CBA 300 Mod 1 &2
At the beginning of 2014, the value of the outstanding stock of foreign direct investment of all nations totaled more than
$26 trillion.
The level of services exports in 2013, worldwide, was
$4.6 trillion
When considering where to export, advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include the fact that
1. export and import regulations are not insurmountable. 2.satisfactory transportation facilities have already been established.
Regarding economic and social development
1. for the Trade and Development Index, the best regional performance among developing countries was that of the countries of the East Asia and Pacific region. 2.FDI plays a key role in influencing the composition of exports, including the technological content of the goods produced in a nation and the development of sufficient capacity to meet export demand for these goods.
Regarding the direction of world trade
1. more than half of the exports from developing nations go to developed nations. 2. nearly 20 percent of U.S. exports went to Canada in 2014.
A survey of CEOs of the 162 largest firms on Fortune's list of the 500 largest American corporations found that the CEOs strongly believed that
1. the importance of international business skills and knowledge for promotion to senior executive positions was higher for companies anticipating an increased level of importance of international activities in the next five years. 2.international business skills and knowledge were important for appointment to entry-level positions
When considering where to export, advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include all of the following except
1. there are abundant natural resources in the importing nation. 2.the cultures of the two countries should be relatively similar and compatible
Regarding annual inflows of FDI, which of the following statements is incorrect?
1.The U.S. and the European Union accounted for an average of less than 25 percent for 2010-2013. 2.the proportion of Asian FDI directed to China and its territories, which represented almost 75 percent of the total FDI flowing to Asia from 2010 to 2013.
The level of merchandise exports in 2013, worldwide, was
18.8 trillion
When nations and corporations are ranked by GNI and total sales, respectively, for 2013 data, how many of the top 100 on the list are corporations?
41
One measure of the magnitude of international trade and how it has grown is _____________ of global output that is now destined for international trade.
60%
UNCTAD, an agency of the United Nations, estimates there are __________ transnational corporations with international production activities
82,000
Which of the following is the best example of the competitive driver of international business activity?
A company that enters a foreign competitor's home market to distract them.
Which of the following is not linked to the market driver of international business activity?
A company that moves its manufacturing operations to another country because labor costs are lower.
Which of the following is not linked to the cost driver of international business activity?
A manufacturing company that follows its customers to foreign markets to be able to supply them.
Which of the following is an argument presented in support of opponents of globalization?
A report by the Labor Secretariat for the North American Free Trade Agreement (NAFTA) reported that more than half of firms surveyed used threats to close U.S. operations as a tool to fight union-organizing efforts
According to the text, the countries accounting for the largest amount of goods exported from the U.S. were
Canada; China
In 2013, the United States exported the most goods to _______, and imported the most goods from _______.
Canada; China
The three largest markets for American exports of goods in 2018 were
Candan, Mexico, China
__________ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840.
China
Regarding the major trading partners of the United States
China, Canada, and Mexico were the three largest markets for U.S. goods exports.
The three nations that exported the largest amount of goods to the United States in 2018 were
China, Canada, and Mexico.
Which of the following was not presented as data in support of liberalization of trade?
Citizens from more globally integrated countries have lower levels of civil liberties but greater economic prosperity.
Which of the following elements is included in Porter's diamond model of national advantage?
Demand conditions and Factor conditions
Which of the following is not true regarding foreign direct investment
FDI includes foreign investment in stock markets.
The monopolistic advantage theory states that
FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.
Examples of the kinds of uncontrollable forces listed in the text are each of the following except A. economic. B. sociocultural. C. marketing. D. labor. E. technological.
marketing
The domestic environment is composed of all the uncontrollable forces originating in the __________ that surround and influence the life and development of the firm
home country
According to the text, personnel working in a foreign subsidiary are working in the international environment
if they are responsible for the subsidiary's exports.
International business differs from domestic business in that a firm operating across borders must deal with which of the following additional environmental forces?
Foreign
Examples of the kinds of external forces listed in the text are each of the following except A. sociocultural. B. labor. C. human resources. D. technological. E. physical.
HR
_______ refers to the transportation of any domestic good or service to a destination inside a country or region, from a foreign origination point.
Importing
Which of the following are identified in the text as being one of the five major drivers of globalization? A. Monetary B. Technological C. Cultural D. Market E. Communications
Market
Which of the following statements is not true? A. Although the mercantilist era ended in the late 1700s, its arguments live on. B. Many of the world's managers see China as a present-day "fortress of mercantilism" that raises barriers to imported goods while giving its own exporters an unfair advantage. C. Many people see trade as a zero-sum activity, in which one party must lose for another to gain. We still use the term favorable trade balance to mean a nation exports more goods and services than it imports. D. Mercantilism generated benefits for certain economic groups, such as emerging industrialists and shippers, though at a cost to other groups including consumers. E. Mercantilists viewed precious metals such as gold and silver as the only source of wealth, and their accumulation as essential to a nation's welfare.
Mercantilism generated benefits for certain economic groups, such as emerging industrialists and shippers, though at a cost to other groups including consumers.
Which of the following are identified in the text as being one of the five major drivers of globalization? A. Political B. Social C. Cultural D. Economic E. Productive
Political
The trend toward unification and socialization of the global community is illustrated by which of the following?
Preferential trading arrangements that group several nations into a single market.
According to the text, personnel working in a foreign subsidiary are not working in the international environment
if they work and live in the foreign subsidiary's country.
The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to _______________ foreign direct investment when they have technical and other advantages over indigenous firms
increase
The forces over which the management does have some command are called
internal
The theory that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open market is known as
internalization theory.
A survey of CEOs of the 162 largest firms on Fortune's list of the 500 largest American corporations found that for developing international skills, respondents believed that a number of courses in the international business curriculum are relevant to their companies, including courses on topics related to:
international marketing
The theory of overlapping demand suggests that
international trade in manufactured goods will be more common between countries with similar levels of income.
An international business
is a business whose activities involve crossing national borders.
The argument that free trade is the best strategy for advancing the world's economic development
is a proposition with which almost all economists agree.
The international product life cycle
is concerned with the role of innovation in trade patterns.
Domestic business differs from international business in that a firm operating within the borders of one country
is not entirely free from the international and foreign environments.
As mentioned in the text, managers in companies with no foreign operations of any kind still need a global perspective, for all of the following reasons except
it will enable them to be effective leaders across different cultures and political systems.
Which of the following is not an argument presented in support of opponents of globalization?
Prosperity generated by globalization results in improved environmental and health standards.
The major globalization drivers include all of the following except A. political. B. social. C. technological. D. market. E. competitive.
Social
Examples of the kinds of internal forces listed in the text are each of the following except
labor & natural resources
Data have shown a clear and definitive link between
liberalization of trade and economic growth.
When a supplier to an original equipment manufacturer (e.g., a battery manufacturer supplying an automobile producer) follows their large customer to a new country, this is an example of a ________ driver of international business activity.
market
Which of the following is not true regarding transnational corporations?
They account for approximately 50 percent of total global output
Which of the following is not true regarding state-owned transnational corporations?
They account for more than 11 percent of all transnational corporations
Which of the following is not true about uncontrollable forces?
They include political forces and human resource activities.
The capability of one nation to produce more of a good with the same amount of input than another country is a/an
absolute advantage.
The increased internationalization of business requires __________ to have a basic knowledge of international business.
all managers
International business differs from domestic business in that a firm operating across borders must deal with
all three of the international environment, the domestic environment, and the foreign environment.
The proportion of world trade accounted for by Asia has ____ since
almost doubled
Foreign direct investment (FDI) from the United States to the rest of the world reached a record high of $1.4 trillion from 2010 to 2013. This volume of FDI was _________ the U.S. average a decade before.
almost three times
The proportion of world trade in services accounted for by North America has evidenced ____ since 1980
an increase of one-third
An industry that has a limited number of competing firms, such as the U.S. mobile phone market in which four firms controlled 98 percent of the market in 2014, is known as
an oligopolistic industry
The proportion of world trade in services accounted for by the European Union has evidenced ____ since 1980.
an overall decline
Economies of scale
are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.
International business really began
before the time of Christ.
Foreign business denotes
business conducted within a foreign country.
Porter's diamond model of national advantage
claims that the ability of local firms in a country to use the country's resources to gain a competitive advantage is based on demand conditions, factor conditions, related and supporting industries, and firm strategy, structure, and rivalry.
A nation having absolute disadvantages in the production of two goods with respect to another nation has a/an ___________ in the production of the good in which its absolute disadvantage is less.
comparative advantage
Environment as used in the textbook is the forces surrounding and influencing the life and development of the firm and is classified as
controllable and uncontrollable as well as internal and external.
According to supporters of the globalization of trade and investment, free trade
creates more and better jobs
The purchase of an existing business in another nation is known as a(an)
cross-border acquisition
More than one-half of the exports from developing countries go to __________ countries, and this proportion has been _____________.
developed; decreasing
The theory that for a firm to successfully invest overseas, it must have not only ownership of unique knowledge or resources, but also the ability to dynamically create, sustain, and exploit these capabilities over time, is known as
dynamic capabilities theory.
According to the text, the tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making this integration happen, is called
economic globalization.
Historically, international business
existed before the time of Christ
Economies of scale and the experience curve
explain why many companies will engage in international trade.
The theory of overlapping demand
explains where competitive clusters will occur.
In examining the volume of international trade
exports of services grew faster than trade in merchandise for the last 20 years.
Regarding foreign direct investment and trade
fewer government barriers to trade, increased competition from globalizing firms, and new production and communications technology are causing many international firms to disperse the activities of their production systems to locations close to available resources.
According to the international product life cycle
foreign-produced products compete in export markets in the third stage.
According to opponents of the globalization of trade and investment
globalization has contributed to a decline in environmental and health conditions.
According to opponents of the globalization of trade and investment
globalization has had harmful effects on labor and labor standards.
According to opponents of the globalization of trade and investment
globalization has produced uneven results across nations and people.
The establishment of new facilities from the ground up is known as
greenfield investment.
The international product life cycle theory
may have its greatest usefulness in explaining trade and investment behavior when international firms first introduce new products in their home markets.
Decision making in the international environment is __________ it is in a purely domestic environment.
more complex than
Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies
more liberal
The 17th and 18th centuries have frequently been termed the age of mercantilism because
national power depended on the sponsorship and control of merchant capital.
The level of merchandise exports worldwide were _____ larger in 2013 than they were in 1980.
nearly 10 times
According to the Exporter Data Base, small and medium-sized enterprises accounted for ___________ of all U.S. exporters
nearly 98 percent
The foreign environment is composed of all the uncontrollable forces originating _______ that surround and influence the life and development of the firm
outside the home country
The proportion of world trade accounted for by Latin America has evidenced ____ since 1980.
overall decrease
The proportion of world trade accounted for by North America has evidenced ____ since 1980.
overall decrease
Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have the following kinds of advantages:
ownership-specific, location-specific, and internalization.
A market situation in which there is a sufficiently large number of well-informed buyers and sellers of a homogeneous product such that no individual participant has enough power to determine the price of the product, resulting in a marketplace that is efficient in production and allocation of products is known as
perfect competition.
When a government sees that local industry is threatened by imports, it can threaten to erect import barriers to stop or reduce these imports. This is an example of a ________ driver of international business activity.
political
According to the text, political drivers of globalization include
preferential trading agreements.
Theory based on ___________________ states that international and interregional differences in production costs occur because of differences in the supply of production factors.
resource endowments
Foreign subsidiaries must obey the local laws. If they don't, they are subject to
seizure by the host government.
Unconscious reference to one's own cultural values when judging behavioral actions of others in a new and different environment is called
self-reference criterion.
A country ________ when it decides to use its resources to produce only the product in which it has an absolute advantage.
specializes
The theory of resource endowment
states that a nation will trade goods that can be produced with the production factor that is most abundant
The theory suggesting that rivalry between firms in an oligopolistic industry will result in firms closely following and imitating each other's international investments in order to keep a competitor from gaining an advantage is known as
strategic behavior theory
Good, inexpensive international communication enables firms to "body shop," that is, transmit computer-oriented tasks worldwide to a cheap but skilled labor force. This is an example of a ________ driver of international business activity.
technological
Adam Smith claimed
that market forces, not government controls, should determine direction, volume, and the composition of international trade.
Rapid urbanization of populations combined with industrialization in the emerging markets is quickly shifting the world's economic center of gravity from
the Americas and Europe to Asia.
According to the text, technological drivers for globalization include all of the following except
the Internet, which limits business between buyers and sellers who are physically separated.
In examining the volume of international trade, the proportion of world exports and imports accounted for by the 10 largest exporting and importing nations in 2013
the U.S. ranks as the largest in levels of both merchandise and services imports.
Firms from __________ had the largest total outstanding stock of direct overseas investment at the beginning of 2014.
the United States
The kinds of forces in the foreign environment are __________ those in the domestic environment except that they occur in foreign nations.
the same as
Foreign environmental forces often operate differently than domestic environmental forces because
they are unable to be observed
Many of the same Asian countries that are major exporters to the United States are also significant importers of American goods because of all of the following reasons except
they prefer to deal with the U.S. democratic system than the political systems of Europe.
The worldwide stock of outward FDI is estimated to have increased _______ between 1990 and 2014.
thirteenfold
According to trade theory
traders need to know the exchange rate between their own currency and that of the nation they are considering trading with, before they can decide whether it is advantageous to import, export, or buy locally.
The level of service exports worldwide increased about _______ between 1980 and 2013
twelvefold
Supporters of mercantilism
viewed accumulation of precious metals as an activity essential to a nation's welfare.
Regarding the volume of international trade, exports of U.S. goods and services ___________ in 2014.
were $2.3 trillion
Regarding the value of the outstanding stock of foreign direct investment, which of the following is not true? A. During the prior three decades up to 2014, the proportion of FDI accounted for by the European Union increased. B. During the prior three decades up to 2014, the proportion of FDI accounted for by the European Union decreased by over half. C. Developing countries have dramatically increased their share of FDI stock, from 1 percent in 1980 to 19 percent at the beginning of 2014. D. The value of the outstanding stock of foreign direct investment of the European Union was more than 50 percent higher than the level for the United States at the beginning of 2014. E. The value of the outstanding stock of foreign direct investment of the developing countries was higher than the level for the United States at the beginning of 2014.
E. The value of the outstanding stock of foreign direct investment of the developing countries was higher than the level for the United States at the beginning of 2014.
A survey of CEOs of the 162 largest firms on Fortune's list of the 500 largest American corporations found that the CEOs strongly believed all of the following except
E. foreign language proficiency was essential for promotion to senior executive positions.
According to the text, you can improve your chances for obtaining an overseas post by doing all of the following except
EXCEPT: 1. getting a well-paid domestic internship. 2. taking advanced classes in accounting or information systems.
If Ecuador has an absolute advantage in coffee and Argentina in wheat, then, according to trade theory
Ecuador should focus production on coffee and trade for other goods.
Which of the following elements is not included in Porter's diamond model of national advantage?
Export conditions
_______ refers to the transportation of any domestic good or service to a destination outside a country or region.
Exporting
Which of the following statements is not true? A. Some observers have argued that American industry and the American economy as a whole will be strengthened by sending activities to workers in India or other foreign nations that have comparative advantages in areas such as labor costs. B. India, with relatively few resources but a large population, should have a comparative advantage in the production of goods or services that require large amounts of expensive labor. C. India may have a comparative advantage over some other developing countries because about 350 million of its people are able to read English, and 100 million of those also understand spoken English and can communicate in English sentences. D. The sophistication and skill levels required for jobs outsourced to India are rising rapidly, driven by the abundance of qualified and low-cost workers in India. E. An estimated 1.6 million U.S. individual and corporate tax returns are prepared annually in India.
India, with relatively few resources but a large population, should have a comparative advantage in the production of goods or services that require large amounts of expensive labor.
According to the text, the international environment consists of which of the following interactions?
The domestic environmental forces and the foreign environmental forces, as well as the foreign environmental forces of two countries when an affiliate in one country does business in another country.
Which of the following statements is not true?
The first multinational company, Singer Sewing Machine, built a factory in Scotland in 1868.
Regarding the annual outflows of foreign direct investment, which of the following is not true? A. The overall volume of outward FDI from developing nations in 2013 was nine times the level in 2003. B. The proportion of worldwide outward FDI that came from developing nations was 19 percent in 2013. C. About two-thirds of annual outflows of FDI originates from the developed countries. D. The United States and the EU combined have continued to account for one-third to one-half of worldwide FDI in recent years. E. Historically, approximately two-thirds of the value of corporate investments made in the United States from abroad have been spent to acquire going companies rather than to establish new ones.
The proportion of worldwide outward FDI that came from developing nations was 19 percent in 2013.
Which of the following is not true regarding foreign investment?
The value of foreign securities owned by U.S. investors at the beginning of 2014 was five times larger than in 2004.
Regarding the annual outflows of foreign direct investment, which of the following is not true? A. The overall volume of outward FDI from developing nations in 2013 was nine times the level in 2003. B. The proportion of worldwide outward FDI that came from developing nations increased from under 5 percent in 1990 to over 32 percent in 2013. C. U.S. FDI outflows of $338 billion in 2013 were more than the combined outflows of the next three largest sources of FDI: Japan, China, and Saudi Arabia. D. The United States and the EU combined have continued to account for one-third to one-half of worldwide FDI in recent years. E. The United States was the leading single national source of FDI outflows through most of the period from 1990 to 2013, with an average of nearly one-quarter of total FDI outflows for 2010-2013.
U.S. FDI outflows of $338 billion in 2013 were more than the combined outflows of the next three largest sources of FDI: Japan, China, and Saudi Arabia.
According to the text, an international business is
a company with operations in multiple nations.
Mercantilists believed that
a nation should have an export surplus in order to accumulate precious metals.
According to the theory of comparative advantage
a nation should produce the goods for which its absolute disadvantage is less.
Examples of the kinds of external forces listed in the text are each of the following except A. competitive. B. technological. C. legal. D. production. E. labor.
production
The rise of the Ottoman Empire before 1300
promoted a search for sea routes from Europe to Asia.
Experience curve
refers to the rising scale on which efficiency improves as a result of cumulative experience and learning.
Regarding foreign investment
the distinction between portfolio investments and direct investments has begun to blur.
The term globalization was first coined by Theodore Levitt in a Harvard Business Review article in which he maintained that
the future belonged to global companies that sold the same things the same way, everywhere.
The rapid expansion of world exports since 1980 demonstrates that
the opportunity to increase sales by exporting is a viable growth strategy.
