1) raymond vernon suggested that the wealth and size of the u.s. market gave u.s. firms
a strong incentive to develop new consumer products.
2) without consolidated financial statements, a multinational firm could conceal losses
in an unconsolidated subsidiary.
3) according to some analysts, deregulation and reduced controls on cross-border
capital flows are making individual nations more vulnerable to speculative capital
flows.
4) the amount of local currency required to meet interest payments and retire principal
on local debt obligations is not affected when a country’s currency depreciates.
5) the amount of currency needed to purchase one ounce of gold under the gold
standard was referred to as the gold par value.
6) the strength of the bretton woods system was that it could work even if its key
currency, the u.s. dollar, was under speculative attack.
7) a relatively high level of fixed costs can make it uneconomical to perform a
particular activity in several locations at once.
8) cross-licensing agreements can be used to formalize arrangements to swap skills and
technology in a strategic alliance.
9) one of the most important drawbacks of the limited liquidity of an international
capital market is that the cost of capital tends to be higher than it is in a purely domestic
market.
10) a key issue in the “millennium round” of the wto was to reduce barriers to
cross-border trade in agricultural products.
11) concentration of production makes most sense when trade barriers are high.
12) the friedman doctrine is the belief that ethics are nothing more than a reflection of
culture and therefore, a firm should adopt the ethics of the culture in which it is
operating.
13) a major aspect of a transnational strategy is a belief in the idea that valuable
knowledge does not reside just in a firm’s domestic operations.
14) a eurocurrency is the currency used by the countries of the european union.
15) if a _____ change in a price produces a _____ change in demand, then price is
elastic.
a.small; large
b.small; small
c.large; small
d.large; large
16) cross-licensing agreements are increasingly common in the _____ industry.
a.transportation
b.high-technology
c.construction
d.consumer durables
17) the _____ suggested that it would be desirable for most major currencies to
appreciate relative to the dollar, and signatories pledged to intervene in the foreign
exchange markets, selling dollars, to achieve this objective.
a.louvre accord
b.plaza accord
c.bretton woods agreement
d.gold standard
18) a japanese executive’s ritual of presenting a business card to a foreign business
executive is an example of:
a.mores
b.values
c.attitudes
d.folkways
19) which of the following statements is true about government restrictions that block
earnings from a foreign project?
a.the problem of blocked earnings is now much more serious than before.
b.greater acceptance of free market economics has increased the number of countries in
which governments are likely to block earnings.
c.firms have few options for circumventing host-government attempts to block the free
flow of funds from an affiliate.
d.stockholders do not perceive blocked earnings as contributing to the value of the firm.
20) when a firm wants to enter a market where there are already well-established
incumbent companies, and where global competitors are also interested in establishing
a presence, the firm should consider:
a.joint ventures
b.turnkey projects
c.acquisitions
d.greenfield investments
21) which of the following is a disadvantage of the localization strategy?
a.decrease in the value of the product in the local market
b.duplication of functions
c.inability to accommodate varying tastes and preferences in different markets
d.reduced customization
22) patents, inventions, formulas, processes, designs, copyrights, and trademarks are all
forms of
a.licensing agreements
b.franchising agreements
c.intangible property
d.tangible property
23) with a concentrated retail sector:
a.a relatively large sales force is required
b.the orders generated from each sales call can be large
c.there are long channels of distribution
d.it is expensive for the firm to make contact with each individual retailer
24) the idea that businesspeople should consider the social consequences of economic
actions when making business decisions and that there should be a presumption in favor
of decisions that have both good economic and social consequences is known as:
a.business ethics
b.noblesse oblige
c.ethical dilemma
d.social responsibility
25) a managed-float system is also known as a:
a.fixed exchange rate system
b.floating exchange rate system
c.pegged exchange rate system
d.dirty-float exchange rate system
26) which of the following is not true regarding a worldwide area structure?
a.it tends to be favored by firms with a low degree of diversification
b.it facilitates local responsiveness
c.it tends to be favored by firms with a domestic structure based on function
d.decision-making responsibilities are centralized
27) a “best prospects” list:
a.gives the names and addresses of potential distributors in the domestic market
b.is provided by the united states and foreign commercial service agency
c.can provide a firm free, customized market research survey on any product
d.provides information gathering, technical assistance, and export subsidies
28) the common law system:
a.lacks the flexibility that other systems have
b.is based on tradition, precedent, and custom
c.gives judges the power only to apply the law
d.is based on a detailed set of laws organized into codes
29) tariffs do not benefit:
a.consumers
b.domestic producers
c.governments
d.domestic firms
30) the extent to which the income from individual transactions is affected by
fluctuations in foreign exchange values is known as:
a.economic exposure
b.financial exposure
c.translation exposure
d.transaction exposure
31) one function of the foreign exchange market is to provide some insurance against
the risks that arise from changes in exchange rates, commonly referred to as:
a.foreign market hazard
b.global jeopardy
c.foreign exchange risk
d.commerce uncertainty
32) under a pegged exchange rate regime, a country will peg the value of its currency to
_____ so that its own currency rises too.
a.its domestic inflation rate
b.that of a major currency
c.its interest rates
d.its foreign exchange reserves
33) trips regulations oblige wto members to all of the following except:
a.grant and enforce patents lasting at least 20 years
b.grant and enforce copyrights lasting 50 years
c.comply with the rules within five years in the case of rich countries
d.comply with the rules within 10 years in the case of the poorest countries
34) the trips regulations established at the 1995 uruguay round:
a.established regulations on patents and copyrights
b.set a new level of agriculture subsidies
c.organized oecd countries to eliminate tariffs on textiles
d.established new tariff levels on technology
35) what is meant by the phrases the dollar is selling at a discount’ on the 30-day
forward market and the dollar is selling at a premium’ on the 30-day forward market?
36) compare and contrast folkways and mores.
37) how are dividend remittances used by firms to transfer funds from foreign
subsidiaries to the parent company?
38) what is a knowledge network? what is the advantage of such a system?
39) compare and contrast counterpurchase agreements and offset arrangements. why
might an exporter prefer an offset to a counterpurchase deal?
40) discuss the growth of exporting. what are the factors contributing to the growth
pattern?
41) what is the political case for integration? how did political arguments influence the
establishment of the european union?
42) with the help of examples, differentiate between transnational financing and
transnational investments.
43) how can a firm protect its proprietary information in a joint venture arrangement?