The move toward a global economy has strengthened the adoption of conservative
economic policies by developing nations.
Answer:
Since its establishment in January 1, 1999, the euro has steadily appreciated against the
U.S. dollar, reaffirming the ability of the European Central Bank to manage monetary
policy within the euro zone.
Answer:
International firms pursuing an ethnocentric staffing policy may be better able to create
value from the pursuit of experience curve and location economies than firms pursuing
other staffing policies.
Answer:
A firm’s ability to use a pull marketing strategy is limited in some countries by media
availability.
Answer:
The higher the firm’s profit per unit sold is, the greater its profitability will be, all else
being equal.
Answer:
Multinational corporations do not qualify to act as moral agents within the framework
of rights theories.
Answer:
Substantial impediments, such as barriers to foreign direct investment, make it difficult
for firms to achieve the optimal dispersion of their productive activities to locations
around the globe.
Answer:
Firms that pursue an international strategy focus on increasing profitability by reaping
the cost reductions that come from economies of scale, learning effects, and location
economies.
Answer:
A country’s economic system and property rights regime do not influence the
attractiveness of the country as a market or investment site.
Answer:
In international business, joint ventures with local partners face a significantly higher
risk of being subject to nationalization.
Answer:
Franchising is essentially the service-industry version of licensing, although it normally
involves much longer-term commitments than licensing.
Answer:
In general, as countries get richer, they enact tougher environmental and labor
regulations.
Answer:
By lowering production costs, subsidies help foreign competitors gain export markets.
Answer:
Spot exchange rates and the 30-day forward rates are the same.
Answer:
The mission of the Foreign Credit Insurance Association is to provide financing aid that
will facilitate exports, imports, and the exchange of commodities between the United
States and other countries.
Answer:
Confucianism and Confucian ethics influence behavior and shape culture in parts of
Asia, hence it is correct to characterize Confucianism as a religion.
Answer:
Although free markets and democracy can still be found around the world, the tide has
been running in favor of command economies and totalitarian dictatorships.
Answer:
Ownership restraints and performance requirements are the two most common ways in
which host governments restrict FDI.
Answer:
Commercial banks and major accounting firms are rarely willing to assist small firms in
starting export operations due to high default risks.
Answer:
Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by
pursuing retaliatory trade policies rather than free trade policies.
Answer:
Under the fixed exchange rate system, the dollar could be devalued only if all countries
agreed to simultaneously revalue against the dollar.
Answer:
Economists refer to knowledge ‘spillovers” as externalities, and there is a
well-established theory suggesting that firms can benefit from such externalities by
locating close to their source.
Answer:
According to the theory of comparative advantage, potential world production is greater
with unrestricted free trade than it is with restricted trade.
Answer:
When managers in an international business consider market segmentation in foreign
countries, they need to be cognizant of the differences between countries in the
structure of market segments.
Answer:
Economic freedom does not necessarily equate with political freedom.
Answer:
In international commerce, a sight draft allows for a delay in payment.
Answer:
By adopting the Contracts for the International Sale of Goods (CIGS), a nation signals
to other adopters that it will treat the convention’s rules as part of its law.
Answer:
In Amartya Sen’s view, development is solely an economic process, and not a political
process.
Answer:
Currency swaps are transacted between international businesses and their banks,
between banks, and between governments when it is desirable to move out of one
currency into another for a limited period without incurring foreign exchange risk.
Answer:
A drawback of exporting is that tariff barriers can make it uneconomical as a mode of
entry into a foreign market.
Answer:
A country has an absolute advantage in the production of a product when it is more
efficient than any other country in producing it.
Answer:
The term political economy is used to stress the fact that the political, economic, and
legal systems of a country are independent of each other.
Answer:
The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government
officials to gain business.
Answer:
Licensing is not a good option if the competitive advantage of a firm is based upon
managerial or marketing knowledge that is embedded in the routines of the firm or the
skills of its managers, and that is difficult to codify in a “book of blueprints.”
Answer:
According to the product life-cycle theory, the locus of global production initially
switches from developing countries to other advanced nations and then from those
nations to the United States.
Answer:
Which of the following theories began to emerge when economists pointed out that the
ability of firms to attain economies of scale might have important implications for
international trade?
A.Comparative advantage
B.Heckscher-Ohlin
C.New trade
D.Product life-cycle
E.Absolute advantage
Answer:
According to the product life-cycle theory, the high cost of U.S. labor gave U.S. firms
an incentive to:
A.lower costs of services to offset a fall in demand.
B.develop cost-saving process innovations.
C.invite foreign direct investment in domestic industries.
D.embrace and promote open market capitalism.
E.import new consumer products and export agricultural products.
Answer:
Although it normally involves much longer-term commitments, franchising is
essentially the service industry version of:
A.exporting.
B.licensing.
C.foreign direct investment.
D.greenfield investment.
E.diversifying.
Answer:
Which of the following refers to systematic reductions in production costs that have
been observed to occur over the life of a product?
A.Experience curve
B.Learning effects
C.Location economies
D.Efficiency slope
E.Economies of scale
Answer:
As a result of consumer surplus, a firm typically charges a lower price for a good or
service than the value placed on it by customers because:
A.the value creation results in a corresponding reduction in costs of production.
B.it is highly unlikely that the same good or service will be available to the customers
from other firms.
C.the firm is competing with other firms for the customer’s business.
D.the firm charges a price that reveals a consumer’s assessment of the product’s value.
E.the firm creates value for the customer by producing a wide range of products.
Answer:
Which of the following is an example of concerns over national sovereignty acting as
an impediment to regional economic integration?
A.The Organization of the Petroleum Exporting Countries regulating the supply of
petroleum as a cartel
B.The Asia-Pacific Economic Cooperation failing to establish itself as a regional
arrangement
C.Admission of Eastern European nations into the European Union
D.Great Britain refusing to adopt the common currency of the European Union, the
euro
E.The rise of the World Trade Organization
Answer:
Which of the following are social conventions concerning things such as the
appropriate dress code in a particular situation, good social manners, eating with the
correct utensils, neighborly behavior, and the like?
A.Folkways
B.Proscriptions
C.Reprobations
D.Fellowships
E.Taboos
Answer:
Exporting is nearly always a way to increase the revenue and profit base of a company
because:
A.there is little competition in the international market.
B.foreign governments encourage imports from other countries.
C.international markets are less complex than their domestic counterparts.
D.the international market is much larger than the domestic market.
E.it does not involve wasting resources on paperwork.
Answer:
Which of the following strategies is most likely to be pursued by a firm when there are
strong pressures for cost reductions and demands for local responsiveness are minimal?
A.Domestic strategy
B.Global standardization strategy
C.International strategy
D.Transnational strategy
E.Nationalization strategy
Answer:
Trade creation occurs when lower-cost external suppliers are replaced by higher-cost
suppliers within the free trade area.
Answer:
Jonathan is the manager of his company’s facilities in the Philippines. He believes in
ensuring the exact same standards of working conditions, wages, and labor management
in the Philippines as practiced by the company’s corporate office in its home country,
the United States. His policy does not always lead to profits because of the vast cultural
differences between the two nations. Which of the following straw men approaches to
ethics is most likely being adopted by Jonathan?
A.Naive immoralism
B.Cultural relativism
C.Righteous moralism
D.Sullivan principles
E.Just distribution
Answer:
Which of the following type of laws hold a firm and its officers responsible when a
product causes injury, death, or damage?
A.Product equity
B.Product failure
C.Product liability
D.Product parity
E.Product testing
Answer:
Which view of FDI traces its roots to Marxist political and economic theory?
A.Radical
B.Free market
C.Pragmatic nationalism
D.Comparative advantage
E.Pluralist
Answer:
Which of the following is intended to build a manager’s skills over his or her career
with a firm?
A.Ethnocentrism
B.Cultural toughness
C.Total Quality Management
D.Management development
E.Learning effects
Answer:
Which of the following is in a country’s best interests, according to the main tenet of
mercantilism?
A.Importing products from developing rather than developed countries
B.Importing products even if they are efficiently produced at home
C.Importing less specialized goods rather than attempting to make them at home
D.Minimizing exports and maximizing imports
E.Maintaining a trade surplus
Answer:
Which of the following is a consequence of using just-in-time inventory systems?
A.It slows down inventory turnover.
B.It increases inventory holding costs.
C.It increases the amount of working capital a firm needs.
D.It can help firms improve product quality.
E.It does not allow defective inputs to be spotted immediately.
Answer:
Which of the following is true of the provisions of the North American Free Trade
Agreement?
A.It does not allow financial institutions unrestricted access to the Mexican market.
B.It abolishes special treatment (protection) given to Mexican energy and railway
industries.
C.It allows lowering of national environmental standards to lure investment.
D.It seeks the removal of most barriers on the cross-border flow of services.
E.It does not deal with the protection of intellectual property rights.
Answer:
For more than 2,000 years until the 1949 communist revolution, which of the following,
which teaches the importance of attaining personal salvation through right action, was
the official ethical system of China?
A.Maoism
B.Feng Shui
C.Confucianism
D.Shintoism
E.Buddhism
Answer:
Which of the following components of Porter’s diamond is particularly important in
shaping the attributes of domestically made products and in creating pressures for
innovation and quality?
A.Basic factor endowments
B.Advanced factor endowments
C.Firm strategy
D.Demand conditions
E.Supporting industries
Answer:
The United Republic emphasizes individual performance and achievements in every
sphere of society. Which of the following statements is true about the society of this
country?
A.The country suffers from a low degree of dynamism and innovation.
B.The country has a low degree of managerial mobility.
C.There is a low degree of entrepreneurial activity in the country.
D.The employees in this country will lack loyalty and commitment to a company.
E.Managers in such a country have highly developed company-specific skills but they
lack general skills.
Answer:
Which of the following statements is true about the class system in the United States
when compared to the British class system?
A.The class system in the United States is more pronounced than in Britain.
B.In the United States, upward social mobility cannot normally be achieved in one
generation.
C.Class membership in the United States is mainly determined by an individual’s
background and schooling.
D.In American society, the extreme emphasis on individualism increases the impact of
class background on business operations.
E.Successful individuals from humble origins are highly respected in American society.
Answer:
Which of the following is an argument for a floating exchange rate system?
A.Each country should be allowed to choose its own inflation rate.
B.Speculation in exchange rates dampens the growth of international trade and
investment.
C.Unpredictability of exchange rate movements makes business planning difficult.
D.Removal of the obligation to maintain exchange rate parity destroys a government’s
monetary control.
E.Trade deficits can be determined by the balance between savings and investment in a
country, not by the external value of its currency.
Answer:
Which of the following poses a problem for international businesses in the long run?
A.Using exchange rate instruments like the forward market and swaps
B.Volatility of the global exchange rate regime
C.Anti-inflationary monetary policies
D.Maintaining strategic flexibility by dispersing production to different locations
E.A policy of reduction in government spending
Answer:
According to the UN Charter, one of the four purposes of the UN is to:
A.be a center for harmonizing the actions of nations.
B.encourage high tariffs on imports of manufactured goods.
C.provide enhanced protection for patents.
D.promote the establishment of multinational treaties.
E.facilitate globalization of production.
Answer:
Adopting which kind of an exchange rate regime moderates inflationary pressures in a
country?
A.Nominal
B.Pegged
C.Pure “free float”
D.Clean float
E.Real
Answer:
In the context of individualism, which of the following is inconsistent with the works of
the ancient Greek philosopher Aristotle?
A.Guaranteeing individual freedom
B.Government dictating what is in the best interest of society
C.Guaranteeing self-expression
D.Committing to private ownership
E.Treating individual diversity as desirable
Answer:
Which of the following is an indicator of low human development in a country?
A.A score of 0.3 on the HDI scale
B.Rapid “democratization” of political communities
C.Large population due to a highly developed health care system
D.Giving citizens a voice in the important decisions made for the community
E.A higher GNI per capita than the United States
Answer:
Which of the following is an advantage of choosing exporting as a mode of entry into
foreign markets?
A.A firm can avoid the cost of establishing manufacturing operations in the host
country.
B.A firm shares the development costs and risks with its host partner.
C.A firm can earn returns from process technology skills in countries where FDI is
restricted.
D.A firm has access to local partner’s knowledge.
E.A firm has the ability to engage in global strategic coordination.
Answer:
In the country of Normian Republic, an individual’s right to own land is restricted to a
large extent on the basis that it runs counter to “the common good.” In this context,
which of the following is most likely to be the political system adopted by Normian
Republic?
A.Individualism
B.Democracy
C.Collectivism
D.Capitalism
E.Protectionism
Answer:
The European Council is considered to be the ultimate controlling authority within the
European Union (EU) because:
A.it monitors member-states to make sure they are complying with EU laws.
B.it has a monopoly in proposing EU legislation.
C.it has 754 members that are directly elected by the populations of the member-states.
D.draft legislation from the European Commission can become EU law only if the
council agrees.
E.it is the supreme appeals court for EU law.
Answer:
Which of the following refers to the institutional arrangements that govern exchange
rates?
A.Generally accepted accounting principles
B.General agreement on tariffs and trade
C.International monetary system
D.General agreement on trade in services
E.Financial management information system
Answer:
Describe Islamic fundamentalism.
Answer:
What is repatriation? What is its importance?
Answer:
List the three measures on which the Human Development Index (HDI) is based.
Answer:
Discuss Paul Samuelson’s critique of free trade.
Answer:
Briefly describe the new trade theory.
Answer:
Describe the different approaches that international businesses take to labor relations.
Answer:
Briefly describe how the creation of a single market through regional economic
integration offers significant opportunities. Provide an example.
Answer:
From a profit perspective based on the various international theories, how would a
business go about choosing locations for its various productive activities?
Answer:
Production and logistics functions must be able to accommodate demands for local
responsiveness. Elaborate.
Answer:
What are grease payments? Are they acceptable by the U.S. law and OECD
convention?
Answer:
Describe the Jamaica agreement of 1976. What were the main elements of this
agreement?
Answer:
How does Porter’s theory predict patterns in international trade? Do his predictions turn
out to be accurate in a real-world scenario?
Answer:
Describe Dunning’s arguments regarding the location-specific advantages.
Answer:
What are operations of a firm? How can operations be categorized?
Answer:
Compare and contrast the principles of Hinduism and Buddhism.
Answer:
What are the different types of competitive pressures that firms competing in a global
marketplace face? How can firms respond to such pressures?
Answer:
What are the reasons for the failure of spouses to adjust to an expatriate’s foreign
posting?
Answer:
Briefly discuss product safety and liability laws.
Answer:
Discuss the arguments for and against globalization regarding jobs and income.
Answer:
What is the difference between a sight draft and a time draft?
Answer: