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

MGT 56787

February 28, 2019
Incoterms are established by the UN Commission on International Trade.
International strategy involves decisions that deal with a single area, such as marketing
or production.
A form of organization characterized by lateral decision processes, horizontal networks,
and a strong corporatewide business philosophy is a horizontal corporation.
Standards are documented agreements containing general guidelines, rules, or
definitions of the characteristics of a product, process, or service.
Moving executives around an IC system can increase confidence and mutual reliance.
Planning for an expatriate's return should begin while the employee is still on the
overseas assignment.
By and large, the UN record of facilitating business transactions has been minor.
Products placed in a bonded warehouse do not pay import duties until they are
Limits, interdependence, and equity are characteristics of sustainable business practices.
Voluntary export restraints are imposed by the importing nation to avoid violating WTO
The law of one price states that in an efficient market, like products will never have like
Research shows that surviving pioneers hold a smaller average market share when their
industries reach maturity than firms that were either fast followers or late entrants in the
product category.
The level of merchandise exports coming from Africa decreased between 1980 and
The e-commerce potential index developed in the text includes three indexes: market
size, market growth rate, and e-commerce readiness.
Dunning's eclectic theory of international production provides an explanation for the
choice by the international firm of its overseas production facilities.
The theory of absolute advantage suggests that under free, unregulated trade, each
nation should specialize in producing those goods it can produce most efficiently.
Some observers have argued that American industry and the American economy as a
whole will be strengthened by offshoring activities to workers in India or other nations
that have comparative advantages in areas such as labor costs.
A structure organized by more than one dimension at the top level is a matrix
In a DAP (delivered at named place), the buyer is responsible for paying for all
transportation costs from the seller's location, including customs clearing, to the buyer's
Parent-country nationals usually are not knowledgeable about the host-country culture
and language, but many such expatriates have adapted, learned the language, and
become thoroughly accepted in the host country, which allows them to avoid any biases
of their own cultural experience and to be able to understand and perform effectively
within the new operating context.
The current rate translation method translates current assets at the rate in effect when
they were acquired.
Contingency plans are developed in some firms for the best-and worst-case scenarios
and for critical events.
All the reasons for making decisions at IC headquarters, at 100 percent-owned
subsidiary headquarters, or cooperatively do not apply in joint venture situations.
When operating in other cultures, if we realize that, underneath it all, we are all the
same, we will be fine.
Tactical/operational plans are more detailed than strategic plans.
Laws on pollution, consumer protection, and operator safety are critical as legal forces.
According to the text, the process of coordinating and integrating the flow of materials,
information, finances, and services within and among companies in the value chain is
called operations management.
Businesses favor unstable governments because they present more profit opportunities.
Because large multinationals generate an average of nearly two-thirds of their revenues
within their home region, some researchers have suggested that a regional strategy
perspective is more appropriate than a global perspective.
One type of strategic alliance between competitors is an R&D partnership.
Environmental sustainability is about maintaining the environment, and it is both local
and global.
Evidence suggests that:
A. the Internet can be an effective tool in personal selling, when used to build trust.
B. the Internet is more effective in personal selling than is face-to-face communication.
C. the Internet is an inappropriate choice for personal selling when trust building is
D. all of the above.
When an IC hires and trains local, host-country people, the IC often:
A. pays them too much and creates inflation.
B. overtrains them to IC culture-based standards.
C. may lose them to local firms or other ICs once they are trained.
D. encourages their transfer, causing brain drain.
E. two of the above.
The increased internationalization of business requires __________ to have a basic
knowledge of international business.
A. all managers
B. managers of multinationals
C. managers of transnationals
D. managers of purely domestic operations
E. none of A, B, C, or D
A nontariff barrier is illustrated by:
A. the French requirement in 1982 that all Japanese VCRs be inspected in Poitieres, far
from the port and lacking speedy highway connection to the port.
B. the widespread Japanese belief that American rice can cause cancer.
C. the European attitude toward genetically modified crops.
D. all of the above.
A joint venture may be:
A. a corporate entity formed between an international firm and local owners.
B. a corporate entity formed between two or more international firms.
C. a corporate undertaking between two or more firms of a limited-duration project.
D. two 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.
According to the text, which of the following can be outsourced?
A. Product design
B. Human resources
C. Two of A, B, and E
D. All of A, B, and E
E. Logistics
The Council of European Union, the primary policy-setting institution of the EU, is
composed of:
A. the member-states' prime ministers or presidents.
B. the member-states' ministers who represent the specific area being discussed.
C. elected members from across Europe, elected by country.
D. appointed representatives from each member-state.
In an affective culture (Trompenaars), emotions are seen as:
A. responses to be freely displayed.
B. private and, therefore, not displayed.
C. a weakness and, therefore, hidden.
D. appropriate to share with family members only.
Latin and Asian countries' scores on Hofstede's power distance dimension are relatively
large and relatively low on:
A. the individualism dimension.
B. transparency.
C. masculinity.
D. femininity.
A. prescribe how certain activities will be carried out.
B. are broad guidelines used to assist lower-level managers to handle recurring
C. ensure that all budgets will be prepared using the same format.
D. all of the above.
A foreign currency sale is recorded as revenue, using the exchange rate:
A. on the date of the sale.
B. on the date the balance sheet is consolidated to financial reports.
C. on a historical average over the period between the sale and the consolidation.
D. that the company decides to use.
Basic named perils marine insurance covers:
A. perils of the sea, fires, jettisons, hurricanes.
B. theft and larceny.
C. piracy on the seas.
D. accidents and storms other than hurricanes.
E. flooding, tsunamis, earthquakes.
Hall's high and low context is based upon communication styles and specifically on the
role of:
A. the speakers.
B. nonverbal behavior.
C. the medium.
D. context.
Nuisance tariffs:
A. annoy the importers with red tape and administrative paperwork.
B. are a historical anomaly.
C. are found in developed nations more than in developing nations.
D. have no point other than to indicate that tariff regulations change quickly.
E. two of the above.
At the beginning of 2010, the value of the outstanding stock of foreign direct
investment of all nations totaled more than:
A. $500 billion.
B. $3 trillion.
C. $12 trillion
D. $19 trillion.
E. $21 trillion.
The reasons a government may nationalize a firm include:
A. to extract more money from the firm.
B. to increase the firm's profitability.
C. to preserve jobs.
D. all of the above.
The results of liberalized trade so far have been:
A. beneficial for developing economies.
B. harmful for developing economies.
C. unconnected to developed economies.
D. uneven for developing and developed economies.
Which of the following are reasons that many firms engage in exporting?
A. Exports enable the firm to serve markets where it has sufficient production facilities.
B. Exports can offset cyclical sales in the firm's domestic market.
C. Exports eliminate the risk of losing the firm's technology to potential competitors.
D. All of the above.
The Organization for Economic Cooperation and Development provides information
A. military alliances.
B. economic and other activities within its member-nations.
C. trade imbalances for nonmember countries.
D. sovereign debt risk.
Sam Palmisano, CEO of IBM, has described a new way of doing business that goes to
equity of distribution by observing that:
A. profit sharing will need to increase.
B. stakeholder theory provides a way forward, combining local and global.
C. IBM would end its colonial company model and move on to an integrated model
with high levels of trust among stakeholders.
D. A and B.
At the end of World War II, the UN called for the conference that set up the World Bank
and the IMF. This conference was:
A. convened in San Francisco.
B. held at Yalta.
C. held at Grasleben, Germany.
D. held at Bretton Woods, New Hampshire.
Global companies:
A. none of the following is correct.
B. do not have international divisions.
C. are large companies with numerous overseas manufacturing facilities.
D. are organized on the basis of products and do not have other organizing dimensions
in a pure organization.
Punitive damages in product liability cases can be awarded in:
A. Japan.
B. Japan and the EU.
C. the UK.
D. the United States
E. all of the above.
Which of the following is(are) true about assistance provided to the spouses of
A. Over half of companies provide education or training assistance to spouses.
B. Nearly 70 percent of companies provide language training to spouses.
C. About one-quarter of companies sponsor work permits.
D. Two of the above.
Foreign direct investment (FDI) includes all of the following except:
A. wholly owned subsidiary.
B. joint venture.
C. management contract.
D. strategic alliance.
Locating activities in another nation is:
A. outsourcing.
B. offshoring.
C. foreign direct investment.
D. all of the above.
The major argument against 3BL is that:
A. companies don't want the public to know what they are doing.
B. social and environmental impacts cannot be measured as well as can economic
C. measurement won't get us closer to the desired state.
D. A and B.
A business established for the purpose of marketing goods and services, not producing
them, is:
A. a franchisee.
B. a direct exporter.
C. a sales company.
D. a joint venture.
Arbitration is a private solution that is:
A. often preferred by foreign litigants because it is perceived as fairer, faster, cheaper,
and more confidential than are the courts.
B. favored by international unions.
C. recommended by the UN for international companies facing litigation in developing
D. two of the above.
As stated in the text, an international business is:
A. a business whose activities involve crossing national borders.
B. the operations of a company outside its home or domestic market.
C. an organization with multicountry affiliates that each formulate their own business
D. an organization that attempts to standardize operations worldwide.
The masculine-feminine dimension is about:
A. task vs. relationship.
B. the gap between men's and women's roles in the culture.
C. doing vs. being.
D. quality of work vs. quality of life.
When a company faces strong pressures for reducing costs and limited pressure to adapt
products for local markets, it should tend to use a:
A. global strategy.
B. multidomestic strategy.
C. transnational strategy.
D. differentiation strategy.
E. home replication strategy.
Collection documents are:
A. for debt carried in cash receivables.
B. needed to load and unload transported goods.
C. presented to the buyer for payment.
D. certificates of origin, invoices, and inspection certificates.
E. C and D.

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