Liquidity refers to the ease with which bondholders and shareholders may convert their
investments to cash.
A differentiation strategy is often implemented when a company wants to exploit
economies of scale to have the lowest cost structure.
Securitization is the unbundling and repackaging of hard-to-trade financial assets into
liquid financial instruments.
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.
Trade agreements allow competitors from other nations to enter the domestic market.
The primary advantage of franchising is that franchisees have a great degree of
organizational flexibility.
Assessing potential in emerging markets by ranking locations using market-potential
indicators is useful only for companies involved in exporting.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
In a totalitarian system, rulers tightly control people’s lives and do not tolerate opposing
viewpoints.
The physical path a product follows on its way to customers is called a promotional
channel.
Sensitivity training constitutes the most basic level of cultural training for managers on
international assignments.
Centralizing the decisions that directly impact workers’ lives contribute to better
labor-management relations.
A brand name can function as a legal property.
Scenario: Cleanshot USA in Russia
When Cleanshot USA, a photography products company, decided to enter the
international arena, it chose Russia as its main market. Although Russia has been in
transition for years, Cleanshot managers believe their company has tremendous
opportunities there.
Managers who take an active approach to political risk management are likely to rely
on statistical modeling to quantify the precise degree of political risk.
Companies selling differentiated products find centralized production most effective.
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.
Countries belonging to a free trade area must concede a certain amount of their national
autonomy to the supranational union of which they are a part.
Scenario: Learning the Americas’ Way
The newly-formed countries that emerged after the break up of the United Frontier
States (UFS) are interested in learning more about integration in the Americas. Because
the former UFS nations have many similarities with the countries of North and South
America, they believe they can learn from the integration experience in the Americas.
To that end, they pose the following questions. The main difficulty CARICOM will
continue to face is that most members trade more with nonmembers than they do with
each other.
Which of the following is a debt instrument that specifies the timing of principal and
interest payments?
A) stock
B) bond
C) share
D) equity
Which of the following is a reason for the failure of PPP to predict exchange rates
accurately?
A) PPP takes transportation costs into consideration while predicting exchange rates.
B) PPP assumes no barriers to international trade while predicting exchange rates.
C) PPP considers the role of people’s confidence and beliefs about a nation’s economy
in exchange rate predictions.
D) PPP does not take into account the effect of the market forces of demand and supply.
What do communists and socialists have in common?
A) Both believe in the elimination of political opponents.
B) Both believe that the government should control all types of economic activity.
C) Both believe that the pricing of goods should be the responsibility of individuals.
D) Both believe that a violent revolution is necessary to seize control over resources.
________ is the simultaneous purchase and sale of foreign exchange for two different
dates.
A) Currency hedging
B) Currency speculation
C) Currency swap
D) Currency arbitrage
Scenario: Swingset International
Jerome Johnston, the human resource manager at the U.S.-based Swingset
International, is developing an international staffing policy for the company. Jerome
personally believes Swingset should send managers from the United States to manage
each subsidiary. But the CEO of the company, Valerie Vermont, believes subsidiary
operations ought to be managed by individuals from the host country. Which of the
following is a drawback of Jerome’s staffing approach?
A) expense to relocate managers
B) potential for losing control of the host-country operations
C) potential for losing control of the home-country operations
D) inability to re-create local operations in the image of the home-country operations
When a product has a higher selling price in the target market than it does in the home
market or the country where production takes place, it is called ________.
A) price skimming
B) price escalation
C) price dispersion
D) price fixing
The major disadvantage of a geocentric staffing policy is its potential for ________.
A) creating barriers for the host-country office
B) being costly due to high salaries and moving costs of managers
C) creating legal problems for the home-country office
D) losing control of host-country operations
Currently the most sophisticated and advanced example of regional integration is
occurring in ________.
A) Asia
B) Europe
C) North America
D) Africa
________ is the trend toward greater economic, cultural, political, and technological
interdependence among national institutions and economies.
A) Privatization
B) Heterogenization
C) Globalization
D) Decentralization
The European Commission is the ________ body of the European Union.
A) legislative
B) executive
C) financial
D) monitoring
Which of the following does the secondary footprint measure?
A) the burning of fossil fuels
B) direct energy consumption
C) indirect carbon dioxide emissions
D) emissions caused by natural forces
Purposely understaffing customs offices to cause time delays, requiring special licenses
that take a long time to obtain, and requiring air carriers to land at inconvenient airports
are all examples of ________.
A) local content requirements
B) import quotas
C) administrative delays
D) voluntary export restraints
According to Hofstede’s framework, cultures that score high on ________ value respect
for tradition, thrift, and perseverance, and have strong work ethics.
A) power distance
B) masculinity
C) uncertainty avoidance
D) long-term orientation
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Susan finally settles upon Valmira because it has a stable business environment. Which
of the following factors, if true, proves her decision to be a good one?
A) Valmira does not enforce any product liability laws.
B) Valmira’s legal system protects individual property rights satisfactorily.
C) The business laws of Valmira are flexible and can be interpreted according to the
comfort of government officials.
D) The government of Valmira does not allow the private sector to flourish.
Which of the following is an important factor in forming successful business ventures
in China?
A) following the strategies of western countries for establishing business relationships
B) focusing on establishing tight formal contracts
C) giving high importance to written contracts
D) establishing a trusting relationship before proceeding with business
What are the factors managers consider when analyzing industrialized markets? Discuss
why the comparability of data is a major challenge while conducting international
research.
Explain the theory of market imperfections and describe the two major market
imperfections.
Explain mercantilism. What were its major flaws?
Discuss why companies strive toward quality improvement and the two methods of
doing so.
Explain the differences between a mission statement and a business-level strategy.
Describe the purpose of a foreign trade zone. How is it used to promote trade?