1) A country highly productive in manufacturing typically generates a merchandise
trade deficit.
2) Subsidies are nontariff barriers.
3) A competitive advantage that is sustained implies that it is permanent.
4) Liability of foreignness is the inherent disadvantage firms experience in home
countries.
5) A disadvantage of licensing is high development costs.
6) The product life cycle theory is the first dynamic theory to account for changes in the
patterns of trade over time.
7) Firms operating in democracies never confront political risk.
8) English-speaking countries contribute the largest share of global business output.
9) Passport-free travel zones can only be setup in political unions.
10) The existence of multiple currencies and the resultant currency risks can be viewed
as informal trade and investment barriers.
11) Political arguments against free trade focus on protectionism and infant industries.
12) Majority of the global GDP is contributed by the emerging markets.
13) Cognitive pillar is the coercive power of governments.
14) According to the institution-based view, managers and firms make choices outside
institutional constraints.
15) Non-equity modes of entry include acquisitions and wholly-owned subsidiaries.
16) Emerging markets contribute about 26% of global GDP without adjusting for
purchasing power parity (PPP).
17) Forward discount is a condition under which the forward rate of one currency
relative to another currency is lower than the spot rate.
18) A(n) ____ is a set of guidelines for helping a firm make ethical decisions.
a. operating agreement
b. certificate of incorporation
c. mission statement
d. code of conduct
19) The set of informal institutions that stresses the cognitive pillar lays emphasis on
_____.
a. establishing wholly owned subsidiaries
b. granting more liberal policies
c. copying reputable organizations to ensure a low-cost way to gain legitimacy
d. the internalized taken-for-granted values and beliefs that guide firm behavior
20) ____ best suits situations where the pressures to globalize are relatively low, and
local firms’ strengths lie in a deep understanding of local markets.
a. Defender strategy
b. Extender strategy
c. Dodger strategy
d. Contender strategy
21) The ability to raise external capital is an example of a firms _____.
a. human resources
b. technological resources
c. financial resources
d. intangible resources
22) _____ firms often build alliances with stakeholder groups.
a. Accommodative
b. Reactive
c. Defensive
d. Proactive
23) Which of the following is one of the four segments of the strategic response
framework?
a. Accommodative
b. Aggressive
c. Interactive
d. Offensive
24) The act of setting prices below cost to eliminate rivals while intending to raise them
in the long run to make up for the initial losses is known as _____.
a. dumping
b. collusive price setting
c. predatory pricing
d. counterattack
25) Which of the following industrial characteristics makes a collusion difficult but
leads to competition?
a. Existence of few firms in the industry
b. Existence of an industry price leader
c. Lack of market commonality
d. High barriers of entry
26) Which of the following is true of indirect exports?
a. They typically provoke protectionism, potentially triggering antidumping actions
b. They treat foreign demand as an extension of domestic demand
c. They export through domestically based export intermediaries
d. They do not enjoy the economies of scale similar to direct exports
27) Which of the following is true of the Union of South American Nations (USAN)?
a. It is made of nations that are not present in either the Andean Community or
Mercosur
b. It is a proposed integration of Mercosur and the Andean Community
c. It is a proposed free trade area integrating the Andean Community and ASEAN
d. Its integration mechanism is modeled after the NAFTA
28) A code of conduct is also called _____.
a. code of defense
b. code of legitimacy
c. code of ethics
d. code of reactivity
29) Governments confiscation of foreign assets is known as _____.
a. obsolescing bargains
b. sunk costs
c. expropriation
d. conflicting interests
30) Which of the following was considered the secondary sector for organized
economic activities during the Industrial Revolution in the 18th and 19th centuries?
a. Retail
b. Residual service activities
c. Manufacturing
d. Agriculture
31) Which of the following are not engaged in transactions with the corporation and are
not essential for its survival?
a. Employees
b. Fair labor associations
c. Governments
d. Regulation communities
32) Which is the best-case scenario for a non-equity-based alliance?
a. High tacitness and low influence of formal institutions
b. Low potential as real options and low influence of formal institutions
c. High tacitness and high importance of direct organizational monitoring and control
d. Low tacitness and low importance of direct organizational monitoring and control
33) A currency board is a monetary authority that issues notes and coins convertible
into a key foreign currency at a _____ exchange rate.
a. clean floating
b. dirty floating
c. fixed
d. target
34) Which of the following was true of the Bretton Woods system?
a. All currencies in the system had floating exchange rates
b. All currencies were pegged at a fixed rate to the dollar
c. All currencies were maintained by fixing their prices in terms of gold
d. All currencies in the system were required to be gold convertible
35) Which of the following supports the notion that most new ventures in China are
financed by friends and family?
a. Informal investments are outlawed in China
b. China lacks formal market-supporting institutions
c. Credit reporting agencies are abundant in China
d. Venture capitalists are the biggest investors for entrepreneurship in China
36) Which strategy is best for environments where there are clear differences among
national and regional markets and there is a low pressure for cost reduction?
a. Home replication strategy
b. Localization strategy
c. Global standardization strategy
d. International strategy
37) In terms of corporate social responsibility, MNEs should:
a. get involved in the internal political affairs of the host country
b. offer bribes and gifts to public servants whenever required
c. avoid giving advance notice of plant closures
d. reinvest some profits in the host country
38) _____ are rules stipulating that a certain proportion of the value of the goods made
in one country must originate from that country.
a. Voluntary export restraints
b. Local content requirements
c. Import quotas
d. Trade embargoes
39) _____ is a long-standing legal doctrine that excuses firms from living up to the
terms of a deal in the event of natural disasters or other calamities.
a. De minimis
b. Nolo contendere
c. Force majeure
d. Travaux prparatoires
40) Which of the following primary activities of a firm corresponds to its support
activity of infrastructure?
a. Research and development
b. Components
c. Final assembly
d. Marketing
41) Which of the following is a WTO agreement regulating intellectual property?
a. GATT
b. GATS
c. MFA
d. TRIPS
42) Which of the following is true of globalization according to the new force
perspective?
a. It is a process of trade integration that has both advantages and disadvantages
b. It is a phenomenon that is technologically out of sync
c. It is a historical aspect of human trade
d. It is a western ideology focused on exploiting and dominating the world through
MNEs
43) The strategy of treating each country as a unique market and in total isolation is
referred to as _____.
a. total globalization
b. standardization
c. semiglobalization
d. localization
44) Non-native employees who work and reside in a foreign country are known as
_____.
a. host-country nationals
b. expatriates
c. multinationals
d. repatriates
45) Which of the following is a characteristic of high masculinity societies?
a. Women are more likely to become politicians and soldiers
b. Men frequently assume the role of nurses, teachers, and househusbands
c. There is a sharp role differentiation along gender lines
d. Managers are less visible, intuitive rather than decisive, and accustomed to seeking
consensus
46) Which of the following countries is represented in the Triad of the global economic
pyramid?
a. India
b. China
c. Japan
d. Russia
47) Which of the following trade theories divides the nations of the world into three
categories?
a. National competitive advantage of industries
b. Strategic trade
c. Factor endowment
d. Product life cycle
48) The _____ theory advocates government intervention in highly capital-intensive,
high entry-barrier industries in which domestic firms may have little chance without
government assistance.
a. product life cycle
b. laissez faire
c. strategic trade
d. absolute advantage
49) Among developed countries, _____ has the lowest rate of start-ups.
a. United Kingdom
b. United States
c. Russia
d. Japan
50) Which of the following countries would be characterized as an emerging economy?
a. Brazil
b. USA
c. Germany
d. Japan
51) The resource-based view differs from the institution-based view in that the
resource-based view focuses on a firms _____.
a. external threats and opportunities
b. internal strengths and weaknesses
c. external strengths and opportunities
d. internal threats and weaknesses
52) In a(n) ____, members coordinate and harmonize monetary, fiscal, and taxation
policies.
a. customs union
b. common market
c. economic union
d. free trade area
53) A strategy that endeavors to do more than is required in CSR is called a(n) _____
strategy.
a. accommodative
b. proactive
c. defensive
d. reactive
54) A clean floating exchange rate policy is a government policy to _____.
a. set exchange rates purely on the basis of supply and demand
b. allow a currencys value to fluctuate according to the foreign exchange rate
c. allow selective government intervention in determining the exchange rate
d. link the exchange rate of a currency to the gold standard
55) In staffing, elimination of language and cultural barriers is an advantage of hiring
_____.
a. multinationals
b. third-country nationals
c. parent-country nationals
d. host-country nationals
56) A conversion that determines the equivalent amount of goods and services that
different currencies can buy is known as _____.
a. purchasing power parity
b. foreign exchange rate
c. country’s deficit
d. gross domestic product
57) _____ refers to the ability to quickly react to unexpected shifts in supply and
demand.
a. Aggregation
b. Adaptability
c. Alignment
d. Agility
58) Proponents of the best practices school argue that firms should adopt best practices
with respect to certain contexts.
59) The defender strategy centers on local assets in areas in which MNEs are weak.
60) Summarize the advantages and disadvantages of the transnational strategy.
61) One of the merits of alliances is to use them as real options. Elaborate.
62) Externally, HRM is shaped by national and industry contexts.
63) PCNs generally stay in their positions longer and thus provide more continuity of
management.