1) A culture in which people prefer to handle tasks sequentially is a polychronic culture.
2) Germanic and Japanese companies tend to be more optimistic than U.S. and U.K.
companies.
3) The most important rationales for NAFTA are geographic proximity and trading
importance.
4) Dollarization of a currency occurs when a country takes all of its own currency out
of circulation and replaces it with U.S. dollars.
5) General Electric’s Ecomagination initiative is responding in part to the fact that it is
operating in many countries which require compliance with higher environmental
standards than exist in the United States.
6) Export prices of primary products fluctuate less than export prices of manufactured
products.
7) An objective of neomercantilism is to build up gold reserves.
8) Cost-minimization strategies force MNEs to establish economies of scale in
manufacturing.
9) Companies have found that superior human resources are instrumental to improving
their ability to create and sustain competitive advantage.
10) Companies new to exporting most frequently suffer over-commitment by top
management in taking on the initial difficulties and financial requirements of exporting.
11) Critics of offshoring assert that the short-term cost savings derived from offshoring
hinder firms from developing more efficient production methods
12) Which of the following is most important to the effectiveness of an internal code of
conduct?
A) ensuring that employees understand the code by requiring confirmation in writing
B) paying bonuses to suppliers and distributors that agree to the code
C) relying on nonprofit NGOs to develop guidelines
D) adhering to industry standards and norms
13) One way to account for the challenge of the variability of future cash flows is to
________.
A) adjust the hurdle rate for the project
B) use the most likely cash flow estimate
C) ignore different rates of inflation to prevent confusion
D) leave out a consideration of the terminal value of an investment
14) Top executives at Jordan, a U.S. consulting firm, are debating whether or not to
expand operations into a country with a great deal of violence by staffing mostly with
U.S. personnel. A vice president argues that Jordan should send its employees there.
Which of the following statements LEAST supports the vice president’s position?
A) Jordan can evacuate personnel more quickly than in earlier eras in case of a real
emergency
B) It is hard to identify countries without a possibility for violence
C) Operating costs are lower in violent areas
D) Jordan’s industry does not allow the firm the luxury of avoiding high risk locations
15) Which of the following statements most likely undermines the infant-industry
argument?
A) Total unit costs decrease through economies of scale
B) High tariffs to prevent foreign competition increase government revenues in the
protected country
C) Domestic entrepreneurs need assistance to compete in industries with high entry
barriers
D) Experience of operating over time triggers higher productivity and global
competitiveness
16) The more a company engages in international collaborative arrangements as
opposed to wholly owned foreign operations, the more it is likely to ________.
A) decrease its exposure to political risk
B) increase its control over foreign operations
C) learn rapidly about foreign environments
D) protect its core assets
17) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum
outsources portions of its production to independent companies located in Bangladesh
and India where child labor is common. Other clothing and footwear firms have
recently faced criticism regarding the use of child labor, and Quantum executives want
to avoid similar problems. Which of the following guidelines enforced by Quantum
would LEAST likely be supported by the International Labor Organization?
A) establishing bridge schools
B) monitoring workplace safety
C) allowing children ages 10-15 to work a maximum of 4 hours per day
D) prohibiting abusive labor conditions
18) According to U.S. tax law, if a foreign subsidiary earns income, ________.
A) its income is immediately taxable to the parent, irrespective of the type of income
earned
B) that income is not taxable to the parent company as long as the subsidiary pays
income taxes in the country where it is earned
C) passive income is taxable to the parent unless the parent company is a controlled
foreign corporation
D) active income is taxable to the parent when it is remitted as a dividend
19) Which of the following is most likely a true statement about the relationship
between the United Nations and NGOs?
A) The UN must license an NGO for it to be involved in any international relief efforts
B) A UN committee discusses issues of importance to NGOs but does not regulate their
activities
C) The UN determines which NGOs can work on international humanitarian issues and
relief efforts
D) NGOs typically operate in only one country, whereas UN agencies can operate
anywhere in the world
20) In general terms, we see the principles of horizontal differentiation in the design
logic of ________.
A) vertical differentiation
B) decentralization
C) the value chain
D) the unity-of-command principle
21) Which of the following is NOT one of the three main reasons affecting international
business for governments to cooperate with each other?
A) to attack problems jointly that one country acting alone cannot solve
B) to deal with issues that lie outside the territory of any nation
C) to gain reciprocal advantages
D) to establish a common language
22) According to the text, what is the most common concern that expatriates have
before they move overseas?
A) reestablishing a social life
B) missing friends and family
C) learning a foreign language
D) adapting to the culture
23) Larson Shoes is a British company. Which balance sheet format is most likely used
by Larson?
A) assets + liabilities = shareholders’ equity
B) liabilities + shareholders’ equity = assets
C) noncurrent assets + current assets – current liabilities – noncurrent liabilities =
shareholders’ equity
D) noncurrent assets – net current assets = liabilities + capital and reserves
24) What is an equity alliance?
A) a collaborative arrangement in which at least one collaborating company takes an
ownership position in the other
B) a collaboration in which each contributor receives an equitable return based on
relative contribution
C) a collaboration in which partners agree to share technology with each other
D) a wholly owned acquisition to prevent appropriation of intellectual property
25) Which of the following best explains why MNEs often employ more locals than
expatriate managers in foreign facilities?
A) lower compensation expense
B) better support from unions
C) improved economies of scale
D) better grasp of core competencies
26) What led to the Greek financial crisis of 2010? What have been the roles of the IMF
and European Central Bank in the crisis? What challenges with the euro facilitated the
crisis?
27) Compare the two major approaches used to translate foreign currency financial
statements, and explain how translation gains and losses are reported under these two
approaches.
28) What is the difference between a command economy and state capitalism?
29) What general characteristics of a country should managers consider when analyzing
an economic environment? What specific indicators help managers measure the
economic development, performance, and potential of a country?
30) What is a multinational enterprise (MNE)? How do physical and social factors
affect how an MNE functions in a foreign country?