Which of the following is true of acquisitions?
A. It is a time-consuming process and takes a lot of time to execute.
B. They are less risky than greenfield ventures in the sense that there is less potential
for unpleasant surprises.
C. They give the firm a much greater ability to build the kind of subsidiary company
that it wants.
D. In many cases, firms make acquisitions to preempt their competitors.
The Research and Development division of a company has recently designed a new
coffee vending machine that is likely to sell very well in the market. It is compact,
user-friendly, and provides unprecedented efficiency in terms of cost per cup.
Consequently, the company fears that its competitors would soon mimic the design of
their product and to protect its product, it is now seeking a _____.
A. copyright
B. patent
C. trademark
D. certification .
_____ argued that countries should specialize in the production of goods for which they
have an absolute advantage.
A. Paul Krugman
B. David Hume
C. David Ricardo
D. Adam Smith
When evaluating expatriates, home-country managers usually rely on:
A. the manager’s ability to develop cross-cultural awareness.
B. hard data such as market share.
C. the ability of the expatriate to work with local managers.
D. a set of subjective criteria such as interpersonal skills.
The tenet of _____ is that the welfare of society is best served by letting people pursue
their own economic self-interest.
A. socialism
B. communism
C. anarchism
D. individualism
Which of the following established the second largest currency zone in the world?
A. Treaty of Rome
B. Maastricht Treaty
C. Treaty of Lisbon
D. Single European Act
A measure of the responsiveness of demand for a product to change in price is referred
to as:
A. arbitrage demand.
B. predatory pricing.
C. price elasticity of demand.
D. experience curve pricing.
A _____ has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between
members.
A. common market
B. customs union
C. free trade area
D. bonded market
A _____ is a less rigid form of social stratification in which social mobility is possible.
A. caste system
B. normative system
C. religious system
D. class system
A _____ tends to be adopted by firms that are reasonably diversified and originally had
domestic structures based on product divisions.
A. worldwide product division structure
B. global matrix structure
C. worldwide area structure
D. performance structure
Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the
home currency because Eurocurrency deposits:
A. are funded by the European union.
B. lack government regulations.
C. are associated with low risk.
D. have minimum foreign exchange risk.
For firms that are selling a product that serves universal needs, and that do not face
significant competition, a(n) _____ strategy makes sense.
A. localization
B. international
C. transnational
D. global standardization
Which of the following areas of international trade is regulated by the Foreign Corrupt
Practices Act?
A. Making and performance of commercial contracts in international trade.
B. Preventing bribery and unethical acts in the conduct of international business.
C. Establishing a set of safety standards to which a new product must adhere.
D. Controlling the mafia activity that hinders trade in Russia, Japan, and the U.S.
Which of the following statements about the legal systems of countries is true?
A. They can affect the attractiveness of a country as an investment site or market.
B. They are not influenced by the prevailing political system of the country.
C. They are almost the same for all countries.
D. They are of little importance to international business.
Which of the following is a document used to give the title of the products to a bank?
A. Bill of lading
B. Letter of credit
C. Draft
D. Promissory note
In an international transaction involving a bank as a third party, the exporter ships the
product after:
A. the bank receives materials from the importer.
B. receiving a cleared payment through bank.
C. the importer has paid the bank.
D. the bank promises to pay on the importer’s behalf.
Which of the following statements is true of reactive firms?
A. Reactive firms consider a variety of markets for selling their products and services.
B. They consider exporting only after their domestic market is saturated.
C. They systematically scan foreign markets for profitable export opportunities.
D. They create excess productive capacity and actively hunt for opportunities in foreign
markets.
Which of the following was required for new applicants to qualify for EU membership?
A. Minimum economy size of €1 trillion
B. Nationalization of private assets
C. Deregulation of markets
D. Sustained GDP growth of 10 percent for five years
There are five strategic levels for global purchasing that can be undertaken by a global
company. At which level do companies engage in global purchasing activities that are
integrated across worldwide locations and functional groups?
A. Level II
B. Level III
C. Level IV
D. Level V There are five strategic levels for global purchasing that can be undertaken
by a global company. Level V involves engaging in global purchasing activities that are
integrated across worldwide locations and functional groups. Broadly, this means that
the firm integrates and coordinates the purchasing of common items, purchasing
processes, and supplier selection efforts globally, for example.
According to the strategic trade policy argument:
A. government intervention is not required because firms can borrow money from the
capital markets to finance the required investments.
B. selling goods in a foreign market at below their “fair” market value is legally and
ethically justified.
C. government support can help domestic firms overcome the first-mover advantages
enjoyed by foreign competitors.
D. a government should use subsidies to support promising firms that are active in old,
established industries.
If a firm’s core competency is based on control over proprietary technological
know-how, _____ and _____ arrangements should be avoided if possible to minimize
the risk of losing control over that technology.
A. licensing; joint-venture
B. wholly owned subsidiary; exporting
C. turnkey contracts; exporting
D. exporting; joint-venture
According to the concept of economies of scale, as plant output expands, _____.
A. productivity declines
B. total costs decrease
C. unit costs decrease
D. utilization of capital decline
New trade theory suggests that nations:
A. increase their commitment to research and development.
B. adopt policies that promote strong competition within domestic markets.
C. cannot benefit from trade when they do not differ in resource endowments or
technology.
D. may benefit from trade even when they do not differ in resource endowments or
technology.
The value of international trade in services now accounts for about _____ of the value
of all international trade.
A. 15%
B. 20%
C. 30%
D. 40%
_____ recognize that human beings have fundamental rights and privileges that
transcend national boundaries and cultures.
A. Rights theories
B. Utilitarians
C. Cultural relativists
D. Kantian ethics
The term _____ stresses that the political, economic, and legal systems of a country are
interdependent.
A. political economy
B. common law
C. socialism
D. collectivism
Which feature of a customs union differentiates it from a free trade area?
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 is true of exporting?
A. A common pitfall of exporting is a poor understanding of competitive conditions in
the foreign market.
B. Securing financing is rarely a problem for exporters.
C. A common pitfall of exporting is trying too hard to customize a product offering
rather than “sticking with what you know.”
D. Most exporters have a very good understanding of the competitive conditions in the
foreign market.
A _____ is a situation in which a country cannot service its foreign debt obligations.
A. currency crisis
B. banking crisis
C. foreign debt crisis
D. moral crisis
Which feature of an economic union differentiates it from a common market?
A. Free flow of products and factors of production between member countries
B. A common monetary and fiscal policy
C. A common external trade policy toward nonmembers
D. Ability of factors of production to move freely between members
Which of the following is one of the three main reasons for the spread of democracy?
A. New information and communication technologies have broken down the ability of
the state to control access to uncensored information.
B. Totalitarian regimes delivered economic progress to the bulk of their populations but
not enough to the power brokers.
C. Democratic regimes failed to deliver economic progress to the vast bulk of their
populations.
D. Economic advances in the past quarter-century have led to the emergence of a class
of ruling elite.
Which of the following is a successful exporting strategy used by 3M?
A. Add additional products once exporting becomes successful.
B. Enter many markets at one time to gain maximum exposure.
C. Bring in expert marketing specialists to promote the firm’s products.
D. Enter on a large scale to flood the market.
National regulations including local content rules and policies pertaining to layoffs
might act as a source of inertia.
The extra profit that producers make when supply is artificially limited by an import
quota is referred to as a(n) _____.
A. tariff rate quota
B. import quota
C. subsidy
D. quota rent