When assessing the firm’s readiness to internationalize, managers peer into their
organization to determine the degree to which it has the resources necessary to
successfully engage in international business.
Estimating project cash flows is complex and requires forecasting a range of variables
that contribute to anticipated revenues and costs over several years.
When using a multidomestic strategy, products and services are carefully adapted to suit
the unique needs of each country.
Free trade produces lower-cost imports that help consumers save money, thereby
increasing their living standards.
When determining a product’s potential in numerous foreign markets, it is usually best
to assume that buyers have identical needs and purchasing habits across the markets.
A project perspective approach in capital budgeting can be employed by managers
interested in initially screening the appropriateness of an international capital
investment project.
The Internet has increased the cost of transmitting voices, data, and images.
Sourcing inputs from large-scale, centralized suppliers allows firms to obtain
economies of scale, more consistent quality, lower costs, and generally more efficient
operations.
The strategies that MNEs developed decades ago and refined in mature
advanced-economy markets are considered most suitable for achieving success in
emerging markets.
Promotional activities are typically long-term marketing activities.
Of the five types of participants that are active in transforming political and legal
systems, the public sector is the most important.
Equity financing comes from either of two sources: (1) loans from banks and other
financial intermediaries, or (2) the sale of corporate bonds to individuals or institutions.
The innovativeness of a nation’s firms has no significant impact on the national
competitive advantage.
Governments often impose trade barriers to restrict imports of products or services seen
to threaten national assets.
If high tariffs are present, managers may consider other strategies, such as FDI,
licensing, and joint ventures that allow the firm to operate directly in the target market,
avoiding import barriers.
Transaction exposure refers to the impact of exchange rate fluctuations on long-term
profitability resulting from miscalculated expenses and revenues.
The official price of gold is used to determine the value of all major currencies in the
exchange rate system used for international trade today.
Governments and state enterprises in emerging markets are major targets for sales of
infrastructure-related products and services.
Global sourcing has gained momentum in the current phase of globalization.
In a multidomestic strategy, there is maximum pressure on headquarters staff because
there is little incentive for decision making by individual managers.
Exporting and importing collectively refers to international trade.
Countries appropriate for firms intending to use FDI as an entry strategy should exhibit
a potential for long-term growth with limited political risk.
The global recession and financial crisis that began in 2008 arose largely from
inadequate regulation and insufficient enforcement of current regulations in the banking
and finance sectors.
According to the internationalization process model, a firm starts out in a pre-export
phase and is preoccupied with business in its home market.
In a franchising agreement, the franchisee provides training, ongoing support, and the
right to participate in cooperative marketing programs to the franchisor.
A firm in need of short-term financing will most likely turn to the global money market
instead of the global capital market.
Patents provide inventors the right to prevent another person or company from selling
or using an invention for up to twenty years.
Front-office activities typically include internal, upstream business functions.
English is the most common primary language in the world.
For foreign firms wanting to do business in emerging markets, family conglomerates
can make valuable venture partners.
The lack of confidence among foreign investors with regard to Russia stems from the
nation’s unstable political conditions and its favoritism toward local firms.
The managerial routines, behaviors, and mechanisms that allow a firm to function as
intended are known as ________.
A) organizational designs
B) organizational culture
C) organizational processes
D) organizational structure
Which of the following is provided by the licensor in a licensing agreement?
A) a monetary down-payment plus royalties for all products sold locally
B) a combination of intellectual property and technical information and assistance
C) a storefront or facility and the necessary materials to make the product
D) a combination of a lump-sum payment and the intellectual know-how
In a short essay, discuss the impact of globalization on Africa.
Graham Technologies is a U.K.-based consumer electronics manufacturer. The
company markets netbooks, smartphones, laptops, and desktops in the international
market and each product division operates as a stand-alone profit center with substantial
autonomy. This is an example of a ________.
A) global matrix structure
B) functional structure
C) product structure
D) geographic area structure
Acme Software (Scenario)
Acme Software is a U.S.-based maker of software products for the health care industry.
Recently Acme has been investigating whether it would be beneficial to internationalize
some of its value-chain activities. Acme hires a consulting group to help determine
which, if any, value-chain activities could be conducted abroad to promote business
growth. The consulting group identifies two health care software development
companies in India that could provide programming services at a lower cost than
Acme’s current expenditures for programming. In addition, the consultants conduct
international market research which shows that German health care companies have a
strong demand for the type of software that Acme offers.
Which of the following would be most important for Acme to determine before
outsourcing its programming services to India?
A) What benefits have Indian companies gained historically from internationalizing
their value-chain activities?
B) Do Indian businesses outsource value-chain activities to Europe?
C) Would the lower cost of outsourcing allow Acme to sustain a competitive advantage
in its business operations?
D) Is either of the Indian health care companies interested in moving their operations
abroad?
Each of the following has contributed to the rapid growth of trade among nations
EXCEPT ________.
A) the growth of emerging market countries
B) the increase in trade barriers
C) advances in information technology
D) the liberalization of markets
Which of the following is a driver of globalization?
A) greater emphasis on proactive internationalization
B) internationalization of firm’s value chain
C) integration of world financial markets
D) globalization of services
According to Michael Porter, a nation’s factor endowments help determine its
________.
A) national competitive advantage
B) demand conditions
C) negative balance of trade
D) comparative advantage
What has been the impact of social democracy on international business relations in
some European countries?
A) Regulations have forced foreign firms to invest elsewhere.
B) Politically conscious foreign firms have begun investing in socialist nations.
C) Low income tax rates have encouraged an influx of FDI.
D) Political stability has decreased the country risk of socialist nations.
Which of the following is an example of a developing economy?
A) Australia
B) Bangladesh
C) France
D) Brazil
In the Emerging Market Potential Indicators index, households with Internet access per
100 inhabitants are an indicator of ________.
A) market intensity
B) commercial infrastructure
C) country risk
D) market consumption capacity
Which of the following has occurred as a result of NAFTA?
A) workers at maquiladoras have instigated union strikes
B) Mexico’s per-capita income has risen substantially
C) Canadian exports to Europe and Asia have doubled
D) foreign investors have been replaced by U.S. firms
Which of the following is true with regard to firm strategy in international labor
relations?
A) Cross-border linkages give rise to complex interactions among differing national
labor systems.
B) Since unions have little influence on the cost of labor, managing labor relations on a
global scale is often inessential.
C) Labor relations are more or less consistent around the world.
D) Delegating the management of labor relations to their foreign subsidiaries helps
MNEs eliminate risks stemming from labor disputes.
Which of the following is the LEAST adversarial method of resolving a contractual
dispute?
A) trial
B) arbitration
C) litigation
D) conciliation
Economic Development Workshop (Scenario)
Members of 50 different countries attended a workshop on economic development
hosted by an international organization based in Geneva, Switzerland. Attendees of the
workshop learned about techniques designed to assist countries in expanding their
degree of economic development.
The workshop participants are divided into groups of three. For learning purposes, each
group must be made up of individuals from countries with a similar degree of economic
development. Which of the following might be grouped together?
A) Representatives from Bangladesh, Nicaragua, and Zaire
B) Representatives from Germany, China, and Sudan
C) Representatives from the U.S., China, and Belarus
D) Representatives from Sudan, Spain, and France
International Management Qualifications (Scenario)
Core Computer Corporation (CCC) recently opened a customer service facility in New
Delhi, India. Managers of the Texas-based firm have been displeased with the local
manager hired to run the New Delhi facility because of a variety of problems that took
place. CCC managers believe that a representative from the headquarters should
manage the Indian facility for one year in order to train personnel and to improve the
quality of customer service. Two CCC executives have expressed a desire to work and
live in India: Craig Springer and Devon Parks. The CCC human resources department is
comparing the qualifications and characteristics of the two men in order to determine
which candidate would be the most successful in India.
Which of the following would be the most important for human resources managers to
determine before deciding who should manage the New Delhi facility?
A) Which candidate possesses the ability to be a flexible and sensitive leader with
superior cross-cultural knowledge?
B) Which candidate best understands CCC corporate culture in Texas?
C) Which candidate is the most knowledgeable about CCC’s products?
D) Which candidate has mentored the most CCC interns and new employees over the
past three years?
________ is an explanation of the process by which firms acquire and retain one or
more value-chain activities inside the firm, minimizing the disadvantages of dealing
with external partners and allowing for greater control over foreign operations.
A) Internalization theory
B) Monopolistic advantage theory
C) Absolute advantage theory
D) Dunning’s eclectic paradigm
International Business Class (Scenario)
Students in Professor Manning’s international business class have been assigned the
task of explaining the different types of FDI. Professor Manning formed groups among
students. The groups are to research their assigned topic and present their information to
the class using examples of real-world firms for illustration. Jessica Hanson is the
leader of Group A; Manu Patel is the leader of Group B; and Mario Witherspoon is the
leader of Group C.
During his presentation, Manu describes how a large U.S. retailer entered the Mexican
market by purchasing the stores and assets of a Mexican retailer. Which of the
following topics was most likely assigned to Group B?
A) merger
B) turnkey operation
C) acquisition
D) collaborative venture
Which of the following is true with regard to culture?
A) It captures how the members of the society live.
B) It is absolute.
C) It does not define the collective behavior of each society.
D) It is inherited.
Members of ________ benefitted the most from the maquiladora program.
A) NAFTA
B) EFTA
C) EU
D) MERCOSUR
Which of the following is a benefit of internalizing foreign-based value-chain
activities?
A) The MNE maintains a monopolistic presence in foreign countries.
B) The MNE eliminates employee turnover.
C) The MNE oversees control of foreign operations and ensures product quality.
D) The MNE learns new manufacturing methods from foreign partners.
Which of the following is true about language?
A) Language does not entail facial expressions and gestures.
B) National languages, dialects, and translation facilitate straightforward
communication.
C) Language has both verbal and nonverbal characteristics.
D) Business jargons are common across cultures.
Blocking imports ________.
A) increases the availability of raw materials
B) increases the availability of products sold in the home market
C) reduces the availability of products sold in the home market
D) decreases the cost of products sold in the home market
The United States restricts foreign investments that might affect ________.
A) immigration reforms
B) labor negotiations
C) national security
D) manufacturing technologies
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was
created by the ________.
A) IMF
B) United Nations
C) WTO
D) World Bank
Cross-licensing often occurs in the semiconductor and chemical industries in order to
________.
A) divide the costs of production and marketing between competing firms
B) avoid research duplication and building on each other’s innovations
C) protect the inventions and designs of small firms from large MNEs
D) decrease the likelihood of industrial spying and theft among firms
Which of the following terms refers to the type of currency used only for domestic
business transactions?
A) hard currency
B) convertible currency
C) nonconvertible currency
D) alternative currency
Manufacturers of branded products are concerned about gray market activity because it
can lead to ________.
A) a tarnished brand image
B) empowerment of distributors
C) lower quality outputs
D) decreased productivity
Which of the following offsets some of the benefits of paying low wages abroad?
A) high productivity
B) flat organizational structures
C) cost of training
D) expatriate assignment failure
Income repatriation laws affect MNEs that earn profits in foreign countries by
________.
A) enforcing strict stipulations on cross-border transactions and joint ventures
B) limiting the amount of net income or dividends that can be transferred to the
home-country headquarters
C) restricting the amount of earned income being re-invested in the foreign facility
D) imposing restrictions on the distribution of products from the foreign facility