1) Uneven income distribution is largely a problem confined to poorer nations.
2) A condition that is conducive to low transfer prices from the parent company to the
subsidiary and high transfer prices from the subsidiary to the parent company is where
the corporate income tax is lower in the subsidiary’s country than in the parent country.
3) Offshore manufacturing is attractive because it offers high labor costs, cheap
materials and components, and proximity to markets.
4) There is a positive correlation between economic freedom and economic growth.
5) Exporting helps firms improve productivity by utilizing unused capacity and
spreading research costs over more customers.
6) Helping a struggling domestic company through import restrictions frequently causes
other countries to retaliate.
7) The keiretsu structure long used by Japanese companies is an example of virtual
organization.
8) Central bank reserve assets are kept in three major forms: foreign-exchange reserves,
silver, and gold.
9) The introduction of the euro has eliminated currency as a barrier to trade in all
European countries.
10) Warehouse configuration is a particularly important consideration in the
establishment of a transportation network.
11) Coordination by plan deals with exact rules and procedures that spell out what
needs to be done and how.
12) A market economy gives individuals the freedom to decide where to work doing
what, how to spend or save money, and whether to consume now or later.
13) International marketing differs from domestic marketing in that ________.
A) marketing principles are different
B) consumers prefer domestically made merchandise
C) environmental variations require applying principles differently
D) low prices are a more important competitive factor in foreign markets
14) The ________ of a country specifies the rules that regulate behavior, the processes
by which laws are enforced, and the procedures used to resolve grievances.
A) political system
B) political philosophy
C) philosophical orientation
D) legal system
15) Increasingly, media reach audiences in more than one country, such as through
satellite TV that reaches multiple countries simultaneously. What is NOT a problem of
advertising on these media?
A) Because of reaching so many households, the cost is prohibitive
B) The product may not be available everywhere it is advertised
C) A company may not be able to advertise prices because they may differ among
countries
D) The advertisement may reach countries using different languages
16) On the basis of which interest rate are Euroloans often quoted?
A) United States Prime Rate
B) European Central Bank Offer Rate
C) London Interbank Offer Rate
D) International Monetary Fund Interest Rate
17) What is the main information-related challenge in global supply chain
management?
A) The Internet is growing too quickly in emerging markets
B) Few countries are technologically advanced
C) The industrial equipment and food/agriculture industries use e-commerce more than
industries such as defense and motor vehicles
D) Many emerging market networks cannot be managed through the Internet because of
the lack of technology
18) Which of the following statements is most likely true regarding vertical
differentiation?
A) MNEs with decentralized structures are more appealing to foreign workers
B) Most MNEs balance authority between headquarters and subsidiaries because of
globality
C) MNEs with many organizational levels are less likely to perform well in emerging
markets
D) Most MNEs implement centralized authority structures due to the complexity of
globalization
19) Zara creates, produces, and distributes most of its products from its headquarters in
Spain. Zara is most likely using a ________ configuration.
A) concentrated
B) coordinated
C) dispersed
D) logical
20) The benefits of retaining a core competency within a company and purposefully
threading that core competency through the value chain are referred to as ________
advantages.
A) internalization
B) domestic
C) location
D) ownership
21) An import tariff may be protective ________.
A) only if it is on imports the country produces domestically
B) if it serves primarily to restrict entry of hazardous materials
C) if it does not generate significant tax revenue for essential industries
D) even though the importing country does not produce the product
22) In addition to hiding losses, Parmalat engaged in financial statement fraud to
________.
A) pay shareholders
B) bribe government officials
C) support family-owned businesses
D) avoid paying high export/import tariffs
23) Which of the following is a sourcing strategy in the global context?
A) use only local purchasing agents
B) establish local purchasing offices
C) purchase only from global suppliers
D) assign domestic buyers for international purchasing
24) Pender Pharmaceuticals is considering expanding overseas and is focusing
primarily on the BRICs. Which of the following countries is one that Pender is
considering?
A) Indonesia
B) Chile
C) Russia
D) Bangladesh
25) Garrison Industries, a global firm, provides financial information in its annual
reports in more than one currency. Garrison Industries is most likely ________.
A) trying to provide information to users from different countries
B) providing footnotes to clarify its accounting practices
C) implementing global reporting requirements
D) altering its losses to show gains
26) Which of the following accurately identifies a difference between GATT and the
WTO?
A) GATT could enforce member compliance with agreements, but the WTO cannot
B) At its inception, GATT had more member nations than the WTO currently has
C) GATT withdrew the most-favored-nation clause, but the WTO reinstated it
D) GATT rules did not cover trade in services, but the rules of the WTO do
27) Ian, a financial manager, is preparing to transfer to Germany where he will serve as
an expatriate manager of his employer’s European office. With which type of legal
system will Ian most likely have to deal with in Germany?
A) mixed
B) common
C) civil
D) theocratic
28) All of the following are common problems associated with exporting and importing
EXCEPT ________.
A) managing financial risks
B) finding reliable intermediaries
C) matching foreign rivals’ prices
D) establishing distribution networks
29) Advocates of the comparable access argument for trade protection primarily assert
that domestic industries ________.
A) will deteriorate in countries that have lower import restrictions than their trading
partners
B) should be required to implement export-led development policies on foreign
competitors
C) are entitled to the same access to foreign markets as foreign industries have to their
markets
D) are forced to lower prices for domestic consumers because of foreign import
restrictions
30) Advantages of following a strategy of local responsiveness include the ________.
A) improved ability to transfer skills to employees in different locations
B) opportunity to adopt a global advertising program
C) ease in standardizing manufacturing methods across countries
D) flexibility to apply location-specific skills to local opportunities
31) Tests to substantiate the factor proportions theory have had mixed results most
likely because ________.
A) labor migration quickly outdates any studies
B) most countries have a favorable balance of trade
C) labor skills and education are not homogeneous
D) large and small countries have different trade policies
32) Using the same exchange rate to set the budget and monitor results ________.
A) allows management to focus on operating variances instead of exchange-rate
variances
B) enables management to focus on both operating and exchange-rate variances
C) is an illegal reporting method according to the FASB
D) is the only method that can be used in Europe
33) How does a nation’s legal environment affect an MNE’s marketplace behavior,
especially when the rule of man prevails?
34) In a short essay, list and discuss the nontariff barriers that relate to direct price
influences: subsidies, aid and loans, customs valuations, and other direct price
influences.
35) What individual characteristics and qualifications should a company consider when
choosing managerial candidates for foreign assignments? Which one do you think is
most important? Why?
36) What has been the impact of NAFTA on trade and employment in NAFTA nations?
37) What is the gray market? Why are companies concerned about it?
38) Explain the rationale for and problems with making the infant-industry argument
work as intended.
39) What is configuration? Briefly list and discuss the factors that influence value chain
configuration.
40) Describe the pressures for local responsiveness that international companies face.