A currency swap deal enables companies to insure themselves against foreign exchange
risk.
The international monetary system refers to the institutional arrangements that govern
exchange rates.
A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this
loan will be less if U.S. dollar appreciates against the Chinese currency.
A manager might be sent on several foreign postings over a number of years to build
his/her cross-cultural sensitivity and experience as part of a management development
program.
Like Christianity and Judaism, Islam is a polytheistic religion.
The Free Trade Area of the Americas that was established in 2005 has thus far proven to
be a success.
Evaluation of a subsidiary should not be separate from the evaluation of its manager.
Buying a product from external vendors is highly appropriate when a firm intends to
protect proprietary technology.
An individual with a strong sense of personal ethics is less likely to behave in an
unethical manner in a business setting.
The total size of a firm’s cash pool increases when it pools cash reserves of subsidiaries.
Outsourcing is a process that is limited to manufacturing enterprises.
Poor product quality and low productivity are hidden costs associated with basing
production in a foreign location.
Norms are abstract ideas about what a group believes to be good, right, and desirable.
Concentrated retail systems tend to promote the growth of wholesalers to serve
retailers, which lengthens channels.
The Friedman doctrine is the belief that ethics are nothing more than a reflection of
culture and therefore, a firm should adopt the ethics of the culture in which it is
operating.
A country’s economic system and property rights regime are reasonably good predictors
of economic prospects.
Accounting is shaped by the environment in which it operates.
HRM professionals have a critically important strategic role.
Hofstede’s study found that in masculine cultures, sex roles were less sharply
distinguished, and little differentiation was made between men and women in the same
job.
The bill of lading does not serve as a document of title as such.
Most subsidiaries of an international business operate in uniform environments.
It is difficult to ascertain accountability in the global matrix structure.
In a business setting, noblesse oblige is taken to mean benevolent behavior that is the
responsibility of successful enterprises.
Resources always move easily from one economic activity to another.
Building an organization culture that places a high value on ethical behavior requires
incentive and reward systems.
The TRIPS regulations oblige WTO members to grant and enforce patents lasting at
least 20 years and copyrights lasting 50 years.
The International Monetary Fund’s original function was to provide a pool of money
from which members could borrow in the short term.
A sight draft allows for a delay in payment.
According to Rawls, inequalities are unjust even if the system that produces inequalities
is to the advantage of everyone.
Government limitations are more severe for securities denominated in foreign
currencies than for domestic securities.
Countries adopting a pragmatic stance pursue policies designed to maximize the
national benefits and minimize the national costs.
Companies that trade small volumes of product can benefit from economies of scale.
The term social strata refers to the extent to which individuals can move out of the
strata into which they were born.
Eurobonds are usually offered to residents of the country in whose currency they are
denominated.
For a firm, all positions on the efficiency frontier are viable.
The agreement reached at Bretton Woods established the International Monetary Fund
(IMF) and the World Bank.
A firm using a polycentric staffing policy:
A. is less likely to suffer from cultural myopia.
B. seeks the best people for key jobs throughout the organization, regardless of
nationality.
C. will most likely follow an ethnocentric strategy.
D. is likely to have improved communication between host-country managers and
parent-country managers.
Global learning based on the multidirectional transfer of skills between subsidiaries and
the corporate center is a central feature of a firm pursuing a(n) _____ strategy.
A. localization
B. global standardization
C. transnational
D. international
Which of the following is a way that improved quality control reduces costs?
A. Increasing unit costs
B. Increasing rework and scrap costs
C. Increasing the warranty costs
D. Increasing productivity because time is not wasted producing poor-quality products
that cannot be sold
The G20 was originally established to:
A. preserve peace through international cooperation and collective security.
B. maintain order in the international monetary system.
C. formulate a coordinated policy response to financial crises in developing nations.
D. manage, regulate, and police the global marketplace.
Local content regulations:
A. protect domestic producers by limiting foreign competition.
B. lower the prices of imported components.
C. tend to benefit consumers and not producers.
D. encourage outsourcing of production units.
Which of the following statements about the use of spoken language is true?
A. The nature of a language has no effect on the way we perceive the world.
B. The language of a society does not direct the attention of its members to certain
features of the world rather than others.
C. Countries with more than one language often only have one culture.
D. Most people prefer to converse in their own language rather than English.
How can FDI undertaken to serve the home market stimulate economic growth in the
home country?
A. By freeing home-country resources to concentrate on activities where the home
country has a comparative advantage
B. By importing more goods and services than it is exporting
C. By circumventing trade barriers that may have prevented direct exports in the past
D. By reducing demand for home-country exports of capital equipment, intermediate
goods, and complementary products Far from reducing home-country employment,
such FDI may actually stimulate economic growth (and hence employment) in the
home country by freeing home-country resources to concentrate on activities where the
home country has a comparative advantage.
Which of the following is true of the international strategy?
A. Product development tends to be highly decentralized.
B. Manufacturing and marketing are typically located in the headquarters location.
C. Extensive production customization is common.
D. The strategy is not viable in the long-run.
Country A exports electronic goods from Country B although there are no underlying
differences in factor endowments between the two countries. Which of the following
theories explains this anomaly?
A. Comparative advantage theory
B. New trade theory
C. Ricardo’s theory
D. Smith’s theory
Which of the following is true about the International Monetary Fund?
A. It is primarily responsible for policing the world trading system.
B. It is seen as the lender of last resort to nation-states whose economies are in turmoil.
C. It is responsible for establishing multinational treaties to govern the global business
system.
D. It was established to formulate a coordinated policy response to financial crises in
developing nations.
Which of the following statements pertaining to innovation and entrepreneurship is
true?
A. They are the engines of growth.
B. They require strong legal systems.
C. They require state ownership of means of production.
D. They require a mixed economy.
Which of the following is a factor that initiated the collapse of the fixed exchange rate
system?
A. Worsening of Great Britain’s balance of trade
B. Recession in third world countries
C. Price inflation in Europe
D. Worsening of U.S. foreign trade position
_____ arise(s) from using 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.
A. Multipoint competition
B. The eclectic paradigm
C. Location-specific advantages
D. Outflow of FDI Location-specific advantages are advantages that arise from using
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. Natural resources such as oil
and minerals, for example, are specific to certain locations. Firms must undertake FDI
to exploit such foreign resources.
Which of the following statements is true of Eurocurrency?
A. Eurocurrency market is a relatively high-cost source of funds.
B. It is produced and banked within European countries.
C. Eurocurrency can be created anywhere in the world.
D. It is used only for internal transactions within European Union.
Which of the following statements is true of the capital budgeting used in international
businesses?
A. Capital budgeting does not provide connection between cash flows to the parent and
subsidiaries.
B. Its basic framework is vastly different from the framework of domestic capital
budgeting.
C. Capital budgeting does not consider the cash flows between subsidiaries of a firm.
D. It enables top managers to compare different investment alternatives in an objective
fashion.
An act, as simple as shaking hands when meeting new people is an example of _____.
A. values
B. symbolic behavior
C. mores
D. social stratification
Child labor is permitted and widely employed in Country X. A multinational company
entering Country X decides to employ minors in its subsidiary, even though it is against
the multinational’s home-country ethics. Which of the following approaches to business
ethics would justify the actions of the multinational company?
A. Righteous moralist
B. Cultural relativism
C. The justice theory
D. The rights theory
Country A can produce product X, but it can also buy it at a cheap rate from Country B.
Which of the following courses of action is suitable in this situation according to Adam
Smith’s theory of absolute advantage?
A. Country A should import product X from country B and it should not attempt to
produce it at home.
B. Country A should partly import the product and produce it domestically.
C. Country A should produce more of product X and should attempt to obtain an
absolute advantage for the product.
D. Country A should subsidize the production of product X to obtain an absolute
advantage over country B.
After the United States, the second-largest source country of MNEs is:
A. Japan.
B. China.
C. a tie between France and the United Kingdom.
D. a tie between Germany and the United Kingdom.
If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater
than the demand for it, what will happen?
A. The dollar will appreciate against the yen
B. The dollar will depreciate against the yen
C. The exchange rates will remain the same
D. The yen will appreciate against the dollar
According to the _____, top managers typically overestimate their ability to create
value from an acquisition.
A. misvaluation theory
B. performance extrapolation hypothesis
C. market timing theory
D. hubris hypothesis
The costs of promoting and establishing a product offering when a firm enters a foreign
market prior to its rivals are known as _____.
A. switching costs
B. market development costs
C. pioneering costs
D. promotional development costs
_____ is characterized by lack of government regulation.
A. The Eurocurrency market
B. A money market fund
C. The New Your Stock Exchange
D. A hedge fund
A large-scale entrant is more likely than a small-scale entrant to be able to capture
first-mover advantages associated with _____.
A. scale economies
B. diseconomies of scale
C. pioneering costs
D. diseconomies of scope
Training can help a manager and spouse cope with issues of adjusting to the foreign
environment. _____ is aimed at helping the expatriate manager and family ease
themselves into day-to-day life in the host country.
A. Language training
B. Practical training
C. Others-orientation training
D. Cultural training
A _____ is simply an order written by an exporter instructing an importer, or an
importer’s agent, to pay a specified amount of money at a specified time.
A. letter of credit
B. bill of lading
C. draft
D. banker’s letter
Which of the following terms refers to the unit cost reductions associated with large
sized outputs?
A. Absolute advantage of production
B. Economies of scale
C. Constant marginal returns
D. Diminishing marginal returns
How has the euro contributed to increasing competition in the European region?
A. By increasing hedging costs
B. By increasing the cost of capital
C. By making price comparisons easy
D. By enabling a common monetary policy
_____ account for about two-thirds of all Eurocurrencies.
A. Euro-yen
B. Euro-pound
C. Euro-Euro
D. Euro-dollars
_____ are social conventions concerning things such as the appropriate dress code in a
particular situation, good social manners, eating with the correct utensils, neighborly
behavior, and the like.
A. Values
B. Beliefs
C. Mores
D. Folkways
Consider whether the shift toward a more integrated and interdependent global
economy is a good thing. Discuss the shift from the eyes of the consumer, the worker,
the company, and the environmentalist.
Compare and contrast a free trade area and a common market.
Discuss the evolution of strategy.
How can firms successfully leverage the skills developed at the subsidiary level?
What has been the experience of the WTO to date? What does the future look like for
the organization?
Describe the disadvantages of economic integration for international businesses. How
can firms protect themselves from these threats?
Refreezing an organization should happen quickly.
Explain the dynamic gains that are generated by opening an economy to trade.
Consider the firm in terms of a value chain. What is the difference between primary
activities and support activities?
Discuss the role of technology in new-product development, including the concept of
“creative destruction.
Discuss the key factors that companies must be aware of before deciding to do business
in other countries.
Describe some of the home country policies that encourage outward FDI.
What are the central issues facing the WTO at the present time?
Should a firm pay executives in different countries according to the prevailing standards
in each country, or should it equalize pay on a global basis?
Substantial differences exist in the compensation of executives at the same level in
various countries. These differences raise the question of whether a firm should pay its
expatriate managers the prevailing wage rate in the country that they are working in, or
whether the firm should pay all of its expatriate managers at the same level of
responsibility a similar amount of pay?
Explain the idea of a turnkey project.
Describe the concept of minimum efficient scale. Discuss the implications of minimum
efficient scale.