1) The Malcolm Baldrige National Quality Award is an example of a general standard
that is presented annually to companies that demonstrate quality strategies and
achievements.
2) A civil law system anchors itself in the wisdom of daily experience or, more
intellectually, great spiritual or philosophical traditions.
3) EDI is software that can link information flows from different parts of a business and
from different geographic areas.
4) A company sometimes handles a broader line of products in a foreign country than in
its home country because most of its new product development is abroad.
5) Internal tension may develop within a company as it changes an international
operating mode because some managers gain responsibility and others lose it.
6) The Happy Planet Index measures well-being and perceptions of living conditions by
assessing areas such as housing, incomes, security, and work-life balance.
7) Cultural change may come by choice or imposition.
8) The truly experienced international firm will usually make use of various modes of
operation simultaneously.
9) Collaborative arrangements prevent the possibility of information being passed to
potential competitors.
10) According to theories of specialization in international trade, gains occur because
specialized workers move to countries that can use their skills more effectively.
11) A tax credit is a credit on goods and services paid by one member of a corporate
family to another.
12) In assessing political risk, the observation of past patterns is problematic because
situations may change for better or worse.
13) All of the following countries have a totalitarian political system EXCEPT
________.
A) China
B) Russia
C) South Korea
D) Saudi Arabia
14) Ampco Industries has a production facility in an area of India in which roads are
poorly maintained and dangerous. What part of Ampco’s marketing mix do these
conditions most likely affect?
A) distribution
B) branding
C) product standardization
D) promotion
15) Which of the following is an example of interest arbitrage?
A) investing in debt instruments in different currencies or different countries
B) selling U.S. dollars for Swiss francs, then selling Swiss francs for British pounds,
then selling British pounds for U.S. dollars
C) investigating different commercial banks to find the best exchange rate
D) an American investing in a London-based company
16) Subpart F income is ________.
A) usually earned by a branch rather than a corporation
B) not taxed to the parent unless a dividend is remitted
C) not eligible for the tax credit
D) passive and usually derived from operations in a tax-haven country
17) Managing and cultivating diverse teams is facilitated by first encouraging team
members to ________.
A) understand each other’s culture before dealing with the tasks at hand
B) jump into the task allowing the team members to react and adapt to each other
C) allow team members to deal with the fellows as they would in their own culture
D) establish strict rules on how the task will be performed
18) A(n) ________ ideology is the system of ideas that expresses the goals, theories,
and aims of how society should work.
A) technological
B) economic
C) legal
D) political
19) Which of the following should an MNE most likely consider in a make-or-buy
decision?
A) organizational hierarchy
B) supplier capabilities
C) employee morale
D) niche markets
20) Political, legal, economic, monetary, and institutional forces comprise the ________
of international business and influence managers’ actions.
A) environment
B) competition
C) culture
D) threat
21) Assume the following conditions: In the United States it takes 4 units of resources
to produce a ton of potatoes and 5 to produce a ton of coal. In Canada it takes 6 units of
resources to produce a ton of potatoes and 10 to produce a ton of coal. According to the
theory of comparative advantage, ________.
A) there would be no basis for trade
B) the United States should import potatoes from Canada and export coal to Canada
C) the United States should export both potatoes and coal to Canada
D) the United States should export potatoes to Canada and import coal from Canada
22) A major benefit of the international division structure is ________.
A) outsourcing distribution and shipping tasks
B) responding quickly to foreign events
C) diversifying most product groups
D) hiring low-cost, local workers
23) In the opening case on the Java Lounge in Saudi Arabia, Saudi businessmen
engaged in chit-chat while drinking coffee at a caf during the conduct of business.
Which of the following was the most likely reason for their behavior?
A) They are fatalistic, believing that the business outcome was predetermined
B) Their religious convictions kept them from discussing business over alcoholic drinks
C) They come from a polychronic culture that prefers to multitask
D) They come from a high-context culture in which small talk and seemingly unrelated
information is important to decision making
24) For U.S. companies, foreign-currency-denominated receivables and payables give
rise to exchange gains and losses ________.
A) at the end of each accounting period
B) only when the dollar strengthens against the foreign currency
C) only when the dollar weakens against the foreign currency
D) whether the transactions are denominated in dollars or the foreign currency
25) In terms of international business, it is most accurate to say that ________
A) there is a universal “best way” to conduct business
B) global competition affects large companies but not small ones
C) most firms depend either on foreign markets and supplies or compete against
companies that do
D) government regulation of international business has little effect on a company’s
profits
26) ________ is a particularly important consideration in the establishment of a
transportation network.
A) Warehouse configuration
B) ISO 9000
C) Rationalization
D) The kanban system
27) Which of the following was a notable trend in political systems during the second
half of the 20th century and beginning of the 21st century?
A) A wave of democratic transformations occurred as countries around the world
moved away from totalitarian systems
B) A wave of theocratic revolutions occurred as people around the world looked to
spirituality to guide them
C) Socialistic revolutions swept the world as countries aspired toward greater social
justice
D) A totalitarian revolution swept the world as people looked to strong state leadership
in uncertain times
28) When a company wants to be compensated in a foreign subsidiary beyond its
contribution in capital and managerial resources, it often ________.
A) licenses intangible property to its subsidiary
B) negotiates a special agreement with the host government
C) establishes a management contract
D) sets up an equity alliance
29) Historically, the most important criterion in selecting individuals for posting to an
expatriate slot has been ________.
A) foreign language abilities
B) technical competence
C) leadership skills
D) flexibility
30) What methods are used by managers to forecast exchange rates? What are the main
factors that influence exchange rates?
31) Why should domestic managers have an understanding of globalization and
international business? What are the current views regarding the future of
globalization?
32) In a short essay, discuss the theory of mercantilism, and discuss favorable and
unfavorable balances of trade as they apply to international business.
33) What is a black market? Under what conditions might one exist?
34) What is extraterritoriality? Why is the concept controversial?
35) What is the Bank for International Settlements? What three categories does the BIS
designate in the foreign-exchange market? Briefly describe each category.
36) What are the characteristics of the spot market? What institutions handle spot
exchanges?
37) What is the difference between relativism and normativism? How do these concepts
relate to ethical behavior in international business?