1) Social structure is the outcome of a societys formal and informal rules of the game.
2) Every time a WTO country lowers a trade barrier, it has to do the same for all other
member countries.
3) FDI is more suitable if the activity is marginal and common across multiple end-user
industries.
4) The process of outsourcing to a domestic firm is known as captive sourcing.
5) The demonstration effect refers to the ability of a firm to engage in an upstream stage
of the value chain in a host country.
6) Cultural intelligence emphasizes the understanding of informal institutions.
7) A countrys current account deficit can only be financed using its savings.
8) Offshoring refers to setting up subsidiaries in foreign locations to perform in-house
work.
9) Tangible resources and capabilities are assets that are observable and easily
quantified.
10) A type of FDI in which the firm moves upstream or downstream in different value
chain stages in a host country is called horizontal FDI.
11) Majority of the largest US firms practice currency hedging.
12) Which of the following economic perspectives on FDI has its principles rooted in
Marxism?
a. Pragmatic nationalism
b. Laissez-faire
c. The free market view
d. The radical view
13) _____ are the most basic non-equity mode of entry, capitalizing on economies of
scale in production concentrated in the home country and providing better control over
distribution.
a. Indirect exports
b. Direct exports
c. Turnkey projects
d. Acquisitions
14) ____ innovation is the use of purposive inflows and outflows of knowledge to
accelerate internal innovation and expand the markets for external use of innovation.
a. Collaborative
b. Open
c. Closed
d. Absorptive
15) CAFTA refers to _____.
a. a regional integration mechanism integrating two existing customs unions (Andean
Community and Mercosur) in South America
b. a free trade agreement between the United States and five Central American
countries and the Dominican Republic
c. a proposed free trade area for the entire Western Hemisphere
d. a proposed customs union between nations that are present near the Pacific Ocean
16) Which of the following is true of the reactive strategy to ethical challenges in
business?
a. It admits responsibility and does less than what is required
b. It accepts responsibility and does more than what is required
c. It anticipates institutional changes and does more than what is required
d. It denies responsibility and takes a passive approach
17) Natural resource-seeking firms have compelling reasons to enter culturally and
institutionally distant countries. This is a counter example of _____.
a. the stage model
b. large-scale entry
c. the equity mode of entry
d. the country-of-origin effect
18) Which of the following was part of the agenda of the Doha Round?
a. Reducing agricultural subsidies in developing countries
b. Increasing tariffs in the industries that developed countries might benefit from
c. Freeing up trade in services
d. Loosening intellectual property protection
19) A(n) ____ is an investment in real operations as opposed to financial capital.
a. real account
b. hubris
c. real option
d. foreign direct investment
20) Which of the following describes resource mobility as assumed by the classical
theories of international trade?
a. It is the assumption that a resource used in producing a product for one industry can
be shifted and put to use in another industry
b. It is the notion that countries should share their resources freely with other countries
c. It is the expectation that all resource-based transactions will have no foreign
exchange complications
d. It is the assertion that all resources of a nation should be directly controlled by the
government
21) MNEs pursuing home replication strategy typically hire _____ as top managers at
local subsidiaries.
a. third-country nationals
b. host-country nationals
c. multinationals
d. parent-country nationals
22) Organizational culture is an example of _____.
a. human resources and capabilities
b. physical resources and capabilities
c. organizational resources and capabilities
d. technological resources and capabilities
23) Which of the following is true of private ownership?
a. Firms are established by entrepreneurs, owners, and investors
b. Management appointments are made by government officials and bureaucrats who
may also use non-economic criteria
c. Firms objective would be to find a fair deal for all stakeholders
d. Firms deemed too big to fail may be supported by taxpayer dollars indefinitely
24) The hierarchical arrangement of individuals into categories such as classes, castes,
or divisions within a society is referred to as _____.
a. social dumping
b. social stratification
c. social facilitation
d. social loafing
25) In an alliance, keeping critical skills and technologies not meant to be shared a
secret helps prevent _____.
a. proxy fight
b. corporate raider
c. opportunism
d. hostile takeover
26) _____ refers to longer term, broader preparation to improve managerial skills for a
better career.
a. Benchmarking
b. Nepotism
c. Outplacement
d. Development
27) A _____ approach is the opposite of an ethnocentric approach.
a. telocentric
b. polycentric
c. geocentric
d. regiocentric
28) Which of the following is true of the Washington Consensus?
a. It provided measures that governments can take in order to move toward a command
economy
b. It listed the bail out procedures that governments could follow in case of a firms
bankruptcy
c. It advocated more governmental control in trade
d. It advocated the superiority of private ownership over state ownership
29) _____ refers to the official title for regional economic integration involving 21
member economies around the Pacific.
a. UNASUR
b. APEC
c. NAFTA
d. CAFTA
30) Which of the following is true of OEMs?
a. It includes research and development in its value chain
b. It does not include procurement of components in its value chain
c. It does not include marketing in its value chain
d. It does not include final assembly in its value chain
31) Which of the following is an example of a firms physical resources and
capabilities?
a. Integrated management information systems
b. Access to raw materials and distribution channels
c. Ability to generate internal funds
d. Capacities for organizational innovation and change
32) Firms that design, manufacture, and market distinguished products are called
_____.
a. original design manufacturers
b. original equipment manufacturers
c. original brand manufacturers
d. business process outsourcing firms
33) Corporations in _____ are bank-oriented, network-based systems.
a. China
b. continental Europe
c. the United States
d. the United Kingdom
34) Which of the following is a modern trade theory?
a. Comparative advantage
b. National competitive advantage
c. Mercantilism
d. Absolute advantage
35) The conflicts between controlling shareholders and minority shareholders are called
_____.
a. owner-manager conflicts
b. agent-agent conflicts
c. principal-agent conflicts
d. principal-principal conflicts
36) Which of the following is an example of tacit knowledge?
a. Performing surgery
b. A product manual
c. HR policies
d. Writing an e-mail
37) The European Union (EU) was established when the ____ went into effect in 1993.
a. Treaty of Rome
b. Maastricht Treaty
c. Lisbon Treaty
d. ECSC Treaty
38) _____ are legal rights awarded by government authorities to inventors of new
products.
a. Copyrights
b. Patents
c. Trade secrets
d. Trade marks
39) MNEs adopting the _____ strategy may designate centers of excellence.
a. global
b. home replication
c. localization
d. transnational
40) Which of the following alliances is an equity-based alliance?
a. Strategic investment
b. Licensing
c. Turnkey projects
d. Co-marketing
41) _____ refers to the clustering of economic activities in certain locations.
a. Internalization
b. Expropriation
c. Agglomeration
d. Intrafirm trade
42) Which of the following is true of individualists and collectivists?
a. Individualists are more collaborative when dealing with in-group members
b. Collectivists are more opportunistic when dealing with out-group members
c. Individualists discriminate more harshly against out-group members
d. Collectivists are opportunistic when dealing with in-group members
43) An ODM is similar to an OBM in that both _____.
a. execute design blueprints provided by other firms
b. include product marketing in their organizational boundary
c. exclude manufacturing in their organizational boundary
d. design and manufacture their own products
44) Which of the following is true of modes of entry?
a. Non-equity modes require the establishment of independent organizations overseas
b. Non-equity modes are methods used to enter a market in the home country
c. Equity modes are indicative of relatively larger, harder-to-reverse commitments
d. Equity modes do not require the establishment of independent organizations overseas
45) A ____ is a financial contract that states that the importer’s bank will pay a specific
sum of money to the exporter upon delivery of the merchandise.
a. bill of lading
b. deed
c. letter of credit
d. bill of exchange
46) Firms with ____ ownership have numerous small shareholders but none with a
dominant level of control.
a. concentrated
b. family
c. diffused
d. state
47) The _____ strategy is characterized by some support from top managers, who may
increasingly view CSR as a worthwhile endeavor.
a. accommodative
b. reactive
c. proactive
d. defensive
48) _____ is the cost needed to own a product, consisting of initial purchase cost and
follow-up maintenance/service cost.
a. Total cost of ownership
b. Price
c. Fixed cost
d. Cost-plus pricing
49) Which of the following is referred to as a multilateral trading system?
a. WTO
b. EU
c. NAFTA
d. ASEAN
50) _____ is the difference between two cultures along identifiable dimensions.
a. Cultural cringe
b. Cultural distance
c. Reverse culture shock
d. Culture shock
51) _____ refers to a philosophy or way of thinking that places the highest priority on
the creation of superior customer value in the marketplace.
a. Market orientation
b. Societal orientation
c. Relationship orientation
d. Sales orientation
52) Firms that are first to introduce new goods or services are likely to earn monopoly
profits until competitors emerge.
53) According to the resource-based view, holding institutions constant, firms that
develop the best capabilities in marketing and supply chain management will emerge as
winners.
54) Briefly explain the classical theory of mercantilism.
55) Briefly explain the strengths and weaknesses of the absolute advantage and
comparative advantage trade theories.
56) Suppliers and customers are secondary stakeholders.
57) The relationship between strategy and structure is reciprocal.
58) The primary stakeholder groups are those who influence or affect, or are influenced
or affected by, the corporation, but are not engaged in transactions with the corporation.
59) Briefly explain the cause for the fall of the Bretton Woods System.
60) The ability to meet the needs of the present without compromising the ability of
future generations to meet their needs around the world is called global sustainability.