1) When using a budget for foreign operations, it is important for the parent company to
select an exchange rate to set the budget and use that same rate to evaluate
performance.
2) An important business objective for pursuing ethical behavior is to create a better
relationship with corrupt politicians and customers.
3) The group most likely to become involved in disputes concerning trade protectionism
is consumers.
4) Options are more flexible than forward contracts.
5) Outright forward transactions involve the exchange of currency the second day after
the date on which the two foreign-exchange traders agree to the transaction.
6) Exporters employ an export management company as part of an indirect exporting
strategy.
7) According to utilitarianism, actions are moral if they produce the greatest amount of
good for the greatest number of people.
8) Understanding trade theories helps companies know if they will need to compete
against goods and services produced abroad.
9) Laws on local business activities directly influence the operations of domestic and
foreign companies in areas such as hiring and firing workers.
10) Six Sigma is a highly focused system of quality control that scrutinizes a company’s
entire production system.
11) Countries have reduced import trade barriers in the expectation that other countries
will do the same
12) The existence of the four favorable conditions of the diamond of national advantage
does not guarantee that an industry will develop in a given locale.
13) Foreign acquisitions are more advantageous than start-ups when the industry has
little excess capacity than when it has a lot of excess capacity.
14) The U.S. dollar is widely traded because it is a transaction currency in many
international commodity markets.
15) Which of the following was NOT a result of the Smithsonian Agreement?
A) revaluation of currencies other than the dollar against gold
B) establishment of par values the quota system
C) devaluation of the dollar against gold
D) widening of exchange-rate flexibility
16) Most of the world’s goods and services are sold ________
A) in international markets
B) in the countries where they are produced
C) through exports to small countries
D) through exports to large countries
17) 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
18) The term protectionism, when applied to international trade, refers to ________.
A) governmental restrictions and competitive support actions to affect trade flows
B) payments to dock workers to prevent pilferage of imported shipments
C) border checks to prevent entry of illegal aliens
D) methods used to prevent intellectual property theft
19) Successful implementation of a ________ strategy requires a company to develop
unique competencies that rivals find hard, if not impossible, to match or copy.
A) differentiation
B) cost leadership
C) globalization
D) marketing
20) In a command economy, the goods and services that a country produces, the
quantity in which they are produced, and the prices at which they are sold are planned
by ________.
A) government officials
B) private industries
C) individual entrepreneurs
D) local trade associations
21) All of the following are true about distribution concerns when marketing
internationally EXCEPT which one?
A) Geographic barriers may divide countries into very distinct markets
B) In some countries, few potential sales lie outside the large metropolitan areas
C) Each country has its own distribution system, making standardization of distribution
difficult
D) Because most foreign consumers are easily presold by advertising messages, it is
difficult to convince retailers to offer good service
22) A possible drawback to the essential industry argument for import protectionism is
________.
A) that such protection hurts the protecting country’s balance of payments
B) in times of military emergency, almost any product could be considered essential
C) other countries find supplies elsewhere
D) unemployment increases in the protecting country
23) A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a
________ legal system.
A) civil
B) common
C) customary
D) mixed
24) Which of the following statements about GE and its “Green is Green” movement is
true?
A) GE is responding in part to the fact that it is operating in many countries which
require compliance with higher environmental standards than exist in the United States
B) GE has decided to develop new products that are environmentally friendly rather
than adopt internal policies to reduce greenhouse gas emissions
C) GE has moved aggressively to reduce greenhouse gas usage internally but has not
been able to develop commercially viable “clean” technologies
D) GE considered joining the U.S. Climate Action Partnership but decided the group
was too radical in its approach to reducing greenhouse gas emissions
25) The standard-setting organization tasked with the challenge of determining one set
of accounting standards that can be used worldwide is the ________.
A) Global Financial Accounting Standards Board
B) International Organization of Securities Commissions
C) International Financial Reporting Committee
D) International Accounting Standards Board
26) Which of the following best describes the concept of serendipity in exporting?
A) modifying products to meet cultural preferences
B) initiating global sales through e-commerce methods
C) relying too much on exports when domestic sales suddenly increase
D) opportunistically responding to unsolicited orders from foreign customers
27) Which of the following is promoted by a neoclassical structure?
A) innovation of ideas
B) information control
C) project competition
D) minimal relationships
28) Why is economic freedom an important factor to consider when analyzing a
country’s economic development, performance, and potential?
29) What is meant by liability of foreignness? How might this influence location and
allocation decisions?
30) What is a just-in-time inventory system? What are the implications of JIT for firms
that use global sourcing?
31) What difficulties of exporting can be minimized by customs brokers?
32) What challenges are created by selling internationally through the Internet? How
does e-commerce affect pricing?
33) What is the International Monetary Fund (IMF)? What are its objectives? What
occurs when a country joins the IMF today?
34) In a short essay, discuss why simply examining a country’s per capita GDP and its
population doesn’t necessarily lead to a good estimate for potential demand.