Business & Society, 16e (Lawrence)
Chapter 4 Business in a Globalized World
1) Globalization directly and indirectly influences the politics, environment, geopolitics, and
economics of virtually every country in the world.
2) Although many firms conduct business across national boundaries, most global commerce is
carried out by a small number of powerful firms.
3) Even small local businesses often compete with global companies from around the world.
4) The importing of foreign goods by U.S. firms is called foreign direct investment.
5) The main purpose of inversion is to reduce corporate income tax obligations.
6) The World Bank makes currency exchange easier for member countries so that they can
participate in global trade.
7) The World Trade Organization conducts negotiations, called “cycles,” on various topics,
rotating its meetings among different cities.
8) Under the World Trade Organization’s most favored nation rule, member countries may not
discriminate against foreign products for any reason.
9) Globalization is accepted worldwide and creates little controversy.
10) Productivity rises more quickly when countries produce goods and services for which they
have a natural talent.
11) Only manufacturing jobs are being lost through globalization.
12) Critics of globalization support the spread of American ideals and culture throughout the rest
of the world.
13) Most nations in the world share similar political, social, and economic beliefs.
14) At the beginning of the 20th century, no country in the world had universal suffrage.
15) The term sector refers to broad divisions of a whole.
16) Global market channels involve a firm producing goods in:
A) Their home country and exporting them to other countries.
B) Their home country to sell at home.
C) A foreign country to sell at home.
D) A foreign country to sell abroad.
17) A firm that has global operations has:
A) All of their manufacturing and service operations abroad.
B) Some or all of their manufacturing or service operations abroad.
C) Manufacturing but not service operations abroad.
D) Service but not manufacturing operations abroad.
18) A firm that would like to develop a global supply chain would:
A) Manufacture components or supplies in other countries.
B) Sell raw materials, components, or supplies produced at home abroad.
C) Purchase raw materials, components, or supplies from sellers in other countries.
D) Check products that were manufactured abroad for defects in their home country.
19) The three strategies of globalization can be summarized using what three words?
A) Channels, operations, and chains.
B) Export, locate, and purchase.
C) Sell, make, and buy.
D) Ethics, import, and sell.
20) Which of the following statements accurately describe the practice of tax inversion:
A) A company shifts their headquarters to a foreign country.
B) A company decreases cash holdings in a foreign country.
C) A company increases debt in their home country.
D) Both of these answers are correct: A company shifts their headquarters to a foreign country; and
a company increases debt in their home country.
21) Microfinance refers to banks:
A) Lending money to a very small number of businesses.
B) Lending money to low-income businesses.
C) Lending very small amounts of money to wealthy businesses.
D) Charging low fees for all business loans.
22) An example of an international financial and trade institution is:
A) World Bank.
B) International Monetary Fund.
C) World Trade Organization.
D) All of these answers are correct.
23) Representation on the World Bank’s board of directors is based on:
A) The size of the member nation’s population.
B) The size of the member nation’s economy.
C) The size of the member nation’s land mass.
D) Equal representation of all member nations.
24) The primary goal of a “vulture fund” is to:
A) Provide countries with debt relief.
B) Pay back loans in default.
C) Increase global financial stability.
D) Make a profit.
25) The primary purpose of the International Monetary Fund is to:
A) Lend foreign currency to member countries.
B) Exchange one currency for another.
C) Consolidate the debt facing Third World nations.
D) Collect the interest on loans made by the World Bank to Third World nations.
26) The purpose of the World Trade Organization is to:
A) Impose barriers to free trade among nations.
B) Eliminate barriers to free trade among nations.
C) Develop trading partnerships between rich and poor nations.
D) Decrease globalization and free trade.
27) Under the World Trade Organization’s most-favored nation rule:
A) All import restrictions imposed by other nations on their goods are illegal unless a cultural
waiver is issued.
B) All import restrictions are illegal unless proven scientifically.
C) Most-favored nations can impose heavy tariffs on other nations.
D) Most-favored nations can oppose the dumping of goods by any nation in their home market.
28) The theory of comparative advantage states that:
A) Productivity rises more quickly when countries produce goods and services for which they
have a natural talent.
B) Productivity decreases when countries produce goods and services based on their natural
resources.
C) All countries start out on an equal playing field.
D) Countries that operate under a policy of isolationism have a comparative advantage.
29) An individual who is a supporter of globalization would argue that it helps the developing
world by:
A) Giving entrepreneurs access to foreign investment funds to support economic development.
B) Allowing new ideas and technological innovations to spread quickly.
C) Providing people in developing countries with more jobs.
D) All of these answers are correct.
30) The deep anti-Americanism that exists in some parts of the world is thought to be caused by:
A) Increased local culture and religious diversity.
B) Resentment of cultural penetration from U.S.-based multinational enterprises.
C) An upswing in the number of Communist countries in the world.
D) Expanded regional health and environmental standards.
31) A critic of globalization might argue that companies decide to manufacture in China mainly
because of China’s:
A) Strict law enforcement.
B) High environmental standards.
C) Weak health and safety regulations.
D) Strong worker unions.
32) The term “race to the bottom” refers to:
A) Seeking to mine valuable minerals from the bottom of the ocean.
B) Moving production jobs to the country with the lowest labor cost.
C) Efforts to deconstruct the assembly process in manufacturing industries.
D) An old concept of globalization that is no longer relevant.
33) According to the United Nations, a feature of democracy is:
A) Fair elections.
B) An independent media.
C) A government with power balanced among executive, legislative, and judicial branches.
D) All of these answers are correct.
34) Single-party rule by communist parties still remains in:
A) Lithuania.
B) Vietnam.
C) Thailand.
D) Russia.
35) The most important agreement which codifies human rights is:
A) The American Civil Liberties Act.
B) The Versailles Treaty.
C) The Universal Declaration of Human Rights.
D) The U.S. Declaration of Independence.
36) A society where economic power is concentrated in the hands of government officials and
political authorities is called:
A) A central state control system.
B) A social democracy.
C) A political control system.
D) A military dictatorship.
37) A free enterprise system refers to:
A) Economic assets that are privately owned and exchanged in an open market.
B) Property ownership by a centralized government.
C) A mix of privately owned and government controlled economic assets.
D) An index of economic freedom.
38) The Heritage Foundation scored which nation of the world among the most repressed in 2018?
A) Hong Kong.
B) Australia.
C) North Korea.
D) Singapore.
39) Assets that a person accumulates and owns at a certain point in time are called:
A) Income.
B) Equity.
C) Wealth.
D) Microfinance.
40) The percentage of global wealth concentrated at the base of the Pyramid is:
A) 8 percent.
B) 22 percent.
C) 60 percent.
D) 70 percent.
41) Which statement(s) below are true about global income?
A) Income is how much one earns in a day or a year.
B) Income at the bottom of the pyramid varies from place to place.
C) Around 10 billion people globally sit at the bottom of the pyramid.
D) Both of these answers are correct: Income is how much one earns in a day or a year; and income
at the bottom of the pyramid varies from place to place.
42) Experts attribute the growth of nongovernmental organizations to:
A) The creation of global stock exchanges and enhanced currency transactions.
B) The globalization of marketing and converging consumer preferences.
C) Greater openness in many societies.
D) All of these answers are correct.
43) Government has distinctive resources and competencies including:
A) Knowledge of public policy.
B) Ability to enforce the rules.
C) Revenue from taxation.
D) All of these answers are correct.
44) An example of a Global Action Network, or GAN, is:
A) The World Trade Organization.
B) Nongovernmental organizations.
C) The Kimberley Process.
D) The Heritage Foundation.
45) How did Intel eliminate conflict minerals from their supply chain?
A) Entirely through their own internal processes.
B) The U.S. government stepped in to eliminate the conflict minerals.
C) By collaborating with most suppliers in the chain including smelters, processors, and traders.
D) Intel has not eliminated conflict minerals from their supply chain.
46) What is a multinational enterprise (MNE)? How do these corporations operate in the global
marketplace?
47) Describe the roles of the World Bank, International Monetary Fund, and World Trade
Organization as international financial and trade institutions.
48) Discuss the benefits and costs of globalization. Provide examples of how globalization has
helped or harmed individual nations and the world economy.
49) Explain the theory of competitive advantage.
50) Compare and contrast the world’s political and economic systems and their effects on
globalization.
51) Explain global wealth and power inequalities. What are the special challenges of serving the
“bottom of the pyramid” sector?
52) How can global action networks help global problem solving?