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

ECO 76062

February 28, 2019
ASEAN, whose initial goal was political, to foster peaceful relations among members,
includes China as its core member.
Globally, the overall level and rate of growth of merchandise exports exceed those of
commercial services.
Permanent members of the UN Security Council vote on Security Council measures,
and only the secretary-general of the UN, Ban Ki-Moon, has veto power.
The UN Convention on the International Sale of Goods (CISG) has established legal
rules and outlined the rights and obligations of the buyer and seller.
Consolidation is the process in which a company's various results are aggregated into
one report.
Change is understood differently in different cultures, which suggests that leading
global change is a challenging process.
Due to developments such as a rapid rise in the level of uncertainty in many areas of
international business, many firms have moved toward more structured strategic
planning formats and longer planning documents.
Compassion has nothing to do with sustainable business. Business is business.
Companies with a primarily international strategic orientation may adopt an
ethnocentric staffing policy.
When production equipment is similar, home office control of quality in foreign
affiliates is more difficult because management must ensure that all plants adhere to the
same standard.
The WTO supports trade with discrimination as a basic right of trading nations.
Foreign environmental forces act as deterrents to the international standardization of
advertising, and among the most influential of these forces are the sociocultural forces.
Global managers who want to drive change need to be able to communicate across
cultural boundaries and build trust.
Exporters should consider both private and public export financing.
U.S. ocean shipping companies are benefiting from U.S. government subsidies.
Anthropologist E. T. Hall suggests that to learn another culture, you need to spend two
weeks in it with a training program.
Opponents of globalization argue that globalization has contributed to an improvement
in environmental and health conditions.
Leadership traits may vary some by culture, but underneath they build on the idea that
all people want to be led and directed.
China and India combined are using more marketed energy than is the United States,
and this trend is projected to increase.
Some of the culture dimensions that are involved in change are tolerance of ambiguity
and power distance.
There are three points at which operating in a foreign currency raises accounting issues:
when transactions are made in foreign currencies, when foreign subsidiaries consolidate
their results to the parent company, and when debt is acquired in foreign currencies.
Wholesale importers are independent merchants that buy for their own account.
A study of the liberal arts disciplines of history, political science, foreign languages, and
geography would be a helpful background for an aspiring global leader.
Importing refers to the transportation of any good or service to a destination into a
country or region, from a foreign origination point.
The only export support available in the United States at the federal level is through
trade. gov.
Being from another country qualifies expatriates for international status.
According to the theory of comparative advantage, a nation can gain from trade if it is
not equally less efficient in producing two goods.
In general, when the basic need for a product is absent, no reasonable expenditure of
effort is likely to enable a firm to market its goods or services.
Scenarios are a particularly useful approach for international companies that face high
levels of change and uncertainty, because they allow management to anticipate and
prepare for opportunities and threats by predicting and controlling for these
There is a growing tendency for firms to use strategic planners to devise the corporate
plan, which is then handed to operations people for execution.
International strategy helps firms to make choices about how to deploy scarce resources
in order to achieve their international objectives.
When a business pays in dollars for an import from Turkey, the dollars that leave the
United States will eventually show up as a credit on the U.S. capital account.
Product liability is an area of torts in which the U.S. courts can make large awards,
unlike in other countries.
A structure organized by more than one dimension at the top level is known as a:
A. hybrid organization.
B. matrix organization.
C. matrix overlay.
D. network corporation.
E. virtual corporation.
One of the major differences between GAAP and the IFRS is that:
A. IFRS relies more on norms than does GAAP, which relies on expedience for
B. IFRS is more lax than is GAAP.
C. IFRS relies on principles, whereas GAAP is rules-based.
D. A and C.
Buyers of __________ usually act on the same motives worldwide.
A. impulse goods
B. mass-consumption products
C. industrial products
D. low-priced products
E. none of the above.
Efforts to improve the efficiency and effectiveness of a firm's international operations
are often referred to as:
A. offshoring.
B. outsourcing.
C. supply chain management.
D. subcontracting.
E. all of the above.
The U.S. government's attitude toward transfer pricing on subsidiary transactions in
foreign locations is:
A. uninterested, because these transactions are outside the United States and, thus,
beyond U.S. jurisdiction.
B. interested, because transfer pricing has tax implications for the host governments—
hence the IRS guidelines.
C. neither interested nor uninterested, because, although there are tax implications for
the host country, the U.S. tax authorities feel comfortable exercising their authority
D. uninterested, because foreign taxes are of no interest to them.
The successful domestic leader:
A. can easily adapt to the global arena because the leadership challenges there are the
same as those in the domestic arena.
B. faces daunting new skills in transferring to the global leadership arena, skills having
to do with understanding a fast-moving environment and cultural differences.
C. can be retrained to lead globally through an international global leadership program.
D. will need to learn foreign languages and nonverbal communication patterns to be a
global leader.
E. C and D.
The regionalized organization seems to be popular with companies that:
A. operate in many diverse foreign regions.
B. favor licensing as a form of market entry.
C. manufacture products with a low technological content requiring strong marketing
D. manufacture products incorporating high technology in industrialized regions.
E. two of the above.
In a free trade area, members drop internal tariffs. External tariffs:
A. are dropped also.
B. are coordinated so that there is one agreed-upon set of external tariffs.
C. are maintained independently by each member.
D. do not apply to an FTA.
According to trade theory:
A. traders need to know the exchange rate between their own currency and that of the
nation they are considering trading with before they can decide whether it is
advantageous to import, export, or buy locally.
B. if a currency's exchange rate strengthens, then its exporters will no longer be able to
profitably export their products.
C. devaluation of a currency will automatically cause a nation's products to be
price-competitive in international markets.
D. all of the above.
Problems with the matrix structure include that:
A. two or more managers must agree on decisions, which can lead to slow decision
B. special divisions often must be established to serve heterogeneous customer
C. global branding and production coordination are hindered.
D. all of the above.
The horizontal corporation:
A. often draws teams from different departments to solve a problem or deliver a
B. has been characterized as "antiorganization."
C. puts greater decision-making responsibility in the hands of middle managers.
D. all 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. Process
C. Customer class
D. Nature of competition
E. All of B, C, and D
A. all of B, C, and D.
B. prescribe how certain activities will be carried out.
C. are broad guidelines used to assist lower-level managers to handle recurring
D. ensure that all budgets will be prepared using the same format.
E. two of B, C, and D.
That the common interest of all nations in a workable international exchange rate
system transcends their conflicting international interests is the premise of:
A. the International Monetary Fund (IMF).
B. the Bank for International Settlements.
C. the World Central Bank.
D. the World Bank for Reconstruction and Development.
Entry barriers, profit remittance barriers, and policy stability are all part of the:
A. first screening.
B. second screening.
C. third screening.
D. fourth screening.
E. fifth screening.
Financial dumping is:
A. sending excess financial resources to other nations.
B. a government's decision to subsidize low interest rates for purchases of its exports.
C. allowing a bank to have a low level of capital to total assets.
D. all of the above.
Training and development of potential candidates for expatriate assignments:
A. are unnecessary with host-country nationals.
B. are unnecessary with home-country nationals.
C. depend on whether the candidate is a home-, host-, or third-country national.
D. wastes company resources because management is an art form, not a skill.
E. none of the above.
A survey of CEOs of the 162 largest firms on Fortune's list of the 500 largest American
corporations found that the internationally oriented courses that were viewed as being
the most important for early career positions included topics related to:
A. an introduction to international business.
B. international strategy and competitiveness.
C. international legal and political issues.
D. all of the above.
Environment as used in the textbook is the forces surrounding and influencing the life
and development of the firm and is classified as:
A. controllable or uncontrollable.
B. domestic or foreign.
C. internal or external.
D. all of the above.
A culture's sense of beauty and taste is:
A. universal, as described in Homer's The Odyssey.
B. an aesthetic concern of no interest to the international manager.
C. an aesthetic concern that may interest the trailing spouse and is good to know a little
D. expressed in the culture's art and music and important for international managers to
know about.
Acceptable leadership traits across cultures, according to Project GLOBE, include:
A. directive, not afraid of criticizing others, and direct.
B. planning, able to stick to schedule, and able to stay within budget.
C. effective bargainer, dependable, win-win problem solver, and plans ahead.
D. high context, high power distance, and high tolerance for ambiguity.
E. low power distance, female, and low tolerance for ambiguity.
Musical tastes vary across cultures:
A. and are built on the solid foundation of the octave.
B. which is why they need to be understood by marketers who use music in
C. and come together in the Silk Road.
D. A and D.
Culture plays a role in global team member expectations. For example:
A. Americans are likely to want strong group identity.
B. Japanese are likely to want hierarchical leadership.
C. Germans are likely to want high levels of task ambiguity.
D. Thais are likely to want group accountability.
E. B and D.
_______ refers to the transportation of any domestic good or service to a destination
outside a country or region.
A. Importing
B. Foreign direct investment
C. Exporting
D. International business
E. None of the above
Supporters of mercantilism:
A. viewed accumulation of precious metals as an activity essential to a nation's welfare.
B. viewed industrial development as the primary source of a nation's wealth.
C. promoted trade policies that generally benefited consumers and emerging
D. all of the above.
The IBRD is a major institution of the World Bank whose function is to loan to:
A. countries whose income levels make them not creditworthy.
B. private-sector development-focused firms.
C. private individuals in developing nations whose entrepreneurial efforts support
D. middle-income and creditworthy poor nations.
A vehicle currency is a currency:
A. used to trade in the transportation sector and is usually the dollar, euro, or yen.
B. whose value lies in its function in transfer pricing.
C. specifically used in arbitrage deals as a trading medium only.
D. used for international trade or investment.
ASEAN began as a:
A. free trade pact.
B. cooperative marketing alliance among Southeast Asian nations.
C. security and military alliance among Southeast Asian nations.
D. response to the EU.
The lowest corporate tax rates are found in:
A. the United States, Brazil, India, and France.
B. Brazil, China, Australia, and Japan.
C. Peru, Australia, Italy, and Luxembourg.
D. Switzerland, Ireland, Singapore, and Russia.
Which of the following is false regarding sociocultural screening?
A. Sociocultural factors are fairly subjective.
B. Data are difficult to assemble, particularly from a distance.
C. Unless an analyst is a specialist in the country, he or she must rely on the opinions of
D. The use of checklists of sociocultural components can be useful.
E. Immigrants from the country are valuable as being representative data sources.
Environmental scanning is mostly used:
A. during the planning process.
B. to gather information on market weaknesses.
C. to obtain information on opportunities and threats.
D. all of the above.
The owners of private companies sometimes complain that government-owned
companies have unfair advantages.
Explain the principles on which The Economist's Big Mac index is built, and comment
on its use to international managers.
Discuss how culture might impact accounting.
What is dumping, and why is it found to be problematic?
Discuss the advantages in focusing attention on a nation that is already a sizable
purchaser of goods coming from the exporter's home country.
Describe the impact of the EU on a non-EU firm.
Although air freight rates are usually higher than ocean freight rates, air freight may be
less costly for a firm.
How might U.S. law affect international managers?
Explain the purpose of a mission statement, a vision statement, values statements, and
Discuss the theory of absolute advantage and how it explains the basis for trade
between nations.
Identify the appealing factors of online advertising in the international sphere, as
discussed in the text.
Discuss the risks associated with transaction exposure and how to hedge them.
What two aspects of the culture frameworks would you share with a colleague leaving
on her first foreign assignment, and why?
Identify and discuss the five major kinds of drivers that are leading international firms
to the globalization of their operations.
The five principles of the WTO (trade without discrimination, freer trade, predictability,
fair competition, and encouraging development and economic reform), if followed,
would provide developing nations a boost in their development.