Chapter 14: The Future of International Management
TRUE/FALSE
1. The world’s poorest billion people who have largely missed the economic progress that has come from
globalization over the last 25 years are known as the bottom billion.
2. Trade between corporations or individuals takes place when both sides are made better off by the
exchange.
3. In management, entrepreneurship is defined as value-creation activities by individuals, either in
creating a new enterprise or building a new business or product line within an existing organization.
4. In the second stage of development, the economy shifts away from manufacturing toward services.
5. A low level of entrepreneurship in a country implies that the country does not have potentially
innovative employees, or has employees who will resist innovation and empowerment.
6. Entrepreneurs are confined to niches in domestic economies, with the real economic impact coming
from large multinational companies that produce a majority of the world’s wealth and products.
7. Evidence suggests that entrepreneurial firms excel at creating new jobs.
8. For potential entrepreneurs, the decision about starting a business is influenced by additional
characteristics within the existing business environment, which are referred to as entrepreneurial
framework conditions.
9. The United States has experienced a largely uninterrupted economic expansion from the 1960s until
recently.
10. Businesses that are not diversified will only have to make choices about a functional-level strategy
because they are in only one business.
11. Social and political institutions significantly shape the attitudes and behavior of transnational
entrepreneurs.
12. For entrepreneurial ventures that need to compete internationally, it is important that they have more
tangible assets than intangible assets.
13. Typically, an entrepreneurial firm that is international from its beginning will pursue a
focus-differentiation business strategy.
14. Corporate entrepreneurship is a concept that has not been widely supported.
15. Benchmarking involves comparing a firm’s activities against the best in the industry.
16. Upstream innovation is a firm’s ability to use research and basic product components and package
them together to create a new, salable product or service.
17. A turnkey firm would buy other firms’ technology, such as computers, communication devices,
sensors, and operating systems, and use this technology to put together its own products.
18. Firms that are innovative in packaging products, building brands, and developing new markets are
generating downstream innovation.
19. Experts in corporate sustainability help a firm lower its energy consumption and minimize its negative
impact on the environment.
20. A large majority of the world’s population has benefited as the global economy has grown
dramatically in recent years.
21. The EU demands that even the poorest among new EU members contribute to the European foreign
aid agency, EuropeAid.
22. The “bottom of the pyramid” is not a viable market, and accounts for hardly any economic activity in
developing countries.
23. Contrary to popular assumptions, the poor can constitute a very profitable market—especially if
multinational enterprises change their business models.
24. The bottom of the pyramid is characterized by low margins, low unit sales, and low inventory
turnover.
25. According to the efficient market hypothesis, asset prices are always at the correct price.
MULTIPLE CHOICE
1. Which of the following statements about international management is false?
a.
The trend of people working in multinational enterprises, whether at home or abroad, has
accelerated in recent years with the establishment of the WTO and its free trade policies.
b.
Issues such as entrepreneurship, the environment, and the bottom billion will affect
international managers and their global businesses increasingly.
c.
By exponentially expanding international trade since the end of World War II, the world
has become much wealthier.
d.
The increase in oil and commodity prices and turmoil in numerous asset markets is not
linked to increasing demand and prosperity in emerging economies, but to poverty.
2. _____ probably account for most farms and small manufacturing and service firms in the first stage of
development.
a.
Sole proprietorships
b.
Partnerships
c.
Corporations
d.
Limited liability companies
3. Which of the following statements about the second stage of development entrepreneurship is true?
a.
The economy remains focused on small-scale household production.
b.
In this stage, entrepreneurial activity does not decline.
c.
This stage is marked by decreasing rates of entrepreneurship, and self-employment
actually declines.
d.
Sole proprietorships probably account for most farms and small manufacturing and service
firms in this stage.
4. The third stage of development:
a.
sees businesses moving from family-based entrepreneurial capitalism to more Big Unit
and managerial capitalism.
b.
is marked by a return to increasing entrepreneurial activity.
c.
is dominated by family-run farms and household businesses and is marked by high rates of
non-agricultural self-employment.
d.
is marked by decreasing rates of entrepreneurship.
5. Countries like Uganda, Peru, Ecuador, and several lesser-developed African countries all have high
levels of entrepreneurial activity, often called:
a.
necessity entrepreneurship.
b.
opportunity entrepreneurship.
c.
ethnic entrepreneurship.
d.
macroentrepreneurship.
6. Which of the following statements about entrepreneurs is false?
a.
The role of entrepreneurs is critical to the prosperity of the global economy.
b.
The role of entrepreneurs is critical for the creation of needed innovations.
c.
Entrepreneurs are confined to niches in domestic economies.
d.
Entrepreneurs have demonstrated their importance creating important new goods that have
aided in the global economy’s development.
7. In most classical economics:
a.
entrepreneurship is an economic factor to focus on.
b.
economists see entrepreneurs as essential to business.
c.
entrepreneurs help to bring new inventions and innovations to the market.
d.
entrepreneurs will develop if the economy and its institutions are strong enough.
8. According to economist Joseph Schumpeter:
a.
entrepreneurs are a nonessential issue to business.
b.
entrepreneurs are the bearers (not creators) of economic change and growth.
c.
entrepreneurs and entrepreneurial firms will develop if the economy and its institutions are
strong enough.
d.
entrepreneurship happens naturally as a result of institutions and is not an economic factor
to focus on.
9. All of the following are observations made by Joseph Schumpeter EXCEPT:
a.
entrepreneurs happens naturally as a result of institutions.
b.
entrepreneurs are the bearers (not creators) of economic change and growth.
c.
entrepreneurs help to bring new inventions and innovations to the market.
d.
entrepreneurs are often not the prime movers behind many innovations.
10. Entrepreneurship is broadly conceptualized by management scholars as:
a.
something that is not an economic factor to focus on.
b.
something that happens naturally as a result of institutions.
c.
bringing new innovations to the market, but entrepreneurs are not the prime movers
behind many innovations.
d.
value-creation activities and the seizing of economic opportunities and efficiencies.
11. What is the occupational definition of entrepreneurship?
a.
The seizing of economic opportunities and efficiencies.
b.
Happening naturally as a result of institutions.
c.
Owning a business.
d.
Value-creation activities only.
12. Which of the following statements about the behavioral notion of entrepreneurship is true?
a.
Entrepreneurs in the behavioral sense necessarily need to be business owners.
b.
Entrepreneurs can create significant value within a large organization, including
government agencies and nonprofits.
c.
Entrepreneurs are often not the prime movers behind many innovations, at least not in any
systematic way.
d.
Entrepreneurial decisions are a routine application of standard rules and production
functions.
13. A new focus has arisen at the crossroads of behavioral entrepreneurship and the dynamic perspective
of occupational entrepreneurship. Which of the following statements do not apply here?
a.
The entrepreneur helps to bring new inventions and innovations to the market, but is often
not the prime mover behind many innovations.
b.
It is a perspective that considers venture creation and innovation to be the hallmark of
entrepreneurship.
c.
The entrepreneur is someone who specializes in making judgmental decisions about the
coordination and deployment of scarce resources.
d.
It emphasizes that the entrepreneur is an individual and that entrepreneurial decisions are
not simply a routine application of standard rules and production functions.
14. For potential entrepreneurs, the decision about starting a business is influenced by additional
characteristics within the existing business environment. These are referred to as:
a.
necessity entrepreneurship facets.
b.
entrepreneurial framework conditions.
c.
behavioral notions of entrepreneurship.
d.
dynamic perspectives of occupational entrepreneurship.
15. Which of the following statements about entrepreneurial framework conditions is false?
a.
These conditions comprise a country’s capacity to encourage start-ups.
b.
They encourage the motivations of those who wish to go into business for themselves.
c.
When successfully combined, these conditions will lead to new businesses.
d.
They will increase innovation and decrease competition within the marketplace.
16. Which of the following highlights the critical role of entrepreneurs as agents who accelerate the
generation, application, and spread of innovative ideas and economic growth?
a.
Economic Cooperation Organization
b.
World Trade Organization
c.
Organization for Economic Cooperation and Development
d.
International Monetary Fund
17. According to the text, entrepreneurial firms that are started as international firms are:
a.
born globals.
b.
innate exporters.
c.
high technology start-ups.
d.
leapfrogging.
18. Which of the following is an example of a tangible asset?
a.
Patent
b.
Equipment
c.
Copyright
d.
License
19. _____ refers to mature firms acting more like small start-up firms, taking greater risks and reducing
their bureaucracy.
a.
Necessity-based entrepreneurship
b.
Opportunity-based entrepreneurship
c.
Corporate entrepreneurship
d.
Start-up entrepreneurship
20. _____ involves comparing a firm’s activities against the best in the industry.
a.
Leapfrogging
b.
Process management
c.
Reengineering
d.
Benchmarking
21. All organizations have key employees who are internal _____ that influence others, and who are
usually veterans of the firm and particularly important in knowledge-based organizations.
a.
opinion leaders
b.
born globals
c.
business decision makers
d.
surrogate buyers
22. Research and development, basic science, and university-company partnerships are all part of:
a.
turnkey innovation.
b.
upstream innovation.
c.
downstream innovation.
d.
lateral innovation.
23. _____ is a firm’s ability to use research and basic product components and package them together to
create a new, salable product or service.
a.
Informal innovation
b.
Research innovation
c.
Downstream innovation
d.
Upstream innovation
24. Integrating technologies into a firm’s production and development systems to facilitate the creation
and delivery of a product to customers or service to employees is:
a.
benchmarking.
b.
upstream innovation.
c.
turnkey innovation.
d.
technology indigenization.
25. Many successful entrepreneurial firms do not develop their own technology; rather, they combine and
distribute inventions and innovations generated by others upstream. This is known as:
a.
turnkey innovation.
b.
technology indigenization.
c.
benchmarking.
d.
reengineering.
ESSAY
1. Developmental economists distinguish three major stages of development that business people need to
be aware of as they seek to do business overseas. What are they?
2. Write a short note on entrepreneurs.
3. What are the steps that a firm needs to take to implement corporate entrepreneurship?
4. Write a short note on technology indigenization.
5. Write a short note on a renewable energy certificates.
6. What are the goals set by the United Nations for eliminating extreme poverty?
ANS:
7. How can the poor can constitute a profitable market?