In the United States, the only firms allowed to import cheese are certain trading
companies, each of which is allocated the right to import a maximum number of pounds
of cheese each year. This is an example of _____.
A. a subsidy
B. an import quota
C. a local content requirement
D. an ad valorem tariff
Which of the following is an advantage of the geocentric staffing policy?
A. It enables the firm to grow its human resources department.
B. It enables the firm to build a cadre of international executives who feel at home
working in a number of cultures.
C. It enables the firm to build a cadre of home-country executives.
D. Firms may be better able to create value despite adverse experience curves and poor
location economies.
Linking neighboring countries economically and making them interdependent:
A. increases the potential for violent conflict.
B. creates increased political tensions.
C. leads to dilution of cultures.
D. creates incentives to increase political cooperation as well.
French wine, Italian clothes, and German luxury cars all benefit from _____.
A. source effects
B. noise levels
C. cultural preferences
D. cultural differences
Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than
those over the quota.
Which of the following is an accounting problem that only international businesses
face?
A. Lack of consistency in the accounting standards
B. Inaccurate filing of profit-and-loss statements
C. False reporting of income to the government
D. Lack of a dedicated accounting function within the firm
The _____ establishes a uniform set of rules governing certain aspects of the making
and performance of everyday commercial contracts between sellers and buyers who
have their places of business in different nations.
A. Trade-Related Aspects of Intellectual Property Rights (TRIPS)
B. Paris Convention for the Protection of Industrial Property
C. United Nations Convention on Contracts for the International Sale of Goods (CIGS)
D. World Trade Organization (WTO)
_____ occurs when a firm agrees to purchase a certain amount of materials back from a
country to which a sale is made.
A. Barter
B. Offset
C. Counterpurchase
D. Buyback
Although a foreign exchange transaction can involve any two currencies, most
transactions involve _____ on one side.
A. pounds
B. yen
C. dollars
D. euros
_____ is essentially the service-industry version of licensing, although it normally
involves much longer term commitments.
A. Franchising
B. Subsidizing
C. Greenfield investment
D. Patenting Franchising is essentially the service-industry version of licensing,
although it normally involves much longer-term commitments than licensing.
Which of the following is a consequence of globalization?
A. Decreasing interdependence between national economies
B. Increasing outsourcing of services
C. Differentiation of material culture
D. Increase in barriers to cross-border trade
An arrangement whereby a firm grants the right of intangible property to another entity
for a specified time period in exchange for royalties is a(n) _____ agreement.
A. turnkey
B. licensing
C. greenfield
D. acquisition
Since the late 1980s, there has been a spread of democracy. This is because:
A. a state’s ability to control access to uncensored information has increased.
B. the socialist model failed to deliver economic progress to the vast bulk of their
populations.
C. in many countries the middle and working classes have become less powerful.
D. in many countries state-ownership of firms has encouraged innovation and
entrepreneurship.
WTO rules allow countries to _____ foreign goods that are being sold cheaper than at
home, or below their cost of production, even when domestic producers can show that
they are being harmed.
A. impose antidumping duties on
B. subsidize
C. lower the import quota on
D. place countervailing duties on
Which of the following statements is true regarding management development?
A. Historically, most international businesses have been more concerned with
management development than with training.
B. Management development facilitates the creation of an informal network for sharing
knowledge within the multinational enterprise.
C. Management development refers to specific training efforts to prepare home-country
nationals for foreign postings.
D. Typically, management development programs use standard psychological tests to
select managers for specific foreign postings.
According to Ricardo’s theory of comparative advantage, a country should produce
goods:
A. for which it has access to raw materials.
B. that it produces most efficiently.
C. that have the highest domestic demand.
D. for which it has an absolute advantage.
A polycentric approach may be effective for firms pursuing a(n) _____.
A. international strategy
B. localization strategy
C. transnational strategy
D. global standardization strategy
Assume that the interest rate on borrowings in Japan is 1 percent, while the interest rate
on deposits in Australian banks is 5 percent. A trader borrows in yen and then converts
the money into Australian dollars and deposits it in an Australian bank to make a 4
percent margin. Which type of trade is this an example of?
A. Swing trade
B. Carry trade
C. Channel trade
D. Price action trade
Which of the following is an example of an external stakeholder?
A. Employees
B. Customers
C. Stockholders
D. The board of directors
The abolition of _____ in a command economy means there is no incentive for
individuals to look for better ways to serve consumer needs.
A. private ownership
B. public ownership
C. government-owned businesses
D. co-operatives
In the 1990s, most of the borrowing by the companies who invested in Asian countries
had been in _____.
A. Japanese yen
B. local currencies
C. Chinese yuan
D. U.S. dollars
Which of the following is an argument that supports global advertising?
A. Standardized advertising lowers the costs of value creation by spreading the fixed
costs of developing the advertisements over many countries.
B. Because of concerns about the scarcity of creative talent, some feel that smaller
efforts will produce better results than one large effort to develop a campaign.
C. Even though there are cultural differences between nations, a single advertising
theme that is effective worldwide can be easily developed.
D. Standardized advertising may be implemented even in the face of advertising
regulations.
According to Levitt, which of the following statements is true?
A. Technology drives the world toward a converging commonalty.
B. There are accustomed differences in national preferences.
C. The multinational corporation operates in a number of countries at low relative costs.
D. The global corporation operates with resolute consistency at high relative costs.
Moving down the experience curve:
A. increases the cost of a firm’s raw material.
B. allows a firm to reduce its cost of creating value.
C. decreases a firm’s profitability.
D. increases the research and development expenditure of a firm.
What is the long-term goal of international trade secretariats (ITSs)?
A. To increase the competition between national unions
B. To be able to bargain transnationally with multinational firms
C. To accommodate wide variation in union structure
D. To be able to regulate multinationals with regard to labor policies
A major difference between Buddhism and Hinduism is that unlike Hinduism,
Buddhism:
A. does not support the caste system.
B. emphasizes wealth creation.
C. promotes blind loyalty to employers.
D. supports extreme ascetic behavior.
The average tariff rates for manufactured goods have fallen significantly since 1950 and
now stand at about _____.
A. 18%
B. 5.9%
C. 4.8%
D. 1.5%
A _____ is more likely to capture first-mover advantages associated with demand
preemption, scale economies, and switching costs.
A. large-scale entrant
B. joint venture
C. small-scale entrant
D. turnkey contract
According to Adam Smith, a country should specialize in the production of a good
when it has:
A. an absolute advantage in the production of the good.
B. a strong domestic demand for the good.
C. the ability to help country increase its national output.
D. the necessary raw materials for production.
Which of the following philosophies can be traced back to the ancient Greek
philosopher Aristotle?
A. Socialism
B. Individualism
C. Collectivism
D. Anarchism
How can a borrower hedge against unpredictable movements in exchange rates?
Discuss the two schools of thought on exchange rate forecasting.
How can polycentric approach to staffing result in the creation of a “federation” within
the firm? Why is this a disadvantage for the firm?
Discuss the issues involved in refreezing an organization.
Discuss the strategic objectives of the production and logistics functions of an
international firm.
Describe the situations when licensing is not a good option for a firm.
Where is the foreign exchange market located? What is the nature of the market? Is the
market growing or shrinking on a global basis?
Falling barriers to international trade destroy manufacturing jobs in wealthy advanced
economies. Discuss this statement.
A benefit to companies of economic integration is the opportunity to centralize their
production and reduce costs.
Discuss the trend toward increased regional economic integration.
The political systems of a country raise ethical issues that have implications for the
practice of international business.
What is a greenfield investment? How does it compare to an acquisition? Which form
of FDI is a firm more likely choose? Explain your answer.
What are the basic principles for successful organizational change?
What are the major drawbacks of licensing according to the internalization theory?
Explain Smith’s theory of absolute advantage.
How can firms reduce the bias in performance appraisals of expatriate managers?