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

ECO 60360

February 28, 2019
Human resources are influenced by cultural values because values are the foundation of
motivation and evaluation.
Finance is best left decentralized in international firms so that local efficiencies and
opportunities can be accessed.
The reasons international firms enter foreign markets are all linked to either (1) the
desire to increase profits or (2) the desire to increase sales.
Licensing is a form of franchising.
The International Finance Corporation (IFC) acts as an investment banker, arranging
private risk ventures in developing countries.
Foreign direct investment may be an attempt by foreign companies to establish
competitive advantage over potential competitors in other markets, due to possession of
advantages not available to local firms. Such advantages possessed by foreign
companies over their local competitors include knowledge about local market
conditions and cost efficiencies from operating at a distance.
Generally, industrial products require greater adaptation than consumer products to
meet the demands of the world market.
Many corporations do not hedge translation exposure.
As discussed in the chapter, institutions are organizations constructed to create jobs for
government employment initiatives.
According to the text, Zara's strategy focuses on continual renewal of its clothing lines.
Cluster analysis is a technique for dividing objects into groups based on geographic or
economic similarity.
A multidomestic company is an organization that attempts to standardize and integrate
operations worldwide in all functional areas.
When engaging in international business, banks are concerned with the merchandise,
not the documents.
As discussed in the text, global sourcing arrangements include overseas joint ventures,
independent overseas manufacturers, and wholly owned subsidiaries.
Both multinational and global companies use regionalized organizations.
The L/C sets up the bank as an intermediary between the seller and the buyer and
reduces risk of nonpayment.
Companies controlled by other companies through ownership of enough voting stock to
elect majorities on the board of directors are called subsidiaries or affiliates.
General surveys are not done with a specific firm in mind.
The world stock of outward foreign direct investment was $19 trillion at the beginning
of 2010, which was more than nine times what it was in 1990.
The EU is administered by the European Commission, a group composed of 27
commissioners elected at the EU level.
A central reserve asset is a holding that has value that is held by private banks in case of
a liquidity crisis.
Culture includes everything objective, and religion contains values and is thus not a part
of culture.
Porter's diamond model suggests that Switzerland should not be competitively
A disadvantage for companies that insist on less risky transactions, such as a letter of
credit, is that they may be losing business to competitors that sell on open accounts.
Firms that include imported parts in their finished products must pay duty on the
imports, but this duty is returned when the product is exported (customs drawback).
With less than 50 percent of the voting stock, or even with no voting stock, an IC can
still have control.
Unless a product or service is purchased from a company that is registered to the
appropriate ISO 9000 standard, a buyer cannot be assured that the quality of what was
received will be what was expected.
Coal and nuclear power are both in decline as energy sources.
A business whose activities are carried out across national borders is known as an
international business.
Turnkey projects export technology, management expertise, and capital equipment.
Firms have developed international finance centers in order to:
A. centralize the financial management function and thereby reduce costs and increase
both profits and efficiencies.
B. meet WTO guidelines.
C. compete with international banks.
D. facilitate interfirm and intrafirm transfer pricing.
A purchase of foreign goods from the United States (requiring importing) will:
A. be recorded in the BOP as an asset in the current account.
B. be recorded in the BOP as a debit in the current account.
C. have no record in the BOP because the purchase is made in the United States.
D. be recorded in the BOP as a liability in the foreign transfer account.
The Anglo-American inclination toward optimism is explained by a desire to:
A. promote good feelings within the firm.
B. show impressive earnings that will attract investors.
C. promote capitalism.
D. contribute to political stability.
Leadership may be influenced by sociocultural forces, and its model might be:
A. either anachronistic or contemporary.
B. reasoned, emotional, strategic, or planned.
C. exogenous or endogenous.
D. paternalistic, heroic, integrative, or directive.
UNCTAD, an agency of the United Nations, estimates there are __________
international firms in the world.
A. 5,500
B. 12,000
C. 64,000
D. 82,000
E. over 800,000
The national defense argument for trade restrictions has been used in the United States
to argue for restriction on imports of:
A. munitions.
B. uniforms.
C. shoes.
D. all of the above.
The Foreign Corrupt Practices Act is U.S. legislation that:
A. outlines bribery practices that are allowed abroad but not in the United States.
B. prohibits bribery by American companies abroad.
C. allows bribery in foreign dealings when culturally sanctioned.
D. outlines and prohibits foreign bribery practices by foreign nationals in foreign
E. clearly states the basis for illegal bribery.
Opponents of globalization argue that globalization has produced:
A. more and better jobs.
B. deleterious effects on labor and labor standards.
C. uneven results across nations and people.
D. all of the above.
McDonald's, Kentucky Fried Chicken, and Subway are examples of:
A. joint ventures.
B. licensing.
C. franchising.
D. strategic alliances.
E. none of the above.
According to the text, which of the following dimensions provide(s) the basis for
organizational subdivisions at the secondary, tertiary, and still lower levels?
A. Two of B, C, and D
B. National subsidiary
C. Domestic or international
D. Function
E. All of B, C, and D
Natural resources are:
A. anything that is alive in the natural world.
B. anything provided by nature on which people depend.
C. any raw material that becomes a component in a manufactured good.
D. anything that is used for food or fuel.
Investigations of large multinationals in manufacturing and service sectors reveal that:
A. a majority of them use a global strategy.
B. a majority of these firms generate an average of about 65 percent of their worldwide
revenues within their home region.
C. most of these firms have achieved broad and deep penetration of international
markets as a whole.
D. none of the above.
The marketed energy use has been dominated since 1980 by:
A. renewable energy sources.
B. nuclear energy and coal.
C. nonrenewable energy sources.
D. solar and wind power.
The impact of the EU on the WTO could be said to be negative, since:
A. a country could belong to only one of these organizations.
B. the favored trade relationships among EU members are not extended to nonmember
countries, so the EU undercuts the WTO.
C. the euro threatens other hard currencies supported by the WTO, such as the dollar
and the yen.
D. the WTO does not collect dues from EU member-nations.
Organizational design:
A. is a process that deals with how an international business should be organized in
order to ensure that its business activities are integrated globally.
B. must consider the size of an organization and the complexity of its business
C. must be able to evolve over time in order to enable the organization to respond to
D. all of the above
E. two of A, B, and C.
The United States allocates quotas to 40 countries for specific tonnages of:
A. sugar.
B. roast beef.
C. malt beer.
D. soybeans
E. two of the above.
When designing production facilities, designers generally find that:
A. automated machinery is severely limited in flexibility regarding product variety and
B. general-purpose machines require skills that are built into a special-purpose machine.
C. they have to choose between low-output specialized machinery and higher-output,
general-purpose machines.
D. all of the above
E. two of A, B, and C
An export bill of lading serves as:
A. a contract for carriage between the shipper and the carrier.
B. a receipt from the carrier for the goods shipped.
C. a certificate of ownership.
D. a receipt for the IRS.
E. A, B, and C.
Which of the following dimensions has (have) been identified as being associated with
cross-cultural adjustment?
A. Work context
B. Gender
C. General environment
D. all of the above
E. two of A, B, and C
The law of one price is that:
A. only one price can be charged for an item in a contract deal.
B. in an efficient market, one price only is the permissible price.
C. in an efficient market, like goods will have like prices.
D. even in international markets, bait and switch is illegal.
In his book Cannibals with Forks, John Elkington puts forward the argument that:
A. capitalism can become civilized.
B. capitalism is not, by its very nature, uncivilized and destructive of natural resources.
C. natural resources are a God-given gift for mankind to use.
D. developing nations will become more competitive with Western nations.
If two English multinational companies had a dispute arising in New York City, and
there were no choice-of-law or choice-of-forum clauses in their contract, it is likely
A. a New York court would hear their complaint.
B. they would bring their dispute to an English court.
C. the dispute would get heard not in court but, rather, in the boardrooms.
D. they would reach an agreement informally and develop an off-the-books settlement.
E. they would bring their dispute to the World Court for adjudication.
The cash flow management of a global firm, compared to that of a domestic firm, is:
A. exactly the same: moving money is moving money.
B. less complex, because the sums are larger and the process is centralized.
C. more complex, because currencies vary, as do national-level regulations.
D. more complex, because the number of subsidiaries or branches is larger.
All UN member-countries belong to the UN's:
A. Peace Jurga.
B. General Assembly.
C. Internal Court of Justice.
D. Committee on Intelligence.
EU rulings:
A. affect all businesses headquartered within the EU.
B. affect all businesses within the EU and those that trade within the EU.
C. limit businesses outside the EU but not in the United States.
D. are of no importance outside the EU.
The primary motivation of tariffs is to:
A. raise government revenue at the cost of importers.
B. raise the price of imports, to protect domestic goods.
C. punish countries over political issues.
D. encourage foreign consumption.
E. none of the above.
Climate influences:
A. intelligence and energy levels, per the North-South divide.
B. what people can do, physically and economically.
C. levels of emotional well-being.
D. adjustment and motivation.
Heavy oil is:
A. a group of unconventional oil sources such as oil sands, shale, coal, and natural gas,
all of which via processing can yield oil.
B. a rich oil found in deposits in Saudi Arabia and Kuwait whose molecular weight is
heavier than normal oil.
C. oil extracted from biomass that is reprocessed.
Heavy oil is oil that is obtained from unconventional sources and usually through
additional processing involving heating and pressure treatments. It does not flow easily
and cannot be obtained from wells, as can conventional oil.
The EMU (European Monetary Union or Economic and Monetary Union) has
established the euro, a currency that is used in:
A. all of the EU.
B. all of the EU and much of the rest of Europe.
C. 16 of the EU member-countries.
D. the Bank for International Settlements and the IMF.
Foreign reserves are used to:
A. help foreigners who need additional funds.
B. provide military support to foreign operations, for example, the French legion and
UN peacekeepers.
C. cover foreign debt, import purchases, and other demands for foreign currency that
banks might encounter.
D. support foreign operations that are branches but not subsidiaries.

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