Which of the following reflects the major contribution of GATT to globalization?
A) It instituted strict controls on international currencies.
B) It simplified patent and copyright laws.
C) It reduced barriers to international trade and investment.
D) It eliminated the divide between the rich and the poor.
Governments have facilitated economic integration by ________.
A) increasing barriers to international trade and investment
B) creating supranational institutions to further reduce trade barriers
C) adopting different monetary and fiscal policies within the same regional economic
integration blocs
D) standardizing consumer lifestyles and preferences
Which of the following terms refers to the price of one currency expressed in terms of
another?
A) countertrade
B) monetization
C) credit derivative
D) exchange rate
Which of the following situations is an example of geocentric orientation?
A) Marsha, CEO of QST Solutions, believes that top level executives at her company
should be Americans to avoid any communication gaps.
B) The Gram Group of retail stores decided to open branches in China and focus on
changing their policies to suit the Chinese population to maximize profits.
C) Derek, the VP of Banner Technologies, wants managers from the firm’s India office
to visit the U.S. branch to provide training to American officials visiting India.
D) Chill & Break Inc., an American global coffee company, is used to judging other
cultures by the standards of its own culture.
Which of the following terms refers to the government reduction of its currency value
relative to the other currency values?
A) devaluation
B) hyperinflation
C) depreciation
D) fluctuation
Which of the following is true with regard to women in international business?
A) Representation by women in senior management is lowest in Russia and the
Philippines.
B) Female senior managers in international business are still more the exception than
the norm.
C) Usually, firms do not hesitate to send women to countries where traditional gender
roles are the norm.
D) In the United States, unemployment rates are higher for women than for men.
Which of the following is an advantage of licensing?
A) It is ideal for products, services, or knowledge that is highly complex.
B) It is easy to maintain control over how the licensed asset is used.
C) It requires very little capital investment in the foreign market.
D) It guarantees a basis for future expansion in the market.
Vytel Communications (Scenario)
Vytel Communications is a U.S.-based telecommunications company that is considering
doing business in Argentina. Vytel managers hire a consulting firm to investigate the
risks and benefits related to doing business in Argentina. The consulting firm identifies
a number of challenges that might prohibit Vytel from entering Argentina. In addition,
the consultants conduct surveys which indicate a demand for Vytel’s products and
services.
Which of the following most likely supports the consulting firm’s recommendation that
Vytel proceed with plans to do business in Argentina?
A) The political conditions in Argentina are stable.
B) Government bureaucrats favor domestic firms to foreign firms.
C) Potential local partners have few government contacts.
D) The Argentine government lacks transparency.
Which of the following is a comparative advantage?
A) close relationships with suppliers
B) superior strategies of an organization
C) entrepreneurial orientation
D) the distinct capabilities of an organization
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 questions would be more important for Intensity financial
managers to evaluate when deciding the best method for the firm to raise funds?
A) What percentage of stock is owned by the CEO of Intensity Games?
B) How will the dividend be paid to shareholders if the firm expands its Chinese
facility?
C) What type of debt financing would be most economical for Intensity?
D) At which bank does Intensity do the majority of its business transactions?
Which of the following industries considers proximity to customers especially
important in the decision to enter a foreign market?
A) fashion
B) automotive
C) biotechnology
D) mining
A(n) ________ is the purchase of an existing company or facility.
A) greenfield investment
B) outsourcing arrangement
C) acquisition
D) offshoring arrangement
Per-capita GDP converted at market exchange rates does NOT paint an accurate picture
of the market potential of an emerging market because ________.
A) it tends to over-emphasize the role of pricing in driving growth in emerging markets
B) it overlooks the substantial price differences between advanced economies and
emerging markets
C) prices are usually higher for most products and services in emerging markets
D) emerging markets do not support inward FDI
An American automaker operating in the Asian and the European markets designs
various models around a standardized platform. The firm adds parts, features, and
regular units to this basic standardized platform according to the preferences of its
customers. This exemplifies ________.
A) segmentation
B) customer relations management
C) brand dilution
D) modular architecture
Transition economies were once socialist states but have been largely transformed into
capitalism-based systems, partly through ________.
A) low inward FDI
B) high trade barriers
C) low energy consumption
D) privatization of state-owned industries
Which of the following does the central bank perform in order to accommodate a
nation’s economic growth?
A) enforce strict regulations on foreign direct investment
B) increase the nation’s money supply
C) establish a voluntary export restraint
D) restrict innovation and entrepreneurship
Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the
United States. Given the firm’s success in the U.S. market, Happy Pet managers are
considering internationalizing their operations to the EU. The market research
conducted by the company identified several established pet product manufacturing
companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns
about expanding the firm’s operations into the EU. She believes internationalizing in the
EU is not profitable because of the presence of these established competitors. However,
Edward O’Neal, the COO of Happy Pet, believes the corporation is ready for the next
step. Happy Pet executives and managers have gathered to discuss their organization’s
readiness to internationalize.
Which of the following should most likely be considered in determining whether Happy
Pet is ready to internationalize?
A) What is the market demand for Happy Pet’s products in selected target markets?
B) What demands will internationalization make on Happy Pet’s financial resources?
C) How will Happy Pet managers determine which foreign market is appropriate?
D) Should Happy Pet relocate its corporate headquarters after internationalizing?
Which of the following terms refer to the application of home-country laws to persons
or conduct outside national borders?
A) anti-boycott regulations
B) extraterritoriality
C) transparency
D) anti-dumping policies
Audio Component Outsourcing (Scenario)
Echo Corp., a company based in Boston, manufactures high-quality audio components,
such as speakers, amplifiers, and receivers for home entertainment systems. Echo has
been losing market share in recent years due to the competitive pricing of other audio
component manufacturers that engage in global sourcing. Echo managers are
attempting to convince Nathan Douglas, the firm’s founder and CEO, that global
sourcing would enable the firm to be more competitive without sacrificing quality.
Which of the following would be most important to determine in deciding whether to
outsource some of Echo’s value-chain activities?
A) What are the long-term strategic goals and objectives of Echo?
B) Do engineers working in Echo have the ability to speak one or more European
languages?
C) Are Echo employees generally afforded a high degree of workplace freedom?
D) Does Echo intend to increase its annual budget for innovation?
How does the acquisition of a foreign company most likely benefit a focal firm in the
foreign market?
A) The focal firm can extend its market reach through readily available distribution
networks.
B) The MNE avoids domestic and foreign taxation, which enables the firm to invest
more resources in the foreign market.
C) Firm managers can reduce their workload by ensuring that all decision-making
responsibilities are taken up by foreign managers.
D) The firm eliminates the need to train its own employees by utilizing the workers
previously hired by the foreign firm.
Which of the following is a characteristic of project-based, non-equity ventures?
A) a broad scope of product development
B) a specific agenda and timeframe
C) long-term sharing of resources
D) formation of a new legal entity
Which of the following is an example of a multidomestic industry?
A) chemicals
B) telecommunications
C) fashion
D) aerospace
In 2014,________ was the largest single source of counterfeit products imported into
the U.S.
A) China
B) The United States
C) Iran
D) Russia
Which of the following statements is true of the global financial system?
A) It consists of the institutional frameworks, rules, and procedures that govern how
national currencies are exchanged for one another.
B) It includes key players such as finance ministries and national stock exchanges but
excludes commercial banks and central banks.
C) It is built on the activities of firms, banks, and financial institutions engaged in
ongoing international financial activity.
D) Since the 1960s, the volume and structure of the global financial system has been
reducing.
Azure Inc. has established a domestic market in clothing and apparel in Thailand and
has received orders from abroad. Currently, the firm is investigating the feasibility of
undertaking international business. Azure is in the ________ stage of the
internationalization process.
A) active involvement
B) experimental involvement
C) pre-export
D) committed involvement
Global sourcing becomes a catalyst to overhaul organizational processes and company
operations and increases the firm’s overall competitive advantages by ________.
A) encouraging firms to train unskilled labor through extensive training programs
B) allowing firms to free expensive analysts, engineers, and managers from routine
tasks to spend more time on high-value-adding activities
C) relaxing quality standards
D) installing a system of rewards to motivate employees
Which of the following trends supports improving economic conditions in Africa?
A) direct investment from abroad
B) the growing importance of the public sector in Africa
C) the gradual liquidation of the mining industry
D) the rising cultural affinity toward goods manufactured in the West
________ describes the total value of assets that MNEs own abroad via their investment
activities.
A) Monopolistic advantage
B) FDI stock
C) Absolute advantage
D) Variable capital
________ is the most populous Muslim country in the world.
A) Saudi Arabia
B) Iran
C) Egypt
D) Indonesia
A(n)________ is a special type of acquisition in which two companies join to form a
larger firm.
A) merger
B) acquisition
C) wholly owned direct investment
D) greenfield investment
The ________ phase of globalization began around 1900 and was associated with the
rise of electricity and steel production.
A) first
B) second
C) third
D) fourth
Which of the following is true with regard to the risks of global sourcing?
A) Inadequate legal systems, red tape, convoluted tax systems, and complex business
regulations complicate local operations in many countries.
B) Firms that source from countries whose currencies are strengthening experience
lower costs.
C) Global sourcing weakens competition leading to a considerably risk-free
international business environment.
D) Environmental challenges exclude currency fluctuations, tariffs and other trade
barriers, high energy and transportation costs.
Which of the following statements is true of infringement of intellectual property?
A) The most commonly counterfeited goods include heavy machinery and computer
manufacturing.
B) It amounts to piracy and takes the form of production and distribution of counterfeit
goods.
C) It is the ability to control important intellectual property before it reaches
competitors.
D) Counterfeiting and piracy can be particularly troublesome in advanced economies
because of subjective ethical standards.