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According to Porter, the competitive advantage of a nation depends on the collective
competitive advantages of the nation's firms.
Firms prefer HCNs when the host-country environment is complex and their specialized
knowledge or local connections are required in the local marketplace.
In expatriate compensation, tax equalization is a special consideration.
Branding refers to the process of dividing a firm's total customer base into
homogeneous clusters in a way that allows management to formulate unique marketing
strategies for each group.
Due to the competition involved in global industries, marketing strategies are
determined by the unique needs and regulations of each nation.
Ethnocentric orientation refers to a host-country mind-set in which the manager
develops a strong affinity with the country in which she or he conducts business.
Many international firms are investing in local communities and establishing global
standards of fair treatment for workers in an effort to be socially responsible.
A devaluation is an action taken by the international monetary fund.
In order to facilitate shared decision-making between headquarters and country
managers, corporate representatives should often visit subsidiary locations.
Capital flight from a country enhances its ability to service debt and pay for imports.
Globalization results in more demanding buyers who shop for the best deals worldwide.
Expropriation is the term used to describe a host-country government seizing the assets
of a foreign corporation and providing no compensation in return.
A centralized depository lets managers reduce the size of highly liquid accounts and
invest the funds, generally at the higher interest rates offered for large deposits, to
generate maximal returns.
Firms often establish their own sourcing operations abroad to maintain control of
outsourced activities and technologies.
Investment banks underwrite (guarantee the sale of) stock and bond issues and advise
on mergers.
Momentum trading occurs when investors buy stocks whose prices have been falling
and sell stocks whose prices have been rising.
Avoiding trade barriers is classified as a market-seeking motive for FDI.
Visionary leadership is more complex and important in domestic firms than global
firms because corporate headquarters is where major decisions are made.
The first wave of offshoring began in the 1990s with the exodus of service-sector jobs
in credit card processing, software code writing, accounting, health care, and banking
services.
Economists estimate real buying power by calculating GDP statistics based on
purchasing power parity.
A centralized approach means substantial autonomy and decision-making authority are
delegated to the firm's subsidiaries around the world.
A multidomestic industry is one in which competition takes place on a regional or
worldwide basis.
Industry market potential is identical to company sales potential.
The likelihood of a firm internalizing marketing and branding instead of outsourcing it
is high.
Companies that proactively build a global organizational culture subscribe to subjective
ethical and moral standards.
Experienced managers scan operations in each country and potential partners for the
possibility of ethical abuses. Such scanning is an ongoing process because company
operations and environments evolve continuously.
Under a build-operate-transfer (BOT) arrangement, a firm or consortium of firms
contracts to build a major facility abroad and then transfers ownership to the project
sponsor, typically the host-country government or public utility.
A firm can reduce its marketing and advertising costs substantially by focusing on
numerous national brands instead of a single global brand.
In the decision about whether to outsource, manufacturing of products is considered of
high importance to a firm.
FDI and ownership restrictions increase the competitive advantage of foreigners while
diminishing that of the local firms.
Improper ethical behavior is unlikely to result when bad means are justified by good
ends.
Global integration is a plan of action that accounts for competition on a
country-by-country basis.
Consumers prefer globally branded products because branding provides a sense of trust
and confidence in their purchasing.
When compared to licensing agreements, the relationships established in franchising
arrangements are typically volatile and short-term.
Early trade theories failed to consider the fact that the primary participants in
international trade are individual firms that differ in significant ways from each other.
Firms that engage in FDI avoid problematic trade barriers because the physical
presence of a foreign firm earns it the same privileges as a local firm.
Wonder Cat Licensing (Scenario)
Wonder Cat is a popular, new cartoon series created by the U.S-based All Cartoon
Channel (ACC). Currently, the only Wonder Cat item available for sale are shirts that
are sold exclusively through the ACC Web site. The cartoon series is a big hit in China,
and as a result ACC has been approached by a Chinese firm about a licensing
agreement. ACC executives are considering the pros and cons of such an agreement
before making any final decisions.
Which of the following questions would be more important to evaluate before ACC
enters a licensing agreement with the Chinese firm?
A) What other cartoon characters in the U.S. have been licensed to Chinese firms?
B) Should the Wonder Cat shirts that were available on the firm's Web site be removed
from sale?
C) Will the Wonder Cat products made by the Chinese firm be available for sale on the
ACC Web site?
D) How much control will ACC be able to maintain over the use of the Wonder Cat
brand?
Which of the following countries is home to the largest number of franchisors?
A) United States
B) Britain
C) China
D) Canada
Which of the following factors is typically most important to firms considering FDI
entry?
A) availability of skilled labor and managerial talent
B) pricing strategies of competitors
C) tariffs applied for exporting
D) literacy level of the consumers
Which of the following statements is true about value chain and international business?
A) Exporting firms perform most of the downstream value chain activities in the home
market.
B) Exporting firms perform most of the upstream value chain activities in the home
market.
C) Exporting firms perform most of the upstream value chain activities abroad.
D) Exporting firms perform most of the research and product development and
production abroad.
Which of the following statements is true of the global debt crisis?
A) Fiscal imbalances are the least important source of risk and uncertainty in the global
business environment.
B) The smallest proportion of government debt results from national pension and
healthcare programs.
C) Debt has substantially decreased in major advanced economies mainly due to
excessive government spending.
D) When a government tries to pay down its debt, money is drawn out of the national
money supply, which hinders economic activity and reduces tax revenues.
Which of the following laws is responsible for the ban on cigarette advertisements in
France?
A) environmental laws
B) product and liability laws
C) foreign investment laws
D) marketing and distribution laws
Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores
across America. After months of research, CCC executives have decided to open their
first international store in Sydney, Australia. CCC managers have been assigned the
task of selecting an appropriate Australian business partner for the coffee company.
CCC managers flew to Sydney to interview potential business partners, and they have
narrowed the list to three.
All of the following are criteria most likely established by CCC managers for choosing
the best foreign business partner EXCEPT ________.
A) requirement for competent management skills and qualified staff
B) familiarity with U.S. government franchising regulations
C) knowledge about the food and beverage industry
D) good connections with the Australian government
Which of the following is true with regard to global advertising agencies?
A) They are also known as unauthorized intermediaries.
B) They rarely offer additional services such as market research, publicity, and package
design.
C) They can create advertising that is both global and sensitive to local conditions.
D) Typically, they do not cater to MNEs.
Which of the following is an example of an ownership-specific advantage?
A) the physical assets owned by a firm
B) natural resources of the region where the firm operates
C) low-cost labor
D) inexpensive capital
Managers typically consider all of the following elements when developing
compensation packages for employees working abroad EXCEPT ________.
A) wages
B) premium
C) incentives
D) benefits
________ is the process of dividing the firm's total customer base into homogeneous
clusters in a way that allows management to formulate unique marketing strategies for
each group.
A) Brand management
B) Customer relationship management
C) Market segmentation
D) Market diversification
Which of the following statements would be supported by Michael Porter?
A) Economic prosperity depends primarily on inherited national advantages.
B) The presence of strong competitors in a nation hinders national competitive
advantage.
C) The presence of highly demanding customers discourages innovation.
D) Rivalry among industry competitors spurs innovation.
________ are the most transformative technology in developing economies.
A) Mobile phones
B) Televisions
C) Intranets
D) E-mails
Which of the following best summarizes the goal of cross-cultural awareness training
for expatriates?
A) It enables expatriates to cope with reverse-culture shock.
B) It enables expatriates to share knowledge with host-country nationals more
effectively.
C) It enables expatriates to significantly upgrade their technical skills.
D) It enables expatriates to effectively communicate with local customers and
employees and be sensitive to the host-country's culture.
A focal firm's overreliance on suppliers can potentially lead to ________.
A) reduced control over important value-chain tasks
B) added competitive advantage for the focal firm
C) an excessive burden on home-country suppliers
D) consolidation of the focal firm's network of intermediaries
Which of the following approaches to ethical standards for corporate governance
reflects the view that the best action treats everyone equally and in a just manner?
A) fairness approach
B) virtue approach
C) utilitarian approach
D) rights approach
Technological advances have contributed to manufacturing by ________.
A) promoting traditional lifestyles and values
B) reducing cross-border flow of factors of production
C) promoting nationalization
D) reducing production costs
The reputation of a licensor will be jeopardized by a licensing agreement if the licensee
________.
A) markets competing products for significantly lower prices
B) uses the licensing asset to create products of poor quality
C) refuses to pay the agreed upon royalties to the licensor
D) does not guarantee future expansion in the market
Differences in culture, laws, and media availability imply ________.
A) that culture is a weak determinant of buyer attitudes toward the role and function of
advertising
B) that international advertising expenditures tend to remain unchanged regardless of
the firm's foreign operations
C) that it is seldom possible to duplicate in foreign markets the type and mix of
advertising used in the home market
D) that it is difficult to influence buyer perception through media
The free movement of capital around the world is also known as ________.
A) bond-based debt financing
B) contagion
C) the globalization of capital
D) common market arrangement
Which of the following is a disadvantage of a multidomestic strategy?
A) lack of opportunities to delegate tasks
B) high pressure on headquarters staff
C) inefficient manufacturing
D) standardized products in culturally different markets
Japanese Supercenter (Scenario)
The Tag-Mart chain of discount superstores is nearing completion of its new
supercenter in Tokyo. The Tokyo store is the first foreign store for the large U.S.-based
company. Tag-Mart offers a large variety of products at virtually unbeatable prices. A
group of Tag-Mart representatives has traveled to Tokyo to inspect the new store and
hire a store manager. The top two contenders for the position are Hisako Aoki and
Takematsu Sato. Aoki has 25 years of experience managing a local department store
renowned for its customer service. Sato, born and raised in Japan, earned a college
degree in the U.S. before working six years as a manager at a Texas Tag-Mart.
Which of the following, if true, most supports the decision to operate the Tokyo store in
a manner similar to Tag-Mart stores in the U.S.?
A) Customer service is of utmost importance to local shoppers.
B) Finding efficient and knowledgeable employees in Tokyo is difficult.
C) Other supercenter stores in Tokyo have gone out of business in the last year.
D) Local shoppers desire both efficiency and low prices.
The volume and complexity of a firm's intracorporate transfers depends on ________.
A) the amount of cash available from loans
B) the value of the shareholders' stock
C) the country from which the firm originates
D) the number of subsidiaries and alliances the firm maintains worldwide
International Management Position (Scenario)
Global Choppers Inc. is an MNE based in Vancouver that manufactures high-quality
motorcycles for sale around the world. The majority of design work is done at the
Vancouver headquarters, but manufacturing and assembly are performed in company
facilities located in Romania. In order to maintain control over manufacturing quality,
Global Choppers sends representatives from the company headquarters to manage the
Romanian facility for one year rotations. Conrad O'Neil has been selected to run the
foreign facility for the upcoming year. The human resources department of Global
Choppers will be preparing him for his foreign assignment through a variety of training
methods.
The human resources department of Global Choppers designs trainings for employees
in a way that helps them avoid the self-reference criterion. This implies that the training
designed by the human resources department of Global Choppers ________.
A) helps counter the tendency of viewing foreign assignments with suspicion and
distrust
B) does not emphasize cultural awareness
C) is inadequately equipped to enhance the cultural intelligence of employees
D) helps counter the tendency of viewing other cultures through the lens of one's own
culture
Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with
preparing a comprehensive report on the company's global operations over the past
twenty years. Deva assigns three strategists to collaborate on the History portion of the
report, which details the rationale behind Pax's decisions to expand operations in
particular areas. Rashid Ahl focuses on early expansion to China, which occurred after
China began to make its market more accessible to foreign companies. Markus Teller
focuses on Pax's expansion to Eastern Europe, which was motivated by increased
industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan,
which happened when the company's commercial bank expanded its service network to
Asia.
The third phase of globalization was triggered by the development of personal
computers, the Internet, and Web browsers.
Which of the following is true with regard to a global positioning strategy?
A) A global positioning strategy does not address the shared expectations of a global
customer market segment.
B) More often than not, global positioning dilutes brand equity in the international
market.
C) A global positioning strategy reduces international marketing costs.
D) Internationalizing firms rarely aim for a global positioning strategy.
Extra Clean Strategy (Scenario)
Extra Clean Soap Company has been manufacturing soap products, such as
dishwashing liquid, bath soap, and shampoo, for over 20 years from its facility and
headquarters in Dublin, Ireland. A recent opportunity allowed Extra Clean to purchase
soap companies in Taiwan and India. Extra Clean is now servicing both foreign and
domestic markets with its products and manufacturing in all three locations. Recent
reports from managers in the foreign facilities indicate that Extra Clean sales in Taiwan
and India are low due to a lack of local responsiveness. Extra Clean managers from
Ireland, India, and Taiwan are having a teleconference in an attempt to devise a strategy
to improve the profitability of Extra Clean.
Which of the following questions would be most important for Extra Clean managers to
evaluate the integration-responsiveness framework?
A) What types of global IT infrastructure and tools should be used in Dublin to
maintain efficiency?
B) Should the Extra Clean headquarters relocate to Taiwan for six months?
C) Would the foreign managers benefit from a training session in Ireland?
D) What type of balance is appropriate between headquarters and country managers?
Which of the following is true of the Grameen Bank founded by Prof. Muhammad
Yunus?
A) It provides funding primarily to global conglomerates.
B) It is a family conglomerate based in Bangladesh.
C) It provides small-scale financial services to aspiring entrepreneurs in poor countries.
D) It sells insurance in India for less than 20 cents.
In terms of financial management tasks that are key to MNE success, which of the
following comes after the task of assessing the financial attractiveness of major
investment projects?
A) oversees transactions in various foreign currencies and manages risk exposure
resulting from exchange-rate fluctuations
B) administers funds passing in and out of the firm's value-adding activities
C) obtains financing for funding value-adding activities and investment projects
D) learns to operate in a global environment with diverse accounting practices and
international tax regimes
A U.S. company buys from a supplier whose currency is increasing against the dollar.
Which of the following will the company most likely have to do if the purchasing price
is expressed in the supplier's currency?
A) pay less in dollars than originally expected
B) pay more in dollars than originally expected
C) pay the same amount of dollars as originally expected
D) pay part of the transaction in the supplier's currency
Firms with strong environmental interests are most likely to ________.
A) provide employees educational opportunities
B) encourage the use of sweatshops
C) optimize diversity in hiring
D) minimize pollutants in manufacturing
Financing Corporate Expansion (Scenario)
Intensity Games is an MNE based in San Francisco that manufactures a popular line of
video game consoles and accessories. Intensity owns manufacturing facilities in China
and Russia where the components of the game consoles are manufactured and
assembled before being shipped around the world. Intensity also owns numerous
subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity
managers have determined that the firm needs to expand its Chinese facility to
accommodate the increasing demand. The firm needs to raise several million dollars to
finance the expansion. The financial managers of Intensity are discussing the various
financing options available to the firm.
Which of the following is most likely a disadvantage of Intensity raising funds through
equity financing?
A) Intensity management could lose a controlling interest in the firm.
B) Intensity would not be able to repay shareholders at any time.
C) Intensity management would end up in bankruptcy.
D) Intensity could lose money from currency fluctuations in emerging markets.
International experience tends to ________.
A) lower sensitivity
B) lower cross-cultural awareness
C) enhance problem-solving and crisis management skills
D) enhance a greater unease in traveling on foreign assignments
Which of the following most likely supports the purchase of Maple Leaf by FEG?
A) Canadian and U.S. accounting systems and regulations are harmonized.
B) Maple Leaf financial records lack transparency despite tax audits.
C) Currency traders anticipate FEG will need to hedge the Canadian dollar.
D) FEG should be able to attain a fronting loan for the purchase of Maple Leaf.
International division managers usually oversee ________.
A) large-scale investments
B) product development
C) distributor relationships
D) corporate accounting
What is offshoring? Describe the types of industries that tend to offshore.
Describe the guidelines for protecting intellectual property.
Describe country risk and discuss how political and legal systems contribute to country
risk. Explain the differences between political systems and legal systems in your
answer.
Explain the belief that a persistent trade deficit is harmful to the national economy. Why
was the Bretton Woods Agreement initiated and why was it terminated?
In a short essay, explain the absolute advantage principle. Provide an example of the
principle at work.
What role do logistics play in global sourcing? In a short essay, discuss how logistics
relates to cost. Provide an example of a firm that lost money as a result of inadequate
logistics.
Briefly describe the five levels of economic integration.
In a short essay, explain why some international firms chart global career paths for
employees, and discuss the reasons women still do not enjoy equal access to senior
management positions in most countries.
How do firms decide whether or not to outsource? In a short essay, describe the factors
that contribute to the decision to internalize or externalize business activities.
In a short essay, explain why international business managers should engage in critical
incident analysis to avoid the self-reference criterion. Describe why an examination of
values and attitudes toward culture is important in this analysis.
In a short essay, explain the factor proportions theory. How does the theory differ from
other theories?
What is transparency? Explain how transparency varies around the world.
In a short essay, explain why non-profit organizations might conduct cross-border
activities.
How has technology affected foreign exchange trading?
How are large MNEs from advanced economies competing against new emerging
market MNEs? In a short essay, describe the methods used by the incumbents to protect
market share from emergent firms.
Describe the similarities and differences of common law and civil law, and explain how
inadequate or underdeveloped legal systems pose a risk for international businesses.
Describe the advantages of international collaborative ventures, and describe the
potential risks of collaboration.
Describe the six major financial management tasks that are critical to firms active in
international business transactions.
