International Marketing Chapter 1

50. (p. 6) A global company is A. a business whose activities involve crossing national borders. B. the domestic operations within a foreign country. C. an organization with multicountry affiliates. D. an organization that attempts to standardize operations worldwide. E. an organization that operates outside its home or domestic market.

D. an organization that attempts to standardize operations worldwide.

55. (p. 7) Examples of the kinds of uncontrollable forces listed in the text are A. competitive. B. technological. C. gravitational. D. competitive and technological. E. competitive, technological, and gravitational.

D. competitive and technological.

58. (p. 8) Foreign environmental forces often operate differently than domestic environmental forces because A. they are uncontrollable. B. force values are different. C. changes are difficult to assess. D. forces have different values and can be difficult to assess. E. managers are most familiar with them

D. forces have different values and can be difficult to assess.

71. (p. 11) Foreign subsidiaries must obey the local laws. If they don't, they are subject to A. legal action by the host country. B. legal action by the host country and the country of the parent company. C. seizure by the host government. D. cancellation by the parent company of its right to do business in the host country. E. legal action or government seizure.

E. legal action or government seizure.

54. (p. 7) Management has no direct control over the external environment of the firm but can exert influence by A. heavy promotion of new products to change cultural attitudes. B. focus on the strategic plan. C. lobbying. D. factors of production. E. lobbying for a change in a law and heavily promoting a new product to change cultural attitude.

E. lobbying for a change in a law and heavily promoting a new product to change cultural attitude.

85. (p. 19; 21) According to the text, the dimensions along which management can globalize (standardize) their company's international activities include A. markets. B. competitive strategy. C. political exposure. D. use of home country personnel. E. markets and competitive strategy.

E. markets and competitive strategy.

83. (p. 16) According to the text, the reasons international firms enter foreign markets are linked to A. the desire to increase profits and sales. B. the desire to invest excess capital from domestic markets. C. the desire to protect profits and sales from being eroded by competitors. D. the desire to increase sales and reduce costs. E. the desire to increase profits and sales and to protect profits and sales from being eroded by competitors.

E. the desire to increase profits and sales and to protect profits and sales from being eroded by competitors.

86. (p. 22) The international business manager can choose to A. transfer a management practice intact. B. transfer and adjust a management practice. C. not transfer a management practice at all. D. always use management practice. E. transfer, adjust, or not use management practice at all.

E. transfer, adjust, or not use management practice at all.

69. (p. 10) UNCTAD, an agency of the United Nations, estimates there are __________ international firms in the world. A. 5,500 B. 12,000 C. 64,000 D. 120,000 E. over 800,000

C. 64,000

73. (p. 11) _______ refers to the transportation of any domestic good or service to a destination outside a country or region. A. Importing B. Foreign direct investment C. Exporting D. International business E. Franchise

C. Exporting

72. (p. 11) The worldwide stock of outward FDI is estimated to have increased _______ between 1980 and 2008. Refer To: Figure: 1.1, World merchandise exports, commercial services exports, and outward foreign direct investment, 1980-2009 A. Threefold B. Fivefold C. Ninefold D. Twelvefold E. Seventeenfold

C. Ninefold

74. (p. 11) The level of service exports worldwide increased more than _______ between 1980 and 2008. Refer To: Figure: 1.1, World merchandise exports, commercial services exports, and outward foreign direct investment, 1980-2009 A. Fourfold B. Sixfold C. Tenfold D. Twelvefold E. Seventeenfold

C. Tenfold

49. (p. 6) A multidomestic company is A. a business whose activities involve crossing national borders. B. the domestic operations within a foreign country. C. an organization with multicountry affiliates. D. an organization that attempts to standardize operations worldwide.

C. an organization with multicountry affiliates.

68. (p. 9) International business really began A. with the East India Company chartered in 1600. B. when Singer Sewing Machine put up a factory in Scotland in 1868. C. before the time of Christ. D. when Colt Fire Arms set up a plant in England. E. when the Ottoman Empire was established.

C. before the time of Christ.

75. (p. 12) According to the text, the tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making this integration happen, is called A. internationalization. B. international business. C. economic globalization. D. multinationalization. E. global integration.

C. economic globalization.

66. (p. 9-10) Historically, international business: A. is relatively new. B. existed before the time of Christ. C. existed before the time of Christ and was influenced by the rise of Ottoman Empire. D. was influenced by the rise of the Ottoman Empire. E. existed only after the time of Christ.

C. existed before the time of Christ and was influenced by the rise of Ottoman Empire.

57. (p. 8) The domestic environment is composed of all the uncontrollable forces originating in the __________ that surround and influence the life and development of the firm. A. international arena B. host nation C. home country D. foreign country E. overseas

C. home country

64. (p. 9) Decision making in the international environment is __________ it is in a purely domestic environment. A. less complex than B. less demanding than C. more complex than D. about the same as E. easier than

C. more complex than

65. (p. 9) Unconscious reference to ones own cultural values when judging behavioral actions of others in a new and different environment is called: A. self-reference culture. B. self-reference values. C. self-reference criterion. D. self-reference customs. E. self-reference environment.

C. self-reference criterion.

11. (p. 6) According to the definitions in the text, a multidomestic firm is an organization that attempts to standardize operations worldwide in all functional areas.

False

13. (p. 7) International business differs from domestic business in that a firm operating across borders must deal with the forces of two kinds of environments-domestic and foreign.

False

15. (p. 7) According to the text, environmental elements over which management does have some control-include competitive, labor, and financial forces-are called the internal forces.

False

16. (p. 7) External environmental forces are commonly referred to as controllable.

False

18. (p. 8) The international environment is composed of all the uncontrollable forces originating in the home country.

False

19. (p. 8) According to the text, the international environment is all of the uncontrollable forces originating outside the home country that surround and influence the firm.

False

2. (p. 6) Only those companies that have foreign operations need to be aware of what is occurring globally in its markets and their industry.

False

21. (p. 8) The forces in the international environment are the same as those in the domestic environment except that they occur in foreign nations.

False

22. (p. 9) A common cause of the added complexity of foreign environments is managers unfamiliarity with other cultures and is called self-reference syndrome.

False

23. (p. 9) According to the text, the self-absorption criterion is probably the biggest cause of international business blunders.

False

25. (p. 9) Britain was the worlds leading manufacturing country for about 1,800 years, until it was replaced by the United States at the end of the 1800s.

False

27. (p. 10) Transnational corporations account for approximately 25 percent of total global output and nearly 50 percent of world trade.

False

28. (p. 11) Critics of large global firms compare these firms sales with nations total sales to illustrate the tremendous size of these firms.

False

3. (p. 6) Foreign business is business whose activities are carried out across national borders.

False

32. (p. 11) Exporting refers to the transportation of any good or service to a destination inside a country or region.

False

39. (p. 15) Opponents of globalization argue that globalization has contributed to an improvement in environmental and health conditions.

False

4. (p. 6) An international company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

False

41. (p. 16) The reasons international firms enter foreign markets are all linked to either (1) the desire to increase profits or (2) the desire to increase sales.

False

44. (p. 19) In organizing their international activities, there are five dimensions along which management can globalize or standardize these activities.

False

7. (p. 6) The term international business is used to describe an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

False

8. (p. 6) A multidomestic company is an organization that attempts to standardize and integrate operations worldwide in all functional areas.

False

1. (p. 6) American companies want their managers to have a basic knowledge of international business.

True

10. (p. 6) A global company is an organization that attempts to standardize and integrate operations worldwide in most or all functional areas.

True

12. (p. 6) The United Nations uses the term transnational to describe an enterprise doing business in more than one country.

True

14. (p. 7) External forces in the international business environment are commonly called uncontrollable forces.

True

17. (p. 7) Internal environmental forces are commonly referred to as controllable.

True

20. (p. 8) According to the text, the domestic environment is all of the uncontrollable forces originating in the home country that surround and influence the firm's life and development.

True

24. (p. 9) While international business as a discipline is relatively new, international business as a business practice is not.

True

26. (p. 10) According to the text, the level of intracompany trade of multinationals in 1930, as a percentage of world trade, may have exceeded the proportion at the end of the 20 th century.

True

29. (p. 11) One variable commonly used to measure where and how fast internationalization takes place is the increase in total foreign direct investment.

True

30. (p. 11) The world stock of outward foreign direct investment was $16.2 trillion in 2008, which was 9 times what it was in 1990.

True

31. (p. 11) Importing refers to the transportation of any good or service to a destination into a country or region, from a foreign origination point.

True

33. (p. 12) The tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen, is referred to as economic globalization.

True

34. (p. 12) There are five major kinds of drivers, all based on changes that are leading international firms to the globalization of their operations.

True

35. (p. 14) That free trade is the best strategy for advancing the worlds economic development is one of the few propositions on which almost all economists agree.

True

36. (p. 14) Supporters of globalization generally argue that it is the best strategy for advancing the worlds economic development.

True

37. (p. 14) Expanded international trade is linked with the creation of more and better jobs.

True

38. (p. 15) Globalization has produced uneven results across nations and people.

True

40. (p. 15) Opponents of free trade point out that globalization has contributed to a decline in environmental and health conditions.

True

42. (p. 17) Greater profits may be obtained by either increasing total revenue or decreasing the cost of goods sold.

True

43. (p. 18) Changing the method of going abroad from exporting to overseas production is often necessary to protect foreign markets.

True

45. (p. 21) There are many outstanding international career opportunities for people with desirable interpersonal and language skills that are not in mainstream business but may require basic business expertise.

True

5. (p. 6) A business whose activities are carried out across national borders is known as an international business.

True

6. (p. 6) Foreign business refers to the operations of a company outside its home or domestic market.

True

9. (p. 6) The term international company refers to both global and multidomestic companies.

True

79. (p. 12) The trend toward unification and socialization of the global community is illustrated by which of the following A. Preferential trading arrangements that group several nations into a single market. B. Progressive increases in barriers to foreign investment by most governments. C. Increased public ownership of much of the industry in formerly communist nations. D. Preferential trading arrangements that group several nations into several markets. E. Progressive increases in barriers to foreign investment by few governments.

A. Preferential trading arrangements that group several nations into a single market.

46. (p. 6) The increased internationalization of business requires __________ to have a basic knowledge of international business. A. all managers B. managers of multinationals C. managers of transnationals D. managers of purely domestic operations

A. all managers

80. (p. 14) According to supporters of the globalization of trade and investment, free trade A. creates more and better jobs. B. benefits all nations and workers. C. does not cause the loss of high-paying jobs. D. creates poverty. E. impairs socioeconomic development.

A. creates more and better jobs

47. (p. 6) An international business A. is a business whose activities involve crossing national borders. B. denotes the domestic operations within a foreign country. C. is an organization with multicountry affiliates. D. is an organization that attempts to standardize operations worldwide.

A. is a business whose activities involve crossing national borders.

52. (p. 7) International business differs from domestic business in that a firm operating across borders must deal with A. three kinds of environments - domestic, foreign, and international. B. only domestic and foreign environment. C. the foreign environment. D. the international environment. E. the domestic environment.

A. three kinds of environments - domestic, foreign, and international.

78. (p. 12) The major globalization drivers include all of the following except: A. Political B. Social C. Technological D. Market E. Cost

B. Social

76. (p. 12) According to the text, the tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen, is termed: A. international business. B. economic globalization. C. foreign direct investment. D. political globalization. E. technological globalization.

B. economic globalization.

70. (p. 11) Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies _______________. A. more strict B. more liberal C. harsher D. more confronting E. more competitive

B. more liberal

84. (p. 16) Reasons for international firms to enter into foreign markets are all linked to which of the following desires A. increased sales and reduced costs B. protecting sales and profits from being eroded by competitors C. enabling the company to grow in size and prestige. D. to invest excess capital from domestic markets. E. to sell excessive products.

B. protecting sales and profits from being eroded by competitors

48. (p. 6) Foreign business denotes A. a business whose activities involve crossing national borders. B. the domestic operations within a foreign country. C. an organization with multicountry affiliates. D. an organization that attempts to standardize operations worldwide.

B. the domestic operations within a foreign country.

59. (p. 8) The kinds of forces in the foreign environment are __________ those in the domestic environment except that they occur in foreign nations. A. different from B. the same as C. less than D. more stringent than

B. the same as

77. (p. 12) Which of the following are identified in the text as being drivers of globalization? A. Political B. Social C. Cultural D. Economic E. Geographic

A. Political

89. (p. 14-16) Discuss the arguments supporting and opposing globalization of trade and investment.

Answers may vary, but arguments supporting globalization should include discussion about how free trade enhances socioeconomic development and about how free trade promotes more and better jobs. Arguments opposing globalization of trade and investment should include discussion of how globalization has produced uneven results across nations and people, has had deleterious effects on labor and labor standards, and has contributed to a decline in environmental and health conditions.

88. (p. 12) Identify and discuss the 5 major kinds of drivers that are leading international firms to the globalization of their operations.

Answers may vary, but should address each of the five major kinds of drivers: political, technological, market, cost, and competitive.

87. (p. 7-8) Discuss the three environments in which an international company operates.

Answers may vary, but should address each of the three kinds of environments that firms operating across borders must deal with: domestic, foreign, and international. The domestic environment involves all of the uncontrollable forces originating in the home country that surround and influence the firm's life and development. The foreign environment involves all of the uncontrollable forces originating outside the home country that surround and influence the firm. The international environment involves the interaction between domestic and foreign environmental forces, or between sets of foreign environmental forces.

90. (p. 16-19) Explain the different reasons for firms to enter foreign markets.

Answers may vary, but should note that the reasons firms enter foreign markets are all linked to either (1) the desire to increase profits and sales, or (2) the desire to protect these profits and sales from being eroded by competitors. For increasing profits and sales, responses may address such factors as entering promising new market, creating new markets, accessing faster-growing markets, exploiting improvements in communication technologies, obtain greater profits, increase revenues, lower costs of goods sold, and access higher overseas profits. For protecting markets, profits and sales, arguments may address such factors as following customers overseas, attacking a competitor's home market, using foreign production to lower costs, protecting foreign markets, dealing with lack of foreign exchange, respond to local production by competitors, exploit downstream markets, respond to protectionism, guarantee supply of raw materials, access technology and managerial know-how, achieve geographic diversification, or satisfy management's desire for expansion.

91. (p. 19; 21) Identify the seven dimensions along which management can globalize, in organizing their international activities.

Answers should identify the following seven dimensions: product, markets, promotion, where value is added to the product, competitive strategy, use of non-home-country personnel, and extent of global ownership in the firm.

82. (p. 15-16) According to opponents of the globalization of trade and investment, A. globalization has produced uneven results across nations and people. B. globalization has had harmful effects on labor and labor standards. C. globalization has contributed to a decline in environmental and health conditions. D. globalization has produced uneven results across nations and people, has had harmful effects on labor and labor standards, and has contributed to a decline in environmental and health conditions. E. globalization has produced even results across nations.

D. globalization has produced uneven results across nations and people, has had harmful effects on labor and labor standards, and has contributed to a decline in environmental and health conditions.

56. (p. 7) The forces over which the management does have some command are called A. internal but not controllable. B. external and controllable. C. foreign. D. internal (controllable). E. external.

D. internal (controllable).

62. (p. 8-9) The international environment is the interactions between A. the domestic environmental forces and the foreign environmental forces. B. the foreign uncontrollable forces and the domestic uncontrollable forces. C. the foreign environmental forces of two countries when an affiliate in one country does business in another country. D. the domestic environmental forces and foreign environmental forces, and exists between the foreign environmental forces of two countries when an affiliate in one country does business in another country. E. the foreign internal and external forces.

D. the domestic environmental forces and foreign environmental forces, and exists between the foreign environmental forces of two countries when an affiliate in one country does business in another country.

67. (p. 9) __________ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840. A. The United States B. Germany C. India D. France E. China

E. China

60. (p. 7) International business differs from domestic business in that a firm operating across borders must deal with what environmental forces? A. International B. Foreign C. Political D. Competitive E. Domestic, foreign, and international

E. Domestic, foreign, and international

61. (p. 7) Environmental forces can be classified as: A. external B. uncontrollable C. internal D. controllable E. external (uncontrollable) and internal (controllable)

E. external (uncontrollable) and internal (controllable)

53. (p. 7) Environment as used in the textbook is the forces surrounding and influencing the life and development of the firm and is classified as A. controllable and uncontrollable. B. domestic and foreign. C. internal and external. D. competitive and distributive. E. external (uncontrollable) and internal (controllable).

E. external (uncontrollable) and internal (controllable).

81. (p. 15) Opponents of globalization argue that globalization has produced A. more and better jobs. B. deleterious effects on labor and labor standards. C. uneven results across nations and people. D. even results across nations and people. E. globalization has produced uneven results across nations and people and deleterious effects on labor and labor standards.

E. globalization has produced uneven results across nations and people and deleterious effects on labor and labor standards.

63. (p. 9) According to the text, personnel working in a foreign subsidiary are working in the international environment A. if they work and live in a foreign country. B. if they are responsible for the subsidiarys exports. C. if they are also responsible for the management of another foreign subsidiary. D. all of the above. E. if they are responsible for exporting or the management of other affiliates.

E. if they are responsible for exporting or the management of other affiliates.

51. (p. 6) Firms that have substantial operations in more than one country are called A. global companies. B. multidomestic firms. C. affiliated companies. D. all of the above. E. international company.

E. international company.