Currency Arbitragers are currency traders who seek to minimize their risk of
exchange-rate fluctuations, often by entering into forward contracts or similar financial
instruments.
Relative efficiency of production refers to the total value of assets that MNEs own
abroad via their investment activities.
Born globals have emerged in large numbers for two main reasons: globalization and
advances in communication and transportation technologies .
Per-capita GDP converted at market exchange rates paints an accurate picture of market
potential.
Tapping into supplier networks is one of the methods of estimating industry market
potential.
Trade as a percentage of GDP is used to measure a country’s market receptivity.
Products or services that are well-received at a firm’s home country are more likely to
be accepted in foreign countries as well.
Firms obtain debt financing by selling stock shares to investors who then have an
ownership interest in the firm.
Advances in communications technologies makes it difficult to deceive consumers in
foreign countries .
Totalitarianism’s fundamental tenet is that capital and wealth should be vested in the
state and used primarily as a means of production rather than for profit.
Developing talent is a multistep collaboration between human resource managers and
executive management.
Country risk is present in select nations.
The globalization of capital refers to the aggregate activities of firms that gives rise to
economic integration.
The complexity of the tax system is one of the factors to be considered in selecting FDI
locations.
Front-office activities cannot be classified under BPO.
The International Monetary Fund is part of the global financial system.
Currency controls harm companies that export their products from the host country, but
favor those that rely heavily on imported parts and components.
Global IT infrastructure and tools such as intranets, the Internet, and electronic data
interchange ensure that distant parts of the global network share knowledge and learn
from each other.
Current rate method is the translation of foreign currency balance sheet and income
statements at an exchange rate that varies with the underlying method of valuation.
NAFTA is a treaty entered into by Canada, Mexico, and the United States.
According to the internationalization process model, internationalization takes place in
incremental stages over a long time.
Governments impose offensive barriers to safeguard industries, workers, and special
interest groups and to promote national security.
Company logos, trademarks, national flags, and historical monuments are considered
symbolic productions.
One approach for reducing exposure to trade barriers is to have exported products
classified in the appropriate harmonized product code.
Governments encourage inward FDI because it transfers skill and technologies.
Where counterfeiting and piracy are commonplace, companies are reluctant to invent,
innovate, and market legitimate products, which reduces consumer choices and
ultimately lowers living standards.
Host-country nationals (HCNs) are citizens of the country where the MNE is
headquartered.
Companies have a tendency to prefer handling international business transactions with
their own country’s currency rather than with the currency of another country.
Most European countries restrict firms’ ability to lay off workers.
Intra-corporate fund transfers enable MNEs to access cash from subsidiaries through
royalty payments, transfer pricing, and multilateral netting.
According to the factor proportions theory, differences in the quantity of factors of
production held by countries do not determine international trade patterns.
A democratic government seeks to control not only all economic and political matters
but also the attitudes, values, and beliefs of the citizenry.
Natural disasters in foreign countries is one of the reasons for the emergence of
potential target markets for selling products and services.
China has the second most MNEs.
International advertising expenditures vary depending on the size and extent of a firm’s
foreign operations.
Outsourcing helps firms become more efficient, concentrate on their core competencies,
and obtain competitive advantages .
When a Japanese firm sells yen-denominated bonds in the United States, it is issuing
foreign bonds.
The integration of international financial and monetary activity can be attributed to the
growing role of single-currency systems, such as the euro.
Firms usually hire HCNs abroad to maintain local control over foreign operations.
All of the following refer to key tasks of IHRM EXCEPT ________.
A) developing global managers
B) assessing job performance of expatriates
C) evaluating internal accounting practices and audits
D) handling labor disputes and strikes
When using the five-step framework for making ethical decisions, which of the
following steps involves investigating which individuals have a stake in the outcome?
A) examining the facts
B) implementing a decision
C) evaluating alternatives
D) identifying the ethical problem
Managers with a geocentric view of the world ________.
A) are generally better at understanding and accommodating similarities and differences
among cultures
B) ritually avoid analyzing awkward situations in cross-cultural encounters
C) have a strong preference for ambiguity
D) tend to view other cultures through the lens of his/her own culture
Which of the following is a characteristic of a global team?
A) culturally diverse
B) similarly trained
C) domestically based
D) constant face-to-face interaction
An advantage of licensing is that firms are able to ________.
A) enter markets with extensive trade barriers
B) guarantee a basis for future expansion
C) control how the licensed asset is used
D) resolve disputes easily
The buying power of the country’s residents is termed as ________.
A) market intensity
B) market size
C) market consumption capacity
D) market receptivity
Sid Maxwell (Scenario)
Sid Maxwell is the head of legal affairs at Hudson Inc., an American toy manufacturer.
Hudson’s signature toy, the Witty Parakeet, includes an embedded software program
that allows the bird to interact with children. Hudson is currently planning to expand its
market in Asia but Sid is concerned about reports of software piracy in the region.
The software program embedded in Hudson’s signature toy, the Witty Parakeet, is an
example of a(n) ________.
A) tangible asset
B) intellectual property
C) trademark
D) trade secret
Which of the following is a recent trend regarding women in business?
A) Companies worldwide are substantially increasing the number of women on foreign
assignments.
B) The majority of international managers are female.
C) Better-educated women are no more likely to obtain jobs than their less-educated
counterparts.
D) New legislation in Norway requires listed and state-owned companies to ensure that
women hold no more than 20 percent of seats on corporate boards.
A firm most likely enters the home market of a foreign competitor in order to
________.
A) enter a collaborative venture with the competitor
B) gain access to the competitor’s government contracts
C) force the competitor to expend resources to defend its market
D) interfere with the competitor’s marketing campaign
Advertising themes often convey unfavorable and embarrassing interpretations. This is
most likely because ________.
A) popular slogans used in international advertising do not use idiomatic expressions
B) advertising themes often lose their original meaning in translation or give the wrong
impression
C) language is rarely subtle
D) colloquial expressions are more likely than not to puzzle native speakers
Which of the following is most likely a disadvantage to firms who use exporting as an
entry strategy?
A) high cost of foreign market entry
B) difficulties withdrawing from foreign markets
C) high risk of low sales due to fluctuations in exchange rates
D) high risk due to uncertainty in the political environment of the foreign market
An arrangement whereby the firm owns, or seeks to own, multiple stages of a value
chain for producing, selling, and delivering a product or service is termed as ________.
A) vertical integration
B) horizontal integration
C) decentralization
D) centralization
Which of the following is a characteristic of a bond?
A) It is a short-term loan from a commercial bank.
B) It refers to capital raised by selling corporate shares.
C) It refers to a debt security used to raise capital.
D) It is a debt instrument on which dividends are paid.
Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with
preparing a comprehensive report on the company’s global operations over the past
twenty years. Deva assigns three strategists to collaborate on the History portion of the
report, which details the rationale behind Pax’s decisions to expand operations in
particular areas. Rashid Ahl focuses on early expansion to China, which occurred after
China began to make its market more accessible to foreign companies. Markus Teller
focuses on Pax’s expansion to Eastern Europe, which was motivated by increased
industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan,
which happened when the company’s commercial bank expanded its service network to
Asia.
Offshoring and the flight of jobs are prime drivers of market globalization.
Members of ________ agree to adopt common tariffs and non-tariff barriers that are
applied to imports from nonmember countries.
A) free trade areas
B) customs unions
C) the NAFTA
D) the EFTA
The ________ is the simplest and most common level of regional integration.
A) common market
B) political union
C) customs union
D) free trade area
A ________ is a debt instrument that enables the issuer (borrower) to raise capital by
promising to repay the principal along with interest on a specified date (maturity).
A) fronting loan
B) stock
C) bond
D) forward contract
Which of the following tasks should a shoe manufacturing company perform first if it
needs to assess the global market opportunity?
A) assess the suitability of the company’s shoes for foreign markets
B) analyze the firm’s readiness to internationalize
C) choose foreign business partners
D) screen countries to identify foreign markets
Employee Categories (Scenario)
Styleco Inc. is an international manufacturer of leather wallets and briefcases. Based in
Canada, the firm has subsidiaries throughout Europe and Asia. High-level Styleco
employees are often re-located for months at a time to foreign offices depending on the
needs of the firm. Shelly Eaton, a Canadian, has been sent to manage the Styleco office
in Italy. Raj Patel, an Indian, is an experienced software designer who is on assignment
for Styleco in its Paris office. Keiko Tran of Japan is employed as a manager in
Styleco’s Tokyo office. Marcus Field is a Canadian working at the Styleco headquarters
in Ontario as a manufacturing engineer.
Which of the following employees is a parent-country national working in a host
country?
A) Marcus Field
B) Keiko Tran
C) Raj Patel
D) Shelly Eaton
A ________ is one or more resources or capabilities a company possesses that few
other firms have.
A) factor endowment
B) country-specific advantage
C) comparative advantage
D) monopolistic advantage
Which of the following statements is true of trade surplus?
A) It is a negative balance of trade.
B) It occurs when there is a net outflow of domestic currency to foreign markets.
C) It occurs when a nation imports as much as it exports.
D) It occurs when a nation’s exports exceed its imports.
Which of the following is a typical complaint of host-country competitors against
foreign firms?
A) Foreign firms burden the host-country with infrastructure requirements.
B) Foreign firms do not have to obey host-country laws and regulations.
C) Foreign firms receive financial support from host-country governments.
D) Foreign firms lure host-country workers to the home-country businesses.
Given the potential hardships of working abroad, many MNEs also provide ________
to expatriate employees which is similar to a bonus.
A) wages
B) incentives
C) base remuneration
D) allowance
Which of the following levels of the global monetary and financial systems pyramid
includes commercial banks?
A) national government level
B) national infrastructure level
C) international organization level
D) firm level
Managers who exemplify an open-minded attitude and who appreciate cultural diversity
are described as applying a global ________.
A) sensitivity
B) standard
C) posture
D) mindset
Which of the following legal systems is based on legal precedents and past practices set
by the nation’s courts through interpretation of statutes, legislation, and past rulings?
A) common
B) religious
C) socialist
D) civil
Firms that anticipate close public scrutiny of their foreign operations often avoid
potential difficulties by ________.
A) locating in culturally similar countries
B) investing in international securities
C) hiring additional local personnel
D) diversifying their corporate activities
Which of the following is true about global teams?
A) It is a locally distributed group of employees charged with specific problem solving
that affects company operations at the domestic scale.
B) To develop global strategies, the team should include culturally diverse managers
whose business activities span the globe.
C) Strategic global teams focus on the efficient and effective operation of the business
across the whole network.
D) Operational global teams identify or implement initiatives that enhance the
long-term direction of the firm in its global industry.
International firms operating within the Eurozone are less concerned about currency
risk than international firms operating outside the Eurozone mainly because of the
________.
A) tax haven privileges in the bloc
B) consistently favorable exchange rates for the bloc
C) use of a single currency within the bloc
D) economic bloc restrictions that are applicable to all the firms
Which of the following resolves the problem of making international payments and
facilitates international investment and borrowing among firms, banks, and
governments?
A) foreign exchange
B) barter
C) capital flight
D) buyback
Which of the following is characteristic of the fixed exchange rate system?
A) utilized by most advanced economies
B) rates based on supply and demand forces
C) value of currency is set relative to the value of another
D) allows for monetary policy flexibility
________ is the procurement of selected value-chain activities, including production of
intermediate goods or finished products, from independent suppliers.
A) Purchasing power parity
B) Outsourcing
C) Privatization
D) Nationalization
A firm would be compelled to seek global integration when it has to ________.
A) adjust to cultural differences
B) cater to local customer needs
C) capitalize on converging consumer trends and universal needs
D) accommodate differences in distribution channels
If one U.S. dollar equaled one euro last year, and then the exchange rate shifted so that
today one dollar equals two euros, which of the following will most likely occur?
A) Europeans will purchase more U.S. products.
B) Americans will have a lower standard of living.
C) Americans will cancel vacations to Europe.
D) Europeans will purchase fewer U.S. products.
What are some of the risks for firms involved with international e-commerce?
In a short essay, describe three key drivers responsible for the recent growth of global
sourcing.
Discuss four macroeconomic trends that have the potential to significantly alter the
current status of international business and trade. Discuss the questions that managers
should investigate to deepen knowledge about the international market potential of a
product or service
Write a short essay on technology and emerging markets.
Describe the two elements which contribute to country risk. Provide examples of
countries with high and low country risk, and explain the reasons for these two
distinctions.
Describe the two main types of foreign exchange management used today. Provide
examples of nations which use each type of system. What are the benefits of each
system?
Why do nations trade? What would the world be like without international trade?
Discuss the four key differences between project-based, nonequity ventures and equity
ventures.
In a short essay, discuss the three cultures into which employees are socialized-national
culture, professional culture, and corporate culture.
Explain the difference between working capital and net working capital, and discuss
why managers employ net present value (NPV) analysis to evaluate domestic and
international capital investment projects.
Describe the two techniques most often used to estimate company sales potential in
developing countries and emerging markets. Provide examples to illustrate how each
method works.
What goals does harmonization of world accounting practices aim to achieve?
