries, and divisions; and then assigns
authority and authority relationships.
A) systemic differentiation
B) horizontal differentiation
C) vertical differentiation
D) schematic differentiation
In the global environment, firms use an international strategy, a localization strategy, a
global strategy, or a ________ strategy.
A) regional
B) standardization
C) transnational
D) locational
Sarah, a manager at Farley Enterprises, an MNE with operations in Asia, Europe, and
North America, is using past trends in exchange rate movements to spot future trends.
Which type of forecasting approach is Sarah most likely using?
A) fundamental
B) technical
C) application
D) economic
Countries often use local content regulations to determine the proportion of the product
that must be made in the local market versus made outside of the local market in order
to ________.
A) maximize product safety
B) ensure a cultural fit
C) favor domestic companies
D) relieve production pressures on local companies
Companies are more likely to gain advantages by locating near competitors for all the
following reasons EXCEPT to ________.
A) take advantage of competitors’ research to pick an ideal location
B) attract multiple suppliers and personnel with specialized skills
C) agree with competitors on production limitations
D) attract buyers who want to compare suppliers
Critics of the view that regionalization will prevail over globalization most likely base
their argument on the belief that ________.
A) regionalization is a transition stage toward globalization
B) neighboring countries are more apt to disagree politically than distant countries
C) neighboring countries are too geographically similar to benefit from trade
D) business in non-territorial areas is not regional
For the provider, management contracts offer the advantage of ________.
A) receiving income without making a capital outlay
B) increasing their merchandise exports
C) reducing their global taxes
D) better access to raw materials
Based on the hierarchy-of-needs theory, in which of the following would fulfillment of
lower-order needs be the best motivator?
A) wealthy countries
B) Protestant countries
C) high femininity countries
D) very poor countries
The recent global financial crisis has led to which of the following?
A) governments seeking to impose more constraints on capitalism
B) governments seeking to eliminate constraints on capitalism
C) governments seeking to increase the interdependence of developing economies
D) governments seeking to eliminate the interdependence of developing economies
A system in which individuals, rather than the government, make the majority of
economic decisions is commonly referred to as a ________.
A) command economy
B) market economy
C) private economy
D) mixed economy
When a company has improved its operations efficiency so much that it decide to move
back to its home country, this is called ________.
A) nearshoring
B) offshoring
C) onshoring
D) outsourcing
An import license is ________.
A) an agreement whereby one country gives another country permission to use a patent
that a company has registered there
B) a requirement that exporters take merchandise in lieu of money as payment for their
sales
C) a requirement that permission be secured from governmental authorities before
importation can be undertaken
D) a government prohibition of imports from a specific country
The ________ approach to corporate taxation is considered double taxation.
A) separate entity
B) integrated system
C) capital gains
D) value-added
ACE Computers established an assembly operation in Malaysia so that it would be
close to its key suppliers. ACE is most likely engaging in ________.
A) industrial clustering
B) horizontal sourcing
C) zero sourcing
D) offshoring
The MNE that applies a global strategy aims to ________.
A) compete essentially the same way wherever the company does business
B) empower local operations to make decisions about value activities
C) adapt activities to the industry standards in critical markets
D) customize its business practices to consumer expectations
Which of the following statements BEST describes a limitation of the Big Mac Index?
A) Profit margins vary by the strength of competition, which affects relative prices.
B) The theory of PPP incorrectly assumes that there are barriers to trade.
C) The Big Mac represents all possible commodities and services.
D) Taxes have no effect on Big Mac prices.
The temporary arrangement of independent companies, suppliers, and free agents for
the purpose of completing a task or project is best known as a(n) ________
organization.
A) virtual
B) independent
C) decentralized
D) international
According to the research described in your text, which of the following is among the
factors that would increase a firm’s probability of exporting?
A) low domestic productivity
B) high domestic labor costs
C) high level of efficiency
D) high R & D demands
A(n) ________ is the right but not the obligation to buy or sell a foreign currency
within a certain time period or on a specific date at a specific exchange rate.
A) forward rate
B) bid
C) offer
D) option
Ongoing research confirms that MNEs with superior ________ practices correlate to
high productivity, value creation, and a competitive advantage.
A) human resource
B) human capital
C) expatriate
D) parent-country
Unemployed workers are most apt to form a pressure group to support ________.
A) export restrictions
B) import restrictions
C) price limitations
D) import subsidies
Which of the following is NOT causing greater complexity in the regulation of trade?
A) growth in export tariffs
B) services available over the Internet
C) heightened concern about product safety
D) development of new products that must be classified
At Cooper Industries, Jake is responsible for evaluating potential acquisitions abroad,
managing cash flow, tax planning, and internal auditing. Which of the following is most
likely Jake’s position at Cooper?
A) CEO
B) treasurer
C) regulator
D) controller
What is a transfer price? Why are transfer prices used?
What is the difference between a polycentric, ethnocentric, and geocentric approach to
international management? What key factors should a firm consider before adopting
one of these approaches?
What factors influence international accounting practices? What forces are leading to
the global convergence of accounting practices?
What is the theory of country size? How is country size determined? How does country
size affect national trade patterns?
How do MNEs benefit from superior international HRM especially when filling
expatriate positions? What costs do MNEs face when expatriate assignments are
unsuccessful?
What are the main arguments for and against Africa developing a common currency
like the EU?
What is the country similarity theory? According to this theory, what factors affect trade
patterns?
How might centralization of decision making adversely affect local managers in an
MNE?
How do exchange rates affect budgets used to evaluate performance in MNEs?
What is gross national income? How is it calculated? Illustrate your answer with a
specific example.
Describe the four major theories discussed in your text that explain why motivation
differs from one country to another.
Why would companies become involved in arbitrage? What is the difference between
arbitrage and interest arbitrage?
What motivations do companies have to act responsibly? How can codes of conduct
help firms to act ethically?
Describe the pressures for local responsiveness that international companies face.
What types of employees are increasingly being chosen for expatriate assignments?
What characteristics are firms seeking when selecting expatriates?
