International Business: The Challenges of Globalization, 7e (Wild)
Chapter 1 Globalization
1) International business is any commercial transaction that crosses the borders of two or more
nations.
2) Imports are goods and services purchased abroad and brought into a country.
3) Multinational corporations (MNCs) have direct investments abroad in multiple countries.
4) A born global firm is a company that engages in international business from or near its
inception.
5) The term “globalization of production” refers to convergence in buyer preferences in markets
around the world.
6) Products marketed in all countries essentially without any changes are known as continental
products.
7) The General Agreement on Tariffs and Trade (GATT) was designed to promote free trade by
reducing both tariffs and nontariff barriers to international trade.
8) The power of the General Agreement on Tariffs and Trade (GATT) to settle trade disputes is
what sets it apart from the World Trade Organization (WTO).
9) The World Trade Organization’s dispute settlement system has the ability to penalize
offending nations.
10) NAFTA is the international organization that enforces the rules of international trade
worldwide.
11) Resistance to worldwide trade agreements has resulted in some nations placing greater
emphasis on regional pacts.
12) Gross national product (GNP) is the value of all goods and services imported into a country
over a one-year period.
13) Extranets give distributors and suppliers access to a company’s database to place orders or
restock inventories electronically.
14) A characteristic of the world’s least-global nations is low levels of corruption.
15) The role of the World Bank is to provide financing for national economic development
efforts.
16) The rules of the international monetary system are enforced by the World Bank.
17) Critics of globalization argue that it eliminates jobs in developing nations.
18) Pro-globalization economists believe globalization increases wealth in both developed and
developing nations.
19) Flexible labor markets allow workers to be redeployed rapidly to sectors of the economy
where they are highly valued.
20) Supporters and critics of globalization appear to agree that globalization prevents dislocation
in labor markets.
21) Critics of globalization believe the overall gains that accrue to national economies are worth
the lost livelihoods of some workers.
22) Export-processing zones are special areas in which companies engage in tariff-free importing
and exporting.
23) Research shows that pollution-intensive U.S. companies tend to invest in nations with lenient
environmental standards.
24) International firms tend to support reasonable labor and environmental laws to expand future
local markets for their businesses.
25) Small businesses will be completely immune to events in the international business
environment.
26) Any commercial transaction that crosses the borders of two or more nations is known as
________.
A) domestic marketing
B) market segmentation
C) international business
D) global manufacturing
27) Goods and services purchased abroad and brought into a country are called ________.
A) gross domestic products
B) exports
C) gross national products
D) imports
28) ________ are all goods and services sold abroad and sent out of a country.
A) Net national products
B) Exports
C) Gross domestic products
D) Imports
29) Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in the
United States is an example of a ________.
A) net national product
B) U.S. export
C) U.S. import
D) gross domestic product
30) Which of the following terms applies to the sale of a particular brand of jeans manufactured
in the U.S. and sold in Canadian stores?
A) exporting
B) outsourcing
C) insourcing
D) importing
31) A business that has direct investments (in the form of marketing or manufacturing
subsidiaries) abroad in several countries is called a ________.
A) dummy corporation
B) shell corporation
C) multinational corporation
D) domestic corporation
32) The rise of a new international entity called the ________ suggests that any company,
regardless of age, experience, and resources, can engage in international business.
A) transnational corporation
B) multinational corporation
C) born global firm
D) global firm
33) Small companies selling traditional products benefit from ________.
A) the barriers to trade that restrict their products from crossing domestic boundaries
B) increased investment by foreign competitors in domestic markets
C) government policies that seek to regulate the flow of capital across national borders
D) technology that lowers the costs and difficulties of global communication
34) ________ is an effective alternative to traditional distribution channels for firms that sell
digitized products.
A) Dual licensing
B) Electronic distribution
C) Visual merchandising
D) Digital switchover
35) ________ is the trend toward greater economic, cultural, political, and technological
interdependence among national institutions and economies.
A) Privatization
B) Heterogenization
C) Globalization
D) Decentralization
36) Globalization is characterized by ________.
A) the demise of democracy within a nation
B) national boundaries becoming less relevant
C) the fortification of trade barriers
D) rigid foreign relations policies
37) As a result of globalization, Argonia finds that its national borders are becoming less
relevant. This indicates that Argonia is undergoing ________.
A) denationalization
B) standardization
C) reorganization
D) internationalization
38) The term ________ refers to entities cooperating across national boundaries.
A) internationalization
B) supranationalism
C) denationalization
D) multiculturalism
39) Which of the following refers to convergence in buyer preferences in markets around the
world?
A) heterogenization of markets
B) globalization of markets
C) segmentation of markets
D) nationalization of markets
40) Which of the following refers to the use of computer networks to purchase, sell, or exchange
products; service customers; and collaborate with partners?
A) e-commerce
B) telecommuting
C) data virtualization
D) virtual hosting
41) Gentian Violet is a dye manufacturing company that uses computer networks to sell its
products, service customers, and collaborate with partners. Which of the following technologies
is the company engaging in this scenario?
A) rapid prototyping
B) e-business
C) simulation
D) console automation
42) Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs indicates ________.
A) egalitarianism
B) denationalization
C) generalizability
D) sustainability
43) Most companies today operate in an environment of increased transparency and scrutiny
regarding their business activities. This is due to ________.
A) the rise of the social media
B) the prosperity of developing nations
C) the heterogeneity in markets
D) labor market flexibility in developing nations
44) An established consumer market that primarily comprises the middle class and possesses
efficient infrastructure is characteristic of ________ markets.
A) emerging
B) frontier
C) traditional
D) developed
45) ________ markets are characterized by the rural population migrating to cities for better pay
and thus, overloading cities’ infrastructures.
A) Traditional
B) Emerging
C) Virtual
D) Developed
46) Konesia is a country in which rising incomes are increasing the global demand for basic
products and services. Which of the following is the type of market featured in this country?
A) traditional market
B) emerging market
C) feudal market
D) virtual market
47) The population of a(n) ________ market is mostly rural and is characterized by poor
infrastructure with little credit or collateral.
A) emerging
B) traditional
C) developed
D) virtual
48) Kireki is a small country with a corrupt government. Its population is rural for most part and
citizens have few or no legal rights. Which of the following is the type of market featured in
Kireki?
A) developed market
B) traditional market
C) emerging market
D) virtual market
49) ________ is defined as the dispersal of production activities to locations that help a company
achieve its cost-minimization or quality-maximization objectives for a good or service.
A) Global offering
B) Globalization of production
C) Global governance
D) Globalization of markets
50) Which of the following is an example of globalization of production?
A) Canadian consumers who import food products from Australia
B) A German company which sells car components to British car makers
C) A U.S. company that builds a computer hardware manufacturing facility in India
D) A Swiss watch manufacturer that builds a manufacturing facility in Switzerland
51) Whereas relocating production to low-cost locales traditionally meant production of goods
almost exclusively, it increasingly applies to the production of ________.
A) domestic products
B) perishables
C) services
D) global brands
52) 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
53) As former competitors in many industries link up to challenge others on a worldwide basis,
________ occurs.
A) segregation
B) denationalization
C) consolidation
D) technological stagnation
54) The purpose of the General Agreement on Tariffs and Trade (GATT) was to ________.
A) create an international currency
B) regulate exchange rates
C) create regional trade organizations
D) promote free trade
55) ________ place limits on the quantity of a product being imported.
A) Embargoes
B) Trade blocs
C) Nontariff barriers
D) Anti-dumping duties
56) A major flaw of the original General Agreement on Tariffs and Trade (GATT) was that it
lacked the power to ________.
A) displace the WTO
B) reduce nontariff barriers to international trade
C) govern exchange rates
D) enforce world trade rules
57) The ________ replaced the institution of GATT while retaining all of the former GATT
agreements.
A) World Trade Organization
B) Federation of International Trade Association
C) Commonwealth of Nations
D) International Monetary Fund
58) The three main goals of the World Trade Organization (WTO) are to help the free flow of
trade, help negotiate the further opening of markets, and ________.
A) measure the extent of globalization across the world
B) settle trade disputes between its members
C) accelerate technological innovation
D) fund small traders in developing nations
59) Some nations encourage ________ because of recent resistance to worldwide trade
agreements.
A) regional pacts
B) homogeneous markets
C) product standardization
D) domestic manufacturing
60) The value of all goods and services produced by a country’s domestic and international
activities over a one-year period is the country’s ________.
A) gross domestic product (GDP)
B) gross world product (GWP)
C) gross national product (GNP)
D) gross state product (GSP)
61) Crystal inc. is a multifaceted company that deals with the mining, cutting, and selling of
diamonds. It gives distributors and suppliers access to its database to place orders or restock
inventories electronically and automatically. Which of the following is the network implemented
in the company?
A) intranet
B) chaosnet
C) extranet
D) ethernet
62) The KOF Index measures the ________.
A) distribution of the global workforce
B) extent of globalization
C) gross regional product of an area
D) extent of technological innovation in a nation
63) The ________ is an agency created to provide financing for national economic development
efforts.
A) Global Financial Markets Association
B) World Trade Organization
C) Financial Stability Board
D) World Bank
64) Which of the following was created to regulate fixed exchange rates and enforce the rules of
the International monetary system?
A) International Monetary Fund
B) World Trade Organization
C) European Union
D) World Bank