Companies usually decide to reinvest when a market is experiencing rapid growth.
A characteristic of the world’s least-global nations is low levels of corruption.
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
In a free trade area, each country can maintain whatever policy it sees fit against
nonmember countries.
Guerrilla linguistics is often used in the cultural assimilation stage.
Predictable exchange rates increase the need for currency hedging.
Training local workers on how to work on an assembly line is an example of cultural
assimilation.
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
A group of nations in a geographic region undergoing economic integration is called a
regional trading bloc.
Cultural elements can influence what kinds of products are sold and how they are sold
in a country.
Fundamental analyses used for forecasting exchange rates estimate the timing,
magnitude, and direction of future exchange rate changes.
Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin
America. To that end, Blickinstock is trying to decide whether to purchase an existing
company in a remote region of Argentina or build its own subsidiary. Keith Moon,
Blickinstock’s vice president of global business development, will be making a
presentation to the board outlining the company’s options.
Which of the following is used by home country governments to limit outbound foreign
direct investment?
A) ownership restrictions
B) differential tax rates
C) tax breaks
D) low-interest loans
Scenario: Frankfurter Friday
Betty Cleveland is the vice president of Frankfurter Friday, a highly successful hot dog
joint in Oceania. Her company decides to expand to Asia and identifies China as the
ideal market. Before she leaves for China, she studies their culture extensively and
discovers that the number four is considered extremely unlucky, that not everybody is
fluent in China’s official language-Mandarin-and that punctuality is a highly valued trait
in the country.
Once in China, Betty witnesses the ease with which Chinese employees incorporate
change and new ideas into their work-unlike the people of Oceania who prefer strong
systems of rules and guidelines. Which of the following statements within Hofstede’s
framework is consistent with her observation?
A) China scores low on the uncertainty avoidance dimension.
B) China scores high on the feminity dimension.
C) Chinese organizations are the least entrepreneurial.
D) Chinese organizations have high levels of employee turnover.
A bond issued by a Venezuelan company, denominated in U.S. dollars, and sold in
Britain, France, and Germany is an example of a ________.
A) dragon bond
B) yankee bond
C) Eurobond
D) samurai bond
The just-in-time (JIT) manufacturing technique was originally developed in ________.
A) the United States
B) China
C) Japan
D) Germany
The main benefit of a multidomestic strategy is that it ________.
A) exploits scale economies in product development and marketing
B) is cost-saving due to product and marketing standardization
C) takes advantage of location economies
D) responds quickly and effectively to emerging buyer preferences
Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products.
Recently the company launched an innovative mousetrap with a unique design that has
been selling well in the U.S. market. Senior Vice President Marc Wallace, even
recommended expanding sales overseas in order to increase company revenues.
Eventually, Wallace expects that domestic production of the mousetrap will cease
altogether. This would happen in the ________ stage of the product life cycle.
A) new product
B) maturing product
C) adapted product
D) standardized product
The ________ theory states that a firm tries to establish a dominant presence in an
industry by undertaking foreign direct investment.
A) eclectic
B) market power
C) market imperfections
D) international product life cycle
Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in
the United States is an example of a ________.
A) net national product
B) U.S. export
C) U.S. import
D) gross domestic product
Nepotism often prevails in ________ cultures.
A) extended-family
B) individualistic
C) monotheistic
D) nuclear family
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
If these twenty-six nations continue to eliminate all barriers to trade among themselves
and set a common trade policy against nonmembers, they would create a ________.
A) free trade area
B) preferential trading area
C) customs union
D) political union
A(n) ________ tariff is levied as a particular fee for each unit of an imported product.
A) specific
B) compound
C) ad valorem
D) transit
Which of the following is true of trade diversion?
A) It increases the purchasing power of consumers.
B) It increases the level of trade between nonmember nations.
C) It generally increases the prices of products in a nation.
D) It guarantees consumers a wider selection of goods.
Explain how both the international product life cycle theory and the new trade theory
ultimately result in lower priced goods. Include a definition of “first mover advantage”
in your answer.
Why do managers prefer that movements in exchange rates be predictable? How does
the Big Mac index help determine whether a currency is overvalued or undervalued,
and what are its drawbacks?
What are the advantages of pursuing a wholly owned subsidiary as an entry strategy?
Explain globalization of production and its benefits. Why should a company study
international firm management if its leadership commits to globalization of production?
Explain the effect of counterfeit goods and black markets on international product
strategies.
What are the differences between a turnkey project and a strategic alliance?
What is value density and what is its impact on an organization’s distribution policy?
Explain the concept of culture. Why is it important to avoid ethnocentricity and gain
cultural literacy?
Why are many mixed economies converting to market-based systems? How does the
role of government change when a mixed economy transitions to a market economy?