The failure rate of collaborative ventures is higher in developing economies than in
advanced economies.
With a global strategy, headquarters seeks substantial control over its country
operations in order to minimize redundancy and achieve maximum efficiency, learning,
and integration worldwide.
Offshoring is a process of creative destruction; according to this view, firms’ innovative
activities tend to make mature products obsolete over time.
Obtaining economic development incentives from host-or home-country governments
increases the cost of trade and investment barriers.
Most companies have a distinctive set of norms, values, and modes of behavior that
distinguish them from other organizations.
When consumers buy counterfeit goods, payments accrue to the firm that invented the
product and not to illicit enterprises.
Screening countries to identify target markets is the most time-consuming step for most
firms.
Equity joint ventures have the simplest management structure.
International business is performed not just by individual firms, but also governments
and international agencies.
Widespread corruption hinders economic development.
Africa’s GDP has improved substantially since the 1960s.
Vertical integration is an arrangement in which the firm owns, or seeks to own, the
activities performed in a single stage of its value chain.
To minimize globalization’s harm and reap its benefits, governments should strive for
nationalized economic regimes.
Culture refers to the inherited attitudinal traits of an individual.
Ethnocentric assumptions lead to poor business strategies in both planning and
execution.
Union membership has experienced a gradual decline in many advanced economies.
Transformational outsourcing suggests that just as the firm achieves gains in efficiency,
productivity, quality, and revenues by leveraging offshore talent, it also obtains the
means to turn around failing businesses, speed up innovation, restructure operations,
and fund otherwise-unaffordable development projects.
With rapid globalization, the incidence of strikes has increased worldwide.
Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.
Focal firms that intend to sell their trademark and copyrights typically work with
foreign licensing partners instead of franchisors.
MERCOSUR, an economic bloc in Latin America, is an example of an economic union.
Key challenges faced by the franchisee is the decreased likelihood of operating an
independent business.
The IMF and the World Bank seldom work together.
In deal-oriented cultures, managers focus on the task at hand and prefer getting down to
business.
China, Indonesia, and Russia are examples of advanced economies with strong
intellectual property protection.
By standardizing international operations as much as possible, yet being adaptable to
the needs of local markets, a firm is utilizing a transnational strategy of globalization.
Cultural intelligence focuses on specific capabilities important for high-quality personal
relationships and effectiveness in culturally diverse settings and work groups.
Democracy is characterized by limited governmental interference.
Adjusted per-capita GDP does not represent the amount of products consumers can buy
in a given country.
Comparative advantage includes inherited resources, such as labor, climate, arable land,
and petroleum reserves.
Freedom Shoes (Scenario)
Freedom Shoes Inc., a sports shoe company, is considering entering into a contract with
an overseas vendor to expand its production capacity. The company investigated several
suppliers and found one vendor to be the most attractive in terms of cost and
manufacturing efficiency. However, Freedom’s managers have heard reports that the
vendor operates factories with sweatshop conditions.
Standards of ethical behavior are uniform worldwide.
A reputed American automaker competes in the premium car market segment. It targets
affluent buyers with refined tastes who would not mind paying several thousand dollars
for a premium car. This is an example of positioning.
New markets, new resources, and improved efficiency are the three main motives for
firms to enter foreign markets through FDI.
Most MNEs employ advertising agencies to create promotional content and select
media for foreign markets.
In typical licensing agreements, the licensee compensates the licensor with a
down-payment plus ongoing royalties based on sales.
Firms often follow their key customers abroad to preempt other vendors from serving
them.
Which of the following is the term used to describe an expatriate’s return to his/her
home country following completion of a foreign assignment?
A) repatriation
B) reverse culture shock
C) national integration
D) codetermination
Galaxy Inc., a reputed global conglomerate, has suffered substantial losses in recent
months owing to the problem of end-user prices shooting high up in the export market.
In order to regain its competitive advantage abroad, Galaxy must ________.
A) increase its budget on technical research
B) hire a greater number of semi-skilled workers
C) shorten the distribution channel
D) centralize production and sourcing to a single location
When making decisions regarding ethical business actions, managers should ________.
A) minimize employee empowerment to achieve greater control
B) focus mainly on the company’s obligations to produce profits for its shareholders
C) place the highest emphasis on enhancing the company’s ability to benefit from a
common pool of resources
D) balance their obligation to shareholders with explicit contributions to the broader
public good
Quik Meal Structure (Scenario)
Quik Meal is a fast-growing MNE that manufactures and sells energy gels for
consumption by serious athletes, such as marathoners and triathletes. The energy gels
produced by Quik Meal taste much better than the gels sold by other firms, which has
led to an increase in sales. Managers and executives with Quik Meal need to determine
the best organizational structure for the young firm. Quik Meal has subsidiaries in Japan
and Brazil, while company headquarters are based in San Francisco.
Which of the following questions would be more important for Quik Meal executives to
evaluate when determining whether to centralize or decentralize the firm’s structure?
A) How much modification is needed for Quik Meal products in Japan and Brazil?
B) How many athletes from each country participated in the Olympics?
C) What sports drinks are available and popular in Asia?
D) What is the possibility of Quik Meal establishing a subsidiary in India?
Armaz Inc., a manufacturing company, has its headquarters located in Texas, U.S., and
subsidiaries in India, China, and Vietnam. Which of the following decisions will be the
most centralized?
A) decision about building factories in Cambodia
B) decision about hiring a marketing manager for its India operations
C) decision to open a retail store in Vietnam
D) decision about marketing newly developed products for the Chinese market
Which of the following is true with regard to offshoring?
A) Offshoring is common in the service sector, including banking, software code
writing, legal services, and customer-service activities.
B) Russia is the current leader in the processing of advanced economies’ relocated
business services.
C) Offshoring substantially reduces the overall efficiency of MNEs.
D) With rapid globalization and internationalization of businesses, offshoring is a
visibly declining trend.
A cross-border contractual relationship provides the focal firm with ________ over the
foreign partner.
A) a low level of control
B) a moderate level of control
C) a high level of control
D) seldom any control
The employer of Expert B can most likely be categorized as which of the following?
A) investment bank
B) private bank
C) commercial bank
D) offshore bank
EZ Lawn Currency Risk (Scenario)
The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers,
blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in
Florida, but the firm outsources inputs from a number of countries, each with varying
degrees of economic stability. Given the importance of the firm’s sourcing activities, EZ
Lawn managers are discussing methods which might reduce the currency risk faced by
EZ Lawn.
Which of the following would most likely be an effective currency risk strategy for EZ
Lawn management?
A) increase prices of EZ Lawn products to cover currency issues
B) decentralize the entire currency management to local managers
C) use a spot rate for long-term transactions between suppliers
D) monitor the economic trends of the suppliers’ nations
Which of the following is a characteristic of successful international retailers?
A) conservative managers and salespeople and a centralized organizational system
B) an entrepreneurial approach to foreign markets and an understanding of the target
market
C) significant financial borrowings and high foreign and domestic operational costs
D) extreme competition and support from home-country governments exclusively
In his International Product Life Cycle (IPLC) Theory, Raymond Vernon observed that
each product and its manufacturing technologies go through three stages of evolution:
introduction, maturity, and ________.
A) decline
B) standardization
C) growth
D) diversification
Which of the following is characteristic of exclusive licensing agreements?
A) The licensor is not allowed to interfere with the production or marketing of the
licensed asset.
B) It ensures payment from the licensee to the licensor upon receipt of an export
shipment.
C) The licensee cannot cancel the contract with the licensor even if sales of the licensed
asset are poor.
D) The licensee is prohibited from sharing the licensed asset with another company
within a specified region.
Which of the following terms refers to the difference between the total amount of
money flowing into and out of a nation over the course of a year?
A) momentum trading
B) trade surplus
C) exchange rate system
D) balance of payments
Subjective dimensions of culture (Scenario)
In the last two years, the sales of consumer electronics in China have risen by 9.4
percent. Moreover, the market is becoming increasingly competitive since a large
number of Japanese, European, and American manufacturers are building factories to
face the competition from low-cost Chinese manufacturers. Grande Co. is a U.S.-based
consumer electronics manufacturer that has been negotiating with Chinese authorities
for eight years to open a factory in the country. Since Grande has spent significant time
and energy on negotiation in the past eight years, they should quit and set up a factory
in a more responsive society.
Which of the following can be inferred from the above passage?
A) The Chinese culture is more likely than not to be deal-oriented.
B) The Chinese culture is more likely than not to be relationship-oriented.
C) The American culture is more likely than not to be relationship-oriented.
D) The American culture is less likely to take an impersonal approach to business.
Which of the following refers to a typical CSR value?
A) increasing profits
B) upholding market monopolies
C) engaging in philanthropy
D) sustaining sweatshops
Which of the following is characteristic of emerging markets?
A) minimal trade barriers
B) high trade volume
C) low inward FDI
D) highly developed industry
Class Reports (Scenario)
Prof. Jacob Middleton has divided students in his international business class into three
groups. Each group has been assigned the task of presenting an overview of a major
country group and outlining its distinguishing characteristics. Group 1 will discuss
advanced economies, Group 2 will address the characteristics of developing economies,
and Group 3 will focus on emerging markets.
Which of the following refers to a distinctive trait of the type of economy discussed by
Group 2?
A) substantial competition
B) minimal trade barriers
C) poor industrialization
D) high inward FDI
International business is also known as which of the following?
A) born global business
B) laissez-faire business
C) cross-border business
D) multi-hub business
International Management Qualifications (Scenario)
Core Computer Corporation (CCC) recently opened a customer service facility in New
Delhi, India. Managers of the Texas-based firm have been displeased with the local
manager hired to run the New Delhi facility because of a variety of problems that took
place. CCC managers believe that a representative from the headquarters should
manage the Indian facility for one year in order to train personnel and to improve the
quality of customer service. Two CCC executives have expressed a desire to work and
live in India: Craig Springer and Devon Parks. The CCC human resources department is
comparing the qualifications and characteristics of the two men in order to determine
which candidate would be the most successful in India.
Which of the following, if true, most seriously undermines the argument in favor of
hiring Devon Parks as manager for CCC’s facility in New Delhi?
A) Devon has few local connections in New Delhi where success is largely determined
by local connections and networking.
B) CCC wants to maintain strong control over all its foreign operations including India.
C) Devon is capable of working independently and with little direction.
D) CCC has significantly benefitted in the past by hiring PCNs for training local
managers in Asia.
Each of the following types of organizations is active in international business EXCEPT
________.
A) MNE
B) SME
C) RND
D) NGO
Which of the following is an advantage of a multidomestic strategy?
A) standardized organizational culture
B) minimal pressure on headquarters staff
C) minimum redundancy
D) low operating costs
The new global challengers have become formidable competitors primarily because
________.
A) of instant brand recognition
B) of the easy availability of low-cost labor, skilled workforces, government support,
and family conglomerates
C) of superior market research and customer service
D) substantial government funding, high wages, and value-chain diversification
________ estimates future cash flows from the project in the functional currency of the
parent firm.
A) Project’s perspective
B) Parent’s perspective
C) Passive hedging
D) Active hedging
________ are letters, figures, colors, or other characters that communicate a meaning.
A) Rituals
B) Symbols
C) Norms
D) Customs
A global brand can best be defined as ________.
A) a brand with a complicated value-chain
B) a brand that focuses on a single generational group within a country
C) a brand that uses a variety of marketing campaigns in different markets
D) a brand whose positioning, advertising strategy, look, and personality are
standardized worldwide
In recent years, business executives and scholars have used ________ to refer to the
advantages possessed by nations and individual firms in international trade and
investment.
A) comparative advantage
B) country-specific advantage
C) competitive advantage
D) cost advantage
Which of the following is an essential method used by a focal firm to protect its
intellectual property in a foreign country?
A) lobbying foreign governments for stronger intellectual property laws
B) avoiding trade in countries with weak intellectual property laws
C) bribing foreign government officials
D) password-based security systems
________ are citizens of the country where the MNE’s subsidiary is located.
A) Third-country nationals
B) Expatriates
C) Host-country nationals
D) Parent-country nationals
Which of the following statements is true about international franchisors?
A) Entry into numerous foreign markets is tough and costly.
B) Maintaining control over franchisees is seldom difficult.
C) Franchisors need to invest substantial capital.
D) Franchisees may use franchise knowledge to start a competing business.
Common and Civil Law (Scenario)
Zane Computer Corporation is considering the possibility of building a new
manufacturing facility in a foreign country in order to lower labor and production costs.
The legal department of Zane has raised some issues regarding two countries that are
the top contenders for the new facility. The legal system of Country A is based on civil
law, while the legal system of Country B is based on common law. Other than the legal
systems of the two countries, all other aspects are virtually identical. Zane’s legal
experts must determine which system would be the most beneficial to Zane in the
long-term.
Which of the following questions would be more important for Zane legal experts to
consider before recommending Country A or Country B?
A) Have other corporations based in these two countries been profitable?
B) What is the prevalence of industrial crime in these two countries?
C) How would a contractual dispute with a local vendor be resolved?
D) Would local environmental organizations target Zane for its manufacturing
practices?
Discuss the reasons why labor union membership has declined in recent years.
Describe the role of commercial banks in the global financial sector. Provide a brief
description of the activities performed by three different types of commercial banks.
In a short essay, describe how cost efficiencies are a benefit to sourcing abroad, and
explain how information and communications technology can help reduce costs for an
international firm.
Explain how a nation’s economic growth is measured and what stimulates economic
growth. What is the central bank, and how does it affect economic growth?
In a short essay, describe two methods of government intervention and explain the four
major defensive motives for government intervention.
Compare and contrast licensing and franchising as foreign market entry strategies. Why
is franchising a more comprehensive strategy?
When is a standardized marketing approach the most appropriate? Define global brand.
Discuss the economic and business implications of religion.
How can a firm’s strategy make the best use of the firm’s resources? How does a firm’s
decision to have a centralized versus a decentralized organizational structure affect its
strategy?
Company employees are socialized by three cultures: national culture, professional
culture, and corporate culture. In a short essay, explain corporate culture. Provide
examples of companies that have distinctive corporate cultures.
What are the principal characteristics of managers who are best suited to working in
foreign environments?
How do cultural perceptions of time relate to international business? In a short essay,
provide examples of contrasting cultural time perceptions.
In a short essay, explain how a “pay-for-performance system” and “lifetime
employment” complicate company activities. Explain how these two cross-cultural
differences reflect Hofstede’s long-term versus short-term orientation.
What is a collaborative venture? In a short essay, describe the two major types of
international collaborative ventures.
In a short essay, explain how global sourcing can affect home-country employees.
