Book Title
International Business: The Challenge of Global Competition 13th Edition

MGMT 20862

February 28, 2019
The international Fisher effect states that the interest rate differentials for any two
currencies reflect the expected change in their exchange rates.
Environmentally sustainable businesses need to consider the economic and ecological
systems in which they function, but not the social.
A disadvantage of hiring local managers is that they are often unfamiliar with the home
country of the IC and with its policies and practices.
The first formulation of international trade theory, by Adam Smith, was motivated by
political considerations.
The existence of two or more partners, which typically have differences in strategies,
operating practices, and organizational cultures, is a factor that tends to promote
successful management and performance of strategic alliances.
Export merchants are exporters that sell for the manufacturer but do not take ownership
of the product.
Team establishment involves weakly linked member identification to ensure creativity.
New exporters often fail to provide local language translation of service, sales, and
warrantee information.
BOP accounts are recorded in a double-entry bookkeeping method, with each
transaction having debit and credit sides.
Trading and pooling alliances are typically different in their goals, optimal structures,
and managerial challenges.
Buyers of industrial goods and luxury products usually act on the same motives the
world over, lending themselves to a standardized approach.
Feminine cultures in Hofstede's dimensions care about relationships and are not focused
on business success. It is quality of life that matters.
CeBIT is a horse-trading-related trade fair.
Subsidies that confer a benefit may well evoke countervailing duties.
International business managers need to be able to communicate across cultural
borders, even if they don't speak foreign languages.
The influence of organizational culture on change efforts is stronger than the influence
of national culture.
An arrangement in which one or more activities that could be provided in-house are
instead provided by another company is offshoring.
The increasing pace of change and intensity of competition in many markets of the
world, as well as continued differences across many markets, are causing even large
experienced companies to delegate at least some decision-making authority to
subsidiary managers.
The more familiar, or the more similar, conditions in the host country are perceived to
be, the more likely headquarters is to rely on subsidiary management.
A basic cultural decision for the marketer is whether to position the product as foreign
or local, and which way to go seems to depend on the country, the product type, and the
distribution channel.
An examination of the 2009 Human Development Report shows that only 23 of the 182
countries for which data were available had average annual GDP per capita growth rates
that were higher than the U.S. growth rate for the period 1990-2007.
The first step in the process of strategic planning is to define the company's business
and mission.
The benefits from standardization of the marketing mix are lower costs, easier control,
and reduction of time in preparing the marketing plan.
According to the text, differences in taste, a demand variable, can reverse the direction
of trade predicted by the theory.
Recently, regional trade agreements have grown, a trend that may be seen to strengthen
the WTO, according to the text.
According to Frederick W. Gluck, formal strategic planning teams must assume a more
explicit strategic decision-making role in strategic planning, including dedicating a
large amount of time to deciding how things ought to be instead of listening to analyses
of how they are.
According to the text, a concurrent engineering approach to design promotes
cross-functional participation in the design process and thereby helps to identify and
avoid many of the potential sourcing, manufacturing, and other difficulties that can be
associated with a particular design.
(p. 206)-Global foreign currency exchange transactions total in the area of $4 trillion
Reverse trade missions try to find import sources in foreign countries for U.S.
The great disparity in income throughout the world promotes worldwide product
When possible, it is better for companies to initially outsource complex activities in
order to achieve better cost benefits.
Knowing the number of imports to a specific country provides a firm with a complete
measure of market potential.
Exporting is a way for firms to improve the efficiency of manufacturing equipment.
China, Mexico, and Japan are the three largest trading partners of the United States, in
terms of the total volume of imports and exports.
Managerial functions associated with the movement of materials such as raw materials,
work in progress, or finished goods are referred to as:
A. standards.
B. processes.
C. logistics.
D. value chains.
E. none of the above.
Regarding economic and social development:
A. international trade has an important role in influencing nations' economic and social
performance, with this role being even more fundamental in the case of developed
B. expansion of trade guarantees improvement for a country and its people.
C. the Trade and Development Index attempts to provide a quantitative indication of a
nation's social and economic development.
D. the 30 highest-ranked nations in the initial Trade and Development Index were all
developed countries.
E. for the Trade and Development Index, the best regional performance among
developing countries was that of the countries of the East Asia and Pacific region.
To set corporate objectives, management must first:
A. select a viable market segment.
B. quantify them.
C. define the firm's mission.
D. research the market.
E. none of the above.
The OECD has encouraged members to:
A. develop trade relationships within the OECD only.
B. eliminate bribery in all commercial transactions.
C. standardize electrical wave signals.
D. extend their tax regulations beyond their borders.
According to the text, the types of information an IC needs to have reported by
subsidiaries include:
A. financial.
B. organizational structure and systems.
C. political.
D. all of the above.
In high-context cultures, face-to-face relationships tend to be important and:
A. knowledge is situational.
B. decisions focus around personal relationships.
C. long term.
D. all of the above.
Team leadership has these main activities:
A. directing and evaluating.
B. directing and organizing.
C. establishing, coaching, and assessing.
D. establishing, coaching, and setting norms.
E. A and C.
According to the text, approximately ______ percent of the companies surveyed
required cross-cultural training for their expats or their families.
A. 21 percent
B. 27 percent
C. nearly half
D. 77 percent
E. 90 percent
Team coaching is critically important in global teams because:
A. with high levels of diversity, team members who don't know each other are likely to
expect poor performance.
B. team members need coaching to cross cultural barriers.
C. global teams are challenged with diversity, which leads to innovation.
D. without coaching, each separately located member is likely to work independently.
Production managers have discovered that their introduction of new production
methods across cultures is affected by varying attitudes toward:
A. their personalities.
B. developed economies.
C. change.
D. technology.
A patent gives the inventor:
A. property rights for 10 years.
B. the right to use the invention until development costs are recouped.
C. exclusive rights to manufacture, exploit, use, and sell the invention for a given time
D. the right to keep the patented process but not the product for five years.
E. two of the above.
According to the text, changes in the way corporate planning is done:
A. include greater attention being paid to sociopolitical developments.
B. include the use of advanced computing techniques to make detailed five-year
C. include heavy emphasis on the use of variables that can be quantified.
D. all of the above are correct.
E. two of A, B, and C.
Most African nations have their main trade relationships:
A. within local FTAs.
B. with other African nations due to transport costs.
C. with developed nations, often built on former colonial ties.
D. with China.
The current account on the BOP has three subaccounts:
A. export, import, and capital.
B. tangible exports, tariff revenues, and capital.
C. fixed assets, current liabilities, and long-term debt.
D. merchandise, services, and unilateral transfers.
Reasons for sourcing globally include:
A. a lower price.
B. products not available locally.
C. a firm's worldwide operation and quality.
D. all of the above.
Hiring and promoting employees on the basis of the specific local context in which the
subsidiary operates refers to:
A. an ethnocentric orientation.
B. a polycentric orientation.
C. a regiocentric orientation.
D. a geocentric orientation.
E. none of the above.
Which of the following are reasons that many firms engage in exporting?
A. Exports can allow the firm to meet customer requests for the firm to export.
B. Exports can help a company to remain price competitive in the home market.
C. Exports are the best way for gaining information about foreign markets and
D. All of the above.
Physical barriers that have led to the development of separate languages in the same
country are known as:
A. political and cultural patterns.
B. topographical barriers.
C. linguistic tariffs.
D. differentiating borders.
The international business manager can choose to:
A. transfer a management practice intact.
B. transfer and adjust a management practice.
C. not transfer a management practice at all.
D. two of A, B, and C.
E. all of A, B, and C.
Nancy Adler's research suggests that women:
A. will never get to the top because they take time-out for children.
B. are more likely than men to succeed if they quit the company and start their own
C. have been remarkably successful in international assignments, which does not seem
to be related to gender.
D. are less likely than men to succeed in international assignments.
E. two of the above.
In the United States, the Smoot-Hawley Tariff Act:
A. outlawed tariffs for U.S. imports.
B. led to the Wall Street crash of 1929.
C. established some of the highest tariffs the United States has known.
D. two of the above.
The forward currency market:
A. allows purchasers to lock in purchases of currencies at known rates.
B. provides governments a way to manage their currency's value.
C. makes trading in several currencies more efficient.
D. helps managers manage domestic debt.
Much of the confusion in the ongoing discussion about whether a global firm can have
global products results from the discussants not clarifying whether they are referring to
A. total product, physical product, or brand name.
B. final product, physical product, or brand name.
C. total product, final product, or brand name.
D. physical product, final product, or brand name.
Plans for the best-or worst-case scenarios or for critical events that could have a severe
impact on the firm are known as:
A. scenario plans.
B. strategic plans.
C. contingency plans.
D. emergency plans.
E. none of the above.
Porter's Diamond Model of national advantage:
A. claims that the ability of local firms in a country to utilize the country's resources to
gain a competitive advantage is based on demand conditions, factor conditions,
substitute products, and firm strategy, structure, and rivalry.
B. links intraindustry trade to relative levels of per capita income.
C. is not affected by chance.
D. all of A, B, and C.
E. two of A, B, and C.
In the new strategic planning process:
A. top management is assigning strategic planning to teams of line and staff managers
from the same business.
B. interaction with important customers and suppliers should be included.
C. governments and other stakeholdersshould be direct participants.
D. all of the above.
The Alien Tort Statute allows foreigners to:
A. sue in U.S. courts for residency in the United States.
B. file claims in U.S. courts for violations of international law that may have occurred
beyond U.S. borders.
C. file claims in U.S. courts for alleged violations of foreign laws.
D. file claims against other foreign nationals for violations of U.S. EEOC law.
E. avoid prosecution from U.S. laws as long as they live, work, and have citizenship in
another country.
The new directions in planning:
A. two of B, C, D, and E.
B. have made strategic planners dominant in the planning process.
C. have brought operating managers into the planning process.
D. have relieved the firm's chief executive officer of the responsibility for strategic
E. have made the use of computers and professional planners essential for the planning
Running afoul of miscellaneous laws in a foreign country is:
A. easily understood and forgiven by foreign police.
B. a serious error, so the local law should be known.
C. not a major issue, since the embassy can work out your release.
D. not a serious issue because your country and company stand behind you.
E. none of the above.
Facebook is:
A. an organization based on kinship.
B. an organization based on free association.
C. a tool that international marketers best avoid, given the complexities of culture.
D. a passing fad that will absorb many marketing budgets but won't produce much in
the way of results.
The use of third-country nationals as IC executives in LDCs is a growing practice
A. they tend to prefer working in LDCs.
B. there is frequently a shortage of skilled host-country nationals.
C. all of A, B, and D.
D. they often already have host-country work permits and knowledge of the host
country's language and culture.