Which of the following is true with regard to firm-level theories?
A) Firm-level theories are classical theories, widely accepted since the sixteenth
century.
B) Firm-level explanations address the question: “How can internationalizing firms gain
and sustain competitive advantage?”
C) Firm-level explanations address the question: “Why do nations trade?”
D) Firm-level theories do not address the issue of organizational performance.
A French company sells goods to a foreign customer whose currency is depreciating
against the euro. Which of the following will the company most likely experience when
completing the sale?
A) The company will receive fewer euros if the sales price was expressed in the buyer’s
currency.
B) The company will receive more euros if the sales price was expressed in the buyer’s
currency.
C) The company will receive fewer euros if the sales price was expressed in euros
originally.
D) The company will receive more euros if the sales price was expressed in euros
originally.
A fronting loan would most likely be utilized by an MNE attempting to ________.
A) increase transfer pricing
B) reduce dividend payments
C) minimize taxes
D) conceal corporate debt
When using equity financing, firms run the risk of ________.
A) diluting the firm’s ownership
B) regular monthly payments of principal and interest
C) incurring a high debt ratio
D) severe penalties for late or missed payments of interest
Cotton Quota (Scenario)
Cotton growers in the nation of Zanzi export nearly 700,000 bales of cotton every year.
Zanzi is the home country for a fabric manufacturing facility that exports high-quality
cotton fabric around the world. The government imposed a quota of 1 million bales of
cotton that can be imported into Zanzi every year. The local fabric manufacturer is
lobbying the government to remove the quota on cotton.
Which of the following best supports maintaining the existing cotton quota?
A) Zanzi cotton growers are protected from cheaper cotton imports.
B) Zanzi cotton growers have an advantage when they export cotton fabric to other
countries.
C) The local fabric manufacturer pays high prices for cotton.
D) The local fabric manufacturer uses mostly Zanzi-grown cotton.
Expert A most likely works for which of the following?
A) Union Bank in Switzerland
B) Bank of America
C) Arab-Malaysian Merchant Bank
D) Goldman Sachs
A firm that pursues a collaborative venture to access raw materials is demonstrating
a(n) ________ motive.
A) efficiency-seeking
B) novelty-seeking
C) asset-seeking
D) market-seeking
Which of the following is a disadvantage of equity joint ventures?
A) termination difficulties
B) lesser control over future directions
C) imbalanced relationship
D) vague contractual partnership
Which of the following is true with regard to strategies for minimizing the risks of
global sourcing?
A) To ensure the success of sourcing ventures, the focal firm must exercise great care to
identify and screen potential suppliers and then monitor the activities of those suppliers
from which it sources.
B) To maximize returns and minimize risks, management should outsource core
business operations.
C) Because production quality in an emerging market rarely varies over time, managers
at the focal firm are not obliged to closely monitor manufacturing processes.
D) Firms must refrain from maintaining their own sourcing operations abroad in order
to trim costs and minimize risks stemming from frequent currency fluctuations.
________ refers to the number of distributors or other intermediaries that it takes to get
the product from the manufacturer to the market.
A) Channel depth
B) Marketing mix
C) Channel length
D) Social network
Which of the following is an example of trademark licensing agreement?
A) a China based consumer electronic company that has invented a flexible casing for
its MP3 players
B) a Thailand-based pharmaceutical company that receives manufacturing knowledge
from a U.S-based pharmaceutical
C) a U.K.-based cosmetics manufacturer that is allowed to use an American cosmetics
manufacturing firm’s logo for its new line of “Titanium” makeup products
D) a U.S.-based clothing company that opens a factory in Vietnam and Cambodia to
utilize low-labor costs
Advanced economies account for about ________ percent of the world population.
A) 14
B) 42
C) 61
D) 5
A quantitative restriction on specific imports for a set period of time is referred to as
________.
A) tariff
B) quota
C) investment barrier
D) country risk
________ are the people and organizations that support the political system and receive
government resources.
A) Subsidiaries
B) Regional trade blocs
C) Constituents
D) Shell corporations
Serving a key global customer in a consistent and standardized manner, regardless of
where in the world it operates is known as ________.
A) global account management
B) offshoring
C) marketing communications
D) insourcing
Professional service firms, such as PriceWaterhouseCooper, often enter large
international markets through FDI but usually use ________ to enter small markets.
A) equity-based collaborative ventures
B) affiliates
C) BOT arrangement
D) turnkey contracting
A car rental agency that was planning to internationalize its operations would most
likely select a(n) ________.
A) distributor
B) intermediary
C) franchisor
D) licensor
According to the Emerging Market Potential Indicators index, ________ is an indicator
of market intensity.
A) average annual growth rate of primary energy use
B) percentage share of middle class in income/consumption
C) private consumption as a percentage of GDP
D) per-capita imports from the United States
Stella manages the production team at Camden Inc., a manufacturer of heavy industry
machinery in the United States. She needs to decide if her firm should export finished
products or manufacture abroad. Which of the following would most likely help her
evaluate the best alternative in this instance?
A) What is the gross national income of the United States?
B) What are the costs of transporting raw materials, components, and finished products?
C) Is employee empowerment culturally favored in the United States?
D) What is the average annual rate of employee turnover in the manufacturing industry?
Governments support domestic industries by ________.
A) incentivize dumping
B) increase the costs of production of domestic industries
C) alienate domestic industries
D) adopting procurement policies that restrict purchases to home-country suppliers
Which of the following situations illustrate a polychronic perspective?
A) When a North American talks to a Latin American, he or she may unconsciously
back up to maintain personal space.
B) In Islamic countries close interaction between men and women is not encouraged in
public places.
C) Latin Americans have a flexible perception of time and may not arrive exactly at the
pre-determined time for appointments.
D) People in young countries like Australia, Canada, and the United States are
relatively focused on schedules, punctuality, and time as a resource.
In terms of financial management tasks that are key to MNE success, which of the
following comes immediately after the task of raising funds for the firms?
A) assesses the financial attractiveness of major investment projects, such as foreign
expansion
B) determines the ideal long-term mix of financing for the firm’s international
operations
C) learns to operate in a global environment with diverse accounting practices and
international tax regimes
D) administer funds passing in and out of the firm’s value-adding activities
In Cadmia, foreign-owned automobile manufacturing companies must be managed by a
Cadmian national and most board members must be Cadmian citizens. This exemplifies
________.
A) FDI and ownership restrictions
B) administrative and bureaucratic procedures
C) Regulations and technical standards
D) Anti-dumping duty
________ is the most common primary language in the world.
A) Chinese
B) Arabic
C) Spanish
D) English
If demand for the dollar is low, the price of the dollar is most likely to ________.
A) rise
B) remain stable
C) fall, then rise
D) fall
The European Union is classified as a(n) ________.
A) international organization
B) regional trade organization
C) special interest group
D) competing firm
Information technology has increased the success and growth of international
franchising operations by ________.
A) eliminating the need for corporate meetings to discuss quality control
B) improving communication between MNE managers and their franchisees
C) reducing Internet sales and the need for freight forwarding services
D) assigning franchisors maximum control to oversee franchisees activities
Born global firms are ________.
A) companies that forgo the domestic focus stage of the internationalization process
B) companies that focus mainly on running a trade surplus
C) young companies that internationalize early in their evolution
D) young companies that focus on the ratio of production costs rather than the absolute
cost of production
________ is the currency risk that firms face when outstanding accounts receivable or
payable are denominated in foreign currencies.
A) Translation exposure
B) Transaction exposure
C) Spot exchange rate
D) Multilateral netting
Which of the following is management’s goal when utilizing gradual elimination?
A) diminish the number of foreign markets served by a large MNE
B) lessen the number of corporate managers involved in subsidiary issues
C) decrease the need for foreign intermediaries to improve profitability
D) reduce the number of nations to investigate as potential foreign markets
A favorable global market opportunity for a firm would most likely lead to ________.
A) a change in product packaging
B) the procurement of new distributors
C) the establishment of a production facility
D) the sale of corporate stock
