BUS 327 Midterm

What is the term for a company's formal statement of the ethical priorities it expects all of its employees to follow? A. Code of ethics B. Stakeholders pledge C. Moral courage D. Difference principle

A. Code of ethics

_____ is essentially the service-industry version of licensing, although it normally involves much longer term commitments. A. Franchising B. Subsidizing C. Greenfield investment D. Patenting

A. Franchising

According to the _____ policy, subsidies can help a firm achieve a first-mover advantage in an emerging industry. A. strategic trade B. antidumping C. tariff quota D. free trade

a. strategic trade

what is the main reason that managing an international business differs from managing a domestic business? a. because international managers are more experience b. because countries differ in their cultures and political/economic/legal systems c. because countered want to do business with their neighbors d. because countries want to keep their transactions simple

b. because countries differ in their cultures and political/economic/legal systems

The Research and Development division of a company has recently designed a new coffee vending machine that is likely to sell very well in the market. It is compact, user-friendly, and provides unprecedented efficiency in terms of cost per cup. Consequently, the company fears that its competitors would soon mimic the design of their product and to protect its product, it is now seeking a _____ for the same a. copyright b. patent c. trademark d. certification

b. patent

___________ is required for a business environment to be conductive to innovation and entrepreneurial activity a. state ownership of means of production b. strong legal protection of property rights c. barriers to foreign trade market d. government regulation of the market

b. strong legal protection of property rights

identify two benefits and two costs of FDI from the perspective of the home country

benefits: 1. balance of payments 2. employment effects 3. valuable skills learned costs: 1. balance of payments 2. employment

identify two benefits and two costs of foreign direct investment (FDI) from the perspective of the host country

benefits: 1. resources transfer effects 2. employment effects costs: 1. competition w/in host nation 2. balance of pmts 3. loss of national sovereignty

In 1997, two South Korean manufacturers of semiconductors, LG Semicon and Hyundai Electronics, were accused of selling dynamic random access memory chips (DRAMs) in the U.S. market at below their costs of production. It was alleged that the firms were trying to unload their excess production in the United States. This is an example of: A. ad valorem tariff. B. subsidy. C. dumping. D. import quota.

c. dumping

What term refers to a situation in which a government does not attempt to restrict what its citizens can buy or sell to another country? A. Tariffs B. Import quotas C. Free trade D. Subsidies

c. free trade

totalitarianism: a. refers to a political system in which government is by the people, exercised either directly or through elected representatives b. is based on a belief that citizens should be directly involved in decision making c. id a form of government in which one person or political party exercises absolute control over all spheres of human life

c. id a form of government in which one person or political party exercises absolute control over all spheres of human life

The Japanese government was pressurized by the U.S. government to place limits on the number of vehicles exported to the United States by Japanese automobile producers in 1981. This is an example of: A. Tariff rate quota. B. Specific tariffs. C. Voluntary export restraint. D. Ad valorem tariff.

c. voluntary export restraint

in its extreme viewpoint, ________________ suggests that if a culture supports slavery, it is all right to use salve labor in the country a. the freedman doctrine b. noblesse oblige c. righteous moralist d. cultural relativism

d. culture relativism

ex: appreciate or depreciate 3.10 went to 3.13

depreciated because you have to use more money to buy $1

true or false Licensing gives a firm tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability

false

true or false the ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut and easy to determine

false

true or false A Japanese car manufacturer acquires an Italian producer of car tires. This is an example of a greenfield investment.

false

true or false A firm's internal stakeholders include customers, suppliers, and lenders

false

true or false Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.

false

true or false Tariff barriers lower the costs of exporting products to a country.

false

true or false Tariffs are pro-consumer and anti-producer.

false

true or false The WTO has the ability to force any member nation to take an action to which it is opposed.

false

true or false The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

false

true or false Unlike other trade policies, local content regulations tend to benefit consumers and not producers.

false

true or false When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that have a high value-to-weight ratio.

false

true or false a nation's legal system is usually of very little interest to international business managers, because international businesses are headquartered in different countries

false

true or false antagonistic relationship between management and labor classes may result in lower costs of production.

false

true or false in todays world of global communications, rapid transportation, and global markets, cultural differences have ceased to exist

false

true or false the health care sector in the U.S. cannot benefit from outsourcing to low-cost producers in other nations because of the nature of the technical work

false

Brazil's form of government

federal republic

the tenet of ________________ is that the welfare of society is best served by letting people pursue their own economic self-interest a. socialism c. communism c. anarchism d. individualism

individualism

essay what are the three factors that contribute to the attractiveness of a country as a market or investment site?

political, economic, legal

true or false Facilitating payments are also known as 'speed money' or 'grease payments'.

true

true or false inadequate protections for intellectual property reduce the incentive for innovation

true

true or false the foreign corrupt practices act outlawed the paying of bribes to foreign government officials to gain business

true

true or false By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing.

true

true or false Gross National Income (GNI) per capita can be adjusted by purchasing power to account for differences in the cost of living.

true

true or false Talking with prior employers regarding someone's reputation is a good way to discern a potential employee's ethical predisposition.

true

true or false The two most common methods of restricting inward Foreign Direct Investment (FDI) are ownership restraints and performance requirements.

true

true or false a caste system is a closed system of stratification in which social position is determined by the family in which the person is born

true

true or false a country's balance of payments accounts keep track of both its payments to and its receipts from other countries

true

true or false a well-functioning market economy requires laws protecting private property rights and providing mechanisms for contract enforcement

true

true or false antidumping policies are designed to punish foreign firms that are engaged in dumping

true

true or false by identifying and investing early in a potential future economic star , international firms can build brand loyalty and gain experience in that country's business practices

true

true or false differences between countries requires that an international business vary its practices country by country

true

true or false evidence suggests that technological changes have had a bigger impact on the declining share of national income enjoyed by labor than globalization

true

true or false governments of not always act in the national interest when they intervene n the economy; politically important interest groups often influence them

true

true or false if a country's economy is to sustain long-run economic growth, the business environment must be conductive to innovations and entrepreneurial activity

true

true or false in a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more.

true

true or false in an individual society, the welfare of society is best served by letting people pursue their own economic self-interest

true

true or false local content regulations provide protection for a domestic producer of parts by limiting foreign competition

true

true or false moral courage enables mangers to walk away from a decision that is profitable but unethical

true

true or false other things being equal, the greater the capital investment in an economy, the more favorable its future growth prospects are likely to be

true

true or false property rights refer to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource

true

true or false research supports the view that multinational firms often transfer significant technology when they invest in a foreign country

true

true or false rivers Inc. a U.S. based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. this is an example of foreign direct investment

true

true or false social responsibility refers to the idea that businesspeople should favor decisions that have both good economic and social consequences

true

true or false strategic trade policy suggests that a government should use subsidies to support promising firms that are active in newly emerging industries

true

true or false the economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy

true

true or false the political, economic and legal environment of a country influence the attractiveness of that country as a market or investment site

true

true or false the shift toward a more integrated and interdependent world economy is referred to as globalization

true

true or false to conform to local content regulations, a firm may have to locate more production activities in given market than it would otherwise

true

true or false an individual with a strong sense of person ethics is less likely to behave in an unethical manner in a business setting

ture

true or false what is considered normal business in one country may be considered unethical in other countries

ture

Which of the following observations about subsidies is true? A. Government subsidies must be paid for, typically by taxing individuals and corporations. B. Subsidies are used to reduce exports from a sector, often for political reasons. C. Whether subsidies generate national benefits that exceed their national costs is debatable. D. Subsidies help foreign producers gain a competitive advantage over domestic producers.

A. Government subsidies must be paid for, typically by taxing individuals and corporations.

Which of the following is NOT an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe? A. Reduced tariffs on imports of manufactured goods B. Government regulations C. Issues associated with economic and political risk D. Barriers to foreign direct investment

A. Reduced tariffs on imports of manufactured goods

Which of the following is a home-country policy aimed at limiting outward FDI flow? A. Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings B. Implementation of government-backed insurance programs to cover major types of foreign investment risk C. Eliminating double taxation of foreign income D. Persuading host countries to relax their restrictions on inbound FDI

A. Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings

A situation in which none of the available alternatives seems morally acceptable is called: A. an ethical dilemma. B. noblesse oblige. C. the tragedy of the commons. D. the free rider problem.

A. an ethical dilemma.

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as: A. location-specific advantages. B. capital-specific advantages. C. absolute advantages. D. production factor advantages.

A. location-specific advantages.

Local content regulations: A. protect domestic producers by limiting foreign competition. B. lower the prices of imported components. C. tend to benefit consumers and not producers. D. encourage outsourcing of production units.

A. protect domestic producers by limiting foreign competition.

Which of the following is NOT one of the main instruments of trade policy? A. Tariffs B. Credit portfolios C. Local content requirements D. Administrative policies

B. Credit portfolios

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralist B. Cultural relativism C. The justice theory D. The rights theory

B. Cultural relativism

Which of the following is NOT an example of internal stakeholders? A. Employees B. Customers C. Stockholders D. The board of directors

B. Customers

Identify the INCORRECT statement about environmental regulations. A. Environmental regulations are often lacking in developing nations. B. Environmental regulations are similar across developed and developing nations. C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, etc. D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.

B. Environmental regulations are similar across developed and developing nations.

Which of the following is a consequence of the emphasis on individual performance in many Western societies? A. Decreased entrepreneurship B. High degree of managerial mobility C. Increased loyalty towards an individual company D. Executives are not exposed to different ways of doing business

B. High degree of managerial mobility

_____ is a direct restriction on the quantity of some good that may be imported into a country. A. Import tariff B. Import quota C. Import subsidy D. Ad valorem tariff

B. Import quota

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold. Which business practice is this an example of? A. Acquisition B. Licensing C. Exporting D. Greenfield investment

B. Licensing

Which of the following enables managers to walk away from a decision that is profitable, but unethical? A. Noblesse oblige B. Moral courage C. The difference principle D. The Friedman doctrine

B. Moral courage

Which of the following arises when a country is importing more goods and services than it is exporting? A. Current account surplus B. Trade deficit C. Trade surplus D. Trade balance

B. Trade deficit

FDI occurs when a firm: A. ships its products from one country to another. B. invests directly in facilities to produce a product in a foreign country. C. invests in the shares of another company operating in the same country. D. grants permission to another company in a different country to use its brand name.

B. invests directly in facilities to produce a product in a foreign country.

In a pure market economy: A. all productive activities are owned by the state. B. production is determined by the interaction of supply and demand. C. collectivist goals are given priority over individual goals. D. the prices at which goods are sold is determined by the government.

B. production is determined by the interaction of supply and demand.

Since the late 1980s, there has been a spread of democracy. This is because A. a state's ability to control access to uncensored information has increased B. the socialist model failed to deliver economic progress to the vast bulk of their populations C. in many countries the middle and working classes have become less powerful D. in many countries state-ownership of firms has encouraged innovation and entrepreneurship

B. the socialist model failed to deliver economic progress to the vast bulk of their populations

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons EXCEPT: A. they are away from their ordinary social context and supporting culture. B. they are psychologically and geographically closer to the parent company. C. they may be based in a culture that does not place the same value on ethical norms important in the manager's home country. D. they may be surrounded by local employees who have less rigorous ethical standards.

B. they are psychologically and geographically closer to the parent company.

essay: . Identify and describe two technological changes that have affected and significantly increased the global markets.

Major advances in 1. communication, 2. information processing, and (3) transportation technology have facilitated the globalization of markets and production.

Brazil's primary language

Portuguese

Brazil's primary religion

Roman Catholic

Brazil's largest city

Sao Paulo

essay: Managing an international business is different from managing a purely domestic business for at least four reasons:

(1) Countries are different, (2) the problems themselves more complex (3) limits imposed by government intervention (4) different currencies.

***Name three reasons why an expatriate manager is at a greater risk of violating their personal code of ethics? An expatriate manager is one that is away from his home (native) land.

(1) away from their ordinary social context and supporting culture, (2) may not have same value on ethical norms (3) The parent company may pressure expatriate managers to meet unrealistic goals t (4) Local managers might encourage the expatriate to adopt local behavior.

name and define the two main forms of FDI

1. greenfield investment: establishment of wholly new operation in foreign country 2. acquisitions or mergers: with existing firms in the foreign country

****name three of the five wats in which international business and its managers can ensure that ethical issues are considered in business decisions?

1. hiring and promoting people with a well-grounded sense of personal ethics 2. build an organizational culture 3. ach in manner consistent with rhetoric 4. decision-making processes in place 5. develop moral courage

name three political reasons for governments to intervene in markets?

1. protecting jobs 2. protecting industries 3. protecting the environment

what determines culture (5 things)

1. religion 2. political and economic philosophies 3. education 4. language 5. social structure

name two of the three drawbacks of government intervention

1. self-defeating through protecting inefficiency 2. may trigger a trade war 3. could be captured by special interest groups if executed poorly

what are the three factors that determine the long-run monetary benefits of doing business in a country?

1. size of the market 2. present wealth 3. future growth prospects

name two of the three primary reasons for the spread of democracy

1. socialists models failed to deliver economic progress 2. Increased flow of uncensored information

how do governments intervene in markets (know 5) *****

1. tariffs 2. subsidies 3. import quotas 4. administrative policies 5. antidumping policies

how do governments intervene in markets

1. tariffs 2. subsidies 3. import quotas 4. administrative policies 5. antidumping policies

Which of the following is an example of a greenfield investment? A. A Chinese sugar maker setting up a sugar crushing facility in Cuba. B. A Serbian automobile company purchasing a Croatian component manufacturer. C. A Finnish mobile phone manufacturer expanding its production facility in Finland. D. An Indian oil exploration company acquiring an oil refining company.

A. A Chinese sugar maker setting up a sugar crushing facility in Cuba.

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting? A. By implementing import quotas B. By imposing FDI limits in industries C. By increasing tax rates D. By limiting free flow of capital

A. By implementing import quotas

Which of the following is an example of ethnocentrism? A. A manager in India looks down upon his subordinates because they are from a lower caste, compared to him. B. An upper-middle-class woman talks rudely to a sales person, because she looks down upon individuals belonging to the working-class. C. An American manager criticizes the cultural practices of Saudi Arabia, when he is sent there on business, because it differs from his own cultural norms. D. A French business owner, who plans to expand his market to China, conducts a detailed cultural study of China to customize his marketing campaign.

C. An American manager criticizes the cultural practices of Saudi Arabia, when he is sent there on business, because it differs from his own cultural norms.

Which of the following refers to the values and norms that the employees of an organization share? A. Vision statement B. Cultural relativism C. Organization culture D. Power orientation

C. Organization culture

Import tariffs: A. Reduce the price of foreign goods. B. Create efficient utilization of resources. C. Reduce the overall efficiency of the world economy. D. Are unambiguously pro-consumer and anti-producer.

C. Reduce the overall efficiency of the world economy.

Which of the following statements pertaining to innovation and entrepreneurship is NOT true? A. They are the engines of growth. B. They require strong property rights. C. They require state ownership of means of production. D. They require a market economy

C. They require state ownership of means of production.

The benefits of doing business in a country are a function of all of the following EXCEPT: A. the size of the market. B. its present wealth. C. its past growth. D. its future growth prospects.

C. its past growth.

BP, one of the world's largest oil companies, has made it part of the company policy to undertake "social investments" in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP's actions are an example of: A. cultural relativism. B. the Friedman doctrine. C. noblesse oblige. D. the tragedy of the commons.

C. noblesse oblige.

Religion may be defined as: A. routine conventions of everyday life. B. social rules that govern people's actions toward each other. C. shared beliefs and rituals that are concerned with the realm of the sacred. D. a set of moral principles, or values, that are used to guide and shape behavior.

C. shared beliefs and rituals that are concerned with the realm of the sacred.

The financial crisis in the U.S. in 2009 was triggered by ____. A. the global hike in the price of crude oil B. the slowdown in U.S. imports C. the problems in the U.S. subprime mortgage lending market D. the artificial fixing of currency rate by China

C. the problems in the U.S. subprime mortgage lending market

Licensing would be a good option for firms in which of the following industries? A. High-technology industries in which protecting firm-specific expertise is of paramount importance. B. Global oligopolies, in which competitive interdependence requires that multinational firms maintain tight control over foreign operations. C. Industries in which intense cost pressures require that multinational firms maintain tight control over foreign operations. D. In fragmented, low-technology industries in which globally dispersed manufacturing is not an option.

D. In fragmented, low-technology industries in which globally dispersed manufacturing is not an option.

When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments? A. Greenfield investments are characterized by reduced management control. B. Mergers and acquisitions are preferred because most greenfield investments fail. C. It is easier and less risky for a firm to build strategic assets than acquire similar assets. D. Mergers and acquisitions are quicker to execute than greenfield investments.

D. Mergers and acquisitions are quicker to execute than greenfield investments.

The U.S. government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws. This is an example of government intervention based on: A. Human rights protection. B. National security. C. Consumer protection. D. Retaliation.

D. Retaliation.

Cross-cultural literacy refers to: A. an individual's self-concept derived from perceived membership in a relevant social group. B. the phenomenon of merging and converging cultures. C. abstract ideas about what a group believes to be good, right, and desirable. D. an understanding of how cultural differences can affect business.

D. an understanding of how cultural differences can affect business.

The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines: A. society. B. value systems. C. principles. D. culture.

D. culture

A common law system is different from a civil law system because: A. a common law system is based on religious teachings, while a civil law system is based on cultural traditions. B. a common law system is very rigid, while a civil law system tends to be more flexible. C. in a common law system a judge relies on legal codes to make rulings, while in a civil law system a judge relies on his intuition and moral reasoning to make judgments. D. in a common law system a judge has the power to interpret the law, while in a civil law system a judge has the power only to apply the law.

D. in a common law system a judge has the power to interpret the law, while in a civil law system a judge has the power only to apply the law

The finance minister of a country considers several large, state-owned iron manufacturing units to be inefficient and a source of corruption. To generate resources for public expenditure and promote economic growth, the government decides to auction an entire iron manufacturing plant to sell it to a strategic investor. This process exemplifies ____. A. nationalization B. industrialization C. liberalization D. privatization

D. privatization

In the last two decades, Latin American countries like Brazil, Mexico, and Chile have ____. A. embraced communist principles B. promoted government ownership of enterprises C. experienced increasing debt and inflation D. welcomed foreign investment

D. welcomed foreign investment

the ________ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states A. International Development Association B. World Bank C. International Court of justice D. World Trade Organization

D. world trade organization