IB Set 1

at six sigma, a production process would be highly accurate and create just

3.4 defects per million units

Which of the following is an advantage of franchising?

A firm is relieved of many of the costs and risks of opening a foreign market on its own

Lenovo's ThinkPad laptop computer is designed in the US, the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built in wireless card in Malysia; and the microprocessor in the US. In each case, these components are manufactured and sourced from the optimal location given current factor costs. In this example, Lenovo has:

A global web of value creation activities

Which of the following is NOT true of a strong corporate culture?

A strong culture leads to high performance

Which of the following statements is true of turnkey projects?

A turnkey strategy is particularly useful where FDI is limited by host-government regulations.

Which of the following is an example of a positive source effect?

An Audi R8

Which of the following statements is true of EMCs

EMCs are export specialists that act on behalf of their client firms

_____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product

Experience curve

Which of the following is a disadvantage of global capital market?

Foreign investments may be driven by speculative flows in the market

Increasingly the _____ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies

IMF

Which of the following is a reason why the global capital market is increasingly becoming speculative

Investments in the global capital market are faced with a lack of quality information

Identify an advantage of adopting a low minimum efficient scale.

It allows the firm to accommodate demands for local responsiveness.

what is the primary advantage of licensing

It helps a firm avoid the development costs associated with opening a foreign market

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

It is likely to create high unemployment in some cases

When a channel is exclusive

It is often difficult for a new firm to get access to shelf space in supermarkets

Which of the following statements is true of market makers?

Market makers connect investors and borrowers in a capital market.

Which of the following decisions is typically centralized at a firm's headquarters?

Overall firm strategy

RSA is a bicycle manufacturing company. Which of the following is a make-or-buy decision that the company will have to make?

Should the company outsource production to a low-cost vendor?

Which of the following is an argument that supports global advertising?

Standardized advertising lowers the costs of value creation by spreading the fixed costs of developing the advertisements over many countries.

Which of the following statements is true of foreign bonds?

Such bonds are denominated in the issuing country's currency

Which of the following statements is true of export credit insurance?

The FCIA provides coverage against commercial risks and political risks

The international trade secretariats (ITS) have had virtually no real success. Which of the following is NOT cause of the ITS's ineffectiveness?

The codes of conduct developed by international labor organization and the organization for economic cooperation and development prevented the ITS from exercising the absolute power

Which of the following is a disadvantage of using a letter of credit (L/C)?

The importer must pay a bank fee for the letter of credit

Which of the following is true of the international strategy?

The strategy is not viable in the long-run.

ABB Bank is a financial corporation located in England and uses euro as its official currency. The company borrows 1 million U.S. dollars from a bank based in United States. ABB will be at a disadvantage if ____.

U.S. dollar appreciates against Euro

An equity loan is made when ____.

a corporation sells stock to investors

In a concentrated retail system:

a few retailers supply most of the market.

If a producer sells through an import agent, a wholesaler, and a retailer, then:

a long channel exists

An ethnocentric staffing policy is one in which:

all key mgmt positions are filled by parent-country nationals

eurodollars____

are dollars banked outside of the United States

A eurocurrency in any currency

banked outside of its country of origin

The valuable asset of firms, whose competitive advantage is based on management know-how is their

brand name

Centralization and decentralization differ because:

centralization ensures that decisions are consistent with organizational objectives, while decentralization can result in decisions at variance with organizational goals.

refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses.

channel quality

The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, EXCEPT:

choose, according to strategy, any position on the efficiency frontier as all positions are viable.

Historically, Unilever measured the performance of national operating subsidiary companies according to profitability. In this example, profitability is a(n):

control system

Which of the following statements is true of countertrade

countertrade occurs when goods and services are traded for other goods and services

The relatively low correlation between the movement of stock markets in different countries indicates that ____.

countries pursue different macroeconomic policies

The "Swiss Made" label has leveraged several watch-making companies (for example, TAG Heuer) for decades now. This is an example of a ____ effect.

country of origin

In the 1960s, the swedish vacuum manufacturer Electrolux successfully marketed vacuums in the UK with the slogan "nothing sucks like an electrolux". the informal us meaning of the word "sucks" was already well known in the UK at the time, and the company hoped the slogan, with its possible double entendre, would gain attention. When the slogan was used in the US market, it was a catostrophe. this is an example of

cultural differences

A strategy that focuses on increasing the attractiveness of a product is referred to as a

differentiation strategy

Identify the currency that was convertible to gold under the Bretton Woods system.

dollar

Which of the following is a disadvantage of the localization strategy

duplication of functions

In theory, the advantage of EMCs is that they are __________________.

experienced specialists who can help the neophyte exporter

Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on _____.

first-mover advantages

The element of risk into investing in foreign assets is more with _____ exchange rates.

floating

_____ exchange rates were declared as acceptable in the Jamaica agreement of IMF.

floating

The most important determinant of channel length is the degree to which a retail system is

fragmented

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces

free float

A ____ seeks the best people for key jobs throughout the organization, regardless of nationality

geocentric staffing policy

The idea that valuable knowledge does not reside just in a firm's domestic operations but can also be found in its foreign subsidiaries is called _____.

global learning

Which of the following is an advantage that banks have when they deal with foreign currencies

governments give banks more freedom when dealing with foreign currencies

Firms entering markets where there are no incumbent competitors to be acquired should choose:

greenfield investments

A firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up, called the ____.

greenfield strategy

Firms pursuing a global standardization strategy:

have a high need for coordination and cultural controls.

According to the ____, top managers typically overestimate their ability to create value from an acquisition.

hubris hypothesis

In a typical international trade transaction, the

importer's bank sends a letter of credit to the exporter's bank

In which of the following organizational structures are the domestic operations and foreign operations isolated from each other leading to coordination problems

international division structure

Firms pursuing a ____ attempt to create value by transferring core competencies from home to foreign subsidiaries

international strategy

The Six Sigma methodology _____.

is a direct descendant of the total quality management philosophy

A draft used in international transactions ____.

is a document requesting payment

A firm using a polycentric staffing policy

is less likely to suffer from cultural myopia

The worldwide product division structure

is weak in local responsiveness

Which of the following is NOT an effective strategy for implementing organizational change?

keep the organizational structure

A(n) _____ is valuable because it can be used as a nonbureaucratic conduit for information flows within a multinational enterprise

knowledge network

Flexible manufacturing technology is also known as

lean production

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through

learning effects

_____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense

localization

A polycentric approach may be effective for firms pursuing a(n):

localization strategy

A firm benefits by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. Firms that pursue such a strategy can realize:

location economies.

Vertical integration refers to _____

making all or part of a product in-house

Which of the following is NOT an action taken by organized labor to respond to the increased bargaining power of multinational corporations?

ncreasing competition between national unions

The probability of effective communications is reduced by

noise

In a(n) ____, one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale and this party can fulfill the obligation with any firm in the country to which the sale is being made.

offset

Which of the following would be a typical responsibility of a product division in a product divisional structure?

operating decisions

Which control system is most widely used by small firms

personal

The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as ____.

pioneering costs

If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquarters, the firm is following a(n)

polycentric staffing policy

The percentage increase in net profits over time measures:

profit growth

_____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital

profitability

The Export-Import Bank ____.

provides finance to facilitate trade between United States and other countries

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with

scale economies

Which of the following is a disadvantage of the integration facilitated by technology

shocks that occur in one financial center will spread globally

If a ____ change in a price produces a ____ change in demand, then demand is said to be elastic.

small; large

Which of the following is mainly concerned with the selection of employees for particular jobs

staffing policy

Which of the following terms refers to the use of a specialized third-party trading house in countertrade arrangement

switch trading

If market segments transcend national borders

the company can view the global market as a single entity and pursue a global strategy

Mendenhall and Oddou's "Other orientation" dimension, in their study on what predicts success in foreign job postings, refers to:

the expatriate's ability to interact effectively with host-country nationals

An advantage of buying component parts, or even an entire product, from independent suppliers is that _____.

the firm can maintain its flexibility by switching orders according to circumstances

a push stategy is apporpriate when

the firm is selling complex new products

A country is said to be in balance-of-trade equilibrium when ____.

the income its residents earn from exports is equal to the money its residents pay for imports

Expatriate failure refers to:

the premature return of an expatriate manager to his or her home-country

Those in favor of floating exchange rate claim that ____.

trade imbalances can be adjusted by using floating exchange rates

The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of ____.

traditions

Cultural myopia refers to a firm's failure to

understand host-country cultural differences

According to the concept of economies of scale, as plant output expands, _____.

unit costs decrease

Which of the following is an advantage of establishing a joint venture

when the development costs and/or risks of opening a foreign market are high, a firm might gain by sharing these costs and or risks with a local partner

When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service

wholly owned subsidiary

Which of the following is a factor that initiated the collapse of the fixed exchange rate system?

worsening of U.S. foreign trade position