1) The opportunity to increase profitability is the primary reason that firms decide to
export.
2) The protection of intellectual property rights is very similar from country to country.
3) Although the broadening of product lines increases distribution efficiencies, too
broad a line can create problems in selling.
4) Sales potential is probably the most important variable in determining international
location decisions because consumer demand exceeds supply.
5) Historically, companies have not been particularly concerned with the challenge of
repatriation in managing their international human resources.
6) Licensing companies commonly negotiate a “front-end” payment from licensees to
cover ________ transfer costs.
A) employee
B) brand name
C) technology
D) copyright
7) Which of the following countries has a soft peg currency?
A) China
B) Brazil
C) Japan
D) India
8) ________ 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
9) What is the LEAST likely reason that international companies are concerned about
the gray market?
A) undermining the long-term viability of the distributorship system
B) causing a firm’s operations in different countries to compete against each other
C) requiring companies to make frequent price adjustments to capture the market
D) preventing companies from charging what the market will bear in each country
10) Boyce Dynamics, a U.S. maker of LED flashlights, fills unsolicited orders from
foreign buyers. It has not proactively investigated international trade options. Boyce
Dynamics is best categorized as a(n) ________.
A) regular exporter
B) non-exporter
C) occasional exporter
D) domestic exporter
11) The International Fisher Effect implies that ________.
A) the country with the higher interest rate should have lower inflation
B) the currency of the country with the lower interest rate will strengthen in the future
C) the currency of the country with the higher interest rate will strengthen in the future
D) interest rates and inflation are not linked at all
12) 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
13) ________ political risks arise from political actions, such as public corruption or a
partisan judicial system, that interfere with transactions between sellers and buyers and
that can significantly raise the costs of getting things done.
A) Systemic
B) Procedural
C) Catastrophic
D) Distributive
14) Which of the following is an argument for using a collaborative agreement?
A) to prevent problems caused by minority shareholders
B) to preserve a concentration strategy
C) to secure vertical and horizontal links
D) to maintain better control
15) Which of the following best explains why foreign subsidiary managers are often
reluctant to propose divestments in the countries where they are working?
A) They are afraid of proposing the elimination of their jobs
B) They are usually poorly trained in how to sell units or how to close them down
C) They are too nationalistic to examine political risk objectively
D) Many are in countries where the cultural attribute of power-distance is very high
16) In the context of manufacturing strategy, the degree of consistency between the
foreign investment decision and the company’s competitive strategy is known as
________.
A) compatibility
B) coordination
C) control
D) configuration
17) In foreign-exchange markets, reporting dealers are ________.
A) financial institutions that actively participate in local and global foreign-exchange
markets
B) located primarily in New York City since U.S. dollars are the most widely traded
currency
C) controlled by the Bank for International Settlements located in Switzerland
D) hedge funds and pension funds monitored by the World Bank
18) All of the following are arguments for permitting foreign control of key industries
EXCEPT which one?
A) Managers, whether in a foreign or local company, make decisions based on what
they think is best for the company rather than based on some local socio-economic
agenda
B) MNEs staff their organizations abroad mainly with local nationals and depend in
part on their input for making decisions
C) Foreign governments can no longer use their home-based companies to influence
policies abroad
D) The security arguments for restrictions on foreign ownership are really just a sham
to protect politically powerful industries and employment
19) Which of the following statements is NOT true about risk as it affects companies’
choice of locations for foreign operations?
A) Companies and their managers differ in their perception of what is risky
B) One company’s risk may be another company’s opportunity
C) There are means to reduce risk other than avoiding locations
D) Companies choose the cheapest location regardless of risks
20) Gates Manufacturing is striving to improve its performance reliability, speed of
delivery, and product reliability. Gates is most likely focusing on a(n) ________
strategy.
A) flexibility
B) innovation
C) dependability
D) quality
21) Which of the following is most important when designing an internal code of
conduct?
A) requesting U.N. oversight and intervention when necessary
B) communicating the code of conduct only to employees
C) reporting results to external stakeholders
D) forming local policies for each subsidiary
22) The primary responsibilities of the ________ are the assessment and collection of
all duties, taxes, and fees on imported merchandise, the enforcement of customs and
related laws, and the administration of certain navigation laws and treaties.
A) Bureau of Customs and Border Protection
B) U.S. Secret Service
C) Internal Revenue Service
D) Food and Drug Administration
23) Which term refers to a tariff or duty assessed as a percentage of an item’s value?
A) specific duty
B) effective tariff
C) ad valorem duty
D) compound tariff