Importing and foreign direct investment are two approaches to meeting overseas
demand.
There is a trend toward treating third-country nationals the same as home-country
expatriates in terms of their compensation plans.
Direct exporting is an excellent means of getting a feel for international business
without committing a great amount of human or financial resources.
Exchange rate forecasting is an advanced science; with the correct data, we can predict
with accuracy exchange rate movements.
Chief financial officers avoid tapping into international markets because they bring too
many unpredictable variables.
Both developed nations and developing nations tend to trade more with developed
nations.
International strategy involves decisions that deal with a single area, such as marketing
or production.
International institutions provide nations the opportunity to build multilateral solutions,
and thus make significant contributions to international stability.
Generally, the deeper the immediate market penetration desired, the greater the product
modification must be.
It is possible to hide profits with transfer prices.
Consolidation is the process in which a company’s various results are aggregated into
one report.
Product liability is an area of torts in which the U.S. courts can make large awards,
unlike in other countries.
The tendency toward an international integration of goods, technology, information,
labor, and capital, or the process of making this integration happen, is referred to as
economic globalization.
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.
One way that the WTO defines dumping is the selling of a product abroad for less than
the average cost of production in the importing nation.
Trompenaars’ achievement vs. ascription dimension describes social status based on
what one does or who one is. The United States is a culture in which people build who
they are through work, so its social status tends to be based on ascription.
The first step in the process of strategic planning is to define the company’s business
and mission.
The Global Leadership Triad includes skills in business, relationships, and personal
effectiveness.
Women’s leadership skills coincide with global leadership skills.
When the government of a host country requires companies to have some local
participation, foreign firms must engage in strategic alliances with local owners.
A recent study reported that 77 percent of companies considered that cross-cultural
training was highly valuable and required such training for their expats or their families.
Market screening can assist firms that sell exclusively in the domestic market.
According to the definitions in the text, a multidomestic firm is an organization that
attempts to standardize operations worldwide in all functional areas.
A follower will most likely succeed when there are few legal, technological, cultural, or
financial barriers to inhibit entry, as long as it has sufficient resources or competencies
to overwhelm the pioneer’s early advantage.
Exporting is a way for firms to improve the efficiency of manufacturing equipment.
Egocentric ruthlessness is a leadership trait admired in some cultures, as suggested by
Project GLOBE.
Indirect procurement includes such items as maintenance, repair, raw materials and
components, office equipment, and other services and supplies.
Parent-company nationals commonly encounter difficulty overcoming the biases of
their own cultural experience and being able to understand and perform effectively
within a new operating context.
The reasons international firms enter foreign markets are all linked to either (1) the
desire to increase profits or (2) the desire to increase sales.
Trompenaars’ dimension of universalism vs. particularism measures whether rules or
rewards regulate behaviors.
Trademarks can include a shape, a color, or a sound.
International firms must export their products or services in order to establish and
expand their overseas operations.
The unspoken language cannot tell the international manager something that the spoken
language does not.
Small and medium-sized enterprises accounted for nearly one-third of all U.S.
exporters.
Cultures that tolerate high levels of ambiguity, such as Japan and Germany, are likely to
be more change-friendly.
The marketing of services, sometimes called intangibles, is similar to the marketing of
consumer products in that these products are generally harder to market globally than
industrial products.
Intermediate technology is:
A. technology between the capital-and labor-intensive processes.
B. synonymous with necessary technology.
C. older technology previously used by multinationals.
D. A and C.
The balance-of-payments account is divided into the following three major
subaccounts:
A. trade, capital, and debt.
B. cash flow, assets, and reserves.
C. services, cash flow, and debt.
D. current, capital, and reserves.
The following conditions led to the establishment of international finance centers:
A. the end of the gold standard and the Bretton Woods Accord.
B. WTO guidelines and IMF regulations.
C. floating exchange rates and growth in the FX markets.
D. growth of sustainable business practices and social responsibility.
The impact of the EU on the WTO could be said to be negative, since:
A. a country could belong to only one of these organizations.
B. the favored trade relationships among EU members are not extended to nonmember
countries, so the EU undercuts the WTO.
C. the euro threatens other hard currencies supported by the WTO, such as the dollar
and the yen.
D. the WTO does not collect dues from EU member-nations.
To sum up international trade theory, we can say that the primary reason for trade is:
A. the increase in OPEC oil prices.
B. governments want to accumulate money.
C. the existence of price differentials among nations.
D. the creation of new nations from former colonies.
E. none of the above.
Problems with the matrix structure include that:
A. two or more managers must agree on decisions, which can lead to slow decision
making.
B. special divisions often must be established to serve heterogeneous customer
segments.
C. global branding and production coordination are hindered.
D. all of the above.
E. two of A, B, and C.
Assumptions that underlie a country’s legal, political, and economic systems:
A. do not influence accounting because it is a quantified discipline, objective and
factual.
B. influence accounting, both its practice and the commonly shared understanding of its
purpose.
C. influence accountants but not the science of accounting.
D. do not influence accounting because value is measured in currency, an objective and
comparable measure.
The monopolistic advantage theory states that:
A. a firm that has a monopoly has a major advantage in overseas investment.
B. FDI is made by firms in oligopolistic industries possessing technical advantages over
local companies.
C. a firm that has a monopoly domestically will have no competition making overseas
investments.
D. the firm making the overseas investment first has a monopolistic advantage.
E. none of the above.
Price and profit allocation decisions are usually best made:
A. at the subsidiary headquarters.
B. at the IC headquarters.
C. cooperatively by both subsidiary and IC headquarters.
D. at the subsidiary headquarters in the host country with the lowest prices.
E. none of the above.
The following arrangement can provide a firm with foreign products:
A. domestic subsidiary.
B. wholly owned subsidiary.
C. foreign sales office.
D. two of the above.
E. all of A, B, and C.
WIPO is a:
A. UN agency that administers intellectual property treaties and advises countries on
intellectual property-related administrative issues.
B. WTO group opposed to patent extension and pro-generic.
C. part of the Club of Rome that lobbies for longer patent periods.
D. a research arm of the fuel cartel that has been advocating longer patent protection for
biofuel processing systems.
E. creation of the Paris Union.
Antitrust law is intended to:
A. challenge successful businesses to allow proper levels of competition.
B. prevent large concentrations of economic power, such as monopolies.
C. create a more trusting business environment.
D. allow socialism to flourish.
E. two of the above.
A hybrid organization may result from:
A. the firm’s acquiring a company with distinct products and distribution channels.
B. management’s attempt to mesh product and regional expertise.
C. management’s problems with a matrix organization.
D. a firm’s use of SBUs.
E. none of the above.
Management has no direct control over the external environment of the firm but can
exert influence by:
A. heavy promotion of new products to change cultural attitudes.
B. only competing in the domestic market.
C. lobbying.
D. all of the above.
E. two of A, B, and C.
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.
E. none of A, B, or C.
Setting prices of goods for export for both unrelated and related firms is known as:
A. foreign national pricing.
B. international pricing.
C. transfer pricing.
D. market pricing.
E. none of the above.
Counterarguments to the “protect domestic jobs from cheap foreign labor” argument
include:
A. the labor rate is not all of the labor cost or the production cost.
B. productivity per worker is what matters.
C. cheap foreign labor is a natural occurrence.
D. two of the above.
E. all of A, B, and C.
A survey of CEOs of the 162 largest firms on Fortune’s list of the 500 largest American
corporations found that the internationally oriented courses that were viewed as being
the most important for early career positions included topics related to:
A. an introduction to international business.
B. international strategy and competitiveness.
C. international legal and political issues.
D. all of the above.
E. two of A, B, and C.
The WTO is the only international organization designed to establish and help
implement:
A. efforts at peace between nations.
B. rules of trade among nations.
C. security measures between nations.
D. strategic planning for developing nations.
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
According to supporters of the globalization of trade and investment, free trade:
A. creates more and better jobs.
B. benefits all nations and workers.
C. does not cause the loss of high-paying jobs.
D. all of the above.
E. two of A, B, and C.
According to the text, the types of information an IC needs to have reported by
subsidiaries include:
A. financial.
B. organizational structure and systems.
C. political.
D. all of the above.
E. two of A, B, and C.
An organization in which top-level divisions are required to heed input from a staff
composed of experts of another organizational dimension in an attempt to avoid the
double-reporting difficulty of a matrix organization but still mesh two or more
dimensions is known as a:
A. hybrid organization.
B. matrix organization.
C. matrix overlay.
D. network corporation.
E. virtual corporation.
Nonquantitative nontariff barriers:
A. are seen by many to be the most significant nontariff barrier.
B. often involve government participation in trade, especially in customs and other
administrative procedures.
C. often involve standards.
D. all of the above.
E. two of A, B, and C.
Europe follows the precautionary principle approach to environmental health and
safety. This means:
A. everyone takes precautions and is always on the watch for environmental issues.
B. once a product is thought to be harmful, it is investigated immediately.
C. manufacturers of new products need to prove the product is safe.
D. consumers regularly review product safety regulations.
According to a survey by Bain & Company, the management tool with the highest level
of satisfaction among global executives is:
A. value chain analysis.
B. industry and competitor analysis.
C. strategic planning.
D. environmental analysis.
E. none of the above.
Monochronic cultures tend to be:
A. high context (HC).
B. low context (LC).
C. ethnocentric.
D. hierarchical.
One of the major differences between GAAP and the IFRS is that:
A. IFRS relies more on norms than does GAAP, which relies on expedience for
compliance.
B. IFRS is more lax than is GAAP.
C. IFRS relies on principles, whereas GAAP is rules-based.
D. A and C.
An export bill of lading serves as:
A. a contract for carriage between the shipper and the carrier.
B. a receipt from the carrier for the goods shipped.
C. a certificate of ownership.
D. a receipt for the IRS.
E. A, 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
economies.
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.
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.