If a foreign subsidiary is located in a low tax country, the parent company would
probably use a ________.
A) high transfer price on inventory shipped from the parent to the subsidiary
B) high transfer price on goods sold by the subsidiary to the parent
C) low transfer price on inventory shipped from the subsidiary to the parent
D) tax credit price to minimize local tax liabilities
Assume a firm plans to expand internationally. If its managers wish to avoid pitfalls
caused by differences in “silent language,” they should consider differences in
________.
A) normal proximity during conversations
B) degree of detail expected in written contract
C) the meaning of slang words during presentations
D) importance of adherence to schedules
In the spot market, the ________ is the difference between the bid and offer rates and is
the trader’s profit margin.
A) bid
B) offer
C) cross rate
D) spread
Commodity agreements ________.
A) were initially established to attempt to stabilize commodity prices
B) are effective in regulating the price of grains but not minerals
C) are effective in regulating the prices of both grains and minerals
D) were disbanded by the United Nations for being non-competitive
A major challenge faced by Western Union in wiring money between the United States
and Mexico is that ________.
A) it can only transfer funds in one direction
B) it is facing competition from some commercial banks
C) Mexican citizens do not like to use its services because it does not have strong ties
with Mexican banks
D) Mexican citizens trust the banks but do not trust Western Union due to its heritage as
a Western bank
Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum
outsources portions of its production to independent companies located in Bangladesh
and India, where child labor is common. Other clothing and footwear firms have
recently faced criticism regarding the use of child labor, and Quantum executives want
to avoid similar problems. Which of the following would be the best approach for
Quantum?
A) improving conditions at the subcontract facilities
B) developing an external ethics code for foreign partners and letting them worry about
compliance
C) requiring local governments to alter their labor policies
D) leaving the market and focusing on domestic production
Which of the following was NOT a result of the Smithsonian Agreement?
A) revaluation of currencies other than the dollar against gold
B) establishment of par values the quota system
C) devaluation of the dollar against gold
D) widening of exchange-rate flexibility
What is the most likely reason that a universal scheme for assessing the performance
and potential of a country’s economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
B) a lack of reliable economic data from most developed economies
C) the isolation of most markets from each other
D) static nature of the marketplace
Which of the following countries has a collectivist orientation?
A) Canada
B) Australia
C) Japan
D) Netherlands
A company starting out with a global focus, usually because of the international
experience of its founders, is called a ________.
A) multinational enterprise
B) transnational company
C) strategically allied company
D) born-global company
According to the theory of comparative advantage, a country gains from foreign trade
even though it may have an absolute advantage in the production of all products
because ________.
A) the country will forgo producing its less efficient output in order to produce its more
efficient output
B) workers become more efficient through specialization
C) economies of scale will reduce cost
D) there will be more incentive to develop cost-saving technologies
Coca-Cola has collaborative arrangements whereby it produces concentrate that it sells
to other companies to bottle its drinks. Which of the following terms best describes this
type of arrangement?
A) vertical alliance
B) horizontal alliance
C) link alliance
D) scale alliance
History suggests that if the economic crisis worsens, we are likely to see more people
question the ________.
A) fall of communism
B) legitimacy of capitalism
C) practicality of mixed market economies
D) correlation between economic freedom and prosperity
ION Software is the registered owner of a program designed to help sort and organize
incoming and outgoing e-mail. Which of the following legal conventions does ION
most likely have?
A) intellectual property right
B) trademark credential
C) patent certificate
D) TRIPS permit
Boyce Dynamics, a U.S. maker of LED flashlights, fills unsolicited orders from foreign
buyers. It has not proactively investigated international trade options. Boyce Dynamics
is best categorized as a ________.
A) regular exporter
B) non-exporter
C) sporadic exporter
D) domestic exporter
Which of the following BEST explains why foreign subsidiary managers are often
reluctant to propose divestments in the countries where they are working?
A) They are afraid of proposing the elimination of their jobs.
B) They are usually poorly trained in how to sell units or how to close them down.
C) They are too nationalistic to examine political risk objectively.
D) Many are in countries where the cultural attribute of power-distance is very high.
The stock market is also known as the ________.
A) capital market
B) foreign-exchange market
C) bond market
D) equity capital market
International accounting firms, such as Deloitte and KPMG, have the most influence on
________.
A) international and domestic tax laws
B) public record disclosure rules
C) global auditing practices
D) domestic legal systems
Tanya is a manager at a global firm that has operations located in Brazil, India, and
Japan. Tanya is in the process of making a fundamental analysis in order to forecast
exchange rates in each country. Which of the following is a confidence factor that
Tanya should consider in trying to predict exchange rate movements in each country?
A) What are the expectations of the market with respect to the political environment?
B) Have there been significant national events that have appeared in the news lately?
C) At what rates do there appear to be buy and sell orders?
D) What trends do the charts show?
Which of the following most accurately describes the current state of HRM efforts to
staff international operations?
A) Fewer women are accepting international assignments.
B) The length of permanent assignments is rising among middle managers.
C) There are historic shortages of executive talent for international assignments.
D) Third-country nationals are quickly being replaced by localized expatriates.
The need for greater efficiency, which is closely linked to ________, forces MNEs to
align their overall strategy with operations.
A) higher costs
B) quality control
C) cost reduction
D) flexibility
Which of the following is most likely a basis for a Jamaican natural advantage in
international trade?
A) product technology developed by a Jamaican company
B) high literacy rates among Jamaican citizens
C) the use of English as the primary language
D) beautiful beaches and climate
The primary objective of the International Monetary Fund is to ________.
A) encourage euro adoption
B) promote exchange rate stability
C) establish a unilateral system of payments
D) foster the power of the foreign-exchange market
Assume the per capita consumption of shoes is three pairs in Country A and two pairs in
Country B. The difference probably means that there is a ________ gap in Country B.
A) product line
B) usage
C) distribution
D) competitive
Zara creates, produces, and distributes most of its products from its headquarters in
Spain. Zara is most likely using a ________ configuration.
A) concentrated
B) coordinated
C) dispersed
D) logical
The importance of using a brand to convey the perception of whether a firm will deliver
what it promises is more critical in ________.
A) countries without strong trademark protection
B) selling to mass markets than in selling to niche markets
C) countries with strong cultural characteristics of uncertainty avoidance
D) selling industrial products than final consumer products
What is a turnkey operation?
A) a contract for a large construction project, often for a government agency
B) a contract with a government to service one of its key industries
C) the buying of another company
D) the repatriation of equity
Presently, which of the following countries is BEST characterized as a pure example of
a command economy?
A) Russia
B) North Korea
C) China
D) Vietnam
Which of the following is NOT an advantage associated with Eurocurrencies?
A) more convenience for users
B) better yield for lenders
C) tighter U.S. regulation
D) cheaper lending rates
The EU organization that ensures consistent interpretation and application of EU
treaties is the ________.
A) European Commission
B) Council of Ministers
C) Court of Justice
D) Council of Treaties and Laws
Which of the following is a drawback of the polycentric approach?
A) Host-country nationals become more committed to company headquarters than to
their local colleagues.
B) Successful local units may increasingly function independently and pay less
attention to headquarters.
C) Local units depend too much on headquarters for resources and innovations, with
little incentive to develop their own.
D) Local managers study international business and cultural practices in other markets
in preparation for international assignments at the expense of not fully investing in
understanding the host country.
Formal reports, management performance evaluations, and financial metrics are three
examples of ________.
A) coordinating tools
B) coordinating systems
C) control systems
D) control mechanisms
The relationship between import substitution policies and export-led development
policies is best characterized by which of the following?
A) Import-substitution policies are more likely to lead to production of mature products,
whereas export-led development policies result in production of growth products.
B) The two are hard to distinguish because production under import substitution may
eventually be exported.
C) Production under import substitution policies, as opposed to export-led development
policies, is more likely to be located in urban areas.
D) Production under import substitution policies, as opposed to export-led development
policies, is likely to be more labor-intensive.