Chapter 11 - Global and International Issues

Weaknesses of competitors in foreign lands are often underestimated, and strengths are often overestimated.

False

While there are a few U.S. industries that are not yet greatly challenged by foreign competitors, many products and components within these industries too are now manufactured in foreign countries.

True

Though China has more than 1.3 billion residents, the middle class segment that is able to buy goods and services is rapidly shrinking.

False

With the rise in world commerce, government regulatory bodies are no longer able to closely monitor foreign business practices.

False

The smile is one form of communication that works the same worldwide.

True

The social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive opportunities and threats that face a multinational corporation are almost limitless.

True

The U.S. furniture manufacturing industry is not yet greatly challenged by foreign competitors.

true

What percent of the world's population lives in the United States? A) 5 B) 10 C) 15 D) 85 E) 95

A) 5

Which of the following is a potential advantage of conducting international operations? A) Competitors in foreign markets may not exist, or competition may be less intense than in domestic markets. B) Dealing with two or more monetary systems can complicate international business operations. C) Differing language, culture, and value systems can make communication difficult. D) Gaining an understanding of regional organizations is difficult but is often required in doing business internationally. E) All of the above

A) Competitors in foreign markets may not exist, or competition may be less intense than in domestic markets.

________ countries are market leaders in labor-intensive industries and ________ offers abundant natural resources and rapidly developing markets. A) East Asian; Brazil B) South American; Germany C) East Asian; Germany D) South American; Brazil E) European; Japan

A) East Asian; Brazil

In 2012, ________ African countries held democratic elections. A) 3 B) 13 C) 23 D) 31 E) 43

C) 23

The average level of union membership across the whole of the European Union, weighted by the numbers employed in the different member states, is ________ percent compared to about ________ percent in the USA. A) 11; 23 B) 15; 44 C) 23; 11 D) 51; 26 E) 70; 30

C) 23; 11

A global strategy means considering individual countries distinctly, one at a time, when designing, producing, and marketing products.

False

Although growth in revenues and profits is a common expectation of shareholders, it is not a measure of organizational success.

False

It is an exaggeration to say that in an industry that is global, the riskiest possible posture is to remain a domestic competitor.

False

Many countries became less protectionist during the recent global economic recession.

False

Mass communication and high technology have led to highly individualized and distinct patterns of consumption in diverse cultures worldwide.

False

American firms that seem insulated from foreign competition today may be vulnerable tomorrow.

True

Mass communication and high technology have ________ in diverse cultures worldwide. A) created similar patterns of consumption B) resulted in highly individualized patterns of consumption C) rendered patterns of consumption identical D) had little to no effect on patterns of consumption E) ignored patterns of consumption

A) created similar patterns of consumption

The world population that lives outside of the USA is growing ________ the U.S. population. A) 30 percent slower than B) 70 percent slower than C) 30 percent faster than D) 70 percent faster than E) at the same rate as

D) 70 percent faster than

Whereas ________ businesses embody individualism, achievement, competition, and informality, ________ businesses stress collectivism, continuity, cooperation, and formality. A) Japanese; Mexican B) Mexican; Japanese C) Mexican; American D) American; Mexican E) Japanese; American

D) American; Mexican

All of the following are things that many cultures around the world value more than the competitiveness that is so important in the USA EXCEPT A) modesty. B) team spirit. C) individualism. D) collectivity. E) patience.

C) individualism.

How does life in Mexico compare to life in the United States? A) It is faster. B) It is more hectic. C) It is more punctuality-driven. D) It is slower. E) It is more competitive.

D) It is slower.

In which of the following industries is the USA NOT yet greatly challenged by foreign competitors? A) Auto industry B) Electronics C) Manufacturing D) Retailing E) None of the above

D) Retailing

All of the following are potential advantages to initiating, continuing, and/or expanding international operations EXCEPT A) firms can gain new customers for their products. B) foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets. C) foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials and/or cheap labor. D) foreign operations could be seized by nationalistic factions. E) foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment.

D) foreign operations could be seized by nationalistic factions.

Keeping informed about the number and the nature of competitors is easier when doing business internationally.

False

To see and appreciate the world from the perspective of others has become a matter of survival for business.

True

The various opportunities and threats that face multinational corporations are almost limitless, and the number and complexity of these factors ________ the number of products and the number of geographic areas served. A) decrease dramatically with B) drastically increase with C) drop slightly with D) are constant despite E) are unaffected by

A) decrease dramatically with

________ can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries. A) Economies of scale B) Joint ventures C) Low-cost production facilities D) Reduced tariffs E) Domestic operations

B) Joint ventures

To avoid paying U.S. taxes on income made in other countries, many U.S. companies are ________ outside the USA but ________ inside the USA. A) cash-poor; cash-rich B) cash-rich; cash-poor C) unincorporated; incorporated D) cash-poor; incorporated E) unincorporated; cash-rich

B) cash-rich; cash-poor

Which of the following statements is NOT true? A) America's economy is becoming much less American. B) A world economy and monetary system are emerging. C) Corporations in every corner of the globe are taking advantage of the opportunity to obtain customers globally. D) Markets are shifting slowly and in many cases diverging in tastes, trends, and prices. E) Innovative transport systems are accelerating the transfer of technology.

D) Markets are shifting slowly and in many cases diverging in tastes, trends, and prices.

Foreign revenue as a percentage of total company revenues ________ in hundreds of U.S. firms, including ExxonMobil, Gillette, and Citicorp. A) is almost 10 percent B) approaches 20 percent C) is 25 percent D) exceeds 50 percent E) is at least 70 percent

D) exceeds 50 percent

While multinational corporations face almost limitless social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive opportunities and threats, the number and complexity of these factors do not dramatically increase with the number of products produced and the number of geographic areas served.

False

An important business activity in Japan is entertaining because it strengthens Wa.

True

Time spent with the family and the quality of relationships are more important in some cultures than the personal achievement and accomplishments espoused by the traditional U.S. manager.

True

The strategic-management process for multinational firms is ________ for purely domestic firms, and the process is ________ for international firms. A) conceptually the same as; more simple B) conceptually the same as; more complex C) conceptually different than; more simple D) conceptually different than; more complex E) conceptually the same; less important

B) conceptually the same as; more complex

Strategists in multinational corporations are often confronted with the need to be globally competitive and nationally responsive at the same time.

True

The availability, depth, and reliability of economic and marketing information in different countries vary extensively.

True

The need to amortize massive R&D investments over many markets is a major reason why the aircraft manufacturing industry became global.

True

Desire for ________ is a part of the social fabric in worker-manager relations in Mexico. A) harmony B) friction C) conflict D) independence E) punctuality

A) harmony

A firm's power and prestige in domestic markets may be significantly enhanced if the firm competes globally A) which can translate into improved negotiating power among important groups. B) though this rarely results in a practical advantage. C) but this can hurt its bargaining power with suppliers and distributors. D) yet this does nothing to improve its position with creditors. E) which can alienate the firm from its domestic creditors, suppliers, and distributors.

A) which can translate into improved negotiating power among important groups.

In South Korea, activities involve concern for ________, or harmony based on respect of hierarchical relationships, including obedience to authority. A) guanxi B) inhwa C) feng shui D) nemaswashio E) Wa

B) inhwa

U.S. managers in Japan have to be careful about ________, whereby Japanese workers expect supervisors to alert them privately of changes rather than informing them in a meeting. A) feng shui B) nemaswashio C) Wa D) guanxi E) inhwa

B) nemaswashio

High corporate tax rates A) encourage investment in new factories. B) provide strong incentives to avoid and evade taxes. C) attract foreign investors. D) make a nation a desirable location for investment. E) have been a growing trend since the 1980s.

B) provide strong incentives to avoid and evade taxes.

In an industry that is, or is rapidly becoming global, the riskiest possible posture is to A) become a global competitor. B) remain a domestic competitor. C) remain a global competitor. D) expand beyond the role of domestic competitor. E) none of the above

B) remain a domestic competitor.

The lowest cost source for precision machinery is A) Japan. B) Sri Lanka. C) Malaysia. D) Europe. E) Mexico.

D) Europe.

Joint ventures and partnerships between domestic and foreign firms are A) falling out of favor. B) increasingly difficult to engineer. C) the exception rather than the rule. D) extremely commonplace. E) subject to too many regulations to be feasible.

D) extremely commonplace.

The domestic food industry ________, so Kraft Foods is focusing on foreign acquisitions. A) is falling 5% per year B) is falling 1% per year C) is stagnant D) is growing 3% per year E) is growing 7% per year

D) is growing 3% per year

Strengths of competitors in foreign lands are often ________, and weaknesses are often ________. A) overestimated; overestimated B) overestimated; underestimated C) underestimated; underestimated D) underestimated; overestimated E) none of the above

D) underestimated; overestimated

Protectionism involves countries doing all of the following EXCEPT A) levying tariffs against firms outside the country. B) imposing taxes on firms outside the country. C) imposing regulations on firms outside the country. D) restricting imports from firms outside the country. E) liberalizing restrictions on the import of foreign goods.

E) liberalizing restrictions on the import of foreign goods.

Although a firm's power and prestige in domestic markets may be significantly enhanced when the firm competes globally, this rarely translates into improved negotiating power among creditors, suppliers, or distributors.

False

As long as the price and quality of a firm's products and services are competitive on a local basis, it has nothing to worry about.

False

Brazil offers skilled labor and technology, while Germany offers abundant natural resources and rapidly developing markets.

False

Europeans are especially motivated by pay-for-performance, commission salaries, and objective measurement and reward systems.

False

Foreign banks currently operate and compete in most parts of the United States.

False

Foreign revenue as a percentage of total company revenues is approaching 20 percent for Colgate-Palmolive.

False

In Mexico, business associates usually entertain each other at their homes.

False

In the United States, an amicable relationship is often mandatory before conducting business.

False

It is possible to obtain insurance from the U.S. government 's OPIC to eliminate all risks associated with doing business internationally.

False

Joint ventures and partnerships between domestic and foreign firms are becoming the exception rather than the rule.

False

Mexican workers expect and desire a work environment in which self-expression and initiative are encouraged.

False

Since the 1980s, most countries including the USA have been steadily lowering their tax rates.

False

The drive to improve the efficiency of global business operations is leading to lesser functional specialization.

False

The strategic-management process is conceptually different for multinational firms than for purely domestic firms.

False

The understanding of Asian cultures is a strength U.S. firms have in competing with Pacific Rim firms.

False

A potential advantage to initiating, continuing, or expanding international operations is that foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets.

True

Before entering international markets, firms should do research to try and diminish the risk of doing business in new markets.

True

Firms are often motivated to initiate international operations because competitors in foreign markets may not exist, or competition may be less intense than in domestic markets.

True

Geographic distance and cultural differences are two of the factors that can make communication between domestic headquarters and overseas operations difficult.

True

In China, business relations revolve around guanxi, or personal relations.

True

In China, one should eat heartily to demonstrate enjoyment of the food.

True

In socialist countries such as France or Belgium, the only grounds for immediate dismissal from work is a criminal offense.

True

In the three Nordic countries of Denmark, Sweden, and Finland about 70 percent of all employees are in unions.

True

In today's global climate, many companies may find it difficult to survive by relying solely on domestic markets.

True

Investors are now looking closely at Africa in the wake of low interest rates and slow growth elsewhere on the planet.

True

Labor markets have become steadily more international with more and more countries around the world welcoming foreign investment and capital.

True

Language, culture, and value systems differ among countries, which can create barriers to communication and problems managing people.

True

One aspect of the global challenge faced by U.S. business involves the complications of having to deal with two or more monetary systems.

True

One of the dangers of remaining a local competitor is that more aggressive companies will use their global growth to capture economies of scale and learning.

True

Organizations that conduct business operations across national borders are called international firms or multinational corporations.

True

Perhaps the greatest advantage of international operations to a firm is the ability to gain new customers for its products and services, thus increasing revenues.

True

Protectionism refers to countries imposing tariffs, taxes, and regulations on firms outside the country to favor their own companies and people.

True

Shifts in the nature and location of production systems, especially to China and India, are reducing the response time to changing market conditions.

True

The strategic-management process is more complex for international firms due to more variables and relationships.

True

Trade barriers are one of the unique and diverse risks that face multinational corporations

True

Which of the following is NOT a typical characteristic of most Japanese managers? A) Reserved B) Quiet C) Distant D) Impulsive E) Introspective

D) Impulsive

Multinational corporations face unique and diverse risks, which include all of the following EXCEPT A) favorable foreign court interpretations of contracts and agreements. B) currency losses through exchange rate fluctuations. C) social/political disturbances. D) import/export restrictions. E) tariffs.

A) favorable foreign court interpretations of contracts and agreements.

What percent of the world's population lives outside the United States? A) 55 B) 65 C) 75 D) 85 E) 95

A) 55

Which group generally softens up executives with praise before they criticize? A) Americans B) Italians C) Germans D) French E) All of the above

A) Americans

Marketing managers in Japan see making a sale ________ the selling process. A) as the beginning of B) as the end of C) as the midpoint of D) as unrelated to E) None of the above

A) as the beginning of

The U.S. government's OPIC A) offers insurance to offset some risks of doing business internationally. B) provides insurance to eliminate all of the risks of doing business internationally. C) gives informational seminars about the risks associated with doing business internationally. D) requires that paperwork be filed by U.S. companies desiring to do business internationally. E) discourages foreign companies from doing business in the United States.

A) offers insurance to offset some risks of doing business internationally.

In general, U.S. managers feel the day has been productive if it is spent A) rushing to meetings and conferences. B) resting. C) listening. D) meditating. E) thinking.

A) rushing to meetings and conferences.

Americans place an exceptionally high priority on ________ whereas many foreigners place more worth on ________. A) time; relationships B) relationships; time C) silence; time D) silence; relationships E) formality; informality

A) time; relationships

More time and effort are required to identify and evaluate external trends and events in domestic corporations than in multinational ones.

False

Which of the following is NOT true concerning the Japanese concept of Wa? A) Nearly all corporate activities in Japan encourage Wa among managers and employees. B) Discussions potentially disruptive to Wa are generally conducted in very formal settings. C) The potential attractiveness of alternative business decisions are evaluated in terms of their long-term effect on the group's Wa. D) Entertaining is an important business activity in Japan because it strengthens Wa. E) The Wa concept involves group loyalty and consensus.

B) Discussions potentially disruptive to Wa are generally conducted in very formal settings.

Which of the following nations has the highest corporate tax rate? A) Ireland B) The USA C) Great Britain D) France E) Germany

B) The USA

________ is a process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerations. A) Multinational corporation B) Protectionism C) Globalization D) Assimilation E) World recession

C) Globalization

All of the following are potential disadvantages to initiating, continuing, or expanding business across national borders EXCEPT A) firms confront different social, cultural, and political forces when doing business internationally, which can make communication in the firm difficult. B) keeping informed about the number and nature of competitors is more difficult when doing business internationally. C) foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets. D) dealing with two or more monetary systems can complicate international business operations. E) foreign operations could be seized by nationalistic forces.

C) foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets.

Most economists argue that protectionism ________ the world economy because it ________ trade among countries. A) helps; inhibits B) helps; encourages C) harms; inhibits D) harms; encourages E) doesn't impact; doesn't affect

C) harms; inhibits

Organizations that conduct business operations across national borders are called A) protectionists. B) national firms. C) multinational corporations. D) domestic companies. E) all of the above.

C) multinational corporations.

Punctuality is generally revered in all cultures of the world.

False

Which of the following is NOT true regarding European workers and workplaces? A) Most European workers are unionized. B) Most European workers enjoy more frequent vacations and holidays than U.S. workers. C) Guaranteed permanent employment is typically a part of employment contracts in Europe. D) Many Europeans respond enthusiastically to pay-for-performance, commission salaries, and objective measurement reward systems. E) Many Europeans find the notion of team spirit difficult to grasp.

D) Many Europeans respond enthusiastically to pay-for-performance, commission salaries, and objective measurement reward systems.

In Europe it is generally true that the farther ________ on the continent, the more participatory the management style. A) south B) east C) west D) north E) southeast

D) north

Which of the following U.S. industries is NOT yet greatly challenged by foreign competitors? A) Aircraft manufacturing B) Auto manufacturing C) Heavy equipment manufacturing D) Tire manufacturing E) Furniture manufacturing

E) Furniture manufacturing

________ recently cut its corporate tax rate by five percentage points, leaving ________ with the highest corporate tax rate among all the nations in the world. A) The USA; Brazil B) Brazil; Japan C) Japan; Brazil D) Brazil; the USA E) Japan; the USA

E) Japan; the USA

Which U.S. industry is already greatly challenged by foreign competitors? A) Printing B) Retailing C) Retail banking D) Consumer packaged goods E) None of the above

E) None of the above

Communication between domestic headquarters and overseas operations is often made difficult by A) geographic distance. B) cultural differences. C) variations in business practices. D) national differences. E) all of the above

E) all of the above

The ________ opportunities and threats that face a multinational corporation are almost limitless. A) social B) cultural C) environmental D) political E) all of the above

E) all of the above

Exactly 70 percent of the world's population lives outside of the USA.

False

A primary reason why most domestic firms are engaging in global operations is that growth in demand for goods and services outside the USA is considerably higher than inside.

True