Lack of knowledge is one of the biggest impediments to a company becoming a
successful exporter.
The most global markets currently are markets for consumer products.
The European Union is an example of a perfect economic union.
The gold standard called for fixed exchange rates against the U.S. dollar.
The Cold War was, in many respects, a war between collectivism and individualism.
The ending rate refers to the spot exchange rate forecast for the end of the budget
period in the Lessard-Lorange Model.
In countries where the value of group identification is considered to be primary,
managers and workers are discouraged from moving from company to company.
The bill of lading can function as collateral against which funds may be advanced to the
exporter by its local bank.
The relatively low correlation between the movements of stock markets in different
countries indicates that countries face different economic conditions.
Proactive firms do not consider exporting until their domestic market is saturated.
The governments of some countries require or prefer foreign multinationals to finance
projects in their country by local debt financing or local sales of equity.
A capital market brings together those who want to invest money and those who want to
borrow money.
In the case of an ethnocentric approach, it is possible that managers may make
decisions that are ethically suspect because they do not understand the culture in which
they are managing.
The connection between cash flows to the parent and the source of financing must be
recognized when performing capital budgeting for an international business.
A theocratic law system is one in which the law is based on religious teachings.
Protecting industries deemed important for national security, and retaliating against
unfair foreign competition are economic arguments for intervention.
Expatriate failure refers to a manager’s failure to understand host-country cultural
norms and values, leading to ineffective work.
The Uruguay Round, finalized in December 1993, reduced protection for patents,
trademarks, and copyrights.
Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than
involvement in this world.
The more fragmented the retail system, the more expensive it is for a firm to make
contact with each individual retailer.
The principles of multilateral netting and bilateral netting are different.
Auditing standards are rules that define the accounting principles and monetary policy
of a nation.
Most moral philosophers see value in utilitarian and Kantian approaches to business
ethics.
In general, FDI in the form of greenfield investments should increase competition.
The value an international business creates in a foreign market depends on the
suitability of its product offering to that market and the nature of indigenous
competition.
The Single European Act committed EU countries to adopting a common currency by
January 1, 1999.
Antidumping actions are concentrated in certain sectors of the economy such as basic
metal industries, chemicals, plastics, and machinery and electrical equipment.
When communism collapsed, many of the communist countries lacked the legal
structure required to protect property rights because all the property was earlier held by
the state.
Foreign bonds are sold within the borrower’s country and are denominated in the
currency of the country in which they are issued.
Beyond the initial functional division of the organization, further horizontal
differentiation may be required if the firm significantly diversifies its product offering,
which takes the firm into different business areas.
A caste system is a closed system of stratification in which social position is determined
by the family into which the person is born.
Once a firm has established a low-cost position, it can act as a barrier to new
competition.
Antidumping policies vary drastically from country to country.
Threats of protectionism, economic nationalism, and local content rules dictate that
international businesses manufacture locally.
One of the sources of economies of scale is the ability to spread fixed costs over a large
volume.
Ricardo’s theory makes fewer simplifying assumptions compared to Heckscher-Ohlin
theory.
The WTO supports the promotion of international trade in services.
The entry of large discount superstores such as Tesco and Carrefour has shortened
channel length in some countries.
The need for coordination between units is greatest in firms pursuing a localization
strategy.
The term _____ to refer to a group of people sharing a common set of values and
norms.
A. mores
B. society
C. culture
D. folkway
The term society to refer to a group of people sharing a common set of values and
norms. While a society may be equivalent to a country, some countries harbor several
societies or subcultures (i.e., they support multiple cultures), and some societies
embrace more than one country (e.g., the Scandinavian countries of Denmark, Norway,
and Sweden are often viewed as culturally being a part of one society in terms of the
business marketplace).
The theory of comparative advantage suggests that trade is a _____ game in which all
countries that participate realize economic gains.
A. net-sum
B. positive-sum
C. zero-sum
D. negative-sum
Practical training is:
A. provided to foster an appreciation for the host country’s culture.
B. aimed at helping expatriates improve their communication skills.
C. aimed at helping expatriate managers to build relationships in the host-country.
D. aimed at helping the expatriate manager and family ease themselves into day-to-day
life in the host country.
Location economies are the economies that arise from performing a _____ activity in
the optimal location for that activity.
A. universal need
B. core competence
C. value creation
D. localization strategy
Critics of globalization argue that if proponents of globalization were correct about the
supposed benefits associated with free trade and investment, then which of the
following would have happened?
A. The average GNI per person between the richest and poorest nations would have
shrunk
B. The debt burdens of the poorest nations would have increased
C. Tougher environmental and labor laws would have been implemented in
less-developed countries
D. Factories based in Mexico would not be cleaner
A tax haven is a country:
A. where companies benefit from establishing fully operating subsidiaries.
B. that does not charge local companies for importing products from other countries.
C. that does not charge taxes on the purchase or sale of any items.
D. with an exceptionally low, or even no, income tax.
An advantage of forming a strategic alliance is that it helps firms:
A. protect their procedures and technologies.
B. reduce the level of conflicts that occur within an organization.
C. share the risks of developing new products or processes.
D. increase the cultural similarities between employees.
Which of the following is true regarding approaches to labor relations?
A. International businesses use mostly similar approaches to international labor
relations.
B. The trend is toward greater decentralized control of international labor relations.
C. Historically, most international businesses have centralized the labor relations
function.
D. Many firms are now using the threat to move production to another country in their
negotiations with unions.
_____ is a French term that refers to honorable and benevolent behavior considered the
responsibility of people of high (noble) birth.
A. Bienveillante
B. Honourable
C. Aristocratic
D. Noblesse oblige
According to Lessard-Lorange model, _____ is the spot exchange rate forecast for the
end of the budget period.
A. projected
B. initial
C. ideal
D. ending
Why is the European Council said to be the ultimate controlling authority within the
EU?
A. It is responsible for implementing EU legislation and monitoring compliance with
EU laws by member states
B. Its role in setting competition policy is becoming increasingly important to business
C. It has the right to vote on the appointment of commissioners
D. Draft legislation from the commission can become EU law only if the council agrees
An expatriate’s base salary normally:
A. varies from the base salary for a similar position in the home country.
B. is paid half in the home-country currency and half in the local currency.
C. is in the same range as the base salary for a similar position in the home country.
D. is paid in Eurocurrency.
A society’s social structure refers to its:
A. system of values and norms.
B. basic social organization.
C. religious practices.
D. educational infrastructure.
An organization’s norms and value systems are known as its _____.
A. corporate culture
B. mission statement
C. human resources
D. organizational structure
The two largest emitters of carbon dioxide are:
A. China and the United States.
B. China and the United Kingdom.
C. Canada and the United States.
D. Mexico and the United States.
A firm’s _____ determines where in its hierarchy the decision-making power is
concentrated.
A. organizational architecture
B. vertical differentiation
C. organizational structure
D. horizontal differentiation
Which of the following is a disadvantage of the localization strategy?
A. Decrease in the value of the product in the local market
B. Duplication of functions
C. Inability to accommodate varying tastes and preferences in different markets
D. Reduced customization
A Japanese firm prefers expatriate Japanese managers to head its foreign operations
because these managers have been socialized into the firm while employed in Japan.
This indicates that the firm:
A. believes that such managers cannot progress beyond middle-manager positions in
their parent company.
B. follows an ethnocentric staffing policy to maintain a unified corporate culture.
C. is trying to create value by transferring core competencies to a foreign operation.
D. requires host-country nationals to be recruited to manage subsidiaries.
Which of the following is a factor that makes Eurobonds more attractive than most
major domestic bonds?
A. Presence of a regulatory interference
B. Strong disclosure requirements
C. Favorable tax status
D. Protection from exchange risks
The establishment of the euro required participating countries to:
A. first convert their currency to U.S. dollars, then to euros.
B. give up their monetary policy.
C. create national banks at which citizens can convert their existing currency.
D. maintain their own currency in parallel to the euro.
_____ refers to the fact that a firm’s pricing strategy in one market may have an impact
on its rivals’ pricing strategy in another market.
A. Multipoint pricing
B. Experience curve pricing
C. Predatory pricing
D. Competitive pricing
A _____ is issued to the exporter by the common carrier transporting the merchandise.
A. bill of lading
B. sight draft
C. time draft
D. letter of credit
The _____ has 15 members who are responsible for the formulation of new
international financial reporting standards.
A. U.S. Securities and Exchange Commission
B. International Accounting Standards Board
C. Office of Economic Analysis
D. Financial Accounting Standards Board
In early 2006, six CARICOM members and the United States established the _____,
which was modeled on the EU’s single market.
A. Central American Common Market
B. Central America Free Trade Agreement
C. Caribbean Single Market and Economy
D. North American Free Trade Area
An advantage of buying component parts, or even an entire product, from independent
suppliers is that:
A. it can make planning, coordination, and scheduling of adjacent processes easier for
the firm.
B. the firm can maintain its flexibility by switching orders according to circumstances.
C. the firm will be able to maintain strict control over its proprietary technology.
D. the firm will have access to superior quality raw materials and will deliver high
quality products.
Advantages that arise from using resource endowments or assets that are tied to a
particular place and that a firm finds valuable to combine with its own unique assets are
known as:
A. location-specific advantages.
B. capital-specific advantages.
C. absolute advantages.
D. production factor advantages. By location-specific advantages, John Dunning means
the advantages that arise from utilizing resource endowments or assets that are tied to a
particular foreign location and that a firm finds valuable to combine with its own
unique assets.
Which of the following statements about individualism is true?
A. Individualism promotes state ownership of the basic means of production,
distribution, and exchange.
B. Individualism promotes globalization.
C. Individualism creates an anti-business environment.
D. Individualism advocates for a democratic political system.
When the need for integration is very high, firms may:
A. use direct contact between subunit managers.
B. give a person in each subunit responsibility for coordinating with another subunit on
a regular basis.
C. institute a matrix structure, in which all roles are viewed as integrating roles.
D. use temporary or permanent teams composed of individuals from the subunits that
need to achieve coordination.
_____ is favored if differences between countries in factor costs have a substantial
impact on the costs of manufacturing in various countries.
A. Decentralized production
B. Just in time (JIT)
C. Concentration of production
D. Total quality management (TQM)
Tight cross-functional integration between R&D, production, and marketing can help a
company to ensure that which of the following take place?
A. Time to market is maximized.
B. Development costs are not a consideration in developing the best product.
C. New products are designed for ease of manufacture.
D. Product development projects are driven by internal needs.
A(n) _____ involves attempting to collect foreign currency receivables early when a
foreign currency is expected to depreciate and paying foreign currency payables before
they are due when a currency is expected to appreciate.
A. follower strategy
B. interim strategy
C. lead strategy
D. lag strategy
What prompted the formation of the European Union?
Discuss the sources of inertia in organizations.
Explain the difference between fundamental analysis and technical analysis.
Explain the notion of predatory behavior with regard to dumping.
Compare and contrast import quotas and voluntary export restraints.
Explain how the Koran views business.
Why are tariff rates on agricultural products generally higher than tariff rates on
manufactured products or services?
Describe three factors that complicate the process of an international business.
Because of its individualistic mindset, Japanese culture is more supportive of
entrepreneurial activities than American culture.
Discuss the two main forms of FDI.
Explain the notion of economic exposure.
What are the factors that determine the long-run monetary benefits of doing business in
a country?
What are foreign bonds?
What are the four attributes that are discussed in Porter’s diamond?
Discuss Mendenhall and Oddou’s assertion that an executive who performs well in a
domestic setting may not adapt to a different cultural setting.
