Moral hazard arises when people behave recklessly because they know they will be
saved if things go wrong.
Corporations can contribute to the global tragedy of the commons by not pumping
pollutants into the atmosphere or dumping them in oceans or rivers.
Base pay in most firms is set with regard to global market conditions.
Modern consumer products such as personal computers serve universal needs.
Ex-Im Bank has a direct lending operation under which it lends dollars to foreign
borrowers.
Education plays an important role, from an international business perspective, as a
determinant of national competitive advantage.
In today’s world of global communications, rapid transportation, and global markets,
cultural differences have ceased to exist.
Ethical strategies are the accepted principles of right or wrong governing the conduct of
businesspeople.
During the 1980s and early 1990s, the world trading system erected by the GATT
gained momentum as protectionist demands generally decreased across the world.
Social responsibility refers to the idea that businesspeople should favor decisions that
have both good economic and social consequences.
The efficient market school argues that investing in exchange rate forecasting services
would be a waste of money.
Ethical dilemmas are situations in which none of the available alternatives seems
ethically acceptable.
Performance of international subsidiaries depends on the transfer price set-up by the
corporate.
Deming, the proponent of total quality management, suggested that management
shouldn’t attempt to train employees in new skills.
If the law of one price were true for all goods and services, the purchasing power parity
(PPP) exchange rate could be found from any individual set of prices.
Rivals rarely imitate what a firm does in an oligopoly.
The purchasing power parity (PPP) theory is a strong predictor of short-run movements
in exchange rates covering time spans of five years or less.
Studies of privatization in central Europe have shown that the process often fails to
deliver predicted benefits if the newly privatized firms continue to receive subsidies
from the state and if they are protected from foreign competition.
A rich country improves its productivity by engaging in free trade with a poor country.
This situation supports Paul Samuelson’s critique.
A nation’s legal system is usually of very little interest to international business
managers, because international businesses are headquartered in different countries.
To facilitate international business, property rights are defined in a consistent way
across countries.
Cultural relativism suggests that even if slavery is culturally acceptable in a country, a
foreign firm operating in that country should avoid using slave labor.
Most international businesses require all budgets and performance data within the firm
to be expressed in the currencies of the countries where its subunits are located.
What is considered normal business practice in one country may be considered
unethical in other countries.
A firm’s strategy can be defined as the actions that managers take to attain the goals of
the firm.
GATT has not recognized the infant industry argument as a legitimate reason for
protectionism.
Contractual safeguards cannot be written into an alliance agreement to guard against the
risk of opportunism by a partner.
The set of choices the firm offers to its targeted markets is known as the marketing mix.
In practice only a few countries country have adopted the free market view in its pure
form.
In a totalitarian country, there are safeguards to protect an individual’s right to freedom
of expression, opinion, and organization.
Regional economic integration involves agreements among countries in a geographic
region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of
goods, services, and factors of production between each other.
Accounting standards are rules for preparing financial statements.
One of the UN’s central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development.
A class system is a rigid form of social stratification in which the position a person has
by birth cannot be changed through his/her own achievements or luck.
Concentration of production is not favored when important exchange rates are expected
to remain relatively stable.
The government of a country takes over the airport security industries following a
major terrorist attack, to improve airport security. This is an example of privatization.
A wholly owned subsidiary limits a firm’s control over operations in different countries.
Societal business ethics are divorced from personal ethics.
A firm that is facing both strong cost pressures and strong pressures for local
responsiveness should follow a(n) _____ strategy.
A. localization
B. global standardization
C. international
D. transnational
Which of the following statements is true of products with high value-to-weight ratios?
A. Transportation costs usually account for a large percentage of their total costs.
B. They are relatively inexpensive and weigh a lot.
C. They are usually produced in multiple locations close to major markets.
D. Their transportation account for a very small percentage of the total costs
A _____ specifies that parent companies are not taxed on foreign source income until
they actually receive a dividend.
A. bilateral agreement
B. tax credit
C. deferral principle
D. tax treaty
A civil law system tends to be less adversarial than a common law system because the:
A. judges’ decisions are based on detailed legal codes.
B. judges have the freedom to interpret laws based on the situation.
C. judges’ decisions are based on religious teachings.
D. judges are guided by interpretations made in prior legal cases.
Historically, most international businesses have been:
A. more concerned with training than with management development.
B. focused on smoothly transitioning their home-country nationals back from foreign
postings to home postings.
C. more concerned with management development than with training.
D. less focused on training their home-country nationals for foreign postings than with
training home-country managers.
_____ seeks to explain why firms often prefer foreign direct investment over licensing
as a strategy for entering foreign markets.
A. Knickerbocker’s theory
B. Internalization theory
C. The noninterventionist theory
D. The eclectic paradigm Internalization theory seeks to explain why firms often prefer
foreign direct investment over licensing as a strategy for entering foreign markets.
The percentage increase in net profits over time measures _____.
A. capital return
B. profitability
C. market growth
D. profit growth
Which of the following is a characteristic of a command economy?
A. Promotion of foreign direct investment
B. Allowing prices to be set by the interplay between demand and supply
C. Limited international trade
D. Restricted state-ownership of means of production
_____ are the advantages associated with entering a market early.
A. Pioneering advantages
B. First-mover advantages
C. Core competencies
D. Late-mover advantages
_____ are the most important source of external capital for business enterprises in the
United States.
A. Stocks or bonds
B. World Bank loans
C. Banks
D. Venture capitalists
Which of the following is true of fixed-rate bonds?
A. Returns from fixed-rate bonds are dependent on the profitability of the issuing
company.
B. Investors get back the face value of the bond at maturity of fixed-rate bonds.
C. Fixed-rate bonds issue cash payoffs only at maturity of fixed-rate bonds.
D. Investors get a share of the company’s profit when using fixed-rate bonds.
The protection of the right to private property is embedded within _____.
A. Islam
B. Christianity
C. Hinduism
D. Protestantism
If a firm is serious about building a(n) _____, it may have to pay its international
executives the same basic salary irrespective of their country of origin or assignment.
A. expatriate community
B. international cadre
C. inpatriate community
D. international corps
Japan’s great trading houses are called _____.
A. Nikei
B. sogo shosha
C. Yen houses
D. Samurai houses
According to Alexander Yeats:
A. the trade diversion effects of Mercosur outweigh its trade creation effects.
B. the fastest growing items in intra-Mercosur trade were capital-intensive goods
produced efficiently in the member countries.
C. Mercosur countries will be able to compete globally once the group’s external trade
barriers come down.
D. the customs union is becoming more perfect over time.
_____ arises when two or more enterprises encounter each other in different regional
markets, national markets, or industries.
A. Horizontal integration
B. Multipoint competition
C. An oligopoly
D. Vertical integration Multipoint competition arises when two or more enterprises
encounter each other in different regional markets, national markets, or industries.
Cost and _____ are the two main drivers behind make-or-buy choices made by global
companies when they engage in global supply chains.
A. production capacity
B. assurance of continual supply
C. quality control
D. control
_____ involves removing legal restrictions to the free play of markets, the
establishment of private enterprises, and the manner in which private enterprises
operate.
A. Deregulation
B. Trade certification
C. A product law
D. A liability law
_____ is/are best defined as shared assumptions about how things ought to be.
A. Norms
B. Values
C. Society
D. Culture
Which of the following is a reason why managers behave in a manner that is unethical?
A. Psychological and geographical distances of a foreign subsidiary from the home
office
B. Pressure from an ethical leader
C. Confusion between personal ethics and business ethics
D. Incorporating ethical issues into strategic and operational decision making
The move toward economic union raises the issue of how to make a coordinating
bureaucracy accountable to the citizens of member nations. Which of the following
offers a solution to this problem?
A. A common market
B. A free trade area
C. A customs union
D. A political union
A currency crisis occurs due to:
A. the loss of confidence in a country’s banking system.
B. heavy foreign debt obligations.
C. high levels of trade deficit.
D. a speculative attack on the exchange value.
A law system that is based on a detailed set of laws organized into codes.
A. Theocratic
B. Contract
C. Civil
D. Common
Country X, a poor country, invents a revolutionary electronic product. The country
markets this new product in other poor countries to garner large profits. This occurrence
is against the idea of ____.
A. product life-cycle theory
B. Ricardo’s theory
C. theory of absolute advantage
D. theory of comparative advantage
To increase the potential for a successful acquisition, a firm should:
A. always bid low to allow for partial failure.
B. try to acquire a firm with a very different corporate culture so there is no forced
“overlap.”
C. screen the foreign enterprise to be acquired.
D. seek companies only from similar national cultures.
Which of the following is one of the most important trading centers in the foreign
exchange market?
A. Beijing
B. Sau Paulo
C. Zurich
D. Seoul
When a country tries to hold the value of their currency within some range against an
important reference currency such as the U.S. dollar without adopting a formal pegged
rate, it is referred to as a _____.
A. gold standard
B. pegged float
C. dirty float
D. currency peg
The Uruguay Round provided:
A. reduced protection for patents, trademarks, and copyrights.
B. enhanced protection for patents, trademarks, and copyrights.
C. increased trade barriers.
D. reduced coverage of services and manufactured goods.
_____ is a type of control that tends to be most widely used in small firms.
A. Personal control
B. Output control
C. Bureaucratic control
D. Cultural control
The means a firm chooses for delivering the product to the consumer is its _____.
A. communication strategy
B. segmentation strategy
C. product attributes
D. distribution strategy
What are the three factors that contribute to the trend toward greater retail concentration
in developed countries? How have these factors promoted retail concentration?
What are the factors that contribute to the risks of doing business in a country?
What is the Single European Act? What was the effect of the Single European Act on
the EU economy? Did the Single European Act achieve its goals?
Compare and contrast the four forms of totalitarianism.
When does concentration of production make sense?
Discuss the limitations of Hofstede’s research.
Discuss the Free Trade Area of the Americas.
Why does China represent both opportunities and threats for established international
businesses?
Describe the five-step process that businesses can use to think through ethical problems.
What is Theodore Levitt’s contribution to international business?
What is the philosophy of Amartya Sen?
Why do many economists favor internalization theory as an explanation for FDI
compared to Knickerbocker’s theory?
What are impediments to countries integrating?
Discuss the reasons for the growth in FDI over the last 30 years.
Discuss the notion of social responsibility.
Should a multinational feel free to pollute in a developing nation?
Briefly describe the Six Sigma methodology.