If last year one dollar equaled one euro, and then the exchange rate shifted so that today
one dollar equals two euros, which of the following would most likely NOT occur?
A) European firms would pay more for raw materials imported from the United States.
B) European consumers would purchase fewer U.S. products and services.
C) Fewer Europeans would travel to the U.S. or study at U.S. universities.
D) European firms would lower their prices on goods made with U.S. parts.
All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a
consulting firm, Brown and Associates, to identify foreign markets that might be
appropriate for internationalization. Brown consultants have been working for two
weeks with All You managers to identify the best foreign markets for the Canadian
cosmetics company, which specializes in organic cosmetics and skin care products. So
far, Brown consultants have narrowed down the list of countries to fifteen. However,
the consultants need to eliminate unattractive markets and reduce the list to five nations,
which will then be researched more closely.
Which of the following factors should most likely be considered by Brown consultants
as they screen countries for All You Cosmetics?
A) Which markets have the highest number of skin cancer cases among women?
B) In which markets are women the primary breadwinners for their families?
C) Which markets have the highest number of environmentally-friendly corporations?
D) In which markets are organic cosmetics and skin care products currently
unavailable?
International Advertising (Scenario)
Quik-Vac Corporation, a U.S.-based company, manufactures small, inexpensive
vacuum cleaners that work on rechargeable batteries. Quik-Vac customers typically live
in small apartments where a large vacuum cleaner is neither necessary nor easy to use.
Quik-Vac managers believe there is a market for the vacuum cleaners outside of the
United States, especially in communities where living space is limited. The Quik-Vac
marketing department has been assigned the task of creating an advertising campaign to
introduce Quik-Vac’s offerings to global consumers.
Standardized advertising, if used by Quik-Vac, would most likely ________.
A) cater to customers with varied preferences worldwide
B) simplify Quik-Vac’s communications strategy and save costs
C) appeal to the highly literate populations only
D) make importation of raw materials mandatory for Quik-Vac
Strikes organized by labor unions are aimed at ________.
A) settling disputes regarding offshore unions
B) pressuring management to grant union demands
C) pressuring management to unionize
D) creating public awareness about social issues
Polycentric orientation refers to ________.
A) a host-country mind-set in which the manager develops a strong affinity with the
country in which she or he conducts business
B) the use of one’s own culture as the standard for judging other cultures
C) a collectivist mind-set, which emphasizes conformity, duty, prescribed roles, and
sacrifice for the greater good
D) the tendency to rely on elaborate verbal explanations, putting much emphasis on
spoken words
Which of the following best explains why some service industry firms most likely enter
foreign markets through FDI?
A) The market abroad is saturated, therefore, the other entry strategies are most likely to
fail.
B) The service of the firm requires tough intellectual property laws.
C) The service offered by the firm requires direct contact with customers.
D) The firm’s service is not successful domestically, so globalization is required.
The eclectic paradigm specifies three conditions that determine whether a company will
internationalize via FDI. Which of the following refer(s) to one of those conditions?
A) entrepreneurial orientation of national enterprises
B) FDI stock
C) availability of variable capital in the home country
D) location-specific advantages
Restrictions on the outflow of hard currency from a country or on the inflow of foreign
currencies is called ________.
A) antidumping duty
B) currency appreciation
C) currency control
D) currency depreciation
In international business, marketing is concerned with ________.
A) disseminating the organizational culture of a firm across global subsidiaries
B) identifying, measuring, and pursuing customer needs and market opportunities
abroad
C) maintaining a steady flow of product-based innovations
D) interacting with global business leaders
Which of the following is characteristic of collectivist societies?
A) In collectivist societies, each person tends to focus on his or her own self-interest.
B) In collectivist societies, compromise and conformity help maintain group harmony.
C) In collectivist societies, ties among people are relatively loose.
D) In collectivist societies, those who compete best are rewarded financially.
Which of the following comparative advantages is acquired over time?
A) labor
B) innovative capacity
C) arable land
D) petroleum reserves
Which of the following statements is true about currencies?
A) The British pound is an example of a nonconvertible currency.
B) Hard currencies are highly unstable currencies.
C) Currencies that are used for international transactions are called nonconvertible.
D) Convertible currencies can be readily exchanged for other currencies.
The three major types of current political systems are ________.
A) totalitarianism, socialism, and democracy
B) socialism, democracy, and monarchy
C) totalitarianism, liberalism, and fascism
D) democracy, republicanism, and oligarchy
Which of the following refers to an important monopolistic advantage for firms?
A) imitable skills
B) unskilled labor
C) favorable climate
D) proprietary technology
Common and Civil Law (Scenario)
Zane Computer Corporation is considering the possibility of building a new
manufacturing facility in a foreign country in order to lower labor and production costs.
The legal department of Zane has raised some issues regarding two countries that are
the top contenders for the new facility. The legal system of Country A is based on civil
law, while the legal system of Country B is based on common law. Other than the legal
systems of the two countries, all other aspects are virtually identical. Zane’s legal
experts must determine which system would be the most beneficial to Zane in the
long-term.
Which of the following statements is most likely applicable to Country B?
A) local and national legislatures pass laws
B) ethics and morality are the underlying tenets
C) an all-inclusive system of law that has been codified
D) detailed contracts that clearly state all potential contingencies
Which of the following would a firm considering a corporate merger consult for issues
related to the merger?
A) private bank
B) offshore bank
C) commercial bank
D) investment bank
Which of the following is a characteristic of advanced economies?
A) poor quality of life
B) low life expectancy
C) high purchasing power
D) high infant mortality rate
Which of the following is NOT one of the four dimensions of cultural intelligence?
A) behavioral flexibility
B) motivation
C) strategy
D) introversion
In countries with minimal corruption ________.
A) commercial laws are unfair and discriminatory
B) financial and accounting information is transparent
C) direct investment does not take place
D) the contribution of the private sector to the national GDP is negligible
________ refers to the transfer of assets to another country or the acquisition of assets
in that country.
A) International investment
B) International trade
C) Importing
D) Exporting
The purchase of an existing company or facility is known as a(n) ________.
A) greenfield investment
B) licensing
C) acquisition
D) equity joint venture
The greatest amount of licensing occurs in the ________ industries.
A) pharmaceutical
B) music
C) toy
D) mining
Contract manufacturing can best be defined as ________.
A) the outsourcing to independent suppliers of business service functions such as
accounting, payroll, human resource functions, travel services, IT services, customer
service, or technical support
B) the relocation of a business process or entire manufacturing facility to a foreign
country
C) sourcing from the firm’s own production facilities
D) an arrangement in which the focal firm contracts with an independent supplier to
manufacture products according to well-defined specifications
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.
The CEO justified one of the company’s moves by pointing out that it not only enabled
Sterling to benefit from global sourcing advantages, but it also provided access to new
ideas about business methods. The shareholders viewed this justification positively
most likely because they understood which of the following?
A) Sourcing advantages are usually more important to growth than obtaining new
business ideas.
B) International firms may have more than one motive for international expansion.
C) The most compelling motive for international expansion is to gain new ideas from
other markets.
D) This expansion strategy would enable the company to better manage cross-cultural
risk.
Equity financing comes from ________.
A) foreign bonds
B) domestic bonds
C) capital by selling stocks
D) Eurocurrency market
The process of reproducing assets without compensating those who originally created
them is known as ________.
A) counterfeiting
B) bribery
C) product differentiation
D) trademarking
Firms that are more successful at global competition display each of the following
qualities EXCEPT ________.
A) identifying foreign market opportunities aggressively
B) approaching internationalization from a reactive standpoint
C) actively pursuing partnerships with foreign firms
D) focusing intensively on building organizational capacities
Acme Ethical Standards (Scenario)
Four senior managers of Acme International meet to discuss strategies for improving
ethical practices in the company’s worldwide operations. Jang heads the company’s
manufacturing division in China, while Luis and Marta are based in the Finland and
U.S. sales divisions, respectively. Geoff manages the research and development office,
based in Brazil.
Who among the following managers is most likely to raise concern over the ban on
advertising directed at children in his/her country?
A) Marta
B) Geoff
C) Luis
D) Jang
Fun Play Global Sourcing (Scenario)
Fun Play Inc., a company manufacturing toys for children, has decided to outsource
some of its value-chain activities. However, the firm has no experience with global
sourcing and has hired a consulting firm to assist its managers. The consulting firm has
been assigned the task of determining which activities should be outsourced and where
the outsourced activities should be located.
If Fun Play decides to source from its own wholly owned subsidiary, it would be
engaging in ________.
A) offshoring
B) contract manufacturing
C) cause marketing
D) captive sourcing
Vytel Communications (Scenario)
Vytel Communications is a U.S.-based telecommunications company that is considering
doing business in Argentina. Vytel managers hire a consulting firm to investigate the
risks and benefits related to doing business in Argentina. The consulting firm identifies
a number of challenges that might prohibit Vytel from entering Argentina. In addition,
the consultants conduct surveys which indicate a demand for Vytel’s products and
services.
Which of the following should be considered by the consulting firm before
recommending that Vytel should do business in Argentina?
A) What other emerging markets are dominated by family conglomerates?
B) What has been the historical economic effect of family conglomerates in Argentina?
C) Do family conglomerates control the telecommunications industry in Argentina?
D) What benefits and loans are received by family conglomerates in Argentina?