MNEs with a global mindset encourage an ethnocentric orientation among managers
and employees working abroad.
Confiscation is the seizure of assets with compensation.
A patent exclusively refers to a distinctive design, symbol, logo, word, or series of
words placed on a product label.
In today’s world, the most important source of national advantage is a country’s natural
resources.
Manufacturers face legal penalties and lawsuits under product safety and liability laws
if they are responsible for damage, injury, or death caused by defective products.
When it comes to ensuring ethical behavior, experienced managers follow a systematic
process.
Eurobond is a bond sold outside the issuer’s country and denominated in the currency of
the country where issued.
Indirect exporting is exporting that is accomplished by contracting with intermediaries
located in the foreign market.
In a typical licensing agreement, after the relationship is established, the licensor is
required to be directly involved in the market and provide ongoing managerial
guidance.
In a market economy, the government may intervene to address the inequalities that
market economies sometimes produce.
Nationalization describes government seizure of an entire industry, with or without
compensation.
FDI is also known as international portfolio investment.
The exporter usually first issues a quotation or pro forma invoice upon request by
potential customers.
Piracy is equivalent to counterfeiting.
Intellectual property rights law enacted in one country are enforceable worldwide.
Communications, information, and transportation technologies have decreased people’s
ability to learn about and connect with unfamiliar cultures.
Unlike exporters and licensors, who both face currency risk, managers of foreign
investment portfolios are sheltered from the rise and fall of exchange rates.
A company can be compelled to be locally responsive in individual countries to provide
uniform services to global customers.
Religion belongs to the folk cultural makeup that we are aware of.
In companies with decentralized organizational structure, power is concentrated at the
regional or corporate headquarters.
The Indian rupee is one of the currencies upon which the value of the Special Drawing
Right (SDR). is based.
The existence of a substantial market motivates many firms to produce offerings at or
near customer locations.
A global supply chain is the compilation of business activities intended to create,
produce, advertise, deliver, and support a focal firm’s product or service.
Gray market activity often leads to enhanced brand equity.
According to the framework for arriving at ethical decisions, a course of action must be
identified as soon as the ethical problem is detected.
During the recent global recession, efficiency and flexibility became particularly
important to the success of multinational firms.
Businesses in emerging markets are far less important targets for machinery and
equipment sales compared to those in advanced economies.
Host-country governments often pressure MNEs to undertake acquisition over
greenfield investments.
By establishing a physical presence inside a country or an economic bloc, the foreign
company obtains the same advantages as local firms.
The immediate cause of country risk is a legal or political factor.
Channel length refers to the number of distributors or other intermediaries that it takes
to get the product from the manufacturer to the market.
Nonverbal communication belongs to the deep cultural makeup that we are unaware of.
Market globalization compels firms to organize their sourcing, manufacturing,
marketing, and other value-adding activities on a strictly local scale.
In which of the following organizational structures does an employee at a foreign
subsidiary report to both a local manager and a corporate manager?
A) global matrix structure
B) functional structure
C) home replication structure
D) multidomestic structure
To maximize returns, management should outsource those activities ________.
A) that offer great value to the bottom line
B) in which it is relatively weak
C) that are critical to the firm’s core competencies
D) in which it has the greatest expertise and knowledge
An international human rights organization recommends that its member countries
review their human rights policies on a periodic basis to ensure that their governments
are upholding ethical standards for the treatment of prisoners. Which of the following
represents the most effective reasoning in support of the organization’s
recommendation?
A) Ethical policies and practices tend to remain consistent within the same country over
time.
B) Nations should emphasize more on rehabilitation than retribution in their treatment
of prisoners.
C) Nations should enforce only those ethical standards that have been adopted by other
nations.
D) Ethical standards change over time, so national policies should be updated as
necessary.
Governments sometimes retaliate against subsidies by imposing ________, tariffs on
products imported into a country to offset subsidies given to producers or exporters in
the exporting country.
A) local content requirements
B) investment incentives
C) countervailing duties
D) antidumping duties
________ marked the end of the 50-year Cold War and smoothed the integration of
former command economies into the global economy.
A) The end of World War II
B) The Bolshevik Revolution in Russia
C) Free-market reforms in China and the former Soviet Union
D) China’s move to join the WTO
Which of the following represents the final stage in a firm’s value chain?
A) marketing
B) procurement
C) research and development
D) sales and service
Which of the following services cannot be exported?
A) insurance services
B) education
C) pure services
D) construction
Which of the following best summarizes the argument in favor of microfinance?
A) Microfinance ultimately leads to greater tax revenues for national governments.
B) Recently, mainstream banks have begun to view microfinance as the prime driver of
advanced economies.
C) Microfinance allows the underprivileged to create businesses and improve their
lives.
D) Microfinance alleviates the pressure on MNEs to support developing economies.
International Management Position (Scenario)
Global Choppers Inc. is an MNE based in Vancouver that manufactures high-quality
motorcycles for sale around the world. The majority of design work is done at the
Vancouver headquarters, but manufacturing and assembly are performed in company
facilities located in Romania. In order to maintain control over manufacturing quality,
Global Choppers sends representatives from the company headquarters to manage the
Romanian facility for one year rotations. Conrad O’Neil has been selected to run the
foreign facility for the upcoming year. The human resources department of Global
Choppers will be preparing him for his foreign assignment through a variety of training
methods.
Which of the following sums up the goal of training Conrad for his assignment in
Romania?
A) increasing Conrad’s effectiveness abroad
B) ensuring a smooth repatriation for Conrad
C) decreasing the per-unit cost of production
D) enhancing overall freedom for employees
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 supports Country A over Country B?
A) contractual noncompliance provisions are broader in scope
B) contracts are so detailed that they are expensive to draft
C) higher flexibility compared to other legal systems
D) judges confer with legislators on international business issues
Which of the following market characteristics offers the most potential for a firm’s
success at internationalization?
A) a widely-distributed product or service
B) an unaffordable product or service
C) an unavailable product or service
D) an unknown product or service
The global capital market has grown rapidly due to widespread ________ of financial
instruments, which results in the conversion of illiquid financial instruments, such as
bank loans, into tradable securities, such as bonds.
A) debt consolidation
B) factoring
C) securitization
D) multilateral netting
When developing strategies, managers start by ________.
A) configuring and coordinating the firm’s activities around the world
B) deciding which customers to target
C) analyzing the particular opportunities and challenges that confront the firm
D) examining the firm’s specific strengths and weaknesses
Which of the following is a key reason that a focal firm would most likely enter a
collaborative venture with a foreign firm?
A) the foreign firm can fill an important gap in the focal firm’s value chain
B) the foreign firm requires the focal firm’s financial resources to compete locally as
well
C) the focal firm wants to duplicate a competitor’s marketing strategies abroad
D) the market abroad is saturated; there is no scope for the focal firm’s products or
services
Which of the following best describes an expatriate?
A) an employee who is assigned to live and work in a foreign country for an extended
period
B) an employee who returns to his home country after a foreign assignment
C) an employee hired on a temporary basis by an MNE
D) an employee who is a host-country national
The ability of a nation to govern its own affairs is known as ________.
A) sovereignty
B) liberalization
C) interdependence
D) homogenization
Freedom Shoes (Scenario)
Freedom Shoes Inc., a sports shoe company, is considering entering into a contract with
an overseas vendor to expand its production capacity. The company investigated several
suppliers and found one vendor to be the most attractive in terms of cost and
manufacturing efficiency. However, Freedom’s managers have heard reports that the
vendor operates factories with sweatshop conditions.
Which of the following, if true, implies that Freedom has a strong social interest?
A) The top management of Freedom actively engages in positively contributing to the
disadvantaged communities in the society.
B) According to Freedom, a firm that fails to institute a green purchasing policy in
sourcing its inputs is more likely than not to fail in the long run.
C) Freedom considers that the key to success for MNCs lie in their ability to tap
resources effectively and at a lower cost.
D) Despite the overseas vendor’s effectiveness, Freedom decides not to enter into a
contract with it because according to Freedom, tolerating sweatshop conditions is
unethical.
Transaction exposure occurs when ________ are denominated in foreign currencies.
A) accounts receivables
B) financial reports
C) bank loans
D) wages and salaries
In the five-step framework for making ethical decisions, implementing a course of
action implies ________.
A) assessing how effective the decision was
B) reviewing any proposed action to ensure it is acceptable according to company
policy and the firm’s code of conduct
C) determining the nature and dimensions of the ethical problem
D) creating new rules, processes, or procedures, and putting these into effect
A subsidiary is most likely to receive favorable treatment from an MNE if it is located
in a country with ________.
A) lower corporate income-tax rates
B) significant restrictions on profit repatriation
C) low tariffs for the product in question
D) political instability
CEO Hiring Interview (Scenario)
The Ace Children’s Clothing Company is a mature MNE that has been manufacturing
and selling children’s clothing in Ace stores around the world for 30 years. Ace has seen
a downturn in global sales recently due to trendy adult clothing companies branching
out into children’s clothing. The Ace board of directors is interviewing candidates to
replace the outgoing CEO. The board wants a CEO who will take Ace into the future
and pull customers back into Ace stores. Two candidates are being interviewed for the
position: Dan Elizarde and Tanya Carson. Tanya and Dan have comparable executive
experience with retail clothing companies. Therefore, the board will be basing its final
decision on visionary leadership skills. Which of the following characteristics should
the winning candidate most likely possess if Ace executives desire a CEO with a global
mind-set?
A) open-minded about diversity
B) subjective ethical standards
C) fluency in two languages
D) proponent of cultural imperialism
In the five-step framework for making ethical decisions, which of the following
approaches to evaluating actions is being used by a manager who questions whether a
proposed action embodies character strengths he/she values?
A) rights approach
B) virtue approach
C) common good approach
D) utilitarian approach
Excessive bureaucracy is usually associated with ________.
A) strong legal framework
B) low country risk
C) lack of transparency
D) low trade barriers
In emerging markets, MNEs must set prices appropriate for local conditions because
________.
A) research and development is relatively cheaper in emerging markets
B) of high corruption and bureaucracy
C) of inadequate legal framework
D) emerging market consumers cannot pay high prices
Firms with global mindsets are characterized by ________.
A) staff diversity
B) parochialism
C) a strong sense of national pride
D) rigid hiring policies
Firms that have to make debt service payments incur ________ costs.
A) variable
B) adjustable
C) fixed
D) semi-variable
Governments impose offensive barriers to ________.
A) protect domestic industries
B) promote national security
C) increase employment
D) safeguard the interests of special interest groups
Economic exposure results from exchange-rate fluctuations that affect ________.
A) marketing strategies
B) tariffs and duties
C) brand personality
D) product pricing
Which of the following is the most likely source for foreign market information,
assessments, and statistics?
A) World Trade Organization
B) Canada’s Ministry of Foreign Affairs
C) U.S. Department of Commerce
D) Council of the European Union
Prejudices in a culture ________.
A) represent the symbolic, material, and creative productions unique to a society
B) are rigidly held attitudes, usually unfavorable, and usually aimed at particular groups
of people
C) guide the development of our attitudes and preferences
D) represent a person’s judgment about what is important and what is not
Distinguish between comparative and competitive advantages. Provide examples.
What is an ethical dilemma? In a short essay, include one example of an ethical
dilemma that a business manager might face.
Why might firms choose to pursue internationalization strategies? In a short essay,
identify five major motivations for expanding overseas. Classify these motivations as
strategic or reactive and provide an example of each.
Distinguish between captive sourcing and contract manufacturing.
In a short essay, explain why a “one offering-one world” marketing strategy is difficult,
and cite an example of an industry that has attempted a “one offering-one world”
approach. How does culture affect variances in marketing programs around the world?
Explain how licensing works as an entry strategy into foreign markets. Describe the
risks faced by technological firms that enter licensing agreements in foreign countries.
Explain the differences between a forward contract and a futures contract.
Describe the purpose of CORE. How does it aid managers?
Describe the four-step process many managers use to achieve successful exporting.
Explain extraterritoriality. Provide examples to illustrate how extraterritoriality affects
international business.
Define performance appraisal. Briefly describe the factors that make performance
evaluations more complex in the international context and explain the use of incentives
in the compensation of employees.
Explain why FDI is a particularly risky foreign entry strategy. How is FDI different
from international portfolio investment?
What is a code of ethics? What function does it serve for businesses?
What is cross-licensing? Why does the pharmaceutical industry tend to favor
cross-licensing arrangements? Explain your answer in a short essay.
What are some of the criticisms of Hofstede’s study? In a short essay, discuss the
limitations of the study.
In a short essay, explain the meaning of international trade. Describe the two major
forms through which international trade takes place.
What is implied by industrialization? How does it bring about economic development?
Describe the fourth phase of globalization. What is contagion?
Discuss the factors relevant to a firm’s decision to centralize or decentralize foreign
operations.
Explain the connection between democracy and economic freedom. What are some of
the characteristics associated with political and economic freedom?