GEB 3375 CHAPTER 6
According to Michael Porter, a nation's factor endowments help determine its ________. A) national competitive advantage B) demand conditions C) negative balance of trade D) comparative advantage
Answer: A
In which of the following stages of the internationalization process is a firm preoccupied with business in its home market? A) domestic focus B) experimental involvement C) active involvement D) pre-export
Answer: A
The Gulf nations benefit economically from rich petroleum reserves in the region. This is an example of ________. A) comparative advantage B) competitive advantage C) ownership-specific advantage D) cost advantage
Answer: A
Which of the following explains the expansion of born global firms despite the scarcity of financial, human, and tangible resources? A) the integration of world economies under globalization B) a concerted effort by developing nations for running a trade surplus C) product shortages and supply crunch resulting from import restrictions D) rising inflation in developing economies
Answer: A
Which of the following is a typical outcome of free trade? A) Unrestricted international trade generally increases the overall prosperity of poor countries. B) Free trade sustains inflation in developing economies. C) Domestically produced products tend to be cheaper than imported products. D) Lower-cost imports cause living standards to deteriorate.
Answer: A
Which of the following is an example of an ownership-specific advantage? A) the physical assets owned by a firm B) natural resources of the region where the firm operates C) low-cost labor D) inexpensive capital
Answer: A
Which of the following is true about national industrial policy? A) It is designed to create monetary and fiscal policies, such as low-interest loans, that provide a stable supply of capital for company investment needs. B) It explains why nations attempt to run a trade surplus. C) It demonstrates that what matters is not the absolute cost of production, but rather the relative efficiency with which two countries can produce the products. D) It underlines the demerits of rigorous educational systems at the precollege level.
Answer: A
Which of the following is true about networks? A) Networks are neither formal organizations with clearly defined hierarchical structures nor impersonal, decentralized markets. B) In networks, buyers and sellers share no linkages and rarely interact with each other. C) In a network, continued interaction among partners leads to competition and rivalry that bring down productivity. D) Networks represent the economically beneficial short-term relationships the firm undertakes with other business entities.
Answer: A
Which of the following is true about the first stage of evolution in the international product life cycle theory? A) The product enjoys a temporary monopoly at this stage. B) The product's inventors mass-produce it and seek to export it. C) The knowledge about how to produce the product is widespread. D) The competition intensifies at this stage and export orders begin to come from lower-income countries.
Answer: A
________ refers to the superior features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national policies. A) Comparative advantage B) Competitive advantage C) Absolute advantage D) Industrial cluster
Answer: A
According to the internationalization process model, a firm advances to the ________ stage by initiating limited international activity, typically in the form of basic exporting. A) active involvement B) experimental involvement C) pre-export D) domestic focus
Answer: B
Which of the following is an element of the comparative advantage principle? A) per unit cost advantage B) relative efficiency of production C) absolute cost of production D) negative balance of trade
Answer: B
Which of the following is an example of a location-specific advantage? A) managerial skills B) skilled labor C) proprietary knowledge D) the ability to reduce buyer uncertainty
Answer: B
Which of the following is the last stage of evolution in the international product life cycle theory? A) temporary monopoly B) standardization C) decline D) diversification
Answer: B
Which of the following is true about the determinants of national competitive advantage? A) The presence of strong competitors in a nation adversely affects national competitive advantage. B) The strength and sophistication of buyer demand facilitates the development of competitive advantages in particular industries. C) Demand conditions describe the nation's position in factors of production, such as labor, natural resources, capital, technology, entrepreneurship, and know-how. D) Vigorous competitive rivalry among firms lowers national innovativeness.
Answer: B
Which of the following is true with regard to competitive advantage? A) Competitive advantages are typically derived from deliberate national policies. B) A competitive advantage is difficult for competitors to imitate. C) A competitive advantage is also known as a country-specific advantage. D) Competitive advantage includes inherited resources, such as arable land.
Answer: B
Which of the following is true with regard to firm-level theories? A) Firm-level theories are classical theories, widely accepted since the sixteenth century. B) Firm-level explanations address the question: "How can internationalizing firms gain and sustain competitive advantage?" C) Firm-level explanations address the question: "Why do nations trade?" D) Firm-level theories do not address the issue of organizational performance.
Answer: B
Which of the following was the analysis revealed by the "Leontief paradox"? A) that despite having an abundant pool of labor, the U.S. was exporting capital-intensive goods B) that the U.S. often exported labor-intensive goods and imported more capital-intensive goods C) that international trade was simpler than perceived D) that contrary to the popular belief, new products are more likely to originate in developing economies
Answer: B
A proactive economic development plan initiated by the government, often in collaboration with the private sector, that aims to develop or support particular industries within the country is referred to as ________. A) national endowment policy B) national fiscal policy C) national industrial policy D) policy on national industrial relations
Answer: C
According to Porter's competitive advantage of nations, ________ refer to the nature of home-market demand for specific products and services. A) firm strategy, structure, and rivalry B) factor conditions C) demand conditions D) demand liabilities
Answer: C
Born global firms are ________. A) companies that forgo the domestic focus stage of the internationalization process B) companies that focus mainly on running a trade surplus C) young companies that internationalize early in their evolution D) young companies that focus on the ratio of production costs rather than the absolute cost of production
Answer: C
Competitive advantage refers to the ________. A) belief that national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports B) superior features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national policies C) distinctive assets or competencies of a firm that are difficult for competitors to imitate and are typically derived from specific knowledge, capabilities, skills, or superior strategies D) relative absence of restrictions to the flow of goods and services between nations
Answer: C
Current trends suggest that early internationalizing firms will ________. A) eliminate MNEs worldwide B) be unable to sustain the rigors of international trade C) gradually become the norm in international business D) significantly dampen entrepreneurial efforts of smaller firms
Answer: C
In recent years, business executives and scholars have used ________ to refer to the advantages possessed by nations and individual firms in international trade and investment. A) comparative advantage B) country-specific advantage C) competitive advantage D) cost advantage
Answer: C
In the ________ phase of international product life cycle theory, knowledge about how to produce the product is widespread and manufacturing becomes straightforward. A) temporary monopoly B) introduction C) standardization D) maturity
Answer: C
Nations running a trade surplus ________. A) rely solely on imports B) openly discourage export C) export more goods than they import D) import more goods than they export
Answer: C
The ________ is one of the three key modern perspectives that helps explain the development of national competitive advantage. A) factor proportions theory B) absolute advantage principle C) national industrial policy D) comparative advantage of nations
Answer: C
The ________ rests on the premise that countries differ in the type and quantity of production factors they possess. A) cost-advantage theory B) competitive advantage theory C) factor proportions theory D) comparative advantage theory
Answer: C
Which of the following is a comparative advantage? A) close relationships with suppliers B) superior strategies of an organization C) entrepreneurial orientation D) the distinct capabilities of an organization
Answer: C
Which of the following is an element that brings about a competitive advantage more at the national level than at the individual company level? A) firm strategy, structure, and rivalry B) factor conditions C) industrial cluster D) demand conditions E) related and supporting industries
Answer: C
Which of the following refer to a collaborative venture which results in a new legal entity? A) non-equity-based strategic alliances B) sole proprietorships C) equity-based joint ventures D) not-for-profit organizations
Answer: C
In the ________ stage of the internationalization process, a firm targets numerous foreign markets via various entry modes, especially FDI. A) pre-export B) domestic focus C) experimental involvement D) committed involvement
Answer: D
International entrepreneurship is a new field of scholarly inquiry that is a result of the ________ phenomenon. A) standardization B) industrial cluster C) localization D) born global
Answer: D
Which of the following is an example of an industrial cluster? A) the proliferation of counterfeit goods in the global marketspace B) the elite community of industrialists in the United States C) high productivity of workers in South Korea D) the consumer electronics industry in Japan
Answer: D
Which of the following is true with regard to mercantilism? A) Mercantilism does not harm consumers. B) Mercantilism helps curb inflation. C) Mercantilism is superior to free trade. D) Mercantilism tends to harm firms that import.
Answer: D
Which of the following statements would be supported by Michael Porter? A) Economic prosperity depends primarily on inherited national advantages. B) The presence of strong competitors in a nation hinders national competitive advantage. C) The presence of highly demanding customers discourages innovation. D) Rivalry among industry competitors spurs innovation.
Answer: D
________ argues that increasing returns to scale, especially economies of scale, are important for superior international performance in industries that succeed best as their production volume increases. A) Comparative theory B) Competitive theory C) Cost-advantage theory D) New trade theory
Answer: D
________ is the belief that national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports. A) Positivism B) Imperialism C) Communism D) Mercantilism
Answer: D
According to Porter, competitive advantage, resulting from firm strategy, structure, and rivalry refer to the presence of clusters of suppliers, competitors, and complementary firms that excel in particular industries.
Answer: FALSE
According to the absolute advantage principle, national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports.
Answer: FALSE
According to the comparative advantage principle, what matters most is the absolute cost of production of the product and not the relative efficiency with which a country can produce the product.
Answer: FALSE
According to the factor proportions theory, differences in the quantity of factors of production held by countries do not determine international trade patterns.
Answer: FALSE
According to the internationalization process model, a firm is unlikely to receive unsolicited product orders from abroad before advancing to the pre-export stage.
Answer: FALSE
According to the internationalization process model, a firm starts out in a pre-export phase and is preoccupied with business in its home market.
Answer: FALSE
Countries cannot create or acquire comparative advantage.
Answer: FALSE
Low-cost labor and inexpensive capital are examples of a firm's competitive advantage.
Answer: FALSE
Mercantilism benefits consumers because restricting imports increases the choice of domestic products they can buy.
Answer: FALSE
Modern business executives use the term comparative advantage when referring to the assets of individual firms.
Answer: FALSE
Relative efficiency of production refers to the total value of assets that MNEs own abroad via their investment activities.
Answer: FALSE
The innovativeness of a nation's firms has no significant impact on the national competitive advantage.
Answer: FALSE
According to Porter, the competitive advantage of a nation depends on the collective competitive advantages of the nation's firms.
Answer: TRUE
Adam Smith attacked the mercantilist view by suggesting that nations benefit most from free trade.
Answer: TRUE
Comparative advantage includes inherited resources, such as labor, climate, arable land, and petroleum reserves.
Answer: TRUE
Early trade theories failed to consider the fact that the primary participants in international trade are individual firms that differ in significant ways from each other.
Answer: TRUE
Free trade produces lower-cost imports that help consumers save money, thereby increasing their living standards.
Answer: TRUE
Industrial cluster refers to a concentration of businesses, suppliers, and supporting firms in the same industry at a particular geographic location, characterized by a critical mass of human talent, capital, or other factor endowments.
Answer: TRUE