Chapter 01: Introduction to International Management
TRUE/FALSE
1. The process of applying management concepts and techniques in a multinational environment is called
international management.
2. Offshoring occurs when activities that were once part of a company’s internal operation, are performed
by other firms outside of the U.S. at a lower cost.
3. The number of jobs insourced to the U.S. increased even more than those outsourced in 2000.
4. International business focuses on how individuals manage a global business.
5. Tariffs are defined as taxes on exported goods.
6. The Big Unit economy generally produced efficient but rigid, pyramidal organizations and government
departments that demanded excellence and accountability in work and educational quality.
7. The change in the amount of information available began with the globalization of television.
8. A sustaining innovation is an innovation that changes the economics or technological standard of an
industry.
9. The market for corporate control is beginning to expand worldwide.
10. The greatest opportunity for the poor around the world is protectionism.
11. China is now the largest recipient of foreign direct investment.
12. The original six members of the European Union were Austria, West Germany, Luxembourg, France,
Italy, and the Netherlands.
13. The countries that are part of the WTO are committed to the promotion of trade.
14. The Japan-Thailand Trade Agreement went beyond established regional trade agreements and allowed
Thailand greater access to rice grown in Japan.
15. China was a doctrinaire communist country until 1978.
16. During the last 30 years China has experienced economic growth averaging about 5 percent annually.
17. India has undergone an economic revival in recent years and now has a GDP of $3.7 trillion in
purchasing-power parity terms.
18. The International Monetary Fund was established in 1944 as part of the Bretton Woods Agreements.
19. In lending to different nations, the World Bank typically imposes standards of behaviors that require
the country to conduct certain reforms.
20. One of the recent trends in international management has been the growth of multinational and
bilateral agreements with the goal of encouraging free trade.
21. Under the Foreign Corrupt Practices Act, ‘‘facilitating payments’’ are not allowed.
22. The costs of the Sarbanes-Oxley Act have been quite high, particularly for small firms.
23. Business ethics is, in part, concerned with understanding the firm’s stakeholders and their needs and
desires.
24. All firms believe a business should add more to society than just jobs.
25. Ethical choices in international management often mean choosing between either two bad choices
where you try to do the least harm, or paradoxically, between two rights.
MULTIPLE CHOICE
1. Globalization results from a dramatic increase in all of the following EXCEPT:
a.
protectionism.
b.
international trade.
c.
cultural exchange.
d.
foreign direct investment.
2. _____ occurs when activities that were once part of a company’s internal operation, are performed by
other firms outside of the U.S. at a lower cost.
a.
Offshoring
b.
Outsourcing
c.
Telecommuting
d.
Open-sourcing
3. _____ focuses on how individuals manage a global business.
a.
International business
b.
Global business strategy
c.
International management
d.
Global trade
4. Which of the following focuses on the macro approach to operating internationally?
a.
Global trade
b.
International management
c.
Global business strategy
d.
International business
5. Which of the following statements about Big Unit Capitalism is false?
a.
It is characterized by a low degree of central planning even in many free-market
economies.
b.
The period immediately after World War II is referred to as the period of Big Unit
capitalism.
c.
Big Unit Capitalism from the end of World War II until 1971 produced a period of
unmatched economic growth.
d.
It is characterized by stable economics with large domestic firms.
6. Which of the following was a negotiated monetary order after World War II to govern monetary
relations and currency exchange rates among independent states?
a.
World Trade Organization
b.
Bretton Woods system
c.
Big Unit Capitalism
d.
GATT
7. The change in the amount of information available began with the globalization of:
a.
computers.
b.
telephones.
c.
television.
d.
radio broadcasting.
8. The flow of information about the need to be able to act on specific problems has led to a new
invention from Massachusetts Institute of Technology called the:
a.
self-replicating machine.
b.
digital fabricator.
c.
RepRap Project.
d.
fab lab.
9. Which of the following statements about the fab lab is false?
a.
It is a collection of commercially available machines that can be used to make anything
with features smaller than those of a computer chip.
b.
It includes a laser cutter that makes two-dimensional and three-dimensional structures.
c.
It contains a miniature milling machine that maneuvers a cutting tool in three dimensions
to make circuit boards and other precision parts.
d.
The components can machine objects with precision within one-millionth of a meter.
10. What is the purpose of the fab lab?
a.
To train managers around the world and to ensure that the global managers are using
consistent methods.
b.
To give backyard and desktop inventors access to design houses and job shops to produce
prototypes.
c.
Creating a Global Production Center to ensure state-of-the-art production methods are
used around the world.
d.
Focusing on quality manufacturing and a commitment to innovation, even at the lower end
of the marketplace.
11. For much of the post-Cold War era, most large-scale domestic and international lending or
underwriting was done by all of the following EXCEPT:
a.
big commercial banks.
b.
investment banks.
c.
credit unions.
d.
insurance companies.
12. A new technological innovation, product, service or business model that overturns the existing
dominant innovation or technological standard in the marketplace is called a(n):
a.
de facto innovation.
b.
evolutionary innovation.
c.
sustainable innovation.
d.
disruptive innovation.
13. _____ are bonds that corporations issue directly to the public in order to raise capital.
a.
Treasury bills
b.
Equity bonds
c.
Derivatives
d.
Commercial bills
14. The _____ of home mortgages occurred in the 1970s, when bonds in dominations as small as $1,000
were created.
a.
commercialization
b.
disruptive innovation
c.
privatization
d.
securitization
15. Which of the following offered an alternative opportunity for financing, while the public could invest
in growing firms or firms undergoing turnarounds while enjoying higher interest?
a.
Junk bonds
b.
Municipal bonds
c.
Treasury bonds
d.
Brady bonds
16. In the late 1980s, the then U.S. Treasury Secretary helped to get Latin American debts to the major
commercial banks converted into U.S. government-backed bonds. These bonds are called:
a.
High-yield bonds.
b.
Brady bonds.
c.
Junk bonds.
d.
Municipal bonds.
17. The greatest opportunity for the poor around the world is:
a.
tariffs.
b.
subsidies.
c.
free trade.
d.
protectionism.
18. Which of the following was one of the original members of the EU?
a.
Poland
b.
Denmark
c.
Austria
d.
Belgium
19. The establishment of rules by the World Trade Organization is an umbrella agreement called the:
a.
OECD.
b.
NAFTA.
c.
GATT.
d.
ITO.
20. The agreement signed in 1994 between Canada, the U.S., and Mexico, which has created a largely
free-trade zone between these three nations with all tariffs eliminated as of 2003, is:
a.
GATT.
b.
NAFTA.
c.
FTAA.
d.
WTO.
21. Which country is seen as the greatest market opportunity in the world?
a.
China
b.
India
c.
Japan
d.
Thailand
22. What is the IMF’s basic function?
a.
To improve the living standards of people in the developing world.
b.
To advise nations on how to establish sound political policies.
c.
To provide a means for the exchange of currencies among different nations.
d.
To fight poverty in all nations.
23. What is the stated goal of the World Bank?
a.
Lending to different nations if their balance of payments is such that they have shortages
that threaten the stability of their monetary system.
b.
Providing additional stability to the economic systems of the various member states of the
Bretton Woods Agreements.
c.
Providing a means for the exchange of currencies among different nations.
d.
Fighting poverty and improving the living standards of people in the developing world.
24. Which act grew out of revelations that some U.S. firms had paid bribes to obtain contracts overseas?
a.
Sarbanes-Oxley Act
b.
International Anti-Bribery and Fair Competition Act
c.
Foreign Corrupt Practices Act
d.
Contract Disputes Act
25. All of the following are major provisions of the Sarbanes-Oxley Act EXCEPT:
a.
CEO and CFO certification of financial reports.
b.
ban on loans to insiders, excepting executive officers and directors.
c.
real-time disclosure of material events.
d.
enhancement of criminal and civil penalties for violations of securities law.
ESSAY
1. What is outsourcing and what is its impact on the U.S.?
2. Write a detailed note on Big Unit Capitalism.
3. Explain the Bretton Woods System in detail.
ANS:
4. What is a fab lab and how is it useful?
5. What are junk bonds?
ANS:
6. Write a note on the World Trade Organization and GATT.
7. List some of the major provisions of the Sarbanes-Oxley Act.
ANS: