1) U.S. and U.K. companies tend to be more transparent than Japanese companies.
2) The essential-industry argument holds that industries with potential export
capabilities should be protected.
3) Demand for a country’s independently floating currency is a function of the demand
for that country’s goods, services, and financial assets.
4) The most-favored-nation policy is a WTO privilege that allows member nations to
restrict tariff cuts to members.
5) The Eurocurrency market is limited to exchanges that include the euro.
6) A culture with a preference for a problem-solving style that first settles principles is a
pragmatic culture.
7) In a production orientation, a company focuses on efficiency and product quality
when selling abroad.
8) Patents, copyrights, and trademarks are all examples of property rights that may be
licensed to one company from another.
9) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) permits developing countries to import generic products from other countries
if they don’t have the capacity to produce generic drugs.
10) As companies expand internationally, they must change their organizational
structure and operating strategies to take advantage of regional trading groups.
11) Companies around the world typically find it easy to locate a number of executives
able and willing to run foreign operations.
12) Germanic countries tend to be more transparent than the United States and the
United Kingdom in terms of financial reporting due to their reliance on bank financing.
13) The goal of a free trade agreement is to abolish all tariffs among member countries.
14) The creation of a code of conduct includes steps such as establishing a global
policy, communicating the code to employees, ensuring that the policies are followed,
and reporting results to external stakeholders.
15) A U.S. firm plans to shift from exporting to production in China to serve the
Chinese market. Which of the following statements would best explain this decision?
A) China’s currency is appreciating relative to the U.S. dollar
B) The firm is nearing capacity utilization in its U.S. plant
C) The company need not alter its products for the Chinese market
D) Transportation costs have become low relative to production costs
16) It is sometimes contended that by imposing import controls a country might be able
to increase its exports. This contention is premised on ________.
A) the country’s simultaneous currency depreciation, which decreases the price of its
exports
B) using the import taxes to institute efficiency measures in potential export industries
C) raising domestic prices in one industry so that the excess domestic profits in that
industry can compensate for the cost of dumping products from another industry into
foreign markets
D) getting other countries to maintain or relax their current import restrictions instead
of escalating restrictions in a trade war
17) Ray, a marketer at a global firm, monitors the exchange rate of countries in which
the firm sells its products. Ray is most likely concerned about changes in ________.
A) operating expenses
B) exporting policies
C) product demand
D) quality control
18) All of the following are benefits of using free trade zones EXCEPT ________.
A) streamlined customs procedures
B) reduced or eliminated duties
C) deferred or eliminated taxes
D) improved quality of goods
19) Why should managers have an understanding of trade protectionism?
A) Trade protectionism targets factor endowments, thus affecting the best country to
locate production
B) Trade protectionism affects a company’s ability to sell abroad and ability to compete
at home
C) Trade protectionism affects the number of people permitted to practice a specific
profession
D) Trade protectionism prevents companies’ enactment of merger and acquisition
agreements
20) Which of the following is a true statement about the Euroloan market?
A) It is extremely competitive and lenders operate on razor-thin margins
B) It is extremely competitive but lenders still receive substantial margins
C) It is monopolistic, yet lenders operate on razor-thin margins
D) It is monopolistic and lenders receive substantial margins
21) One of the potential problems for an MNE that practices too much polycentrism is
________.
A) demanding that local communication methods be replaced with modern technology
B) underestimating the complexity of introducing new management practices
C) losing innovative capabilities to less-risky host-country practices
D) relying too much on home-country directions and policies
22) The fundamental limitation of a matrix structure is that it ________.
A) creates a poor organizational culture
B) isolates upper management from operational levels
C) institutes a dual hierarchy that violates the unity-of-command principle
D) introduces more errors in the decision-making process due to the speed of the
process
23) In which of the following countries would business activity, given its status as a
“not free” marketplace, be under the greatest government control?
A) Vietnam
B) Pakistan
C) India
D) Brazil
24) Which of the following is NOT a characteristic of capitalism?
A) private ownership of assets
B) right to profit from individual effort
C) state control of factors of production
D) private control of investment
25) Which of the following best explains recent governmental relaxation of restrictions
on cross-border trade or resource movements?
A) Most countries face shortages of workers, so they seek immigrants who can help
them produce more
B) Governments believe that this will decrease the need to make their own companies
more innovative
C) Consumers increasingly want to buy goods and services produced in their own
countries, making restrictions less necessary
D) Governments believe that domestic producers will become more efficient as a result
of foreign competition
26) Logan Electronics has a production facility in Bolivia. Recently, the firm was taxed
at a significantly higher rate than a local electronics company. Which type of political
risk is Logan most likely experiencing?
A) systemic
B) procedural
C) distributive
D) catastrophic
27) A kanban system is best described as a system that ________.
A) uses special locations for storing imported inventory to avoid paying duties
B) seeks to improve quality by setting a rigorous goal of zero defects
C) electronically links together suppliers, customers, and intermediaries
D) facilitates JIT by using cards to control the flow of production through a factory
28) Which of the following is the most accurate statement about culture?
A) Cultural variables can easily be isolated from other factors such as economic and
political conditions
B) Although most cultural variables are universal, the forms these variables take differ
from culture to culture
C) Most cultural variables are superficial and can easily be influenced by environmental
factors
D) Within a culture, everyone responds to particular cultural variables the same way
29) If a foreign currency is quoted in American terms (the direct quote) and the forward
rate for a foreign currency is less than the spot rate, the foreign currency is selling at a
________.
A) forward premium
B) backward discount
C) backward premium
D) forward discount