A common law system is based on tradition, judge-made precedent, and usage in which
the courts assign a preeminent position to existing case law to guide dispute resolution.
The government considers itself a better judge of resource allocation than businesses or
citizens in a market economy.
The protection of intellectual property rights is very similar from country to country.
Vertical integration occurs when the company owns the entire supplier network or at
least a significant part of it.
Pressures for global integration include economic integration, convergent consumer
preferences, and political demands imposed by host countries.
Coordination methods include mutual adjustment, planning, and standardization.
A political ideology is the collection of ideas that expresses the goals, theories, and
aims that constitute a sociopolitical program.
An advantage of locating operations where there are many competitors is that the
cluster of competing firms attracts multiple suppliers and specialized personnel.
The most common type of tariff is the export tariff.
Good scanning helps managers avoid the need to make a detailed analysis of countries
when deciding where to operate.
When firms estimate the costs of outsourcing to low-wage countries, they often
overlook problems such as long distances.
The use of management contracts has been significant in hotel operations.
Serendipity is often an export trigger for companies that purposefully look to
internationalize their operations.
A potential problem of polycentrism is failure to introduce innovative superiority.
In a multiple exchange-rate system, the government determines which kinds of
transactions are to be conducted at which exchange rate.
Outright forward transactions involve the exchange of currency the second day after the
date on which the two foreign-exchange traders agree to the transaction.
When a company sells technologically advanced products to global customers, it is
more likely to handle distribution itself.
An international management contract is an agreement between a company and a
foreign government on the number of foreign personnel it can employ.
The functional structure is inappropriate for firms with products and manufacturing
methods that are largely undifferentiated among countries.
A tariff is the price of a currency.
Different country standards, such as safety regulations, add complexity to whether
companies decide to use a globally standardized product.
A criticism of globalization is that as economic growth increases, too many
nonrenewable resources are used.
A firm’s vertical differentiation determines where in its organization structure managers
have decided to concentrate decision-making authority.
The Foreign Corrupt Practices Act applies only to companies registered in the United
States.
Losses to companies from natural disasters are much less risky than losses from
operating in violent areas.
Multilateral development banks encourage development in risky environments through
financial incentives.
A payment to a customs official to clear legitimate merchandise is permitted by the
Foreign Corrupt Practices Act.
Unlike grids, matrices do not require managers to determine weights for factors that
indicate risk.
Similarity among people is both a cause and effect of national boundaries.
The three levels of quality standards are general, international, and industry-specific.
The premise that there will be more finely tuned specialization of production among
countries is most likely based on the idea that companies will ________.
A) depend more on production of nontradable goods and services
B) encourage urbanization in emerging countries that lack infrastructure
C) establish facilities in dispersed locations to hinder domestic competition
D) take advantage of wage and skill differences among countries
Premium Manufacturing is planning to expand operations overseas. Executives at the
firm are considering a number of different countries. Which of the following countries
would most likely have the lowest start-up costs?
A) India
B) China
C) Japan
D) Guatemala
Hong Kong is one of the top four largest markets in the world in foreign-exchange
trades and the largest in Asia.
Firms that compete in the global marketplace typically face the asymmetric forces of
pressures for ________ and ________.
A) global integration; local responsiveness
B) price reductions; cost reductions
C) political sensitivity; market leadership
D) cost reductions; customer satisfaction
The industry organization (IO) paradigm reports that, on average, the BEST predictor of
firm strategy is the ________.
A) company’s stockpile of assets, skills, and capabilities
B) aggressiveness of a company’s marketing objectives
C) link between a company’s products and processes
D) structure of the industry in which it competes
Corbin Coffee plans to initiate activities in foreign markets through indirect exporting.
The firm is most likely to use ________.
A) local managers to pay tariffs and duties
B) external specialists to assist in the export process
C) the International Trade Administration to monitor exports
D) freight forwarders to act as distributors in foreign markets
Which of the following is NOT one of the arguments for governments to limit foreign
control of key industries?
A) Host countries don’t need foreign resources such as technology and export markets
for these industries.
B) History shows that home governments have used powerful foreign companies to
influence policies in the countries where they operate.
C) Important decisions can be made abroad that are contrary to the country’s best
interest.
D) Foreign companies can find means of profiting in these industries without having to
control them.
Countries most likely establish export restrictions to ________.
A) ensure their population obtains the goods first
B) raise prices in foreign markets
C) encourage substitute products
D) reduce domestic production
The degree of caution companies display in valuing assets and recognizing income is
known as ________.
A) conservatism
B) transparency
C) measurement
D) disclosure
Bocce Shoes, an Italian firm, set up a production facility in Vietnam to manufacture the
firm’s line of athletic shoes. Bocce is most likely using a(n) ________ strategy.
A) dependability
B) flexibility
C) innovation
D) efficiency/cost
The translation method used when the functional currency is the parent currency is the
________.
A) current-rate method
B) temporal method
C) translate-restate method
D) consolidation method
Stella, who works and lives in San Diego, wants to send money to her mother who lives
in a small village south of Puerto Vallarta, Mexico. Stella typically uses Western Union
to handle the transaction. Which of the following is the most likely reason that Stella
uses Western Union?
A) no fees
B) convenience
C) low exchange rates
D) cross rate capability
What is the most likely reason that consumers rarely protest import restrictions that
raise the prices they pay for a specific product?
A) They reason that if the import restrictions are removed, the foreign producers will
raise their prices to those of the domestic producers anyway.
B) Many countries prohibit consumers to band together to influence political actions.
C) Typically, although the added costs to consumers for a given product are high in
aggregate, they are fairly trivial for most individual consumers.
D) They reason that if they do something to hurt domestic employment for one product,
the displaced workers will then do something that will hurt their own employment.
The owner of a U.S. football team and the owner of a Canadian hockey team purchase a
British soccer team. This is an example of a ________.
A) royalty
B) portfolio investment
C) turnkey operation
D) joint venture
Jordan, a manager at an MNE, is responsible for supervising the transportation and
storage of materials and final goods. Jordan is most likely a manager involved with
________.
A) quality control
B) offshoring
C) logistics
D) inventory management
What is the primary advantage of an MNE using an ethnocentric framework?
A) minimizing relocation costs
B) developing community support
C) transferring core competencies abroad
D) encouraging innovative business practices
The OECD is concerned about transfer pricing practices because ________.
A) transfer pricing can help maximize a company’s worldwide tax liability
B) transfer prices tend to be higher in industrial than developing countries
C) governments use transfer prices to manipulate companies’ investment strategies
D) companies use transfer prices to manipulate prices and, therefore, taxes
A company should probably use a concentration strategy for international expansion
when there are ________.
A) high needs for product adaptation and low growth in each market
B) short competitive lead times and low spillover effects
C) high growth rate and long competitive lead times
D) low sales stability and short competitive lead times
The inability of a company to gain foreign production factors to use in its domestic
operations most likely ________.
A) entices the company to export its own production factors
B) stimulates the company to adopt efficient substitute methods of production
C) stimulates foreign companies to invest in that domestic market
D) causes the company’s products to move more rapidly through their life cycles
Which of the following is NOT a common argument for the slowing of future
globalization?
A) Antiglobalization interests have been successful in electing parties that oppose freer
movement of trade or people.
B) Technological, transportation, and communication advances will decline in the near
future.
C) Major countries have either ignored certain international treaties or have refused to
sign them.
D) The growing split between those who succeed in a global environment and those
who do not will foster greater antiglobalization sentiments.
Country X is withholding goods from international markets in an attempt to raise prices
abroad. Such actions will be most effective for Country X if the nation ________.
A) supports the development of substitutions
B) provides domestic industries with tax breaks
C) receives low-interest loans from foreign banks
D) holds a monopoly on the product or resource
________ is the process of a firm having inputs supplied to it for the production
process.
A) Sourcing
B) Subcontracting
C) External production
D) Offshoring
________ are among the fastest-growing economic activities in the world.
A) Global manufacturing and supply-chain management
B) Accounting and taxation
C) Finance and human resources
D) Exporting and importing
In the United States, the unemployment rate indicates the ________.
A) percentage of the labor force that wants to work full-time but can only find part-time
employment
B) number of people who have stopped looking for work because full-time jobs are
unavailable
C) percentage of unemployed workers seeking paid work relative to the total labor force
D) number of workers eligible for government services and unemployment benefits
In a command economy, ________.
A) businesses and consumers are assumed to be the best judges of how resources
should be allocated
B) the government sets goals and determines the price and quantity of what is produced
C) different economic sectors coordinate the activities of the federal government
D) each enterprise sets its goals before making reports to the central government
Which of the following is most likely a true statement about organization culture?
A) Many organizations use a robust organization culture to create consistently high
performance.
B) Fewer and fewer companies allow an organization’s culture to emerge naturally.
C) Typically, managers from different countries have values similar to those endorsed
by the company.
D) Divergent values among managers and employees ease the exchange of ideas
between people from different countries.
Which of the following is NOT a potential problem of using export controls?
A) There is an incentive for other countries to develop production of their own.
B) Domestic producers may have less incentive to increase output.
C) Prices go up in the country imposing the controls.
D) There is more incentive for smuggling.
A bond that is issued by Nestle, a Swiss company, which is denominated in yen and
sold to residents of Japan is most likely a ________.
A) Eurobond
B) global bond
C) foreign bond
D) country fund
All of the following are true about passive exports EXCEPT that ________.
A) companies adapt their products very little to foreign consumer preferences
B) companies frequently export only if they have excess capacity
C) companies generally quote higher prices on exports than on domestic sales
D) they refer to the filling of unsolicited requests from abroad
An exporter that implements a(n) ________ strategy does so with the intent to develop
its own international marketing capability.
A) indirect selling
B) freight forwarding
C) direct exporting
D) export intermediation
The accounting value that relates to issues such as how to present financial information
and discuss financial results is known as ________.
A) measurement
B) conservatism
C) disclosure
D) optimism
Budget versus actual comparisons, followed by some form of ROI, are most likely used
by ________ MNEs.
A) Japanese
B) American
C) British
D) German
The U.S. catfish industry petitioned the U.S. government for increased taxes on
imported Vietnamese fish, claiming that the fish were being sold below the cost of
production. The U.S. catfish industry was accusing the Vietnamese fish industry of
________.
A) dumping
B) using an embargo
C) subsidizing
D) using offsets
In addition to understanding the laws affecting business in countries where their
companies operate, it is most important for managers to understand the ________.
A) methods for appointing local judges
B) ethical rationale behind the laws
C) history of the local legal system
D) degree of law enforcement
Without a proven track record in collaborative arrangements, a company will most
likely need to ________.
A) have its home country government approve licensing contracts
B) delegate fewer responsibilities to partners at the company
C) negotiate harder with and make more concessions to a partner
D) depend more on trust as a control mechanism
What is the difference between primary and secondary activities in the value chain?
Describe the functions of configuration and coordination in these value activities.
In a short essay, discuss how companies use foreign exchange.
What is a just-in-time (JIT) inventory system? What are the implications of JIT for
firms that use foreign sourcing?
Compare the two major approaches used to translate foreign currency financial
statements, and explain how translation gains and losses are reported under these two
approaches.
In a short essay, compare push and pull promotional strategies.
Explain the major types of classical organization structures and the advantages and
disadvantages of each for international operations.
You are the chief financial officer at an MNE. What are your main responsibilities in
this position? What taxation issues have a significant effect on the decisions you make?
In a brief essay, discuss how decentralized management and organizational culture
affect Johnson & Johnson.
In a short essay, compare the roles of the Federal Reserve Bank of New York and the
European Central Bank.
What is inflation?
How has intellectual property theft affected China’s economy? What is the relationship
between China’s legal environment and intellectual property theft?
How do foreign government regulations affect pricing and promotion for international
businesses?
How do cultural values such as optimism, conservatism, transparency, and secrecy
affect country differences in accounting systems?
In a brief essay, discuss the strategy used by Zara, the firm described in the opening
case. Also discuss the features of Zara’s value chain.
What are the differences between merchandise and service imports and exports?
Provide examples to illustrate your answer.
What are the disadvantages of import restrictions in regards to creating domestic
employment opportunities?
What are the characteristics of the forward market? Why do companies participate in
the forward market? Provide an example to illustrate your answer.