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Quick Study Questions
Quick Study 1
1. Q: What is the value of goods and services that all nations of the world export every year?
A: Goods worth $16.2 trillion and services worth 4.7 trillion.
2. Q: A business that has direct investments in the form of marketing or manufacturing
subsidiaries abroad in multiple countries is called a what?
A: A business that has direct investments abroad in multiple countries is a multinational
3. Q: A born global firm engages in international business from or near its inception and does
what else?
A: A born global firm also adopts a global perspective.
Quick Study 2
1. Q: Globalization causes the institutions and economies of nations to become what?
A: Globalization causes institutions and economies of nations to become more interdependent.
2. Q: What benefits might a company obtain from the globalization of markets?
A: Globalization of markets refers to convergence in buyer preferences in markets around the
world. Potential benefits for companies include: (1) reduced marketing costs by standardizing
3. Q: Sustainability is development that meets present needs without compromising what?
A: Sustainability is development that meets present needs without compromising the ability of
future generations to meet their own needs.
Quick Study 3
1. Q: What global organizations have helped expand globalization?
A: The 1947 GATT lowered trade barriers and made it cheaper and easier to ship goods across
borders. In 1988 world merchandise trade was 20 times larger than in 1947; average tariffs
dropped from 40 percent to 5 percent. A 1994 GATT revision created the WTO, which has the
2. Q: What technological innovations are helping to propel globalization?
A: E-mail and videoconferencing speed information flows and ease the tasks of coordination
and control. Firms use the Web to sharpen forecasting, lower inventories, and improve
communication with suppliers, and to communicate with distant managers quickly, cheaply, and
efficiently. The Web also reduces the cost of reaching international customers—important for
3. Q: What nations rank high in terms of globalization?
A: Netherlands, Ireland and Belgium are examples of a nations that rank high in terms of
globalization.
Quick Study 4
1. Q: In the debate over jobs and wages, opponents of globalization say that it does what?
A: Opponents state that globalization eliminates jobs in developed nations, exploits workers in
developing countries, and lowers wages in developed nations.
2. Q: In the debate over jobs and wages, supporters of globalization say that it does what?
A: Supporters state that globalization generates labor market flexibility in developed nations
Quick Study 5
1. Q: Evidence suggests that globalization can help developing nations boost incomes for their
poorest citizens in what part of the debate over inequality?
A: Inequality within nations
2. Q: In the debate over inequality between nations, evidence suggests that developing nations
that are open to trade and investment do what?
than rich nations.
3. Q: Regarding the debate over global inequality, experts tend to agree on what?
A: Experts tend to agree that inequality has fallen in recent decades.
Quick Study 6
1. Q: People opposed to globalization say that it does what to national cultures?
A: People opposed to globalization say that it homogenizes national cultures.
2. Q: Regarding national sovereignty, opponents of globalization say that it does what?
A: Opponents say that globalization helps supranational organizations gain power, may force
process and individual liberty.
3. Q: With regard to the physical environment, what do globalization supporters argue?
A: Supporters argue that companies have invested in nations that were enacting stricter
environmental rules; that few U.S. firms invest to obtain low-cost resources and then export
Quick Study 7
1. Q: It helps to think about international business as four elements that occur within a what?
A: It is helpful to view international business as occurring within an integrated global system
consisting of four main elements: (1) Globalization is a potent force transforming our societies
and commercial activities. (2) Separate national business environments, including culture and
2. Q: How does managing an international firm differ from managing a purely domestic business?
A: International firms encounter unfamiliar societies. International managers must scan the
to local conditions.
Ethical Challenge
You are the CEO of a major U.S. apparel company that contracts work to garment manufacturers
abroad. Employees of the contractors report 20-hour workdays, pay lower than the minimum wage,
overcrowded living conditions, physically abusive supervisors, and confiscation of their passports.
Contractors and government officials say local labor laws are adhered to and enforced, though abuses
appear widespread. You send inspectors to the factories abroad but they uncover no labor violations.
A labor-advocacy group claims that supervisors coached workers to lie to your inspectors about
conditions and threatened workers with time in makeshift jails without food if they talked.
1-5. Should you implement a monitoring system to learn the truth about what is happening?
A: The implementation of a monitoring system is important. A keener sense of business ethics
and social responsibility are critical to the success of MNC. These concepts serve as the guiding
1-6. Do you help the factory improve conditions, withdraw your business, or simply do nothing?
A: The answer depends on the overall outlook of the market and opportunities that it presents.
If the long term opportunities are good, it is important to note the business does have a social
1-7. How might your actions affect your relations with the factory owner and your ability to do
business in the country?
A: It’s extremely important that your company be thorough and transparent throughout the
monitoring process. The monitoring process could seem more impartial by contracting an
independent organization to conduct the investigation, rather than employ someone with whom
Teaming Up
Research Project. Imagine that you and several of your classmates own a company that manufactures
cheap sunglasses. To lower production costs, you choose to move your factory from your developed
country to a more cost-effective nation.
1-8. What elements of the national business environment might influence your decision where to
move production? Are there obstacles to overcome in the international business environment?
A: The first factor is based on the need potential. For example, if a company produces air
conditioners, it will obviously look at countries with warm climates. You would then address
the Financial and Economic Forces, the analyst should look at factors such as trends in inflation
1-9. What aspects of the globalization of production and marketing will you expect will benefit your
company after the move?
A: This project gets students to begin pondering the types of elements that must be considered
when selecting a country for investment. At a minimum, students’ responses should consider:
Practicing International Management Case
MTV Goes Global with a Local Beat
1-16. Q: Some people outside the United States say teens exposed to large doses of U.S. youth culture
on MTV will identify less with their own societies and teens in developing countries will want
Western goods they cannot afford. MTV’s response: “It’s just fun, it’s only TV,” says one
executive. What do you think? Are there dangers in broadcasting U.S.-style programs and ads
to developing countries?
A: The debate over the impact of U.S. programming beamed to other developed and developing
cultures will likely never cease. The U.S. television program The Simpsons, which depicts a
rather unflattering U.S. family, is seen in more than 90 countries. Such a program is unlikely to
encourage young people outside the United States to grow up to be like Homer Simpson.
In regard to desires among young people for more “Western” goods, this is a sensitive
issue involving elements of economic development and materialism. It could be argued that it is
1-17. Q: Digital compression technology made it possible for MTV to program over a global
network. Can you think of other technological innovations that have helped companies to think
globally and act locally?
A: Internet retailers such as Amazon make online books in English available globally.
However, Amazon also has online service to accommodate those in French- and Spanish-
speaking countries. This is a localized approach. The French version of Amazon can further
