Regardless of a firm’s domestic structure, its international division tends to be organized
on _____.
A. product
B. geography
C. people
D. economy
Dumping occurs whenever a firm sells a product:
A. for a price that is less than the cost of producing it.
B. without paying the necessary regulatory charges.
C. for a price that is higher than the market rate.
D. by including a premium for the R&D activities of the firm.
A multinational corporation uses both its own employees from inside the firm and an
external supplier to perform certain tasks, often in concert with each other.
A. Insourcing
B. Offshore outsourcing
C. Nearshoring
D. Co-sourcing Co-sourcing occurs when a multinational corporation uses both its own
employees from inside the firm and an external supplier to perform certain tasks, often
in concert with each other.
The General Agreement on Tariffs and Trade (GATT) was responsible for ____.
A. protecting government owned enterprises
B. policing the global marketplace
C. limiting nuclear testing
D. promoting environment friendly technology
Which of the following is a reason why the global capital market is increasingly
becoming speculative?
A. A global market reduces the liquidity of investments and increases the chances of
incurring losses.
B. Investments in the global capital market are faced with a lack of quality information.
C. Investments in the global capital market are not conducive to diversification.
D. The cost of capital is more in a global market and this increases the level of risk
associated with it.
Consumers in highly developed countries value _____ as compared to their
counterparts in less developed nations.
A. product price
B. product reliability
C. product attributes
D. product value
Assume that the current exchange rate is €1 = $1.50. If you exchange 1,000 euros for
dollars, you will receive ____.
A. $1,000
B. $750
C. $1,500
D. $667
A _____ refers to a loss of confidence in the banking system that leads to a run on
banks as individuals and companies withdraw their deposits.
A. currency crisis
B. banking crisis
C. foreign debt crisis
D. domestic debt crisis
A country rejects FDI proposals in certain industries. It does so because the tangible
advantages of such investments are lesser than potential costs like loss of employment
and reduction of overall well-being. However, it aggressively pursues inviting foreign
investments in sectors like infrastructure, education, and healthcare because of the
benefits that accrue with them. Which political view of FDI is discussed in this
example?
A. The pure market view
B. The free market view
C. The radical view
D. The pragmatic nationalist view The pragmatic nationalist view is that FDI has both
benefits and costs. According to this view, FDI should be allowed so long as the
benefits outweigh the costs.
Most banks charge a(n) _____ for moving cash from one location to another.
A. transfer fee
B. internal forward rate
C. accounting service fee
D. audit fee
According to the _____ approach, the best decisions are those that produce the greatest
good for the greatest number of people.
A. naive immoralist
B. Friedman doctrine
C. Kantian ethics
D. utilitarian
_____ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain
amount of materials back from a country to which a sale is made.
A. Counterpurchase
B. Barter
C. Offset
D. Switch trading
Firms entering markets where there are no incumbent competitors to be acquired should
choose _____.
A. greenfield investments
B. joint ventures
C. acquisitions
D. takeovers
The volume of world trade in merchandise growing faster than world GDP implies that:
A. more firms are dispersing their production processes to global locations.
B. the economies of the world’s nation-states are becoming more independent from each
other.
C. the global economy is headed for a large downward correction.
D. the world is becoming poorer.
The growth of international trade in services has been driven by advances in:
A. communications.
B. transportation.
C. agriculture.
D. energy.
Which of the following is a first-mover advantage?
A. International firms may gain experience in that country’s business practices.
B. An international firm can reap the rewards of growth in a new market without
incurring the risks.
C. A firm may have the opportunity to be the first to introduce generic brands to a
market.
D. A firm can gauge how well their product will do in the market without taking the risk
of investing their.
Firms pursuing a(n) _____ strategy increasingly are using management development as
a strategic tool.
A. localization
B. global standardization
C. transnational
D. international
For a company whose core competency is management know-how, which entry mode
would be optimal?
A. Turnkey contracts
B. Licensing agreements
C. Strategic alliances
D. Foreign franchises controlled by joint ventures
The competitive advantage of many service firms is based on management know-how
(e.g., McDonald’s, Starbucks). For such firms, the risk of losing control over
management skills to franchisees or joint-venture partners is not that great. These firms’
valuable asset is their brand name, and brand names are generally well protected by
international laws pertaining to trademarks. Many service firms favor a combination of
franchising and master subsidiaries to control the franchises within particular countries
or regions. The master subsidiaries may be wholly owned or joint ventures, but most
service firms have found that joint ventures with local partners work best for the master
controlling subsidiaries. A joint venture is often politically more acceptable and brings a
degree of local knowledge to the subsidiary.
The _____ of FDI refers to the amount of FDI undertaken over a year.
A. stock
B. net value
C. accumulated value
D. flow The flow of FDI refers to the amount of FDI undertaken over a given time
period (normally a year).
Hinduism and Buddhism both stress the importance of _____.
A. the caste system
B. the afterlife
C. Confucian ethics
D. life on earth
Which of the following statements about barriers to international communication is
true?
A. Source effects occur when the receiver of the message evaluates the message on the
basis of the location of the sender.
B. The best way for a firm to overcome cultural barriers is to use local input.
C. Source effects and country of origin effects are always negative.
D. Noise is extremely high in highly developed countries such as the United States.
A group of people who share a common set of values and norms form a _____.
A. culture
B. society
C. country
D. caste
When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale,
the firm should follow a(n) _____ strategy.
A. global standardization
B. localization
C. international
D. customization
_____ are popular among many of the world’s smaller nations.
A. Floating exchange rates
B. Full fixed exchange rates
C. Fixed exchange rates
D. Pegged exchange rates
A(n) _____ involves the free flow of products and factors of production between
member countries, the adoption of a common external trade policy, a common currency,
harmonization of members’ tax rates, and a common monetary and fiscal policy.
A. economic union
B. common market
C. customs union
D. free trade area
The _____ specifies that government agencies must give preference to American
products when putting contracts for equipment out to bid unless the foreign products
have a significant price advantage.
A. General Agreement on Tariffs and Trade
B. Buy America Act
C. American Reinvestment Act
D. Smoot-Hawley Act
Before a firm is allowed access to the European marketplace, the European Union
requires that the quality of the firm’s manufacturing processes and products be certified
under a quality standard known as _____.
A. Six Sigma
B. ISO 9000
C. Kaizen
D. total quality management The European Union requires that the quality of a firm’s
manufacturing processes and products be certified under a quality standard known as
ISO 9000 before the firm is allowed access to the EU marketplace.
The variety of goods that a country can produce is limited by the size of the market in
industries where _____ are important.
A. factor endowments
B. current account deficits
C. economies of scale
D. current account surpluses
Which of the following is the main concept of economies of scale?
A. Productivity declines when firms attempt to reduce costs.
B. Total costs decrease as firms increase the production.
C. Unit costs decrease as a plant’s output increases.
D. Utilization of capital declines when firms grow in size.
The Six Sigma methodology:
A. is used to compare and benchmark the performances of competing firms.
B. gives more importance to productivity than product quality.
C. is a direct descendant of the total quality management philosophy.
D. recommends that only one product should be defective in a thousand products.
A(n) _____ eliminates trade barriers between member nations, adopts a common
external policy, and permits factors of production to move freely between member
countries.
A. free trade area
B. common market
C. economic union
D. customs union
Most international businesses require all budgets and performance data within the firm
to be expressed in the “corporate currency,” which is normally:
A. a common currency such as the U.S. dollar.
B. the home currency.
C. a foreign currency.
D. the currency of the country where products are sold.
With a(n) _____ system, suppliers, shippers, and the purchasing firm can communicate
with each other with no time delay.
A. CAD
B. JIT
C. CAM
D. EDI
It follows from the Fisher effect that if the real interest rate is the same worldwide; any
difference in interest rates between countries reflects differing expectations about
_____.
A. foreign exchange rates
B. inflation rates
C. unemployment rates
D. GDP growth rates
A caste system differs from a class system because:
A. a caste system is an open system of stratification, while a class system is a closed
system of stratification.
B. it is not possible for an individual to change his or her caste, while a class system
allows people to change their class through individual achievement.
C. the social mobility in caste systems varies from society to society, while in a class
system there is no social mobility.
D. a caste system is a less rigid form of social stratification, while a class system is a
comparatively more rigid form of social stratification.
How does the growth in the global capital markets affect investing firms?
Identify the multinational institutions that were established at the Bretton Woods
agreement. What were their roles in the international monetary system?
Discuss collectivism.What ideals does the philosophy support? Where did the
philosophy start? How does collectivism exist in the modern world?
Explain the events that led to the failure of the Bretton Woods system.
What are the ways in which international business and its managers can ensure that
ethical issues are considered in business decisions?
When a firm is considering FDI, what are the some of the negotiating points it must
weigh before making its decision?
Discuss individualism. Explain the key positions of the philosophy, it roots, and its role
in the modern economy.
What are the factors that contribute to the attractiveness of a country as a market or
investment site?
Is privatization by itself enough to guarantee economic growth? Why? Explain using an
example.
Consider the influence of Confucian ethics on the economies of China, Japan, South
Korea, and Taiwan.
What are the three main factors that affect the decision of locating production?
How is a country’s accounting system affected by the providers of capital? Explain with
the help of suitable examples.
Explain briefly the regulatory influences on pricing.
Describe a typical international trade transaction.
Compare and contrast a pure democracy and a representative democracy. Which type of
democracy is more common today? Why?
Explain why a firm might adopt the just-in-time system.
Discuss the concept of the globalization of production.
With the help of an example, explain how balance-of-trade equilibrium is maintained
under the gold standard.
Explain the concept of moral imagination as it relates to a company’s stakeholders.
Explain why barter is viewed as the most restrictive counter-trade arrangement.