EDI is software that can link information flows from different parts of a business and
from different geographic areas.
Collaborative agreements allow companies to specialize more in those activities that
best fit their competencies.
The International Fisher Effect links interest rates and exchange rates.
The international bond market is much larger and more lucrative than the domestic
bond market.
The four favorable domestic conditions of the diamond of national advantage help to
explain how and where globally competitive companies develop and sustain
themselves.
There is a strong correlation between the intensity of religious belief and attributes that
lead to economic growth, such as obeying laws and thriftiness.
The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers
costing the same in the United States as abroad.
Gross domestic product is the value of production that takes place within a nation’s
border, without regard to whether the production is done by domestic or foreign factors
of production.
A common feature of neoclassical structures is greater cross-functional collaboration.
Companies use the foreign-exchange market to convert money for use in financial
transactions.
Passive exports involve the filling of unsolicited orders from abroad.
Equity financing is the degree to which a firm funds the growth of a business by debt.
An exchange rate is the number of units that buys one unit of another currency.
Most foreign exchange is handled through voice brokers.
Governments sometimes prohibit operations of private companies, foreign or domestic,
in some sectors because they feel these services should not be sold at a profit.
The more a company engages in collaborative agreements, the more it loses control
over decisions and their implementation.
Options are more flexible than forward contracts.
Cultural change may come by choice or imposition.
Electronic data interchange (EDI) is an online collaboration model that brings
manufacturers, distributors, value-added retailers, and customers together to execute
trading transactions.
The specific learned norms based on attitudes, values, and beliefs of a group of people
are known as ethnology.
The global integration of capital markets is a major force leading to the convergence of
accounting standards.
A company that adapts its marketing to foreign differences without deviating very much
from its experience is following a customer orientation.
By operating internationally, a company may take advantage of business-cycle
differences among countries and thereby reduce its financial risks.
The functional structure is ideal when the company faces complex and changing
environments.
When planning international geographic expansion, decision makers use scanning to
reduce the number of options available to a manageable number for further detailed
analysis.
When using the current-rate method to translate foreign currency financial statements
into the parent currency, translation gains and losses are recognized in comprehensive
income.
Labor cost advantages gained by moving into a country with low wages may be
short-lived because tax increases cancel out the low-wage advantages.
A confirmed letter of credit may obligate the exporter’s bank to honor a draft presented
to it.
A culture with a preference for a problem-solving style that first settles principles is a
pragmatic culture.
Home-country consumers are typically active in preventing their domestic companies
from dumping products into foreign markets.
The pushback against democracy has powered a rise in totalitarianism, a situation that
is likely to include which of the following?
A) increasing adoption of the principles of the rule of law
B) growing demands worldwide for greater fairness and justice in legal proceedings
C) increasing adoption of the principles of the rule of man
D) suppression of state-control in the direction of legal activities
The lower survival rate of foreign companies in comparison to local firms for many
years after they begin operations is known as ________.
A) ethnocentric reaction
B) polycentric reaction
C) liability of foreignness
D) most-favored-nation behavior
The HRM requirements of a(n) ________ strategy are well matched with an
ethnocentric staffing policy.
A) multidomestic
B) transnational
C) international
D) global
What is an equity alliance?
A) a collaborative arrangement in which at least one collaborating company takes an
ownership position in the other
B) a collaboration in which each contributor receives an equitable return based on
relative contribution
C) a collaboration in which partners agree to share technology with each other
D) a wholly owned acquisition to prevent appropriation of intellectual property
When the European Union was formed, the size of the market increased for European
companies. This is most likely an example of a ________.
A) dynamic effect
B) static effect
C) trade diversion
D) trade reflection
How do U.S. companies recognize transaction gains and losses in the financial
statements?
A) They are recognized as gains and losses in the income statement.
B) They are recognized as gains and losses in owners’ equity.
C) Gains are recognized in the income statement, but losses are not.
D) Losses are recognized in the income statement, but gains are recognized in owners’
equity.
A(n) ________ is the price of a currency.
A) tariff
B) quota
C) exchange rate
D) subsidy
Which of the following accurately explains how producers are affected by exchange
rate changes?
A) To save money, a manufacturer may decide to relocate production to a country with
a stronger currency.
B) A manufacturing firm relocating to a country with a weak currency can make a
cheap initial investment.
C) Goods manufactured in a country with a weak currency may be relatively expensive
in world markets.
D) A manufacturer with high operating expenses would likely relocate production to a
country with a currency that is gaining value.
Microsoft has a tendency to hire home-country nationals for jobs outside the United
States. Microsoft’s leadership supports a(n) ________ approach to staffing.
A) geocentric
B) ethnocentric
C) adaptive
D) polycentric
Which of the following is an argument for using a collaborative agreement?
A) to prevent problems caused by minority shareholders
B) to preserve a concentration strategy
C) to secure vertical and horizontal links
D) to maintain better control
Grover Enterprises is an MNE that relies on shared values among all employees to
idealize the preferred behaviors and identify performance measures within the
company. Grover is most likely applying a system of ________.
A) market control
B) bureaucratic control
C) planning control
D) clan control
Hudson Manufacturing is an MNE based in the United States with operations in Asia.
The firm is considering expansion into the European Union. Which of the following
questions is most relevant to the decision?
A) What is the primary language of most workers?
B) Which country has the best production location?
C) Which currency has the most favorable value of the euro?
D) Which country has the lowest tariffs for manufactured products?
Gap analysis is ________.
A) a method for estimating a company’s potential sales by identifying segments it is not
serving adequately
B) an investment advisor’s report on the future of one of the leading clothing retailers
C) the leap-frogging of demand in many developing economies whereby consumers
skip certain generations of products, buying the latest model instead
D) an estimation of the disparity in incomes between the very rich and the very poor in
a given market
Why are options most likely so attractive to companies?
A) The writer of the option does not charge the company any fee for writing the option.
B) Options provide companies with more flexibility than a forward contract.
C) Options are usually cheaper than forward contracts.
D) Options can be used for only foreign-exchange deals.
An irrevocable letter of credit ________.
A) is issued by a global credit agency
B) is the basis for multilateral credit netting
C) can be amended only if all parties involved agree
D) obligates the exporter’s bank to pay interest to the importer
If Toranaga-san, who works for a Japanese trading company that operates in Japanese
yen, wanted to purchase Spanish castanets from a company in Barcelona and needed
euros to complete the transaction, he would use the ________ to gain access to spot
euros.
A) stock market
B) foreign-exchange market
C) New York Stock Exchange
D) international export market
Which of the following statements about the English language is most likely NOT true?
A) The largest portion of global output is in English-speaking countries.
B) A large portion of MNEs are headquartered in English-speaking countries.
C) English is the official national language in most countries where FDI is encouraged.
D) Many MNEs from non-English speaking countries use English as their operating
language.
A distinct disadvantage of an international strategy is ________.
A) restricting the movement of core competencies to local markets
B) capitalizing on the benefits of global learning
C) customizing product offerings to local conditions
D) relying on home managers’ knowledge of foreign markets
Neoclassical structures aim to support organizations ________.
A) in which the location of control in a network alliance is evident
B) that centralize decision-making authority to those who can make informed decisions
C) that dismantle horizontal, vertical, or external boundaries that block ideas and
relationships
D) that create predictable workplaces with minimal collaboration among subsidiaries
Which of the following is NOT one of the arguments for permitting foreign control of
key industries?
A) Managers, whether in a foreign or local company, make decisions based on what
they think is best for the company rather than based on some local socioeconomic
agenda.
B) MNEs staff their organizations abroad mainly with local nationals and depend in
part on their input for making decisions.
C) Foreign governments can no longer use their home-based companies to influence
policies abroad.
D) The security arguments for restrictions on foreign ownership are really just a sham
to protect politically powerful industries and employment.
Firms most likely borrow money in the international bond market to ________.
A) guarantee high yields and low rates
B) enable diversification of funding sources
C) protect against costly government regulations
D) allow emerging markets to invest in foreign exchange
The primary result of the Jamaica Agreement was to ________.
A) allow greater exchange-rate flexibility
B) set austerity measures for debt control
C) establish a system based on par values
D) implement fixed exchange rates
Rapid Technologies owns its entire supplier network, which means that the firm most
likely uses ________.
A) industrial clustering
B) competitive sharing
C) vertical integration
D) global outsourcing
Why do turnkey operators often require a feasibility study as part of the contract?
A) By adding to the cost, they earn more money.
B) This lessens the risk of contract cancellation when political leadership changes.
C) This lowers their risk of foreign-exchange losses.
D) This helps to define what constitutes “satisfactory completion” of the project.
A governmental strategic trade (industrial) policy is one that ________.
A) lessens dependence on foreign military goods
B) seeks reciprocal free trade agreements between developed and developing countries
C) targets the resources needed to support industries that seem to fit best with the
country’s advantages
D) limits imports to encourage domestic production of what would otherwise be
imported
How does arbitrage differ from speculation?
A) Speculation, unlike arbitrage, is never used to protect against risk.
B) A speculator buys or sells foreign currency with the hope that that currency will
either weaken or strengthen in the future, resulting in a profit.
C) Speculation is the purchase of foreign currency on one market for the immediate
resale on another market.
D) Arbitrage is another way to speculate for profit or protect against risk.
Which of the following is a difference between export management companies (EMCs)
and export trading companies (ETCs)?
A) ETCs deal with both exports and imports, while EMCs deal only with exports.
B) ETCs are subject to antitrust laws, while EMCs are not.
C) ETCs typically carry inventory, while EMCs typically do not.
D) ETCs operate more on the basis of demand, while EMCs operate more on the basis
of supply.
Which of the following has extensive banking activities involving short-term financial
transactions?
A) booking center
B) operational center
C) foreign-exchange market
D) international regulatory market
The three major responsibilities of the ________ are legislative power, control over the
budget, and supervision of executive decisions.
A) European Commission
B) European Council
C) European Parliament
D) European Court of Justice
Which of the following should an MNE most likely consider in a make-or-buy
decision?
A) organizational hierarchy
B) supplier capabilities
C) employee morale
D) niche markets
Executives at Wilson Enterprises need to determine how to leverage and improve the
firm’s existing competencies on a global basis. What are the two most basic questions
that they must answer?
A) Which markets should we serve and where should production be located to serve
those markets?
B) What are the short-term competitive advantages of the project and what is the return
on investment?
C) What is the total investment required and what are the managerial resources needed
to supervise the investment?
D) What is the availability of land and what is the cost of labor?
Although globalization may bring economic growth, critics nevertheless contend that
________.
A) the growth is too fast
B) the inequality of gains puts some people in a relatively worse economic situation
C) this growth is mainly for the future, thus ignoring present economic growth needs
D) the cultural foundations of sovereignty are supported by globalization
Organizing work differently to improve productivity will likely fail ________.
A) if the workforce has a low tolerance for authoritarianism
B) if workers participate in planning the improvement
C) unless changes are compatible with competitors’ practices
D) if changes interfere with strongly held value systems
What is globalization? What modes of international business are used by firms that
want to globalize? Briefly describe each method.
What assumptions underlie the theories of specialization in international trade? What
are the limitations of these assumptions?
How do exchange rate changes affect a company’s marketing, production, and financial
decisions? What predictors should a manager monitor to forecast exchange rate
changes?
What has been the impact of NAFTA on trade and employment in NAFTA nations?
Discuss the various ways a broker or other import consultant can help an importer
minimize import duties.
In a short essay, discuss purchasing power parity and the short-run problems that affect
PPP.
What are the main arguments for limiting trade in services? What is your opinion on
limiting trade in services?
What is a Special Drawing Right (SDR)? How is it used?
What are the characteristics of the spot market? What institutions handle spot
exchanges?
In a short essay, describe the various reasons for product alteration.
What are the characteristics of individualist and collectivist cultures?
What is the Foreign Corrupt Practices Act? How has this law affected ethical behavior
among international businesses?
Explain why the argument that “anything that is legal is ethical” is insufficient.
What is culture shock? How can an international employer help prevent culture shock
and improve the success of expatriates?
What is international business? What are the primary reasons that companies engage in
international business?
