British MNEs are more likely to use the forecast exchange rate to set the budget.
On average, workers displaced by imports earn higher wages in the new jobs they
accept.
Under a strategic marketing orientation, a company considers potential environmental,
health, social, and work-related problems from the sale of its products abroad.
Critics of offshoring assert that the short-term cost savings derived from offshoring
hinder firms from developing more efficient production methods.
Although the broadening of product lines increases distribution efficiencies, too broad a
line can create problems in selling.
Patents, copyrights, and trademarks are all examples of property rights that may be
licensed to one company from another.
NGOs must be recognized by the United Nations in order to do humanitarian work in
developing countries.
Horizontal differentiation is concerned with how the managers of a firm decide to
divide the company into discrete subunits.
In the U.S., international trade is hampered by homeland security issues and delays.
Cultures do not transcend national (state) boundaries.
Higher disposable income and technological advances help overcome many geographic
constraints on product demand and distribution.
A French company floating a bond issued in Swiss francs in Switzerland would be
selling a foreign bond.
The lowering of a foreign producer’s price as a result of an imposed import tax is
known as an optimum tariff.
When analyzing the key elements of a country’s economic environment, it is best to
apply a systems perspective.
The view that regionalization, rather than globalization, will prevail in the future is
largely based on the use of common languages among countries in a region.
Translation of foreign currency financial statements is the process of restating foreign
currency financial statements from one currency into another.
Decentralization has the key advantage of letting decisions be made by those who
directly deal with customers, competitors, and markets.
Japanese companies are more likely to use sales as a measure of performance
evaluation of foreign operations than income-based measures.
According to utilitarianism, actions are moral if they produce the greatest amount of
good for the greatest number of people.
In a country with a high masculinity score, people have a tendency to feel sympathy
towards individuals who are unemployed or homeless.
Germanic countries tend to be more transparent than the United States and the United
Kingdom in terms of financial reporting due to their reliance on bank financing.
Dollarization of a currency occurs when a country takes all of its own currency out of
circulation and replaces it with U.S. dollars.
The so-called “misery index” is the sum of a country’s inflation and unemployment
rates.
Pressures for local responsiveness are especially important in industries where value
creation is a function of a company’s capacity to adapt to local market conditions.
Onshoring is also knows as reshoring.
The factor proportions theory holds that countries should improve their competitiveness
by importing capital and skilled employees from abroad.
Countertrade is an efficient way of doing business.
As exemplified in China, the government in a collectivist society is highly connected to
and interdependent with business.
The European Commission is the European Union’s ultimate decision-making body and
is composed of the different ministers of the member countries.
Most MNEs generate a majority of their revenues in their home regions.
A turnkey operation is a contract for the construction of an operating facility for a fee.
In an FX swap, one currency is swapped for another on one date and then swapped back
on a future date.
A tax credit is a credit on goods and services paid by one member of a corporate family
to another.
Totalitarian countries are favored by MNEs because state governments typically favor
foreign investors over local companies.
The common values shared by a company’s employees are known as its organization
culture.
Tel-Comm Tek is a company that sees the world as a single market, assuming that
consumer preferences and industry conditions do not vary much among countries.
Tel-Comm Tek is likely to adopt a multidomestic strategy.
A hardship allowance nullifies the risk that an expatriate will suffer a decline in his or
her standard of living due to the exorbitant expense of a particular city.
Countries with large land areas are generally less dependent on trade than countries
with small land areas.
An exception to the PLC theory in terms of production location is often a product with
very rapid change in innovation.
Governmental agencies and nongovernmental organizations monitor the behavior of
companies and their employees to ensure that laws are being followed.
Which of the following types of agents moves international cargo, facilitates shipment
tracking, and handles product returns for exporters and importers?
A) trade intermediaries
B) third party logistics
C) customs brokers
D) freight forwarders
The EU organization that provides political leadership, drafts laws, and runs the daily
programs of the EU is the ________.
A) European Commission
B) Council of Ministers
C) European Parliament
D) European Central Bureaucracy
The major trade group in South America involving Brazil, Paraguay, Uruguay, and
Argentina is ________.
A) Mercosur
B) UNASUR
C) APEC
D) CAN
Comparative advantage differs from absolute advantage in that the former ________,
whereas the latter ________.
A) holds that countries should specialize their production; does not
B) holds that trade should be kept as nearly in balance as possible; says countries
should seek a favorable balance of trade
C) bases trade on natural advantages; bases trade on acquired advantage
D) states that there is a basis of trade even if one country can produce everything more
efficiently than another country; does not deal with this issue
In a country that emphasizes collectivism, ________.
A) the interests of the individual are more important than the interests of the state
B) one person or political party exercises absolute control over the political and
economic systems
C) the needs of society and the needs of individuals are treated as equally important
D) the needs of society take precedence over individual freedoms
According to the text, which of the following has resulted from GE’s Ecomagination
initiative?
A) rising profitability for many GE products
B) increasing doubt among GE’s foreign partners
C) reducing investments by GE due to poor returns
D) improving pollution levels near GE plants in China
Studies indicate that the main cause of nearly half of failed expatriate assignments is the
inability of the expatriate to ________.
A) meet performance expectations
B) initiate a fair compensation package
C) adapt to the host culture
D) learn the local language
A(n) ________ outlines a firm’s ultimate goal and its guiding values in broad terms.
A) mission
B) strategy
C) vision
D) imperative
A speculator is someone who ________.
A) trades foreign exchange illegally
B) deals in the black market in currency
C) takes positions in foreign-exchange markets to earn a profit
D) works for OTC financial institutions rather than non-financial corporations
Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has
recently developed an innovative blender design that Wharton executives anticipate
being very profitable. Currently, Wharton has production facilities in the United States
and China. Wharton executives are trying to determine where the new product should
be manufactured. Which of the following best supports a decision to manufacture the
new product in the United States instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
B) A strategic marketing plan can be quickly developed in the United States.
C) Contract enforcement is a simple process in the United States.
D) The United States is experiencing an economic recession.
Which of the following statements would most likely NOT be supported by an advocate
of offshoring?
A) Offshoring increases the number of high-value jobs in the home countries of
offshoring companies.
B) Offshoring is fundamentally better for workers than the introduction of labor-saving
technologies.
C) Workers displaced due to offshoring are able to find new jobs as easily as those
displaced by technology.
D) There are upper limits to offshoring because of the lack of skilled workers willing to
work permanently for low wages.
All of the following are features of the diamond of national advantage theory EXCEPT
________.
A) firm strategy, structure, and rivalry
B) strategic trade policy regulations
C) related and supporting industries
D) demand conditions
The Organization of Petroleum Exporting Countries ________.
A) uses import tariffs to control oil prices
B) stabilizes prices based on demand
C) uses quotas to control oil prices
D) produces all of the world’s oil
An argument against limiting exports to unfriendly countries is that ________.
A) the costs of the sanctions are borne by innocent people rather than by leaders
B) markets cannot be regained after the countries become friendly
C) one country’s essential product is superfluous to another
D) the exporting nation’s cultural identity is harmed
Which of the following interpretative frameworks does NOT automatically presume
that a particular nation provides a solution to every problem or an explanation for every
action?
A) ethnocentric
B) geocentric
C) polycentric
D) intercentric
Country X has a floating rate for luxury goods and a lower rate for semi-manufactured
goods. Which of the following is most likely used by Country X?
A) import deposit requirements
B) multiple exchange rates
C) import licensing
D) quantity controls
Watson Electronics, an MNE based in Canada, tends to follow an ethnocentric staffing
model. From which group will it most likely hire for upper-level management positions
in its new facility in Germany?
A) home-country nationals
B) third-country nationals
C) host-country nationals
D) local citizens
Critics complain that pharmaceutical research budgets emphasize non-debilitating
conditions common in developed countries rather than life-threatening diseases
common in developing countries. People answering this criticism have contended that
________.
A) correction of developed country conditions, such as balding, are necessary to
stimulate developing country innovations that push global economic growth
B) very small portions of research budgets actually target these non-debilitating
conditions
C) by being located almost entirely in developed countries, pharmaceutical companies
lack access to locations where they can study diseases such as malaria and sleeping
sickness
D) pharmaceutical companies cannot recoup expenses for research on some of the
developing country problems, so governmental research centers and nonprofit
foundations should handle this research
Select the correct order, going from low to high total impact on an MNE, of the
following types of political risk: (1) procedural political risks, (2) systemic political
risks, (3) distributive political risks, (4) catastrophic political risks.
A) 3, 2, 1, 4
B) 1, 2, 3, 4
C) 2, 3, 4, 1
D) 2, 1, 3, 4
According to the A.T. Kearny/Foreign Policy Globalization Index, countries ________.
A) tend to be ranked similarly on all four dimensions
B) are more globalized on the political dimension than on personal contact
C) that are large in land mass and population are less globalized than small countries
D) sometimes rank high on one dimension and low on another
The belief that there are universal standards of behavior that all cultures should follow
is called ________.
A) humanism
B) relativism
C) normativism
D) naturalism
Which of the following statements best describes a pluralistic society?
A) Multiple segments of society adhere to the same political philosophy.
B) Two dominant political parties rule local and federal governments.
C) Different ideologies are held by different segments of society.
D) Various ethnic groups belong to the official political party.
Which of the following handles the majority of all foreign-exchange activities?
A) multinational enterprises
B) commodities exchanges
C) commercial banks
D) regional banks
Which of the following is most important to the effectiveness of an internal code of
conduct?
A) ensuring that employees understand the code by requiring confirmation in writing
B) paying bonuses to suppliers and distributors that agree to the code
C) relying on nonprofit NGOs to develop guidelines
D) adhering to industry standards and norms
Home-country nationals are ________.
A) used a great deal abroad by polycentric companies
B) citizens of the countries in which they are working
C) citizens of the country where the company is headquartered
D) noncitizens of the countries in which they are working
Which of the following states that the country with the higher interest rate should have
the higher inflation?
A) the Fisher Effect
B) the International Fisher Effect
C) the Interest Rate Inflation Theory
D) the Forward Rate Theory
The global capital market offers all of the following advantages to firms EXCEPT
________.
A) short-term financing options
B) numerous investment opportunities
C) wide array of financing sources
D) financing at reduced cost
Google essentially views the entire world as one market and assumes that there are no
fundamental differences among countries with regard to consumers’ preferences.
Google is engaging a(n) ________ strategy.
A) international
B) localization
C) transnational
D) global
Which of the following is the LEAST likely reason that global firms are shifting away
from formal organizational structures?
A) advancements in communication systems
B) changes in managerial standards
C) opportunities in new markets
D) demands of stockholders
Which of the following is NOT a problem when it comes to using a worldwide brand?
A) Brand names may carry a different association in another language.
B) Pronunciation may be difficult in another language.
C) Acquired brand names cannot be legally changed.
D) Pictogram alphabets need visual appeal in addition to phonetic appeal.
Under NAFTA, rules of origin ensure that ________.
A) only goods produced mostly within the region are eligible for liberal tariff
conditions
B) only American products are shipped to Canada and Mexico duty-free
C) all members import products only from member nations
D) all members have the same external and internal tariffs
Which of the following is the LEAST likely reason that inaccuracies appear in
published information about countries?
A) inclusion of both legal and illegal economic activities
B) inclusion of both market and non-market economic activities
C) poor methodology used in data collection
D) use of different translation software
In societies where trust is high, ________.
A) people tend to be more future-oriented
B) business costs are typically lower
C) people tend to be more fatalistic
D) family businesses are dominant
What is the role of the controller in an MNE? What are some of the challenges that a
controller faces in an international environment?
Contrast common law, civil law, customary law, and theocratic law.
Why are third-country nationals increasingly being used to fill expatriate assignments?
How do third-country nationals fit into the concept of geocentrism?
List and define the types of nontariff barriers that limit the quantity of goods traded:
quotas, embargoes, buy local legislation, standards and labels, specific permission
requirements, administrative delays, and reciprocal requirements.
What factors makes international pricing and distribution more complex than domestic
pricing and distribution?
Briefly discuss the four noneconomic rationales for governmental intervention in the
free movement of trade: maintaining essential industries, preventing shipments to
unfriendly countries, maintaining or extending spheres of influence, and preserving
national identity.
What are the major types of published data that managers can use to compare
countries? Describe the tools available to managers for making country comparisons.
What is a black market? Under what conditions might one exist?
What are three factors that have led to the increased growth in international business in
recent decades? Which do you think has been most important and why?
Why is global HRM more difficult than domestic HRM? How can staffing a foreign
facility with locals alleviate some of these HRM difficulties?
What are the rules of origin and regional content provisions of NAFTA?
Compare and contrast the rule of law and the rule of man.
Profile the causes and likely benefits that prompt companies to consider adopting a
neoclassical structure.
Why do companies engage in international harvesting or divestment?
What is the difference between import substitution policies and export-led development
policies? What are the potential effects of each?
What are the major sources of external funds for an MNE’s normal operations? Why do
MNEs use offshore financial centers to raise funds?
Compare the advantages of locating foreign operations to avoid where competitors have
gone versus locating where competitors are.
What is remittance income? What institutions in Mexico can handle remittance
accounts? Why are some institutions used more frequently than others?
