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

MGT 12385

February 28, 2019
The same general criteria for selecting home-country employees apply to host-country
Multiplicity and interdependence are among the four dimensions of complexity
identified by scholars.
FASB 52 requires that companies record foreign currency-based transactions at the spot
rate at the time of the transaction.
Assessing global leadership skills is a well-understood, basic process.
Kidnap, ransom, and extortion are techniques often used by terrorists against which no
insurance is available.
The Global Leadership Triad includes skills in business, relationships, and personal
Public relations includes the various methods of communicating with the firm's publics,
including the governments where it operates, in order to secure a favorable impression.
Indirect procurement includes such items as maintenance, repair, raw materials and
components, office equipment, and other services and supplies.
The standardization of processes and machinery provides a reasonable guarantee that
parts manufactured in the firm's various plants will be interchangeable.
Nontariff barriers that are not quantitative can be divided into two groups, those that are
established by the government participation in trade and those that are administrative.
The GLED model is used to develop management skills.
A global mindset is built on a thorough knowledge of geography.
Public international law refers to legal relations between governments and publicly
held companies.
Mountains tend to impede trade, whereas flat areas tend to facilitate trade relationships.
The complexity of the gold standard was a part of its appeal.
Free trade zones are areas designated by the government of a country for duty-free
entry of any nonprohibited good.
Generally, it is easier for international firms to standardize the concepts of total quality
management and synchronous manufacturing in their foreign plants than it is to
standardize the actual production facilities.
According to Heenan and Perlmutter, the nationality of a company determines whether
the organization's approach to international human resource management should be
ethnocentric, polycentric, regiocentric, or geocentric.
Drastic modifications in the physical product may be necessary because of two
problems prevalent in the developing countries: a tendency to overload equipment and
to slight maintenance.
A candidate's fluency in the host country's language is a strong indicator of his or her
ability to effectively adjust within the host country.
The initial choice of organizational structure after discarding the international division
is usually a hybrid based on product and market factors.
International companies need a new kind of leader for the international environment
due to increased complexity.
The following is an area in which the UN plays a significant role for international
business: loaning seed money for entrepreneurial start-ups in developed nations.
Procedures are broad guidelines issued by upper management for the purpose of
assisting lower-level managers in handling nonrecurring problems.
The EU uses the CE mark to certify health and safety.
In a customs union, common external tariffs are added to an existing FTA, as found in
the Southern African Customs Union and Mercosur.
Dissimilar cultural patterns generally necessitate changes in marketing of food and
other consumer goods.
Supporters of globalization generally argue that it is the best strategy for advancing the
world's economic development.
Triple-bottom-line accounting is built on the assumption that capitalism can become
The overall goal of cash flow management is to reduce risk and position the firm so that
it can benefit from opportunities.
As international companies increasingly take the geocentric view, we can be certain to
see less use of third-country nationals.
Country and region are units of analysis for market screening.
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.
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
D. less expensive, because the debt is usually aggregated.
Problems associated with e-procurement include:
A. it cannot be isolated from the company's overall business system.
B. it must be completed before the firm can engage in other purchasing functions, such
as supplier determination and analysis.
C. it can expose the company to a wide range of potential security issues.
D. all of the above.
Usually, it is reasonable to assume that foreign law:
A. will be similar to U.S. law.
B. will differ from U.S. law and must be understood.
C. won't matter because you and your trading partner will agree to arbitrate.
D. will be biased against the foreigner.
E. will vary but that U.S. law will take precedence.
All forms of communication between a firm and its publics are:
A. advertising.
B. promotion.
C. limited by government regulations.
D. an accepted part of doing business in emerging markets.
E. two of the above.
Discussion of bribery and transparency has generally not come into despite the Foreign
Corrupt Practices Act (FCPA), the OECD convention, and the UN initiative.
The route to global leadership:
A. is well established on the MBA foundation.
B. has many options, depending on context.
C. involves recognizing the traits early because global leaders have skills they were
born with.
D. is dependent on early career success in accounting or auditing and knowledge of
foreign languages.
E. A and D.
The rapid expansion of world exports since 1980 demonstrates that:
A. businesspeople must be prepared to meet increased competition.
B. domestic business cannot compete with cheap imports.
C. the opportunity to increase sales by exporting is a viable growth strategy.
D. all of the above.
A term Hofstede uses to describe long-term orientation is:
A. Herculian commitment.
B. Confucian dynamism.
C. big-picture focus.
D. strategic commitment.
Control activities:
A. are the efforts to develop strategic plans for an organization.
B. are needed more by domestic companies than international companies.
C. should be linked to evaluation and reward systems.
D. none of the above.
Honda's "You meet the nicest people on a Honda" campaign appealed to Americans
who used their motorcycles as pleasure vehicles, but in Brazil Honda stressed the use of
the same motorcycles as basic transportation. This is an example of which promotional
A. Same product-same message
B. Product adaptation-same message
C. Product adaptation-message adaptation
D. Different product for the same use-different message
E. None of the above
The trend in diverse global teams is to:
A. treat everyone the same.
B. suppress differences and focus on commonalities.
C. focus on differences and suppress commonalities.
D. treat everyone as a unique individual.
E. avoid discussing politics, sex, and religion.
In examining the volume of international trade:
A. the proportion of manufacturing value added generated by South and East Asia has
quadrupled since 1980.
B. the proportion of manufacturing value added generated by Latin America has
doubled since 1980.
C. the proportion of world exports and imports accounted for by the 10 largest
exporting and importing nations exceeded 70 percent in 2010.
D. all of the above.
Standardization of law:
A. would challenge international business because IB would lose protection.
B. would make IB work more smoothly because uniform, predictable laws would result.
C. has been progressing in some areas, such as taxation, but there is a long road
D. two of the above.
Transfer pricing may serve as a vehicle for:
A. moving blocked goods from one country to another.
B. moving profits and blocked royalties from high-tax to low-tax subsidiaries.
C. manager motivation.
D. A, B, and C.
The level of services exports in 2010, worldwide, was:
A. $3.7 trillion.
B. $8.5 trillion.
C. $15.2 trillion.
D. $18.9 trillion.
E. $23.4 trillion.
The planning method that is becoming more popular is:
A. top down.
B. bottom up.
C. sequential.
D. a combination of top down and bottom up.
E. centralized planning.
Exposure netting is a transaction exposure hedging technique that is similar to:
A. leading and lagging.
B. a forward market contract.
C. multilateral netting.
D. a spot currency contract.
The EU applies its competition policy:
A. extraterritorially.
B. only within the EU.
C. within the EU and applicant states.
D. within the EU and other European nations.
E. none of the above.
For expatriate employees, the salary portion of the compensation package is:
A. usually higher than that for employees at the same level in the home company.
B. usually lower than that for employees at the same level in the home company.
C. usually within the range of that for the employees at the same level in the home
D. usually on a separate, expatriate schedule.
How many countries in the EU use the euro as their currency?
A. 17
B. 23
C. 15
D. 7
According to the text, political drivers of globalization include:
A. preferential trading agreements.
B. reduction of barriers to trade and foreign investment.
C. nationalization of much of the industry in formerly communist nations.
D. all of the above.
(p. 226)-Which of the following are reasons that many firms engage in exporting?
A. Exports can allow the firm to serve markets where it has no or limited production
B. Exports can offset cyclical sales in the firm's domestic market.
C. Exports can test foreign markets and foreign competition inexpensively.
D. All of the above.
Reengineering is:
A. the redesign of the company's products to improve the quality.
B. the significant reduction of middle management.
C. the empowerment of employees.
D. two of the above.
In their measurement and disclosure for accounting systems, less developed countries
tend toward:
A. transparency and conservatism.
B. transparency and optimism.
C. secrecy and optimism.
D. secrecy and conservatism.
Barriers to trade:
A. are a political issue but affect the cost of imports only marginally.
B. cost consumers billions of dollars per year.
C. save jobs in unprotected industries at $231,289 per job per year.
D. none of the above.
The worldwide stock of outward FDI is estimated to have increased _______ between
1990 and 2010.
A. 3-fold
B. 5-fold
C. 9-fold
D. 12-fold
E. 17-fold
ISO 9000:
A. is the most used standard for quality in the United States.
B. is a set of five universal standards for a quality assurance system agreed to by the
C. ensures product quality.
D. all of A, B, and C.
E. two of A, B, and C.
Countries put limitations on the convertibility of their currency when they are
concerned that:
A. there is too much domestic spending.
B. foreigners will hold control of their monetary policy.
C. their foreign reserves could be depleted.
D. there is not enough domestic spending.
The international Fisher effect says that the interest rate differentials in any two
currencies reflect:
A. the ratio of their inflation rates minus COL
B. arbitrary differences in the two economies.
C. PPP differences in the two economies.
D. the expected change in their exchange rates.
The extent to which members of a society expect and accept that power is to be
distributed unequally is termed by Hofstede as:
A. uncertainty avoidance.
B. feminist.
C. power distance.
D. nondemocratic.
If people belong to strong, cohesive in-groups that look after them in exchange for
loyalty, the culture is likely to be:
A. low context.
B. collectivist.
C. economically underdeveloped.
D. democratic.
Why is the closer integration of functions important for new product development?
What challenges often confront the spouses of expatriates, and what options are
available for managing these challenges?
Given what you have read about institutional theory, comment on the quote from
William Inge, former dean of St.
Please provide an overview of the major issues a compensation package for expatriates
should address.
Describe the global product form, explain why a company might adopt this form, and
identify the disadvantages of this structure.
Why might international marketing managers wish to standardize the marketing mix?
Discuss the keystone of international trade, the theory of comparative advantage.
How does the notion of sustainable business compare to Milton Friedman's assertion
that the focus of business should be only on the bottom line?
Why have more companies, at home and abroad, begun to obtain licenses instead of
making illegal copies?
Discuss cluster analysis as a method of estimating market demand.
Briefly review the appeal of the gold standard, and comment on why it is not presently
in use.
How could an IC benefit from leading and lagging?
Discuss the observation made recently by an undergraduate philosophy major that "the
major international institutions are concerned with keeping the rich countries rich, at the
expense of the poorer ones.
Discuss the use of market indicators.
Under what circumstances is a follower likely to succeed when entering into
international markets?
What are the options for global electronic procurement, and what are the benefits of
such systems?
Compare and contrast home replication, global, multidomestic, and transnational
With global leadership, global teams, and global change, the global context adds
substantial complexity to the activity.
Discuss barriers to trade, using examples to illustrate your points.
How do U.S. nonexporting firms often explain their avoidance of foreign markets?