Expatriate managers who lack others-orientation tend to treat foreign nationals as if
they were home-country nationals.
Answer:
The Nobel Prize-winning economist Paul Samuelson argued that contrary to the
standard interpretation, in certain circumstances the theory of comparative advantage
predicts that a rich country might actually be worse off by switching to a free trade
regime with a poor nation.
Answer:
In terms of the differences between countries with respect to distribution systems, there
is a tendency for lesser retail concentration in developed countries.
Answer:
According to the influential economist Jeffrey Sachs, tropical regions have a more
extensive division of labor than temperate regions.
Answer:
The globalization of markets and production and the resulting growth of world trade,
foreign direct investment, and imports all imply that firms are finding it easier to protect
themselves from attack by foreign competitors.
Answer:
According to John Rawls’s difference principle, wide variations in income and wealth
can be considered just if the market-based system that produces this unequal
distribution also benefits the least-advantaged members of society.
Answer:
The various value creation activities that a firm undertakes are referred to as operations.
Answer:
The expertise, competencies, and skills of established retailers in a nation, and their
ability to sell and support the products of international business are referred to as
channel exclusivity.
Answer:
The need for preempting competitors is particularly great in the telecommunications
market.
Answer:
Since the number of trade groups in the African continent is impressive, progress
toward the establishment of meaningful trade blocs has been fast.
Answer:
Other things being equal, when fixed costs are substantial and minimum efficient scale
of production is high, the arguments for concentrating production at a few choice
locations are strong.
Answer:
If newly privatized firms are protected from foreign competition by barriers to
international trade and foreign direct investment, they continue to act like state
monopolies.
Answer:
The Peruvian development economist Hernando de Soto has argued that much of the
developing world will fail to reap the benefits of capitalism until they relax the property
rights offered by their legal systems.
Answer:
Porter argues that an absence of domestic rivalry is vital to the creation and persistence
of international competitive advantage in an industry.
Answer:
Islamic law is primarily a moral rather than a commercial law and is intended to govern
all aspects of life.
Answer:
The Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions obliges member-states and other signatories to make the bribery
of foreign public officials a criminal offense.
Answer:
Liability laws are typically the least extensive in highly developed nations.
Answer:
Large-scale entry allows an international firm to learn about a foreign market while
limiting the firm’s exposure to that market.
Answer:
An international firm that perceives its technological advantage to be transitory and
susceptive to rapid imitation might want to license its technology to foreign firms.
Answer:
In a class system, individuals born into a class at the bottom of the social hierarchy can
work their way up.
Answer:
When a firm enters into a spot exchange contract, it is taking out insurance against
adverse future exchange rate movements.
Answer:
The location-specific advantages argument associated with John Dunning helps explain
why firms prefer FDI to licensing or to exporting.
Answer:
According to Theodore Levitt, technology has resulted in the emergence of global
markets for standardized consumer products on a previously unimagined scale of
magnitude.
Answer:
As a result of globalization, companies rarely need to customize marketing strategies,
product features, and operating practices in different countries.
Answer:
Confucianism is not concerned with the supernatural and has little to say about the
concept of a supreme being or an afterlife.
Answer:
Firms pursuing global standardization or transnational strategies tend to prefer setting
up wholly owned marketing subsidiaries.
Answer:
A letter of credit may reduce an importer’s ability to borrow funds for other purposes.
Answer:
Social unrest and disorder are less likely to be found in countries that contain more than
one ethnic nationality.
Answer:
The euro/dollar exchange rate is €1 = $1.20. If it costs $36 to buy a European product,
the stated price of the product would be €36.
Answer:
Firms that operate internationally are able to realize location economies by dispersing
individual value creation activities to locations where they are performed most
efficiently and effectively.
Answer:
A pegged exchange rate means the value of the currency is fixed relative to a reference
currency, and then the exchange rate between that currency and other currencies is
determined by the reference currency exchange rate.
Answer:
By adopting the euro, the European Union has created the second most widely traded
currency in the world after that of the U.S. dollar.
Answer:
Other things being equal, a nation with democratic political institutions is clearly more
attractive as a place in which to do business than a nation that lacks democratic
institutions.
Answer:
An organizational culture that requires all decisions to be purely economic allows
unethical behavior to flourish and persist.
Answer:
An advantage of the emergence of single markets is that the lowering of barriers to
trade and investment among countries has led to decreased price competition
throughout the European Union.
Answer:
Firms that pursue which of the following strategies take products first produced for
their domestic market and sell them across various markets with only minimal local
customization?
A.Nationalization
B.Transnational
C.Global standardization
D.International
E.Localization
Answer:
Which of the following is a step taken by automobile companies in situations where
neither centralization nor decentralization of production is feasible?
A.Outsourcing production to developing countries
B.Inshoring production into the home country
C.Selling product patents and technology to competitors
D.Refraining from international trade
E.Establishing top-to-bottom manufacturing operations
Answer:
In the past two decades, the majority of Latin American countries have:
A.experienced a decline in the health of their economies.
B.sold state-owned enterprises to private investors.
C.been characterized by low growth, high debt, and hyperinflation.
D.restricted investment by foreign firms.
E.discouraged both democracy and free market reforms.
Answer:
Certovia and Norkland are two neighboring countries that actively trade goods and
services with each other. Under the gold standard, there will be a net flow of gold from
Norkland to Certovia when:
A.Certovia is in trade deficit with Norkland.
B.Norkland is in balance-of-trade equilibrium with Certovia.
C.Certovia is in trade surplus with Norkland.
D.Certovia imports more than it exports to Norkland.
E.Norkland’s balance of payment to Certovia is favorable.
Answer:
According to Krugman, which of the following best indicates the dangers of a strategic
trade policy?
A.Decrease in subsidies
B.Decrease in protectionism
C.Occurrence of a trade war
D.Huge financial debts for the countries involved
E.Occurrence of a global recession
Answer:
A nationwide group of international trade attorneys who provide free initial
consultations to small businesses on export-related matters is the:
A.TradeNet Export Advisor.
B.Export Trade Assistance Partnership.
C.United States Trade Service.
D.Export Legal Assistance Network.
E.Ex-Im Network.
Answer:
One can adjust GNI per capita by purchasing power to account for differences in the:
A.cost of living.
B.population density.
C.geographical area.
D.factor endowments.
E.labor productivity.
Answer:
Which retail system has many retailers, no one of which has a major share of the
market?
A.Concentrated
B.Fragmented
C.Focused
D.Consolidated
E.Exclusive
Answer:
Which of the following marketing strategies relies on access to advertising media?
A.Personal selling
B.Direct selling
C.Push strategy
D.Pull strategy
E.Copy testing
Answer:
Which of the following staffing policies is pursued by a firm where considerable
resentment is caused among foreign nationals who are members of the international
cadre and work with U.S. nationals, if pay is not equalized?
A.Polycentric
B.Geocentric
C.Ethnocentric
D.Regiocentric
E.Localized
Answer:
Which of the following best exemplifies a first-mover advantage?
A.Venus Inc. has more than 50 percent market share in the telecom industry, because no
other company had invested in this industry before Venus Inc.
B.Maya won a cash discount of 75 percent on the latest NewY phone as she was the
winner of a competition conducted by NewY.
C.The level of satisfaction Simon experienced when dining at the Emerald Inn was
greatest the first time, and thereafter it reduced each time he dined there.
D.Innovative Creations Inc. was the first to exit the declining pager phone
manufacturing industry and as a result, it avoided losing a lot of money.
E.Product critiques are extremely respected by major firms, as they are the first ones to
review new products and services.
Answer:
Which of the following is a reason why governments limit convertibility of their
currency?
A.To encourage foreign investments
B.To control currency appreciation
C.To encourage capital flight
D.To preserve their foreign exchange reserves
E.To promote neo-mercantilism
Answer:
In terms of foreign exchange, which of the following is true of leading and lagging
strategies?
A.They primarily protect long-term cash flows from adverse changes in exchange rates.
B.They are used to minimize economic exposure of companies.
C.They can help firms minimize their transaction and translation exposure.
D.They involve accelerating payments from strong-currency to weak-currency
countries.
E.They are limited by governments because they create pressure on strong currencies.
Answer:
In general, the more value customers place on a firm’s products:
A.the lesser the profitability of the firm.
B.the higher the competitive pressure from other firms.
C.the lesser the quality of the product.
D.the lesser the consumer surplus for those products.
E.the higher the price the firm can charge for those products.
Answer:
Which of the following is the most appropriate solution to the problem of rising carbon
dioxide emissions in developed economies?
A.Roll back the trade liberalization efforts that have fostered economic growth and
globalization.
B.Tie free trade agreements to the implementation of fewer environmental and labor
laws in less developed countries.
C.Get the nations of the world to agree to policies designed to limit pollutant emissions.
D.Increase the export of low-wage manufacturing jobs to developing nations.
E.Restrict international trade and investment only to services.
Answer:
In 1904, who theorized that there was a relationship between Protestantism and the
emergence of modern capitalism?
A.Karl Marx
B.Alfred Schmidt
C.Max Weber
D.Abraham Maslow
E.Adam Smith
Answer:
Firms that pursue which of the following strategies differentiate their product offering
across geographic markets to account for local differences?
A.International
B.Global standardization
C.Transnational
D.Multidomestic
E.Nationalization
Answer:
Which kind of strategy do firms in consumer goods industries that are trying to sell to a
large segment of the market generally favor?
A.Push
B.International
C.Lag
D.Pull
E.Exclusive distribution
Answer:
Hofstede’s fifth dimension of Confucian dynamism captures:
A.how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
B.the relationship between an individual and his or her fellows along with the degree to
which individual achievement and freedom are emphasized.
C.the extent to which different cultures socialized their members into accepting
ambiguous situations and tolerating uncertainty.
D.attitudes toward time, persistence, ordering by status, protection of face, respect for
tradition, and reciprocation of gifts and favors.
E.the extent to which sex roles are differentiated and values such as achievement and
power are emphasized.
Answer:
Which of the following is a primary activity in the operations of a firm?
A.Logistics function
B.Research and development
C.Information systems
D.Human resource function
E.Company infrastructure
Answer:
Which of the following suggests that consumers in all nations can consume more if
there are no restrictions on trade?
A.The Heckscher-Ohlin theory
B.Mercantilism
C.Leontief’s paradox
D.Ricardo’s theory of comparative advantage
E.The Samuelson critique
Answer:
Products of the mind, such as computer software, a screenplay, a music score, or the
chemical formula for a new drug, constitute:
A.assets which receive no protection under law.
B.non-performing assets.
C.tangible assets.
D.intellectual property.
E.real property.
Answer:
Which of the following is concerned with the present measurement of past events?
A.Economic exposure
B.Transaction exposure
C.Arbitrage
D.Translation exposure
E.Currency speculation
Answer:
Which of the following is the last step in ethical decision making?
A.Judging the ethics of the proposed decision
B.Establishing moral intent
C.Auditing of decisions
D.Engaging in ethical behavior
E.Identifying the stakeholders a decision would affect
Answer:
The International Monetary Fund has been criticized for:
A.its lack of a “one-size-fits-all” approach to macroeconomic policy.
B.encouraging moral hazard among banks.
C.its lack of power and authority.
D.using external experts to gain knowledge about a country.
E.keeping its operations open to outside scrutiny.
Answer:
Which of the following legal systems is most likely to be based on tradition, precedent,
and custom?
A.Common law
B.Civil law
C.Autocracy law
D.Monarchy law
E.Universal law
Answer:
Which of the following is a disadvantage of greenfield ventures?
A.They have a higher potential for throwing up unpleasant surprises.
B.It is much more difficult to build an organizational culture from scratch than to
change the culture of an existing unit.
C.Companies find it difficult to avoid falling into the trap of the hubris hypothesis.
D.It is slower to establish than acquisitions.
E.A firm does not have the freedom to build the kind of subsidiary that it wants.
Answer:
Which of the following was pioneered by Japanese firms during that country’s
remarkable economic transformation during the 1960s and 1970s?
A.Lean production
B.Flexible manufacturing technology
C.Dynamic capabilities
D.Just-in-time inventory systems
E.Global learning
Answer:
In the 1960s, organized labor believed that by coordinating union action across
countries through an international trade secretariat, it could counter the power of a
multinational corporation by:
A.threatening to disrupt production on an international scale.
B.introducing a reciprocal tax treaty.
C.trying to farm out highly skilled tasks back to the home country of the firm.
D.increasing its bargaining power.
E.lobbying for importing employment practices from the home country of the firm.
Answer:
A key advantage of adopting the euro is that it:
A.helps in reduction of competition in Europe.
B.has prevented the development of a highly liquid pan-European capital market.
C.lowers foreign exchange and hedging costs in Europe.
D.insulates Europe from international competition.
E.increases the range of investment options open to institutions only.
Answer:
In the context of cost, which of the following can be considered as the most attractive
market or investment site?
A.A country that has adopted a closed totalitarian state
B.A country that has a well-developed body of business contract law
C.A country with a command-based economic system
D.A country with stringent product safety laws and huge liability insurance rates
E.A country which does not provide any protection for property rights
Answer:
Which of the following does the U.S. law and OECD convention allow as an
exception?
A.Bribing a foreign government official to obtain a contract
B.Failure to keep records that would reveal if a violation of the Foreign Corrupt
Practices Act has occurred
C.Grease payments or speed money
D.Private action
E.Breach of the rule of law
Answer:
Briefly describe the different types of countertrade arrangements.
Answer:
What are the political arguments for government intervention into international trade?
Give examples.
Answer:
Discuss any two straw men approaches to business ethics.
Answer:
How can governments restrict the outward flow of FDI?
Answer:
What are the advantages and disadvantages of exporting as a mode of entry into foreign
markets?
Answer:
Why are home-country managers working abroad in multinational firms (expatriate
managers) likely to experience more than the usual degree of pressure to violate their
personal ethics?
Answer:
“There is not a strict one-to-one correspondence between a society and a nation-state.”
Discuss.
Answer:
Elaborate on the main criticisms of the International Monetary Fund’s approach to
financial crises.
Answer:
Describe flexible manufacturing and mass customization as important factors in
location decisions.
Answer:
During the 1980s and early 1990s, why did the world trade system, erected by GATT,
come under strain due to increased pressures for greater protectionism?
Answer:
Mercantilism viewed trade as a zero-sum game. Discuss Adam Smith’s and David
Ricardo’s stand on this view. Also discuss the phenomenon of neo-mercantilism.
Answer:
Why are supranational organizations, such as the World Trade Organization and the
United Nations, criticized?
Answer: