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

MGT 17959

February 28, 2019
Strategic planning processes are something that only the company's most senior
executives are involved with.
The United Kingdom Bribery Act includes penalties for corporate failure to prevent
bribery, but only if the act of bribery occurred in the United Kingdom.
A virtual corporation is also called a network organization.
Currencies float because they are allowed to make their own adjustments in the
Country risks are increasingly political in nature.
One example of nationalization of private companies is the nationalization of
French-owned firms in Europe after World War II.
There are more global leaders than there is demand for them.
While indirect production-oriented goods have been the focus of management attention
for many years, the purchasing of goods and services that are part of finished goods—
termed indirect procurement—is also critical.
Although engineers are required for the maintenance of specialized machinery, only
highly-skilled people are needed to attend the machines.
A way to open up the cultural assumptions team members have is the
map-bridge-integrate model.
Hiring personnel who are third-country nationals can be advantageous, especially in
developing countries, because they may accept lower wages and benefits than will
employees from the home country and they may come from a culture similar to that of
the host country.
Low-context cultures tend to be polychronic, with a lot going on at one time.
Employees hired in the host country are sometimes called inpatriates.
When people are kidnapped for ransom, the right response is to pay the ransom, get the
hostages released, and then retaliate.
Generally, as marketers go down the economic and social strata in each country, they
tend to find greater similarities among countries on social and cultural values.
The primary reason for international trade is a lack of natural resources in the
developed nations.
Historically, foreign direct investment has followed foreign trade, and one reason is that
foreign trade is typically less costly and less risky than making a direct investment into
foreign markets.
The use of TCNs has become particularly prevalent in the developing countries.
Hofstede describes his Confucian dynamism dimension as dealing with Virtue
regardless of Truth.
U.S. accounting practice is guided by the Securities and Exchange Commission (SEC)
and the International Accounting Standards Board (IASB), and it follows standards
known as generally accepted accounting principles (GAAP).
International trade includes exports, imports, and foreign direct investment.
Promotion is all forms of communication between a firm and its publics.
The United Nations operates with voluntary agreements, so it is essentially an informal
Nuclear power is a leading contributor to the French energy grid.
Sanctions are a trade restriction that is effective in forcing change.
The value-added tax (VAT) can be rebated to exporters, according to WTO rules.
According to the text, environmental elements over which management does have some
control—including competitive, labor, and financial forces—are called internal forces.
During the second screening, analysts are highly concerned with inflation rates,
education levels, and entry barriers.
Approximately 15 percent of expatriates leave their firms during the course of their
overseas assignment, and an additional 28 percent leave their companies within a year
of their return from abroad.
Firms may choose to issue stock in foreign markets in order to tap into a broader
investor pool.
Social desirability bias can be seen as a cultural problem when conducting market
Manufacturing rationalization is a division of production among a number of
production units, thus enabling each to produce only a limited number of components
for all of a firm's assembly plants.
Managers may consider entering a market in which strong competition already exists if
they believe entering a competitor's home market will distract the competitor's attention
from the new entrant's own home market.
In examining the volume of international trade:
A. exports of merchandise grew nearly fivefold between 1990 and 2010.
B. exports of services grew more than 10-fold between 1980 and 2010.
C. the proportion of world exports of commercial services accounted for by the United
States fell by nearly 20 percent between 1980 and 2010.
D. all of the above.
A company can engage in indirect exporting by using which of the following companies
in its own country?
A. Import merchants
B. Sales companies
C. Export commission agents
D. Overseas merchants
E. Two of the above
The process of transferring value across borders is complex because it involves:
A. currency exchange rates.
B. restrictions on the movement of funds.
C. differing tax systems.
D. A, B, and C.
Swiss exports are concentrated, high-density products that minimize the need for
importing bulky materials because:
A. mountain ranges increase transport costs into and out of Switzerland and limit local
B. the Swiss love of chocolate and watches influenced the export patterns.
C. high-density exports encounter lower tariffs.
D. B and C.
The Eonomist's Big Mac index (May 2010) suggests that against the dollar, the Chinese
yuan is:
A. trading fairly, since the Big Mac prices are similar.
B. quite undervalued, since the Chinese Big Mac is almost 50 percent less expensive
than the U.S. dollar Big Mac.
C. is overvalued, since the Big Mac sells for almost 50 percent less in Chinese currency
than in U.S. dollars.
D. trading at a historical premium.
"Comparing the total cost of ocean freight versus air freight, air freight may be
cheaper." What components are considered when making the previous statement?
A. Insurance rates
B. Packing
C. Replacement cost of damaged goods
D. Inventory cost
E. All of the above
Which of the following is correct about scenario analyses?
A. The objective of the process is to forecast the future.
B. The process extrapolates from past data to build scenarios for guiding decision
C. Managers develop best-case, worst-case, and most likely scenarios to guide decision
D. All of the above are correct.
E. None of A, B, or C is correct.
The balance part of the BOP is explained by:
A. the accounts being double-entry, so they are always balanced.
B. imbalances showing immediately.
C. actions governments take to achieve the balance.
D. none of the above.
The total product:
A. all of B, C, and D.
B. is what the customer buys.
C. includes the physical product and brand name.
D. includes the package.
In response to China's requirement to censor Internet searches:
A. two of B, C, and D.
B. Google chose not to enter that country.
C. Google refused to engage in censorship, including a disclosure on its site that no
censorship had occurred.
D. Google provided users of its Chinese site with a hot link to its uncensored U.S. site,
to circumvent censorship.
E. none of the above.
According to the text, competencies:
A. are skills or abilities required in order to achieve competitive advantage.
B. refer to the ability of a company to have higher rates of profits than its competitors.
C. create value for customers and for which customers are willing to pay.
D. two of the above.
One way to avoid transaction exposure is to:
A. issue all bonds in the home currency.
B. use home-country currency for all transactions.
C. hedge the risk by a forward money market contract.
D. A and C.
The Gold Key Service provided through many American embassies offers companies
the following:
A. orientation briefings.
B. market research.
C. introductions to potential partners.
D. assistance in developing a marketing strategy for the particular country.
E. all of the above.
Climate is probably the most important element of the physical forces, as it sets the
limits on:
A. annual rainfall, and thus water supply.
B. population growth patterns.
C. what people can do physically and economically.
D. expected FDI.
According to the text, the cost of importing a foreign-sourced product, including
freight, insurance, and packing:
A. is insignificant.
B. may range from 26 to 110 percent of the cost of the product.
C. may range from 10 to 12 percent of the cost of the product.
D. may not be charged if the terms of sale are CIF, port of entry.
E. none of the above.
Leading and lagging is a practice:
A. of timing, leading with receivables in a weakening currency and payables in
strengthening currencies.
B. a defensive marketing strategy with finance implications.
C. of interest rate manipulation, borrowing in low-rate environments and lending in
high-rate environments.
D. of leading with payables in weakening currencies and with receivables in
strengthening currencies.
Global leaders confront increased ambiguity because:
A. they find themselves unable to make decisions.
B. their environment is more difficult than that of the domestic leader.
C. much of the information they receive is difficult to give meaning to because it lacks
clarity or has unclear cause-and-effect relationships.
D. they function in a world with too much clarity.
E. A and B.
The characteristics of Hofstede's long-term orientation include:
A. social order and hierarchical relationships.
B. perseverance, pragmatism, and hierarchy.
C. the centrality of spending.
D. planning in the medium-short term.
Project GLOBE found that:
A. all cultures think of leadership in the same way.
B. leadership is individualistic to each culture, with little overlap.
C. leadership is nonexistent in some developing countries.
D. leadership tends to be stable in developed economies and unstable in developing
E. some leadership traits are shared among all cultures
Reasons for international firms to enter into foreign markets are linked to which of the
following desires?
A. Increased sales and reduced costs
B. Protecting sales and profits from being eroded by competitors
C. Creation of new markets.
D. All of the above.
According to a 12-country study conducted by Ernst & Young, _____ percent of U.S.
companies are engaged in some form of strategic alliance.
A. 25
B. 50
C. 65
D. 75
E. 90
The approach to design that promotes cross-functional participation in the design stage:
A. helps to identify many of the potential sourcing, manufacturing, and other
difficulties associated with a particular design.
B. may involve customers in the design process.
C. has been called concurrent engineering.
D. all of the above.
The WTO has made progress on trade-related intellectual property rights (TRIPS). An
example of this progress is:
A. an agreement that property rights should not take precedence over public health.
B. an agreement that copyrights are inviolate.
C. a shared recognition that private property is a basic human right.
D. an agreement that governments should hold all pharmaceutical trade secrets.
In the United States and EU, attitudes toward competition:
A. are quite similar.
B. are based on differing assumptions, with the United States following a per se concept
and the EU concerned about the existence of harm.
C. differ because the EU is anticompetitive; its Commission on Competition ensures
competition isn't too severe.
D. differ on the role of market dominance, with the United States supporting it and the
EU wanting to avoid it.
E. are both focused on prevention of price fixing.
In larger, older organizations:
A. more decisions are delegated to the subsidiary headquarters.
B. decisions are delegated to empowered, decentralized subsidiary managers.
C. more decisions are made at headquarters of the parent company.
D. all of the above.
The specific-diffuse dimension looks at:
A. work behaviors.
B. organizational loyalty.
C. attitudes toward public and private life.
D. attitudes toward paternalism.
Decisions to standardize product and equipment with which to make it and to tailor it to
fit each national market are most likely to be made by:
A. IC headquarters.
B. subsidiary headquarters.
C. LDC government officials.
D. none of the above.
Nationalization and privatization are:
A. similar trends.
B. opposing trends.
C. both risks faced by privately held firms.
D. both risks not encountered in capitalist democracies.
E. two of the above.
A nation having absolute disadvantages in the production of two goods with respect to
another nation has ___________ in the production of the good in which its absolute
disadvantage is less.
A. a comparative advantage
B. an absolute advantage
C. a mercantilist advantage
D. none of the above
E. two of A, B, and C
With increasing inflation, borrowing becomes:
A. more attractive because repayment can be made with cheaper money.
B. less attractive because repayment is made with dearer money.
C. impossible because money has lost its value.
D. a mute issue because of liquidity issues.
The purpose of the International Financial Corporation (IFC) is to invest in companies
and financial institutions in developing countries in order to build:
A. infrastructure.
B. trade routes.
C. domestic logistics.
D. domestic capital markets.
The GLED model of global leadership development:
A. involves antecedents and a process to build higher levels of expertise.
B. applies to managers already belonging to the company.
C. involves extensive foreign training and language acquisition.
D. is used by the State Department.
E. C and D.
In the temporal method, fixed assets such as real estate are translated at:
A. their market value.
B. their historic cost.
C. their assessed value.
D. an average of the period's rates.
The most common form of direct government participation in trade is:
A. the subsidy.
B. shipping on national vessels.
C. import duties.
D. a combination of the above.
According to the text, increased emphasis on the achievement of effective supply chain
performance has resulted from:
A. shorter, more predictable product life cycles.
B. the impact of unplanned political and social events.
C. web-enabled tools for planning, executing, and optimizing supply chains.
D. all of the above.