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

MGMT 55444

February 28, 2019
The International Court of Justice (ICJ) handles all cases brought forward by any
person or organization.
The spot rate is the rate for exchange within two days in the currency market.
Country risk assessment is a measure of the threat of nationalization.
The balance of payments is a record of a country's transactions with its major trading
Tariff barriers may be used to protect domestic industry from foreign, lower-cost
Once a firm determines that a market exists for its products, it needs to decide to export
directly or indirectly.
The exchange rate for today for delivery within two days is known as the current rate.
A company's organizational structure helps to determine where formal power and
authority will be located within the organization.
China participates in the management of the international financial environment by
managing its currency.
When we use cultural frameworks to build our understanding of another culture, we use
our own culture as an implicit reference point.
Discovery refers to the process of finding out facts that indicate a law has been violated,
and it leads to the filing of a legal case, or litigation.
Some firms promote host-country employees to international status without transferring
them abroad.
The marketing of services, sometimes called intangibles, is similar to the marketing of
consumer products in that these products are generally harder to market globally than
industrial products.
Market screening is a modified version of environmental scanning in which the firm
studies the stock market to eliminate the less desirable markets.
The source of international law is mostly the tendency of powerful nations to apply
their laws extraterritorially.
The horizontal organization has been characterized as antiorganization because its
designers try to remove the constraints imposed by the conventional organizational
The European Patent Organization makes filing for a patent in all 27 EU member-states
more difficult than it was previously.
In a firm without a global product policy, the preference of the operations management
people in the home office has always been to localize the product or at least the
production process in as many overseas plants as possible.
Sanctions against nations are not a form of trade restriction because the motivation is
Country risk assessment is an evaluation that assesses a country's political situation and
policies to determine how much risk exists of a change in that country's government.
The United States avoids trade barriers on imports in support of free trade principles.
New exporters always come to the process with a carefully developed marketing
International business differs from domestic business in that a firm operating across
borders must deal with the forces of two kinds of environments—domestic and foreign.
A complete financial analysis is part of the financial and economic forces screening
Economic cooperation often begins with a common market, as in the case of the EU.
Retaliatory trade restrictions are not made for dumping because price competition is
protected by the WTO.
The basic functions of domestic and international marketing are the same.
Commonly, in designing plants for developing countries, engineers will use a hybrid of
capital-intensive processes when they are considered essential to ensure product quality
and labor-intensive processes to take advantage of the abundance of skilled labor.
Moving funds can reduce tax exposure in high-tax locales and can be used as a way to
address limitations placed by foreign governments on the repatriation of profits.
American depository receipts are held by a bank in the stock's home country and these
receipts then are traded on the U.S. exchange.
Expatriate assignments have been reported to lead to faster promotions.
When a country imports more than it exports, the currency might be expected to
Religion is not an important aspect of culture in countries that are secular and have split
the church from the state.
The United States at times applies antitrust law extraterritorially.
When the government of a host country requires companies to have some local
participation, foreign firms must engage in strategic alliances with local owners.
Brake's leadership triad includes:
A. culture knowledge, foreign languages, and business acumen.
B. business, culture, and geographic acumen.
C. business knowledge, relationship skills, and personal effectiveness skills
D. self-discipline, motivational skills, and business skills.
E. personal, business, and motivational skills.
Two good places to begin country-level research are the websites of the:
A. CIA and UN.
B. UN and WTO.
C. BIAC and CIA.
D. specific country's government and OECD.
To fully understand why, how, and where they intend to do business, now and over
time, managers must have:
A. a clear understanding of the company's mission.
B. a vision for how they intend to achieve the company's mission.
C. an understanding of how the company plans to compete with other companies.
D. all of the above.
When the law of one price is applied to interest rates, it suggests that:
A. interest rates do not differ much across national borders.
B. inflation is not affected by interest rates.
C. inflation and interest rates do not follow the law of one price.
D. varying interest rates take into account anticipated differences in inflation rates.
Most significantly for the international manager, the balance of payments reveals:
A. demand for a firm's products.
B. a firm's financial position.
C. a country's export patterns.
D. demand for a country's currency and potential changes in its economic environment.
Purchasing power parity is a way to compare:
A. the purchasing power of several currencies.
B. tastes in several different cultures.
C. the impact of financial aid in several economies.
D. meals in the quick-service restaurant sector—via the Big Mac index.
Management has no direct control over the external environment of the firm but can
exert influence by:
A. heavy promotion of new products to change cultural attitudes.
B. only competing in the domestic market.
C. lobbying.
D. all of the above.
Activities that are involved in producing a company's products and services and how
these activities are linked together are often referred to as:
A. value chains.
B. supply chains.
C. organization design.
D. operations management.
E. none of the above.
The domestic environment is composed of all the uncontrollable forces originating in
the __________ that surround and influence the life and development of the firm.
A. international arena
B. host nation
C. home country
D. foreign country
E. two of the above.
This government commercialized the German Fischer-Tropsch process in order to
obtain oil from coal through a catalyzed chemical reaction:
A. Israel.
B. the Sudan.
C. South Africa.
D. Germany.
Regarding the volume of international trade, exports of goods and services
___________ in 2010.
A. were nearly $4.0 trillion
B. reached $5.8 trillion
C. were $10.4 trillion
D. were nearly $19.0 trillion
E. exceeded $24.5 trillion
The present floating exchange rate system was:
A. designed by the IMF and implemented flawlessly in 1973.
B. established by the major trading nations in 19721 after Nixon closed the gold
C. implemented in tandem with a reintroduction of the gold standard.
D. established after several trials in which central bankers set rates incorrectly and
speculators corrected them in the markets, and it was formalized after the fact in the
IMF's Jamaica Agreement.
Adam Smith claimed that:
A. governments, not market forces, should determine the directions, volume, and
composition of international trade.
B. a nation could trade advantageously if it had a comparative advantage.
C. market forces, not government controls, should determine direction, volume, and the
composition of international trade.
D. customers' tastes are affected by income levels.
E. two of the above.
To sum up international trade theory, we can say that the primary reason for trade is:
A. the increase in OPEC oil prices.
B. governments want to accumulate money.
C. the existence of price differentials among nations.
D. the creation of new nations from former colonies.
E. none of the above.
A contractual arrangement in which one firm grants access to its patents, trade secrets,
or technology to another for a fee is:
A. an exporter.
B. a sales company.
C. a management contract.
D. a joint venture.
LASH and RO-RO are:
A. innovative material-handling methods.
B. kinds of containerization.
C. Panamax ships.
D. barges used in materials handling.
E. Japanese import requirements.
Generally, consumer products require __________ adaptation than (as) industrial
products to meet the demands of the world market.
A. greater
B. less
C. the same amount of
D. about the same
E. none of the above
The FCPA has:
A. hurt American business because managers cannot use bribes anymore.
B. challenged the creativity of American managers and consultants to develop ways to
work around the FCPA.
C. brought the discussion of bribery into the open, which has, overall, been positive.
D. resulted in American foreign business going to Japanese and German businesses.
E. eliminated bribery in international business.
In high-context cultures, relationships tend to be:
A. short term.
B. medium term, except for family.
C. long term.
D. pragmatic.
Regional trade agreements such as NAFTA can be seen to impact the WTO:
A. negatively, because they undercut the nondiscrimination principle of the WTO.
B. positively, because they extend most-favored-nation status to more nations.
C. negatively, because they compete with the WTO for membership, since nations can
belong to only one trade group.
D. negatively, because the United States and the EU do not have a regional trade
agreement between them.
"Women are inappropriate for global leadership positions." This statement is:
A. true, because of cultural differences.
B. true, because of experience gaps.
C. false, because women have characteristics aligned with global leadership traits.
D. false, because women understand oppression and victimization.
E. true, because if women could do the job, they would be doing it.
Wind power is sourced:
A. on land only.
B. on land and sea.
C. where altitudes permit.
D. in the Swiss Alps.
The foundation of a global mindset is:
A. knowledge of and experience in other cultures.
B. knowledge of foreign languages and cultures.
C. intellectual intelligence and global emotional intelligence.
D. global skills.
E. A, B, and D.
Which of the following are identified in the text as being drivers of globalization?
A. Technological
B. Social
C. Two of A, B, and D
D. Economic
E. All of A, B, and D
International business can be a powerful political force, in part because:
A. a recent Supreme Court ruling in the United States allows corporate contributions to
political races.
B. many top management team members are willing to accept roles with national
security agencies.
C. about half the world's 100 largest economic units are firms.
D. business is all about achieving political goals.
E. two of the above.
Historically, more aspects of ______________ have been standardized and coordinated
worldwide by companies than has been the case for other value chain activities such as
A. research and development; manufacturing
B. marketing; manufacturing
C. manufacturing; marketing
D. marketing; research and development
E. none of the above
Cooperation as a global team norm:
A. is scarce and unlikely to develop.
B. helps to overcome the disadvantage of geographic dispersion.
C. is overrated according to research.
D. contributes to high levels of out-group feelings.
E. C and D.
When considering where to export, advantages to managers of focusing on a nation that
is already a sizable purchaser of goods coming from the home country include:
A. the political climate in the importing nation is relatively stable.
B. there are abundant natural resources in the importing nation.
C. satisfactory transportation facilities have already been established.
D. all of the above.
It is sensible for an IC to direct or allocate as much profit as reasonably possible to
subsidiaries in countries with:
A. two of B, C, and D.
B. the least currency controls.
C. lower taxes.
D. the highest rate of inflation.
E. all of B, C and D.
In spite of the advantages of global standardization, many firms find it necessary to:
A. use the domestic marketing mix overseas.
B. modify the present mix or develop a new one for overseas markets.
C. use different marketing mixes overseas, to save money.
D. two of the above.
The potential benefits of the virtual corporation concept include that:
A. it permits greater flexibility than is associated with more typical corporate structures.
B. virtual corporations form a network of static relationships that allow them to take
advantage of the competencies of other organizations.
C. this form of organization increases management's control over the corporation's
D. all of the above.
The International Energy Agency 2010 report observes that an energy revolution
underway may well lead to:
A. a 27 percent drop in oil usage.
B. North America becoming the center of alternative energy research.
C. Africa and the Middle East increasingly relying on fossil fuels.
D. Europe relying increasingly on nuclear.
The International Trade Administration (ITA) is a good place for U.S. beginning
exporters to start out.

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