man3600

________ refers to sourcing from the firm's own production facilities. A) Captive sourcing B) Crowdsourcing C) Business process outsourcing D) Externalization

A) Captive sourcing

Which of the following is an example of a country that has experienced dollarization? A) Ecuador B) Japan C) France D) Brazil

A) Ecuador

Which of the following is a trend seen in the modern international economy? A) Firms from both advanced and emerging economies employ FDI. B) Emerging markets are the sole recipient countries for FDI. C) Companies primarily use acquisitions to enter foreign markets. D) Firms in the service sector use e-commerce exclusively to enter foreign markets.

A) Firms from both advanced and emerging economies employ FDI.

________ is the selling, at a discount, of long-term accounts receivable of the seller or promissory notes of the foreign buyer. A) Forfaiting B) Countertrading C) Confirming D) Factoring

A) Forfaiting

Which of the following propositions would most likely be presented by Group B? A) Global sourcing adversely affects national competitiveness. B) Global sourcing improves the efficiency of manufacturing firms. C) Global sourcing empowers workers in general. D) Global sourcing is usually undertaken by focal firms to increase efficiency.

A) Global sourcing adversely affects national competitiveness.

________ is the procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country. A) Importing B) Exporting C) Offshoring D) Microfinancing

A) Importing

Which of the following is true with regard to the risks of global sourcing? A) Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries. B) Firms that source from countries whose currencies are strengthening experience lower costs. C) Global sourcing weakens competition leading to a considerably risk-free international business environment. D) Environmental challenges exclude currency fluctuations, tariffs and other trade barriers, high energy and transportation costs.

A) Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries.

Which of the following is most likely to be the consultants' utmost concern while deciding if clothing for Fun Play dolls needs to be outsourced? A) Is doll clothing part of Fun Play's core competencies? B) What kind of fabric is used for clothing Fun Play dolls? C) Do the competitors of Fun Play outsource accounting activities abroad? D) Does Fun Play intend to follow a strategy of product diversification in the near future?

A) Is doll clothing part of Fun Play's core competencies?

Expert C most likely works for which of the following? A) Merrill Lynch B) Banco General in Panama C) Federal Reserve Bank D) International Monetary Fund

A) Merrill Lynch

Which of the following is true with regard to offshoring? A) Offshoring is common in the service sector, including banking, software code writing, legal services, and customer-service activities. B) Russia is the current leader in the processing of advanced economies' relocated business services. C) Offshoring substantially reduces the overall efficiency of MNEs. D) With rapid globalization and internationalization of businesses, offshoring is a visibly declining trend.

A) Offshoring is common in the service sector, including banking, software code writing, legal services, and customer-service activities.

The likelihood of internalizing ________ rather than outsourcing it is considerably high. A) R&D B) manufacturing of parts C) sales and distribution D) customer service

A) R&D

A French company sells goods to a foreign customer whose currency is depreciating against the euro. Which of the following will the company most likely experience when completing the sale? A) The company will receive fewer euros if the sales price was expressed in the buyer's currency. B) The company will receive more euros if the sales price was expressed in the buyer's currency. C) The company will receive fewer euros if the sales price was expressed in euros originally. D) The company will receive more euros if the sales price was expressed in euros originally.

A) The company will receive fewer euros if the sales price was expressed in the buyer's currency.

Which of the following supports maintaining the current production status instead of increasing production? A) The euro-dollar exchange rate is unpredictable due to its constant fluctuation. B) Exporters and importers typically profit from currency speculation. C) The euro/dollar exchange rate usually remains steady for long periods of time. D) The cost of living in the U.S. has risen dramatically in the last year.

A) The euro-dollar exchange rate is unpredictable due to its constant fluctuation.

How does the acquisition of a foreign company most likely benefit a focal firm in the foreign market? A) The focal firm can extend its market reach through readily available distribution networks. B) The MNE avoids domestic and foreign taxation, which enables the firm to invest more resources in the foreign market. C) Firm managers can reduce their workload by ensuring that all decision-making responsibilities are taken up by foreign managers. D) The firm eliminates the need to train its own employees by utilizing the workers previously hired by the foreign firm.

A) The focal firm can extend its market reach through readily available distribution networks.

Which of the following is true with regard to strategies for minimizing the risks of global sourcing? A) To ensure the success of sourcing ventures, the focal firm must exercise great care to identify and screen potential suppliers and then monitor the activities of those suppliers from which it sources. B) To maximize returns and minimize risks, management should outsource core business operations. C) Because production quality in an emerging market rarely varies over time, managers at the focal firm are not obliged to closely monitor manufacturing processes. D) Firms must refrain from maintaining their own sourcing operations abroad in order to trim costs and minimize risks stemming from frequent currency fluctuations.

A) To ensure the success of sourcing ventures, the focal firm must exercise great care to identify and screen potential suppliers and then monitor the activities of those suppliers from which it sources.

Which of the following is the most likely underlying reason for the demise of the Bretton Woods system? A) U.S. trade deficits B) creation of the EU C) gold depreciation D) WTO restrictions

A) U.S. trade deficits

Which of the following would be most important to determine in deciding whether to outsource some of Echo's value-chain activities? A) What are the long-term strategic goals and objectives of Echo? B) Do engineers working in Echo have the ability to speak one or more European languages? C) Are Echo employees generally afforded a high degree of workplace freedom? D) Does Echo intend to increase its annual budget for innovation?

A) What are the long-term strategic goals and objectives of Echo?

Which of the following questions must be evaluated by OTC managers as a first step to exporting? A) What are the risks involved in exporting OTC towels to Earth Waves? B) Do Canadian towel companies have a high success rate when they export? C) Will OTC save money on domestic marketing by exporting? D) How can OTC adapt its distribution strategy in Canada?

A) What are the risks involved in exporting OTC towels to Earth Waves?

Which of the following questions is most important for Ciao managers to evaluate in their decision regarding the location of the new manufacturing facility? A) What would be the costs and availability of skilled labor in Canada and Russia? B) What other industries manufacture products in Canada and Russia? C) How much time will it take to train managers in Canada and Russia? D) How should the current marketing strategies be modified to serve markets in Canada and Russia?

A) What would be the costs and availability of skilled labor in Canada and Russia?

Which of the following is the most likely motive behind firms in the mining industry wanting to enter new foreign markets? A) access to natural resources B) availability of excessive non-skilled labor force C) increase in refining capacity D) payment of wages remain the same in both the new market as well as the existing market

A) access to natural resources

Countertrade is ________. A) an international business transaction where all or partial payments are made in kind rather than cash B) the establishment of a firm's presence in a foreign market by investing capital and securing ownership of a factory, subsidiary, or other facility there C) the procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country D) the strategy of producing products or services in one country (often the producer's home country), and selling and distributing them to customers located in other countries

A) an international business transaction where all or partial payments are made in kind rather than cash

Which of the following methods of payment is the LEAST popular among foreign buyers? A) cash in advance B) sight draft C) consignment sales D) countertrade

A) cash in advance

The pattern or geographic arrangement of locations where the firm carries out value-chain activities is known as ________. A) configuration of value-adding activity B) internalization C) visual merchandising D) disintermediation

A) configuration of value-adding activity

After managers have chosen an appropriate market for exporting, the next step is to ________. A) decide about the resources to be committed B) acquire the skills and competencies to handle export operations C) engage appropriate international trade attorneys D) modify advertising and promotional activities to suit individual markets

A) decide about the resources to be committed

Which of the following terms refers to the government reduction of its currency value relative to the other currency values? A) devaluation B) hyperinflation C) depreciation D) fluctuation

A) devaluation

A firm that pursues foreign direct investment to take advantage of government incentives is demonstrating a(n) ________ motive. A) efficiency-seeking B) novelty-seeking C) asset-seeking D) market-seeking

A) efficiency-seeking

During her presentation, Jessica describes how two automakers joined forces and formed a separate firm by pooling their assets. Which of the following topics was most likely assigned to Group A? A) equity joint venture B) acquisition C) greenfield investment D) vertical integration

A) equity joint venture

When a firm establishes a presence in the foreign market by investing capital in and securing ownership of a factory, subsidiary, or other facility there, it is typically a(n) ________. A) equity-based international business activity B) contractual relationship C) home-based international exchange activity D) inbound international exchange activity

A) equity-based international business activity

Which of the following statements is true of a dirty float? A) exchange rates fluctuate with occasional central bank intervention B) beneficial exchange rates are offered in trade with certain nations C) fixed exchange rates are set and maintained by the World Bank D) currency values rise and fall according to the U.S. dollar

A) exchange rates fluctuate with occasional central bank intervention

Which of the following industries considers proximity to customers especially important in the decision to enter a foreign market? A) fashion B) automotive C) biotechnology D) mining

A) fashion

Which of the following resolves the problem of making international payments and facilitates international investment and borrowing among firms, banks, and governments? A) foreign exchange B) barter C) capital flight D) buyback

A) foreign exchange

A firm that develops the capacity to sell its products by investing in marketing and selling operations is demonstrating ________. A) forward vertical integration B) backward vertical integration C) centralization D) decentralization

A) forward vertical integration

Which of the following is most likely an additional problem faced by Country X due to its inflation? A) high interest rates B) herding behavior C) balance of trade D) country risk

A) high interest rates

Relational assets is defined as ________. A) high-quality, enduring business and social relationships B) the creditworthiness of the exporter C) a contract between the banks of a buyer and a seller that ensures payment for both sides D) a set of universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction

A) high-quality, enduring business and social relationships

In order to find appropriate foreign intermediaries, exporters would most likely consult ________. A) industry trade associations B) newspapers C) magazines D) social networking sites

A) industry trade associations

Prox Inc. is a U.S.-based manufacturer of consumer electronics. It decides to export to Mexico and wants to protect its goods against damage, loss, and pilferage. Which of the following documents is applicable here? A) insurance certificate B) bill of lading C) pro forma invoice D) license

A) insurance certificate

The strategic view of global sourcing suggests that ________. A) just as firms achieve gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, they also obtain the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects B) firms that procure supplies from foreign subsidiaries are more likely than not to lose ground to competitors who primarily bank on their own resources C) a strong legal environment is not the prerequisite for increasing efficiencies by relocating strategic operations abroad D) the firms' innovative activities tend to make mature products obsolete over time

A) just as firms achieve gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, they also obtain the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects

Critics of global sourcing maintain that it ________. A) leads to reduced national competitiveness B) results in job losses in host countries C) enhances standards of living D) causes production to drop drastically

A) leads to reduced national competitiveness

Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ________. A) locating in culturally similar countries B) investing in international securities C) hiring additional local personnel D) diversifying their corporate activities

A) locating in culturally similar countries

Two catering companies that join to form a new, larger catering company are an example of a(n) ________. A) merger B) acquisition C) wholly owned direct investment D) greenfield investment

A) merger

The relocation of a business process or entire manufacturing facility to a foreign country is known as ________. A) offshoring B) captive sourcing C) outsourcing D) subsidizing

A) offshoring

The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers is known as ________. A) outsourcing B) franchising C) offshoring D) licensing

A) outsourcing

The rate of inflation is a(n) ________ factor to be considered while selecting the location for FDI. A) profit retention B) market C) infrastructural D) human resource

A) profit retention

The Internet facilitates international trade in the service sector by ________. A) providing the means to export some types of services to foreign markets B) providing the means to avoid taxes in the foreign market C) allowing firms to attain maximum control by establishing ownership of key assets D) eliminating the need to deal with foreign currency exchange rates

A) providing the means to export some types of services to foreign markets

Which of the following is an example of a currency risk? A) purchasing products from a nation with appreciating currency B) purchasing products from a country with depreciating currency C) selling products to a country with appreciating currency D) selling products to a nation that has the same currency value as the exporter's

A) purchasing products from a nation with appreciating currency

A focal firm's overreliance on suppliers can potentially lead to ________. A) reduced control over important value-chain tasks B) added competitive advantage for the focal firm C) an excessive burden on home-country suppliers D) consolidation of the focal firm's network of intermediaries

A) reduced control over important value-chain tasks

A ________ is a facility for trading securities and other financial instruments, including shares issued by companies, trust funds, pension funds, and corporate and government bonds. A) stock exchange B) business strategic unit C) grey market D) shell corporation

A) stock exchange

Which of the following is a disadvantage of equity joint ventures? A) termination difficulties B) lesser control over future directions C) imbalanced relationship D) vague contractual partnership

A) termination difficulties

A risk-averse manager at a Canadian firm would most likely pursue initial internationalization in ________. A) the United States B) China C) India D) Russia

A) the United States

Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm? A) the foreign firm can fill an important gap in the focal firm's value chain B) the foreign firm requires the focal firm's financial resources to compete locally as well C) the focal firm wants to duplicate a competitor's marketing strategies abroad D) the market abroad is saturated, there is no scope for the focal firm's products or services

A) the foreign firm can fill an important gap in the focal firm's value chain

An arrangement whereby the firm owns, or seeks to own, multiple stages of a value chain for producing, selling, and delivering a product or service is termed as ________. A) vertical integration B) horizontal integration C) decentralization D) centralization

A) vertical integration

During the global market opportunity assessment phase, managers will most likely ________. A) visit countries to determine customer needs and government regulations B) perform a test-run by exporting a small amount of products to potential markets C) send out a survey to foreign suppliers and distributors to learn about the culture D) collaborate with another trading company for a short period of time

A) visit countries to determine customer needs and government regulations

Which of the following situations often results in a banking crisis? A) when investors withdraw funds from financial institutions B) when exchange rates fluctuate dramatically C) when governments borrow excessively from banks D) when a nation's currency rapidly depreciates

A) when investors withdraw funds from financial institutions

When Mary begins her search for a foreign intermediary in Australia, ________ would most likely provide her with helpful information. A) Australian customers B) Australian trade consultants C) Australian newspapers D) Australian s

B) Australian trade consultants

Which of the following would most likely be considered by the consultants while deciding whether to keep each value-adding activity in the home country or locate it in a foreign country? A) Who will be responsible for training suppliers in foreign locations? B) Can different value-adding activities be effectively configured across the world? C) Would the HR department of Fun Play be able to ensure smooth repatriation for managers after they complete their assignments abroad? D) What is the odds in favor of Fun Play's dominating the children's toy segment in its home country?

B) Can different value-adding activities be effectively configured across the world?

Two-way trade between ________ and the United States represents the world's largest bilateral trading relationship. A) China B) Canada C) Vietnam D) Russia

B) Canada

Which of the following is true with regard to global sourcing? A) Global sourcing has declined significantly in the current phase of globalization. B) Global sourcing is a low-control strategy in which the focal firm sources from independent suppliers through contractual agreements. C) Global sourcing refers to the relocation of a business process or entire manufacturing facility to a foreign country. D) Global sourcing does not represent the firm's initial involvement in international business.

B) Global sourcing is a low-control strategy in which the focal firm sources from independent suppliers through contractual agreements.

Which of the following should be considered first in making the decision to export OTC towels to Canada? A) What is the probability of OTC and Earth Waves entering into a joint venture? B) How much fluctuation occurs in the exchange rate between the Canadian dollar and the British pound? C) What is the likelihood of Earth Waves opening a subsidiary in Canada? D) What documentation would be required for OTC to export towels to Asia?

B) How much fluctuation occurs in the exchange rate between the Canadian dollar and the British

________ are managers of pensions and mutual funds, as well as insurance companies who have assumed an enormous role in driving capital markets around the world. A) Entrepreneurs B) Institutional investors C) Angel investors D) Venture capitalists

B) Institutional investors

Which of the following is an advantage of countertrade? A) The cash that the seller receives upon selling received goods is always more than expected. B) It can help a firm get a foothold in new markets, leading to new customer relationships. C) It is simple, easy, and time-saving because deals are easily agreed upon. D) It is a high-control strategy that requires substantial resource commitment when compared to an equity joint venture.

B) It can help a firm get a foothold in new markets, leading to new customer relationships.

Which of the following is an effect caused by capital flight? A) It increases the need for domestic investment holdings. B) It decreases the ability of the nation to service debt and pay for imports. C) It reduces harmful currency restrictions. D) It decreases the nation's supply of hard currencies.

B) It decreases the ability of the nation to service debt and pay for imports.

Which of the following most likely supports a decision to enter the Asian market through a project-based, non-equity collaborative venture with an Asian appliance manufacturer to create an environmentally-friendly dishwasher? A) Asian firms have offered to pool their resources with ABC to create a new legal entity. B) Managers of both firms have decided not to seek ownership, rather they have decided to pool in resources. C) ABC managers have the financial resources to quickly build a new Asian plant. D) The Asian government has offered incentives to ABC if the firm builds a plant.

B) Managers of both firms have decided not to seek ownership, rather they have decided to pool in resources.

Which of the following statements is true about managing export-import transactions? A) The commercial invoice is the basic contract between exporter and shipper. B) National governments sometimes require exporters to obtain license due to national security policy. C) Incoterms is the "birth certificate" of the goods being shipped and indicates the country of origin. D) Export declaration lists a set of universally accepted terms of sale that specify how the buyer and seller share freight and insurance costs.

B) National governments sometimes require exporters to obtain license due to national security policy.

Which of the following most strongly suggests OTC should not export its towels to Earth Waves? A) OTC managers are risk-takers with the determination to expand OTC. B) OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity. C) Earth Waves has a large client base and publishes a semi-annual catalog. D) Earth Waves has offered to guide OTC through Canadian regulations.

B) OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity.

An American company that planned to outsource IT development would be most likely to save significantly in salary costs by hiring qualified professionals from ________. A) Hong Kong B) Philippines C) the United States of America D) Germany

B) Philippines

Which of the following statements is true with regard to the R&D activities of a firm? A) As a strategic asset, R&D activities are of moderate importance to the firm. B) R&D activities are usually concentrated at home. C) R&D activities have a low likelihood of being internalized. D) R&D activities have a high likelihood of being outsourced.

B) R&D activities are usually concentrated at home.

Which of the following, if true, most supports the argument in favor of global sourcing? A) There is no scarcity of qualified personnel in and around Boston. B) Studies show that by reconfiguring their value-chain systems or reengineering their business processes, companies can substantially improve their production efficiency and resource utilization. C) Camden Audio, Echo's most formidable rival, follows a strategy of product diversification. D) The rate of employee turnover at Echo has stabilized over the last decade.

B) Studies show that by reconfiguring their value-chain systems or reengineering their business processes, companies can substantially improve their production efficiency and resource utilization.

Which of the following questions would be more important for Chisholm to evaluate before presenting his manufacturing recommendations to shareholders? A) What was the impact of the exchange rate on European exports last year? B) What is the currency risk of exporting additional Plas-Tex products to Europe? C) How effective has the Plas-Tex marketing campaign been in Europe? D) What was the impact on Plas-Tex sales when the euro depreciated last year?

B) What is the currency risk of exporting additional Plas-Tex products to Europe?

Which of the following should most likely be considered in making the decision to expand ABC operations into the Asian market? A) How will domestic competitors of ABC react to an international expansion? B) What technological and managerial know-how can ABC gain from an Asian expansion? C) How many managers will need to relocate to Asia to oversee the Asian project? D) How will ABC utilize the Internet to achieve success in the Asian market?

B) What technological and managerial know-how can ABC gain from an Asian expansion?

Which of the following is an example of a market-seeking motive for FDI? A) a firm wishes to gain access to raw materials B) a firm follows its key customers abroad C) a company wishes to gain access to knowledge D) a company intends to avoid trade barriers

B) a firm follows its key customers abroad

Which of the following is a characteristic of project-based, non-equity ventures? A) a broad scope of product development B) a specific agenda and timeframe C) long-term sharing of resources D) formation of a new legal entity

B) a specific agenda and timeframe

Global sourcing becomes a catalyst to overhaul organizational processes and company operations and increases the firm's overall competitive advantages by ________. A) encouraging firms to train unskilled labor through extensive training programs B) allowing firms to free expensive analysts, engineers, and managers from routine tasks to spend more time on high-value-adding activities C) relaxing quality standards D) installing a system of rewards to motivate employees

B) allowing firms to free expensive analysts, engineers, and managers from routine tasks to spend more time on high-value-adding activities

Which of the following is a characteristic of successful international retailers? A) conservative managers and salespeople and a centralized organizational system B) an entrepreneurial approach to foreign markets and an understanding of the target market C) significant financial borrowings and high foreign and domestic operational costs D) extreme competition and support from home-country governments exclusively

B) an entrepreneurial approach to foreign markets and an understanding of the target market

Which of the following documents is the contract between the shipping company and the exporter? A) pro forma invoice B) bill of lading C) export declaration D) commercial invoice

B) bill of lading

Which of the following is the best example of a back-office BPO activity? A) customer service B) billing C) marketing D) technical support

B) billing

In the ________ stage of internationalization, a firm's critical management activity would be to allocate resources based on available international business opportunities. A) experimental involvement B) committed involvement C) active involvement D) pre-internationalization

B) committed involvement

The U.S. dollar is an example of ________. A) soft currency B) convertible currency C) nonconvertible currency D) private currency

B) convertible currency

Which of the following is the first stage of internationalization? A) experimental involvement B) domestic market focus C) pre-internationalization D) active involvement

B) domestic market focus

Which of the following is a characteristic of direct exporting? A) exporter uses few corporate resources and personnel B) exporter develops a closer relationship with foreign buyers C) exporter contracts with domestic intermediaries D) exporter delegates responsibility of finding buyers

B) exporter develops a closer relationship with foreign buyers

Which of the following is a characteristic of an equity joint venture? A) simple management structure B) facilitates knowledge transfer between partners C) easy to terminate D) lesser exposure to political risk

B) facilitates knowledge transfer between partners

Buying products and services from foreign sources and bringing them into the home market is called ________. A) exporting B) global sourcing C) global bartering D) offshoring

B) global sourcing

GrajQ GmbH., an automobile manufacturing company based in Germany, requires a low-risk strategy to enter China. Which of the following foreign market entry strategies is the most suitable for GrajQ? A) minority-owned equity joint venture B) global sourcing C) project-based (nonequity) collaborative venture D) wholly owned subsidiary (FDI)

B) global sourcing

To maximize returns, management should outsource those activities ________. A) that offer great value to the bottom line B) in which it is relatively weak C) that are critical to the firm's core competencies D) in which it has the greatest expertise and knowledge

B) in which it is relatively weak

Which of the following does the central bank perform in order to accommodate a nation's economic growth? A) enforce strict regulations on foreign direct investment B) increase the nation's money supply C) establish a voluntary export restraint D) restrict innovation and entrepreneurship

B) increase the nation's money supply

Collaborative ventures benefit SMEs by providing them with ________. A) better trained employees B) increased amount of capital C) larger and newer facilities D) more advanced technology

B) increased amount of capital

Which of the following is an example of a push factor for a focal firm? A) foreign government incentives B) increasing competition in the home market C) collaborative venture with a competitor in the foreign market D) increasing demand in the home market

B) increasing competition in the home market

ABC managers have located a small Asian supplier that can fill the order, but the supplier will need to draw on a substantial amount of its working capital. From which of the following would the supplier most likely seek financial assistance? A) factoring house B) local commercial bank C) World Bank Group D) Asian Development Bank

B) local commercial bank

Each of the following factors significantly affects the balance of trade EXCEPT ________. A) exchange rate B) market share C) prices of goods D) trade barriers

B) market share

Which of the following industries-large, publicly traded U.S.-based manufacturing firms-will be more dependent on international sales? A) publishing B) medical equipment C) electrical equipment D) automobile

B) medical equipment

Which of the following levels of the global monetary and financial systems pyramid includes commercial banks? A) national government level B) national infrastructure level C) international organization level D) firm level

B) national infrastructure level

34) Currency risk can best be defined as the risk that occurs when ________. A) currency values remain constant for prolonged periods B) one currency changes in relation to another currency C) buyers and sellers disagree over which currency to use D) fluctuations in the stock market affect all exchange rates

B) one currency changes in relation to another currency

A U.S. company buys from a supplier whose currency is increasing against the dollar. Which of the following will the company most likely have to do if the purchasing price is expressed in the supplier's currency? A) pay less in dollars than originally expected B) pay more in dollars than originally expected C) pay the same amount of dollars as originally expected D) pay part of the transaction in the supplier's currency

B) pay more in dollars than originally expected

The level of taxes in a country is a part of the ________ factor that is considered when selecting an FDI location. A) political B) profit retention C) market D) infrastructural

B) profit retention

Which of the following best characterizes the functions of the World Bank? A) monitor interest rates in emerging economies B) provide loans and technical assistance to developing countries C) offer financial assistance to small businesses D) initiate trading for impoverished nations

B) provide loans and technical assistance to developing countries

Which of the following foreign market entry strategies offers the focal firm the highest degree of control over foreign operations? A) exporting B) wholly owned subsidiary (FDI) C) global sourcing D) countertrade

B) wholly owned subsidiary (FDI)

Expert A most likely works for which of the following? A) Union Bank in Switzerland B) Bank of America C) Arab-Malaysian Merchant Bank D) Goldman Sachs

C) Arab-Malaysian Merchant Bank

The top trading partner for the European Union is ________. A) Norway B) Mexico C) China D) Russia

C) China

________ is the primary rationale for sourcing abroad. A) Superior quality control B) Centralized management of work teams C) Cost efficiency D) Uninterrupted innovation

C) Cost efficiency

Which of the following statements is true about open account? A) It is the most preferred method of payment in international business. B) Exporters can sell any open accounts in their possession, to avoid having to wait weeks or months to be paid for their exports. C) Exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter because of the risk involved. D) It is a contract between the banks of the buyer and seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

C) Exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter because of the risk involved.

Which of the following questions would most likely be important for ABC managers to evaluate as they consider expanding into the Asian market? A) What U.S. firms have successfully partnered with Asian companies? B) Where will ABC management locate the staff needed to oversee an Asian plant? C) How much control does ABC management want to have over their Asian operations? D) What are the pricing strategies followed by competitor firms in Asia?

C) How much control does ABC management want to have over their Asian operations?

Which of the following questions is most likely to be addressed as firms organize for exporting? A) Which market offers the most opportunities to the firm for profit and expansion? B) Which domestic and foreign retailers will probably purchase the firm's products? C) How much should the firm rely on intermediaries to carry out exporting? D) How to adapt pricing and marketing strategies to suit the foreign market?

C) How much should the firm rely on intermediaries to carry out exporting?

Which of the following should be considered in the decision regarding where to build a new Ciao plant? A) How many Ciao cars are sold in Italy and Spain each year? B) What U.S. automakers are the biggest competitors of Ciao? C) How politically stable are the governments of Russia and Canada? D) How will Ciao managers handle the language barriers in foreign markets?

C) How politically stable are the governments of Russia and Canada?

Which of the following questions would be more important to evaluate in determining the reason behind the inflation in Country X? A) Has momentum trading of agricultural commodities been occurring in Country X? B) What is the exchange rate between Country X currency and the euro? C) How quickly was the money supply increased by the central bank of Country X? D) How many pounds of coffee beans are being imported annually to Country X?

C) How quickly was the money supply increased by the central bank of Country X?

Which of the following is a characteristic of momentum trading? A) Investors buy stocks as prices fall. B) Investors sell stocks when others sell. C) Investors buy stocks as prices rise. D) Investors buy and sell stocks spontaneously.

C) Investors buy stocks as prices rise.

Which of the following statements is true of the global financial system? A) It consists of the institutional frameworks, rules, and procedures that govern how national currencies are exchanged for one another. B) It includes key players such as finance ministries and national stock exchanges but excludes commercial banks and central banks. C) It is built on the activities of firms, banks, and financial institutions engaged in ongoing international financial activity. D) Since the 1960s, the volume and structure of the global financial system has been reducing.

C) It is built on the activities of firms, banks, and financial institutions engaged in ongoing international financial activity.

Which of the following is a characteristic of a bond? A) It is a short-term loan from a commercial bank. B) It refers to capital raised by selling corporate shares. C) It refers to a debt security used to raise capital. D) It is a debt instrument on which dividends are paid.

C) It refers to a debt security used to raise capital.

Which of the following actions most likely occurs in the experimental involvement stage of internationalization? A) Managers open franchises within an economic bloc to gain valuable experience. B) Management aggressively targets the domestic market to take control over competitors. C) Managers target low-risk, culturally close markets through exporting or licensing. D) Management targets psychically close markets through collaborative ventures or FDI.

C) Managers target low-risk, culturally close markets through exporting or licensing.

Which of the following most likely supports OTC exporting their towels to Earth Waves? A) Domestic sales of OTC towels have dwindled, and a new market is needed. B) Earth Waves is located in an excellent location in central Toronto. C) OTC is an SME that can readily adapt to the demands of the Canadian market. D) The founder of OTC has numerous contacts in Canada.

C) OTC is an SME that can readily adapt to the demands of the Canadian market.

Which of the following nations is a popular base for technical and user-support services for English-, French-, and German-speaking customers throughout Europe? A) Saudi Arabia B) the United States of America C) South Africa D) Germany

C) South Africa

Which of the following, originally known as the International Bank for Reconstruction and Development, was founded to fund construction of Japan and Europe after World War II? A) The International Monetary Fund B) The Financial Stability Board C) The World Bank D) Bank for International Settlements

C) The World Bank

Which of the following activities is applicable to the final stage of exporting? A) The firm engages appropriate bankers and international trade attorneys. B) The firm screens the most attractive export markets. C) The firm modifies advertising and public relations to suit individual markets. D) The firm acquires product development and foreign language skills.

C) The firm modifies advertising and public relations to suit individual markets.

Which of the following statements is most likely to be true regarding a currency's price if the supply of the currency increases? A) The price of the currency fluctuates randomly. B) The price of the currency remains constant. C) The price of the currency lowers. D) The price of the currency increases.

C) The price of the currency lowers.

Which of the following best explains why some service industry firms most likely enter foreign markets through FDI? A) The market abroad is saturated, therefore, the other entry strategies are most likely to fail. B) The service of the firm requires tough intellectual property laws. C) The service offered by the firm requires direct contact with customers. D) The firm's service is not successful domestically, so globalization is required.

C) The service offered by the firm requires direct contact with customers.

33) Which of the following statements is true regarding the value of national currencies? A) They cannot be quantified. B) They remain highly stable. C) They fluctuate constantly. D) They change occasionally.

C) They fluctuate constantly.

Which of the following factors should be considered by ABC when trying to obtain financing for export sales? A) Where is the manufacturing facility of the Asian exporter located? B) Does the Asian lamp shade supplier sell to ABC's competitors? C) What is the creditworthiness of the Asian lamp shade exporter? D) At what bank does the Asian lamp shade supplier do business?

C) What is the creditworthiness of the Asian lamp shade exporter?

Which of the following should be considered closely before Chisholm recommends increasing production to take advantage of the current exchange rate? A) What is the expected outcome of Plas-Tex negotiations with an Asian manufacturer? B) How much revenue did Plas-Tex generate from European sales last year? C) What will be the effect on Plas-Tex if the euro depreciates more than the U.S. dollar? D) What has been the historic impact of capital flight on Plas-Tex revenues?

C) What will be the effect on Plas-Tex if the euro depreciates more than the U.S. dollar?

Which of the following should be considered before the government takes any action to correct the high rate of inflation? A) What have been the historical consequences of trade barriers in Country X? B) What is the current price of coffee in the United States and Europe? C) What will be the long-term effects of currency depreciation to Country X? D) What other industries in Country X could replace agriculture?

C) What will be the long-term effects of currency depreciation to Country X?

Which of the following is a benefit of global sourcing? A) bridging of the rich-poor divide B) minimal reliance on suppliers C) access to qualified personnel abroad D) elimination of competitors

C) access to qualified personnel abroad

A(n) ________ is the purchase of an existing company or facility. A) greenfield investment B) outsourcing arrangement C) acquisition D) offshoring arrangement

C) acquisition

During his presentation, Manu describes how a large U.S. retailer entered the Mexican market by purchasing the stores and assets of a Mexican retailer. Which of the following topics was most likely assigned to Group B? A) merger B) turnkey operation C) acquisition D) collaborative venture

C) acquisition

The purchase of an existing company or facility is known as a(n) ________. A) greenfield investment B) licensing C) acquisition D) equity joint venture

C) acquisition

A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ________ motive. A) efficiency-seeking B) novelty-seeking C) asset-seeking D) market-seeking

C) asset-seeking

Which of the following represents an infrastructural factor that firms must consider when selecting an FDI location? A) size and growth of national market B) political stability C) availability and quality of local manufacturing D) stability of currency

C) availability and quality of local manufacturing

Which of the following forms of countertrade involves payments in a combination of cash and goods? A) barter B) counterpurchase C) compensation deals D) buy-back agreements

C) compensation deals

Licensing and franchising are ________. A) ownership-based international activities B) turnkey operations C) contractual relationships D) home-based international exchange activities

C) contractual relationships

Which of the following activities can be classified as home-based international exchange activities? A) foreign direct investment B) equity-based collaborative venture C) countertrade D) franchising

C) countertrade

Which of the following is the LEAST secure method of getting in international business? A) letter of credit B) open account C) countertrade D) cash in advance

C) countertrade

Incoterms were developed by the International Chamber of Commerce in order to ________. A) provide permission to export B) standardize the cost of shipping and insuring exported items C) define how the buyer and seller share freight and insurance costs D) reduce the costs of shipping and insuring exported products

C) define how the buyer and seller share freight and insurance costs

Which of the following represents outbound home-based international exchange activities? A) foreign direct investment B) equity-based collaborative venture C) exporting D) franchising

C) exporting

A firm most likely enters the home market of a foreign competitor in order to ________. A) enter a collaborative venture with the competitor B) gain access to the competitor's government contracts C) force the competitor to expend resources to defend its market D) interfere with the competitor's marketing campaign

C) force the competitor to expend resources to defend its market

Which of the following is an example of a pull factor for a focal firm? A) arriving at the mature phase in a product's life cycle B) declining demand in the home market C) foreign government incentives D) increasing competition in the home market

C) foreign government incentives

Frezt Inc., a focal firm, is a telecommunications company based in the United States. The company maintains a relatively low degree of control over its operations in Mexico City. The company has delegated most of its distribution activities to its Mexican partners. Which of the following foreign market entry strategies is the company implementing? A) majority-owned equity joint venture B) minority-owned equity joint venture C) global sourcing D) wholly owned subsidiary (FDI)

C) global sourcing

If a computer contains a microprocessor from Costa Rica and a hard disk drive from the Philippines, the computer manufacturer, who is based in Texas and operates across Europe and West Asia, most likely uses ________ as an entry strategy. A) exporting B) franchising C) global sourcing D) licensing

C) global sourcing

The concept of creative destruction can be reasonably used by Group A to support the view that ________. A) firms that engage in offshoring are more likely than not to fail in the long run B) offshoring forces unskilled workers to seek additional education C) global sourcing creates opportunities and stimulates innovation D) outsourcing technical jobs leads to brain drain

C) global sourcing creates opportunities and stimulates innovation

A ________ is the firm's integrated network of sourcing, production, and distribution, organized on a worldwide scale and located in countries where competitive advantage can be maximized. A) demand chain B) buying center C) global supply chain D) decision making unit

C) global supply chain

A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ________. A) acquisition B) merger C) greenfield investment D) equity participation

C) greenfield investment

During his presentation, Mario describes how a large Japanese automaker built a factory in Kentucky. Which of the following topics was most likely assigned to Group C? A) horizontal integration B) equity joint venture C) greenfield investment D) consortium

C) greenfield investment

Which of the following services cannot be exported? A) travel B) education C) health care D) construction

C) health care

Which of the following refers to a risk, stemming from environmental factors, that is closely associated with global sourcing? A) weak intellectual property laws B) overreliance on suppliers C) high energy costs D) rapid turnover of skilled employees

C) high energy costs

Which of the following is most likely a disadvantage to firms who use exporting as an entry strategy? A) high cost of foreign market entry B) difficulties withdrawing from foreign markets C) high risk of low sales due to fluctuations in exchange rates D) high risk due to uncertainty in the political environment of the foreign market

C) high risk of low sales due to fluctuations in exchange rates

A firm that owns the activities performed in a single stage of its value chain is demonstrating ________. A) centralization B) decentralization C) horizontal integration D) reverse integration

C) horizontal integration

As a strategic asset, ________ is of the lowest importance to a firm. A) customer service B) R&D, design C) manufacturing of parts D) marketing and branding

C) manufacturing of parts

The World Bank Group is an example of a ________. A) factoring house B) government assistance program C) multilateral development bank D) commercial bank

C) multilateral development bank

Which of the following terms refers to the type of currency used only for domestic business transactions? A) hard currency B) convertible currency C) nonconvertible currency D) alternative currency

C) nonconvertible currency

The Bretton Woods Agreement most likely influenced the current trend towards international free trade when member countries agreed to ________. A) no longer impose trading tariffs within economic blocs B) provide low interest loans to poor countries C) not impose restrictions on currency trading D) implement a multilateral trade and investment system

C) not impose restrictions on currency trading

Business activities that would most likely be offshored are characterized by ________. A) high-value-adding activities that contribute more productively to increasing company performance B) services related to critical, long-term research projects and product development C) routine tasks that do not relate to the firm's primary service or product D) functions related to the firm's core competencies and strategic assets

C) routine tasks that do not relate to the firm's primary service or product

The growth of global sourcing has been driven by ________. A) the declining demand for highly skilled workers B) the rapidly aging population in advanced economies C) technological advances in communications D) the rising costs of international business

C) technological advances in communications

________ is a key player in global sourcing in South Asia. A) Mongolia B) North Korea C) the Philippines D) Pakistan

C) the Philippines

Which of the following is characteristic of the fixed exchange rate system? A) utilized by most advanced economies B) rates based on supply and demand forces C) value of currency is set relative to the value of another D) allows for monetary policy flexibility

C) value of currency is set relative to the value of another

________ is a type of countertrade in which the seller agrees to supply technology or equipment to construct a facility and receives payment in the form of goods produced by the facility. A) Barter B) Counterpurchase C) A compensation deal D) A buy-back agreement

D) A buy-back agreement

Which of the following is true about FDI? A) A focal firm makes minimum resource commitment as domestic firms take most of the financial responsibilities. B) A focal firm establishes a relatively permanent base in the foreign market, which increases flexibility for market and company conditions. C) A focal firm attains decreased risk due to the certainty in the foreign business environment. D) A focal firm attains maximum control by establishing a physical presence in the foreign market.

D) A focal firm attains maximum control by establishing a physical presence in the foreign market.

Which of the following statements is true about currencies? A) The British pound is an example of a nonconvertible currency. B) Hard currencies are highly unstable currencies. C) Currencies that are used for international transactions are called nonconvertible. D) Convertible currencies can be readily exchanged for other currencies.

D) Convertible currencies can be readily exchanged for other currencies

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur? A) European firms would pay more for raw materials imported from the United States. B) European consumers would purchase fewer U.S. products and services. C) Fewer Europeans would travel to the U.S. or study at U.S. universities. D) European firms would lower their prices on goods made with U.S. parts.

D) European firms would lower their prices on goods made with U.S. parts.

________ is the discounting of a foreign account receivable by transferring title of the sold item and its account receivable to an organization—that specializes in purchasing accounts receivable—for cash at a discount from the face value. A) Confirming B) Countertrading C) Forfaiting D) Factoring

D) Factoring

________ is the tendency of investors to mimic each others' actions. A) Switch trading B) Dumping C) Momentum trading D) Herding

D) Herding

Which of the following is an advantage of exporting? A) It allows focal firms to attain maximum control by establishing ownership of key assets in the foreign market. B) It is a high-control strategy that requires substantial resource commitment when compared to equity joint ventures. C) It minimizes exposure to tariffs and other trade barriers, as well as fluctuations in exchange rates. D) It increases overall sales volume, improves market share, and reduces per-unit costs of manufacturing.

D) It increases overall sales volume, improves market share, and reduces per-unit costs of manufacturing.

Which of the following statements is true of trade surplus? A) It is a negative balance of trade. B) It occurs when there is a net outflow of domestic currency to foreign markets. C) It occurs when a nation imports as much as it exports. D) It occurs when a nation's exports exceed its imports.

D) It occurs when a nation's exports exceed its imports

Which of the following should be established by Mary's Mosaics to avoid intermediary difficulties? A) It should seek a long-term joint venture partnership. B) It should use countertrade as the method of payment when doing business with foreign intermediaries. C) It should seek permanent employment with the foreign intermediary. D) It should establish a contractual clarification of responsibilities.

D) It should establish a contractual clarification of responsibilities.

Which of the following most likely supports the decision by Ciao managers to build a plant in Russia? A) The Russian government is transparent and totally corruption-free. B) Ciao would be able to take advantage of the North American Free Trade Agreement. C) Intellectual property lawsuits are common in Russia. D) Land and construction costs are relatively inexpensive in Russia.

D) Land and construction costs are relatively inexpensive in Russia

________ will internationalize via FDI because they require direct contact with customers. A) Insurance firms B) Accountants C) Construction firms D) Retailing firms

D) Retailing firms

Which of the following most likely supports a decision to enter the Asian market by building a factory near Tokyo? A) Executives at ABC want the firm to have the flexibility to reconfigure operations at the Japanese plant. B) The Japanese yen has been fluctuating over the last year and analysts do not anticipate it settling down. C) ABC managers want to delegate responsibility of much of the Japanese plant to local intermediaries. D) The CEO of ABC is willing to invest a large amount of capital and other assets to ensure success in Japan.

D) The CEO of ABC is willing to invest a large amount of capital and other assets to ensure success in Japan

Which of the following is most likely to occur if a U.S. firm outsources some of its business operations to a Japanese company, and the Japanese yen strengthens against the dollar? A) The probability of intellectual property laws being enforced would significantly decrease in Japan. B) The U.S. company will experience additional cost savings in using the services of the Japanese company. C) Outsourcing business operations to Japan would become less expensive. D) The U.S. company will experience higher costs in using the services of the Japanese company.

D) The U.S. company will experience higher costs in using the services of the Japanese company.

Which of the following statements is true of the global debt crisis? A) Fiscal imbalances are the least important source of risk and uncertainty in the global business environment. B) The smallest proportion of government debt results from national pension and healthcare programs. C) Debt has substantially decreased in major advanced economies mainly due to excessive government spending. D) When a government tries to pay down its debt, money is drawn out of the national money supply, which hinders economic activity and reduces tax revenues.

D) When a government tries to pay down its debt, money is drawn out of the national money supply, which hinders economic activity and reduces tax revenues.

Company-owned subsidiary is ________. A) accomplished by contracting with intermediaries located in the firm's home market B) typically achieved by contracting with intermediaries located in the foreign market C) a foreign intermediary that serves as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply-chain management, pricing, and customer service D) a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign market

D) a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign markeT

Contract manufacturing can best be defined as ________. A) the outsourcing to independent suppliers of business service functions such as accounting, payroll, human resource functions, travel services, IT services, customer service, or technical support B) the relocation of a business process or entire manufacturing facility to a foreign country C) sourcing from the firm's own production facilities D) an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications

D) an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specification

Which of the following best exemplifies corporate social responsibility? A) a computer firm charging a high fee for recycling old computers B) an automobile manufacturer selling low-fuel economy cars and trucks C) a telecommunications firm charging high-rates to low-income customers D) an automotive battery firm offering free technical training to students of a deprived community

D) an automotive battery firm offering free technical training to students of a deprived community

Which of the following terms refers to the difference between the total amount of money flowing into and out of a nation over the course of a year? A) momentum trading B) trade surplus C) exchange rate system D) balance of payments

D) balance of payments

If Fun Play decides to source from its own wholly owned subsidiary, it would be engaging in ________. A) offshoring B) contract manufacturing C) cause marketing D) captive sourcing

D) captive sourcing

A(n) ________ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project. A) greenfield investment B) acquisition C) merger D) consortium

D) consortium

Which of the following terms is used to refer to a focal firm's partial ownership of an existing firm? A) turnkey operation B) greenfield investment C) direct investment D) equity participation

D) equity participation

32) Which of the following terms refers to the price of one currency expressed in terms of another? A) countertrade B) monetization C) credit derivative D) exchange rate

D) exchange rate

If demand for the dollar is low, the price of the dollar is most likely to ________. A) rise B) remain stable C) fall, then rise D) fall

D) fall

The purpose of the Bretton Woods Agreement was to ________. A) enable the U.S. Government to monetarily recover after WWII B) control the fluctuating price of gold used for global trading C) oversee the importing and exporting of international traders D) govern the exchange rates of major international currencies

D) govern the exchange rates of major international currencies

Which of the following is a potential benefit that Echo can derive from global sourcing? A) cheap R&D B) access to qualified personnel in the home country C) strong intellectual property protection D) improved productivity and service

D) improved productivity and service

The levels of supply and demand for a currency in a free market vary ________ with its price. A) rarely B) occasionally C) directly D) inversely

D) inversely

Which of the following would a firm considering a corporate merger consult for issues related to the merger? A) private bank B) offshore bank C) commercial bank D) investment bank

D) investment bank

Which of the following represents a human resource factor that firms must consider when selecting an FDI location? A) intellectual property protection B) transparency and corruption C) extent of bureaucracy and red tape D) involvement of labor unions

D) involvement of labor unions

Which of the following is a major challenge often faced by focal firms that engage in global sourcing? A) no control over the quality of outputs B) domestic management of local distribution C) increased costs of business travel D) lower-than-expected cost savings

D) lower-than-expected cost saving

Which of the following foreign market entry strategies requires the most substantial resource commitment on the part of the focal firm? A) global sourcing B) licensing C) franchising D) majority-owned equity joint venture

D) majority-owned equity joint venture

In order to eliminate the need for the Asian supplier to borrow money, what could ABC do? A) renegotiate with the hotel chain to try to get them to accept a smaller order size of lamps B) advise the shade manufacturer that it is okay to use lower-cost lamp shade material C) ask the hotel chain if they are willing to extend the manufacturing time specified in their purchase agreement D) make incremental payments to the supplier as lamp shades are shipped to ABC

D) make incremental payments to the supplier as lamp shades are shipped to ABC

Focal firms that internationalize through exporting will most likely perform ________ in the home market. A) sales B) distribution C) marketing D) manufacturing

D) manufacturing

Which of the following activities is highly important to firms as a strategic asset? A) manufacturing of parts B) customer service C) sales and distribution D) marketing and branding

D) marketing and brandin

A consortium is defined as ________. A) purchase of an existing company or facility B) two partners forming a new legal entity C) an equity venture to consolidate the value chain D) multiple partners participating on a large-scale project

D) multiple partners participating on a large-scale project

The employer of Expert B can most likely be categorized as which of the following? A) investment bank B) private bank C) commercial bank D) offshore bank

D) offshore bank

International portfolio investment is characterized by ________. A) short-term foreign market speculation B) long-term administration of MNE stocks C) active control of a foreign business D) passive ownership of foreign stocks and bonds

D) passive ownership of foreign stocks and bondS

Which of the following best describes the role that the international monetary system plays with foreign firms? A) underwrite stock and bond issues and give advice on mergers B) establishes regulations for FDI financing C) oversees finance and trade in developing nations D) provides a framework for monetary and foreign exchange activities worldwide

D) provides a framework for monetary and foreign exchange activities worldwide

Favorable foreign market conditions that encourage firms to internationalize are known as ________. A) proactive factors B) reactive factors C) push factors D) pull factors

D) pull factors

When outsourcing, managers can minimize the risk of creating employee tension by ________. A) increasing the number of junior managers for foreign assignments B) increasing the annual training budget C) sending domestic managers to foreign countries for training D) reaching a consensus of managers and labor

D) reaching a consensus of managers and labor

Which of the following most likely explains why India is a popular offshoring destination? A) total absence of trade unions B) inexpensive land available for developing new MNE facilities C) lack of educated engineers, managers, and other specialists D) skilled workers who work for low wages

D) skilled workers who work for low wage

Which of the following makes a letter of credit the most popular method of payment in export transactions? A) the exporter cannot sell any letters of credit in its possession B) the method requires a limited amount of documentation and is easy to cancel C) the exporter bills customers with strong credit ratings D) the interests of the seller and buyer are protected simultaneously

D) the interests of the seller and buyer are protected simultaneously

Exporting is ________. A) the procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country B) the procurement of selected value-chain activities, including production of intermediate goods or finished products, from independent suppliers C) the transfer of state-owned industries to private concerns D) the strategy of producing products or services in one country (often the producer's home country), and selling and distributing them to customers located in other countries

D) the strategy of producing products or services in one country (often the producer's home country), and selling and distributing them to customers located in other countrieS

Focal firms typically source from external suppliers for all of the following reasons EXCEPT ________. A) the product or service obtained is non-core B) the product can be purchased inexpensively C) the supplier specializes in providing the product or service D) the supplier offers the same product to competing firms

D) the supplier offers the same product to competing firms

A devaluation is an action taken by the international monetary fund

FALSE

A form of collaboration between two firms to form a new, jointly owned enterprise is defined as a joint venture.

FALSE

A global supply chain is the compilation of business activities intended to create, produce, advertise, deliver, and support a focal firm's product or service.

FALSE

A greenfield investment is a direct investment to purchase an existing company or facility.

FALSE

A new legal entity is created during the formation of a project-based, nonequity venture.

FALSE

All business activities and processes lend themselves to global sourcing.

FALSE

All else being equal, the greater the demand for a currency, the lower its price; the lower the demand for a currency, the higher its price.

FALSE

An open account is a contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

FALSE

As a strategic asset, manufacturing of products is of high importance to a firm.

FALSE

As a strategic asset, research and development is of low importance to a firm.

FALSE

Avoiding trade barriers is classified as a market-seeking motive for FDI.

FALSE

Back-office activities consist of downstream, customer-related services.

FALSE

Capital flight from a country enhances its ability to service debt and pay for imports

FALSE

Captive sourcing is an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications.

FALSE

Compensation deal is a type of countertrade in which goods are directly exchanged without the transfer of any money.

FALSE

Equity joint ventures have the simplest management structure.

FALSE

Export Development Corporation is an example of a government assistance program in India.

FALSE

FDI is also known as international portfolio investment.

FALSE

FDI is the least taxing entry strategy that a firm can choose.

FALSE

Factoring occurs when an independent company coordinates an export order in the seller's country and makes payment for the goods in the currency of that country.

FALSE

Foreign direct investment is the least risky entry strategy.

FALSE

Front-office activities cannot be classified under BPO.

FALSE

Front-office activities typically include internal, upstream business functions.

FALSE

Given the complexities of international business, manufacturing is generally the only value-chain activity that firms outsource abroad.

FALSE

Global sourcing and exporting can be classified as equity or ownership-based international business activities.

FALSE

Global sourcing eliminates the possibility of new rivals being created in a country.

FALSE

Global sourcing hinders firms from freeing expensive analysts, engineers, and managers from routine tasks.

FALSE

Home Depot made a greenfield investment when it entered the Mexican market by purchasing Home Mart, a domestic store chain.

FALSE

Host-country governments often pressure MNEs to undertake acquisition over greenfield investments.

FALSE

If an individual buys from a supplier whose currency is depreciating against the individual's currency, the individual will have to pay a larger amount of his own currency to complete the purchase.

FALSE

In advanced economies, firms generally do not outsource value-chain activities because they fear the loss of proprietary knowledge and trade secrets.

FALSE

In international trade transactions, an open account is considered as a more secure method of payment than a letter of credit.

FALSE

Indirect exporting is exporting that is accomplished by contracting with intermediaries located in the foreign market.

FALSE

Industries that benefit the most from global sourcing are characterized by low labor intensity in product and service production.

FALSE

International expansion invariably results in a decrease in a firm's economies of scale.

FALSE

International logistics usually make use of a single transportation mode.

FALSE

International portfolio investment refers to a firm's direct control of foreign operations and is an equity-based method of foreign market entry.

FALSE

Large MNEs use exporting as a manner of initial internationalization, but once they build large manufacturing facilities abroad, the firm no longer exports many products due to the high costs involved.

FALSE

Licensing and franchising are typical examples of home-based international exchange activities.

FALSE

Momentum trading occurs when investors buy stocks whose prices have been falling and sell stocks whose prices have been rising.

FALSE

National governments require exporters to obtain a license to protect the exported goods against damage, loss, pilferage, and delay.

FALSE

One of the key advantages to an equity joint venture is that the management structure is very simple which allows for easy adjustments and modifications

FALSE

Project-based, nonequity ventures are difficult to set up.

FALSE

Providing after-sales service is typically the activity of a supplier.

FALSE

Reva Inc. is a U.S.-based automobile manufacturing company that sets up manufacturing bases in India. Its suppliers followed them to India. This is an example of a proactive move.

FALSE

Tariff and other trade barriers for exports and FDI are identical.

FALSE

The Bretton Woods Agreement was brought into existence in the late 1960s when the U.S. needed to finance government programs and the Vietnam War.

FALSE

The Central Bank is an international agency that provides loans and technical assistance to low- and middle-income countries, with the goal of reducing poverty.

FALSE

The IMF and the World Bank seldom work together.

FALSE

The Indian rupee is one of the currencies upon which the value of the SDR is based

FALSE

The Internet provides the means to export pure services.

FALSE

The ability to formulate and implement marketing plans and the extent of geographic coverage provided in the target market are evaluation criteria for an export intermediary's managerial commitment

FALSE

The bill of lading is the "birth certificate" of the goods being shipped and indicates the country where they originate.

FALSE

The challenges faced due to FDI are the same all over the world.

FALSE

The floating exchange rate system is also called a pegged exchange rate system.

FALSE

The floating exchange rate system is victim to maximum governmental intervention.

FALSE

The foreign-exchange market is located exclusively in the United States.

FALSE

The global financial system establishes the rules and procedures for exchanging national currencies in international business transactions.

FALSE

The likelihood of a firm internalizing research and development instead of outsourcing it is low.

FALSE

The monetary authority in each country that regulates the money supply, issues currency, and manages the exchange rate of the nation's currency relative to other currencies is called the World Bank.

FALSE

The more diverse the firm's global supply chain, the lesser the cost of logistics.

FALSE

The official price of gold is used to determine the value of all major currencies in the exchange rate system used for international trade today.

FALSE

The pre-internationalization stage of internationalization is followed by the committed involvement stage.

FALSE

The strategic purpose behind firms competing with rivals in their own market is to force them to expend resources and thus, defend the firm's own market

FALSE

Typically, firms tend to concentrate research and development activities abroad rather than in their home countries.

FALSE

Using individual managers in each European country is more efficient that using the same base of managers all over Europe.

FALSE

Value chain is the collection of logistics specialists and activities that provides inputs to manufacturers or retailers.

FALSE

Vertical integration is an arrangement in which the firm owns, or seeks to own, the activities performed in a single stage of its value chain.

FALSE

With increasing output, the per-unit cost of production increases.

FALSE

Countries with weak legal environments can erode key strategic assets of firms.

TRU

A merger is a special type of acquisition

TRUE

All else being equal, the greater the supply of a currency, the lower its price; the lower the supply of a currency, the higher its price.

TRUE

An increase in a nation's rate of inflation is caused by an oversupply of money and this eventually leads to a decrease in the value of the nation's currency.

TRUE

Because of the risk involved in an open account, exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter.

TRUE

By establishing a physical presence inside a country or an economic bloc, the foreign company obtains the same advantages as local firms.

TRUE

Cash in advance is the most secure method of getting paid in international business

TRUE

Central banks are categorized at the international organization level of the global monetary and financial system.

TRUE

Close collaboration with suppliers in codevelopment and codesign activities enables the focal firm to continuously tap ideas for new products, processes, technologies, and improvements.

TRUE

Companies have a tendency to prefer handling international business transactions with their own country's currency rather than with the currency of another country.

TRUE

Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.

TRUE

Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.

TRUE

Compared to small firms, large companies usually can access capital at lower cost.

TRUE

Countertrade is an elaborate and international form of the bartering system, and it accounts for one-third of all global trade.

TRUE

Countertrade refers to an international business transaction in which full or partial payments are made in kind rather than cash.

TRUE

Cross-licensing agreements are a type of project-based, nonequity venture in which the partners agree to allow access to licensed intellectual property developed by the other on preferential terms.

TRUE

Environmental challenges of global sourcing include currency fluctuations, tariffs and other trade barriers, and adverse macroeconomic events.

TRUE

Exporting and importing collectively refer to international trade.

TRUE

Exporting, licensing, and franchising require a relatively low level of managerial commitment and dedicated resources.

TRUE

FDI is the most advanced and complex foreign market entry strategy.

TRUE

Firms often establish their own sourcing operations abroad to maintain control of outsourced activities and technologies.

TRUE

Firms often follow their key customers abroad to preempt other vendors from serving them

TRUE

Firms that engage in FDI avoid problematic trade barriers because the physical presence of a foreign firm earns it the same privileges as a local firm.

TRUE

Firms that internationalize their operations in order to reap the profits of a high-growth market are exhibiting a proactive business strategy.

TRUE

Firms usually internalize those value-chain activities they consider part of their core competencies.

TRUE

Global sourcing has gained momentum in the current phase of globalization.

TRUE

Global sourcing improves agility by shedding unnecessary overhead.

TRUE

Governments encourage inward FDI because it transfers skill and technologies.

TRUE

In most high-inflation nations, interest rates are increasing while the purchasing power of the national currency is plummeting.

TRUE

In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.

TRUE

Incoterms are universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods.

TRUE

International portfolio investment refers to passive ownership of foreign securities.

TRUE

Investment banks underwrite (guarantee the sale of) stock and bond issues and advise on mergers.

TRUE

Many international firms are investing in local communities and establishing global standards of fair treatment for workers in an effort to be socially responsible.

TRUE

Merchant banks provide capital to firms in the form of shares rather than loans

TRUE

Most companies cite cost cutting as the main reason for global sourcing.

TRUE

New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.

TRUE

Offshoring is a process of creative destruction; according to this view, firms' innovative activities tend to make mature products obsolete over time.

TRUE

Offshoring is common in the service sector, including banking, software code writing, legal services, and customer-service activities.

TRUE

Push factors include unfavorable trends in the domestic market that compel firms to explore opportunities beyond national borders.

TRUE

Stability of currency must be considered before selecting the location for FDI.

TRUE

The French franc is one of the European currencies which was taken out of circulation and replaced by the euro.

TRUE

The International Monetary Fund is part of the global financial system.

TRUE

The International Monetary Fund was created through the Bretton Woods Agreement as a way to monitor the foreign exchange systems and lend money to developing economies.

TRUE

The complexity of the tax system is one of the factors to be considered in selecting FDI locations.

TRUE

The existence of a substantial mark motivates many firms to produce offerings at or near customer locations.

TRUE

The exporter usually first issues a quotation or pro forma invoice upon request by potential customers.

TRUE

The failure rate of collaborative ventures is higher in developing economies than in advanced economies.

TRUE

The integration of international financial and monetary activity can be attributed to the growing role of single-currency systems, such as the euro.

TRUE

The largest proportion of government debt results from national pension and healthcare programs

TRUE

The likelihood of a firm internalizing marketing and branding instead of outsourcing it is high.

TRUE

The most universally accepted currencies for international business transactions are the European euro, the U.S. dollar, and the Japanese yen, which are all considered hard currencies.

TRUE

The recent economic turndown is expected to pressure advanced-economy firms to seek further ways to reduce costs.

TRUE

The recent global financial crisis was contained in part because some countries use fixed exchange regimes.

TRUE

The risks and need for financing associated with international sales can be alleviated through the use of distribution channel intermediaries.

TRUE

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

TRUE

Transformational outsourcing suggests that just as the firm achieves gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, it also obtains the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects.

TRUE

When government agencies cite statistics on trade deficits, trade surpluses, and the volume of merchandise trade for individual countries, these data generally refer to firms' collective exporting and importing activities.

TRUE

When large MNEs access equity financing by selling corporate bonds or shares in stock markets, it is considered as intracorporate financing.

TRUE

While franchising facilitates rapid internationalization, compared to FDI, it affords the firm less control over its foreign operations.

TRUE

Which of the following should an international manager keep in mind about the constantly fluctuating exchange rates? A) The prices the firm charges should be quoted in the firm's currency exclusively. B) The firm and its customers should use the exchange rate as it stands on the date of each transaction, there is no scope for an agreement between them to use any other specific exchange rate. C) If goods are bought from a supplier whose currency is appreciating against the buyer's currency, the buyer will have to pay a lesser amount of their currency to complete the purchase. D) The time taken between placement and delivery of an order can at times go up to a few months, fluctuations in the exchange rate during that time can cost or earn the firm money.

The time taken between placement and delivery of an order can at times go up to a few months, fluctuations in the exchange rate during that time can cost or earn the firm money.