The process of shifting production to a foreign country is known as outsourcing.
Very few commodity agreements are successful in bringing together supplier and
consumer countries to stabilize commodity prices.
Geographical barriers typically affect distribution channels within countries, but they
rarely affect distribution channels between countries.
The IMF’s primary role is to identify exchange rate regimes.
The success of a global manufacturing strategy depends on compatibility, configuration,
coordination, and control.
Smithson Pottery is considered a regular exporter because the firm fills unsolicited
orders from foreign buyers and passively investigates international trade options.
The terms multinational corporation and multinational company are frequently used
synonyms for strategic alliances.
An executive with a polycentric staffing policy presumes that successful business
practices at home need not change when transferred to foreign markets.
Meeting the needs of the present without compromising the ability of future generations
to meet their own needs is known as sustainability.
The potential of new entrants is one characteristic of industry structure.
Import restrictions are becoming less important because consumers increasingly want to
buy goods and services produced in their own countries.
The U.S. dollar is widely traded because it is a transaction currency in many
international commodity markets.
A problem of advertising through media that reach multiple countries is that the product
may not be available everywhere it is advertised.
Sourcing in the home country enables a company to avoid numerous problems
associated with global sourcing.
In what is known as direct exporting, the exporter sells goods directly to or through an
independent domestic intermediary in the exporter’s home country that then exports the
products to foreign markets.
The quest to maximize individual purchasing power compels local responsiveness.
The open source model is a hyperarchy that involves giving source code to volunteers
who fix software bugs.
The more partners in a joint venture, the more complex the management of the
arrangement will be.
According to U.S. GAAP, companies recognize transaction gains and losses in the
income statement.
Import substitution is a program promoting local production of products that would
otherwise be imported.
The Financial Accounting Standards Board and International Accounting Standards
Board allow firms to use the current-rate method or the temporal method to translate
foreign currency financial statements into the currency of the parent company.
A company would most likely outsource abroad in order to gain access to more
domestic products.
In a global supply chain, suppliers must be part of the manufacturer’s organizational
structure.
Neoclassical structures aim to centralize decision-making authority by removing
boundaries that impede the decentralization of decision making.
Independent suppliers can connect to a company’s intranet to help automate and
organize delivery of components to that company.
Each country in NAFTA sets its own tariffs to the rest of the world.
A transfer price is a price on goods and services sold by one member of a corporate
family to another.
NAFTA is an example of a common market.
Low-cost Eurocurrency loans can be obtained in offshore financial centers.
One advantage of importing is that an importer can diversify its operating risks by
developing alternative suppliers.
The dominant currencies in the international bond market are the euro and the U.S.
dollar.
Currency is a major issue in financial reporting because companies must decide in
which currency to present their financial information to the general public.
Transparency International, the OECD, and the ICC are all working to stop bribery
around the world.
In assessing political risk, the observation of past patterns is problematic because
situations may change for better or worse.
Creolization refers to the mixing of cultural elements that occurs during cultural
diffusion.
E-commerce facilitates the ability of consumers to compare prices from different
distributors, which will most likely result in lower prices on products.
The past few years have seen fewer females sent on international assignments.
Which of the following is most likely a true statement regarding the rule of law? The
rule of law is a hallmark of ________.
A) a totalitarian government
B) a democratic government
C) societies that place ultimate power in the hands of one person
D) countries that are considered “partly free”
American hamburgers, Japanese sushi, Italian pizza, Mexican tacos, and Middle Eastern
pita bread are now commonly found in most countries. This best supports the argument
that ________.
A) although visible expressions of culture are becoming homogenized, basic differences
in societal values remain strong
B) globalization fulfills lower order needs in Maslow’s hierarchy
C) cultural imperialism is increasingly widespread
D) cultural hybridization is occurring
According to Adam Smith’s theory of absolute advantage, specialization allows
countries to increase their efficiency for each of the following reasons EXCEPT
________.
A) labor could become more skilled by repeating the same tasks
B) transportation costs could be lowered by producing closer to markets
C) labor would not lose time in switching from the production of one kind of product to
another
D) higher production would provide incentives for the development of more effective
working methods
In a ________ economy, certain sectors of the economy are left to private ownership
and free market mechanisms, while other sectors have significant state ownership and
government planning.
A) state-directed
B) market
C) command
D) mixed
The most internationally mobile factor of production is ________.
A) labor
B) management
C) long-term capital
D) short-term capital
It is easier to predict the ________ of a change than the ________ of a change in
exchange rates.
A) altitude; magnitude
B) depth; length
C) timing; depth
D) direction; magnitude
When companies face the same competitors in almost all countries where they operate,
________.
A) what they learn about one another in one country is useful in predicting the others’
strategies and actions elsewhere
B) the market leader is the same everywhere
C) there is less need to understand the physical and societal factors of each country
D) they are less likely to enter joint ventures with other companies
A document requesting payment 30 days after delivery is known as a ________.
A) time draft
B) sight draft
C) spot draft
D) futures draft
Which of the following most likely complicates ethical behavior for firms that expand
overseas?
A) local laws and values
B) expatriate management
C) unstable financial settings
D) international codes of conduct
According to the text, which of the following is the most important competency in the
expatriate selection process?
A) flexibility
B) business acumen
C) global mindset
D) geographic knowledge
The Integration-Responsiveness (IR) Grid expresses how a company’s ________ is a
function of the relationship between its value chain and the prevailing pressures for
global integration or local responsiveness in its industry.
A) value proposition
B) target market
C) mission
D) strategy
A guideline for responsible action by a firm in its operations worldwide is a(n)
________.
A) code of conduct
B) corporate monitoring policy
C) education program
D) honor code
Which of the following best explains why international business has grown rapidly in
the past few decades?
A) the end of the political division between the Communist and non-Communist blocs
B) greater income equality in most countries
C) growing concern about climate change
D) increased concerns about terrorism
Which of the following is NOT a component of modern legal systems?
A) constitutional law
B) criminal law
C) commercial law
D) private law
A foreign direct investment occurs when ________.
A) a company owns at least 25% of a foreign firm
B) a company has a controlling interest in a foreign company
C) foreign ownership is in private rather than government securities
D) a foreign firm agrees to a licensing agreement with a large conglomerate
Advantages of following a strategy of local responsiveness include the ________.
A) improved ability to transfer skills to employees in different locations
B) opportunity to adopt a global advertising program
C) ease in standardizing manufacturing methods across countries
D) flexibility to apply location-specific skills to local opportunities
Which of the following problems in China is blamed for the annual loss of $250 billion
by American MNEs?
A) intellectual property violations
B) environmental hazards
C) child labor violations
D) embezzlement
Falcon Enterprises is an MNE that uses price competition and relative market share to
establish internal performance benchmarks and standards. The firm is most likely
applying a system of ________.
A) bureaucratic control
B) market control
C) standardization control
D) clan control
The perspective of ________ holds that as a company gains experience, resources, and
confidence, it progressively increases its scope of countries to which it exports.
A) serendipity
B) export management
C) the born-global theory
D) incremental internationalization
Which of the following is NOT true about the harvesting or divestment of foreign
operations?
A) One of the motives is to use resources where the performance prospects are better.
B) Companies can harvest or divest by selling existing facilities.
C) Closing a facility can be difficult because of governmental performance contracts.
D) Companies have tended to divest too soon, rather than working to improve
performance.
Some observers feel that international institutions and the people working in them
cannot adequately handle the complexities of an interconnected world. Based on this,
these observers believe that ________.
A) globalization will slow in the future
B) globalization is nevertheless inevitable
C) international business will grow primarily on a regional basis
D) private companies will replace international organizations in running the world’s
economy
Jack, an American accounts manager, is preparing a presentation for a group of
Japanese business people. Jack’s presentation would be most effective if he ________.
A) told an opening joke to put everyone at ease
B) used slang to create an informal atmosphere
C) used long words to impress his counterparts
D) budgeted extra time for translation and clarification
Which of the following statements is most likely true about secrecy and transparency in
accounting?
A) Japanese firms are usually as transparent as U.S. firms.
B) German companies tend to be less transparent than British companies.
C) Secrecy and transparency refer to the degree of caution companies display in valuing
assets.
D) Companies that list on stock exchanges are highly transparent because of
stockholder audits.
An NGO is ________.
A) an agency of the United Nations
B) a private institution independent of a government
C) any organization working on environmental issues
D) an organization that is concerned only with workers’ rights
Which of the following is a unique provision of NAFTA?
A) tariff elimination
B) common currency
C) environmental standards
D) immigration oversights and policies
Historically, the geographic division structure is associated with companies pursuing
________ strategies.
A) multidomestic
B) transnational
C) global
D) international
Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most
likely expect the Hong Kong government to ________.
A) monitor market prices
B) control natural resources
C) ensure fair competition
D) provide innovation incentives
Given the daily volume of foreign-exchange transactions, it is most accurate to say
which of the following?
A) It is impossible for a government’s interventions in the foreign-exchange market to
affect market psychology.
B) A government’s intervention in the foreign-exchange market can reverse a currency’s
slide for the long term.
C) A government’s intervention cannot force the foreign-exchange market to move in a
determined direction.
D) A government should focus more on intervening in foreign-exchange markets than
on correcting economic fundamentals.
Apex Enterprises, an MNE based in the United States, is spending too much money on
expatriate assignments. Which of the following methods would LEAST likely help
Apex reduce expatriate costs?
A) offering cross-border commuter assignments
B) designing more short-term projects
C) establishing a localization policy
D) expanding core competencies
What is the primary reason for technology licensing to take place while a product is still
in the developmental stage?
A) to enable the licensor to receive some earnings in case the technology never
becomes operative
B) to ensure that a product launches in various countries at about the same time
C) to gain funds to complete the development
D) to reduce transaction costs
What are the three levels of quality standards?
A) general, industry-specific, and company
B) general, international, and domestic
C) employee, company, and customer
D) company, international, and industry-specific
What is a supply chain? How does a supply chain differ from materials management
and logistics?
Why do most companies examine expansion proposals one at a time rather than
comparing various expansion proposals? Do you think this is effective? Why or why
not?
What is a futures contract? What institutions handle futures contracts?
According to the appropriability theory and the internalization theory, why would
companies want to control their foreign operations?
What is currency speculation? Why is it risky?
In a short essay, discuss the standardization of two marketing components: advertising
and distribution.
Describe the different types of regional economic integration and give an example of
each type.
Describe total quality management.
In a short essay, discuss why simply examining a country’s per capita GDP and its
population doesn’t necessarily lead to a good estimate for potential demand.
What is an equity alliance? What motives would a firm have for forming an equity
alliance?
Why are the concepts of dependability and quality important when developing a global
manufacturing strategy?