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

ECO 54227

February 28, 2019
Advertisers have followed glocalization to reduce costs, enabling them to develop a
common strategy for large regions.
For the conservative international firm, there is no reason to move money other than the
repatriation of profits.
Only in communist countries do governments own the factors of production.
The proportion of merchandise exports coming from Latin America and the Middle
East decreased between 1980 and 2010.
As humans, it is easier to think of ourselves as market segments that extend across
borders than as discrete country segments.
The OECD and the U.S. Internal Revenue Service have issued guidelines on transfer
pricing because it has such critical tax implications.
External forces in the international business environment are commonly called
uncontrollable forces.
Historically, more aspects of marketing have been standardized and coordinated
worldwide by companies than has been the case for other value chain activities such as
research and development and manufacturing.
Protection of infant industries through trade restrictions is used only in developing
The experience of suppliers to the youth market indicates that this market is essentially
an international market segment.
With a multidomestic strategy, the cost and complexity of coordinating a range of
different strategies and product offerings across national and regional markets can be
The ultimate managers of strategic planning and strategy making are the executive
board of a corporation.
In developing countries, third-country nationals are often preferred by the host country
over nationals of the home country.
Expectations of team leadership style are the same in all cultures.
Every coast between 20 and 30 degrees of the equator (north or south) is dry.
In U.S. industry, the proportion of purchased materials in the overall cost of goods sold
has been rising for several decades.
If a firm decides to set up its own export operation rather than do indirect exporting, the
firm must obtain overseas distribution.
A follower will most likely succeed when there are few legal, technological, cultural, or
financial barriers to inhibit entry, as long as it has sufficient resources or competencies
to overwhelm the pioneer's early advantage.
Companies need to consider two types of measures when assessing strategic
performance: (1) measures of the company's success in obtaining and applying required
resources, such as financial, technological, and human resources, and (2) measures of
the effectiveness of the company's personnel, within and across the firm's international
network of operations, in performing their assigned jobs.
The UN General Assembly is the main staff organization responsible for the UN
Factoring allows the exporter to be more competitive by selling on open account rather
than by means of the more costly letter-of-credit method.
Direct exporting is simpler than indirect exporting because it requires neither special
expertise nor large cash outlays.
The use of third-country nationals has become particularly prevalent in the LDCs
because they provide substantial cost savings over the use of home-country nationals.
The degree to which a country's legal system is based on the rule of law makes no
difference; it is personal relationships that matter in foreign environments.
Because Austria sided with the West in the Cold War, it became a favored location for
offices of international firms servicing eastern European operations.
Companies decide to export to increase their sales and profits or to protect them from
being eroded.
One benefit of exporting is that it can enable a company to serve markets where the
company has no or limited production facilities.
The Internet has made direct exporting much easier.
If assembly or manufacturing is done in an FTZ using imported components, no duties
need to be paid when the finished product is imported.
Every importer should know how the U.S. Customs calculates import duties and know
the importance of the product classification.
New institutional theory suggests that institutions be understood as collections of rules
and codes of conduct that limit behavior.
The regionalized organization appears to be popular with companies that manufacture
products with a rather low technological content.
Whether to use the current or temporal rates depends on the functional currency of the
foreign operation.
One of the most common mistakes made by new exporters is not getting advice.
In two-career families, when one spouse accepts a foreign assignment and the other
spouse goes along, that other spouse is referred to as a trailing spouse.
Zimbabwe's government offers an example of government instability.
Trade obstacles are considered to be legal forces because:
A. they often are based on legislation.
B. their compliance is costly to the firm and the consumer.
C. they are imposed by a formal institution and noncompliance can carry punishment.
D. two of the above.
Government stability is understood to refer to a government's:
A. policies—their ability to endure over time.
B. ability to keep itself in power.
C. two of A, B, and D.
D. ability to adjust to sudden changes by making radical policy changes.
E. all of A, B, and D.
The roles of the global leader include:
A. negotiator and change agent.
B. supervisor and administrator.
C. superintendent and monitor
D. marketer and salesperson for change.
Regarding foreign investment:
A. it can be divided into three components: international trade, portfolio investment,
and direct investment.
B. portfolio investment involves investors who participate in the management of the
firm in addition to receiving a return on their money.
C. deals that result in the foreign investor's obtaining at least 10 percent of the
shareholdings are classified as portfolio investments.
D. two of A, B, and C.
E. none of A, B, and C.
Export marketing plans should be specific about:
A. the markets to be developed.
B. the marketing strategy for servicing them.
C. the tactics required to make the strategy operational.
D. cash flow projections.
E. A, B, and C.
Individualism-collectivism measures:
A. the degree to which people in the culture are integrated into groups.
B. the tendency to differentiate male roles.
C. the degree to which social inequality is tolerated.
D. A and B.
Withholding tax is:
A. an indirect tax paid by employers before employees receive salaries.
B. a direct tax levied on earned income.
C. a 30 percent tax levied on foreign residents.
D. an indirect tax levied on passive income.
Size of the urban population and electricity consumption are part of the __________
A. market size
B. market growth rate
C. e-commerce readiness
D. market factor
E. none of the above
Antitrust laws differ among countries, and complying with them is often difficult for the
firm, so:
A. international firms have had to increase their legal staff to ensure compliance.
B. the U.S. government is pushing for a world organization to clear antitrust issues.
C. firms have moved toward fewer mergers and more regionalized organizations.
D. firms expect to be in antitrust litigation and act accordingly.
E. two of the above.
The consequence for management in a world out of control is a six-element recipe
developed at Massachusetts Institute of Technology for devising a system of distributed
control, which includes:
A. prepare a clear and integrated plan of action.
B. don't change the simple things.
C. master complex tasks first.
D. all of the above.
Understanding the religious beliefs of foreign markets is:
A. not really necessary because religion is one and the Truth is universal.
B. useful, because religions affect attitudes and beliefs across cultures.
C. not necessary because religion is not a part of culture; it is beyond culture.
D. useful because there is always the possibility of conversion.
Hofstede's masculinity-femininity dimension suggests that, as an international manager,
you might well:
A. avoid feminine cultures because their production levels will lag.
B. avoid very masculine cultures because they violate EEOC standards.
C. find men and women equally ready to assume leadership roles in a feminine culture.
D. find women too competitive in a feminine culture.
Managers of international companies that are attempting to develop a competitive
advantage face a formidable challenge because:
A. all of B, C, and D.
B. resources are always scarce.
C. there are many alternative ways to use the company's scarce resources.
D. managers are forced to make choices regarding what to do and what not to do.
E. two of B, C, and D.
All the reasons for making decisions at IC headquarters, at subsidiary headquarters, or
A. do not apply in joint venture situations.
B. apply equally in joint venture situations.
C. apply only to a corporate entity between two or more companies that are foreign to
the area where the joint venture is located.
D. apply only to a corporate entity between an IC and local owners.
The disadvantages of indirect exporting include:
A. firms gain little experience from the transaction.
B. commissions have to be paid to agents.
C. firms are dependent on the agents.
D. all of the above.
In many cases, a firm entering international markets becomes a follower because:
A. barriers are high for new entrants.
B. strong patent protection exists.
C. quicker competition beats it.
D. all of the above.
Monetary and fiscal policies:
A. have nothing to do with exchange rate movement.
B. influence interest rates and taxation, and so may influence exchange rates.
C. have no predictable influence on inflation.
D. have no influence on trade patterns.
The common characteristic of multinationals that are organized by function at the upper
level is a narrow:
A. and highly integrated product mix.
B. and highly integrated customer list.
C. variation of prices in the product mix.
D. research and development effort.
E. none of the above
Mail surveys can be a difficult foreign market research tool because:
A. mail deliveries can take weeks.
B. sometimes mail is not delivered at all.
C. response rates for mail surveys may be low.
D. all of the above.
Which of the following elements are included in Porter's Diamond Model of national
A. Competitive conditions
B. Export conditions
C. Social conditions
D. Supply conditions
E. None of the above
Geographical proximity contributes to:
A. knowledge of the country by its neighbors.
B. lower freight costs.
C. the likelihood of trade relationships.
D. all of the above.
The international structural stages model suggests that a typical evolutional path for an
international company's structure would be:
A. from international division to geographic area division to worldwide product
B. from international division to worldwide product division to geographic area
C. from geographic area division to worldwide product division to global matrix.
D. from functional division to horizontal company to virtual corporation.
E. from international division to worldwide product division to global matrix.
A traditional approach to product design that involves a sequential approach to design
has been termed:
A. product-based design.
B. concurrent engineering.
C. over the wall.
D. sequenced design.
E. participative design.
According to the text, among the appealing factors of online advertising in the
international sphere is the following:
A. the Internet provides access to an affluent, reachable audience.
B. Internet communications can be interactive.
C. the Internet can be particularly important for reaching teenagers.
D. all of A, B, and C.
E. two of A, B, and C.
Income tax is a direct tax levied on earnings, and:
A. VAT is also a direct tax.
B. VAT is not a tax, in the legal sense.
C. VAT, vertical added tax, is indirect.
D. VAT is an indirect tax.
Smaller nations would like patent protection:
A. extended, to allow them to build their competitive advantage.
B. extended, so that they can recoup development costs.
C. reduced, so that they can enter the game earlier, possibly with generics.
D. extended, so that their profits can increase.
Culture includes everything but:
A. religion.
B. religion and politics.
C. higher education and universal values.
D. none of the above.
In __________ screening, the important variables for segmentation are commonalities
in needs and wants among consumers across nationalities.
A. country
B. product
C. segment
D. cultural
E. none of the above.
According to the text, approximately ______ of expatriate failures are family-related.
A. 25 percent
B. 40 percent
C. half
D. nearly 75 percent
E. 90 percent
E. T. Hall suggests that to learn another culture, you have to undergo extensive training
or spend:
A. a lifetime in the other culture.
B. considerable time with people of the other culture, but perhaps outside that culture.
C. time studying the language of the other culture.
D. considerable amounts of time and money taking guided tours in the other culture.
Hofstede's measure of the amount of effort a society puts into ordering the environment
and avoiding ambiguity is termed:
A. Truth.
B. flexibility.
C. ambiguity.
D. uncertainty avoidance.
WIPO and TRIPS represent:
A. patent harmonization agreements in Southeast Asia and the EU, respectively.
B. anticounterfeiting agreements in Korea and North America, respectively.
C. WTO and UN agreements on IP.
D. UN and WTO agencies or programs that focus on IP.
E. international governments during litigation at the World Court.
The concept of strict liability, as found in the U.S. legal system, applies:
A. to harm done by the designer/manufacturer without the need to prove negligence.
B. to harm done within narrow limits, considering the design of the product.
C. to children harmed by products in both the United States and the EU.
D. strictly to harm caused by the designer/manufacturer, so no penalties outside of
damages can be awarded.
E. none of the above.
To create a competitive advantage that is sustainable over time, the international
company should try to develop competencies that:
A. create value for customers and for which they are willing to pay.
B. are easy to imitate or substitute for.
C. are expensive to develop and maintain.
D. all of the above.
In general, with regard to exchange controls, developed countries:
A. rarely use them.
B. use them only to discourage foreign investment.
C. use them when needed to implement monetary policy.
D. use them secretly.