Which of the following best characterizes the functions of the World Bank?
A) monitor interest rates in emerging economies
B) provide loans and technical assistance to developing countries
C) offer financial assistance to small businesses
D) initiate trading for impoverished nations
Which of the following exemplifies local content requirements?
A) Titania charges a 27 percent tariff on imported dairy products.
B) At least 40 percent of the value of all computers assembled in Titania must be from
parts or other inputs produced in Titania.
C) Titania bans imports of firearms.
D) Titania imposes extensive inspections and bureaucratic procedures on the import of
alcoholic beverages.
Which of the following refers to a key strategy used by corporations to combat
international price escalation?
A) lengthen the distribution channel
B) ship assembled products to save additional labor costs
C) redesign the product to remove costly features
D) centralize production and sourcing to a single location
________ refers to the sequence of value-adding activities performed by the firm in the
course of developing, producing, marketing, and servicing a product.
A) A value chain
B) A supply chain
C) Value gap
D) Value migration
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.
Firms often internationalize proactively, in order to pursue new markets, find lower-cost
inputs, or obtain other advantages.
Common and Civil Law (Scenario)
Zane Computer Corporation is considering the possibility of building a new
manufacturing facility in a foreign country in order to lower labor and production costs.
The legal department of Zane has raised some issues regarding two countries that are
the top contenders for the new facility. The legal system of Country A is based on civil
law, while the legal system of Country B is based on common law. Other than the legal
systems of the two countries, all other aspects are virtually identical. Zane’s legal
experts must determine which system would be the most beneficial to Zane in the
long-term.
Which of the following statements supports Country B over Country A?
A) Rules and principles form the starting point for legal reasoning and administering
justice.
B) The flexibility of common law allows for judicial interpretation in unique cases.
C) Common law nations administer justice based on a structured set of rules.
D) Laws are primarily legislative in origin and based on laws passed by national and
local legislatures.
Advances in communications and transportation technology have changed the
internationalization tendencies of firms by ________.
A) establishing a cultural presence in a foreign market prior to establishing a facility
B) providing accessible information about a product to customers but at a significantly
higher cost
C) focusing primarily on the need for local intermediaries to sell products in foreign
markets
D) reducing the risk and difficulty of doing business in markets with unfamiliar cultures
Emerging markets are ________.
A) developing economies where goods and services are directly exchanged for other
goods and services
B) post-industrial countries characterized by high per-capita income, highly competitive
industries, and well-developed commercial infrastructure
C) low-income countries characterized by limited industrialization and stagnant
economies
D) former developing economies that have achieved substantial industrialization,
modernization, and rapid economic growth since the 1980s
What is the primary ethical concern regarding the import of products from poor
countries?
A) Higher tariffs hurt poor nations more than developed nations.
B) Nations lacking economic freedom cannot afford to export.
C) Emerging nations use government intervention to protect domestic industries.
D) Lack of subsidies adversely affect poor countries.
Japanese Supercenter (Scenario)
The Tag-Mart chain of discount superstores is nearing completion of its new
supercenter in Tokyo. The Tokyo store is the first foreign store for the large U.S.-based
company. Tag-Mart offers a large variety of products at virtually unbeatable prices. A
group of Tag-Mart representatives has traveled to Tokyo to inspect the new store and
hire a store manager. The top two contenders for the position are Hisako Aoki and
Takematsu Sato. Aoki has 25 years of experience managing a local department store
renowned for its customer service. Sato, born and raised in Japan, earned a college
degree in the U.S. before working six years as a manager at a Texas Tag-Mart.
Which of the following best supports the selection of Sato over Aoki?
A) Sato is familiar with both Tag-Mart operations as well as the local customs in Japan.
B) Sato is no more skilled in employee training techniques than Aoki.
C) Sato is clearly more relationship-oriented than Aoki.
D) Sato is likely to discourage homogenization of cultures.
Which of the following is an example of a currency risk?
A) purchasing products from a nation with appreciating currency
B) purchasing products from a country with depreciating currency
C) selling products to a country with appreciating currency
D) selling products to a nation that has the same currency value as the exporter’s
Wonder Cat Licensing (Scenario)
Wonder Cat is a popular, new cartoon series created by the U.S-based All Cartoon
Channel (ACC). Currently, the only Wonder Cat item available for sale are shirts that
are sold exclusively through the ACC Web site. The cartoon series is a big hit in China,
and as a result ACC has been approached by a Chinese firm about a licensing
agreement. ACC executives are considering the pros and cons of such an agreement
before making any final decisions.
Which of the following most likely supports an ACC decision to not enter a licensing
agreement with the Chinese firm?
A) ACC does not want to invest capital for FDI in the Chinese market.
B) ACC desires a low-risk, low-cost strategy to internationalize the Wonder Cat
character.
C) The Chinese market restricts ownership of local operations by foreign firms.
D) ACC wants to maintain firm control of how the Wonder Cat character is used.
In a deal-oriented culture, managers ________.
A) focus on the task at hand and prefer getting down to business
B) hold rigid attitudes, usually unfavorable and usually aimed at particular groups of
people
C) emphasize affiliations with people
D) seek to build trust and rapport and get to know the other party in business
interactions
________ refers to the employee’s ability to adopt verbal and nonverbal behaviors
appropriate in different cultures.
A) Behavioral biases
B) Parochialism
C) Behavioral flexibility
D) Ethnocentrism
________ means meeting humanity’s needs without harming the ability of future
generations to meet their needs.
A) Sustainability
B) Corporate social responsibility
C) Ethical behavior
D) Casuistry
High power-distance countries are characterized by ________.
A) organizations that grant a high degree of autonomy to lower-level employees
B) a strong desire to minimize gaps between the powerful and the weak
C) a relative indifference toward social inequalities
D) a relative equality in terms of income and power
________ represents the apex of the pyramid of ethical behavior.
A) Ethical behavior
B) Corporate social responsibility
C) Complying with laws and regulations
D) Guarding against corruption
Gray market activity is also called ________.
A) market diversification
B) target costing
C) puffery
D) parallel importation
Which of the following would NOT be considered an example of foreign direct
investment (FDI)?
A) cross-border purchase of a textile plant
B) cross-border purchase of stocks
C) purchase of capital assets of a foreign company
D) purchase of foreign land for business operations
Which of the following is true with regard to corruption?
A) Countries with minimal corruption fail to attract direct investment.
B) In firms, corruption rarely occurs across the range of value chain activities.
C) Corruption harms the poorest in societies.
D) Under the Sherman Antitrust Act, firms charged for corruption may be fined $2
million and managers can be imprisoned for up to five years.
________ refers to an employee’s ability to function effectively with those from
different cultural backgrounds or in different cultural contexts.
A) Reverse culture shock
B) Ethnocentrism
C) Cultural intelligence
D) Cultural pluralism
EZ Lawn Currency Risk (Scenario)
The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers,
blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in
Florida, but the firm outsources inputs from a number of countries, each with varying
degrees of economic stability. Given the importance of the firm’s sourcing activities, EZ
Lawn managers are discussing methods which might reduce the currency risk faced by
EZ Lawn.
Which of the following would most likely minimize the currency risk of EZ Lawn?
A) Concentrate all of the EZ Lawn outsourcing to one or two neighboring nations.
B) Re-locate a team of EZ Lawn managers overseas to stay abreast of currency
changes.
C) List EZ Lawn stock on foreign stock exchanges to offset any currency losses.
D) Assign an EZ Lawn manager the task of monitoring currency fluctuations.
Which of the following is a characteristic of a transnational strategy to
internationalization?
A) minimal pressure on headquarters staff
B) decision making is delegated to local managers
C) local responsiveness with central control
D) international business is viewed as separate from, and secondary to domestic
business
Host-Country Legal System (Scenario)
Super Sports, a large sporting goods chain based in Australia, wants to open a store in
Norway. With stores around the world, Super Sports executives realize that legal
systems vary from country to country. Having never opened a store in Norway, the
Super Sports legal team is investigating Norwegian laws to determine how they would
impact the corporation and its ability to do business in Norway.
Which of the following is the most important issue to consider when determining the
best entry strategy for Super Sports?
A) What are the regulations regarding income repatriation?
B) What type of promotion and advertising is prohibited?
C) What are the restrictions on inward foreign direct investment?
D) Is the recycling of product packaging mandatory?
Which of the following questions needs to be addressed by managers to determine the
organizational readiness to internationalize?
A) What is the basis of the firm’s competitive advantage?
B) Where do people purchase the product or service?
C) Who initiates purchasing?
D) What economic, cultural, geographic, and other factors in the target market may
limit sales?
Sid Maxwell (Scenario)
Sid Maxwell is the head of legal affairs at Hudson Inc., an American toy manufacturer.
Hudson’s signature toy, the Witty Parakeet, includes an embedded software program
that allows the bird to interact with children. Hudson is currently planning to expand its
market in Asia but Sid is concerned about reports of software piracy in the region.
Which of the following can extend legal protection to Hudson’s proprietary software
used in its toys?
A) a trademark
B) a patent
C) a copyright
D) a users’ license
Minimizing Trade Barriers (Scenario)
National Appliance Corporation (NAC) needs to build a new manufacturing facility to
meet the increasing demand for professional-grade appliances. NAC managers are
considering building the facility in Mexico but are hesitant because of the high tariffs
involved. Another possible location for the facility is India; however, the country also
imposes high tariffs. Wherever NAC builds a plant, parts will need to be imported from
other nations.
Which of the following must NAC ensure in order to reduce exposure to trade barriers?
A) reduced production
B) strong emphasis on quality
C) accurate product classification
D) obtaining patents for inventions
The purpose of the Bretton Woods Agreement was to ________.
A) enable the U.S. Government to monetarily recover after WWII
B) control the fluctuating price of gold used for global trading
C) oversee the importing and exporting of international traders
D) govern the exchange rates of major international currencies
Which of the following is protected under copyright laws?
A) the Nike swoosh
B) the art of Jackson Pollack
C) McDonald’s clown shaped man with puffed out costume legs
D) Winnie the Pooh image
The strategic view of global sourcing suggests that ________.
A) just as firms achieve gains in efficiency, productivity, quality, and revenues by
leveraging offshore talent, they also obtain the means to turn around failing businesses,
speed up innovation, restructure operations, and fund otherwise-unaffordable
development projects
B) firms that procure supplies from foreign subsidiaries are more likely than not to lose
ground to competitors who primarily bank on their own resources
C) a strong legal environment is not the prerequisite for increasing efficiencies by
relocating strategic operations abroad
D) the firms’ innovative activities tend to make mature products obsolete over time
Focal firms typically source from external suppliers for all of the following reasons
EXCEPT ________.
A) the product or service obtained is non-core
B) the product can be purchased inexpensively
C) the supplier specializes in providing the product or service
D) the supplier offers the same product to competing firms
Rosa Suarez reported on her analysis of cross-cultural risks involved with establishing
the plant in Country C. Each of the following was most likely discussed in her report
EXCEPT ________.
A) language barriers
B) lifestyle differences
C) religious beliefs
D) the level of national debt
Which of the following is an advantage of an international division structure?
A) It leverages the benefits of global strategy while responding to local needs.
B) It allows better balance between global integration and local adaptation.
C) It requires a small resource commitment.
D) It allows concentration and development of international expertise.
The purpose of intellectual property rights is to ________.
A) prevent excessive regulation and government bureaucracy
B) grant a firm permission to use another firm’s proprietary names
C) allow inventors monopoly advantage for a specified period of time
D) allow a firm to use an entire business system in exchange for compensation