Tariffs rarely vary with the form of an imported product.
Corporate codes of conduct emphasize standards related to ethics and social
responsibilities.
Local tradition, culture, and cost of living do not influence compensation packages.
In cultures with a monochronic view of time, people view time as linear, managers
make commitments, set deadlines, and adhere to a strict schedule of meetings and
activities.
According to the comparative advantage principle, what matters most is the absolute
cost of production of the product and not the relative efficiency with which a country
can produce the product.
A country’s economic assets are also known as factors of production.
The foreign-exchange market is located exclusively in the United States.
Developing countries lack numerous conditions needed for successful economic
development, including low trade barriers and substantial international trade and
investment.
Most companies cite cost cutting as the main reason for global sourcing.
Socialism is based on a collectivist ideology which assumes that the collective welfare
of people outweighs the welfare of the individual.
Gains and losses do not directly affect cash flows in the case of translation exposure,
but cash flows can be significantly affected by transaction exposure.
The largest proportion of government debt results from national pension and healthcare
programs.
Critical incident analysis examines an episode in which tension arises between an
employee and a foreign counterpart due to a cross-cultural misunderstanding.
The global financial system establishes the rules and procedures for exchanging
national currencies in international business transactions.
One of the best sources of intelligence in the scanning process is employees working in
foreign countries targeted for market entry
Margaret Lee, an American and a private bank employee from New York, is assigned to
work and reside in Paris for five years. She is most likely to be known as a repatriate in
Paris.
Common law is more flexible than the other legal systems.
Maquiladoras refer to export-assembly plants in northern Mexico along the U.S. border
that produce components and typically finished products destined for the United States
on a tariff-free basis.
Back-office activities consist of downstream, customer-related services.
Cultural values and attitudes can be transmitted through a variety of sources including
parents, teachers, friends, government leaders, movies, television, and the Internet.
Countries with weak legal environments can erode key strategic assets of firms.
Subsidies can help counterbalance harmful consequences that disproportionately affect
the poor.
Typically, country laws do not dictate how many employees can come from nonlocal
sources.
Firms that want to become globally competitive must seek simultaneously three
strategic objectives-efficiency, flexibility, and learning.
Modern business executives use the term comparative advantage when referring to the
assets of individual firms.
Laws that govern contractual obligations are uniform across countries, therefore, it
makes contract enforcement abroad easier for firms.
The Central Bank is an international agency that provides loans and technical assistance
to low-and middle-income countries, with the goal of reducing poverty.
The longer the channel, the lesser intermediaries the firm must compensate.
Varying income levels among nations usually necessitate that firms make price
adjustments and product modifications for individual markets.
As the influence of the Chinese economy grows over time, it is likely that Western
countries will embrace some of China’s cultural attitudes and behaviors.
The last task in international financial management is to manage the diversity of
international accounting and tax practices.
CORE is a diagnostic tool mainly used by managers to choose qualified business
partners.
Screening countries to identify attractive target markets is the first step toward
internationalization.
Special interest groups serve the interests of particular countries, industries, or causes.
Home Depot made a greenfield investment when it entered the Mexican market by
purchasing Home Mart, a domestic store chain.
Relying on one’s instincts is often the best way to identify an ethical problem.
Tariff and other trade barriers for exports and FDI are identical.
Frequent business travelers, who are also affluent and eager spenders, represent a global
market segment.
Which of the following benefits would Earth-Rite most likely accrue if it entered into a
joint venture with the Brazilian grocery store chain?
A) Earth Rite would experience high employee turnover in the home country.
B) Earth Rite would be able to eliminate competition in the foreign markets.
C) Earth Rite would be able to completely eliminate the risk of proprietary knowledge
infringement abroad.
D) Earth Rite would have access to the foreign partners’ know-how.
Ciao Manufacturing Location (Scenario)
An Italian car company, Ciao, has made plans to expand its operations by building a
manufacturing facility in a foreign market. Ciao has been very successful selling its
small, economical, and stylish cars in Italy and Spain, and firm managers believe that
Ciao cars will be equally profitable in other markets. Ciao managers are trying to
determine whether Canada or Russia would be the best location for a new automobile
manufacturing facility.
Which of the following questions is most important for Ciao managers to evaluate in
their decision regarding the location of the new manufacturing facility?
A) What would be the costs and availability of skilled labor in Canada and Russia?
B) What other industries manufacture products in Canada and Russia?
C) How much time will it take to train managers in Canada and Russia?
D) How should the current marketing strategies be modified to serve markets in Canada
and Russia?
A strike refers to ________.
A) an unorganized anarchical movement initiated by employees within an organization
B) an organized, collective refusal to work with the aim of pressuring management to
grant union demands
C) the hostile takeover of a weak company by a strong one
D) governmental restrictions on imports
All of the following factors are important to consider about the target audience of an
international advertising campaign EXCEPT ________.
A) buying motivations
B) entrepreneurial experiences of consumers
C) purchasing power
D) age and education
A furniture company that makes its marketing program elements uniform, targeting
entire regions with similar products, is demonstrating ________.
A) product diversification
B) customization
C) standardization
D) adaptation
The extent of a country’s openness to imports is termed ________.
A) market intensity
B) market size
C) market receptivity
D) market growth rate
A proactive economic development plan initiated by the government, often in
collaboration with the private sector, that aims to develop or support particular
industries within the country is referred to as ________.
A) national endowment policy
B) national fiscal policy
C) national industrial policy
D) policy on national industrial relations
Which of the following is a primary question to ask when attempting to determine a
product’s potential in a foreign market?
A) How much is the overall production cost?
B) Is the product safe and reliable?
C) Why do people buy the product?
D) How does the product work?
International Trade Summit (Scenario)
An international trade summit is held in Geneva, Switzerland. The purpose of the
summit is to cooperatively develop policies that promote international trade.
Representatives from 50 different countries attend the summit.
One summit attendee pointed out that the total value of her country’s products trade
typically accounted for more than 100 percent of her nation’s GDP. This attendee most
likely represents ________.
A) Japan
B) United Kingdom
C) France
D) Netherlands
Employee Categories (Scenario)
Styleco Inc. is an international manufacturer of leather wallets and briefcases. Based in
Canada, the firm has subsidiaries throughout Europe and Asia. High-level Styleco
employees are often re-located for months at a time to foreign offices depending on the
needs of the firm. Shelly Eaton, a Canadian, has been sent to manage the Styleco office
in Italy. Raj Patel, an Indian, is an experienced software designer who is on assignment
for Styleco in its Paris office. Keiko Tran of Japan is employed as a manager in
Styleco’s Tokyo office. Marcus Field is a Canadian working at the Styleco headquarters
in Ontario as a manufacturing engineer.
Which of the following employees is most likely a third-country national?
A) Raj Patel
B) Marcus Field
C) Shelly Eaton
D) Keiko Tran
Acme Ethical Standards (Scenario)
Four senior managers of Acme International meet to discuss strategies for improving
ethical practices in the company’s worldwide operations. Jang heads the company’s
manufacturing division in China, while Luis and Marta are based in the Finland and
U.S. sales divisions, respectively. Geoff manages the research and development office,
based in Brazil.
________ is most likely to point to a controversial practice in his/her country in which
the compensation of top executives is far greater than that of low-ranking subordinates.
A) Geoff
B) Luis
C) Jang
D) Marta
According to the ________, a country benefits by producing only those products in
which it has complete advantage or that it can produce using fewer resources than
another country.
A) absolute advantage principle
B) comparative advantage principle
C) factor proportions theory
D) international product cycle theory
Which of the following behaviors of a firm can be called unethical?
A) setting up operations abroad
B) manufacturing luxury consumer goods
C) tolerating sweatshop conditions
D) failing to meet shareholders’ expectations with regard to annual profit
The United Nations estimated that trade barriers alone cost developing countries
________ in lost trading opportunities with developed countries every year.
A) $100 billion
B) $200 billion
C) less than $100 billion
D) more than $500 billion
According to Porter, Kazmia can attain economic prosperity by systematically
cultivating new and superior factor endowments through ________.
A) devaluation of the national currency
B) redevelopment of the country’s depleted diamond mines
C) proactive national industrial policy
D) the consolidation of national human rights institutions
________ are ways of behaving and conducting oneself in public and business
situations
A) Manners and customs
B) Creative expressions
C) Values and attitudes
D) Symbolic productions
A ________ government seeks to control not only all economic and political matters
but also the attitudes, values, and beliefs of the citizenry.
A) democratic
B) socialistic
C) mixed
D) totalitarian
Contractor A would most likely oversee each of the following EXCEPT ________.
A) designing the bridge
B) operating the subway system continuously
C) engineering the bridge
D) constructing the subway system
Which of the following statements is true about protection of an infant industry?
A) Governments can impose temporary trade barriers on foreign imports to ensure that
young firms gain a large share of the domestic market.
B) Such protection is easy to remove.
C) Protected companies become more efficient and produce products with lower prices.
D) Protecting infant industries rarely allows countries to develop a modern industrial
sector.
The ________ is a policy platform and practical framework for companies committed
to sustainability and responsible business practices. It is the world’s largest voluntary
corporate citizenship initiative, representing thousands of businesses in more than 135
countries.
A) Organization for Economic Cooperation and Development
B) United Nations Global Compact
C) International Economic Development Council
D) Global Reporting Initiative
The ________ states that it can be beneficial for two countries to trade without barriers
as long as one is relatively more efficient at producing goods or services needed by the
other.
A) monopolistic advantage theory
B) internalization theory
C) absolute advantage principle
D) comparative advantage principle
Developing economies ________.
A) account for nearly two-thirds of world GDP
B) are often highly developed in historical and cultural terms
C) are characterized by high purchasing power
D) have a high literacy rate
Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with
preparing a comprehensive report on the company’s global operations over the past
twenty years. Deva assigns three strategists to collaborate on the History portion of the
report, which details the rationale behind Pax’s decisions to expand operations in
particular areas. Rashid Ahl focuses on early expansion to China, which occurred after
China began to make its market more accessible to foreign companies. Markus Teller
focuses on Pax’s expansion to Eastern Europe, which was motivated by increased
industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan,
which happened when the company’s commercial bank expanded its service network to
Asia.
The initial phase of globalization was triggered by the introduction of the railroads and
ocean transport.
Phillip Hardy, one of the potential investors, expresses the desire to purchase only those
types of assets in which he can maintain a relatively short-term interest. Which of the
following investment opportunities would be most suited for Mr. Hardy?
A) a venture that gives investors ownership of the equipment used by multiple South
African mining companies
B) an initiative to purchase the technology assets of an Indian consulting firm
C) the Freehold Eastern Growth Fund, which purchases Eastern European growth
stocks
D) the Freehold World Climb Project, which maintains partial ownership of an
Australian hiking equipment production plant
Socialization is defined as ________.
A) the process of segregating people into different racial groups in a society
B) the process of adjusting and adapting to a culture other than one’s own
C) the process of learning the rules and behavioral patterns appropriate to one’s given
society
D) a situation or event in which a cultural misunderstanding puts some human value at
stake
Religion-based totalitarian states are called ________.
A) theocratic
B) secular
C) socialistic
D) atheistic
A government policy that impedes trade through means other than explicit tariffs is
known as a(n) ________.
A) investment incentive
B) subsidy
C) maquiladora
D) nontariff trade barrier
Which of the following is an example of a country that has experienced dollarization?
A) Ecuador
B) Japan
C) France
D) Brazil
Which of the following religions has the largest number of adherents?
A) Islam
B) Christianity
C) Hinduism
D) Judaism
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 3?
A) low inward FDI
B) rapidly liberalizing trade barriers
C) highly developed industry
D) low trade volume
In terms of CSR and sustainability, going wide implies ________.
A) a continuous effort to understand how CSR and sustainability affect every aspect of
the firm’s operations worldwide
B) institutionalizing appropriate behavior into the organization’s culture so it becomes
part and parcel of strategy
C) encouraging unstructured learning among employees
D) a sustained effort to reduce control mechanisms throughout the organization
Which of the following will be accomplished by potential exporters who are involved in
studying import statistics?
A) evaluating the political risk of different markets
B) estimating the profitability of domestic sales
C) predicting the culture risk of an emerging market
D) assessing a market’s viability for accepting new sales
Where are emerging markets mostly found? What are the factors contributing to their
rapid growth?
In a short essay, discuss the factors that complicate the job of international human
resource managers.
What is the connection between the competitive advantage of a firm and the
competitive advantage of a nation? In a short essay, explain the nature of the
relationship between firms and nations.
In a short essay, describe the three types of interests simultaneously pursued by a
sustainable business.
In a short essay, describe some of the subtleties of language. Provide examples that
relate to international business situations.
Describe the variables used to identify the best markets for FDI entry. Which countries
are popular for FDI entry? Why are they popular?
How has the adoption of free markets worldwide served as a driver of market
globalization? Provide three examples to support your answer.
In a short essay, explain how the GATT changed international trade.
Define repatriation. Discuss some of the difficulties faced by repatriated employees.
How can human resource managers assist repatriated employees?
Define international price escalation. Discuss how distribution channel length affects
international business transactions.
Explain the concept of currency risk. How can inflation and interest rates create
currency risk?
In a short essay, describe the negative effects to the economy when a government
intervenes in international trade.
In a short essay, explain the factors involved in a firm’s decision to use indirect
exporting or direct exporting.
What is the difference between a convertible currency and a nonconvertible currency?
Explain why governments of some countries impose restrictions on currency
convertibility.
What is market segmentation? In a short essay, discuss how international firms use
market segmentation.
In a short essay, explain how global sourcing can contribute significantly to a firm’s
ability to achieve its strategic goals. Why is “achievement of strategic goals” actually
the best rationale for global sourcing?
