1) A firm manufacturing clocks in its home country and through FDI is an example of
downstream vertical FDI.
2) Right-wing totalitarianism refers to the monopolization of power in the hands of a
communist party.
3) The cultural norms of a country is an example of an informal institution.
4) Britain, Denmark, and Sweden are the only three countries which did not join the
EU.
5) NAFTA is an example of an economic union.
6) Focusing on a firms internal resources and capabilities is the main emphasis of the
resource-based view.
7) All WTO members are obliged to follow WTO rulings on settlement disputes as law.
8) While emphasizing economic benefits, the most fundamental goal of global
economic integration is to promote peace.
9) Firms become MNEs because FDI provides OLI advantages that they otherwise
would not obtain.
10) Expropriation refers to the rewarding of property rights and incentives to MNEs
from the host country.
11) Innovation-seeking firms often single out the most efficient locations featuring a
combination of scale of economies and low cost factors.
12) The emerging markets of the world are placed at the top of the global economic
pyramid.
13) More than half the GDP produced by emerging markets comes from outside the
BRIC countries.
14) Ethical imperialism suggests that all ethical standards are relative.
15) Strategic hedging means spreading out activities in a number of countries in
different currency zones to offset the currency losses in certain regions through gains in
other regions.
16) FDI stock refers to the accumulation of inbound FDI in a country or outbound FDI
from a country.
17) Totalitarian countries have less political risk than democratic ones.
18) Valuable and rare, but imitable, resources and capabilities give firms a permanently
sustainable competitive advantage.
19) Which of the following is a disadvantage of alliances?
a. Lack of learning race
b. Partner opportunism
c. Value as real options
d. Scale up and scale down of investments
20) The owners of a firm are often known as _____.
a. executers
b. acquirers
c. brokers
d. shareholders
21) In the context of acquisitions, the similarity in cultures, systems, and structures
between firms is called _____.
a. strategic fit
b. acquisition premium
c. organizational fit
d. relational capability
22) Between 1870 and 1914, the value of most major currencies was maintained by
fixing their prices in terms of _____.
a. dollar
b. yuan
c. gold
d. diamonds
23) A recent survey revealed that more than nine out of ten people prefer a watch made
by firms in Switzerland to one made in India or U.S.A or any other country. This is an
example of _____.
a. agglomeration
b. the liability of foreignness
c. benchmarking
d. the country-of-origin effect
24) Which of the following statements best describes an FDI?
a. Setting up subsidiaries in foreign locations to do in-house work
b. Turning over an organizational activity to an outside supplier to perform on behalf of
the firm
c. Outsourcing an in-house activity to another domestic firm
d. Assigning firm activities to foreign firms in neighboring countries
25) Which of the following types of exchange rate policies is apt for a pure free market
economy?
a. Dirty float
b. Flexible float
c. Clean float
d. Target exchange rate
26) Which of the following features refers to the Schengen area in the EU?
a. A passport-free travel zone
b. An open migration zone for workers
c. A common currency zone
d. A Non-EU members zone
27) _____ refers to the problems associated with unauthorized diffusion of firm-specific
know-how.
a. Knowledge spill
b. Dissemination risk
c. Market imperfection
d. Technological spill
28) In a manufacturing industry, _____ refers to firm As agreement to give firm B the
rights to use As proprietary technology (such as a patent) or trademark (such as a
corporate logo) for a royalty fee paid to A by B.
a. franchising
b. bailment
c. adverse possession
d. licensing
29) Which of the following is a non-equity mode of entry?
a. Acquisitions
b. Joint ventures
c. Turnkey projects
d. Green-fields
30) The percentage of total industry sales accounted for by the top firms is called:
a. commonality ratio
b. collusion index
c. concentration ratio
d. barriers to entry
31) Which of the following characterizes a country’s current account?
a. A countrys current account deficit has to be financed by both purchases and sales of
assets
b. A country experiencing a current account deficit will see its currency appreciate
c. A countrys current account balance consists of exports plus imports of merchandise
and services minus income on the countrys assets abroad
d. A country experiencing a current account surplus will see its currency depreciate
32) Equity capital invested in non-public companies is called _____.
a. preferred equity
b. common equity
c. shared equity
d. private equity
33) A high degree of _____ suggests that if a firm attacks in one market, its rivals may
engage in cross-market retaliation.
a. market commonality
b. explicit collusion
c. multimarket competition
d. predatory pricing
34) The _____ strategy focuses on a number of foreign countries/regions, each of which
is regarded as a standalone market worthy of significant attention and adaptation.
a. global
b. home replication
c. localization
d. transnational
35) The _____ strategy focuses on development and distribution of standardized
products worldwide to reap maximum benefits from low-cost advantages.
a. transnational
b. localization
c. home replication
d. global standardization
36) Which of the following will cause a countrys currency to depreciate?
a. High interest rates on the currency
b. High inflation rates
c. High account surplus
d. High in-flow of foreign funds
37) Protectionism is similar to mercantilism as they both advocated _____.
a. dividing the nations of the world into three categories based on its innovation
capabilities
b. developing comparative advantages based on a nations locally abundant factors
c. specializing in economic activities in which a nation can have an absolute advantage
d. government involvement in international trade
38) Dumping is defined as a(n) _____.
a. exporter selling below cost abroad
b. company reducing prices after eliminating rivals
c. firm engaging its rival in multiple markets
d. domestic company selling above cost
39) In the LLL framework, _____ refers to an emerging MNEs ability to identify and
bridge gaps in its market.
a. leverage
b. linkage
c. learning
d. location
40) The _____ strategy endeavors to be simultaneously cost efficient, locally
responsive, and learning-driven around the world.
a. home replication
b. transnational
c. global
d. localization
41) The global product division structure supports the _____ strategy.
a. transnational
b. global matrix
c. multidomestic
d. global standardization
42) The _____ principle advocated that governments should actively protect domestic
industries from imports and vigorously promote exports.
a. comparative advantage
b. absolute advantage
c. protectionism
d. factor endowment
43) Which of the following assumptions are present in the classical theories of
international trade?
a. Different produces have different product life cycles
b. Transportation costs should underpin foreign trade
c. Resource mobility is not easy to achieve
d. No complications in foreign exchange transactions
44) Which of the following is an advantage of a weak US dollar?
a. US consumers benefit from low prices on imports
b. US tourists enjoy lower prices abroad
c. Foreign firms find it harder to acquire US targets
d. Foreign tourists enjoy lower prices in the US
45) _____ is defined as the conversion of one currency into another at Time 1, with an
agreement to revert it back to the original currency at a specific Time 2 in the future.
a. Currency swap
b. Currency hedging
c. Spot transaction
d. Forward transaction
46) In theory, a global matrix structure supports the goals of the _____ strategy.
a. transnational
b. localization
c. global standardization
d. home replication
47) Which of the following regions describes the euro zone?
a. A region that comprises EU members without a common currency
b. A region that comprises all EU members
c. A region that has passport-free traveling
d. A region that has a common currency
48) In the context of acquisitions, which of the following is a resource-based issue
faced by synergistic motives?
a. Herd behavior
b. Enhancement of market power and scale economies
c. Chasing fads of M&As
d. Self-interested actions
49) It is not realistic to implement a(n) _____ strategy when the firm has numerous
reactive employees and consumers.
a. accommodative
b. defensive
c. proactive
d. long-term
50) In which of the following ways do formal institutions regulate trade?
a. By inducing uncodified ethical beliefs into society
b. By putting faith in individuals to expose perceived wrong doings
c. By allowing the cultural beliefs of a society to dictate the terms of trade
d. By imposing laws that make certain trades unacceptable
51) If Apple invests in iPhone dealerships in Asia but does not engage in distribution in
the United States (Apples host country), then Apples Asian investment would be
considered a(n) _____.
a. downstream vertical FDI
b. upstream vertical FDI
c. horizontal FDI
d. FPI
52) Which of the following would lead to the standardization of world markets?
a. Semiglobalization
b. Localization
c. Total globalization
d. Total isolation
53) Technically, place in the four Ps of marketing is also often referred to as the _____.
a. production channel
b. vertical channel
c. distribution channel
d. traditional channel
54) At present, the number of proactive firms is still a minority.
55) The real options view gives the investor the levy of buying an option for initial
investment, holding it until a decision point is arrived, and abandoning it if necessary.
56) Discuss how the institution-based perspective accounts for the success of MNEs by
focusing on regional opportunities.
57) Inside directors are more independent and can better safeguard shareholder
interests.
58) Contractual alliances involve sharing of ownership.
59) Identify and describe two of the arguments that exist against the practice of
imposing antidumping restrictions on foreign firms.
60) What determines the success and failure of FDI around the globe?
61) As one of the Ps in the marketing mix, place is also often referred to as the
distribution channel.
62) European MNEs are more likely to appoint PCNs to lead subsidiaries.
63) In general, the failure rates of expatriates are very low.