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

MGMT 85109

February 28, 2019
Direct investment refers to overseas purchases of stocks and bonds to gain a return on
the funds invested.
For controls to be effective, all operating units of an IC must provide headquarters with
timely, accurate, and complete reports, including those dealing with financial,
technological, market opportunity, and political and economic information.
A global strategy tends to be used when a company faces strong pressures for reducing
costs and limited pressure to adapt products for local markets.
Changing the method of going abroad from exporting to overseas production is often
necessary to protect foreign markets.
Promotion is the paid, nonpersonal presentation of ideas, goods, or services by an
identified sponsor.
The magnitude of international trade and how it has grown are reflected in the fact that
one-fourth of everything grown or made in the world is now exported.
Top management of companies generally accepts the fact that, to be effective, strategic
planning processes should permit ideas to surface from anywhere in the organization
and at any time.
Companies have the potential to achieve competitive advantages through leveraging
their organizational knowledge across national boundaries.
The potential of licensing for generating income has been more limited in recent years
because courts have not upheld patent infringement claims as much as they used to.
International institutions provide nations the opportunity to build multilateral solutions,
and thus make significant contributions to international stability.
Sales promotion provides the selling aids for the marketing function and includes
activities such as the preparation of point-of-purchase displays, contests, premiums,
trade show exhibits, money-off offers, and coupons.
All managers need to have a basic knowledge of international business.
De Gaulle pushed Nixon to close the gold window at the Treasury, and this one action
moved the IMF toward a floating exchange rate system.
No worldwide court has the power to enforce its decrees.
An evolving structure for an international organization over time is normal, as the
company's involvement in foreign markets increases over time.
The WTO has negotiated a TRIPS agreement whereby property rights do not take
precedence over public health.
The traditional functions of purchasing, such as supplier determination, analysis, and
selection, have to be accomplished before the actual purchasing via e-procurement.
The proportion of the outstanding stock of foreign direct investment accounted for by
the United States declined by two-thirds between 1980 and 2010.
Changes in an international company's strategy may require changes in the
organization's design, but not the reverse.
According to the text, the product is the central focus of the marketing mix.
Because of the rapidity of changes in uncontrollable variables, many managers have
turned to contingency plans, which are multiple, plausible stories for probable futures.
Trade barriers create costs that are paid by the government erecting the barrier.
There are many outstanding international career opportunities for people with desirable
interpersonal and language skills that are not in mainstream business but may require
basic business expertise.
Sustainable approaches in business usually involve trade-offs such as lower profits
compensated by reduced marketing costs and improved image/reputation.
Alliances can allow a partner to acquire a firm's technological or other competencies,
thereby raising important competitive concerns.
Intellectual property includes patents and trademarks but not copyrights.
International pricing involves setting prices of goods for export to both unrelated and
related firms.
As Kofi Annan, former secretary-general of the UN, observed, the UN exists to help us
master the challenges of our common, global destiny, which we can do only if we face
them together.
Most companies establish worldwide organizations based on product, region, function,
or customer classes.
Perks are symbols of rank in the corporate hierarchy and are used to compensate
executives while minimizing taxes.
Unlike the topography, the political climate of a country has relatively little influence
on its exports.
In low-context cultures:
A. there is subtlety and innuendo.
B. what you say tends to be what you mean, in that communication tends to be explicit.
C. indirection is prized because it recognizes the ability of the other.
D. leadership is mostly from behind, allowing the work group to self-direct.
The following arrangement can provide a firm with foreign products:
A. domestic subsidiary.
B. independent overseas manufacturer.
C. two of A, B, and D.
D. in-bond plant contractor.
E. all of A, B, and D.
In developing economies, informal institutions tend to play a greater role than in
developed economies, possibly because
A. the developing economies have more ambiguity and lack formal institutions by
definition, so informal institutions step into the breach.
B. developing economies show cultural preference for informality.
C. informal institutions emerge to give order to the unstructured, chaotic environment.
D. A and C.
In the traditional strategic planning approach:
A. the CEO and the head of planning got together to devise a corporate plan, which
would then be handed to the operating people for execution.
B. interaction with important customers and suppliers was included.
C. governments and other stakeholders were direct participants.
D. tended to fall victim to collective mind-sets about the competitive environment.
E. two of the above.
A pioneering firm stands the best chance for long-term success in market-share
leadership and profitability when:
A. there are high entry barriers for competitors.
B. it has strong patent protection.
C. there are substantial investment requirements.
D. all of the above.
Most firms begin their involvement in overseas business by:
A. exporting.
B. licensing.
C. joint ventures.
D. wholly owned subsidiaries.
E. none of the above.
Monochronic cultures tend to be:
A. high context (HC).
B. low context (LC).
C. ethnocentric.
D. hierarchical.
The Right Stuff model of global leadership development:
A. focuses on the needs of the firm and develops managers who bring some of the right
stuff with them.
B. suggests that global leaders are born, not made.
C. looks to universities to train in global leadership.
D. relies on in-house candidates for global leadership positions.
E. assumes that the firm can provide what the global leadership candidate requires.
A strategic plan:
A. will be prepared when the tactical plan is finalized.
B. describes how the firm's goals will be met.
C. contains sales forecasts and budgets.
D. all of the above.
IDA's purpose is to loan to:
A. the poorest nations.
B. middle-level-income nations needing infrastructure.
C. developed nations for use in trade stimulus efforts.
D. any nation with collateral.
That almost everyone in the United States self-identifies as middle class suggests that:
A. the United States is a successful meritocracy.
B. the United States measures low on the uncertainty avoidance dimension.
C. the U.S. economy has failed to support an aristocracy.
D. the United States measures small on the power distance dimension.
Foreign subsidiaries must obey the local laws. If they don't, according to the text they
are subject to:
A. legal action by the host country.
B. two of A, C, and D.
C. seizure by the host government.
D. cancellation by the parent company of its right to do business in the host country.
E. all of A, C and D.
One danger of using the culture frameworks introduced in Chapter 4 is that if we apply
them prescriptively:
A. we'll be able to understand too much detail of a culture, and this will slow down
decision making.
B. we'll limit rather than enrich our perceptions.
C. our perceptions will become stereotypes, however sophisticated.
D. B and C.
According to the text, the firm's ultimate manager of strategic planning is the:
A. vice president for planning.
B. chief operating officer.
C. firm's chief executive officer.
D. director of the strategic planning department.
E. none of the above.
According to the text, a large exhibition, generally held at the same place and same time
periodically, at which companies maintain booths to promote the sale of their products
is known as:
A. a trade mission.
B. a product introduction.
C. a trade show.
D. a trade fair.
E. none of the above.
Generally, as marketers go down the economic and social strata in each country, they
will tend to find:
A. similarities among countries with respect to social and cultural values.
B. dissimilarities among countries with respect to social and cultural values.
C. no significant differences with respect to social and cultural values.
D. greater government support for each succeeding lower stratum.
E. none of the above
__________ are organizational forms in which product divisions are defined as though
they were independent businesses.
A. Free-form management units
B. Strategic business companies
C. Strategic business units
D. Matrix overlays
E. Virtual corporations
__________ was the world's leading manufacturing country for about 1,800 years, until
it was replaced by Britain in about 1840.
A. The United States
B. Germany
C. India
D. France
E. none of the above.
Swap contracts are agreements to exchange:
A. currencies at specified rates at specified times in the future.
B. equity shares in the future at today's rates.
C. supplier information to ensure competitive pricing.
D. B and C.
Performance measures are done to:
A. all of B, C, and D.
B. measure the time the company takes to acculturate new employees.
C. determine if the strategy and its implementation are proceeding successfully.
D. assess assumptions about how the strategic lists affect the business.
E. two of B, C, and D.
3BL gives companies the chance to measure and make public the social and
environmental effects of their decisions: they should welcome this, in part because:
A. what we tend to learn about companies is what is reported in the media, and that
reporting tends to be focused on problems.
B. it's about time companies are held accountable for their actions.
C. right now we measure company decision results only at the economic level.
D. A and C.
A global mindset:
A. is a "prerequisite for global industry dominance."
B. combines an openness to and awareness of diversity across cultures and markets
with a propensity and an ability to synthesize across this diversity.
C. results from a combination of training and language skills.
D. all of the above.
The United Nations is probably the best known among:
A. for-profit organizations.
B. social service organizations.
C. international organizations.
D. military organizations.
In the case of the United States, intrafirm trade accounts for ______ percent of exports
of goods.
A. 15 to 30
B. 45 to 60
C. 35 to 45
D. 30 to 40
E. over 60
An important development in the level of worldwide FDI is the emergence of what has
been called the "bamboo network" of ethnic Chinese family businesses based outside
An advantage of hiring personnel who are citizens of neither the home country nor the
host country may be that they:
A. may accept lower wages and benefits.
B. may come from a culture similar to that of the host country.
C. all of A, B, and D.
D. have international experience.
Maznevski's map-bridge-integrate model helps global team members:
A. more fully understand each other and establish how the team will work.
B. avoid dealing with cultural differences.
C. establish ways to address planning issues.
D. focus more fully on the task.
E. B and D.
An arrangement in which one firm contracts with another firm to produce products to
its specifications but assumes responsibility for marketing is:
A. a license.
B. a franchise.
C. a management contract.
D. contract manufacturing.
E. a turnkey project.
Because of their close linkage, sociologists often combine the terms:
A. social and cultural.
B. social and kinship.
C. kinship and monogamy.
D. culture and monogamy.
Some of the variables that determine which decision is made where include:
A. product and equipment.
B. competence of subsidiary.
C. state-of-the-art communication networks.
D. two of the above.
How are antitrust laws enforced?
Explain the ethnocentric, polycentric, regiocentric, and geocentric approaches toward
international human resource management, including when and how each is best used.
What are the four primary dimensions that need to be considered when designing the
structure of an international company, and why are they important?
Discuss the terrorist threat of kidnapping and how it impacts international business.
Discuss why imports do not completely measure market potential.
What are currency exchange controls, why are they used, and how might they influence
the international manager located in an exchange-controlled environment?
Discuss some cultural problems and technical difficulties in collecting primary data
Why should international managers study the religion of the country they are planning
to work in even if they are not especially interested in the general area of religion?
Why is it often impossible to standardize the marketing mix worldwide?
Is triple-bottom-line accounting a reasonable approach to encourage businesses to take
responsibility for the impact of their actions on social and environmental systems, or
does it place an unrealistic burden on businesses to measure what may not be
What are the primary opportunities and challenges associated with expatriate positions?
Answers may vary, but should include elements such as the following: Companies will
continue to staff many key positions with expatriates, employees who are relocated to
the host country from the home country or a third country, with the assignment lasting
for an extended period of time (two to four years is a common length of time for an
expatriate assignment). Why use expatriates rather than just hire local employees?
Identify the seven dimensions along which management can globalize in organizing
their international activities.
Identify and briefly describe the six most commonly used promotional strategies.
Discuss the global strategic planning process.
Why do international managers need to know anything about a nation's topographic
What is contract manufacturing, and what are the ways in which international firms
employ contract manufacturing?
What is international strategy and why is it important?
Discuss the concerns conducting business in a foreign currency raises from an
accounting perspective.

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