Archives: Quiz

a benefit to companies of economic integration is the opportunity to centralize their production and reduce costs. hofstedes study found that in masculine cultures, sex roles were less sharply distinguished, and little differentiation was made between men and women in […]

the values and norms of a culture do not emerge fully formed. new-product development has a high failure rate. Answer: true although a firm that is successful at developing new products may earn enormous returns, new-product development has a high […]

when a company emphasizes personal selling, the company is probably using a push strategy. Current trends indicate the world is moving toward an economic system that is more favorable for international business. Answer: TRUE Over the next few decades, countries […]

overpayment for assets of an acquired firm is one reason acquisitions fail. if a corporation issued bonds at an amount less than face value, it indicates that the corporation has a weak credit rating. Answer: f firms pursuing a localization […]

exporting is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies. for transnational enterprises to be successful, they must focus on leveraging […]

there is a tendency for greater retail concentration in developing countries. deming, the proponent of total quality management, suggested that management shouldnt attempt to train employees in new skills. Answer: false deming argued that management has the responsibility to train […]

the bank promises to pay on behalf of the importer when a bank is used as third party in international transactions. life expectancy at birth is one of the measures used by the human development index (hdi) to measure the […]

a theocratic law system is one in which the law is based on religious teachings. in practice only a few countries country have adopted the free market view in its pure form. Answer: false in practice no country has adopted […]

an integrated international capital market is less volatile compared to a nonintegrated market. in a matrix structure all roles are viewed as integrating roles. Answer: true when the need for integration is very high, firms may institute a matrix structure, […]

ricardos theory makes fewer simplifying assumptions compared to heckscher-ohlin theory. an individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting. Answer: true our personal ethical code exerts a […]

In the face of unpredictable movements in exchange rates, businesses should pursue strategies that will reduce their economic exposure. a countrys economic system and property rights regime are reasonably good predictors of economic prospects. Answer: true a countrys economic system […]

new processes that might lead to a competitive advantage can be developed anywhere within the organizations global network of operations. Payment of dividends is an uncommon method of transferring funds from foreign subsidiaries to the parent company. Answer: FALSE Payment […]

a key benefit resulting from the adoption of the euro is the ability to compare prices across member markets. firms pursuing a global standardization strategy must cope with a higher level of performance ambiguity, and this raises their costs of […]

ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization. inflation occurs when output increases faster […]

in ethnocentric firms, the lack of managers mobility among national operations implies that pay can and should be kept country-specific. Recent evidence indicates that the solution to the problem of stagnant incomes among the unskilled is to be found in […]

an ethnocentric approach is compatible with both global standardization and transnational strategies. there is no evidence that psychological factors play an important role in determining the expectations of market traders as to likely future exchange rates. Answer: false evidence reveals […]

poor product quality and low productivity are hidden costs associated with basing production in a foreign location. ethical systems may be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred. Answer: […]

hofstedes concept of power distance focused on the extent to which different cultures socialized their members into tolerating uncertainty. plato, to whom the advocacy of collectivism is traced back, did not equate collectivism with equality. Answer: true advocacy of collectivism […]

the structure of market segments may differ significantly from country to country. if the law of one price were true for all goods and services, the purchasing power parity (ppp) exchange rate could be found from any individual set of […]

top management should be viewed as part of the firms infrastructure. the international trade secretariats have had tremendous success. Answer: false in the 1960s, organized labor began to establish international trade secretariats (itss) to provide worldwide links for national unions […]

a well-functioning market economy requires laws protecting private property rights and providing mechanisms for contract enforcement. Accounting standards are rules for preparing financial statements. Answer: TRUE Accounting standards are rules for preparing financial statements. They define what is useful accounting […]

if $150,000 face value bonds are issued at 102, the proceeds received will be $102,000. adam smith argued that countries should specialize in the production of goods for which they have an absolute advantage. Answer: true according to smith, countries […]

an expatriate manager is a citizen of one country who is working abroad in one of the firms subsidiaries. Royalties represent the remuneration paid to the owners for the use of technology or the right to manufacture and/or sell products […]

mercantilism supports the idea that countries should export more than what they import. u.s. organizations can get financing aid from the export-import bank. Answer: true u.s. organizations can get financing aid from the export-import bank and export credit insurance from […]

the entry of large discount superstores such as tesco and carrefour has shortened channel length in some countries. free trade refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can […]

a firms vertical differentiation determines where in its hierarchy the decision-making power is concentrated. Rivers Inc., a U.S. based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. This is […]

according to the righteous moralist, if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. many firms of all national origins increasingly depend on […]

firms based in less-developed nations tend to build a lot of extra performance attributes into their products. recent years have seen a marked increase in the number of countries that adhere to a radical ideology regarding fdi. Answer: false recent […]

porters theory of national competitive advantage recommends unrestricted free trade between countries. a spot exchange rate is quoted for 30 days, 90 days, and 180 days into the future. Answer: false forward exchange rates are quoted for 30 days, 90 […]

Differences between countries require that an international business vary its practices country by country. just-in-time systems help a firm respond quickly to increases in demand. Answer: false the drawback of a jit system is that it leaves a firm without […]

unlike other trade policies, local content regulations tend to benefit consumers and not producers. to conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise. Answer: true to […]

a worldwide product division structure tends to be adopted by firms that are reasonably diversified and originally had domestic structures based on product divisions. common law is primarily a moral rather than a commercial law and is intended to govern […]

the spread between the eurocurrency deposit rate and the eurocurrency lending rate is more than the spread between the domestic deposit and lending rates. since the late 1980s, there has been a strong move away from a more free market […]

in the modern era, the concept of countertrade arose as a way for the united states to purchase imports. upward migration in the strategic role of foreign production sites arises when they upgrade their own capabilities. Answer: true upward migration […]

culture is not static. the production possibility frontier will be parabolic if constant return to specialization is observed. Answer: false constant returns to specialization mean that the units of resources required to produce a good are assumed to remain constant […]

one of the sources of economies of scale is the ability to spread fixed costs over a large volume. a draft is the instrument normally used in international commerce to effect payment. Answer: true a draft, sometimes referred to as […]

a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it. the choice between centralization and decentralization is not absolute. Answer: true decisions regarding overall firm strategy, […]

although a foreign exchange transaction can involve any two currencies, most transactions involve pounds on one side. the east african community (eac) has been a successful integration effort in africa during the last three decades. Answer: false in early 2001, […]

since its establishment, the euro has had a stable trading history. the wto supports the promotion of international trade in services. Answer: true the wto embraces the promotion of international trade in services. many of the worlds larger trading nations, […]

the ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut. A foreign debt crisis is a situation in which a country cannot service its foreign debt obligations. Answer: […]

a key assumption in the heckscher-ohlin theory is that technologies are the same across countries. firms pursuing a global standardization strategy are more centralized than enterprises pursuing a localization or international strategy. Answer: true firms pursuing a global standardization strategy […]

the product life-cycle theory argues that a large proportion of the worlds new products had been developed by u.s. firms. Non-U.S. firms increasingly began to invest across national borders because they wanted to disperse production activities to optimal locations and […]

a subsidy helps domestic producers to compete against foreign imports. cross-licensing agreements can be used to formalize arrangements to swap skills and technology in a strategic alliance. Answer: true both parties to an alliance can agree in advance to swap […]

the carrying value of a bond is equal to the market price on the date of sale. The amount of a currency needed to purchase one ounce of gold was referred to as the gold par value under the gold […]

bureaucratic control involves personal contact with subordinates. because differentiation across countries can involve significant duplication and a lack of product standardization, it may reduce costs. Answer: false firms that compete in the global marketplace face pressures for cost reductions and […]

one of the successful outcomes of the doha round negotiations has been that many nations have proceeded with bilateral free trade agreements. the government of a country takes over the airport security industries following a major terrorist attack, to improve […]

the number of intermediaries between the producer and the consumer is known as the channel length. the main advantage of greenfield investment is that it gives the firm a much greater ability to build the kind of subsidiary company that […]

core competencies enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. an organizational culture can be strong but bad. Answer: true strong does not necessarily […]

education plays an important role, from an international business perspective, as a determinant of national competitive advantage. a debt loan requires a corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit […]

the forward exchange market does not provide adequate coverage for long-term borrowings. a wholly owned subsidiary limits a firms control over operations in different countries. Answer: false a wholly owned subsidiary gives a firm tight control over operations in different […]