IB Set 2

Which of the following observations is true of the Bretton Woods agreement?

All countries agreed to fix the value of their currency in terms of gold under the agreement

Which of the following is a factor that transforms a low-cost location to a high-cost location?

Appreciation of local currency

_____ is viewed as the most restrictive countertrade arrangement and is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.

Barter

____ refers to the number of intermediaries between the producer (or manufacturer) and the consumer

Channel length

___ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain amount of materials back from a country to which a sale is made.

Counterpurchase

___ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent

Countertrade

_____ denotes a whole range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money

Countertrade

Which of the following is a major drawback of engaging in countertrade?

Countertrade may involve the exchange of unusable goods.

Which of the following will help a company hedge against currency fluctuations?

Dispersing production to different geographic locations

Which of the following is one of the four elements that constitute a firm's marketing mix?

Distribution strategy

Which of the following is a nationwide group of international trade attorneys who provide free initial consultations to miniature businesses on export-related matters?

ELAN

Which of the following is a common difficulty that traders face when exporting goods or services to other countries?

Exporters often face voluminous paperwork and complex formalities.

Which of the following is a factor that makes Eurobonds more attractive than most major domestic bonds?

Favorable tax status

Which of the following makes being dependent on one location particularly risky?

Floating exchange rates

Which of the following arguments is in favor of floating exchange rates?

Governments can restore monetary control by removing the obligation to maintain exchange rate parity

Which of the following is a hidden cost associated with basing production in a foreign location?

High employee turnover

Which of the following is a drawback of the polycentric approach to staffing?

Host-country nationals have limited opportunities for advancement beyond senior positions in their subsidiary.

Which of the following is a major source of the improvement in the capabilities of a foreign site?

Increasing abundance of advanced factors of production in the nation where the factory is located

The agreement reached at Bretton Woods established ____.

International Monetary Fund

Which of the following is an argument favoring centralization?

It can avoid the duplication of activities.

Which of the following is a disadvantage of licensing?

It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies.

How has the adoption of just-in-time inventory systems, computer-aided design, and computer-aided manufacturing impact firms' associations with suppliers?

It has increased pressures to establish long-term relationships with suppliers.

Which of the following statements about franchising is true?

It is a specialized form of licensing.

Which of the following is an advantage of countertrade?

It is an effective way of doing business with developing nations.

Which of the following is an argument favoring decentralization?

It permits greater flexibility.

Which of the following is a function of World Bank?

Lending money to governments for development

_____ refers to giving a person in each subunit responsibility for coordinating with another subunit on a regular basis.

Liaison roles

Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets?

Localization strategy

Which of the following statements is true regarding management development?

Management development facilitates the creation of an informal network for sharing knowledge within the multinational enterprise

Which of the following is true regarding approaches to labor relations?

Many firms are now using the threat to move production to another country in their negotiations with unions.

Which of the following statements about retail systems is true?

One factor contributing to greater retail concentration is an increase in car ownership.

Through its _____ program, the SBA oversees about 850 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.

SCORE

Which of the following statements about small-scale entry is true?

Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale.

_____ separated national equity markets from each other historically.

Substantial regulatory barriers

Which of the following is less likely to add to the pressure for a firm to be locally responsive?

Switching costs for consumers

According to Levitt, which of the following statements is true?

Technology drives the world toward a converging commonality.

Which of the following is a problem that arises due to an international division structure?

The heads of foreign subsidiaries are not given as much voice in the organization as the heads of domestic functions or divisions.

Which of the following statements about the choice of distribution strategy is true?

The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product.

Which of the following statements is NOT true?

The price a firm charges for a good or service is typically more than the value the customer places on that good or service

What is the long-term goal of international trade secretariats (ITSs)?

To be able to bargain transnationally with multinational firms

What will happen if a country increases its money supply rapidly under fixed exchange rate regime?

Trade deficit would widen in that country.

Which of the following arguments strengthen the idea of floating exchange rates?

Trade deficits can be corrected through changes in exchange rates.

Which of the following countries has a concentrated retail system?

USA

_____ makes it difficult to evaluate the performance of expatriate managers objectively.

Unintentional bias

United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

United States attracted heavy inflows of capital from foreign investors during this period.

Which of the following statements is true of Web-based EDI systems?

Web-based systems are much easier to install compared to proprietary solutions.

If a high-tech firm sets up operations in a foreign country to profit from a core competency in technological know-how, which of the following entry strategies is best?

Wholly owned subsidiaries

A dirty float refers to a situation in which ____.

a country tries to hold its currency against an important reference currency without a formal pegged rate

When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create

a global web of value creation activities.

Moving down the experience curve:

allows a firm to reduce its cost of creating value.

____ is the direct exchange of goods and/or services between two parties without a cash transaction and is the simplest arrangement

barter

Dynamic capabilities describe skills that _____.

become more valuable over time through learning

In a letter of credit transaction, the importer secures the letter of credit ____.

before product shipment

Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country

being locally responsive

Management development programs aim to:

build a unifying corporate culture.

Other things being equal, the rate of new-product development seems to be greater in countries where:

consumers are affluent.

An important drawback of a purely domestic capital market is that the ____.

cost of capital tends to be higher than it is in a global market

Under a(n) _____ agreement, a firm might license some valuable intangible property to a foreign partner, but in addition to a royalty payment, the firm might also request that the foreign partner license some of its valuable know-how to the firm.

cross-licensing

The continuing persistence of ____ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences

cultural and economic

The emphasis on local responsiveness in firms pursuing a localization strategy creates strong pressures for:

decentralizing operating decisions to foreign subsidiaries.

The means a firm chooses for delivering the product to the consumer is its ____.

distribution strategy

A _____ is simply an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time.

draft

_____ are international bonds, normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated

eurobonds

The international monetary system refers to the institutional arrangements that govern ____.

exchange rates

A(n) ____ distribution channel is one that is difficult for outsiders to access.

exclusive

A Japanese firm prefers expatriate Japanese managers to head its foreign operations because these managers have been socialized into the firm while employed in Japan. This indicates that the firm

follows an ethnocentric staffing policy to maintain a unified corporate culture.

When value of U.S. dollars goes down, ____.

foreign borrowers will garner benefits

Under a currency board system, ____.

government lacks the ability to set interest rates

The benefits of making all or part of a product in-house seem to be greatest when the firm

has highly specialized assets

For firms selling a product that serves universal needs, and do not face significant competition, a(n) _____ strategy makes sense.

international

Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency because Eurocurrency deposits ____

lack government regulations

The main factor that makes the Eurocurrency market attractive to both depositors and borrowers is that it ____.

lacks government regulation

An arrangement whereby a firm grants the right of intangible property to another entity for a specified time period in exchange for royalties is a(n) _____ agreement.

licensing

There is low interdependence, performance ambiguity, and costs of control in firms pursuing a(n):

localization strategy.

Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as:

location economies.

Bringing managers together in one location for extended periods and rotating them through different jobs in several countries is a part of

management development programs

The set of choices the firm offers to its targeted market is known as the ____.

marketing mix

Eurobonds are ____.

normally underwritten by an international syndicate of banks

The norms and values systems that are shared among the employees of a company are referred to as:

organizational culture.

When using the Euromarkets, companies ____.

pay less for the loans

Under a _____ exchange rate regime, a country will attach the value of its currency to that of a major currency

pegged

When a company charges whatever the market will bear, the company is using:

price discrimination.

The cost of capital is the ____.

price of borrowing money

Consumers in highly developed countries value ____ as compared to their counterparts in less developed nations.

product attributes

Tight cross-functional integration between R&D, production, and marketing can help a company to ensure that all of the following take place except:

product development projects are driven by internal needs.

The World Bank was established at the at Bretton Woods conference to ____.

promote general economic development

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as ____.

relational capital

Japan's great trading houses are called ____.

sogo shosha

When an investor purchases a corporate bond, he purchases the right to receive a ____.

specified fixed stream of income from the corporation

The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because:

the customer captures some of that value in the form of a consumer surplus.

In a seminal study, R. L. Tung found that for American multinationals, the biggest impediment to expatriate success was:

the inability of the spouse to adjust.

Organizational structure means all of the following, EXCEPT:

the manner in which decisions are made and work is performed by individuals.

A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a(n) _____ strategy.

transnational

Global learning based on the multidirectional transfer of skills between subsidiaries and the corporate center is a central feature of a firm pursuing a(n) _____ strategy.

transnational

A firm that operates with matrix-type structures in which both product divisions and geographic areas have significant influence would use which of the following strategies?

transnational strategy

Learning effects:

typically disappear after a while, in spite of the complexity of the task.

A consumer surplus can be best described as:

value for the money.

A firm's _____ determines where in its hierarchy the decision-making power is concentrated.

vertical differentiation

A _____ structure encourages fragmentation of the organization into highly autonomous entities.

worldwide area

A(n) _____ tends to be adopted by firms that are reasonably diversified.

worldwide product division structure