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

ECON 27236

February 28, 2019
Strategic business units are an organizational form in which geographic divisions have
been defined as though they were distinct, independent businesses.
On an open account, the buyer assumes all of the payment risk.
Currency exchange rate movements are well understood by economists and can be
accurately forecast, which eliminates risk for the international seller operating with
exposure outside the home currency.
Egocentric ruthlessness is a leadership trait admired in some cultures, as suggested by
Project GLOBE.
One should not look at sociocultural forces as subjective.
Although some business areas are affected by culture, accounting and finance are
objective and thus universal.
The Internet may eventually allow any firm to have the opportunity to conduct surveys
anywhere in the world.
The stakeholder model for environmentally sustainable business has failed because we
don't have an accounting system to measure the present costs of environmental
The term international business is used to describe an organization with multicountry
affiliates, each of which formulates its own business strategy based on perceived market
Porter suggests that adverse conditions can motivate innovation, which may lead to the
development of a competitive advantage.
Bridging involves seeing the other person's point of view.
In cultures with hierarchical values, such as Japan and Brazil, a single leader with
decision-making power is often the case.
In collectivist cultures such as Thailand, accountability is assumed at the group level.
Countries in which strong competition already exists are eliminated from consideration
by most managers.
Brazil, India, and the United States are among the highest corporate tax locations.
If a firm decides to become involved in overseas manufacturing, it has two options: (1)
wholly owned subsidiary and (2) joint venture.
Management should take the attitude that the stability of government policy is more
important than is the particular form of government of a country.
Tariffs are not a financial force; they are a political force.
If freely floating currencies are allowed to fluctuate against one another, at times the
fluctuations might be quite large.
Women's leadership skills coincide with global leadership skills.
Trade restrictions violate the spirit of the WTO.
In a joint venture, a management contract is often used as a control mechanism by
firms, even if they hold only a minority position in the venture.
Social loafing is not an issue on virtual teams.
Market screening can assist firms that sell exclusively in the domestic market.
There are a number of advantages in focusing attention on a nation that is already a
sizable purchaser of goods coming from the would-be exporter's country.
Incoterms are 11 trade terms that describe the responsibilities of the buyer and seller in
international trade.
Bonuses are payments made to compensate expatriates for the extra costs they must
incur to live as well abroad as they did in the home country.
The controlling mechanism for a gold-based exchange system and a floating-rate
system are the same.
The UN Environment Programme laid the groundwork for the Climate Change
Convention, which led to the Kyoto Protocol.
Export pricing and sales agreements for foreign representatives are part of the
marketing mix.
Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries.
The international environment is composed of all the uncontrollable forces that
surround and influence the firm's life and development.
Allied and Axis governments met in Bretton Woods in the final days of World War II.
The United Nations uses the term transnational to describe an enterprise doing business
in more than one country.
Approximately 70 percent of the exports from developed countries go to developed
Lack of top management commitment to export is often a problem with new exporters.
Sales companies will import in their own name from the parent and will invoice in the
currency of the parent company.
Strategic alliances take many forms, including licensing, mergers, joint ventures, and
joint research and development partnerships.
As the 21st century evolves, it is expected that managers will make greater use of the
dynamic network structure to integrate smaller units into an operation better
coordinated by a large central headquarters organization.
The decision of whether to finance by debt or equity may be influenced by the practices
of the local environment, that is, culture.
An arrangement by which one firm provides management in all or specific areas to
another firm is:
A. a license.
B. a franchise.
C. a management contract.
D. all of the above.
Global leadership can be regarded as different in kind from domestic leadership
A. it requires much more knowledge of foreign languages and geography.
B. the differences between them are inconsequential.
C. their differences are of such great degrees with regard to their level of skills and
D. the domestic context does not require travel or knowledge of geography.
E. the domestic context is so limited.
Tactical plans:
A. are operational plans.
B. are broad, operational plans on which strategic plans are based.
C. are specific and short-term compared to strategic plans.
D. all of the above.
Leadership traits viewed universally as unacceptable, according to the Project GLOBE
study, are:
A. egocentric, loner, and dictatorial.
B. indecisive, unprincipled, and dishonest.
C. indirect, indecisive, and antisocial.
D. passive, indirect, and unprincipled.
E. indirect, intellectual, and passive.
The premiums charged by marine insurance companies on an international transaction
depend on:
A. the age of the ship.
B. whether the goods are stowed on deck or under deck.
C. the volume of business.
D. how the good are packed.
E. all of the above.
Topography, including mountains, deserts, plains, and bodies of water, greatly
A. political relationships.
B. the physical distribution of products and services.
C. the local approach to education and health services.
D. local attitudes toward industrially developed economies.
The disadvantages of indirect exporting include:
A. foreign business can be lost if the exporter changes supply sources.
B. no expertise or large cash outlays are required.
C. the firm gains little experience from transactions.
D. two of the above.
Patagonia recognizes that doing business following the traditional approach, focusing
on quarterly earnings, is not complete because this does not focus on:
A. the negative impact of the business.
B. the cost of environmental sustainability.
C. consumer needs for green merchandise.
D. triple-bottom-line (3BL) accounting.
Market screening eliminates:
A. undesirable products.
B. markets that are judged to be less attractive.
C. environmental forces.
D. competition.
E. two of the above.
Firms that have substantial operations in more than one country are called:
A. global companies.
B. multidomestic firms.
C. affiliated companies.
D. all of the above.
Qualifications for a good manager of an overseas operation should include:
A. all of B, C, and D.
B. being bicultural and bilingual.
C. knowing business practices in the home and host countries.
D. having more and different skills than domestic managers.
E. two of B, C, and D.
Cultural problems and technical difficulties cause problems:
A. when preparing for field trips.
B. in the collection of secondary data.
C. in the collection of primary data.
D. during the economic/financial screening.
E. none of the above.
Decision making in the international environment is __________ it is in a purely
domestic environment.
A. less complex than
B. less demanding than
C. more complex than
D. about the same as
E. two of the above
The Doha Development Agenda is:
A. a WTO plan to establish free trade among the emirates in the Persian Gulf.
B. the government seat of Qatar and source of significant WTO funding through Sheik
Kalifa al-Thani.
C. a UN plan to develop the Arab Emirates to ensure their independence.
D. an extended conference of the WTO initially convened in Doha.
The geographical area that receives the most International Development Association
(IDA) credits and grants is:
A. East Asia.
B. Latin America and the Caribbean.
C. Africa.
D. Middle East.
Proximity is a factor in explaining:
A. a nation's political system.
B. the number of a nation's political and trade relationships.
C. language patterns.
D. demand conditions.
A. all of B, C, and D.
B. have an objective of envisioning possible futures that might lie outside their
traditional frame of reference.
C. are based on stories about possible futures that are presented to line managers by the
strategic planners.
D. extrapolate from past data to make predictions.
E. two of B, C, and D.
Most developed nations have:
A. small power distance.
B. high individualism.
C. strong uncertainty avoidance.
D. all of the above.
According to a survey by Bain & Company, the management tool with the highest level
of satisfaction among global executives is:
A. value chain analysis.
B. industry and competitor analysis.
C. strategic planning.
D. environmental analysis.
E. none of the above.
In 2008, foreign firms investing in the United States spent about ____________ on
establishing new firms as they did on acquiring going firms.
A. twice as much
B. 25 percent as much
C. nine times as much
D. one-thirteenth as much
E. the same amount
According to the text, __________ are the most insensitive to the foreign environment.
A. high-style products
B. faddish and consumer products
C. industrial products
D. basic consumer staples
E. none of the above
A multidomestic company is:
A. none of B, C, D, or E.
B. a business whose activities involve crossing national borders.
C. the domestic operations within a foreign country.
D. an organization with multicountry affiliates.
E. an organization that attempts to standardize operations worldwide.
Because of the context in which the global team leader is acting, he or she:
A. confronts the added complexities created by globalization.
B. needs to speak foreign languages and understand foreign cultures.
C. needs to be able to cope with jet lag and cultural adjustment.
D. is sheltered from most domestic political activity.
E. needs to be aware of the possibility of terrorism, including electronic hacking.
According to the Exporter Data Base, small and medium-sized enterprises accounted
for ___________ of all U.S. exporters.
A. under 10 percent
B. 25 percent
C. nearly half
D. 86 percent
E. nearly 98 percent
With patents:
A. there is standardization, to some degree, through the Paris Union.
B. there is no standardization, so often companies such as Nestl file many patent
applications in different countries.
C. total harmonization has been reached through UN accords and the EPO.
D. an inventor is automatically granted rights to her invention as long as she completes
a patent filing.
E. the first person to file is the one who receives patent protection.
Hofstede's long-term orientation tends to be found in:
A. Asian cultures.
B. Canada.
C. Brazil.
D. A and C.
The monopolistic advantage theory states that:
A. a firm that has a monopoly has a major advantage in overseas investment.
B. FDI is made by firms in oligopolistic industries possessing technical advantages over
local companies.
C. a firm that has a monopoly domestically will have no competition making overseas
D. the firm making the overseas investment first has a monopolistic advantage.
Backward vertical integration refers to:
A. the purchase of competitive firms.
B. the installation of production facilities to produce inputs for the production of final
C. the placing of minorities in charge of production processes.
D. the installation of production facilities to consume the outputs of the production
Offshoring is an application of:
A. comparative advantage.
B. differences in taste.
C. money market rates.
D. exchange rate theory.
E. none of the above.
Nonfuel minerals:
A. include chrome, manganese, platinum, and arsenic, all necessary for modern living.
B. are mostly sourced through imports in the United States.
C. frequently originate in China.
D. all of the above.