MGT 4230 exam 1

A shadow economy refers to economic activity that might be in the form of unrecorded cash transactions, which are not reflected in the "official" figures reported by a country. True False

True

What is the central message of individualism? a) State-owned entities are more profitable for the common good. b) Individuals rely on government to organize society. c) Individual economic and political freedoms are the rules on which a society should be based. d) The few should benefit at the expense of the many. e) Harmony can only be achieved by turning our backs on dictatorships.

c) Individual economic and political freedoms are the rules on which a society should be based.

Under common law, __________ refers to the ways in which laws are applied in specific situations. a) precedent b) theocratic c) tradition d) common e) custom

e) custom

In ________ cultures, sex roles were less sharply distinguished, and little differentiation was made between men and women in the same job. In ______ cultures, sex roles were sharply differentiated, and traditional "____ values," such as achievement and the effective exercise of power, determined cultural ideals.

feminine, masculine

Not only is a good education system a determinant of national competitive advantage, but it is also an important factor guiding the ______ choices of international businesses. The recent trend to outsource information technology jobs to India, for example, is partly due to the presence of significant numbers of trained engineers in India.

location

The _____________ orientation dimension refers to the extent to which a culture programs its citizens to accept delayed gratification of their material, social, and emotional needs. It captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.

long-term vs. short-term

Folkways are the routine conventions of everyday life. Generally, folkways are actions of little moral significance. Rather, they are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like. Although folkways define the way people are expected to behave, violation of them is.....

not normally a serious matter.

One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy __________ in wealthy advanced economies such as the United States and western Europe. In the past few years, the same fears have been applied to services, which have increasingly been outsourced to nations with lower labor costs. The popular feeling is that when corporations such as Dell, IBM, or Citigroup outsource service activities to lower-cost foreign suppliers—as all three have done—they are "exporting jobs" to low-wage nations and contributing to ______ and _____ in their home nations (in this case, the United States).

- manufacturing jobs - higher unemployment and lower living standards

Half a century ago, four facts described the demographics of the global economy. 1) 2) 3) 4) All four of these facts have changed rapidly.

1) U.S. dominance in the world economy and world trade picture. 2) U.S. dominance in world foreign direct investment. 3) the dominance of large, multinational U.S. firms on the international business scene. 4) roughly half the globe—the centrally planned economies of the communist world—was off-limits to Western international businesses.

When determining the overall attractiveness of a country, there are three factors to take into consideration:

1) benefits that include size of economy and likely economic growth; 2) costs which include corruption, lack of infrastructure, legal costs; 3) risks which include political risk, economic risk, and legal risk.

The HDI is based on three measures:

1) life expectancy at birth (a function of health care); 2) educational attainment (measured by a combination of the adult literacy rate and enrollment in primary, secondary, and tertiary education); 3) whether average incomes, based on PPP estimates, are sufficient to meet the basic needs of life in a country (adequate food, shelter, and health care).

According to Hofstede's research, in feminine cultures, sex roles are sharply distinguished and there is vast differentiation between men and women in the same job. True False

False

Fifty years ago, the U.S. was struggling to find its place in the world economy and world trade picture. True False

False

An emphasis on collective action makes it easier to build teams within an organization to perform group tasks True False

True

The governments of China, Vietnam, and Laos are communist nations, but they have adopted wide-ranging, market-based economic reforms. True False

True

Transportation costs and the managerial challenge of coordinating a globally dispersed supply chain are just two of the impediments companies face when trying to achieve optimal dispersion of their products between countries. True False

True

what is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.

a culture

To account for differences in the cost of living, one can adjust GNI per capita by purchasing power. Referred to as a purchasing power parity (PPP) adjustment, it allows for

a more direct comparison of living standards in different countries.

What was the motivation for non-U.S. firms to begin investing across national borders in the 1970s? a) desire to disperse production activities to optimal locations b) host of investment opportunities in foreign nations c) shift toward a more integrated and interdependent global economy d) rise in barriers to trade and foreign direct investments e) limits imposed by government intervention in international trade

a) desire to disperse production activities to optimal locations

The main reason that gross national income figures can be misleading is because they a) don't consider differences in the cost of living. b) are determined by individual governments instead of a national institution. c) are an adjustment of the purchasing power parity (PPP). d) measure the total dollar amount of imports coming into a nation. e) allow for a direct comparison of living standards in different countries

a) don't consider differences in the cost of living.

What is one of the three measures used to determine the Human Development Index (HDI) of a country? a) life expectancy at birth b) gender ratio c) carbon footprint of the country d) wholesale price index e) factors of production

a) life expectancy at birth

Daveed is the warehouse supply manager for a privately owned auto parts distributor. It is his job to take inventory of the products the company has available and place orders for parts when supplies run low. This supply and demand form of production is an example of a __________ economy. a) market b) command c) private d) public e) socialist

a) market

According to the Human Development Index, average income adjusted for PPP should be sufficient to a) provide basic needs such as food and shelter. b) promote economic development. c) foster decentralization. d) boost social class. e) foster entrepreneurial dynamism.

a) provide basic needs such as food and shelter.

The social strata evident in a society is primarily derived from a) socioeconomic characteristics. b) evidence of competition. c) government policy. d) the collectivistic nature of the group. e) individual characteristics such as physical appearance

a) socioeconomic characteristics.

Fenton Incorporated plans to do business with a company located in the Leone Republic, a common law country. The companies have agreed to draft the business contract in the Leone Republic. Since the contract will be drafted under a common law framework, it will be a) very detailed with all contingencies spelled out. b) short. c) less expensive than a contract drafted under a civil law system. d) somewhat general since many issues are already covered in the law. e) easy to draft

a) very detailed with all contingencies spelled out.

In a pure command economy, the government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold. Consistent with the collectivist ideology, the objective of a command economy is for government to

allocate resources for "the good of society."

A country's national competitive advantage and its attractiveness as a location for international business are most influenced by a) the prevalence of communist ideals. b) a well-developed education system. c) the existence of a common religion. d) the presence of more than one language or culture. e) an emphasis on caste stratification.

b) a well-developed education system.

The system of values and norms that are shared among a group of people and together create a design for living is known as a a) society. b) culture. c) tradition. d) nationality. e) ritual.

b) culture.

The Simpson Group decided against doing business with a country in Central America because the country exercises tight control over prices and output, prohibits private enterprises from operating in most sectors of the economy, and severely restricts foreign direct investment and international trade. In other words, this country is against the practice of a) protectionism. b) deregulation. c) a command economy. d) collectivism. e) industrialization.

b) deregulation.

U.S.-based Nelson Corporation is hesitant about entering into a licensing agreement with Lapson, Inc., a company from another nation, due to the likelihood that Lapson will break a contract or expropriate property rights. What specific type of risk is Nelson Corporation trying to avoid? a) ethical b) legal c) economic d) technological e) political

b) legal

On the legal front, risks arise when a country's legal system fails to provide adequate safeguards in the case of contract violations or to protect property rights. When legal safeguards are weak, firms are more likely to

break contracts or steal intellectual property if they perceive it as being in their interests to do so.

According to globalization opponents, what is a disadvantage of globalization? a) Free trade limits countries from specializing in production of goods and services they can produce most efficiently. b) As a result of globalization, living standards of unskilled workers in developed nations have declined. c) Globalization results in companies "exporting jobs" to low-wage nations. d) Globalization makes it difficult for poor countries to export more of their agricultural production. e) As a result of free trade, the wage gap between developing and developed nations is broadening.

c) Globalization results in companies "exporting jobs" to low-wage nations.

Bethany has been assigned the task of shipping all of the exhibit parts for the trade show her company is participating in to Germany. She works with a shipping company and has all the parts packaged together in a crate that will be lifted directly from the company truck to the airplane. When the crate arrives in Germany it will go directly onto another truck and will be delivered to the convention center. What innovation in transportation is Bethany using? a) exporting b) communication c) containerization d) sustainability e) customization

c) containerization

one cost-cutting measure used by E-Z Garage Door Co. is sourcing the parts it uses from companies in Germany, Brazil, and Mexico that are more economical than home-country sources. The choice to use these sources is an example of the: a) emergence of global institutions. b) regulation of the environment. c) globalization of production. d) globalization of markets. e) company's social responsibility.

c) globalization of production

Within the context of the individual as the basic unit of a social organization, what is a manifestation of the emphasis on individualism in many Western societies? a) high degree of social stratification b) low degree of competition between individuals c) high degree of managerial mobility between companies d) low degree of entrepreneurial activity e) high degree of cooperation between individuals

c) high degree of managerial mobility between companies

In the United States, citizens have the freedom to pursue the economic and political activities that interest them. This is an example of the philosophy of a) totalitarianism. b) monarchism. c) individualism. d) anarchism. e) collectivism.

c) individualism

The state senator was found guilty of __________ when she tried to overcharge for licenses and permits from an international business that wanted to open a manufacturing plant in her state. a) public transparency b) private violation c) public action d) foreign corrupt practices e) private theft

c) public action

__________ is based on tradition, precedent, and custom. Tradition refers to a country's legal history, precedent to cases that have come before the courts in the past, and custom to the ways in which laws are applied in specific situations.

common law

Individualism also finds expression in a high degree of managerial mobility between companies, and this is not always a good thing. Although moving from company to company may be good for individual managers who are trying to build impressive résumés, it is not necessarily a good thing for _____

companies

_________ has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances. In economic terms, the most important are probably the development of commercial jet aircraft and superfreighters and the introduction of __________, which simplifies transshipment from one mode of transport to another.

containerization

Solar Solutions, a U.S.-based company, is planning to expand operations to a foreign country. Considering the factors that make a country attractive as a place in which to do business, which country should Solar Solutions consider for entry? a) Country A, which lacks democratic institutions and has a market-based economic system b) Country B, which has democratic institutions and where economic activity is heavily regulated by the state c) Country C, which has democratic institutions and where corruption is rampant d) Country D, which has democratic institutions and a market-based economic system e) Country E, which lacks democratic institutions and where property rights are always respected

d) Country D, which has democratic institutions and a market-based economic system

Madeline is always late to meetings. She knows she needs to improve her time management because it is a typical expectation in the United States. This attitude toward time is an example of a a) moral. b) belief. c) value. d) folkway. e) mores.

d) folkway.

Simpson Manufacturing produces high-end kitchen appliances and currently sources component parts for these machines from fifteen different companies around globe. They use these sources to take advantage of lower costs. This demonstrates the idea of a) globalization of markets. b) containerization of production. c) dispersal of production. d) globalization of production. e) industrialization of markets.

d) globalization of production.

In 2017, the Brazilian government transferred the state ownership of the electric company, the airports, highways, and ports to private investors to stimulate the economy. This is an example of a) communism. b) protectionism. c) nationalization. d) privatization. e) socialism.

d) privatization.

A country that has __________ lowers the risk of doing business in that country. a) a high rate of inflation b) a low standard of living c) the presence of more than one ethnic nationality d) the presence of a strong legal system e) a large number of nonperforming loans

d) the presence of a strong legal system

Why was the World Trade Organization established? a) to preserve peace through international cooperation b) to maintain order in the international monetary system c) to formulate a coordinated policy response to financial crises d) to police the international trading system e) to promote economic development

d) to police the international trading system

GNI per person figures can be misleading because they don't consider___________________. For example, although the 2019 GNI per capita of Switzerland at $83,580 exceeded that of the United States by a wide margin, the higher cost of living in Switzerland meant that U.S. citizens could actually afford almost as many goods and services as the average Swiss citizen.

differences in the cost of living

As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to

disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Which scenario best represents a mores violation? a) Showing up late to a meeting in a country where time is equivalent to money. b) Failing to shake hands in a country where shaking hands is a sign of respect. c) Wearing casual clothes to a meeting in a country where the dress code is very formal. d) Addressing a business partner by their first name in a country where appropriate titles and last names are used. e) Bribing a government official in a country where bribery is illegal

e) Bribing a government official in a country where bribery is illegal

According to globalization supporters, what is an advantage of globalization? a) Globalization provides more economic power to national governments. b) As a result of globalization, pollution levels fall significantly in the world's poorer nations. c) As a result of globalization, countries relax their labor standards. d) Globalization leads to tougher environmental regulations, which significantly decrease the costs of manufacturing enterprises. e) Globalization helps create jobs in all countries that participate in the global trading system.

e) Globalization helps create jobs in all countries that participate in the global trading system.

Dominick has analyzed the overall attractiveness of doing business with three possible countries and has determined that Country A is the best choice based on the potential for huge economic growth that should occur there because of recent advances in technology. Which factor of overall attractiveness is Dominick basing his decision on? a) costs b) risks c) norms d) behaviors e) benefits

e) benefits

A __________ economy follows the principles of collectivism as resources are allocated based on "the common good." a) mixed b) private c) supply d) market e) command

e) command

What is an example of a factor of production? a) environment b) competitors c) component parts d) government e) labor

e) labor

In Denmark, the personal income tax rate is 55 percent. One of the reasons workers are willing to pay this is because they know they will reap the benefits later in the form of free health care and a universal pension in retirement. According to Geert Hofstede, what cultural dimension does this most illustrate? a) social mobility b) class consciousness c) uncertainty avoidance d) power distance e) long-term versus short-term orientation

e) long-term versus short-term orientation

Jamal operates a company that manufactures dog food. He pays his factory workers minimum wage, while he pays his managers twice as much with profit sharing. This represents which of Hofstede's cultural dimensions? a) individualism b) masculinity c) uncertainty avoidance d) class consciousness e) power distance

e) power distance

Anastasia asked her assistant to determine the gross national income of six different countries by evaluating the GNI against the cost of living in the United States. What measure is Anastasia asking her assistant to use? a) factor endowments b) gross domestic product c) return on investment d) cash reserve ratio e) purchasing power parity

e) purchasing power parity

What political system has a government in which one political party exercises absolute control over all spheres of human life and doesn't allow opposing political parties to exist? a) right-wing totalitarianism b) democracy c) federalism d) socialism e) totalitarianism

e) totalitarianism

Those who support globalization believe that globalization stimulates

economic growth, raises the incomes of consumers, and helps create jobs in all countries that participate in the global trading system.

Substantial impediments still make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe. These impediments include

formal and informal barriers to trade between countries, barriers to foreign direct investment, transportation costs, issues associated with economic and political risk, and the sheer managerial challenge of coordinating a globally dispersed supply chain.

For now, other things being equal, a nation with democratic political institutions, a market-based economic system, and strong legal system that protects property rights and limits corruption is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions, where economic activity is

heavily regulated by the state, and where corruption is rampant and the rule of law is not respected.

Strong identification with the group is argued to create pressures for mutual selfhelp and collective action. Thus, emphasis on ________ may make it difficult to build teams within an organization to perform collective tasks.

individualism

The central message of individualism, therefore, is that individual economic and political freedoms are the ground rules on which a society should be based. This puts _________ in conflict with ________.

individualism, collectivism

Public action to violate property rights occurs when public officials, such as politicians and government bureaucrats, extort income, resources, or the property itself from property holders. This can be done through

legal mechanisms such as levying excessive taxation, requiring expensive licenses or permits from property holders, taking assets into state ownership without compensating the owners, or redistributing assets without compensating the prior owners.

______ is a term that refers to norms that are more widely observed, have greater moral significance than other norms, and are central to the functioning of a society and to its social life. This means that _____ have a much greater significance than folkways. Accordingly, violating ______ can bring serious retribution, ill will, and collapse of any business deal in the making. In many societies, certain ______ have been enacted into law.

mores

The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of

national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).

When legal safeguards are weak, firms are more likely to break contracts or steal intellectual property if they perceive it as being in their interests to do so. Thus, a legal risk can be defined as the likelihood that a trading partner will

opportunistically break a contract or expropriate property rights.

Large amounts of economic activity may be in the form of unrecorded cash transactions or barter agreements. People engage in such transactions to avoid _________. Known as the black economy or shadow economy, estimates suggest that in India it may be around 50 percent of GDP, which implies that the Indian economy is half as big again as the figures reported.

paying taxes

The World Trade Organization (WTO) (like the GATT before it) is primarily responsible for

policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states.

Hofstede's _________ dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities.

power distance

Hand in hand with deregulation has come a sharp increase in _________. __________ transfers the ownership of state property into the hands of private individuals, frequently by the sale of state assets through an auction. __________ is still ongoing today. For example, in 2017 the Brazilian government announced the _____________ of a state-owned electric company, airports, highways, ports, and the lottery.

privatization

Before the collapse of communism, the governments in most command economies exercised tight control over prices and output, setting both through detailed state planning. They also prohibited private enterprises from operating in most sectors of the economy, severely restricted direct investment by foreign enterprises, and limited international trade. Deregulation in these cases involved

removing price controls, thereby allowing prices to be set by the interplay between demand and supply; abolishing laws regulating the establishment and operation of private enterprises; and relaxing or removing restrictions on direct investment by foreign enterprises and international trade.

Because common law tends to be relatively ill specified, contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. In civil law systems, however, contracts tend to be much

shorter and less specific because many of the issues are already covered in a civil code.

All societies are stratified on a hierarchical basis into social strata. These strata are typically defined on the basis of

socioeconomic characteristics such as family background, occupation, and income

In the archetypal pure market economy, all productive activities are privately owned, as opposed to being owned by the state. The goods and services that a country produces are not planned by anyone. Production is determined by the interaction of

supply and demand and signaled to producers through the price system.

The opposite of collectivism, individualism refers to a philosophy that an individual should have freedom in his or her economic and political pursuits. In contrast to collectivism, individualism stresses that

the interests of the individual should take precedence over the interests of the state

______ is a form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties.

totalitarianism

In many respects, the governments of China, Vietnam, and Laos are communist in name only because those nations have adopted

wide-ranging, market-based economic reforms.