Religion is confined to national political boundaries.
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
When a company exports a product at a price higher than the price normally charged in
its domestic market, it is said to be dumping.
Both GDP and GNP measure a nation’s income per person.
The concept of purchasing power parity (PPP) must be applied to understand the true
value of a currency in its home country.
The most common method used for buying and selling goods internationally is
licensing.
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 result of trade creation is that buyers pay higher prices for imported goods and
services after trade barriers are removed.
A country’s climate plays an important role in determining the basic demand for a
company’s product.
Codetermination allows labor representatives to participate in high-level company
meetings.
Which of the following is a method of export/import financing?
A) offset
B) buyback
C) switch trading
D) documentary collection
Which of the following philosophies maintains that a company should maximize
“good” outcomes and minimize “bad” outcomes wherever it operates?
A) Friedman view
B) righteous moralist view
C) cultural relativist view
D) utilitarian view
A ________ strategy can be implemented successfully for communicating promotional
messages only if a sufficiently large and profitable market segment exists.
A) dual extension method
B) product extension/communications adaptation method
C) product adaptation/communications extension method
D) dual adaptation method
The theory of comparative advantage was proposed by ________.
A) David Ricardo
B) Adam Smith
C) Bertil Ohlin
D) Raymond Vernon
Which of the following is experienced by a company that outsources its product
development?
A) reduced investments in research and development
B) reduced market flexibility
C) less market influence with suppliers
D) lower product costs due to the elimination of intermediaries
Renzi belongs to a country in which religion governs all aspects of his life, whether
personal or public. He has to abide by a strict, rigid, code that dictates everything from
the clothes he wears to the food he eats. Breaking away from these traditions is not an
option since religion plays an important role in the functioning of the nation. What
political system prevails in his country?
A) communist totalitarianism
B) left-wing totalitarianism
C) right-wing totalitarianism
D) theocratic totalitarianism
The board of directors of Sports Stuff is concerned with the firm’s lack of experience in
foreign markets. To minimize this problem, Herb recommends that the firm create a
________ with a local partner.
A) joint venture
B) turnkey project
C) wholly owned subsidiary
D) franchise
Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of
twelve. The company has operations in Switzerland and would like to expand its
foreign operations with a new facility in China.
The spread of privatization encourages the growth of the international equity market.
Which of the following processes will a computer assembling firm engage in if it
decides to manufacture its own monitors and printers?
A) outsourcing
B) vertical integration
C) niche marketing
D) lean production
If Trader’s Paradise purchases and sells the euros simultaneously in different markets
for profit, it would be engaging in currency ________.
A) swap
B) speculation
C) hedging
D) arbitrage
Which of the following terms is used to refer to the process of ranking people into
social layers or classes?
A) social transformation
B) social stratification
C) social loafing
D) social mobility
Which of the following is a method of export/import financing in which the importer’s
bank issues a document stating that the bank will pay the exporter when the exporter
fulfills the terms of the document?
A) sight draft
B) bill of lading
C) letter of credit
D) bill of exchange
Robert believes that social and economic equality can be obtained only by establishing
an economic system in which the government owns and controls all types of economic
activity. However, he does not think of himself as a communist, but as a socialist.
Which of the following statements about Robert is true?
A) Robert does not believe that a violent revolution is needed to seize control over
resources.
B) Robert does not think that political dissidents should go unpunished.
C) Robert believes that the pricing of goods should be left to the discretion of laborers.
D) Robert believes that the means of production should be owned by the people who
use them.
A team in which employees from a single department take on responsibilities of their
former supervisors is called a ________ team.
A) cross-functional
B) self-managed
C) global
D) virtual
Scenario: Happyland
Happyland is a country characterized by beautiful beaches, vast natural resources, and a
highly skilled labor force. Happyland is now encouraging foreign direct investment
flows. The country has been exporting textiles, computer hardware, and software
programs. The net result of the trade is that Happyland exports far more goods and
services and receives more income from abroad than it imports and pays abroad.
Happyland’s international trade situation illustrates that the country is experiencing a
________.
A) current account deficit
B) capital account deficit
C) current account surplus
D) capital account surplus
Predictable exchange rates reduce the need for ________.
A) currency conversion
B) currency swap
C) currency depreciation
D) currency hedging
________ is the value of goods and services that can be purchased with one unit of a
country’s currency.
A) Potential output
B) Gross national product
C) Purchasing power
D) Gross domestic product
Describe the purposes of the international capital market. What factors account for its
rapid growth?
Discuss the benefits and drawbacks of regional integration.
How can a lack of market understanding, theft, and corruption affect distribution?
Identify the World Trade Organization’s (WTO) three main goals and explain how the
WTO differs from the General Agreement on Tariffs and Trade (GATT).
Describe the five communication strategies that companies commonly use and cite
situations where the strategies are used.
How can companies use internal funding to finance ongoing international business
activities?
Explain the differences between a monetary policy and a fiscal policy, and discuss why
the IMF was established.
Discuss the three essential pillars of the theory of mercantilism.
Explain how movement in a currency’s exchange rate affects the activities of both
domestic and international companies. Discuss how companies can export successfully
despite having a strong currency.