1) A geocentric staffing policy is one in which all key management positions throughout
the company’s global operations are filled by host-country nationals.
2) A company that prices its products at a desired margin over cost is using a cost-plus
strategy.
3) An argument for limiting foreign control of key industries is that decisions made
abroad can have adverse effects on the local economy.
4) MNEs typically design their control systems in terms of either market control,
bureaucratic control, or adaptation control.
5) From an accounting perspective, countries with strong equity markets and
shareholder orientations tend to be macro-uniform systems.
6) The shifting of trade to countries in a regional group at the expense of trade with
countries not in the group is known as trade internalization.
7) The International Accounting Standards Board is composed of international
securities regulators and is attempting to harmonize accounting standards through
issuing International Financial Reporting Standards.
8) Economic indicators such as GNI, and its expression in terms of per capita, growth
rate, and PPP, are not sufficient to develop a clear picture of the overall quality of life in
a country.
9) The headquarters-based compensation method bases the expatriate’s compensation
on the salary of a comparable job in the city where the MNE has its headquarters.
10) When different companies produce the same commodity, their costs are essentially
the same.
11) When free mobility of factors of production is added to a common market, the
result is a customs union.
12) Japanese companies are more likely to use sales as a measure of performance
evaluation of foreign operations than income-based measures.
13) The comparative advantage theory holds that a country will gain from trade even
though it can produce all goods more efficiently than other countries.
14) A quota is a quantitative limit on the amount of a product that can be traded.
15) Grover Enterprises is an MNE that relies on shared values among all employees to
idealize the preferred behaviors and identify performance measures within the
company. Grover is most likely applying a system of ________.
A) market control
B) bureaucratic control
C) planning control
D) clan control
16) Agreements on international product standards are hampered by all the following
factors EXCEPT ________.
A) that standardization increases production costs
B) consumer reluctance to change
C) the cost of redesigning and retooling
D) governments’ desires to protect investments
17) Studies indicate a strong correlation between the intensity of religious belief and
________.
A) a desire to convert productivity gains into more leisure time
B) an adherence to some attributes that lead to economic growth
C) the belief that material success is related to salvation
D) the degree of ethnocentrism exhibited in a culture
18) Which of the following are members of NAFTA?
A) the United States, Canada, and Mexico
B) North America and Latin America
C) the United Kingdom, the United States, and Canada
D) the United States, Canada, and Brazil
19) The same automobile company produces Fiats and Ferraris The company builds an
engine plant in China with low production costs for Fiats but not Ferraris The probable
reason is that ________
A) Fiat competes mainly on a focus strategy, whereas Ferrari competes mainly on a
mass-market strategy
B) Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly
on a focus strategy
C) Ferrari faces global competitors in China, whereas Fiat competes in China mainly
against Chinese competitors
D) although Ferrari did not build an engine plant, it will use the same Fiat engines in its
models
20) Lesser-known franchisors sometimes enter foreign countries with company-owned
outlets. A reason for doing this is to ________.
A) guarantee profits
B) avoid competition
C) compete with local stores
D) attract potential franchisees
21) Why is London most likely the top market for trading foreign exchange?
A) The British pound is the world’s top trading currency
B) Most multinational firms are headquartered in London
C) London is uniquely positioned geographically in terms of time zones
D) British traders have always been the most sophisticated in the world
22) Which of the following is NOT true about cultural diversity?
A) Companies may gain competitive advantages by bringing together people of diverse
backgrounds
B) Cultural diversity is most successful when domestic and foreign firms establish joint
ventures
C) Cultural diversity may help a company gain deeper knowledge about products and
services
D) The process of bringing people of different national cultures together is often
difficult
23) Avery Designs is an MNE with a diverse portfolio of products including cookware
and clothing. Both the foreign and domestic operations for the firm’s cookware products
report to the same manager. Which structure is most likely used by Avery?
A) matrix division
B) product division
C) international division
D) geographic division
24) Falcon Enterprises is an MNE that uses price competition and relative market share
to establish internal performance benchmarks and standards. The firm is most likely
applying a system of ________.
A) bureaucratic control
B) market control
C) standardization control
D) clan control
25) Some countries reverse engineer pharmaceutical products ________.
A) because they know that generic products are inherently better than branded products
B) to lower the cost of certain drugs to the domestic market
C) as a way to charge higher prices in domestic markets
D) to comply with international patent laws
26) When a large company and a small company enter a collaborative arrangement,
________.
A) the large company is expected to contribute more to the arrangement
B) the large company is likely to be more active in the venture
C) the small company is more likely to view the collaboration’s expansion as
competition to itself
D) the small company is likely to be disadvantaged if legal action is necessary to solve
a dispute
27) The importance of using a brand to convey the perception of whether a firm will
deliver what it promises is more critical in ________.
A) countries without strong trademark protection
B) selling to mass markets than in selling to niche markets
C) countries with strong cultural characteristics of uncertainty avoidance
D) selling industrial products than final consumer products
28) In a ________ economy, certain sectors of the economy are left to private
ownership and free market mechanisms, while other sectors have significant state
ownership and government planning.
A) state-directed
B) market
C) command
D) mixed
29) The financial reports and information provided by businesses is primarily used by
all of the following EXCEPT ________.
A) educators
B) investors
C) creditors
D) lenders
30) Which of the following is NOT a likely reason for companies to act more ethically?
A) Consumer boycotts may result from unethical corporate behavior
B) Irresponsible and unethical actions may lead to legal problems for MNEs
C) Unethical or irresponsible behavior can negatively impact employee morale
D) The U.N. Global Compact enforces fines on global firms that fail to act ethically
31) The view that globalization is inevitable is most likely based on the belief that
________
A) international organizations will replace nation-states
B) protesters against globalization will be persuaded to change their views
C) people want more global homogeneity of cultures
D) technical advances in transportation and communications are highly persistent
32) What are the three levels of quality standards?
A) general, industry-specific, and company
B) general, international, and domestic
C) employee, company, and customer
D) company, international, and industry-specific
33) A physician, who is a citizen of and licensed in Country A, meets the professional
licensing requirements of Country B. The physician will most likely ________.
A) have to pass a language proficiency exam before being allowed to work in Country
B
B) not be allowed to work in the not-for-profit sector in Country A or Country B for a
set period
C) have to get a work permit from Country B’s immigration authorities to work in
Country B
D) have to work in the not-for-profit sector in Country B for a period of time before
being permitted to work for a profit-seeking organization
34) What factors complicate the international transportation of goods? How can a firm
make the process more efficient?
35) What problems are common with the published data available about different
countries?
36) Are commodity agreements effective? Why or why not?
37) What is capital budgeting? What types of risks are involved? How can an MNE
manage these risks?
38) What is the Foreign Corrupt Practices Act? How has this law affected ethical
behavior among international businesses?
39) How do countries differ in terms of taxation? In regards to taxation, why do some
MNEs turn to offshore financial centers? Why are offshore financial centers a concern
to the OECD?
40) What is the Industry Organization (IO) paradigm? Discuss the underlying
assumptions of this model.
41) What metrics are used to measure the performance of an MNE? How is the
balanced scorecard approach unique?