Historically, approximately two-thirds of the value of corporate investments made in the
United States from abroad has been spent to acquire going companies rather than to
establish new ones.
Currencies float because they are allowed to make their own adjustments in the
marketplace.
In POB accounting, a deficit in the current account is always accompanied by a surplus
in the capital account.
A broad statement that defines the organization’s scope is the mission statement.
CFR (cost and freight, foreign port) is similar to CIF except that the buyer purchases
the insurance because it can obtain it at lower cost or because its government, to save
foreign exchange, insists that it use a local insurance company.
Business makes few costly mistakes in product introductions into foreign markets.
Generally, industrial products require greater adaptation than consumer products to
meet the demands of the world market.
Mistakes in selecting foreign distributors and sales representatives are not an issue new
exporters face.
There are four main types of FX risk: transaction, translation, economic, and arbitrage
exposure.
In high-context cultures, people tend to form long-lasting relationships that endure over
time.
Saudi Arabia and Canada have the largest proven oil reserves.
Intellectual property includes patents and trademarks but not copyrights.
Trade barriers create costs that are paid by the government erecting the barrier.
Licensing refers to a contractual agreement in which the licensor grants access to its
patents, trade secrets, or technology for a fee paid by the licensee.
Voluntary export restraints are imposed by the importing nation to avoid violating WTO
rules.
When we use cultural frameworks to build our understanding of another culture, we use
our own culture as an implicit reference point.
When a business pays in dollars for an import from Turkey, the dollars that leave the
United States will eventually show up as a credit on the U.S. capital account.
There are more global leaders than there is demand for them.
De Gaulle pushed Nixon to close the gold window at the Treasury, and this one action
moved the IMF toward a floating exchange rate system.
Monetary policies control the collecting and spending of money by governments.
Marketing managers of global firms who may want to use a single worldwide strategy
realize that doing so is often impossible.
Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules,
and cash flow projections are all part of the export marketing plan.
College students may make good interviewers for firms doing market research in
foreign countries.
With convergence of accounting standards, accounting statements will still need to be
adjusted to be directly comparable due to varying legal requirements.
Contingency-fee cases are limited to the United States.
Subsidiary management morale is one element in determining where decisions would
be made.
For purchases of capital goods such as manufacturing equipment, many U.S. buying
organizations now use “business-cycle costing” to analyze purchasing decisions.
Hybrid organizations are often the result of a regionally organized company having
introduced a new and different product from what the regionally organized form is
accustomed to handling.
Some think that renewed focus on exchange rates would be a good path forward for the
IMF, which is struggling with core issues related to its purpose.
Your neighbor’s business is cutting down an acre of first-growth, virgin forest and
planting a lawn and garden beds at its HQ. You are likely to be in an Anglo culture,
where domination of nature seems normal.
Employees hired in the host country are sometimes called flexpatriates.
Businesses favor unstable governments because they present more profit opportunities.
A reason that outsourcing has become an increasingly common option for companies is:
A. it helps companies to focus scarce resources on their core competencies.
B. it avoids problems of different languages or cultures.
C. it enhances flexibility.
D. two of the above.
E. all of A, B, and C.
In his book Cannibals with Forks, John Elkington puts forward the argument that:
A. capitalism can become civilized.
B. capitalism is not, by its very nature, uncivilized and destructive of natural resources.
C. natural resources are a God-given gift for mankind to use.
D. developing nations will become more competitive with Western nations.
Transaction exposure occurs when:
A. the value of the currency changes between when the asset or liability is recorded and
when results are consolidated.
B. the firm has transactions in a foreign currency.
C. the firm’s strategic projections use a currency value that has changed.
D. the recorded value of an asset or liability changes between its being reported and its
consolidation.
The segment approach to investigating markets requires that markets should be which
of the following?
A. Definable
B. Focused
C. Profitable
D. All of the above
E. Two of A, B, and C
Both the ISO and the IEC promote:
A. harmonization in international accountancy.
B. standardization in technology-related fields through specifications.
C. union membership in fields that are technology-intensive.
D. shared bankruptcy standards across the globe.
E. none of the above.
The Foreign Corrupt Practices Act has:
A. carried the discussion of transparency and corruption out into the open.
B. impaired American competitiveness abroad.
C. jailed legions of corrupt foreign executives in the United States.
D. introduced clear, concise terminology into the discussion of corruption.
E. been based on the United Kingdom Bribery Act.
Coal pollutes heavily:
A. so its use has declined markedly in the past 15 years.
B. yet its consumption has increased and is projected to continue on this trend,
especially in China and India.
C. and contributes to greenhouse gas emissions, especially in China, India, and the
United States.
D. B and C.
Although there are many forms of strategic alliances or competitive alliances, the
alliances are often between:
A. customers.
B. competitors.
C. suppliers.
D. all of the above.
E. two of A, B, and C.
The U.S. antitrust law contains both civil and criminal penalties:
A. neither of which can be applied outside the United States.
B. and the criminal penalties apply to foreign companies even if the conspiracy took
place outside the United States.
C. but their application to foreign companies is limited to actions that have taken place
within the United States.
D. and they can be administered by foreign courts.
E. and they are enforced through the United Nations
Hofstede’s masculinity-femininity dimension suggests that, as an international manager,
you might well:
A. avoid feminine cultures because their production levels will lag.
B. avoid very masculine cultures because they violate EEOC standards.
C. find men and women equally ready to assume leadership roles in a feminine culture.
D. find women too competitive in a feminine culture.
U.S. antitrust law is applied:
A. to all firms based in the United States, but not others.
B. to all firms, including extraterritorially.
C. only to U.S. owned firms with assets in the United States.
D. to all firms, as long as they have assets in the United States.
E. all of the above.
Compared to equity financing, debt financing is thought to be:
A. less expensive, because interest on the debt is usually tax deductible.
B. more expensive, because interest rates are beyond the control of the company.
C. more expensive, because debt markets are professionally run and mostly
institutional.
D. less expensive, because the debt is usually aggregated.
A structure organized by more than one dimension at the top level is known as a:
A. hybrid organization.
B. matrix organization.
C. matrix overlay.
D. network corporation.
E. virtual corporation.
According to the text, which of the following is true regarding “corporate
anthropology”?
A. It involves extensive use of historical data on cultures.
B. It involves extensive use of surveys.
C. It involves watching consumers use products.
D. All of the above.
E. B and C.
The Treaty of Rome, signed in 1957, established a common market for coal and steel
for:
A. West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
B. England, Ireland, Northern Ireland, Scotland, Wales, and France.
C. Finland, Sweden, Norway, West Germany, Denmark, and Switzerland.
D. Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.
Between 1980 and 2010, the level of merchandise exports from Africa:
A. doubled as a proportion of overall world merchandise exports.
B. increased by 250 percent.
C. declined by half.
D. grew more rapidly as a proportion of world merchandise exports than did the
European Union.
E. two of the above.
One difference between the U.S. and EU approaches to antitrust law is that:
A. the United States follows the per se concept, wherein actions are illegal whether they
have done harm.
B. the EU forbids market dominance by cartels, no matter the conditions, whereas the
United States does not.
C. the U.S. focus is on impact on competition, whereas the EU focus is on the
consumer.
D. the EU avoids competition, whereas the United States seeks it.
E. the EU emphasizes the prevention of price fixing, while the United States does not.
International firms have found it necessary to institute formal global planning:
A. all of B, C, and D.
B. to eliminate the practice of informal planning.
C. to provide top management with a means to identify threats and opportunities
worldwide.
D. to provide consistency of action among the firm’s managers.
E. two of B, C, and D.
All the reasons for making decisions at IC headquarters, at subsidiary headquarters, or
cooperatively:
A. do not apply in joint venture situations.
B. apply equally in joint venture situations.
C. apply only to a corporate entity between two or more companies that are foreign to
the area where the joint venture is located.
D. apply only to a corporate entity between an IC and local owners.
The main purpose of the OECD is to:
A. provide economic research and a discussion forum.
B. function as a developed-nation cartel.
C. limit growth in developing economies.
D. support trading patterns within the group of developed nations.
According to the text, the firm’s ultimate manager of strategic planning is the:
A. vice president for planning.
B. chief operating officer.
C. firm’s chief executive officer.
D. director of the strategic planning department.
E. none of the above.
A value-added tax is actually a sales tax that is:
A. paid by the firm rather than the consumer.
B. paid in stages along the process from raw materials to consumer and then credited
after final sale.
C. called value added to create a positive spin on taxation.
D. voluntarily paid on exports.
Topography, including mountains, deserts, plains, and bodies of water, greatly
influences:
A. political relationships.
B. the physical distribution of products and services.
C. the local approach to education and health services.
D. local attitudes toward industrially developed economies.
The largest international reserve accounts are held by:
A. Hong Kong and Singapore.
B. the United States, Mexico, and Canada (NAFTA).
C. the EU.
D. China and Japan.
If the Japanese yen is strengthening against the U.S. dollar, and the Japanese
government wanted to boost exports, the central bank of Japan might well:
A. sell U.S. dollars in large amounts in the currency markets.
B. buy massive amounts of Japanese yen in the FX markets.
C. sell massive amounts of Japanese yen in the FX markets.
D. buy massive amounts of other hard currencies, such as the British pound sterling and
the euro, to deflect the focus on dollars.
Among the external businesses that conduct country risk assessment are:
A. the Economist Intelligence Unit, Euromoney, the Harvard Business Review
B. Moody’s, Standard and Poor’s, STRATFOR
C. The New York Times, Wilson Quarterly, Forum
D. two of the above.
E. all of A, B, and C.
(p.139)-Renewable energy sources:
A. will replace fossil fuels, due to price, depletion, or carbon emissions.
B. are growing at greater rates than the nonrenewables in the United States and Europe.
C. A and B.
D. are all available everywhere.
Bills of lading are of two types:
A. invalidated and validated
B. endorsed and unendorsed
C. to order and straight
D. confirmed and unconfirmed
E. documented and undocumented
Once convergence is reached:
A. financial markets will be more integrated than they are now.
B. direct comparisons of company statements will be possible.
C. A and B.
D. Western-style capitalism will be at its apex.
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.
The primary dimensions that need to be considered when designing the structure of an
international company are:
A. product and technical expertise, geographic expertise, and functional expertise.
B. product and technical expertise, customer expertise, and functional expertise.
C. geographic expertise, functional expertise, and customer expertise.
D. all of the above
E. two of A, B, and C.
Of the skills required for global leaders, there is:
A. a broad array of competencies.
B. a solid understanding that rests on domestic leadership theory.
C. no understanding of what is needed.
D. limited understanding of the global leader’s activities.
E. wide consensus on what is needed.
In a free trade area, members drop internal tariffs. External tariffs:
A. are dropped also.
B. are coordinated so that there is one agreed-upon set of external tariffs.
C. are maintained independently by each member.
D. do not apply to an FTA.
What are the options for global electronic procurement, and what are the benefits of
such systems?
“There is no difference between management and leadership.
Identify and briefly describe the six most commonly used promotional strategies.
What is contract manufacturing, and what are the ways in which international firms
employ contract manufacturing?
This chapter discusses building a corporate global mindset. What can you do to build an
individual global mindset?
Discuss the theory of absolute advantage and how it explains the basis for trade
between nations.
Why is the international marketing manager’s task complex?
What is supply chain management, and why is it an important issue for a company’s
international competitiveness?
Discuss how culture might impact accounting.
One of the first issues the chapter addresses is the rule of law.
Briefly review the appeal of the gold standard, and comment on why it is not presently
in use.
How are antitrust laws enforced?
Discuss the advantages in focusing attention on a nation that is already a sizable
purchaser of goods coming from the exporter’s home country.
How might inflation influence the firm in its foreign markets?
Describe the global product form, explain why a company might adopt this form, and
identify the disadvantages of this structure.
Why do industrial products or services generally require less modification for
international sales than do consumer products?
Discuss Hall’s high- and low-context framework, and suggest how it might be useful in
an international business situation.
Discuss how new directions in the strategic planning process differ from the old
process.
Answers may vary but may include the following: Strategic planning, particularly in the
more traditional, bureaucratic form that is still practiced in some corporations, has been
described as a calendar-driven ritual, not an exploration of the company’s potential. This
traditional strategic planning approach commonly consists of a company’s CEO and the
head of planning getting together to devise a corporate plan, which would then be
handed to the operating people for execution. Too frequently, companies’ annual
strategic planning processes have become ritualistic and devoid of discovery, with
planners working from today forward, not from the future backward, implicitly
assuming, whatever the evidence to the contrary, that the future will be more or less like
the present. Tending to generate projections based on historical conditions and
performance, this traditional planning approach tends to fall victim to collective—and
frequently outdated—mind-sets about the competitive environment. Not surprisingly,
the resulting strategic planning documents often fail to be implemented successfully.
Increasingly, the old process is being replaced by a strategic management approach,
which combines strategic thinking, strategic planning, and strategic implementation and
which is increasingly recognized as a fundamental task of line management rather than
merely specialized planners in staff positions. Although still susceptible to problems
such as groupthink, this more contemporary approach attempts to incorporate changes
in three areas: (1) who does the planning, (2) how it is done, and (3) the contents of the
plan.
Who Does Strategic Planning?
