A global strategy does not allow a company to modify its products except for the most
superficial features.
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.
According to Adam Smith, international trade should be restricted by tariffs and quotas
in order to give a country an absolute advantage.
Expatriate failure refers to an employee’s early return from an international assignment
because of inadequate job performance.
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.
The most peaceful nations today are those that were once controlled and stabilized by
colonial powers.
Mercantilism states that nations should only concern themselves with accumulating
financial wealth.
Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national
identity and building a self-sustained economy. The government’s priority is to protect
local jobs and provide opportunities to Freeland’s emerging industries to flourish
without the threat of external competition. The protection of infant industries by a
nation’s government can cause more economic harm than good.
Customer service is an example of a support activity in the value chain of an
organization.
Decentralization can help foster participative management practices.
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.
When trade diversion occurs, buyers will likely pay less for products.
According to Hofstede’s framework, cultures scoring high on the dimension of
________ tend to be characterized by personal assertiveness and the accumulation of
wealth, typically translating into an entrepreneurial drive.
A) power distance
B) collectivism
C) uncertainty avoidance
D) masculinity
________ is defined as the dispersal of production activities to locations that help a
company achieve its cost-minimization or quality-maximization objectives for a good
or service.
A) Global offering
B) Globalization of production
C) Global governance
D) Globalization of markets
The ________ of a company is the mix of equity, debt, and internally generated funds
that it uses to finance its activities.
A) enterprise value
B) stock value
C) capital structure
D) corporate structure
A(n) ________ allows the bank to modify the terms of the letter only after obtaining the
approval of both exporter and importer.
A) bill of exchange
B) bill of lading
C) confirmed letter of credit
D) irrevocable letter of credit
Scenario: Stephanie Wong
Stephanie Wong, a Chinese-American, owns a consultancy that advises clients on
strategies for business expansions into China. Wong is to lead a symposium for small
and mid-sized exporters who are planning on expanding their businesses in China.
Therefore, she is preparing answers in advance for questions that symposium
participants would most likely ask. Product liability laws hold only manufacturers
responsible for damage, injury, or death caused by defective products.
________ refers to the number of intermediaries between producer and buyer.
A) Critical path
B) Channel length
C) Frequency
D) Value density
Konesia is a country whose political leaders do not tolerate opposing viewpoints and
often suppress or punish dissidents. The lives of Konesians are tightly controlled by its
rulers. Which of the following political systems prevails in the country?
A) totalitarianism
B) democracy
C) anarchism
D) pluralism
________ place limits on the quantity of a product being imported.
A) Embargoes
B) Trade blocs
C) Nontariff barriers
D) Anti-dumping duties
Scenario: The French Government
The French Government has placed many restrictions upon the use of the English
language within their borders. They argue that the inflow of English movies, music, and
literature is responsible for the dilution of their rich culture.
Which of the following statements, if true, strengthens their argument?
A) The Education Board of France has made it mandatory for schools to teach students
English as a second language.
B) The sales of English novels have risen sharply, while those of French novels have
declined to a corresponding extent.
C) Stores now advertise their presence with two placards; one in English and one in
French.
D) French fashions are no longer popular in English speaking countries.
An established consumer market that primarily comprises the middle class and
possesses efficient infrastructure is characteristic of ________ markets.
A) emerging
B) frontier
C) traditional
D) developed
Kireki is a small country with a corrupt government. Its population is rural for most part
and citizens have few or no legal rights. Which of the following is the type of market
featured in Kireki?
A) developed market
B) traditional market
C) emerging market
D) virtual market
The rate at which one currency is interchanged for another is called the ________.
A) exchange rate
B) interbank interest rate
C) official cash rate
D) prime rate
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.
Home nations discourage foreign direct investment outflows because it ________.
A) discourages cooperation between countries
B) replaces jobs in the home nation
C) fails to protect the ‘sunset” industries in the home nation
D) decreases long-term competitiveness of companies
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.
Cultures isolated by topographical barriers are characterized by slower cultural change.
Country A produces a ton of coffee using one unit of resources. Country B produces
two tons of coffee using one unit of resources. Which of the following is true regarding
Country A and Country B?
A) Country A has an absolute advantage in producing coffee.
B) Country B has an absolute advantage in producing coffee.
C) Neither Country A nor Country B has an absolute advantage in producing coffee.
D) Both Country A and Country B have an absolute advantage in producing coffee.
________ is the process by which a nation changes its fundamental economic
organization and creates new free-market institutions.
A) Central planning
B) Economic transition
C) Industrialization
D) Economic liberalism
Scenario: Sam Dearing, Budding International Financier
Sam Dearing is a summer intern in the arbitrage department at a prestigious Wall Street
firm. Sam is hoping to be offered a full-time position at the firm after he graduates from
college, and therefore, Sam knows that he must demonstrate a strong understanding of
how exchange rates work.
Sam has been studying the price of wheat across markets. If a kilogram of wheat costs
¬1.5 in France and $1 in the United States, the law of one price would tell us ________.
A) the expected exchange rate between the euro and the dollar is ¬1.5/$
B) wheat is over priced in France
C) wheat is under priced in France
D) an arbitrage opportunity exists in the international wheat market
________ refers to the ease with which individuals can move up or down a culture’s
social ladder.
A) Social standing
B) Social mobility
C) Social inertia
D) Social loafing
A country that believes an imported product is being sold in its market for a price lower
than the cost of production for the product may impose a(n) ________ in retaliation.
A) countervailing duty
B) ad valorem tariff
C) antidumping duty
D) compound tariff
Describe the issues involved in the decision of how a company acquires raw materials
and fixed assets.
Briefly describe the three generic business-level strategies, providing an example of
each.
Scenario: The French Government
The French Government has placed many restrictions upon the use of the English
language within their borders. They argue that the inflow of English movies, music, and
literature is responsible for the dilution of their rich culture.
Discuss the concept of lingua franca and how it affects communication in international
business.
Briefly discuss the important political and legal forces that should be analyzed in the
market/site screening process.
Compare and contrast two prevalent political systems: totalitarianism and democracy,
and explain how a country’s political system influences its legal system.
Explain the various methods that host countries use to restrict and promote foreign
direct investment.
Explain participative management and accountability in a decentralized organization,
and discuss the probable accountability issues in a global matrix structure. Include a
description of the global matrix structure in your answer.
Describe the importance of a nation’s legal system, and identify the main differences
between the three main types of legal systems.
Distinguish between attitudes and values. How do cultures differ in their attitudes
toward cultural change?