CHAP 1-SB Reading

What global institution was established on October 24, 1945 and one of its key purposes is to maintain international peace and security?

United Nations (UN)

International trade occurs when a company

exports goods or services to consumers in another country

Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests.

True

Technological innovations and low-cost transportation have reduced the cultural distance between countries and are bringing about some convergence of consumer tastes and preferences.

True

What is one concern voiced by critics of globalization?

An interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations.

Some U.S. hospitals outsource radiology work to India. This is possible because of advancements in ______.

technology

When nations lowered trade barriers it made the globalization of markets a possibility. What was needed to make this possibility a reality?

technology

What is the best description of the globalization of markets?

bringing traditionally separate national markets into one cohesive marketplace

Renata's US-based lifestyle company decides to invest in a company based in France that specializes in health and wellness. This would be an example of

foreign direct investment.

When a company invests in a company or entity outside its home country, it is participating in

foreign direct investment.

The G20 was originally established to ______.

formulate a coordinated policy response to financial crises

The COVID-19 pandemic caused many businesses to rethink their globalization process because

global supply chains were completely shut down during the height of the pandemic.

In the early 1990s there were fewer than 50 bilateral and regional trade agreements between two or more nations. This has changed today as there are about

300

Boeing outsources a large portion of its production. For example, for its most recent jet airliner (the 787), nearly ______ of the total value of the aircraft is outsourced to foreign companies.

65%

The opponents of globalization argue that falling barriers to international trade

eliminate manufacturing jobs in wealthy economies.

Influential economists, politicians, and business leaders who favor globalization argue that

falling barriers to international trade drive the economy toward greater prosperity.

The G20 is comprised of ______ from the 19 largest economies in the world.

finance ministers

Select the four facts that describe the demographics of the global economy a half a century ago.

1. Dominance of large, multinational U.S. firms in the international business scene 2. Roughly half of the globe was off-limits to Western international business 3. U.S. dominance in world foreign direct investment 4. U.S. dominance in the world economy and world trade

The text lists several reasons that stand out as the cause for economic stagnation in the world's poorest countries. What are three of those reasons?

1. Totalitarian governments 2. Poor property rights protection 3. Prolonged civil war

What are the four purposes of the United Nations according to its charter?

1. develop friendly relations among nations 2. be a center for harmonizing the actions of nations 3. cooperate in solving international problems 4. maintain international peace and security

There has been two notable trends in the demographics of multinational enterprises in the last 50 years. These include ______.

1. the rise of non-U.S. multinationals. 2. the growth of mini-multinationals.

What is an accurate depiction of containerization?

It reduces the costs of shipping goods over long distances.

At some point, rising income levels lead to demands for greater environmental protection and, as a result, pollution levels fall. A study by Grossman and Krueger found this generally occurred before per capita income levels reached

$8,000

What two countries are responsible for the largest emissions of carbon dioxide?

1. China 2. U.S.

The purpose of the Uruguay Round negotiations was to

lower the trade barriers between various national markets.

Which country has been the world's largest exporter since 2009?

China

Which argument favors globalization?

Lowering international trade barriers raises the incomes of consumers.

Select the four reasons that explain why managing an international business is different from managing a purely domestic business.

1. The range of problems in international business is wider. 2. Countries are different. 3. International business must work within government limits. 4. International transactions involve converting money into different currencies.

What are the two macro factors that underlie the trend toward greater globalization?

1. technological change 2. decline in trade barriers

______ refers to the shift toward international economic integration.

Globalization

Which environmental concern has been found to rise steadily with higher-income levels?

Carbon dioxide emissions

In terms of conducting international business in China, it can be said that

China represents a large -- basically untapped -- market.

Current trends indicate that, due to the emerging economies, the world is moving ______ an economic system that is more favorable for international business.

Closer to

Distribution of production to separate locations has become more economical for companies because transportation costs have ______.

Declined

One outcome of the globalization of markets is a decrease in the intensity of competition among companies.

False

Small and medium-sized companies do not typically benefit from the globalization of markets.

False

The International Monetary Fund (IMF) is considered less controversial than the World Bank.

False

While there are a large number of nations that are members of the WTO, these nations account for only a small portion of world trade.

False

Colin told the management team that their Ohio-based company should produce the textiles for the new line of jackets in China because it would allow them to price the clothing line lower, which would then give consumers more money to spend on other items. Colin is making an argument for______.

Free trade

In the years leading up to the Great Depression, what practice created a barrier to international trade?

High tariffs on imports of foreign goods

The outward stock of foreign direct investment has ______ for the world as a whole since 1995.

Increased

Boeing's rationale for outsourcing so much production to foreign suppliers is based on which two factors, according to the text?

Increasing the chance to win significant orders from airlines in those countries Using suppliers that are the best in the world at a particular activity

The______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.

Internet

What is an accurate depiction of the World Bank?

It focuses on helping developing countries to fight poverty through investments in the underlying structure of the country.

In the early 1960s, the U.S. was the world's dominant industrial power. How does the U.S. position compare today?

It has diminished in power.

In terms of international business, what is a benefit of the Internet?

It makes it easier for buyers and sellers to connect.

Which statement accurately describes the global economy in the twenty-first century?

More nations are becoming part of the developed world.

What is an accurate description of microprocessors?

They provide a low-cost way to process large amounts of information.

Evidence suggests that Blank______ has impacted the declining share of national income for unskilled labor more so than globalization has.

Tech change

The text notes that there are two macro factors fueling the trend toward greater globalization. These two factors focus on a decline in trade barriers and

Tech change

While the lowering of barriers to trade made globalization a theoretical possibility, it wasn't until the introduction of ______ that it became a reality.

Tech change

What is an accurate description of the International Monetary Fund (IMF)?

The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil.

Which organization would help out a cash-strapped government with a low-interest loan to help that country build new roads?

The World Bank

Why do companies engage in the globalization of production?

To lower their overall cost structure or improve the quality of their product offering

What statement accurately describes the current membership of the United Nations?

Today, nearly every nation in the world belongs to the United Nations.

One of the global institutions that emerged over the past 75 years is GATT which stands for the General Agreement on Tariffs and ______.

Trade

Which U.S. president decided to pull the United States out of the Paris Accord, thereby eliminating the need for the United States to participate in limiting future CO2 emissions?

Trump

Half a century ago, which country dominated world foreign direct investment?

U.S.

What is an example of a regional trade agreement that has reduced trade barriers between nations?

USMCA (U.S/Mexico/Canada)

The trade agreement called the______, finalized in December 1993, established the World Trade Organization to police the international trading system.

Uruguay Round

What is an accurate depiction of Latin America when considering international business?

While favorable economic trends have recently occurred, there is no guarantee that they will continue.

Which global institution is the successor to GATT?

World Trade Organization (WTO)

Which organization is responsible for policing the rules of trade between nations and making sure countries adhere to the rules of trade treaties signed by member states?

World Trade Organization (WTO)

How did the COVID-19 pandemic affect world trade in 2020?

World trade fell by around 8%.

Creating and managing a globally dispersed production system is possible because of ______.

a decrease in the real costs of information processing and communication

The development of the microprocessor has lead to ______.

a reduction in the cost of global communications

While it is known for its peacekeeping role, the United Nations devotes nearly 70% of its work toward promoting conditions of

a vibrant global economy.

Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to ______.

adopt economic policies based on free market economies

During the 1920s and 1930s, when high tariffs were placed on imported manufactured goods

an increase in trade barriers resulted.

The development of what two transportation modes has effectively reduced the size of our world, hence simplifying the transshipment from one mode of transport to another?

commercial jets superfreighters

At the shipping port in Savannah, Georgia, the large shipping boxes that arrive on superfreighters from Indonesia are unloaded directly onto a train car for transport within the United States. This demonstrates how ______ has simplified the transport of products from one mode of shipping to another.

containerization

Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the

costs

In order to manage an international business efficiently, managers might have to

decide if it is ethical to accept the lower labor and environmental standards found in many less developed nations.

Opponents of globalization are concerned that manufacturing jobs will be moved to more______ countries.

developing

Critics of globalization protest in order to ______.

diminish the impact of the culture of multinational enterprises on the world

The globalization of markets and production implies that

domestic firms are facing intense competition from foreign firms.

In the 1960s, when a customer in the United States purchased a television, that television had been manufactured in the United States. Today, thanks to the fall of international trade barriers, televisions purchased in the United States might be manufactured in China or South Korea. This change has occurred as the result of ______.

globalization

The national differences in the quality of factors of production help companies

improve the quality or functionality of their product offering.

The globalization of markets is facilitated by the

improvement in transportation technology.

A(n) ______ business is any firm that engages in cross-border trade or investment.

international

Michael works at a lawnmower manufacturing company in St. Louis, Missouri, and his company imports component parts from Thailand and also ships final product to various countries. Michael's company is an example of a(n)______ business.

international

A manager of a(n)______ business faces a wider and more complex range of problems than one of a(n)______ business.

international domestic

A company is involved in foreign direct investment when it

invests in business activities outside of its home country.

What are three examples of factors of production?

labor, land, capital

During the early years of globalization, outsourcing was primarily confined to ______ activities.

manufacturing

The problems faced while managing an international business are ______ those faced while managing a purely domestic business.

more complex than

A(n)______ is any business that has productive activities in two or more countries.

multinational enterprise

The decline of the United States' standing as a dominant industrial power is considered a(n)______ decline because it reflects the faster economic growth of other economies.

relative

The presence of McDonald's in Tokyo, the opportunity to easily buy iPads in Rio and Berlin, and the ready availability of Gap jeans in Paris as well as San Francisco are examples of

the emergence of global markets for consumer products.

Historically, national markets were distinct and separate entities. Today, these separate national markets have merged. This process is known as ______.

the globalization of markets

Hanson Housewares Inc., based in Tennessee, sources goods from Southeast Asia to take advantage of labor cost savings. This is an example of______.

the globalization of production

A "Black Swan" event, such as the COVID-19 pandemic, can create large negative consequences in the economy even though

there is a low probability for this type of event.

In terms of economic growth, current indicators suggest that

there will be stagnation among the world's poorest nations.

Supporters of globalization suggest that a solution to the problem of slow real income growth among unskilled workers is ______ society's investment in education.

to increase

The outward stock of foreign direct investment refers to the______ of foreign investments by firms domiciled in a nation outside of that nation's borders.

total cumulative value

According to the critics of globalization, increased free trade and investment over the past few decades have

widened the gap between the rich and poor nations.