Committing resources to one country usually means forgoing or delaying projects in
others.
Innovation is the ability of the production process to make different kinds of products
and to adjust the volume of output.
The International Accounting Standards Board is composed of international securities
regulators and is attempting to harmonize accounting standards through issuing
International Financial Reporting Standards.
Coordination by plan deals with exact rules and procedures that spell out what needs to
be done and how.
Countries enact trade policies based on trade theories, which, in turn, affect companies’
optimum production locations.
An export trading company (ETC) works with many manufacturers rather than
representing a single manufacturer.
The combination of free trade and free movement of production factors offers
maximum production efficiency.
A differentiation strategy is a unique mixture of the localization and global strategies
whereby the company attempts to capture the advantages of both.
The essential-industry argument holds that industries with potential export capabilities
should be protected.
Market diversity, government intervention, and currency fluctuations complicate
international pricing decisions.
Pursuing responsible behavior for strategic and financial success is an example of
relative behavior.
The Eurocurrency market is a retail, rather than wholesale, market.
Under the theory of absolute advantage, countries hold two types of advantages—
acquired advantages and technological advantages.
The ethnocentric and polycentric staffing policies, unlike the geocentric staffing policy,
rely on extensive use of expatriate managers.
A core competency gives every employee in an MNE a principle that helps them
coordinate transactions between value activities.
Geocentrism is the preferred approach to international business practices for most
global firms.
Civil conflict, tax discrimination, weak legal systems, and terrorist actions are political
risks faced by MNEs operating in foreign countries.
Most people’s basic values are acquired during childhood and are not readily changed
later in life.
Culture shock is the anxiety and disorientation experienced when one moves into an
unfamiliar culture.
A geocentric staffing policy seeks the best qualified people for key jobs throughout the
organization, irrespective of their nationality.
The three variables predicted by forecasting are the timing, magnitude, and length of
exchange rate movements.
In a concentration strategy for international expansion, a company goes first to one or a
few countries and builds up fast there before going to other countries.
Normativism asserts that universal standards of behavior exist and should be accepted
in all cultures.
An American investing in a London-based company is an example of interest arbitrage.
The OECD Convention against bribery is an example of an agreement that targets the
demand side of bribery.
Mobile Technology is a company that sees the world as a single market, assuming that
consumer preferences and industry conditions do not vary much among countries.
Mobile Technology is likely to adopt a global strategy.
When different companies produce the same commodity, their costs are essentially the
same.
Static effects are the overall growth in the market and the impact on a company caused
by expanding production and by the company’s ability to achieve greater economies of
scale.
Historically, companies have not been particularly concerned with the challenge of
repatriation in managing their international human resources.
Governments that conduct takeovers of foreign companies rarely make formal
declarations of their intent to take over in advance of the action.
The most common predeparture training for an expatriate is ________.
A) an informational briefing
B) role playing
C) in-depth cultural seminars
D) language training
Which of the following refers to the means by which management applies the systems
that link a company’s value activities, whether those activities are performed in one or
in many countries?
A) configuration
B) logistics
C) coordination
D) core competency
U.S. companies generally put earlier and more sales-seeking emphasis on countries
________.
A) with the largest economies
B) with regional trading blocs and high tariffs
C) where governments give operating incentives
D) where operating conditions seem similar to those at home
Which stakeholder group is most interested in trustworthy behavior by corporate
executives and increased corporate taxes?
A) shareholders
B) society
C) employees
D) customers
The ________ approach to expatriate compensation equalizes purchasing power across
countries; this helps employees enjoy the same living standard in their foreign posting
that they enjoyed at home.
A) balance sheet
B) equalization
C) merit
D) differential
According to the product life cycle (PLC) theory, production and sales are primarily
domestic in the introductory stage because ________.
A) businesses need quick market feedback
B) tariff reductions remain under negotiation
C) international transport costs are too high
D) international patents have not been approved
What is the most likely reason that sales to a mass market would be necessary for a
company selling internationally?
A) gaining economies in production and distribution
B) earning initial sales in emerging economies
C) eliminating excess domestic capacity
D) gaining brand recognition
Which of the following reasons most compels companies to make location decisions on
one international opportunity at a time rather than comparing among two or more?
A) The lack of comparability in data among countries renders comparison unfeasible.
B) The information on some countries is so unreliable that companies must deal with
these countries separately.
C) Decisions are made by teams, and it is usually not feasible to give so many people
time away from their usual duties to examine multiple proposals.
D) If an important customer develops opportunities in a foreign country, a company
may have little alternative except to follow that customer’s lead.
On the basis of which interest rate are Eurocredits often quoted?
A) United States Prime Rate
B) European Central Bank Offer Rate
C) London Interbank Offered Rate
D) International Monetary Fund Interest Rate
________ integration is the political and economic agreements among countries that
give preference to member countries to the agreement.
A) Global
B) Economic
C) Bilateral
D) Regional
Gucci, a maker of luxury fashion and leather goods, plans to expand its sales market.
The firm needs to compare countries for the market potential of its products. Which of
the following is the best indicator for Gucci to use?
A) per capita income in each country
B) population size of each country
C) the number of millionaires in each country
D) gross domestic product for each country
Barton Accessories has two retail stores and one production facility where the firm’s
line of leather belts and purses are assembled. Barton employs 430 people and
generates nearly $1 million in revenue each year through domestic and international
sales. Which term best describes the status of Barton?
A) SME
B) MNE
C) MNC
D) FDI
The CEO of Coffman Enterprises wants to export products to foreign markets.
However, top executives at Coffman are concerned that the firm will face fierce
competition from foreign rivals because Coffman lacks significant core competencies.
The executives are most likely worried that Coffman lacks ________.
A) capital advantages
B) internalization advantages
C) location advantages
D) ownership advantages
Which of the following is the primary limitation of the transnational strategy?
A) poor local adaptation
B) cross-unit coordination difficulties
C) duplication of subsidiary activities
D) inability to leverage core competencies
Which of the following is a characteristic of most offshore financial centers?
A) strict domestic regulation
B) minimal banking activities
C) large foreign currency markets
D) nominal or non-existent tax rates
Which of the following is most likely a true statement about companies’ acquisition of
resources/assets abroad?
A) Regardless of industry, cheap labor is the most sought after resource.
B) Resource availability limits a firm’s production location choices.
C) Regardless of industry, raw materials are the most sought after resource.
D) Risks are higher for resource-seeking than for sales-seeking foreign operations.
Improving explanatory power of the IO paradigm can be done by considering the
potential for ________ to lead to a company’s sustained competitive advantage.
A) bright, motivated managers
B) political trends and events
C) cultural institutions
D) new markets
Traditionally, expatriates were ________; today, HRM increasingly considers
________.
A) men; women
B) women; men
C) mid-level and mid-career executives; older employees and younger employees
D) older employees and younger employees; mid-level and mid-career executives
In international trade, what is a quota?
A) a guarantee by one country to buy some minimum amount from another
B) a quantitative limit on the amount of a product that can be imported or exported
C) a countertrade arrangement that establishes the value of imports and exports
D) a bilateral agreement calling for mutual access to markets
Although there are different views about the purpose of a political system, most
analysts agree that an essential task of a political system is to ________.
A) integrate the different elements of a society into a functioning unit
B) allocate scarce resources among competing users
C) develop reasonable attitudes and outlooks within the population
D) protect individuals within the country from foreign threats
The ________ of a country specifies the rules that regulate behavior, the processes by
which laws are enforced, and the procedures used to resolve grievances.
A) political system
B) political philosophy
C) philosophical orientation
D) legal system
Tied aid requires a recipient to ________.
A) donate a portion of the funds to the donor country’s infrastructure needs
B) use the capital in any way as long as donor country approval is granted
C) employ local workers in management positions
D) spend the funds in the donor country
Coordination refers to ________.
A) linking various value activities within an organization
B) identifying the span of control within an organization
C) portioning the performance of specific tasks
D) assigning tasks to qualified managers
A voluntary export restriction (VER) refers to ________.
A) an agreement between two countries to reciprocally restrict exports to one another
B) requests by governments for companies to limit exports of militarily useful
technology
C) limiting companies’ exports to increase domestic supplies
D) limits placed on exports by a government of an exporting country at the request of
the government of an importing country
Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has
recently developed an innovative blender design that Wharton executives anticipate
being very profitable. Currently, Wharton has production facilities in the United States
and China. Wharton executives are trying to determine where the new product should
be manufactured. Which of the following questions is most relevant to the decision?
A) What selection procedures would be best in China?
B) Should expatriates or locals manage the Chinese facility?
C) How can the firm guard against counterfeiting in China?
D) How would China’s individualistic system affect the firm?
People generally prefer little consultation between superiors and subordinates in
cultures where ________ is high.
A) power distance
B) fatalism
C) individualism
D) self-actualization
An example of a third-country national is a ________.
A) dual citizen (Canadian and U.S. citizenship) working for a Mexican company in
Mexico
B) Canadian citizen working for a U.S. company in Canada
C) U.S. citizen working for a U.S. company in Canada
D) Canadian citizen working for a U.S. company in Mexico
Which of the following is NOT one of the reasons that foreign investment may
stimulate exports from the home (donor) country?
A) The investor often sends home-country components to its facilities abroad.
B) The investor often sends home-country equipment to its facilities abroad.
C) Home-country aid usually goes where the investments are made.
D) The foreign facility is adept at selling the investors’ home country products.
An example of an expatriate would be a Canadian manager working for a Canadian
firm in China.
The market for shares sold outside the boundaries of the issuing company’s home
country is the ________.
A) Eurocurrency market
B) international bond market
C) international equity market
D) Euroequity market
What is an international joint venture?
A) an international agreement between two or more companies to have access to each
other’s patents
B) the ownership of a company by two or more companies, of which at least one is a
foreign company where the venture is located
C) an international agreement between two or more firms for the use of a trademark
D) an agreement between two or more organizations to share management expertise
Diversity of international markets and currency instability have the greatest effect on
________.
A) promotion
B) R&D
C) branding
D) pricing
What is a multinational enterprise (MNE)? How do physical and social factors affect
how an MNE functions in a foreign country?
In a short essay, discuss how transportation, trade restrictions, domestic capacity, and
country-of-origin affect companies’ decisions about modes of operating internationally.
How is foreign exchange traded? What methods are available?
What are the four main ways that financial statements differ from country to country?
What role has the IASB played in establishing global accounting standards?
Why do you think corporate universities are becoming more popular among MNEs?
How do both MNEs and employees benefit from corporate universities?
In a short essay, discuss the theory of absolute advantage and the reasons a country’s
efficiency improves based on this theory.
Why is countertrade considered inefficient?
What is the Bank for International Settlements? What three categories does the BIS
designate in the foreign-exchange market? Briefly describe each category.
From an economic standpoint, why do production factors move from one country to
another? How does factor movement affect international trade?
What is the difference between a free trade agreement and a customs union? Provide
examples of each in your answer.
Are commodity agreements effective? Why or why not?
What is state capitalism? Why do you think state capitalism is becoming increasingly
popular around the world?
In a short essay, describe the various affiliations upon which a person’s status can be
based and discuss how social stratification affects such business functions as marketing
and employment practices.
What ethical and labor-related issues are a major challenge to footwear and clothing
MNEs that operate in developing countries? What guidelines are provided by the
Ethical Trading Initiative?
Identify the three common components of modern legal systems and explain their
relevance to managers.
What are the differences between ethnocentric, polycentric, and geocentric
frameworks?
List and discuss the main components of an expatriate’s compensation package.
What motives do businesses have for entering into collaborative arrangements? What
are some of the problems associated with collaborative arrangements?
What methods are used by managers to forecast exchange rates? What are the main
factors that influence exchange rates?
How does a nation’s legal environment affect an MNE’s marketplace behavior,
especially when the rule of man prevails?
