The ________ sets the expatriate’s salary in terms of the salary of a comparable job in
the city where the MNE has its headquarters.
A) host-based method
B) home-based method
C) headquarters-based method
D) culturally based method
Which of the following is most likely a FALSE statement about income inequality?
A) The richest 1% of the world’s population claims as much income as the bottom 57%.
B) GNI is the most effective tool for estimating the relative wealth of a nation’s citizens.
C) Among industrialized nations, the United States has the largest inequality gap
between rich and poor.
D) Income inequality between metropolitan and rural areas threatens a country’s social
stability.
There are several reasons for a company to sell products abroad at either below cost or
below the price in the home country. Which of the following is one of these reasons?
A) encouraging foreign consumers to try new products
B) improving the exporting country’s terms of trade
C) gaining imports that are sold below cost
D) following import substitution objectives
Which of the following BEST explains why Burger King has developed such a strong
presence in many of the small countries of Latin America and the Caribbean?
A) These business environments allowed Burger King to take advantage of economies
of scale.
B) These countries are close to a Burger King’s headquarters.
C) These countries offered greater mobility of funds than countries in the European
Union.
D) Unlike the BRIC countries, these business environments did not require escalation
of commitment.
Which of the following statements about the euro is true?
A) It was adopted by all existing EU members when it was first initiated.
B) It must be adopted by countries as a precondition to joining the EU.
C) It cannot be used by countries that are not members of the EU.
D) It was designed to eliminate currency as a barrier to trade in the EU.
Which of the following ideas holds that a government should NOT interfere in business
affairs?
A) collectivism
B) laissez-faire
C) the rule of man
D) pluralism
Which of the following would most likely be reduced by vertical integration?
A) export tariffs
B) component prices
C) product returns
D) transaction costs
A culture that prefers to first settle general principles rather than small issues is most
accurately characterized as ________.
A) idealist
B) polychronic
C) high-context
D) pragmatist
________ involve the exchange of currency the second day after the date on which the
two foreign-exchange traders agree to the transaction.
A) Spot transactions
B) Outright forward transactions
C) FX swaps
D) Reverse transactions
A 1977 U.S. law that outlaws bribery payments by U.S. firms to foreign government
officials is known as the ________.
A) Anti-Bribery Act of 2004
B) Foreign Corrupt Practices Act
C) Zero Tolerance Initiative
D) Sarbanes-Oxley Act
Today, which of the following circumstances is LEAST likely to cause expatriate
failure?
A) inability of the expatriate’s family to adjust
B) resistance from the expatriate’s partner
C) inadequate technical expertise
D) inability to adjust
Advantages of adopting a polycentric approach include which of the following?
A) capitalizing on the availability of qualified local managers
B) helping transfer core competencies from the home nation to local subsidiaries
C) increasing the international career mobility for local managers
D) offsetting tendencies for the company to adapt excessively to the local market
When no single company has control over a collaborative arrangement, ________.
A) the operation may lack direction
B) none of the partners is responsible for legal violations
C) differences in corporate culture are likely to grow
D) one partner’s interests are likely to be put ahead of the other partner’s interests
A useful way to understanding the purpose of strategy is to think of the firm as a(n)
________, composed of a series of distinct activities, including production, marketing,
materials management, R&D, human resources, information systems, and the firm
infrastructure.
A) activity network
B) value constellation
C) task succession
D) value chain
Political systems based on the ________ paradigm, such as those of Japan and China,
accept the principle that government may intervene to ensure that business practices
benefit society.
A) individualistic
B) collectivistic
C) pluralistic
D) laissez-faire
Which of the following countries is the best example of a mixed economic model?
A) United States
B) France
C) United Kingdom
D) Australia
In the Economic Freedom Index, ________ exhibit high economic freedom whereas
________ exhibit little to no economic freedom.
A) mixed economies; market economies
B) command economies; market economies
C) market economies; command economies
D) centrally planned economies; command economies
A firm would decide to delist its stock from a foreign stock exchange for all of the
following reasons EXCEPT ________.
A) the best price for the stock is in the home market
B) there is increased regulation in that particular foreign market
C) there are weak market returns on the stock
D) there are high trading volumes on the stock
Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She
wants to understand Ballston’s values and its expectations for employee behavior.
Which of the following would most likely provide Monique with this information?
A) mission statement
B) code of conduct
C) vision statement
D) employee contract
Decision making in a functional structure tends to be ________.
A) decentralized
B) centralized
C) horizontal
D) collaborative
Kevin, a marketing executive with Ace Electronics, has relocated to India for an
expatriate assignment. Kevin’s wife, Julia, and three children have joined him. Ace
Electronics provides the family with money intended to help Julia find a job and
develop cross-cultural skills. Which of the following is Ace providing the family?
A) repatriation allowance
B) hardship allowance
C) housing allowance
D) spouse support
A major benefit of the international division structure is ________.
A) the elimination of conflicts of interest among domestic and foreign operations
B) the integration of domestic and foreign operations
C) de-emphasis of economies of scale
D) cost effectiveness
The ________ theory seeks to define the relationship between currencies based on
relative inflation.
A) inflation growth rate
B) revaluation
C) purchasing power parity
D) interest rate
________ effects of trade agreements are the shifting of resources from inefficient to
efficient companies as trade barriers fall.
A) Dynamic
B) Static
C) Economic
D) Barrier
According to the translation process in the United States, ________.
A) companies first translate their statements into dollars, and then recast their financial
statements consistent with U.S. GAAP
B) companies recast their financial statements consistent with U.S. GAAP, and then
translate them into U.S. dollars
C) companies only need to worry about the translation process because local operations
take place in a local GAAP environment
D) companies translate foreign currency financial statements only if the dollar is
weakening against the local currency
Which of the following is a set of universal standards for a globally accepted quality
assurance system?
A) just-in-time (JIT) inventory management
B) Six Sigma
C) total quality management (TQM)
D) ISO 9000
Under the WTO agreement, ________.
A) a dispute resolution mechanism allows countries to bring grievances to the WTO
against countries that levy inappropriate trade discrimination measures
B) there is no dispute resolution mechanism except for trade involving environmental
products
C) countries are allowed to place trade barriers on member countries with no particular
justification, because like GATT the WTO has no enforcement mechanism
D) tariffs are permitted to be levied by developed countries against developing
countries but not against each other
A price on goods and services sold by one member of a corporate family to another is
known as a(n) ________.
A) transfer price
B) tax credit price
C) passive price
D) active price
Which of the following is used as an illustration of the PPP theory for estimating
exchange rates?
A) the Composition of Official Foreign Exchange Reserves (COFER)
B) the black market rate
C) the import licensing ratio
D) the Big Mac Index
Appropriability theory refers to ________.
A) denying rivals access to competitive resources such as management know-how
B) categorizing the appropriateness of a firm’s foreign investments in terms of host
country objectives
C) explaining an investing firm’s choice of partner in a joint venture
D) predicting the general pattern of direct investment locations