Chapter 01 – The Challenging World of International Business
Answers to End of Chapter Questions
1. What are the differences among multidomestic, global, and international companies?
A global company attempts to standardize and integrate operations worldwide, whereas a multidomestic is
2. Business is business, and every firm has to find ways to produce and market its goods. Why,
then, might managers be unable to successfully apply the techniques and concepts they have
learned in their own country to other areas of the world?
3. Give examples to show how an international business manager might manipulate one of the
controllable forces in answer to a change in the uncontrollable forces.
Students will come up with any number of examples such as:
4. Although forces in the foreign environment are the same as those in the domestic environment,
they operate differently. Why is this so?
The kinds of forces in the two environments are identical, but they operate differently because:
5. What is the difference between the foreign environment and the international environment?
The foreign environment includes all of the uncontrollable forces originating outside the home country
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Chapter 01 – The Challenging World of International Business
6. Why, in your opinion, do the authors regard the use of the self-reference criterion as “probably
the biggest cause of international business blunders”? Can you think of an example?
When a situation familiar to the manager arises, there is a tendency to respond without analyzing the
reasons from another cultural viewpoint, especially if it is something he or she has dealt with successfully
7. Discuss some possible conflicts between host governments and foreign-owned companies.
International firms have grown in size and number. As a result, they have become increasingly significant
8. “A nation whose GNI is smaller than the sales volume of a global firm is in no position to enforce
its wishes on the local subsidiary of that firm.” Is this statement true or false? Please explain your
rationale.
The comparison of total sales to GNI is similar to comparing apples with oranges. The subsidiary must
obey a nation’s laws or run the risk of legal action or even expropriation. Admittedly, a global or
9. Discuss the forces that are leading international firms to the globalization of their sourcing,
production, and marketing.
10. What examples of globalization can you identify within your community? How would you
classify each of these examples (e.g., international investment, international trade)?
11. Why is there opposition to globalization of trade and integration of the world’s economy? Please
assess the major arguments for and against such globalization efforts.
Essentially, the pro-globalization debate centers on free trade and its benefits. The opposition points to
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Chapter 01 – The Challenging World of International Business
12. What are the reasons that explain why international firms would enter foreign markets?
13. You have decided to take a job in your hometown after graduation. Why should you study
international business?
No matter where a person is, he or she cannot be entirely free from the impact of international business.
Foreign firms can create competition for your hometown company. Exchange rates can cause local prices
GlobalEDGE Answers
Exercise One
1. The Emerging Market Global Players (EMGP) Project produces annual reports ranking the top
multinational enterprises (MNEs) in emerging markets by their foreign assets. Locate the most recent
annual report of Hungary and identify the ten largest non-financial Hungarian MNEs. In what
industries are they classified? In how many countries do they have operations? In which regions of
the world? Do you notice any similarities or differences in terms of the industries represented in the
ranking and the regions where these MNEs operate? Prepare a short report summarizing your
findings.
Answers:
http://globaledge.msu.edu
Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/
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Chapter 01 – The Challenging World of International Business
Exercise Two
2. The KOF Index of Globalization, provided by the KOF Swiss Economic Institute, measures
globalization on economic, social, and political dimensions. Provide a brief description of this index
and its ranking. Specifically, what factors are considered in calculating the index? Find the most
recent ranking and identify the ten countries with the lowest and highest Globalization Index. Do you
notice any trends or similarities among the countries listed?
Answers:
http://globaledge.msu.edu
Go to Resource Desk: http://globaledge.msu.edu/ResourceDesk/
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