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

ECON 56079

February 28, 2019
Formal institutions operate through laws and regulations. They require members to
make a written commitment.
Companies with a transnational strategic orientation follow a global staffing policy,
selecting the best person for each job without considering national origin and generally
having a consistent HRM strategy across all subsidiaries.
Supply chains are an integral part of global quality and cost management initiatives,
since a typical company's supply chain costs can represent over 80 percent of assets.
Most of the foreign direct investment in the United States has been spent establishing
new companies.
The planning process that begins at the highest level in the organization and continues
downward is top-down planning.
Competencies are skills or abilities required in order to adequately complete a task.
International markets served often differ widely because of great variations in the
uncontrollable environmental forces.
Material culture describes how people make things, who makes what, and why.
Imports to a country can be a good indicator of the potential demand for a new product.
One exchange arrangement is to have no separate legal tender.
Both developed nations and developing nations tend to trade more with developed
Inflated currencies tend to weaken.
Offshore financial centers operate in low-tax and low-regulation markets such as New
York City and Milan.
Record levels of American outward foreign direct investment from 2000 to 2009,
totaling more than $2 trillion, caused U.S. exports to decline during this time period.
Mapping is figuring out a geographical outline for all team members.
Marketing managers of global firms who may want to use a single worldwide strategy
realize that doing so is often impossible.
To hedge the terrorism risk, there are insurance, antiterrorist schools, and even
companies to handle negotiations.
Outsourcing decisions, except for the decision to use global sources of supply, are
extensions of the make-or-buy decisions of earlier eras.
Repetition of the bottom-up or top-down planning process until all differences are
reconciled is sequential planning.
Objectives must be quantified in order to be useful.
Where litigation should occur has to do with the location of the problem and is usually
clear to both the defendant and the plaintiff.
One of the reasons that Internet advertising is not appealing in an international setting is
that most Internet users are poor and difficult to reach.
Evidence suggests that the Internet is not an effective tool in personal selling, especially
when used to build trust.
Emerging industry-based B2B exchanges can help optimize the supply chain across an
entire network of organizations, not merely within a single company.
Hybrid organizations are often the result of a regionally organized company having
introduced a new and different product from what the regionally organized form is
accustomed to handling.
The temporal method of translation translates fixed assets at the rates in effect the day
the assets were acquired.
The United States in recent years has had a significant deficit in its current account.
This means that U.S. citizens are exporting more than they are importing.
A confirmed letter of credit guarantees payment to the seller.
Chief financial officers avoid tapping into international markets because they bring too
many unpredictable variables.
Informal cognitive institutions are not important to international managers because such
managers localize their hiring, and so they can draw on local talent.
Paying ransom makes sense because a life is saved and the payments can be traced.
The Fisher effect describes interest rate parity; it's the law of one price applied to
interest rates. Interest rates vary to take into account anticipated differences in inflation
Part of the problems with international accounting convergence efforts has to do with:
A. cultural differences in value systems between the EU and the United States.
B. stubbornness on the part of U.S. negotiators.
C. accounting's objectivity.
D. difficulties related to quantification.
_____ are paid by firms in recognition of the fact that expatriates and their families
undergo some hardships and inconveniences and make sacrifices while living abroad.
A. Bonuses
B. Allowances
C. Perks
D. Tax exemptions
E. Two of the above
Porter's diamond is a model that offers an explanation of:
A. differing levels of success among the national players in world markets.
B. endowment factor differentials.
C. the impact of climate on development.
D. macro-level FDI.
A standardized global leadership development approach:
A. is under development by leading scholars.
B. has been available to firms for many years.
C. has reduced the complexity of global leadership development.
D. is unlikely, given the complexity of the process.
E. B and C.
(p. 111)-Unlike quotas, voluntary export restraints (VERs) are imposed by the:
A. importing country's government.
B. exporting country's government.
C. either the importing or exporting country's government; what matters is that they are
D. the importing company.
E. none of the above.
One measure of the magnitude of international trade and how it has grown is that
_____________ of everything grown or made in the world is now exported.
A. 10 percent
B. 25 percent
C. 32 percent
D. 45 percent
E. over two-thirds
Contract termination payments are:
A. made to induce the employee to quit.
B. made to induce the employee to work out the contract term.
C. frequently made for work in hardship areas.
D. two of the above.
Where are decisions made?
A. IC headquarters
B. Subsidiary headquarters
C. Cooperatively by IC and subsidiary
D. All of the above
E. Two of A, B, and C
The U.S. body that establishes accounting standards, the FASB, is:
A. a branch of the U.S. government.
B. elected by seat holders on the NYSE.
C. appointed by the chair of the U.S. House of Representatives Banking Committee.
D. a private organization.
Parent-company nationals might be concerned with:
A. the rate at which industrial skills are learned by host-country nationals.
B. how quickly they can learn the local language in their host country.
C. the exchange rate movement of their host country's currency.
D. all of the above.
The OECD is called the "rich man's club" because its members:
A. are rich and male.
B. are 34 of the world's wealthiest nations.
C. are concerned with increasing their own wealth rather than promoting development.
D. promote wealth at the cost of health and safety.
More than one-half of the exports from developing countries go to __________
countries, and this proportion has been _____________ over the past 35 years.
A. developed; increasing
B. developing; increasing
C. developed; decreasing
D. developing; decreasing
E. none of the above
Taxation is a financial force in that:
A. if the firm can achieve a lower tax burden than its competitors, it can generate higher
revenues and then lower its prices or pay higher wages and dividends.
B. governments, which enact taxes, are formal institutions that enforce tax law via
C. businesses are compelled by foreign governments to pay taxes.
D. it is not controlled by the firm.
When a government requires a permit to purchase foreign currency, the exchange rates:
A. are market-driven.
B. can be negotiated by the firm.
C. are unpredictable.
D. are set by the government, often above the free market rate.
Every continent has inland waterways that provide inexpensive access to interior
markets except:
A. Russia.
B. North Africa.
C. Australia.
D. North America.
A reason that outsourcing has become an increasingly common option for companies is:
A. it helps companies to focus scarce resources on their core competencies.
B. it avoids problems of different languages or cultures.
C. it enhances flexibility.
D. two of the above.
An achievement culture is one in which members are:
A. rewarded with social status for who they are in a spiritual sense.
B. rewarded for what they do, what they have accomplished, and so what they are.
C. not rewarded at all because achievement is a doing mentality.
D. rewarded for their lineage.
According to the text, the strategic planning process provides a formal structure in
which managers will:
A. two of B, C, and D.
B. set corporate objectives.
C. implement strategies.
D. manage relationships with government and society.
E. all of B, C, and D.
The value-added tax is levied on:
A. luxury items and paid by the consumer.
B. export items only and thus a direct tax.
C. nonessential goods and paid by the consumer.
D. all goods and is indirect, collected from the value adder.
What is an export license?
A. Permission from the U.S. government to export
B. An international quality performance rating
C. A shipping qualification
D. Permission from the top management team to export
E. Permission to transfer domestic currency abroad
Which country controls the export market of rare earths?
A. Brazil
B. Russia
C. the United States
D. China
Bills of lading are of two types:
A. invalidated and validated
B. endorsed and unendorsed
C. to order and straight
D. confirmed and unconfirmed
E. documented and undocumented
The theory of overlapping demand:
A. explains how international trade in manufactured goods will be linked to gross
national income.
B. states that a nation will trade goods that can be produced with the production factor
that is most abundant.
C. explains why companies will add excess capacity to their production systems.
D. two of the above.
Rare earths are a group of elements used in:
A. jewelry.
B. technology applications.
C. farming.
D. solar applications.
According to the text, manufacturers of ____________ rely more on personal selling
than on advertising to communicate with their overseas markets.
A. industrial products
B. consumer products, especially in developed countries
C. consumer products, especially in developing countries
D. all of the above.
Marketers everywhere must:
A. know the market.
B. satisfy customers' needs.
C. inform potential customers.
D. two of the above.
The Department of Commerce organizes events called "Show and Sells" that are helpful
in both locating foreign representatives and making sales. Which of the following is not
an event offered by the Department of Commerce?
A. U.S. pavilions
B. Reverse trade missions
C. Product literature center
D. Education seminars
E. None of the above
A broad statement that defines the organization's purpose and scope is known as a:
A. strategic plan.
B. mission statement.
C. vision statement.
D. values statement.
E. none of the above.
The international product life cycle:
A. explains how international trade in manufactured goods will be linked to gross
national income.
B. states that a nation will trade goods that can be produced with the production factor
that is most abundant.
C. is concerned with the role of innovation in trade patterns.
D. two of the above.
Opportunities for corporations to tap into varying international markets exist because:
A. markets, although interconnected, are not fully integrated.
B. some regional markets favor certain business sectors (Mexico, cement; U.S., fast
food; EU, cheese).
C. national markets favor domestic companies.
D. B and C.
The EU's impact on international business is:
A. negligible, since the EU members tend to trade with each other.
B. not significant, since the EU members need to trade with other developed
C. substantial, since EU standards, especially in the areas of ecology and sustainability,
impact any firm that wants to do business in the EU.
D. substantial, since the EU is a major exporter into developing nations.
Densely populated areas coincide with:
A. rivers, lakes, and seacoasts.
B. inland waterways.
C. rich mineral reserves and rare earth deposits.
D. low levels of environmental awareness.
The functional currency of a foreign operation is:
A. the currency of the parent company.
B. the currency of the host country.
C. whichever currency the company chooses to declare as the functional currency.
D. the currency in which cash flows, pricing, expenses, and financing are denominated.
The major globalization drivers include all of the following except:
A. competitive.
B. cultural.
C. cost.
D. market.
E. none of the above. All of the above are major kinds of globalization drivers identified
in the text.
According to the text, among the appealing factors of online advertising in the
international sphere is the following:
A. the Internet provides access to a broad, low-income market.
B. Internet communications are unregulated.
C. for some groups, the Internet may be among the best media choices.
D. all of A, B, and C.
E. two of A, B, and C.

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