Islamic law is the most widely practiced theocratic legal system today.
Critics of globalization believe the overall gains that accrue to national economies are
worth the lost livelihoods of some workers.
The Bretton Woods Agreement was an accord among nations to create a new
international monetary system based on the value of the U.S. dollar.
International transactions between two currencies other than the U.S. dollar often use
the dollar as a vehicle currency.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Pluralism is a political system in which political leaders rely on military and
bureaucratic power.
The process of obtaining information that already exists within the company is called
secondary market research.
The human development index (HDI) demonstrates that high national income alone
guarantees human progress.
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
Tariffs are a source of government revenue mostly among developing nations.
A government can limit the economic activities of a foreign firm that resists its effort to
introduce home-country nationals into the company.
The process of reducing the size of an organization’s workforce is called decruitment.
Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national
identity and building a self-sustained economy. The government’s priority is to protect
local jobs and provide opportunities to Freeland’s emerging industries to flourish
without the threat of external competition. Transit tariffs have been almost entirely
eliminated worldwide through international trade agreements.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Economic socialism won the battle over communist totalitarianism and capitalism.
Increased regulation of national capital markets has been instrumental in the expansion
of the international capital market.
Typically, indirect exporting relies on local sales representatives or distributors.
Scenario: Frankfurter Friday
Betty Cleveland is the vice president of Frankfurter Friday, a highly successful hot dog
joint in Oceania. Her company decides to expand to Asia and identifies China as the
ideal market. Before she leaves for China, she studies their culture extensively and
discovers that the number four is considered extremely unlucky, that not everybody is
fluent in China’s official language-Mandarin-and that punctuality is a highly valued trait
in the country.
Low levels of class consciousness encourage social mobility and lessen conflict.
Another term for neomercantilism is ________.
A) new trade
B) free trade
C) economic nationalism
D) political nationalism
A company that hires the best-qualified individuals, regardless of nationality, to manage
foreign operations is utilizing a ________ approach.
A) horizontal integration
B) geocentric staffing
C) ethnocentric staffing
D) vertical integration
Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin
America. To that end, Blickinstock is trying to decide whether to purchase an existing
company in a remote region of Argentina or build its own subsidiary. Keith Moon,
Blickinstock’s vice president of global business development, will be making a
presentation to the board outlining the company’s options.
Tax breaks on profits earned abroad and political pressures are used by ________.
A) host countries to promote FDI
B) host countries to restrict FDI
C) home countries to promote FDI
D) home countries to restrict FDI
________ is the belief that both private and public groups play important roles in a
nation’s political activities.
A) Totalitarianism
B) Capitalism
C) Anarchism
D) Pluralism
In the earliest days of international trade, ________ was the internationally accepted
currency for payment of goods and services.
A) British pound
B) U.S. dollar
C) silver
D) gold
Which of the following statements about representative democracies is true?
A) All citizens participate freely and actively in political processes.
B) Leaders of representative democracies can stay in power indefinitely.
C) Citizens elect individuals from political groups to act on their behalf.
D) Representative democracies across the world share identical features.
Locating production facilities within regional markets is popular because ________.
A) regional markets offer greater range of resources needed for production
B) it provides duty-free access to every consumer in a trade bloc
C) the marketing strategies applied at the regional market level will also be applicable
at the global level
D) it simplifies political and economic activities
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
France gave Excelsior’s Limited permission to export its product as long as the
company obtained a special license first. Excelsior has been waiting six months for the
license and is wondering if it will ever arrive. Excelsior’s Limited is experiencing a(n)
________.
A) administrative delay
B) local content requirement
C) embargo
D) currency control
Scenario: Chuck Praeger, Global Entrepreneur
Chuck Praeger has made a name for himself by selling high-quality golf equipment to
customers in Europe. He would like to expand his business into the Pacific Rim
countries and has therefore, begun making inquiries into potential distributors.
Chuck is convinced that his golf equipment will sell itself. But he is preparing a special
presentation for Asian customers because he wants to make a good first impression. As
an expert in culture of the Pacific Rim countries, which of the following would be your
most likely advice to Chuck?
A) Be sure to have a tight legal contract ready, to avoid product piracy problems.
B) Aggressive salesmanship is unlikely to work in Pacific Rim countries.
C) Have plenty of English-language business cards to pass around because most Asians
know English and like the language.
D) Avoid the confusion introduced by third-party contacts.
Which of the following is an advantage of wholly owned subsidiaries?
A) The parent company receives all profits generated by the subsidiary.
B) They are the least expensive investment entry modes.
C) They help in the sharing of the cost of an international investment project.
D) They are the least risky when compared to other investment entry modes.
The main difference between a free trade area and a customs union is that the members
of a customs union ________.
A) agree to the free movement of all factors of production
B) harmonize their tax, monetary, and fiscal policies and create a common currency
C) agree to treat trade with all nonmember nations in a similar manner
D) accept a common stance on economic and political policies regarding nonmember
nations
A growth strategy is designed to ________.
A) guard against organizational change
B) increase the scale or scope of a corporation’s operations
C) support the stability strategies of an organization
D) support the retrenchment strategies of an organization
Describe any three management issues involved in foreign direct investment decisions.
What is the role of debt in national capital markets, and what form does company debt
normally take? Describe the different types of international bonds.
How do national and international business environments influence multinational
strategy formulation?
Identify why a home country might support or discourage outgoing foreign direct
investment.
Describe the potential benefits of international trade. Why would a nation trading with a
neomercantilist country be at a disadvantage?
Discuss the role entrepreneurs and small businesses play in the expansion of FDI. What
are some of the surprises that managers face as they invest in new markets abroad?
How can a nation’s topography affect the existence of subcultures?
Describe brain drain and its impact on an economy. What is reverse brain drain?
What are the different financing methods available to exporters and importers?
Discuss how a national business environment can influence a firm’s decision to
standardize or differentiate its product. How do cultural differences impact product
strategies?