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

MGT 75343

February 28, 2019
Out of all the pricing methods mentioned, the preferred one for sellers is
Ex-Works/factory door.
Japanese cultural values suggest that in Japan, antitrust law against cartels would be
strictly enforced.
CIF and CFR terms are more convenient for foreign buyers because they merely have
to add the import duties, landing charges, and freight from the port of arrival to their
warehouses to establish their cost.
Managerial positions in overseas operations require more and different skills than do
purely domestic executive jobs.
The Bank for International Settlements operates as the banker for central banks.
To avoid changing the product to meet local legal requirements, manufacturers
frequently design it to meet the most stringent laws, even though it is over designed for
other markets.
Entering foreign markets may be described by two levels of involvement,
nonequity-and equity-based.
The major part of foreign direct investment is made by large, research-intensive firms in
oligopolistic industries.
Kotter's model for change is an eight-step process that includes ways to make the
change stick through leadership and succession.
An organization in which top-level divisions are required to heed input from a staff
composed of experts of another organizational dimension in an attempt to avoid the
double-reporting difficulty of a matrix organization but still mesh two or more
dimensions is called a hybrid organization.
Trompenaars' dimension of individualism vs. communitarianism differs greatly from
Hofstede's individualism-collectivism dimension.
Pricing that is established for transactions between members of the enterprise is called
transfer pricing.
In a currency option hedge, the firm covers its downside risk but, because the contract
is an option, can also benefit from any upside.
The Bretton Woods system led to minimal growth in international trade but helped to
reduce inflation levels.
Companies pursuing a home replication strategy typically centralize product
development functions in their home country and then transfer innovations to foreign
markets in order to capture additional value.
When a country needs new job creation, it follows that government officials will insist
on the use of labor-intensive processes.
Global teams are a decreasing form for international work, since transportation cost
reductions have been implemented in many corporations.
The Bretton Woods Conference established the European Union currency, the euro.
Sometimes there are almost no differences between marketing domestically and
marketing internationally. At other times these differences are great.
When managers are assigned and move abroad with their families, the most difficult
adjustments are frequently for the children.
Transnational corporations account for approximately 25 percent of total global output
and nearly 50 percent of world trade.
The tendency toward an international integration of goods, technology, information,
labor, and capital, or the process of making this integration happen, is referred to as
economic globalization.
Two prominent features of the strategic plan are sales forecasts and the mission
In the case of the United States, intrafirm trade accounts for 30 to 40 percent of exports
of goods.
The FTA's Market Access and Compliance Department monitors foreign country
compliance with trade agreements.
The trend in the debt financing of foreign subsidiaries is to tap the local markets first, so
Toyota in the United States would tend to tap into U.S. debt markets and Pepsi in Japan
would tend to go to the Japanese debt markets first.
Some of the reasons for the global standardization of a firm's manufacturing system are
the effects on organization and staffing.
The EU does not apply its competition policy beyond the EU.
A shipper's export declaration (SED) is a document required by the U.S. Department of
Agriculture to control exports and supply export statistics.
All EU members use the euro and thus have given up part of their national sovereignty
to the EU.
Trend analysis and cluster analysis are used in the third screening phase.
The disadvantages of using employees from the home or host countries can sometimes
be avoided by sending third-country nationals to fill management posts.
The extent of the changes in the marketing mix a firm must make when going overseas
depends on the country, the political forces, and the degree of market penetration
desired by management.
Licensing and joint venture agreements cannot be useful business forms for new
Duties may be used to encourage local input.
Nonrenewable energy sources include coal, fossil fuels, and ocean thermal energy
In debt markets, the corporate trend is to:
A. raise debt-based capital in the home country first.
B. raise debt capital in the local markets first.
C. raise equity capital first.
D. rely first on retained earnings before debt is incurred.
Incoterms attempt to standardize shipping agreements, and they include:
A. FAS and CIF.
B. CED and COD.
C. descriptions of portside processes.
D. insurance arrangements for international shipments.
E. performance guarantees.
The three nations that exported the largest amount of goods to the United States in 2010
A. Japan, Canada, and China.
B. China, Mexico, and the UK.
C. Japan, China, and Saudi Arabia.
D. Canada, Japan, and Mexico.
E. Canada, Mexico, and China.
The kinds of marine insurance policies include:
A. basic named perils.
B. broad named perils.
C. partial risk.
D. all risk.
E. A, B, and D.
New types of dumping include:
A. cultural, social, financial services, and tax dumping.
B. truck, financial services, and black-market dumping.
C. gray-market, subsidiary, and transfer-pricing dumping.
D. two of the above.
There are two points at which operating in a foreign currency raises issues for
A. when debt is incurred and when foreign payrolls are run.
B. when transactions are made in foreign currencies and when foreign subsidiaries
consolidate their results back to corporate financial reports.
C. when the currency fluctuates and when the local inflation rate changes.
D. when the interest and inflation rates change.
Once convergence is reached:
A. financial markets will be more integrated than they are now.
B. direct comparisons of company statements will be possible.
C. A and B.
D. Western-style capitalism will be at its apex.
According to the text, approximately ______ of expatriates leave their firms during the
course of their overseas assignment.
A. 10 percent
B. 25 percent
C. 31 percent
D. nearly 40 percent
E. none of the above
The level of merchandise exports in 2010, worldwide, was:
A. $3.7 trillion.
B. $8.5 trillion.
C. $15.2 trillion.
D. $18.9 trillion.
E. $23.4 trillion.
NAFTA maintains restrictions on the movement of labor, a limitation that suggests it is:
A. a free trade area.
B. a common market.
C. not in compliance with WTO regulations.
D. B and C.
With factor conditions, Porter's diamond model distinguishes between basic factors,
those a country inherits, and
A. imported factors, those it brings in from abroad.
B. demand conditions, the aggregate demand in the economy.
C. climate conditions, the basic influence on business options in the specific location.
D. advanced factors, those a country can mold: labor and infrastructure.
Exchange rate forecasting is:
A. important because exchange rates influence all aspects of business.
B. important because markets depend on solid information.
C. unimportant because exchange rate forecasting does not have a theoretical model.
D. unimportant because exchange rate movements do not impact international
This is the cleanest of the nonrenewable fuel sources, and it has become a substitute for
oil as oil prices increase:
A. natural gas.
B. diesel.
C. nuclear.
D. kerosene.
What is the purpose of multilateral netting?
A. To increase market penetration
B. To increase levels of standardization
C. To decrease inflation risk
D. To reduce transaction costs and increase efficient use of funds
Which of the following is the most risky for an importer?
A. Open account
B. Irrevocable letter of credit
C. Bank collection time draft
D. Cash in Advance
E. None of the above
Reliance on subsidiary management can depend on items such as:
A. two of B, C, and E.
B. how well the executives know one another.
C. IC management understanding host-country conditions.
D. all of B, C, and E.
E. the financial condition of the parent company.
Deserts and tropical forests seem opposites, but they have this trait in common:
A. they are good vacation spots, and thus an economic stimulator.
B. they have small populations on their edges.
C. they separate markets, increasing transportation costs.
D. they are hospitable to insects.
The Chinese concept of guanxi is an example of:
A. an informal, cognitive institution.
B. a regulative, formal institution.
C. a favorite cooking method of Chairman Mao.
D. taken-for-granted approaches to friendship relations.
A statistical technique that divides objects into groups so that the objects within each
group are similar is called:
A. trend analysis.
B. group classification analysis.
C. cluster analysis.
D. factor analysis.
E. none of the above.
The market growth rate index is measured by:
A. none of B, C, D, or E.
B. average growth rate in commercial energy + real growth rate in GDP.
C. real growth rate in commercial energy + real growth rate in GDP.
D. average growth rate in commercial energy + average growth rate in GDP.
E. real growth rate in commercial energy + average growth rate in GDP.
Lack of folklore knowledge is illustrated by:
A. Smirnoff's use of a Che Guevara image in Cuba, because Che is a national hero
B. Apple's use of an image of the Dalai Lama, because it offended China, where the
government sees the Dalai Lama as a political dissident.
C. the U.S. NFL playing U.S. football in the UK.
D. A and B
Standards are a way to establish nontariff barriers, and examples are:
A. all of B, C, and D.
B. Japan's refusal to import light mayonnaise.
C. Canada's categorization of orange juice with added calcium as a drug and subject to
special requirements.
D. the prohibition of imported drugs at the consumer level in the United States.
E. two of B, C, and D.
Dumping is:
A. selling a product abroad for less than its production cost in the importing nation.
B. selling a product abroad for less than the market price in the export nation.
C. exporting a product to a third country without correct documentation.
D. two of the above.
To facilitate Kraft's goal of enhancing growth prospects within developing-country
markets, the company:
A. moved an increasing proportion of decisions to the company's Illinois headquarters.
B. gave full profit-and-loss accountability to the business units.
C. expanded core product categories into large developing countries.
D. all of the above.
Intellectual property:
A. excludes intangibles, which is why it is a difficult area.
B. includes thoughts and ideas, but not tangible products.
C. includes anything that is a result of a creative process that does not have material
D. includes anything that is the result of things created using someone's intellect.
E. excludes things found in nature, such as natural colors, scents, and sounds.
Monochronic time is best illustrated by:
A. university scheduling patterns.
B. a rock concert.
C. high-context cultures, such as Arab and Asian cultures.
D. all of the above.
The continuum from insensitive to sensitive to foreign environment begins with
__________ and ends with __________.
A. basic consumer staples; high-style and faddish consumer products
B. industrial products; high-style and faddish consumer products
C. high-style and faddish consumer products; industrial products
D. basic consumer staples; industrial products
E. high-style and faddish consumer products; basic consumer staples
The trend for firms in regard to country risk assessment (CRA) is to:
A. avoid it as an added cost in competitive markets.
B. concentrate much more on CRA in making decisions about foreign activities.
C. use CRA in obviously dangerous locations, but only in those situations.
D. all of the above.
The major globalization drivers include all of the following except:
A. political.
B. social.
C. cost.
D. market.
E. none of the above. All of the above are major kinds of globalization drivers identified
in the text.
Environmental forces can be classified as:
A. all of B, C, and D.
B. external.
C. uncontrollable.
D. internal.
E. two of B, C, and D.
According to the text, the strategic planning process provides a formal structure in
which managers will:
A. analyze the company's external and internal environments.
B. define the company's business and mission.
C. formulate scenarios.
D. all of the above.
The main purpose of the OECD is to:
A. provide economic research and a discussion forum.
B. function as a developed-nation cartel.
C. limit growth in developing economies.
D. support trading patterns within the group of developed nations.
What is appealing about the gold standard is:
A. everyone loves gold.
B. its simplicity.
C. its transportability.
D. its carrying costs.
According to the text, the types of information an IC needs to have reported by
subsidiaries include:
A. technological.
B. market opportunities.
C. economic events.
D. all of the above.
Historically, gold has been used as a way for people to store value because of its:
A. purity and scarcity.
B. high transportation and security costs.
C. lack of interest-earning ability.
D. all of the above.