A manager receives a bonus because the national operating subsidiary, that she is in
charge of, exceeds its performance target. This is an example of an incentive.
A key benefit resulting from the adoption of the euro is the ability to compare prices
across member markets.
Rivers Inc., a U.S. based sports apparel manufacturer, sets up a production unit in China
to take advantage of the lower labor costs there. This is an example of foreign direct
investment.
The value systems and norms of a country are unrelated to the costs of doing business
in that country.
In mixed economies, in certain sectors the state sets prices, owns businesses, limits
private enterprise, restricts investment by foreigners, and restricts international trade.
“Creative destruction” makes it important for companies to stay on the leading edge of
technology.
Support activities are always less important than the primary activities in achieving a
competitive advantage.
In a worldwide area structure, each area tends to be a self-contained, largely
autonomous entity with its own set of value creation activities.
A good ally will expropriate the firm’s technological know-how while giving away little
in return.
U.S. organizations can get financing aid from the Export-Import Bank.
Brand names are generally well-protected by international laws pertaining to
trademarks.
When consumer tastes and preferences differ significantly between countries, there is
low pressure for local responsiveness.
Exporters often face voluminous paperwork and complex formalities.
A letter of credit states that an exporter has availed credit from the bank to manufacture
goods.
Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks
of foreign expansion.
The Sullivan principles mandated that GM could operate in South Africa as long as the
company complied with the apartheid laws.
International businesses cannot gain economic advantages by making payments to
corrupt government officials.
The most attractive staffing policy is the ethnocentric approach.
A major impediment to economic integration is the loss of sovereignty it entails.
The WTO has the ability to force any member nation to take an action to which it is
opposed.
World Bank gives an aid of 100 million dollars to Kenya for creating rural health care
facilities. This is an example of foreign direct investment.
Using floating exchange rates will help countries reduce the risk of investing in foreign
assets.
The foreign exchange market is a market for converting the currency of one country
into that of another country.
The structure of market segments may differ significantly from country to country.
Coordination and policy harmonization problems are largely a function of the number
of countries that seek agreement.
Countertrade denotes a whole range of agreements that involve financial exchanges.
Offshore production refers to FDI undertaken to serve the host market.
The amount of FDI undertaken over a given time period is known as the flow of FDI.
Norms are abstract ideas about what a group believes to be good, right, and desirable.
Union influence in the auto industry is increasing in part due to Japanese carmakers
building autos in the United States.
Firms based in less-developed nations tend to build a lot of extra performance attributes
into their products.
Franchising enables a firm to quickly build a global presence.
Managing an alliance successfully requires building interpersonal relationships between
the firms’ managers. This is sometimes referred to as ____.
A. relational capital
B. relational assets
C. operational assets
D. venture capital
Which of the following is an advantage of establishing a joint venture?
A. Joint ventures with local partners do not face any risk of being subject to
nationalization or other forms of adverse government interference.
B. Joint ventures give a firm a tight control over subsidiaries that it might need to
realize experience curve or location economies.
C. When the development costs and/or risks of opening a foreign market are high, a
firm might gain by sharing these costs and or risks with a local partner.
D. The firm is deprived of the knowledge of the host country’s competitive conditions,
culture, language, etc.
Containerization allows:
A. reduction of the time needed to get from one location to another.
B. simplification of transshipment from one mode of transport to another.
C. buyers and sellers to find each other easily in a global economy.
D. enterprises to coordinate and control a globally dispersed production system.
Which feature of a common market differentiates it from a customs union?
A. Harmonization of members’ tax rates
B. A common currency
C. A common external trade policy toward nonmembers
D. Ability of factors of production to move freely between members
Which of the following observations is consistent with Michael Porter’s theory of
national competitive advantage?
A. Factors such as domestic demand and domestic rivalry determine nations’ dominance
on production.
B. Countries should produce only those goods for which they have a comparative
advantage.
C. Interplay between the factors of production cause international marketing decisions.
D. International differences in labor productivity determine nations’ supremacy in
production.
Of the five combinations, Lessard and Lorange recommend that firms use the _____
spot exchange rate to translate both the budget and performance figures into the
corporate currency.
A. ending
B. initial
C. final
D. projected
Which of the following is a common criticism against the International Monetary Fund?
A. IMF lacks any real mechanism for accountability.
B. It is hesitant to help banks when they are in crisis.
C. IMF has not intervened to resolve the Asian crisis.
D. It did not try to resolve the Mexican currency crisis.
Which of the following is true regarding the WTO?
A. WTO stands for World Transition Organization.
B. The WTO was succeeded by GATT.
C. As of 2015, the WTO has 160 members.
D. The WTO is policed by the United Nations.
Which of the following is a statement that supports the theory of comparative
advantage?
A. International trade is a zero-sum gain where one nation’s gain is another’s loss.
B. Domestic industries are at risk when a country engages in free trade.
C. A country should maintain trade surplus to succeed in global trade.
D. Global production is greater with free trade than it is with restricted trade.
Which of the following statements about the Trade Related Aspects of Intellectual
Property Rights (or TRIPS) agreement is true?
A. It was designed to oversee the loosening of intellectual property regulations,
beginning in 1995.
B. It obliged WTO members to grant and enforce patents lasting at least 20 years and
copyrights lasting 50 years.
C. It directed rich countries to comply with its rules of intellectual property protection
within five years.
D. It provided the very poorest countries amnesty from complying with its rules of
intellectual property protection. Under the new agreement, known as the Trade Related
Aspects of Intellectual Property Rights (or TRIPS), as of 1995 a council of the World
Trade Organization is overseeing enforcement of much stricter intellectual property
regulations. These regulations oblige WTO members to grant and enforce patents
lasting at least 20 years and copyrights lasting 50 years. Rich countries had to comply
with the rules within a year. Poor countries, in which such protection generally was
much weaker, had five years of grace, and the very poorest have 10 years.
Which of the following is an exchange rate policy where the exchange rate is
determined completely by market forces?
A. Managed float
B. Fixed peg
C. Free float
D. Currency board
Which of the following factors has made the United States an attractive target for
foreign direct investment?
A. Its unstable economy
B. Its unfavorable political environment
C. Its wealthy domestic markets
D. Its closed society The United States has been an attractive target for FDI because of
its large and wealthy domestic markets, its dynamic and stable economy, its favorable
political environment, and the openness of the country to the concept of FDI.
For international businesses, the connection between culture and competitive advantage
is important because:
A. a weak connection is likely to encourage isolationism.
B. a weak connection is likely to encourage competition.
C. a strong connection is likely to produce the most viable competitors.
D. a strong connection is likely to hamper innovation.
A condition where people tend to perceive themselves in terms of their class
background and this shapes their relationships with members of other classes is known
as _____.
A. class stratification
B. social mobility
C. class mobility
D. class consciousness
Norms refer to:
A. the social rules and guidelines that prescribe appropriate behavior in particular
situations.
B. a system of values that are shared among a group of people.
C. the routine conventions of everyday life.
D. abstract ideas about what a group believes to be good, right, and desirable.
The set of choices the firm offers to its targeted market is known as the ____.
A. marketing mix
B. marketing concept
C. marketing strategy
D. market promotion
It is difficult if not impossible to get adequate insurance coverage for exchange rates
that:
A. will occur in the next few weeks.
B. might occur in the next few months.
C. might occur several years in the future.
D. are likely to occur in the coming days.
Which of the following is mainly concerned with the selection of employees for
particular jobs?
A. Retention policy
B. Staffing policy
C. Incentive policy
D. Appraisal policy
Facilitating payments are also known as _____.
A. grease monkeying
B. pocket lining
C. speed money
D. sliding
The largest source country for FDI has been _____.
A. China
B. Japan
C. the United States
D. the Netherlands Since World War II, the United States has been the largest source
country for FDI, a position it retained during the late 1990s and early 2000s. Other
important source countries include the United Kingdom, France, Germany, the
Netherlands, and Japan.
A wholly owned subsidiary is appropriate when the firm wants:
A. to share the cost and risk of developing a foreign market.
B. 100 percent of the profits generated in a foreign market.
C. a plant that is ready to operate.
D. to test a market.
As investors increase the number of stocks in their portfolio, the portfolio’s risk:
A. increases initially and declines later.
B. declines slowly and steadily.
C. increases exponentially.
D. declines rapidly in the beginning.
Porter contends that government:
A. can influence the domestic demand conditions and the domestic rivalry components
of the diamond, but not the other two components.
B. can influence each of the four components of the diamond either positively or
negatively.
C. can influence the factor endowments and the related and supporting industries
components of the diamond, but not the other two components.
D. has little or no effect on the four components that shape the environment in which
firms compete.
The two most common methods of restricting inward FDI are ownership restraints and
_____.
A. resource endowments
B. performance requirements
C. national sovereignty
D. incentives Host governments use a wide range of controls to restrict FDI in one way
or another. The two most common are ownership restraints and performance
requirements.
Which of the following is a concern of organized labor regarding multinational firms?
A. A company can counter a union’s bargaining power with the power to move
production to another country.
B. An international business will keep low-skilled tasks in its home country and farm
out only highly skilled tasks to foreign plants.
C. An international business can attempt to import employment practices and
contractual agreements from its host-country.
D. A multinational company is more likely to receive government support in the case of
hostile labor relations.
If market segments transcend national borders:
A. the company should develop unique products for each national market.
B. the company can view the global market as a single entity and pursue a global
strategy.
C. a localization strategy would be appropriate.
D. consumers will have differing purchasing behavior in different nations.
The problem of blocked earnings is not as serious now as it once was because:
A. fixed exchange rates have become more common now.
B. governmental intervention in earnings is more frequent now.
C. there is greater acceptance of free market economics now.
D. political risk within the economy is very low in modern times.
Facilitating payments are:
A. a direct violation of the Foreign Corrupt Practices Act.
B. permitted so long as they designed only to gain exclusive preferential treatment.
C. used to secure contracts that would otherwise not be secured.
D. permitted under the amended Foreign Corrupt Practices Act.
Three long-term EU members, Great Britain, _____, and Sweden, have not adopted the
euro.
A. France
B. Norway
C. Denmark
D. Greece
A(n) _____ is a loan between a parent and its subsidiary channeled through a financial
intermediary, usually a large international bank.
A. fronting loan
B. equity loan
C. direct loan
D. security loan
When a reciprocal tax treaty is not in force, the firm typically:
A. pays the difference the higher income tax rate makes on the expatriates take-home
pay into a 401K plan.
B. pays the expatriate’s income tax in the home country.
C. reduces the expatriates take-home pay to cover the difference in tax rates.
D. pays the expatriate’s income tax in the host country.
International businesses use foreign exchange markets for many reasons. Which of the
following is one of these reasons?
A. To receive payments from domestic investors that are in local currencies.
B. To pay a foreign company for its products or services in its native country’s currency.
C. To invest for short terms in money markets when they have spare cash.
D. To cover themselves from all risks involved in currency speculation.
What are the four main differences between distribution systems across countries?
Do you think a new trade theorist would stress the role of luck and entrepreneurship?
Explain.
Describe a fixed-rate bond.
What is logistics? Discuss the relationship between production and logistics.
What are the considerations when seeking external financing for international business?
Discuss the cultural relativism approach to business ethics.
What is a knowledge network? What is the advantage of such a system?
How can a firm increase the probability of selecting a good partner?
Explain 3M’s main export principles that have made the company’s exporting business
so successful.
Compare and contrast a pegged exchange system with a dirty-float system of exchange
rates.
Licensing is usually a good option for firms in high-tech industries where protecting
firm-specific expertise is of paramount importance.
In your opinion, are bribes ever acceptable? Why or why not?
An effective business strategy to reduce economic exposure is to contract out high
value-added manufacturing.
Discuss the three primary characteristics of a good ally.
Explain the term relational capital and the importance this concept plays in managing
an effective business alliance.
