Which of the following types of assumptions is the cause of most problems between
business managers and foreign employees?
A) geocentric assumptions
B) ethnocentric assumptions
C) polycentric assumptions
D) religious assumptions
Which of the following countries hosts the greatest number of MNEs?
A) Germany
B) Japan
C) Netherlands
D) United States
Which of the following is true with regard to mercantilism?
A) Mercantilism does not harm consumers.
B) Mercantilism helps curb inflation.
C) Mercantilism is superior to free trade.
D) Mercantilism tends to harm firms that import.
Sterling Auto International (Scenario)
Sterling Auto International is a successful car manufacturing company headquartered in
Detroit, Michigan. Over the past year, the company implemented multiple efforts to
expand its overseas operations. At a recent shareholder’s meeting, attendees questioned
the CEO’s motivations for authorizing certain aspects of the expansion efforts.
In discussing the expansion effort to India, the CEO reminded shareholders of Black
and Decker’s move to partner with the Indian auto retailer Bajaj. The CEO was most
likely attempting to justify which of the following?
A) a joint venture that would position Sterling for long-term sales in India
B) a marketing effort targeted to American citizens living in India
C) a price drop to ward off competition from an emerging Indian auto retailer
D) a new manufacturing protocol based on an efficient Indian production method
Which of the following is a societal consequence of market globalization?
A) greater emphasis on proactive internationalization
B) internationalization of firm’s value chain
C) new risks and instant rivalry from foreign competitors
D) offshoring and the flight of jobs
Which of the following terms is used to refer to compensation paid to the owner of
intellectual property?
A) commission fee
B) trade credit
C) royalty payment
D) dividend remittance
Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and
China and ships them to retail stores around the world. Kitchen sizes vary around the
world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large
refrigerators, while European and Asian retailers demand smaller units. Cold-Aire
manufactures over 20 different models of refrigerators, which often vary in size by only
a few inches. Cold-Aire managers are concerned that the firm is losing money because
of product adaptations. Cold-Aire management is meeting to discuss the various
cost-saving options for the firm.
Which of the following questions would be the most important for Cold-Aire managers
to evaluate when determining how the firm could reduce production costs in a single
market?
A) Has the demand for Cold-Aire refrigerators declined in recent years?
B) Are customized Cold-Aire refrigerators as user friendly as the ones that are not?
C) Can Cold-Aire standardize its refrigerators?
D) Is Cold-Aire refrigerators likely to have greater demand in warmer countries than in
colder regions?
Jordan is employed in an American investment firm and is currently working with some
Japanese clients on a new project. He uses a lot of hand gestures during meetings which
his clients find very distracting and rude. This has also led to many misunderstandings
between Jordan and his Japanese clients in the recent past. Which of the following best
describes such a situation?
A) risk aversion
B) organizational anarchy
C) cross-cultural risk
D) acculturation
Financing Corporate Expansion (Scenario)
Intensity Games is an MNE based in San Francisco that manufactures a popular line of
video game consoles and accessories. Intensity owns manufacturing facilities in China
and Russia where the components of the game consoles are manufactured and
assembled before being shipped around the world. Intensity also owns numerous
subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity
managers have determined that the firm needs to expand its Chinese facility to
accommodate the increasing demand. The firm needs to raise several million dollars to
finance the expansion. The financial managers of Intensity are discussing the various
financing options available to the firm.
Which of the following, if true, supports Intensity raising funds through intracorporate
financing to expand its Chinese facility?
A) Intensity would save money on transaction fees and tax deductible interest
payments.
B) Intensity’s subsidiaries are struggling due to price wars with video game competitors.
C) The Chinese government has offered Intensity a low-interest loan for the expansion.
D) Eurobonds have been a popular choice among MNEs with facilities in China.
Which of the following is an example of intellectual property?
A) systems of measurement
B) Volkswagen’s logo
C) an unpublished book
D) a phone directory
Which of the following best explains the growth of family conglomerates in emerging
markets?
A) declining importance of entrepreneurship
B) high rate of innovation
C) highly competitive markets
D) government protection
Global equity market refers to ________.
A) the international marketplace in which bonds are bought and sold, primarily through
bond brokers
B) collective financial markets where firms can borrow money from banks or other
financial intermediaries, or sell corporate bonds to individuals or institutions, to raise
capital
C) the conversion of illiquid financial instruments, such as bank loans, into tradable
securities, such as bonds
D) stock exchanges worldwide where investors and firms meet to buy and sell shares of
stock
Emerging markets are important in international business and trade due to ________.
A) large informal economy
B) low rates of energy consumption
C) high growth rate of middle class population
D) low inward FDI
Which of the following statements is true of the global money market?
A) A great advantage for investors in the global money market is the ability to access a
wide range of investment opportunities.
B) It refers to the collective financial markets where firms and governments raise
long-term financing.
C) The maturity period for the funding obtained from the global money market is over
ten years.
D) It refers to the collective financial markets worldwide where firms and governments
raise short-term financing.
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 supports a decision in favor of Super Sports opening a store in
Norway?
A) MNEs may transfer profits back to the home country without restriction.
B) The opening of warehouse-style stores requires the approval of local retailers.
C) Product injury cases generally rule in favor of plaintiffs regardless of evidence.
D) Advertising and marketing of particular products are banned under local distribution
laws.
Which of the following refers to the extent to which people can tolerate risk in their
lives?
A) uncertainty avoidance
B) long-term versus short-term orientation
C) power distance
D) individualism
Which of the following is characteristic of the parent’s perspective in capital budgeting?
A) It estimates future cash flows from the project in the functional currency.
B) It adds the subsidiary’s after-tax operating cash flows with the project’s cost of
capital.
C) It seldom uses the currency of the primary economic environment in which it
operates.
D) It estimates the incremental after-tax operating cash flows in the subsidiary’s local
currency.
Internationalization Conference (Scenario)
At a conference on business internationalization strategies, representatives of three
different businesses meet to discuss a joint venture between their companies. Business
A is located in a country that internationalized during the second phase of globalization.
Business B is based in a country that internationalized during the third phase of
globalization. Business C is located in an emerging market country.
The representative from Business A is most likely from ________.
A) China
B) United Kingdom
C) Mexico
D) Brazil
Maximus Motor Company (Scenario)
Maximus Motor Company is a British automobile manufacturer that builds high-end
luxury cars for sale around the world. Maximus managers recognize they are missing
opportunities in emerging markets, such as India, which have an increasing number of
middle-class people ready to purchase affordable cars. Competitors that entered the
Indian market experienced significant profits over the last two years. Maximus
managers have been assigned the task of determining the best strategy for Maximus to
do business in India.
Which of the following would be most important for Maximus managers in determining
the best entry strategy for entering an emerging market such as India, characterized by
the presence of family conglomerates?
A) What other firms have partnered with family conglomerates?
B) How often do Indians use their cars and for what purpose?
C) What type of automobile should Maximus manufacture in India?
D) How would Maximus benefit from partnering with a family conglomerate?
Cultural intelligence is defined as ________.
A) a person’s ability to function effectively in situations characterized by cultural
diversity
B) the method of analyzing awkward situations in cross-cultural encounters by
developing objectivity and empathy for other points of view
C) the measurement of the inequalities in power that exist among people
D) the information gathered by local firms about those entering foreign markets
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 most supports abolishing the cotton quota over maintaining it?
A) The cotton growers have a competitive edge over foreign cotton growers, and they
are profitable.
B) The fabric manufacturer, a prime contributor to the nation’s annual revenue, can earn
better returns by shifting to another country that does not impose cotton quotas.
C) A competing fabric manufacturer is considering opening a production facility in
Zanzi.
D) The price of cotton fabric has remain unchanged over the last decade.
Common law can best be described as a system ________.
A) designed from political and legislative regulations
B) derived from religious beliefs and moral values
C) based on an all-inclusive system of laws that have been codified
D) based on legal precedents set by the nation’s courts
Which of the following is most likely to occur if a U.S. firm outsources some of its
business operations to a Japanese company, and the Japanese yen strengthens against
the dollar?
A) The probability of intellectual property laws being enforced would significantly
decrease in Japan.
B) The U.S. company will experience additional cost savings in using the services of
the Japanese company.
C) Outsourcing business operations to Japan would become less expensive.
D) The U.S. company will experience higher costs in using the services of the Japanese
company.
________ refers to a cross-border business alliance whereby partnering firms pool their
resources and share costs and risks to undertake a new business venture.
A) International collaborative ventures
B) Turnkey operations
C) Greenfield investments
D) Acquisitions
To establish positive relationships with country managers, senior corporate managers
should ________.
A) transfer employees to different countries to maintain a centralized power structure
B) encourage subjective ethical and moral standards across different countries
C) invite local managers to discuss their experiences at regional and global conferences
D) minimize decision making at the local level
The fourth phase of globalization is characterized by ________.
A) the rise of railroads and ocean transport
B) the reduction of barriers to trade by Western industrialized countries
C) the initiation of the Marshall Plan to reconstruct Europe
D) the enormous growth of cross-border trade and investment
Which of the following characterize the most successful global brands?
A) low visibility
B) narrow appeal
C) status symbols
D) highly complex product features
The mix of long-term equity financing and debt financing that firms use to support their
international activities is known as ________.
A) multilateral netting
B) controlling interest
C) capital structure
D) transaction exposure
Which of the following terms refers to two or more geographically connected nations in
pursuit of free trade relations?
A) grey market
B) trading diaspora
C) economic bloc
D) business strategic unit
The most direct implication of market globalization is on the firm’s ________.
A) value chain
B) founders
C) internal stakeholders
D) top management
Which of the following activities is highly important to firms as a strategic asset?
A) manufacturing of parts
B) customer service
C) sales and distribution
D) marketing and branding