Ch 1 & 2 International Management

John, an American national, works as a manager at his firm's subsidiary in Indonesia. A local government official tells John that materials could be delivered to the firm's facility more quickly if John pays an extra fee to the port supervisor. What should be John's first action? A. consult both American and Indonesian laws B. discuss the issue with his local agent C. consult his supervisor in the United States D. refer to the company's code of ethics

A. consult both American and Indonesian laws

Which of the following is the first step of making an ethical decision? A. consulting the laws of both the host and the home countries B. consulting the company's code of ethics and established norms C. consulting the superiors if clarification is sought D. consulting the International Codes of Conduct for MNEs

A. consulting the laws of both the host and the home countries

According to international codes of conduct, which of the following is related to the MNE behavior toward persons? A. consumer protection B. political involvement C. technology transfer D. environmental protection

A. consumer protection

Which of the following best describes nationalization? A. forced sale of an MNC's assets to local buyers B. negative public opinion regarding the actions of an MNC C. hiring preferences given to locals rather than expatriates D. government's gradual and subtle acions against a firm

A. forced sale of an MNC's assets to local buyers

Which of the following is characterized by networks of international linkages that bind countries, institutions, and people in an interdependent global economy? A. globalization B. governmentalism C. ethnocentrism D. nationalism

A. globalization

Which of the following methods is NOT a form of adaptation to the political regulatory environment? A. hedging B. localization C. participative management D. equity sharing

A. hedging

All of the following factors contribute to globalization EXCEPT ___________. A. higher number of trade restrictions B. advancement in technology C. rise of developing countries D. increased flow of labor and capital

A. higher number of trade restrictions

In recent years, the export of hazardous wastes from developed countries to less developed ones has ________________. A. increased significantly B. decreased considerably C. been banned by the EU D. remained about the same

A. increased significantly

Which of the following is a potential benefit to the host country of MNC operation? A. infrastructure development and support B. increased interest rates as supply of local capital decreases C. competition for scarce skills D. increased competition for local scarce capital

A. infrastructure development and support

_________ means that the firm maintains control over raw materials, components, technology, and know-how. A. input control B. position control C. market control D. bureaucratic control

A. input control

Social responsibility, ethical behavior, and interdependence are important concerns to be built into ________. A. management control B. corporate sustainability C. economic control D. moral idealism

A. management control

Political risks are best described as any governmental actions or politically motivated events that _____ A. negatively affect the firm's long-run profitability or value B. harm the firm's capacity to meet consumers demands C. suggest the firm is legally responsible for specific wrongdoings D. interfere with the personal safety of the firm's employees

A. negatively affect the firm's long-run profitability or value

Transparency International is best described as a(n) ________ A. nongovernmental organization that fights corruption B. nonprofit group that raises awareness about human rights violations C. international committee that monitors electronic data privacy laws D. nonprofit organization that argues for workplace equality

A. nongovernmental organization that fights corruption

For autonomous international subsidiaries, most of the impact from political risks will be in which of the following areas? A. ownership and control B. marketing and sales operations C. managerial strategy and policy-making D. financial operations

A. ownership and control

Under governmentalism, the government uses its policy-setting role to favor the interests of ________. A. the nation B. foreign investors C. a foreign company D. a national company

A. the nation

The Foreign Corrupt Practices Act allows "grease" payments to facilitate business in a foreign country, if ________. A. those payments are lawful in that country B. those payments are a small amount compared to the revenue generated C. the purpose of payment is beneficial to the company D. the purpose of payment is beneficial to the home country

A. those payments are lawful in that country

Which of the following was the primary purpose of the Organization for Economic Cooperation and the Development Convention on Bribery? A. to combat corporate corruption B. to protect corporate bribery whistleblowers C. to quantify global corruption D. to establish bribery laws

A. to combat corporate corruption

The Anti-Sweatshop Code of Conduct requires companies to provide a healthy and safe work environment and ________. A. to pay the prevailing local minimum wage B. to employ forced labor when the situation demands it C. to differentiate on the basis of gender D. to reduce environmental footprints

A. to pay the prevailing local minimum wage

The European Union currently consists of how many nations? A. 12 B. 27 C. 46 D. 34

B. 27

Which of the following is a policy of the Electronic Industry Code of Conduct ("EICC")? A. Child labor can be allowed when there is a shortage of employees. B. Contract manufacturers should follow some basic environmental requirements. C. Factory inspection should be limited to the headquarters. D. Excessive overtime can be propagated if it benefits the company.

B. Contract manufacturers should follow some basic environmental requirements.

Which of the following are the three dominant currencies in the world today? A. British pound, U.S. dollar, Hong Kong dollar B. Euro, Japanese yen, U.S. dollar C. Euro, U.S. dollar, Swiss franc D. Swiss franc, Japanese yen, British pound

B. Euro, Japanese yen, U.S. dollar

Which of the following is a true statement regarding economic risk? A. Even minor exchange-rate shifts place a country at economic risk. B. Financial troubles in the U.S. can put the world economy at risk. C. Undeveloped countries pose very little economic risk for MNC's. D. Industrialized nations have a significant risk of economic instability.

B. Financial troubles in the U.S. can put the world economy at risk.

________ refers to the business conduct or morals of MNCs in their relationships with individuals and entities. A. Moral universalism B. International business ethics C. Ethical relativism D. Global corporate culture

B. International business ethics

The Foreign Corrupt Practices Act of 1977 was primarily established to ________. A. combat corruption initiated by electronics firms and their subsidiaries B. distinguish between harmless customs and actual bribery C. prosecute international extortionists under the U.S. legal system D. provide managers with anonymous methods for reporting bribery

B. distinguish between harmless customs and actual bribery

According to the international codes of conduct, the MNE behavior toward the host government is related to ________. A. laws and regulations, technology transfer, and communication practices B. economic and developmental policies, laws and regulations, and political involvement C. political involvement, technology transfer, and environmental protection D. political involvement, communication practices, and laws and regulations

B. economic and developmental policies, laws and regulations, and political involvement

Creating Shared Value ("CSV") creates ________. A. economic value by creating shared value B. economic value by creating social value C. social value by increasing market value D. social value by increasing shared value

B. economic value by creating social value

Which of the following best describes nationalization? A. government's gradual and subtle actions against a firm B. forced sale of an MNC's assets to local buyers C. negative public opinion regarding the actions of an MNC D. hiring preferences given to locals rather than expatriates

B. forced sale of an MNC's assets to local buyers

Which of the following is NOT one of the primary methods of managing political risk? A. hedging B. gainsharing C. dependency D. adaptation

B. gainsharing

With an ethnocentric approach, a company applies the morality used in its ________. A. host nation B. home country C. industry D. general society

B. home country

Which of the following concepts includes the expectation that MNCs should be concerned with the social and economic effects of their decisions? A. corporate technoglobalism B. international social responsibility C. macropolitical interdependence D. moral idealism

B. international social responsibility

What is the primary concern among citizens in developed economies regarding the outsourcing of non-manufacturing jobs? A. supply chains B. job retention C. tax processing D. quality control

B. job retention

Which of the following best explains China's success in exporting? A. geographic location in the world B. low costs and steady stream of capital C. close ties with Japan D. high educational standards

B. low costs and steady stream of capital

Events that affect all foreign firms doing business in a country or region are called ____________. A. micropolitical risk events B. macropolitical risk events C. country risk events D. regional risk events

B. macropolitical risk events

Sundew, an American soda company, opened a number of manufacturing units in a developing country. It employed people from the host country to work in the new units. This move radically lowered the poverty rate in the developing country. In this scenario, Sundew is ________. A. adopting local customs B. making a foreign investment C. making questionable payments D. following moral guidelines

B. making a foreign investment

Micropolitical risk events are those that affect __________. A. managers and employees who are nationals B. one industry or company or a few companies C. several other nations in the same region D. multiple industries and companies

B. one industry or company or a few companies

Which of the following often forces the MNC to act in accordance with ethnocentric value systems? A. media pressure B. public pressure in the home country C. moral universalism D. environmental policies in the home country

B. public pressure in the home country

Tokens of appreciation and grease money are considered ________. A. sales commissions B. questionable payments C. cultural reward systems D. business expenses

B. questionable payments

Which of the following is a true statement about China? A. China retains independence by refusing to join the World Trade Organization. B. China lacks access to oil, which puts the nation at risk in the near future C. Both foreign corporations and the Bamboo Network invest in China D. Regional governments and legal systems create stability for foreign investors

C. Both foreign corporations and the Bamboo Network invest in China

When GM does not allow its subsidiary manufacturing company in China to sell the Chinese-made cars outside of China, GM is exercising ______________. A. Bureaucratic control B. Input control C. Market control D. Position control

C. Market control

Which of the following is the most highly globalized in regards to economic integration, technological connectivity, personal contact, and political engagement? A. New Zealand B. United States C. Singapore D. Denmark

C. Singapore

Which of the following is NOT a true statement about the Mexican trading environment? A. Trade with the U.S. and Canada has tipled since NAFTA was ratified B. In recent years, almost 85% of Mexico's exports go to the United States C. Under NAFTA regulations, Mexico may only trade with the U.S. and Canada D. Mexican trade policy is among the most open in the world

C. Under NAFTA regulations, Mexico may only trade with the U.S. and Canada

Companies often reduce risk in foreign countries by creating dependency of a subsidiary on the host country. Which of the following is NOT a means of maintaining dependency? A. market control B. position control C. equity sharing D. staged contribution strategies

C. equity sharing

McDonald's, a fast-food chain headquartered in the United States, applies the morality it practices in the United States to all foreign countries in which it operates. McDonald's is adhering to ________. A. geocentrism B. ethical relativism C. ethnocentrism D. moral universalism

C. ethnocentrism

India's economic boom is most likely a result of all of the following EXCEPT _________. A. foreign investment B. educated workers C. government leadership D. increasing deregulation

C. government leadership

A company subscribing to ethical relativism would implement the morality of the ________. A. home country B. legal system C. host nation D. shareholders

C. host nation

Which of the following developments in global business has had the greatest effect on international managers in recent years? A. ethnic strife B. increased nationalism C. information technology D. political unrest

C. informational technology

Which of the following requires that a firm keep control of the means of distribution? A. input control B. position control C. market control D. bureaucratic control

C. market control

Under governmentalism, the government uses its policy-setting role to favor national interests, rather than relying on ________. A. environmental standards B. competitive analysis C. market forces D. stockholder interests

C. market forces

Which of the following terms refers to the practice by a country of rallying public opinion in favor of national goals and against foreign influences? A. governmentalism B. privatization C. nationalism D. protectionism

C. nationalism

Risk assessment by multinational corporations usually takes two forms: ___________ and ___________. A. government reports; computer modeling B. internal staff; foreign publications C. outside consultants; internal staff D. outside experts; media reports

C. outside consultants; internal staff

Most small and medium-sized enterprises (SMEs) are _______ A. investing heavily in world markets by offshoring their labor activities B. attempting to avoid becoming globalized too quickly C. competing only on the local level due to technologial and financial constraints D. contributing to their national economies through exporting

D. Contributing to their national economies through exporting

Most of today's world trade takes place in which three trade blocs? A. Middle East, China, and India B. Saudi Arabia, Western Europe, and the United States C. Asia, North America, and Canada D. European Union, Asia, and the Americas

D. European Union, Asia, and the Americas

__________ occurs when the local government seizes the foreign-owned assets of the MNC and provides inadequate compensation. A. Nationalization B. Repartriation C. Confiscation D. Expropriation

D. Expropriation

Which of the following is NOT a true statement about India? A. India is the world's leader for outsourced high-tech services B. India is the fastest-growing free-market democracy C. India's middle class spurs the country's growth D. India's biggest contributor to growth is its excellent infrastructure

D. India's biggest contributor to growth is its excellent infrastructure

________ is a systems view in which one seeks to optimize the total materials cycle from virgin material, to finished material, to component, to product, to obsolete product, and to ultimate disposal. A. Industrial engineering B. Ecological succession C. Ecological shadow D. Industrial ecology

D. Industrial ecology

Which of the following is the last step (not the first step!) of making an ethical decision? A. weighing stakeholders' rights B. consulting your superiors if you still need clarification C. consulting the company's code of ethics and established norms D. following your own conscience and moral code

D. following your own conscience and moral code

Payments to expedite routine transactions are often referred to as ________. A. slotting fees B. gray funds C. expropriation D. grease money

D. grease money

According to international codes of conduct, which of the following is related to the MNE behavior toward persons? A. laws and regulations B. development policies C. political involvement D. human rights

D. human rights

Which of the following is a business benefit from corporate social responsibility? A. revenue decreases B. cost increases C. risk assessment D. increase in brand value

D. increase in brand value

Dell Computers most likely offshore product support service jobs to India because of the __________. A. superior technical knowledge of Indian workers B. customer preferences for interacting with Indian workers C. extensive call center experience of Indian workers D. lower payroll costs associated with Indian workers

D. lower payroll costs associated with Indian workers

Events that affect all foreign firms doing business in a country or region are called ___________. A. regional risk events B. country risk events C. micropolitical risk events D. macropolitical risk events

D. macropolitical risk events

Which of the following requires that the firm actively involve nationals in the management of subsidiaries? A. localization of the operation B. development assistance C. equity sharing D. participative management

D. participative management

Which of the following terms refers to a country's use of tariff and non-tariff barriers to partially or completely close its borders to various imported products that would compete with domestic products? A. privatization B. governmentalism C. nationalism D. protectionism

D. protectionism

Which of the following terms refers to adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today, while protecting, maintaining, and enhancing the human and natural resources that will be needed in the future? A. techno-globalism B. protectionism C. privatization D. sustainability

D. sustainability

Which of the following terms refers to adopting business strategies that meet the current need of the firm and also protect and enhance the human and natural resources that will be needed in the future? A. nationalization B. globalization C. protectionism D. sustainability

D. sustainability

Which of the following is the main reason why companies dispose hazardous wastes in less developed countries? A. advanced waste disposal plants B. international agreements C. large amounts of available land D. weak regulations and low costs

D. weak regulations and low costs