Small and medium-size enterprises, such as SpinCent as seen in the opening case for
chapter 14, account for ________ of all U.S. exporters.
A) 38%
B) 54%
C) 79%
D) 98%
Which of the following accurately identifies a difference between GATT and the WTO?
A) GATT could enforce member compliance with agreements, but the WTO cannot.
B) At its inception, GATT had more member nations than the WTO currently has.
C) GATT withdrew the most-favored-nation clause, but the WTO reinstated it.
D) GATT rules did not cover trade in services, but the rules of the WTO do.
General Electric has focused on being more “green” in recent years most likely because
________.
A) the industry has always looked to GE as a trend setter in green technology
B) GE executives believe the firm can strategically align investor and environmental
interests
C) GE executives realize that the firm can save significant money through the use of
solar technology
D) the U.S. government has decided to use GE as a test case to see if the adoption of the
Kyoto Protocol can actually work for a U.S. firm
Devon, an accounts manager at a large electronics firm, does not have any direct
international responsibilities; however, Devon would most likely benefit from studying
international business issues so that he can ________.
A) conduct better job interviews
B) better understand how foreign operations affect the company’s competitive position
C) supervise and evaluate subordinates who have global assignments
D) understand the legalities of importing and exporting products overseas
Transfer pricing is a strategy that may be used by MNEs to ________.
A) reduce consolidated corporate income taxes
B) partially finance a subsidiary in another country
C) transfer funds from a subsidiary to the parent corporation
D) all of the above
Which of the following is NOT one of the three common ways that private trade
intermediaries are paid by exporters?
A) commission rate
B) buy-sell basis
C) fixed salary
D) special event contribution
The rationale for the infant-industry argument for trade protection is that ________.
A) incubator centers in which business, government, and academia cooperate will
develop entrepreneurial companies
B) a country should give one firm in an industry a monopoly status so that it will grow
large enough to be competitive internationally
C) it takes time for an industry to become competitive in world markets, so protection is
needed to help this industry pass through the critical period
D) lower restrictions should be placed on products coming from countries where a
government has a large sphere of political influence
The approach a company takes when it bases foreign operations on an informed
knowledge of its organizational culture along with home- and host-country needs,
capabilities, and constraints is called ________.
A) polycentrism
B) ethnocentrism
C) neocentrism
D) geocentrism
Generally, HRM is more difficult for international companies for all of the following
reasons EXCEPT which one?
A) Dual career and family obligations make it tough to convince executives to leave the
home office to join a foreign subsidiary.
B) Leadership styles and management practices are so similar from country to country
that it is difficult to create a culture of innovation.
C) Complications arise due to enduring political, cultural, legal, and economic
differences between countries.
D) Labor markets are dramatically different in the mix of workers, costs, and
productivity.
Which of the following is a sourcing strategy in the global context?
A) use only local purchasing agents
B) establish local purchasing offices
C) purchase only from global suppliers
D) assign domestic buyers for international purchasing
According to regional content rules, at least ________ of the net cost of most products
must come from the NAFTA region in order to get access to the tariff reductions of
NAFTA.
A) 62.5%
B) 50%
C) 45%
D) 40.5%
The saying “When in Rome, do as the Romans do” applies to the ________ approach.
A) teleological
B) relativism
C) normativism
D) deontological
Which of the following is NOT one of the three main reasons affecting international
business for governments to cooperate with each other?
A) to attack problems jointly that one country acting alone cannot solve
B) to deal with issues that lie outside the territory of any nation
C) to gain reciprocal advantages
D) to establish a common language
What is the primary concern regarding anti-corruption measures in the EU?
A) resistance to an official anti-fraud commission
B) inability to adopt a corruption definition
C) lack of uniform laws across nations
D) failure to conduct internal auditing
The march toward greater political freedoms and more expansive civil liberties,
beginning in the 1970s, strongly fueled a sense of ________.
A) less predictable operating conditions for companies
B) the inevitability of democracy
C) different rules for domestic versus international competition
D) weaker property rights
Identify and briefly compare the major regional trading groups in Latin America, Asia,
and Africa.
A company that employs a(n) ________ strategy creates value by generating customer
insights and translating those insights into innovations.
A) differentiation
B) diversification
C) cost leadership
D) innovation
Financial statements typically include ________.
A) accompanying footnotes, a balance sheet, and a cash-flow statement
B) translations into the languages of every country where the company lists shares
C) different currency results to reflect the different countries where the company has
investments or generates revenues
D) different reports detailing the differences in generally accepted accounting principles
used by the company in different countries
Which of the following is most likely true regarding options?
A) An option can only be purchased from a commercial bank.
B) Options are never used with foreign currency.
C) An option is a right to sell foreign currency.
D) Options do not provide firms with flexibility.
Functional structures for international operations are most likely found among those
companies that ________.
A) have a narrow range of products that rely on economies of scale
B) have multiple products that share few common technologies
C) rely on differentiated marketing methods
D) compete in unstable industries
Which of the following is the most important constraint on the explanatory power of the
IO paradigm?
A) Many industries are imperfectly competitive.
B) Many companies are locally but not internationally competitive.
C) Most customers have perfect knowledge of the products they select.
D) Most industries have many firms that each have small market shares.
Judson Baked Goods, a U.S. firm, grants the use of its trademark to a company in
Sweden and provides the Swedish company with operational assistance on a continuing
basis. Judson is most likely involved in ________.
A) a management contract
B) franchising
C) offshoring
D) appropriability
The ability of the production process to make different kinds of products and to adjust
the volume of output is known as ________.
A) quality control
B) flexibility
C) dependability
D) innovation
Which of the following is one of the biggest barriers to expanding the use of
outsourcing?
A) long-term independence from an external organization
B) loss of operational control
C) cultural opportunities in the organization
D) language barriers
The Gini coefficient estimates a country’s ________.
A) gross national product
B) economic development
C) political and legal risk
D) income inequality
A company would most likely use gap analysis to ________.
A) estimate market potential over a business cycle
B) compare sales over time
C) compare consumption potential with its own sales
D) determine the best market niches to target
Which of the following is the LEAST likely reason that small countries worry about
overdependence caused by globalization?
A) A large country on which they depend may pressure them on political matters.
B) A large international firm may dictate its terms of operations in a small country.
C) A large company may exploit legal loopholes to avoid tax payments.
D) A large country may substantially increase its demand for the small country’s
production.
El Salvador has a population density of about 620 people per square mile and
neighboring Honduras a population density of about 115 people per square mile.
According to the factor proportions theory of trade, one would expect El Salvador’s
exports to Honduras to ________.
A) have a lower labor-to-land ratio than its imports from Honduras
B) have a higher labor-to-land ratio than its imports from Honduras
C) embody more capital per square mile than its imports from Honduras
D) embody more capital per worker than its imports from Honduras
Communism primarily relies on a system of ________.
A) private business ownership
B) competitive pricing and marketing
C) market-generated supply and demand
D) government-controlled economic activity
Governments have signed treaties to protect foreign-owned property rights, such as
investments and patents. A primary reason for doing so is to ________.
A) gain reciprocal advantages
B) reduce the domestic effects of other countries’ economic policies
C) deal with areas of concern outside the territory of any one country
D) reduce national conflicts leading to violent political demonstrations
________ manufacturing is any manufacturing that takes place in a country different
from the home country.
A) Offshore
B) Multidomestic
C) Cost-minimization
D) Outsourcing
Which of the following best explains recent governmental relaxation of restrictions on
cross-border trade and resource movements?
A) Most countries face shortages of workers, so they seek immigrants who can help
them produce more.
B) Governments believe that this will decrease the need to make their own companies
more innovative.
C) Consumers increasingly want to buy goods and services produced in their own
countries, making restrictions less necessary.
D) Governments believe that domestic producers will become more efficient as a result
of foreign competition.
In a country that practices state capitalism, all of the following are most likely to be
handled by the state EXCEPT ________.
A) leveraging control of the financial system
B) developing national corporations
C) supporting the local activities of foreign competitors
D) systematically managing trade relations
The relationship between the value of the Brazilian and Chinese currencies is known as
the ________.
A) stock price
B) exchange rate
C) foreign-exchange market
D) purchasing power parity
In the foreign-exchange market, the bid is the rate at which ________.
A) the trader is willing to sell foreign exchange
B) the buyer is willing to swap foreign exchange
C) the trader is willing to buy foreign exchange
D) the trader earns a profit