Chapter 3—Managing in a Global Environment
TRUE/FALSE
1. In today’s world, every manager needs to think locally.
2. Business has become a unified, global field as trade barriers fall, communication becomes faster and
cheaper, and consumer tastes converge.
3. The second stage in the process of globalization is the international stage, where the company usually
adopts a multidomestic approach.
4. An example of global outsourcing is seen when Gap, Inc. uses low-cost Caribbean labor to cheaply
produce its clothing, and then finishes off and sells its clothing in the United States.
5. With exporting, the corporation transfers its products for sale and its production facilities in foreign
countries.
6. Seeking cheaper sources of materials or labor offshore is called offshoring.
7. Countertrade is the barter of products for products rather than the sale of products for currency.
8. An estimated 55 percent of world trade is countertrade.
9. When Harbor Trades, a Korean-based company, makes resources including technology, managerial
skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby
allowing Nano to make products similar to CBA, it is engaging in a countertrade agreement.
10. Outsourcing is perhaps the most widespread approach to international involvement in China and India.
11. Infrastructure management is the management of business operations conducted in more than one
country.
12. The basic management functions of planning, organizing, leading, and controlling are the same
whether a company operates domestically or internationally.
13. The sub-divisions of the international environment are the economic, the sociocultural, and the
legal-political environments.
14. Some economic environments of business include resource and product markets, language, religion,
and per capita income.
15. A country’s physical facilities that support economic activities make up its infrastructure.
16. The criterion traditionally used to classify countries as developed or developing is per capita income.
17. LDCs are less developed countries and tend to be found in the Southern Hemisphere including Africa,
Asia and South America.
18. Because of cheap labor, most international business firms are headquartered in the less developed
countries of Asia and South America.
19. Market risk is defined as the risk of loss of assets, earning power, or managerial control due to
politically based events or actions by host governments.
20. The countries experiencing political stability face the greatest threat of violence.
21. A company’s political risk includes riots, revolutions, civil disorders, and frequent changes in
government.
22. Unfortunately, many U.S. managers fail to realize that the values and behaviors that typically govern
how business is done in the United States do not translate to the rest of the world.
23. Countries that value high power distances normally have cities that are geographically separated and
so have the need to transport electrical energy over large distances.
24. The social value of uncertainty avoidance is evident in countries like Japan which support beliefs that
provide stability and conformity among its citizenry.
25. In countries with strong masculine social values including Austria and Japan, both men and women
subscribe to the dominant masculine value.
26. Collectivism means a preference for a tightly knit social framework in which individuals look after one
another and organizations protect their members’ interests.
27. The fifth dimension of Hofstede’s social values is preliminary-term orientation and extended-term
orientation.
28. According to the GLOBE Project, a society with a high performance orientation places high emphasis
on performance and rewards people for performance improvements and excellence.
29. According to the GLOBE Project, gender differentiation refers to the extent to which a society
maximizes gender role differences.
30. According to Spotlight on Skills box in Chapter 3, the polite way to give your business card to a
Japanese business person is when first meeting, presenting your card with both hands.
31. According to Spotlight on Skills box in Chapter 3, being on-time for appointments is very important in
Brazil.
32. Social values greatly influence organizational functioning and management styles.
33. According to the GLOBE Value Dimensions, Japan and Russia both have very high performance
orientation.
34. A low-context culture is a culture in which communication is used to enhance personal relationships.
35. Linguistic pluralism occurs in countries like India where more than one language exist.
36. A high-context interaction requires more time because a relationship has to be developed, and trust and
friendship must be established.
37. German, Swiss, and North American cultures are among the high-context cultures.
38. When an organization has an instrumental attitude toward people it treats employees as a resource to
be used.
39. When an organization has a humanistic attitude, it values employees as an end in themselves.
40. Ethnocentrism refers to a natural tendency of people to regard their own culture as superior and to
downgrade or dismiss other cultural values.
41. Ethnocentrism refers to a natural tendency of people to regard their own culture as inferior to other
cultures.
42. A tendency to regard their own culture as superior and to downgrade other cultures reflects an attitude
called geocentric.
43. The goal of the European Union is to create a powerful single market system for Europe’s millions of
consumers.
44. An organization developed for the purpose of eliminating tariffs in trading between Japan and the
United States is called The North American Freedom of Tariffs Administration (NAFTA).
45. Fifteen member states of the EU have adopted the rupee, as a single European currency.
46. Culture shock refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar
gestures and situations and devise appropriate behavioral responses.
47. Cultural intelligence refers to a person’s ability to use reasoning and observation skills to interpret
unfamiliar gestures and situations and devise appropriate behavioral responses.
48. Culture shock refers to the frustration and anxiety that result from constantly being subjected to
strange and unfamiliar cues about what to do and how to do it.
49. There are three components to cultural intelligence: cognitive, emotional, and physical.
50. A manager’s reality is that isolation from international forces is entirely possible.
51. Globalization reached its peak in the 1970s, and is decreasing at a gradual rate.
52. Licensing means engaging in the international division of labor so that work activities can be done in
countries with the cheapest sources of labor and supplies.
53. The United States has the largest mobile phone market in the world.
54. Whereas China is strong in software services, India is a rising power in manufacturing.
55. Brazil is known to have a young, vibrant population and a rapidly growing middle class that is eager to
experience the finer things in life.
56. The estimated 2010 misery index figures suggest significantly less misery for almost every country as
compared to figures at the beginning of the century.
57. In India, it is not uncommon for social media companies such as Facebook and Twitter to be required
by law to comply with requests to take down content considered incendiary by government entities.
58. A high performance orientation means that a society encourages toughness, assertiveness, and
competitiveness.
59. High-context cultures include Asian and Arab countries, whereas low-context cultures tend to be
American and Northern European.
60. High cultural intelligence requires that a manager be open and receptive to new ideas and approaches.
61. In a recent Fortune magazine poll, 68 percent of Americans say other countries benefit the most from
free trade.
62. The term top of the pyramid refers to the more than four billion people who earn the least, as defined
by per capita income.
63. China and India are ranked first and second on the 2009-2010 Global Competitiveness Ranking of
World Economic Forum.
MULTIPLE CHOICE
1. Today’s companies compete in a ____.
a.
growingly domestic economy
b.
low-context culture
c.
high-context culture
d.
Greenfield economy
e.
borderless world
2. In which stage, market potential is limited to home country, with all production and marketing
facilities located at home?
a.
Domestic
b.
International
c.
Global
d.
Multinational
e.
Stateless
3. In the ____ stage a company usually adopts a multidomestic approach.
a.
Global
b.
Multinational
c.
Stateless
d.
International
e.
Domestic
4. Global Dandelion, with explosion of international operations stage of developement, is participating at
what stage of globalization in the international arena?
a.
International stage
b.
Global stage
c.
Domestic stage
d.
Multinational stage
e.
Interdomestic stage
5. Quality-cast Telecom with an export-oriented, multidomestic strategic orientation would be
participating in what stage of the international arena?
a.
Domestic stage
b.
International stage
c.
Multinational stage
d.
Global stage
e.
Binational stage
6. The process of globalization typically passes through all of the following stages EXCEPT
a.
domestic stage.
b.
global stage.
c.
international stage.
d.
interdomestic stage.
e.
multinational stage.
7. Which of the following refers to engaging in the international division of labor so as to obtain the
cheapest sources of labor and supplies regardless of country?
a.
Franchising
b.
Licensing
c.
Market entry strategy
d.
Outsourcing
e.
Activity
8. The Maquiladora industry along the Texas-Mexico border on the Mexico side uses cheap labor for
assembling products. This lowers the price for U.S. consumers and is an example of
a.
licensing.
b.
joint venture.
c.
outsourcing.
d.
franchising.
e.
none of these.
9. Most firms begin with which strategy to enter foreign markets?
a.
Exporting
b.
Greenfield venture
c.
Joint venture
d.
Acquisition
e.
Direct investment
10. Which of the following is an entry strategy in which the organization maintains its production facilities
within its home country and transfers its products for sale in foreign markets?
a.
Franchising
b.
Licensing
c.
Exporting
d.
Greenfield venture
e.
Joint venture
11. What is exporting?
a.
Countertrade
b.
The barter of products for products, often used in developing nations
c.
Items produced in the home country for sale in foreign markets
d.
All of these
e.
None of these
12. A form of exporting to less-developed countries is called
a.
licensing.
b.
franchising.
c.
greenfield venture.
d.
joint venture.
e.
countertrade.
13. As a first step into international business, which two countries are most companies going to today?
a.
Russia and Japan
b.
Sweden and Germany
c.
China and India
d.
Brazil and Philippines
e.
Indonesia and Brazil
14. ____ is the most widespread approach to international involvement in China and India.
a.
Importing
b.
Exporting
c.
Manufacturing
d.
Outsourcing
e.
Greenfield venture
15. The management of business operations conducted in more than one country is called
a.
global management.
b.
international management.
c.
outsourcing management.
d.
planning management.
e.
domestic management.
16. ____ aspects of management do not change when doing business internationally.
a.
Planning
b.
Organizing
c.
Controlling
d.
Leading
e.
All of these
17. Language, values, religion, and education all describe which dimension in the international
environment?
a.
Economic
b.
Legal
c.
Political
d.
Sociocultural
e.
Technological
18. In international operations, the economic environment represents all of the following factors EXCEPT
a.
infrastructure.
b.
resource and product markets.
c.
laws and regulations.
d.
inflation.
e.
exchange rates.
19. Resource development, infrastructure, and exchange rates all describe which dimension in the
international environment?
a.
Economic
b.
Legal
c.
Political
d.
Sociocultural
e.
Technological
20. In international operations, the economic environment includes
a.
shared knowledge, beliefs and values.
b.
political risks.
c.
social organizations.
d.
infrastructure.
e.
tariffs, quotas, and taxes.
21. Which of the following is a sociocultural factor in the international environment?
a.
Language
b.
Exchange rates
c.
Tariffs, taxes, and quotas
d.
Per capita income
e.
Infrastructure
22. ____ is normally used to classify countries as developed or developing.
a.
Exchange rates
b.
Interest rates
c.
Gross national product
d.
Per capita income
e.
Inflation rates
23. ____ generally are located in Asia, Africa and South America.
a.
MNCs
b.
EUs
c.
LDCs
d.
WTOs
e.
MFNs
24. A country’s physical facilities that support economic activities make up its ____.
a.
resource markets
b.
infrastructure
c.
physical markets
d.
product markets
e.
plants and equipment
25. If you built a computer company in Africa and then found that your product was having difficulty
being distributed to customers because of the road system, your problem would be related to
a.
an inadequate infrastructure.
b.
an economy incapable of supporting growth.
c.
a poor resource market.
d.
a poor product market.
e.
none of these.
26. Your grocery store in India is having trouble getting the local farmers to supply you with the proper
produce. This is a problem with India’s
a.
product market.
b.
resource market.
c.
infrastructure.
d.
economy.
e.
power distance.
27. Exchange rates are included in which of the following international environments?
a.
The legal-political sector
b.
The economic environment
c.
The sociocultural environment
d.
The barter system environment
e.
The government sector
28. The legal-political environment, in international operations, includes which of the following?
a.
Shared knowledge, beliefs and values
b.
Political risks
c.
Social organizations
d.
Infrastructure
e.
None of these
29. Political risk is defined as an organization‘s risk of ____ due to politically based events or actions by
host governments.
a.
loss of assets
b.
managerial control
c.
earning power
d.
all of these
e.
managerial control and earning power only
30. A company’s risk of loss of assets, earning power, or managerial control due to politically based events
or action by host government is referred to as
a.
MFN.
b.
political risk.
c.
tariffs.
d.
political instability.
e.
terrorism.
31. Rooftop International, Inc. buys insurance against host government takeover when investing in foreign
countries. This is an example of which sector of the international environment?
a.
Legal-political
b.
Sociocultural
c.
Technological
d.
Economic
e.
Infrastructure
32. Which of the following is NOT a legal-political factor in the international environment?
a.
Laws and regulations
b.
Language
c.
Tariffs, quotas, taxes
d.
Political risk
e.
Government takeovers
33. A foreign terrorist kidnaps your firm’s marketing VP while the VP is in the host country. This is a
harsh example of
a.
economic development.
b.
infrastructure.
c.
political risk.
d.
international law.
e.
social risk.
34. A nation’s ____ includes the shared knowledge, beliefs and values, as well as the common modes of
behavior and ways of thinking, among members of a society.
a.
power distance
b.
culture
c.
masculinity
d.
individualism
e.
uncertainty avoidance
35. Cultural factors in foreign countries are ____ the political and economic factors.
a.
easier than
b.
similar to
c.
more perplexing than
d.
less important than
e.
none of these
36. ____ refers to the degree to which people accept inequality in power among institutions, organizations,
and people.
a.
Power distance
b.
Uncertainty avoidance
c.
Individualism
d.
Collectivism
e.
Masculinity
37. Countries whose social values reflect low power distance
a.
are highly democratic.
b.
accept inequality in power among institutions, organizations, and people.
c.
expect equality in power.
d.
avoid uncertainty.
e.
none of these.
38. A loosely knit social framework in which individuals are expected to take care of themselves is called
a.
culture.
b.
individualism.
c.
ethnocentrism.
d.
masculinity.
e.
power distance.
39. Collectivist values are represented in the social framework of which of these?
a.
The United States
b.
Australia
c.
Ecuador
d.
Great Britain
e.
All of these
40. Austria’s cultural preference is for achievement, heroism, assertiveness, and material success. This
would be considered
a.
power distance.
b.
individualism.
c.
masculinity.
d.
ethnocentrism.
e.
collectivism.
41. ____ refers to a value characterized by people’s intolerance for uncertainty and ambiguity and resulting
support for beliefs that promise certainty and conformity.
a.
Power distance
b.
Uncertainty avoidance
c.
Certainty avoidance
d.
Conformity seekers
e.
None of these
42. Which of these reflects a cultural preference for cooperation, group decision making, and quality of
life?
a.
Individualism
b.
Collectivism
c.
Masculinity
d.
Femininity
e.
Power distance
43. One of Hofstede’s social values that was developed later is
a.
power distance.
b.
uncertainty avoidance.
c.
masculinity.
d.
collectivism.
e.
long-term orientation.
44. Recent research by the GLOBE project has extended ____ research and offered new insights for
managers.
a.
Hofstede’s
b.
Walton’s
c.
Weber’s
d.
Fayol’s
e.
Gilbreth’s
45. All of the following are cultural dimensions as defined by the GLOBE Project, EXCEPT:
a.
assertiveness
b.
gender differentiation
c.
social collectivism
d.
humane orientation
e.
masculinity
46. In countries where women are often in positions of high status, the Globe Project would describe that
culture as high in ____.
a.
assertiveness
b.
uncertainty avoidance
c.
gender differentiation
d.
societal collectivism
e.
performance orientation
47. A country that places emphasis on fairness and values kindness would be described by the Globe
Project as high in ____.
a.
assertiveness
b.
uncertainty avoidance
c.
gender differentiation
d.
humane orientation
e.
societal collectivism
48. According to Spotlight on Skills in Chapter 3, what does the gesture of scratching one’s head usually
mean in Russia?
a.
“You’re crazy.”
b.
“I am listening carefully.”
c.
“I want to get to know you better.”
d.
“I’m confused or skeptical.”
e.
“No.”
49. According to Spotlight on Skills in Chapter 3, one of the most universal gestures is:
a.
Arm up, shaking back and forth (waving)
b.
Scratching your chin (thinking)
c.
A smile (happiness or politeness)
d.
Closing your eyes (boredom)
e.
A pat on the back (congratulations)