1) Geographical barriers typically affect distribution channels within countries, but they
rarely affect distribution channels between countries
2) Companies find it challenging to judge a potential expatriate’s adaptability to foreign
places, people, and processes.
3) Expatriates are locals from the country of the foreign subsidiary.
4) Democracy and totalitarianism fall on the same end of the political spectrum.
5) Appropriability theory describes a firm’s desire to deny rivals access to its
competitive resources.
6) According to the Treaty of Maastricht, a euro applicant must have a total outstanding
government debt that does not exceed 60% of its GDP.
7) If a U.S.-based MNE translates its German subsidiary’s financial statements from
euros into dollars using the current-rate method, how would it recognize translation
gains and losses?
A) Gains and losses would be taken to the income statement
B) Gains and losses would be recognized on the balance sheet in owners’ equity
C) Gains and losses are not recognized since the financial statements are in dollars
D) There are transaction gains and losses but not translation gains and losses
8) Sales expansion is probably the most important variable in determining international
location decisions. This statement is most likely based on the assumption that
________.
A) consumer demand exceeds supply
B) increased sales will lead to more profits
C) the company will have a first-mover advantage
D) raw materials are available in the country targeted for sales
9) In the text, Costa Rica devised a strategic trade policy to accomplish what goals?
A) attract industries that promised high growth and higher wages
B) develop and grow local industries to keep capital in Costa Rica
C) attract industries that were “green” and produced sustainable products
D) attract companies that were acceptable to the U.S.
10) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum
outsources portions of its production to independent companies located in Bangladesh
and India where child labor is common. Other clothing and footwear firms have
recently faced criticism regarding the use of child labor, and Quantum executives want
to avoid similar problems. Which of the following would be the best approach for
Quantum?
A) improving conditions at the subcontract facilities
B) developing an external ethics code for foreign partners and letting them worry about
compliance
C) requiring local governments to alter their labor policies
D) leaving the market and focusing on domestic production
11) Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens
for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the
lowest possible price
D) importers using foreign sourcing to optimize their supply chains
12) Harmon Clothing has a production facility located in Venezuela. Recently, Harmon
has been unable to arrange for overseas loans due to the burdensome regulatory policies
of the Venezuelan government. Which type of political risk is Harmon most likely
experiencing?
A) catastrophic
B) distributive
C) procedural
D) systemic
13) The major trade group in South America involving Brazil, Paraguay, Uruguay, and
Argentina is ________.
A) MERCOSUR
B) UNASUR
C) APEC
D) CACM
14) When a company’s primary motive for entering a collaborative arrangement is to
learn from its partner, it is likely to ________.
A) leave control to its partner
B) “go it alone” after it has learned what it needs to know
C) have disagreements with the partner over quality issues
D) prefer the arrangement to be a licensing agreement
15) Social network analysis indicates that information flows more efficiently in a(n)
________ manner.
A) collaborative
B) competitive
C) hierarchical
D) impersonal
16) The probability that a business is engaged in exporting tends to ________.
A) decrease with the size of the firm
B) increase with the product life cycle
C) decrease with the product life cycle
D) increase with the size of the firm
17) Which of the following would LEAST likely be caused by a high inflation rate?
A) rules against increasing export prices
B) inability to quote prices in letters or catalogs
C) difficulty making changes to vending machines
D) necessity to set an equivalent value in a stable currency
18) Large companies that have resources to go it alone may have advantages in product
development over small companies that do not because ________.
A) evidence suggests that collaborative arrangements slow the speed of innovation
B) large companies can dictate their terms of operations abroad
C) small companies are disadvantaged in legal settlements
D) large companies need not adapt to national differences
19) Analysts conclude that the finite supply of natural resources will most likely
________.
A) cause a higher proportion of world trade to occur among developed countries
B) cause a higher proportion of world trade to occur among developing countries
C) serve as an advantage for developing countries in their sales to developed countries
D) create a greater portion of world trade in the form of services
20) Which of the following states that the country with the higher interest rate should
have the higher inflation?
A) the Fisher Effect
B) the International Fisher Effect
C) the Interest Rate Inflation Theory
D) the Forward rate theory
21) Research shows that urbanization leads to higher productivity. Which of the
following is the LEAST likely reason for this?
A) Urbanization establishes an inflow of immigrants who will work for less money
B) In urban areas, firms can more easily find people with the exact skills they need
C) Urbanization allows for economies in moving supplies and finished products
D) In urban areas, knowledge flows more easily from one company to another and from
one industry to another
22) Tanya is a manager at a global firm that has operations located in Brazil, India, and
Japan. Tanya is in the process of making a fundamental analysis in order to forecast
exchange rates in each country. Which of the following questions is most relevant to
Tanya?
A) What is the cyclical situation in terms of employment and inflation?
B) Are the government’s intervention practices sustainable?
C) What level of credibility does the government have?
D) What is the possibility of a national crisis?
23) Explain how franchising agreements differ from licensing agreements.
24) Why would companies become involved in arbitrage? What is the difference
between arbitrage and interest arbitrage?
25) In a brief essay, discuss how decentralized management and organizational culture
affect Johnson & Johnson.
26) Describe the exchange rate arrangements used in the EU, Hong Kong, China, and
the U.S.
27) What is an equity alliance? What motives would a firm have for forming an equity
alliance?
28) Discuss the various ways a broker or other import consultant can help an importer
minimize import duties.
29) What are the various types of collaborative arrangement options available to
international businesses? How can firms most effectively manage international
collaborative arrangements?