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

MGMT 88911

February 28, 2019
Although India is a member of the WTO and has benefited greatly from increased trade
as a result of WTO agreements, China is not yet a member.
In the method favored by the majority of American ICs, the salary part of an expatriate
employee's compensation package will generally be governed by the employee's level
in the organization and will not be higher because of the foreign assignment.
When the historic growth rates of a product are known, future growth can be forecast
by means of trend analysis.
Mistakes in selecting foreign distributors and sales representatives are not an issue new
exporters face.
Market indicators are economic data that correlate highly with market demand for a
Worldwide uniformity or standardization in manufacturing methods hinders
headquarters' effectiveness in keeping production specifications current.
The types of information a firm will need to judge country risks vary according to the
nature of its business and the amount of money invested.
By accepting a time draft, the buyer assumes the responsibility for making payment at
maturity of the draft.
Gift-giving across cultures is a simple kindness and need not be complicated with
attempts to understand. The act of generosity says everything in and of itself.
According to the text, shorter and less predictable product life cycles have placed
reduced emphasis on supply chains and their performance.
The length of the investment in a foreign country has no impact on the risk assessment
for that investment. What matters is the economic and political situations in the country.
Only those companies that have foreign operations need to be aware of what is
occurring globally in foreign markets and their industry.
Packaging and transportation requirements for a product can significantly influence
logistics costs, and these factors should be addressed during the postdesign steps in a
company's value chain.
Transformational experiences are a recommended part of preparation for global
Export drafts must be paid before the buyer receives shipping documents.
A business entity with a clearly defined market, specific competitors, the ability to carry
out its business mission, and a size appropriate for control by a single manager is a
strategic operating unit.
The United States has only about 10 percent of the world's population, so the vast
proportion of most companies' potential customers are located elsewhere.
Most companies can enter a market in stages. The order listed in the textbook is
establishment of a foreign sales company, exporting, local assembly, and
Through 2035, fossil fuels are expected to remain the world's dominant energy source.
External environmental forces are commonly referred to as controllable.
According to the text, every successful company uses controls to put its plans into
effect, evaluate, correct, and reward.
Arbitration is less popular than legal proceedings, largely because arbitration is more
As global financial markets become more integrated, we can expect countries' inflation
rates to vary over a small range.
Scenario analysis can help managers to break away from their existing view of the
world and envision alternatives that might lie outside their traditional frame of
A comparison based on hourly wages is a reasonable guide to a need to protect
domestic jobs.
Facebook is a social institution based on free association.
The utility of risk analyses of social, political, and economic factors increases rapidly
over longer time spans.
Subsidiary management morale is one element in determining where decisions would
be made.
The government officials who make decisions about import restrictions are particularly
sensitive to their country's broad population of consumers, who will be hurt by
international competition.
Linder's theory of overlapping demand explains the direction of trade for minerals and
agricultural products.
Value chain linkages must be examined not merely across activities within the company
but also in terms of managing relationships with external entities such as suppliers,
alliance partners, distributors, or customers within and across nations.
Exporting is an expensive option for testing foreign markets and foreign competition.
A fundamental drawback of indirect exporting is that companies must pay a
commission to all of the companies that handle their exports.
A variable levy confers benefit on the domestic producer, as with the EU variable levy
on grain.
The United States avoids extraterritorial application of its laws.
An advantage of bottom-up planning is that the people responsible for attaining the
goals are formulating them.
Global standardization of trade-related law is progressing slowly.
One variable commonly used to measure where and how fast internationalization takes
place is the increase in total foreign direct investment.
Foreign trade zones are also called:
A. free trade zones.
B. transit zones.
C. free perimeters.
D. export processing zones.
E. all of the above.
Sir Isaac Newton put England on the gold standard when he:
A. declared, as master of the English mint, that he would sell gold for 1 pound, 1
shilling, 1 pence, under the law of one price.
B. set a market price for gold, the British pound and the U.S. dollar.
C. established a fixed equivalency between gold and the British currency.
D. brought the matter to Queen Anne, who declared Britain would follow the gold
There are several criteria for segmenting markets. Which of the following is not a
criterion for segmenting?
A. Definable
B. Accessible
C. Small
D. Actionable
E. None of the above (All are criteria for segmenting.)
The forces over which management does have some command are called:
A. internal.
B. controllable.
C. foreign.
D. external
E. two of the above.
In an inflationary economy the following conditions may be present:
A. demand exceeds supply.
B. money supply is increasing.
C. prices are rising.
D. all of the above.
Ex-Works is a short way to say:
A. cash in advance.
B. an open account.
C. consignment.
D. letters of credit.
E. shipment transferred to seller at factory.
According to Warren Bennis:
A. the leader inspires, while the manager controls.
B. the leader orders, while the managers requests.
C. the leader is charismatic, while the manager is a functionary bureaucrat.
D. the leader is acclaimed, while the manager is appointed.
E. the leader initiates, while the manager waits for directives.
Regarding the way international companies are structured and integrated:
A. no single structure is best for all companies and contexts.
B. managers must consider the nature of their company's international operating
environment and their competitors' strategies when deciding when and how to modify
the company's organizational structure.
C. gains from increased specialization will be nullified by increased costs of
coordination, requiring managers to choose between the two.
D. all of the above
E. two of A, B, and C.
Which of the following is explained by international trade theory?
A. Differences in production costs
B. Differences in levels of technology
C. Foreign exchange rates
D. Differences in efficiency of factor use
E. All of the above
International institutions are important to international business managers because, in
general, they:
A. limit financial responsibility of business.
B. promote development.
C. limit choices, thereby providing ways to settle disagreements and resolve conflicts.
D. encourage immigration and labor mobility.
Why is a currency option sometimes preferred to a forward market hedge?
A. It is an optional contract, so the company could not exercise it and be able to benefit
from upside swings in the foreign currency value.
B. The rates are cheaper.
C. Currency options are available for longer periods.
D. The IRS favors currency options for tax credits when they are exercised.
Counterarguments to the "protect domestic jobs from cheap foreign labor" argument
A. the labor rate is not all of the labor cost or the production cost.
B. productivity per worker is what matters.
C. cheap foreign labor is a natural occurrence.
D. two of the above.
The proportion of world commercial services exports accounted for by ___________
has evidenced an overall decline since 1980.
A. the European Union
B. Africa
C. the United States
D. all of the above
E. two of A, B, and C
When a firm offers its stock in a foreign market, it is:
A. encountering foreign currency exposure.
B. trying to limit its investor pool.
C. violating domestic law in the EU or United States.
D. cross-listing.
This group of resources, which includes chrome and manganese, is used in many
technology applications, and the United States imports many of these resources 100
A. rare earths.
B. nonfuel minerals.
C. rare minerals.
D. mineral gems.
Culture plays a significant role in the discipline(s) of:
A. marketing, but not finance, because it is quantitative.
B. leadership, accounting, finance, marketing, human resources, and production.
C. marketing and human resources, but not production, finance, and accounting.
D. all foreign businesses, but not businesses of the home country.
Trompenaars' particularist dimension describes a culture in which:
A. people apply the rules equally to everyone.
B. context is considered when rules are applied.
C. relationships rather than rules regulate behaviors.
D. B and C.
A typical company's supply chain costs can represent more than ____ percent of assets.
A. 20
B. 35
C. 50
D. 60
E. 80
Social loafing is:
A. unusual in virtual teams.
B. a danger in virtual teams.
C. discouraged through a mixture of individual and team-based rewards.
D. more common in face-to-face teams than global virtual teams.
E. B and C.
Generalizations about TCNs are difficult because:
A. the IC usually does not know enough about their backgrounds.
B. the geocentric staffing policy prohibits these generalizations.
C. two of A, B, and D.
D. people achieve the TCN status in different ways.
E. all of A, B, and D.
Bretton Woods led to an exchange rate agreement known as the Bretton Woods System
A. the floating-rate system.
B. the India Accord system.
C. the gold exchange standard.
D. the French rate system.
Setting prices of goods for export for both unrelated and related firms is known as:
A. foreign national pricing.
B. international pricing.
C. transfer pricing.
D. market pricing.
E. none of the above.
Executive compensation packages sometimes include payments called perks that are
extras and are:
A. usually illegal.
B. always legal.
C. uncommon.
D. symbols of rank in the company hierarchy.
E. none of the above.
The price of gold since about 1200 A.D. has been:
A. trending downward.
B. flat, keeping its value.
C. wildly fluctuating.
D. trending upward.
Economic exposure results from:
A. exchange rate variations on projected cash flows.
B. operating exposure.
C. A and B.
D. poor planning.
"Foreign direct investment without investment" is a term sometimes applied to:
A. franchising.
B. exporting.
C. a joint venture.
D. a management contract.
E. contract manufacturing.
Price and profit allocation decisions are usually best made:
A. at the subsidiary headquarters.
B. at the IC headquarters.
C. cooperatively by both subsidiary and IC headquarters.
D. at the subsidiary headquarters in the host country with the lowest prices.
E. none of the above.
As an energy source, nuclear power:
A. is growing significantly, especially in developing countries.
B. has been growing as the price of oil climbs and cleaner energy sources
(nonpolluting) are sought.
C. has been exploited by France, which has one of the lowest greenhouse gas emissions
in the industrialized world.
D. all of the above.
Which of the following is true about alliances?
A. Many alliance partners are also competitors.
B. Alliances are often difficult to manage.
C. The use of alliances is likely to decline as markets internationalize.
D. All of the above.
Market Access and Compliance (MAC) specialists seek to open foreign markets to
American products. MAC specialists do not do the following:
A. develop strategies to overcome obstacles faced by U.S. business in foreign countries
and regions.
B. monitor foreign country compliance with trade agreements.
C. monitor exchange rate movement.
D. all of the above.
Firms from __________ had the largest total outstanding stock of direct overseas
investment at the beginning of 2010.
A. Germany
B. the United States
C. the United Kingdom
D. Japan
E. China
Patent treatment is standardized thanks to:
A. the WTO.
B. the UN Commission on Patents.
C. domestic laws in various nations.
D. the Paris Union.
E. the ACTA.
Environmental sustainability is both local and global because:
A. environmental conditions do not recognize national borders.
B. governments are not prepared to address environmental issues beyond the UN.
C. business has become global, so sustainability must follow the trend.
D. all of the above.

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