Donna Bader, Globalization opponent
Donna Bader spent her final year at college studying the effect of various economic
factors on the economy of developing nations. Based on the results of her study, she
concluded that globalization does these countries more harm than good.
International business is any commercial transaction that crosses the borders of two or
more nations.
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
An import tariff is levied by the government of a country that a product is passing
through on its way to its final destination.
If an individual is traveling to another country and wants to exchange currencies at his
bank before departing, he will be quoted the spot rate since he is exchanging on the
spot.
An exchange rate requiring delivery of the traded currency within two business days is
called a cross rate.
A company often undertakes in-house production when it can manufacture a product for
less than it must pay another business to produce it.
Donna Bader, Globalization opponent
Donna Bader spent her final year at college studying the effect of various economic
factors on the economy of developing nations. Based on the results of her study, she
concluded that globalization does these countries more harm than good.
Imports are goods and services purchased abroad and brought into a country.
In ethnocentric staffing, operations outside the home country are managed by
individuals from the host country.
The primary disadvantage of the gold standard was that it increased exchange-rate risk.
An international division structure reduces the authority of country managers in an
organization’s subsidiaries.
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
An embargo is the most restrictive nontariff trade barrier available.
Developed nations normally have the most active counterfeiting markets.
International firms tend to support reasonable labor and environmental laws to expand
future local markets for their businesses.
Major financial activities take place in booking centers.
Patient money is the cash that can be quickly withdrawn from a market in times of
crisis.
Which of the following communication strategies adapts a product to the requirements
of the international market while retaining its original marketing communication?
A) product/communications extension
B) product extension/communications adaptation
C) product adaptation/communications extension
D) product/communications adaptation
In the ________ of the international product life cycle, competition from other
companies selling similar products pressures companies to lower prices in order to
maintain sales levels.
A) product decline stage
B) new product stage
C) maturing product stage
D) standardized product stage
Which of the following forecasting techniques employs statistical models based on key
economic indicators to forecast exchange rates?
A) financial analysis
B) fundamental analysis
C) probability bounds analysis
D) technical analysis
Which of the following is true of quotas?
A) They are the most common type of trade barrier.
B) They help domestic producers maintain their market shares and prices.
C) Their licenses are granted by governments to other nation companies on a five-year
basis.
D) They lead to a decrease in the prices of intermediate goods.
The principle that a difference in nominal interest rates supported by two countries’
currencies will cause an equal but opposite change in their spot exchange rates is called
the ________.
A) Guidotti-Greenspan rule
B) international Fisher effect
C) comparative advantage theory
D) efficient market view principle
A country that has recently increased the portion of its national production and exports
derived from industrial operations is called a(n) ________.
A) newly industrialized country (NIC)
B) developing country
C) emerging market
D) developed country
Which of the following is least likely to be caused by poor fiscal and monetary policies
of a nation’s central bank?
A) high rates of inflation
B) increasing budget deficits
C) depreciating currency
D) increasing levels of innovation
Scenario: Chong’s analysis of international markets
John Chong is an inexperienced entrepreneur in global business. He wants to sell his
product, Zulu doll, a toy for kids below the age of eight, in every corner of the world.
He wants to examine all potential markets but wants to keep his costs low. John has
asked you to explain a few things about analyzing international markets.
When screening a potential market, which of the following would you advise John to do
first?
A) assess the national business environment
B) select the market
C) identify basic appeal for markets
D) measure market potential
Which of the following is currently a member of the European Free Trade Association?
A) Slovakia
B) Ireland
C) Norway
D) Italy
Two major forces that underlie the expansion of globalization are falling barriers to
trade and investment, and ________.
A) elevation of nationalism
B) rise of closed economies
C) political stagnation
D) technological innovation
Which of the following allows a country to earn back some of the currency it pays out
for imports?
A) switch trading
B) counterpurchase
C) buyback
D) barter
Scenario: Learning the Americas’ Way
The newly-formed countries that emerged after the break up of the United Frontier
States (UFS) are interested in learning more about integration in the Americas. Because
the former UFS nations have many similarities with the countries of North and South
America, they believe they can learn from the integration experience in the Americas.
To that end, they pose the following questions. The NAFTA is best considered a(n)
________.
A) free trade area
B) customs union
C) economic union
D) political union
A firm that buys from another company a good or service that is part of the firm’s
value-added activities is practicing ________.
A) outsourcing
B) vertical integration
C) horizontal integration
D) lean production
Both absolute and comparative advantage theories assume that ________ is the only
resource used in the production process.
A) land
B) labor
C) capital
D) equipment
Which of the following is true of foreign direct investment?
A) The contributions of entrepreneurs and small businesses to foreign direct investment
is insignificant.
B) Globalization has led emerging markets to undertake less foreign direct investment
and industrialized nations to undertake more foreign direct investment.
C) The desire to increase a firm’s global competitiveness drives many cross-border
mergers and acquisitions.
D) Foreign direct investment does not involve obtaining a degree of control in a
company.
Scenario: Topsy Turvey Toys and Ureshi Toys
Topsy Turvey Toys is a U.S.-based toy retailer that buys all its merchandise from Ureshi
Toys, a Japan-based toy manufacturer with production facilities in twelve nations.
Ureshi Toys markets its toys globally without modification.
Topsy Turvey Toys buying its merchandise from Ureshi Toys is an example of
________.
A) importing
B) exporting
C) outsourcing
D) insourcing
The ________ is an IMF asset whose value is based on a weighted basket of four
currencies, including the U.S. dollar, European Union euro, Japanese yen, and British
pound.
A) special drawing right
B) gold standard
C) Eurobond
D) currency board
________ appeals to companies because it lowers the amount of taxes the companies
must pay.
A) Debt
B) Equity
C) Stock value
D) Enterprise value
Scenario: Learning the Americas’ Way
The newly-formed countries that emerged after the break up of the United Frontier
States (UFS) are interested in learning more about integration in the Americas. Because
the former UFS nations have many similarities with the countries of North and South
America, they believe they can learn from the integration experience in the Americas.
To that end, they pose the following questions. Bolivia, Colombia, Ecuador, and Peru
belong to the ________.
A) Latin American Free Trade Association (LAFTA)
B) Central American Common Market
C) Andean Community
D) Latin American Integration Association (ALADI)
What types of information are found in a typical industry analysis? How can companies
use this information?
Describe the three categories of tariffs, and explain how the Smoot-Hawley Act of 1930
influenced tariffs in the United States.
Explain why governments impose restrictions on free trade.
Describe the relationship between culture and the physical environment.
Discuss free trade areas as a level of regional economic integration. How can regional
integration enable employment opportunities?
Describe each instrument that governments use to promote trade.
Explain the concepts of trade creation and trade diversion. Who are the winners and
losers in each scenario?
Briefly describe any two of the three main components of the international capital
market.
Briefly describe the gold standard, its advantages, and why it collapsed.