1) The range of economic systems in the world today, when represented on a spectrum,
has one end anchored by the idea of capitalism, the other with that of socialism.
2) According to EIU research, 37% of the world’s populations live in full democracies.
3) A French company floating a bond issued in Swiss francs in Switzerland would be
selling a foreign bond.
4) Societies that emphasize collectivism place the interests of individuals over the
interests of the state.
5) Labor cost advantages gained by moving into a country with low wages may be
short-lived because tax increases cancel out the low-wage advantages.
6) When a US citizen flies Japan Airlines, the airline acts as a service exporter for Japan
7) The fundamental element of democracy is justice.
8) The rule of law holds that governmental authority is legitimately exercised only in
accordance with written, publicly disclosed laws that have been appropriately adopted
and which are enforced in keeping with established procedure.
9) “Born global” firms are those that step straight onto the world stage, making
exporting the primary goal of the firm from day one of operations.
10) Many firms gain a global competitive advantage by fostering cultural diversity.
11) Between now and 2050, countries undergoing a simultaneous population reduction
and an increased percentage of retirees in the population most likely will need more
________.
A) imports
B) immigrants
C) domestic products
D) favorable balances of trade
12) All of the following are potential problems of using export controls EXCEPT which
one?
A) There is an incentive for other countries to develop production of their own
B) Domestic producers may have less incentive to increase output
C) Prices go up in the country imposing the controls
D) There is more incentive for smuggling
13) Companies typically use various international operating forms simultaneously for
all the following reasons EXCEPT which one?
A) They may be at different stages of commitment for different products
B) They may be at different stages of commitment for different countries
C) They may need to balance foreign revenues among their operating divisions
D) Differences in countries’ characteristics may necessitate diverse operational forms
14) Carrefour has been more successful than Walmart in Europe, whereas Walmart has
been more successful than Carrefour in the United States. What is the most likely
reason for these results?
A) first-mover advantages
B) nationalistic preferences of consumers
C) lack of knowing how to adapt products
D) increased exporting fees and transportation costs
15) If a company from Country A decides to sell merchandise to a company from
Country B, then the company from Country A ________.
A) will denominate the sale in its own currency since it is too hard to convert foreign
currency
B) will denominate the sale in the currency of the buyer since it is too hard for them to
convert foreign currency
C) can denominate the sale in either currency and use the foreign-exchange market to
convert currency
D) can use the OTC market to convert receipts in the future and the exchange markets
to convert receipts in the spot market
16) Ultimately, countertrade is an inefficient way of doing business because it
________.
A) encourages buyers and sellers to use customs brokers to handle exchanges
B) requires buyers and sellers to negotiate a fair value on the exchange
C) reduces the risk that the goods sent as payment are of poor quality
D) eliminates the potential for price and financial distortion
17) Risks to companies from natural disasters and communicable diseases are
________.
A) evenly distributed around the world
B) more complicated today because of publicity
C) a minor issue to global firms because of insurance
D) most prevalent in the poorest countries of the world
18) The U.S. catfish industry successfully petitioned the U.S. government to require
that catfish varieties imported from Vietnam be labeled as tra, basa, or pangasius. This
is an example of which of the following?
A) an embargo
B) a tariff
C) a nontariff barrier
D) a direct price influence
19) Which of the following is NOT a disadvantage of the international strategy?
A) Headquarters can misread foreign-market opportunities and threats
B) The transfer of core competencies to foreign markets is complicated by the need to
adapt to local needs
C) Local subsidiaries are not given the opportunity to adapt value activities and share
what they have learned with headquarters
D) The company can be blindsided by an unexpectedly innovative rival in a foreign
market
20) Terms of trade refers to ________.
A) the quantity of imports that a given quantity of a country’s exports can buy
B) specific requirements placed on imports and exports at the port of entry or exit
C) requirements agreed upon by two countries to regulate bilateral trade
D) an account statement showing a country’s annual imports and exports
21) The ability of the production process to make different kinds of products and to
adjust the volume of output is known as ________.
A) quality control
B) flexibility
C) dependability
D) innovation
22) Which of the following trends has LEAST likely led to the increased demand for
expatriate talent?
A) market developments
B) technology changes
C) globalization
D) nationalism
23) Export restrictions have a tendency to ________.
A) favor domestic consumers
B) protect employment in the export-restricted industries
C) lower prices in foreign markets
D) encourage the development of substitutes in the restricting country
24) Before the strong emphasis on zero defects, U.S. companies operated under the
premise of ________, which allowed a level of poor quality with the assumption that
service warranties and repair facilities would deal with product defects.
A) Six Sigma
B) acceptable quality level
C) just-in-time inventory management (JIT)
D) ISO 9000
25) Which of the following has been the primary reason for the recent growth of India’s
pharmaceutical industry?
A) globalized supply chains
B) tiered pricing guidelines
C) patent-protection laws
D) foreign investors
26) What is international business? What are the primary reasons that companies
engage in international business?
27) Describe and compare the different types of tariffs (duties).
28) What are the differences between democratic and totalitarian political systems?
What does current research suggest about the spread of democracy and totalitarianism
in the world?
29) What is a supply chain? How does a supply chain differ from materials
management and logistics?
30) According to the appropriability theory and the internalization theory, why would
companies want to control their foreign operations?
31) What is procedural political risk? How does a nation’s political and legal
environment influence procedural risk for MNEs?
32) Why do developing countries sometimes impose import restrictions to increase their
levels of industrialization?
33) What are the characteristics of the forward market? Why do companies participate
in the forward market? Provide an example to illustrate your answer.
34) What is the country similarity theory? According to this theory, what factors affect
trade patterns?
35) What is a turnkey operation? What features generally make turnkey operations
different from other collaborative arrangements?