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

MGMT 72534

February 28, 2019
Trompenaars' achievement vs. ascription dimension describes social status based on
what one does or who one is. The United States is a culture in which people build who
they are through work, so its social status tends to be based on ascription.
In organizing their international activities, there are five dimensions along which
management can globalize or standardize these activities.
According to the text, the level of intracompany trade of multinationals in 1930, as a
percentage of world trade, may have exceeded the proportion at the end of the 20th
The practice of country risk assessment is an exercise in xenophobic and ethnocentric
In a forward market hedge, the firm sells forward its foreign currency receivables for its
home currency, matching the time forward to the foreign currency receivable's due date.
Global strategic plans help to ensure that decision makers have a common
understanding of the business and think through the impact of their decisions and
actions firmwide.
Interface, the manufacturer of Flor, is an example of a petroleum-based business that
has developed a sustainable model.
Straight bills of lading are negotiable documents.
Trend analysis assumes that past conditions will remain constant.
By conducting environmental scanning, a firm monitors the natural resources around
the world that may affect it.
The physical product includes the total product, brand name, accessories, after-sales
service, warranty and instructions for use, company image, and package.
Historically, approximately two-thirds of the value of corporate investments made in the
United States from abroad has been spent to acquire going companies rather than to
establish new ones.
Relatively few expatriate failures are family-related. Most relate to the expatriate's lack
of technical skills.
By UN regulation, contracts cannot contain choice-of-law and choice-of-forum clauses.
Although arbitration procedures may be confidential, enabling a company to avoid
unwelcome publicity accompanying an open court case, arbitration is generally slower
than law courts.
According to a study by McKinsey & Company, most executives worldwide agree that
environmental, social, and business trends are less critical to company strategy than was
the case five years ago.
International firms must export their products or services in order to establish and
expand their overseas operations.
Objectives direct the firm's course of action, maintain it within the boundaries of the
stated mission, and ensure its continuing existence.
Country and segment are units of analysis for market screening.
Industrialized nations invest primarily in one another just as they trade more with one
The type of structure that simplifies the task of directing worldwide operations because
every country in the world is clearly under the control of someone who is in contact
with headquarters is global product.
Backward vertical integration establishes facilities to manufacture inputs used in the
production of a firm's final product.
Luxury items such as perfume can often be sold without adaptation in many different
foreign markets.
If a Chinese worker earns $1 a day, then goods produced by this worker will cost less
than the same goods produced by an American earning $18 an hour.
Scenarios are multiple, plausible stories for probable futures.
Exporting refers to the transportation of any good or service to a destination inside a
country or region.
The random walk hypothesis suggests that the best predictor of tomorrow's currency
prices are today's prices.
An international company is an organization with multicountry affiliates, each of which
formulates its own business strategy based on perceived market differences.
According to the text, the domestic environment is all of the uncontrollable forces
originating in the home country that surround and influence the firm's life and
Global leaders confront more complex contexts than do domestic leaders.
Advertising is generally more effective than the other promotional mix elements.
Teams with strong heartbeats may meet less regularly than at their launch and during
According to the definitions in the text, a multidomestic firm is an organization that
attempts to standardize operations worldwide in all functional areas.
Arguments in support of mercantilism largely disappeared after the end of the
mercantilist era in the late 1700s.
Uncontrollable forces are external forces over which management cannot exert any
Customs procedures in many countries often:
A. are transparent and fair.
B. discriminate against imports and favor exports.
C. are online and impersonal.
D. two of the above.
The UN is important to international business for many reasons, including that it:
A. develops standards and norms in technical areas.
B. monitors trade patterns.
C. arranges trade missions to developing nations.
D. arranges international funding for business education.
Before accepting a foreign posting and becoming an expatriate, you should:
A. arrange with someone fairly high in the home-country company to be your mentor
and look out for your interests.
B. insist that the bosses tell you exactly what the company expects you to accomplish.
C. try to assess how your family will adopt to the major changes involved.
D. all the above.
Which of the following is incorrect about scenario analyses?
A. The objective of the process is to force executives to question their assumptions
about the environment.
B. The process attempts to incorporate the uncertainty and potential changes that might
impact strategic and operational performance.
C. Managers develop scenarios and use them for discussion.
D. All of the above are incorrect.
E. None of A, B, or C is incorrect.
According to the text, a brand name has been pirated:
A. when a firm's brand name has been registered by another firm, which is employing it
for its own product's name.
B. when it is registered by someone who hopes to profit by selling the name back to the
originating firm.
C. if it is being used by sailors who are criminals.
D. two of the above.
Who took the United States off the gold system?
A. President Eisenhower
B. President Kennedy
C. the Supreme Court
D. President Nixon
The importance of personal selling compared with advertising depends to a great extent
A. the type of product sold.
B. media availability.
C. availability of funds.
D. all of the above.
International status is the status of:
A. every expatriate employee.
B. third-country nationals.
C. employees of international organizations.
D. the IC employee who is receiving all applicable allowances and bonuses plus perks.
E. two of the above.
Mass customization:
A. is enhanced by a company's use of computer-aided manufacturing systems to
produce and deliver products and services in a batch size of one.
B. is usually appropriate in situations where there is the potential for differentiating a
product for a particular customer.
C. typically requires the company to reconceptualize the design of its products as well
as the design and integration of the processes used for producing and delivering the
product to customers.
D. all of the above
E. two of A, B, and C
Stakeholder theory pushes managers to be clear about how they want to do business, so
it encourages:
A. recognition of and transparency with values and underlying principles.
B. discussion of profit center margins.
C. strategy development from the top down.
D. B and C.
U.S. antitrust law is applied:
A. to all firms based in the United States, but not others.
B. to all firms, including extraterritorially.
C. only to U.S. owned firms with assets in the United States.
D. to all firms, as long as they have assets in the United States.
E. all of the above.
Organizational structure:
A. refers to the way that an organization formally arranges its various domestic and
international units and activities and the relationships among these organizational
B. helps to determine where formal power and authority will be located within the
C. is primarily created and evolved by senior management.
D. all of the above.
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 cultures of the two countries should be relatively similar and compatible.
B. the climate for foreign direct investment in the importing nation is relatively
C. export and import regulations are not insurmountable.
D. all of the above.
Scenarios are designed to assist managers:
A. in becoming aware of the critical elements of the external forces.
B. in brainstorming various "what-if" situations.
C. in preparing budgets.
D. all of the above.
The three main approaches to exchange rate forecasting are:
A. the efficient market approach, the fundamental approach, and the technical approach.
B. the efficient market approach, the random walk hypothesis, and the pragmatic
C. the random walk hypothesis, the pragmatic approach, and the fundamental approach.
D. none of the above.
_____________ is used by management during the planning process to eliminate the
less desirable markets.
A. Market screening
B. Environmental scanning
C. Country screening
D. Segment screening
E. None of the above
The present floating exchange rate system is not a totally free float because:
A. there is an exchange fee of 1.5 to 1.75 percent.
B. some governments refuse to allow foreign traders to trade their currency.
C. some central banks from time to time intervene in the market to buy or sell large
amounts of currency to affect the supply and demand of a particular currency.
D. A and B.
Transaction exposure occurs when:
A. the value of the currency changes between when the asset or liability is recorded and
when results are consolidated.
B. the firm has transactions in a foreign currency.
C. the firm's strategic projections use a currency value that has changed.
D. the recorded value of an asset or liability changes between its being reported and its
The segment approach to investigating markets requires that markets should be which
of the following?
A. Definable
B. Focused
C. Profitable
D. All of the above
E. Two of A, B, and C
The U.S. current account deficit can be explained by:
A. citizens of other nations wanting to hold dollars because the dollar is a stable
B. foreigners wanting to invest in the United States.
C. U.S. citizens importing more than they are exporting.
D. B and C.
International firms have found it necessary to institute formal global planning:
A. all of B, C, and D.
B. to eliminate the practice of informal planning.
C. to provide top management with a means to identify threats and opportunities
D. to provide consistency of action among the firm's managers.
E. two of B, C, and D.
Generally, producers of _______ experience little difficulty in assessing their basic need
A. textiles
B. air conditioners
C. specialized industrial materials
D. frequently purchased consumer goods
E. chocolate
In analyzing the corporate controllable variables, management must address the
A. Who are the company's target customers?
B. What will be the costs that the company will incur in delivering value to its target
C. How much will the company be able to charge for the value it creates for its target
D. All of the above.
Which of the following are not identified in the text as being elements of the
competitive forces that an analyst uses to examine markets?
A. Competitors' number, size, and financial strength
B. Competitors' marketing strategies
C. Competitors' product portfolios
D. Competitors' coverage of the market
E. None of the above (All are identified as elements of the competitive forces used by
The Trompenaars dimension that describes a society whose rules regulate behaviors for
all members and are applied evenly is:
A. particularist.
B. universalist.
C. feminist.
D. specific.
According to the text, personnel working in a foreign subsidiary are working in the
international environment:
A. if they work and live in the foreign subsidiary's country.
B. if they are responsible for the subsidiary's exports.
C. if they are also responsible for the management of another foreign subsidiary.
D. all of the above.
The first principle of the WTO's five basic principles is trade without:
A. negotiation.
B. economic reform.
C. discrimination.
D. competition.
Sustainable business models:
A. incorporate a more socialist political approach to the marketplace.
B. have as a goal to ensure that the marketplace exists for future generations.
C. regard environmentalism as more important than profit.
D. A and C.
Average growth rate in commercial energy use and real growth rate in GDP compose
the __________ index.
A. market size
B. market growth rate
C. e-commerce readiness
D. market factor
E. none of the above
In general, the deeper the desired immediate market penetration is:
A. the more the physical product should be standardized.
B. the greater the product must be modified.
C. the more the total product should be standardized.
D. the lower the pricing must be.
Frederick Gluck, management consultant, says that for firms to develop the flexibility
to compete, managements must make the following change(s) in their planning
A. top management must dedicate more time to deciding how things ought to be done.
B. the nature of planning must change from being an exercise in forecasting to being an
exercise in creativity.
C. planning processes and tools that assume a future much like the past must be
D. strategic planning must be restored to strategic planning departments.
E. two of the above.
Discuss the programmed-management approach to advertising strategy.
Discuss the problems associated with global sourcing.
"There is no difference between management and leadership.
What is international law?
Discuss the arguments supporting and opposing globalization of trade and investment.
Your firm operates in Seattle and is signing a contract to supply advisory services to a
design firm in Beijing. Your payment is 50 percent on contract signing and 50 percent
on completion, which is two years out. Would you want your payment in dollars or
yuan/renminbi for today's portion? What about the portion on completion? Why?
Describe approaches to international dispute settlement.
There are two basic approaches to international dispute settlement, litigation and
arbitration. Litigation can be complex when international parties are involved. Which
court has jurisdiction? Which law applies?
Why do nations care about having outlets to the ocean? Are landlocked nations at a
Explain the concept of sustainability as applied to business, using examples.
Explain what a "global mindset" includes and why this may be important for
international companies and their managers.
Discuss the advantages and disadvantages of employing third-country managers.
(p. 287)-What are the differences between traditional and global teams?
What are the drawbacks of indirect exporting?
One of the first issues the chapter addresses is the rule of law.
What is the value of government-sponsored trade missions and trade fairs?
What are the types of information that an international company needs to have reported
to it by its units around the world, and why is each type important for the IC and its
control efforts?
Discuss Dunning's eclectic theory of international production as a theory to explain
flows of international trade and foreign direct investment.
Why do industrial products or services generally require less modification for
international sales than do consumer products?