SG 1, SGQ 7, SGQ 6, SGQ 10.1-10.3, SGQ 5, SGQ Ch 4, SGQ 3, SGQ 8, SGQ 2

Which of the following best exemplifies a subsidiary? Crimson Inc. is owned by Delta Inc. that owns 100% of its operations. Osmium Inc. is formed by the merger of Iris Inc. and Hexagon Inc. Chromium Inc. uses trademarks, patents, and copyrights of Radon Inc. according to a strict operating agreement. Krypton Inc. pays Argon Inc. a royalty on all sales of its merchandise with Argon Inc.'s logo

Crimson Inc. is owned by Delta Inc. that owns 100% of its operations.

According to author Thomas Friedman, which of the following is true of globalism in the "flat world"?

Individuals in poor countries with limited infrastructure are able to compete with people in rich, well-developed countries

USAID

The U.S. Agency for International Development (USAID) reported that in 2018 the United States provided foreign countries with $47 billion in total economic assistance, from 13 thousand activities or projects in 211 countries (www.usaid.gov).

United Arab Emirates (UAE), in the Middle East, has a bilateral trade agreement with India, a country much richer than itself. UAE exports more products (mostly oil and gas) to India than it imports. This exchange is part of the reason for _____ for UAE. a. high trade volatility b. a trade deficit c. subsidies d. a trade surplus

a trade surplus

Parliamentary Democracy

a system of government in which a constitution outlines the separation of political power into branches, the ministers are chosen by the parliament (legislative branch)

Presidential Democracy

a system of government in which a constitution outlines the separation of political power into branches, the president (executive branch) is most often elected directly in a presidential vote

Civil Law

a system of law that provides a comprehensive code of written law that judges translate into legal principles and regulatory statutes

Theocratic Law

a system of law that relies on religious doctrine and belief

religion

a system of shared beliefs and rituals expressing the way adherents interpret their place in the universe

Which of the following best defines religion?

a system of shared beliefs, values, and rituals, expressing the way adherents understand their relationship with a Supreme Being and their purpose in life.

International Product Life-Cycle

a theory that suggests that the level of trade in a product at any given time is a function of the current stage in the product's life cycle, in which life cycle consists of introduction, maturity, standardization, and decline

Infant Industry

a theory which states that certain emerging industries need to be protected and nurtured for a period of time or they will be unable to compete against established foreign firms

Big Mac Index

a tool developed by the Economist magazine that demonstrates the over- or undervaluation of a currency as compared to the U.S. dollar using the price of the McDonalds' Big Mac

ASEAN

a trade agreement between Indonesia, Singapore, Thailand, and the Philippines

Bilateral Trade Agreement

a trade agreement between just two countries

political factors

external factors including labor laws, property rights, and patent processes

sociocultural factors

external factors including method and style of communications, religions, values and ideologies, education standards, and social structure

economic factors

external factors including the strength or weakness of markets, stability of trade cycles, specific industry conditions, customer preferences, and government's economic policies

technological factors

external factors pertaining to the technological infrastructure in a country, including intellectual infrastructure and investments, information systems, manufacturing equipment, and consumer access to technology

Anarchist

extreme individualists who believe that all government or organization of society should exist only voluntarily and that individuals should govern themselves

The Wealth of Nations

fellow Scotsman Adam Smith (see Figure 7.3), a pioneer in the new field of Economics, proposed in his 1776 book The Wealth of Nations that different countries possessed different abilities to produce goods.

According to leading economists, globalization:

has enriched the world scientifically and culturally, but also perpetuates inequality throughout the world.

Economic factors examined in PEST analysis include which of the following?

market size cost of raw materials and resources, availability and cot of land, wage rates, owrkforce productivity, market size and growth, presence of customers, local competition

Property Rights

may be difficult to enforce in some countries that keep poor records. For instance, owners of 17 properties in Tulum, a beautiful beach town in Mexico, were recently driven out by court order

The term purchasing power parity is BEST defined as a(n)

measure used to standardize the cost of living in each country.

Which of the following is not a typical function of currency?

method of keeping score, since he who dies with the most toys wins

Alcoa, an American mining and metal production company, carried out mining in Brazil. However, because of large-scale protests by local environmental and indigenous groups, the company had to cease its development activities. In this scenario, Alcoa faced a _____ in Brazil.

micro political risk

Discretionary Income

money available to spend on non-essential items.

If a Big Mac costs SFr6.50 in Switzerland (Swiss francs) and US$5.67 in the United States, and the current spot exchange rate is 1 Sfr per US$1, the Swiss franc appears to be _____.

overvalued

In 1900, Felix Hoffman was issued legal intellectual property protection for the chemical formula for aspirin, which can easily be reverse engineered. This is an example of which of the following? a. Trade secrets b. Trademark c. Copyright d. Patent

patent

royalties

payments from the licensee to the licenser consisting of a percentage of what is earned from selling such products and services

Facilitation Payments

payments made to speed up the actions that government officials are already bound to perform

In the context of foreign exchange rates, when Hong Kong fixes its currency (the Hong Kong dollar) at a rate of at $7.75 HKD per $1 USD, it can be said that Hong Kong _____ its currency to the U.S dollar.

peg

franchiser

permission to use another company's trademarks, patents, copyrights and expertise according to a strict template setting out the way it does business

licensing

permission to use another company's trademarks, patents, copyrights, or expertise

Fiat currency is BEST defined as a

piece of paper or a coin that has value merely because the issuing government says it does.

Of the following, which is a result of increased international sales?

reduced per-unit costs

horizontal structuring

reflects the way the company subdivides itself

Rule of the Inidividual

rule of governing whereby one individual is the ultimate authority and has discretion to set and enforce laws

In North Korea, Kim Jong-un is considered the supreme leader. He is the ultimate authority and has discretion to set and enforce laws in North Korea. This scenario exemplifies _____. a. the rule of the individual b. the rule of law c. a socialist economic system d. a democratic government

rule of the individual

Australia operates under common law. It can be said that, in Australia, judges _____.

rule on cases by relying on interpreting legal code and stare decisis. ; South America, Europe, and North Asia operate under civil law; India, China, and much of Africa mix customary law with civil law or common law; and the Middle East and North Africa mix religious law with other forms of law.

respect

s esteem for the worth of a culture.

exporting

sending goods or services out of a company's home country

Consumer Products

serve individuals in large, diverse communities across the world products and services used by people for their personal use

Industrial Products

serve the production and other needs of massive companies and conglomerates in manufacturing, mining, utilities, agriculture, and power generation

ethical system/ethics

sets of moral principles or values that guide and shape behavior

Tiered Pricing

sets the price in proportion to the income levels in the countries where the drug is sold

Westinghouse, an American company, entering into a contract to construct a nuclear power plant for China's State Power Investment Corp to operate would be considered which mode of foreign market entry?

turnkey project

Which aspect of culture is most important to understand well about regional consumers when introducing a new product?

uncertainty avoidance

Lesotho is a country in Southern Africa. The wealth in the country is highly concentrated in a small number of individuals. Given this information, it can be said that Lesotho has a Gini coefficient close to _____.

33.25

Which of the following BEST defines the most favored nation clause?

A clause that says that any deal reached between WTO member countries extends to every other member as well

In the context of money, what is a risk associated with fiat currencies? a. The value of fiat currencies remains constant. b. Bitcoin can undermine the value of a fiat currency. c. Fiat currencies require signed agreements between countries to be worth anything. d. A country can undermine the value of its fiat currency, rendering it valueless.

A country can undermine the value of its fiat currency, rendering it valueless.

Which of the follwing best describes high-context culture?

A culture that uses mroe implicit messaging and contextual elements to convey information

Regional Trade Agreement

A third form of trade agreement happens at the regional level and focuses on regions consisting of many nations. In general, regional trade deals are easier to reach because the countries in the agreement often share interests, cultures, and backgrounds—and sometimes borders.

Which of the following is NOT one of the four largest trading blocs covered by regional trade agreements, such as the U.S.-Mexico-Canada Agreement (USMCA)?

Argentina, Brazil, Paraguay, and Uruguay

BRICs

Brazil, Russia, India, and China

In the context of social stratification, which of the following is a difference between U.S. culture and Japanese culture?

Correct Answer: U.S. culture values accomplishment and achievement regardless of age, whereas Japanese culture values the wisdom and experience of age.

A comparative advantage is

Correct Answer: the ability of a country to conduct one economic activity more efficiently than another activity.????

CQ

Cultural intelligence is measured by a person's cultural intelligence quotient (CQ).43 A person with high CQ can differentiate features of a behavior that relate to culture, features that are universal, and features that are specific to an individual.

What term is best described as the cost advantage companies achieve as they progress down the learning curve to increase throughput and capacity, and therefore spread fixed costs over more units of output?

Economy of scale

What term is BEST described as a government's seizure of assets as a result of political action?

Expropriation

Martha attends a conference that discusses the importance of foreign aid in alleviating poverty. Which of the following is viewed by some as a problem with foreign aid? a. Foreign aid promotes innovation in those countries that receive it. b. Foreign aid frequently goes to corrupt leaders who build personal wealth rather than the infrastructure their countries need. c. Foreign aid creates a natural, healthy reliance on foreign donors. d. Similar to a car with a dead battery, poor countries require a "jump start"—an infusion of foreign aid.

Foreign aid frequently goes to corrupt leaders who build personal wealth rather than the infrastructure their countries need.

Bilateral agreements between nations are exempt from the GATT Most Favored Nation clause. These agreements are MOST likely used for what purpose? a. Further decrease tariffs and trade barriers between two countries. b. Increase free labor movement and tariffs between two countries. c. Increase tariffs and trade barriers between three or more countries. d. Increase tariffs and trade barriers between two countries.

Further decrease tariffs and trade barriers between two countries.

Hyperinflation

If inflation exceeds 50 percent in a month

Which of the following statements is true of the General Agreement on Tariffs and Trade (GATT) treaty? a. It was created with the motive to increase import and export tariffs. b. It was intended to reduce free trade in favor of protectionism. c. It provided a multilateral forum to resolve trade disputes between member countries. d. It encouraged countries to buy only from preferred partners.

It provided a multilateral forum to resolve trade disputes between member countries.

A consumer products manufacturer identifies a foreign market that reports a Gini coefficient close to zero. What does this suggest to the company? a. Exchange rate adjusted prices are competitive. b. A small group of consumers will purchase goods. c. Its moderately priced products will be affordable to the broad population. d. Goods will be sold at one price in every country.

Its moderately priced products will be affordable to the broad population.

Overvalued

Japan, by contrast, has had chronically overvalued currency for the past 20 years or more. This means that Japanese goods—like cars, computers, and TVs—are relatively more expensive than the same goods produced by foreign rivals simply because of the high price of the yen.

manage activities

Knowing how to manage activities when differences arise is key to successfully engaging in international business. strategy, structure, marketing, human resources, supply-chain, and operations, finance and accounting

OECD

Organisation for Economic Co-operation and Development (OECD). The cost of obtaining permits in India accounts for as much as 25 percent of the total costs of construction, compared with a mere 1.6 percent in OECD high-income countries.42 While accessing electricity, registering property, trading across borders and enforcing contracts improved in India from 2016 to 2017, the country is still ranked near the bottom of the list at 130 of 190 countries

saving face

Other forms of motivation include fame or honor, stability and security, avoiding disdain or saving face, providing for family, and meeting other personal needs and goals

Which of the following is a political system in which a legislative branch chooses ministers who run the government?

Parliamentary democracy

Many countries which are members of the European Union (EU) host national elections to choose its legislative body of government. These elected officials will form a cabinet amongst themselves. This is MOST likely reflective of which political system?

Parliamentary government

external factors

Political, economic, socio cultural, technological

GDP

Private consumption + investment + Government Spending + Net exports

An Asian country is attracting significant foreign direct investment as a result of a growing middleclass consumer market that demands locally-produced goods and increased jobs for its community. What will be the MOST likely economic growth signal for the country?

Strengthening of its currency.

Distribution Trap

Successful business models often piggyback on existing distribution networks and try to achieve economies of scope. Distribution networks to serve the poor often do not exist or are very inefficient.

Which of the following BEST defines "spot exchange rate"?

The immediate rate to exchange one currency for another

Which of the following BEST describes the term gross national product ?

The international income of a country

Jenny, a science scholar, has been working in the field of nanotechnology for more than seven years. She has developed a new technique that can be used to treat melanoma. She wants to acquire a patent for this technique and license it to pay off her student loans. Which of the following should Jenny consider before applying for a patent?

The patent application process is expensive and time-consuming.

Which of the following BEST defines currency exchange?

The process by which countries and companies trade one nation's currency for that of another

Arbitration

The process of reaching a binding decision through an arbitrator(a third party) outside the courts.

Which is the BEST description of importing?

The purchasing of goods or services from another country for sale in a company's home market

Depreciation/Weakening

a decrease in the value of one currency relative to another currency

Quota

a direct limit on the number of goods that can be imported into or exported from a country

Poverty

a general scarcity or lack of material possessions or money for consumption; a persistent lack of income that deprives an individual of the ability to obtain appropriate levels of food, water, clothing, shelter, health care, and/or education

Expropriation

a government's seizure of assets as a result of political action

State-Owned Enterprise

a legal entity created by a government or a representative to engage directly in commercial activities on behalf of the government

Structural Risk

a measure of a firm's difficulty when relationships with vendors do not work as expected

Operational Risk

a measure of a firm's inability to document the work remote employees do, describe the different situations they might face, and direct their responses in each scenario

Embargo

a quota that limits all forms of trade on entire categories of goods or services

For two consecutive quarters in the last half of 2016, the gross domestic product of Nigeria, in West Africa, decreased. During these two quarters, the country's output shrank, and the general well-being of its citizens declined. This scenario is an example of _____.

a recession

Capital

a resource that can serve to generate wealth, such as factories, equipment, investment accounts, software, land, and education

joint venture

a separate company jointly owned by two or more other companies

Depression

a severe, sustained period of economic contraction in one or more economies

A norm is

a social rule that governs people's interactions in a culture

Social Democracy

a socialist or collective system of government achieved by democratic elections

Microfinance

a source of financial services for entrepreneurs and small businesses lacking access to banking and entrepreneurial training

Equilibrium

a state of balance

MERCOSUR

a trade agreement between Argentina, Brazil, Paraguay, Uruguay, and Venezuela

GATT

a treaty that has the purpose of reducing trade barriers and tariffs while eliminating trade preferences and providing a multilateral forum to resolve trade disputes between member countries

Market

a virtual or physical setting where people exchange goods and services

"Flat World"

a world with free access to markets, few barriers to competition, and consistent enforcement of regulations.

Protectionist Actions

actions taken by a country to protect domestic industry

Appreciation/strengthening

an increase in the value of one currency relative to another currency

Stereotype

approximation or generalization of a national or cultural character

Law of One Price

assumption that any given good or service would carry the same price everywhere if allowed free movement across national borders

Deficit Spending

attempts to spark consumption by borrowing from investors with a promise of future repayment.

Several countries want to establish a regional trade agreement. In addition to creating an environment where cultural values are shared, trade tariffs are eliminated, and specialization occurs based on natural resource availability, nations in the agreement may be more likely to _____. a. limit currency fluctuations b. decrease global competition c. enforce political consensus d. attract foreign investment

attract foreign investment

The term which best describes the comparison between exports and imports is:

balance of trade

In contrast to overvalued (strong) currencies, undervalued (weak) currencies: a. make foreign debts easier to pay off. b. boost domestic manufacturing sectors. c. encourage citizens to buy foreign-produced products. d. make domestic production less appealing for foreign trade

boost domestic manufacturing sectors.

.___ Which of the following religions is NOT monotheistic?

buddism

A subsidiary is a

child company completely owned by the parent company.

Cuba is a country in the Caribbean with a government that allocates goods and services to workers according to their needs. The workers in the country have collective ownership of resources. The government used revolutionary means to establish society. Given this information, it can be said that Cuba is a(n) _____ state.

communist

Emerging markets

countries moving toward economic policies of open trade and free markets

customs

customs socially approved standards of behavior that are not morally significant

Malawi, a country in East Africa, has vast reserves of uranium. However, many international firms are skeptical of starting mining operations in the country. Which of the following techniques can Malawi use to attract foreign investment? a. By following a fixed exchange rate b. By nationalizing all industries c. By increasing its imports d. By making regulatory reforms

d. By making regulatory reforms

masculinity

degree of separation of traditional "masculine" values and roles from traditionally "feminine" ones

Prisoner's Dilemma

each prisoner has personal incentives to confess but only if the other person does not confess

The ratio that tells how much of one currency is needed in order to buy an equivalent amount of purchasing power in a different currency is known as the currency's _____.

exchange rate

Net Exports

exports minus imports in a given country; a proxy that allows international businesses to measure how likely a country is to be open to potential imports.

Cafédirect, a United Kingdom coffee retailer, provides a guaranteed minimum price to its coffee farmers. This certification is called

fair trade.

Cleon, a fictitious Korean cosmetics brand, recently launched its range of face oils in an entirely new market where that product has never been introduced by any brand. Exploring the new market turned out to be greatly beneficial for the company as the sales increased quickly and earned Cleon a loyal customer base. In the given scenario, Cleon has a _____. a. cash cow business b. business magnet c. first mover advantage d. venture capital investment

first mover advantage

Broston Inc., a fictitious bottling company, has state-of-the-art bottling and capping equipment in its manufacturing facility, and is capable of producing double the quantity required for the domestic market. The company plans to venture into the global market in order to maximize the utilization of the bottling plant and generate more revenue. This scenario reflects the concept of _____.

first movers?

Subsidies

government support for industries

Cumulus Inc., an American consumer electronics company, is considering setting up operations in Turkey, a country in West Asia. To determine the business opportunity in Turkey, Cumulus wants to measure the value of finished goods and services produced within Turkey's borders, including all domestic and foreign companies. Which measure would be the appropriate one for Cumulus to consider?

gross domestic product GDP

Japanese people rarely use the word "no", instead relying on circuitous responses, alternative reasoning, and follow-up questions to convey a negative response. This is an example of which cultural dimension?

high-context

All of the following are resources that can benefit a company if obtained from foreign sources EXCEPT

higher land costs.

objectives

increased sales, new resources and knowledge, reduced risk

supranational law

international law that limits the rights of sovereign governments

CSR

is a form of corporate self-regulation used to further some social good beyond the requirements of law. Such policies are created for many reasons, but if used strategically, they can have beneficial effects on both poverty alleviation and the firm's performance.

Criminal Law

laws and punishments that regulate social conduct and provide personal, property, and human rights protections

protestant work-ethic

led to a culture of rugged individualism and selfsufficiency in the United States, often called the Protestant work ethic.

Foreign Aid

money and programs provided by governments, NGOs, or corporations to help alleviate poverty

Managers from Italy and Mexico would most likely express their emotions openly during a business situation, while managers from England and Japan would most likely consider such behavior unprofessional. Which of the following Trompenaars's value dimensions explains this difference in behavior and attitude?

neutral versus affective

universalistic

objective, broad application of rules instead of consideration for individual circumstances

franchisee

permission to use another company's trademarks, patents, copyrights and expertise according to a strict template setting out the way it does business

In the context of the three steps of managing cultural differences in the workplace, the first step involves:

recognition: Recognizing cultural differences begins with assessing your factual knowledge about the other culture. In Section 8.2, we covered several different cultural dimensions and the ways they influence business. Recognizing what to expect when working with people from different cultures can be the first step in helping you to respond and react correctly. It can help you avoid offending your business partners and understand why a deal you've been trying to structure may be taking so long.

FTC

regulates all forms of online advertising, data collection, and sales, and imposes penalties for companies making false claims or violating customers' rights

Human Rights

rights that belong to every person.

How much of world trade is processed in U.S. dollars?

roughly 85 percent

A ___________ is a percentage of what is earned from selling licensed products or services.

royalty

Rule of Law

rule of governing whereby all individuals are accountable to well-defined and established laws that are fairly enforced

social mores

social mores strict norms that control moral and ethical behavior in a culture

particularistic

sunjective, higher obligation on relationships

Tariffs

taxes on foreign products that discourage imports

Introduction Stage

technically advanced products are produced and consumed in developed

For IRUN, a company that produces athletic footwear, if a decrease in the supply of workers significantly increased manufacturing wage rates in a country where the company has production facilities, this increase would likely be viewed as an external ________ threat.

technological

5.___ In comparison with government aid agencies, multilateral aid agencies:

tend to be less tied to the political self-interests of specific donor countries.

Comparative Advantage

the ability of a country to produce a specific good or service at a lower opportunity cost than a rival

Absolute Advantage

the ability of a country to produce a specific good or service more efficiently than any rival

materialism

the ability to buy and own property and merchandise.

collectivism

the belief that people should prioritize the good of society above the advancement of the individual

n the context of managing exchange rate risks, which of the following statements is true of an option?

the buyer of the option is allowed, but not obligated, to buy a certain amount of currency at a given exchange rate.

Economies of Scale

the cost advantages companies achieve as they progress down the learning curve and spread fixed costs over more units of output

Spread

the difference between the buy and sell price for a currency

FX Swap

the simultaneous purchase and sale of a given amount of currency at two different rates

Regional Cluster

the theories predicting trade as a function of national resources, or product life cycles, some theories predict the level of trade as it relates to regional cluster

stereotyping

treating an individual not as an individual

PPP

we standardize the cost of living in each country using this measure

Balance of Trade

a measure of the difference between exports from and imports into a country

Gini Coefficient

a measure of the distribution of wealth within a country

Purchasing Power Parity

a measure that compares the costs of common products and services in terms of one currency

Human Development Index

a measure used to rank countries into tiers of human development, composed of factors including life expectancy, education, and per capita income

Austria and Germany value competition and have a "can-do" attitude. Therefore, according to the GLOBE project, Austria and Germany are most likely to be ________ societies.

assertive

USMCA

a trade agreement between the United States, Mexico, and Canada

Google is one of the world s most successful companies, and has revolutionized how information is found on the Internet. The Google search algorithm is a highly valuable tool that was developed to provide users with search results on any given topic. It is believed the algorithm is derived from various factors such as website relevance, number of visits, and user location, but the public is not sure because the details were not provided to any licensing authority. This is an example of

a trade secret

Forward Exchange Rate

a transaction involving two parties that agree to exchange currency at some future date at a specific rate they agree to at the time of the deal

International Law

laws agreed on by nations; these laws are binding on nations and supersede their national laws

Tesla, an American innovation company, has received more than $5 billion from the government in the form of incentives, grants, loans, and credits. However, the U.S. government doesn t have direct control over the operations of Tesla. The government does not get direct payment, rather it gets indirect benefits from job creation and growth. Given this information, it can be said that Tesla is a _____.

state-supported company

When the value of a currency increases relative to other currencies, it is said to have

strengthened

Brazil, a country in South America has a relatively high Gini coefficient. It can be said that:

the buying power of everyone in Brazil will not increase to the same degree when output increases.

Quotas and tariffs: a. harm consumers and benefit producers by creating artificial economic inefficiencies. b. reflect a government's lack of support to its domestic firms. c. tariffs lead to lower prices for consumers and harder conditions for domestic manufacturers. d. serve as threats to domestic markets.

reflect a government's lack of support to its domestic firms.

future orientation

the degree to which a culture chooses future rather than immediate results

power distance

the degree to which subordinates in an organization accept that power is distributed unequally

Stare Decisis

the idea that they "stand on decided cases" and are bound by these earlier precedents

Translation Exposure

the impact of currency exchange rate changes on the financial statements of a company

Discount Rate

the interest rate a central bank charges commercial banks to borrow money

Reserve Requirement

the minimum amount of cash reserves a commercial bank must hold

Economic growth in a country can lead to an increase in the value of the nation's currency relative to that of other nations. In the context of the foreign exchange market, the increase in the value of the currency is referred to as _____.

appreciation

2.___ Structural risk arises as firms:

as firms realize that their vendors may have different incentives than the client.

ascribed/ascription

ascribed characteristics an individual is born with

Multiple Objective Trap

Successful ventures have a narrow focus on profitably selling beneficial products to the poor. Trying to serve multiple social objectives usually leads to failure.

Harold, an economist, asserts that international businesses are likely to be significantly affected by Great Britain's exit from the European Union (Brexit). Which of the following statements might Harold say to support his argument?

The British are likely to find it difficult to move money, people, and products across Europe.

It is common for musicians to seek legal protection for their songs. A famous and successful musician would likely transfer this legal protection to their estate, whereas after they are deceased their family members would receive royalty fees for usage of these songs in movies, product ads and/or music sales. This type of legal protection would be known as a(n)

copyright

________ is a form of intellectual property protection granted to authors of a literary, dramatic, musical, or artistic work.

copyright

8.___ In the context of emerging markets, unlike normal innovation, reverse innovation:

creates new products from the ground up to meet the specific needs of the poor.

Desmond has been charged with assault. He is punishable under _____ [what type of law]

criminal law

culture

culture a society's unique set of values and norms that govern how people live and interact with each other

high-context culture

cultures that rely on implicit messages and contextual elements to convey information

pest/pestle

To manage these objectives and determine appropriate modes of operation, companies turn to a tool called "PEST analysis." PEST stands for the political, economic, sociocultural, and technological aspects of the business environment. A PEST analysis examines these factors in order to gain insights about the company's environment. Let's explore these four factors in depth.

Freda, a researcher in the field of physics, has created a new way of operating hydraulic equipment at a minimal operational cost. She is considering acquiring a patent for her work. Her life-coach, Gandalf, suggests she should just "Keep it secret. Keep if safe." What might be a reason that he has this opinion?

To obtain a patent, she will need to disclose the full technical details of the invention to the issuing authority.

Which of the following is considered a global agreement as to what constitute human rights?

Universal Declaration of Human Rights, published by the United Nations in 1948, which include the rights of freedom, life, liberty, and security.

Which of the following best illustrates a multilateral organization?

Universal Trade Forum, an organization that fosters international trade, is funded and managed by representatives from several governments.

Which of the following is a difference between customs and social mores?

Unlike customs, social mores are deeply, morally significant.

Capitalism

an economic system in which factors of trade and production are controlled by private owners rather than by the state

Market-based Economy

an economic system in which factors of trade and production are controlled by private owners rather than by thestate; also known as capitalism

Float

an exchange rate system where the price of the currency is determined by the supply and demand of the currency in the foreign exchange market

Hexagram Inc., an American car-manufacturer, recently started its operations in India. To successfully carry out its operations in India, Hexagram should:

consider all their assumptions and culture-specific knowledge about India.

G2O

consists of finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.

When the nation of Zimbabwe faced rampant economic inflation, it became evident that the inflation reduced the local currency to be nearly worthless. As a result, the Zimbabwean government decided to officially use U.S. currency as legal tender for conducting transactions. Zimbabwe's action of abandoning its own domestic currency and using U.S. currency instead is called _____. a. dollarization b. equitization c. amortization d. delinquency

dollarization

According to Trompenaars's value dimensions, if you are born and raised in an achievement society, your source of status will most likely be based upon your ________. a. age b. father's job c. education level d. gender

education level

Global firms use freedom indices to evaluate a country's openness to trade, protection of foreign investment, government involvement in business, and __________.

enforcement of laws

State-Supported Company

government incentives, grants, tax breaks, discounted loans, and environmental credits. State backs a company either by guaranteeing loans or directly providing resources State provide incentives, grants, tax breaks, subsidies State does not have direct control State often does not get direct payment rather it gets indirect benefits from job creation and growth

The total value of final goods and services provided by companies based in a country, including all sales both foreign and domestic, is its _____.

gross national product

Extremism

holding extreme political or religious views

Limestone is one of the raw materials in the production of steel. It can be said that limestone is a(n) _____.

industrial product

Dawson Inc. is an American smartphone manufacturer. It recently started its operations in Malaysia, a country in Southeast Asia. Its main focus is on selling its smartphones to consumers. Which of the following factors of Gross Domestic Product (GDP) can help Dawson determine the likely demand for its smartphones in Malaysia?

private consumption

_____ is the primary process by which countries with a command economy change to a market economy

privatization

Mature Phase

sales increase, leading to increased competition

Decline Phase

sales spiral downward

Government Spending

spending on government expenses and investments; a good measure of the likely demand for international businesses that focus on providing goods and services to governments, such as building infrastructure and sourcing military equipment

Texas Currency Exchange, located in the Rivercenter in downtown San Antonio, is a commercial business that is involved in foreign exchange trade. Texas Currency Exchange makes money by charging a _____ on the transaction. a. spot rate b. dividend c. valence d. spread

spread

assertiveness

a measure of how competitive and aggressive a culture is

Constitutional Law

laws that set the bounds of government and governmental procedures

WIPO

an organization established in 1990 in Switzerland to help creators obtain legal protection for their work

Ethics

the moral principles of right and wrong that guide personal and organizational decision making

Gross Domestic Product

the value of finished goods and services produced within a country's borders

Harold, an economist, asserts that international businesses are likely to be significantly affected by Great Britain's exit from the European Union (Brexit). Which of the following statements might Harold say to support his argument? a. The refugee crisis in Europe is likely to worsen. b. The financial industry in Europe is likely to do business anywhere on the continent and move employees around without worrying about visas. c. The British are likely to find it difficult to move money, people, and products across Europe. d. London's position as a world financial center is likely to strengthen.

The British are likely to find it difficult to move money, people, and products across Europe.

One of the major objectives that motivates companies to engage in international business is to:

(1) to increase sales, (2) to acquire new resources and knowledge, and (3) to reduce the risk of operating in just one market.

Zero-Sum Game

(for every winner there is a loser)

The United States economy makes fewer international calls than domestic ones. Major corporations' direct investments into expansion are largely domestic. Local trade is about 80%, when compared to international activity. The nation is following what economic trend?

10 percent presumption the presumption that 10 percent of activity is conducted globally, with 90 percent being domestic

What term is best described as the idea that only about one-tenth of activity is conducted globally while the remaining activity is domestic?

10% Presumption

Which description best fits the definition of a sovereign nation?

A country that governs itself rather than being controlled by a foreign power

In the context of cultural customs, which of the following is a difference between the United States and many Latin and African countries? a. Unlike the United States, full-time work in many Latin and African countries consists of 40 hours a week. b. There is great respect for older employees in the United States, while many Latin and African countries value accomplishment and achievement regardless of age. c. A manager from the United States is likely to cut a meeting short due to another appointment, while many from Latin and African countries might choose to be late to an appointment to continue an important conversation. d. The United States accepts large differences in the distribution of authority, while many Latin and African countries have low power distance.

A manager from the United States is likely to cut a meeting short due to another appointment, while many from Latin and African countries might choose to be late to an appointment to continue an important conversation.

Which BEST describes the term "subsidy"?

A price support for domestic industries to improve their ability to compete globally

turnkey project

A project ready for immediate use, especially a project in which a company already in a particular country builds a building, plant, or machine for a foreign company

You are a business analyst working for a software development company which specializes in providing world-class medical research data analytics. You are looking for possible world locations for international expansion opportunities. According to Michael Porter, being part of a regional cluster would provide a unique competitive advantage. Which of the following is not a relevant factor in your search for an expansion target? a. A large concentration of advanced universities and medical schools b. A regional transportation hub for air, train, and marine logistics c. A city where 3 of your closest, but lagging, competitors have innovation centers d. A country which is promoting development of technical infrastructure, including fiber Internet, data centers, and power distribution

A regional transportation hub for air, train, and marine logistics

Joleen is an economist, and she strongly supports trade pattern theories of trade rather than the classic interventionalist (mercantilism and neo-mercantilism) and free-trade (comparative advantage) theories. She believes that government policies and manufacturing capabilities do not capture the entire picture when it comes to a nation's economic growth. Which of the following statements might be something that Joleen would say to support her belief? a. Protectionist policies, subsidies, and taxes form the basis for healthy trade relations. b. Economic growth primarily depends on trade specialization. c. Abundant natural resources or other factors such as labor and capital in a country form a basis for trade. d. Consumer preferences play a negligent role in adopting trading patterns.

Abundant natural resources or other factors such as labor and capital in a country form a basis for trade.

Which of the following BEST relates to the term market-based economy ?

An economic system that relies on individuals and businesses to decide how much consumption and investment to make in the economy.

Imagine you are a foreign exchange currency trader trying to predict exchange rate shifts. Which of the following is likely to result in domestic currency appreciation? a. An increase in aggregate demand for foreign goods and an equivalent increase in government debt. b. An increase in foreign direct investment and an equivalent decrease in aggregate demand for foreign goods. c. An increase in aggregate demand for foreign goods and an equivalent decrease in political stability. d. An increase in foreign direct investment and an equivalent decrease in the supply of its currency.

An increase in foreign direct investment and an equivalent decrease in the supply of its currency.

Which of the following might appear in a Cultural Profile regarding the way Arabs view time? a. Arabs view time as a valuable and limited resource. b. Arabs honor deadlines by all means. c. Deadlines and firm commitments are crucial to Arabs. d. Arabs believe important decisions cannot be rushed.

Arabs believe important decisions cannot be rushed.

Which of the following is NOT one of the three major objectives that motivates companies to engage in international business?

Avoid external factors in their domestic market

The Deepwater Horizon oil spill in the Gulf of Mexico in 2010 released 130 million gallons of crude oil into the water which resulted in harm to wildlife as well as loss of human life on the oil rig. It was owned by BP, a large British oil company, which was operating various deep-sea oil rigs in the Gulf of Mexico at that time. Although, it could be perceived as an accident and tragedy, an investigation found that BP was at fault in a number of areas such as 11 counts of misconduct and neglect, which BP plead guilty. This incident caused BP to emphasize environmentally friendly corporate polices in an effort to improve the image of the company. Which of the following is the BEST summation of the judgment? a. BP admitted to unethical behavior and pursued a public relations effort to improve how people viewed their company. b. BP denied any wrongdoing but admitted mistakes were made. c. BP admitted negligent behavior caused this accident, which was illegal, and had severe consequences to the wildlife in the area as well as crew members who lost their life. d. BP denied wrongdoing in the scenario described, but established a trust in which family of crew members could receive payouts according to the length of time their family member worked for BP

BP admitted negligent behavior caused this accident, which was illegal, and had severe consequences to the wildlife in the area as well as crew members who lost their life.

HDI

Because of the disconnect between GDP and actual well-being, several alternative measures of prosperity are also useful to international businesses. One of these, developed by the United Nations, is the Human Development Index (HDI)

Which of the following is a benefit of international business?

By diversifying the places where its products are made, a company can soften the impact of price increases or supply shortages that may occur in any one country.

Which of the following is an important consideration for companies considering doing international business? a. New AI capabilities can accurately predict future exchange rates. b. Changes in exchange rates over time can make an otherwise good business decision turn bad. c. Foreign investments will always do better than domestic ones. d. Exporting is fine, but importing is not; you should always "Buy American"

Changes in exchange rates over time can make an otherwise good business decision turn bad.

The government of China has lowered the reserve requirement in the country in 2019 and 2020 to fuel spending and investment. It can be said that: a. The availability of credit for businesses in China will reduce. b. China's banks can lend additional funds to businesses. c. China's banks can keep more money in reserve. d. The total value of loans that China's banks can make will be restricted

China's banks can lend additional funds to businesses.

In China, a large portion of the population is employed in the manufacturing sector. However, as the nation's overall income is low, little demand exists within China for the manufactured products. Yet, the government keeps its currency valuation quite low to ensure that: a. Chinese goods are comparatively cheaper in the world market. b. the currency can be abandoned easily for a higher value currency. c. Chinese goods create more competition in the world market with their high prices. d. limited number of manufacturing jobs are created in China.

Chinese goods are comparatively cheaper in the world market.

_____ is the native language of the largest number of people, while _____ is the language spoken most widely in the world.

Chinese, followed by Hindi and english, English

In the context of protecting intellectual property, which of the following is a disadvantage of having a trade secret for a tangible product?

Competitors can purchase and reverse engineer the product.

The _____ tracks the price of a specific set of consumer goods across time, watching for general price increases or decreases.

Consumer Price Index

Starbucks provides loans, R&D, training, and other support to its coffee farmers in order to increase yields and product quality. This is an example of which of the following? a. Marketing b. Reverse innovation c. Corporate social responsibility d. Foreign aid

Corporate social responsibility

Which of the following behaviors BEST reflects that social stratification is very low in the Netherlands, especially across professions?

Correct Answer: Dutch students often refer to their professor by their first name.

Volkswagen Group China, which was a joint venture established in 1984 as the Shanghai Volkswagen Automotive Co., had to adapt from German cultural aspects in terms of management and operations to a Chinese cultural approach. As Germany tends to have a low power distance culture and China would be considered to have a high power distance culture, what was the MOST likely adaptation that Volkswagen had to take into consideration when they opened a manufacturing facility in China with local employees?

Correct Answer: Recognize that little consultation is expected between managers and subordinates in China.

Viet Nam, in Southeast Asia, is experiencing a decline in Gross Domestic Product (GDP) growth rate. Which of the following is a possible a reason for its slow economic growth? a. Increase in government spending on social services b. Increase in large discretionary purchases c. Decline in private consumption and investment d. Decline in reserve requirements for national banks

Decline in private consumption and investment

Which of the following is a difference between developed markets and emerging markets?

Developed markets experience lower economic growth rates than do emerging markets. developed nations have policies of free trade and developing nations have policies that restrict free trade to protect their industries. Therefore, the answer for this question is: Developed markets have economic policies of open trade and free markets, whereas emerging markets have economic policies that restrict open trade and free markets Developed nations have more advanced economies, infrastructure and higher standards of living. Emerging economies have developing manufacturing bases with more rudimentary infrastructure

Mira is an economics professor. She is a critic of the World Economic Forum(WEF). Which of the following statements is something that Mira might say?

Elitist positions of the WEF are not representative of the majority of the world's population.

Which of the following is the simultaneous purchase and sale of a given amount of currency at two different rates?

FX Swap

In the United States, the _____ regulates all forms of online advertising, data collection, and sales, and imposes penalties for companies making false claims or violating customers' rights.

Federal Trade Commission FTC

Which of the following is NOT one of the three types of risk exposure?

Financial exposure real ones are There is transaction, translation, and economic

RemingInc. makes seals that affix to commercial equipment. They are planning to expand their business to a BRIC country, because those countries hold potential to increase global sales for the company. A vice president from the company was assigned to manage the project. The first thing the vice president wants to complete is a PEST analysis. The commission he formed has already researched the specific industry conditions, the cultural preferences, the government related legislation, the educational levels, common values of society, and the available infrastructure of the country. If you were part of the commission, what would you do next? Find out the situation of property rights, patents and labor laws. Work on information related to importing resources and ways to get them. Research about the main product in the U.S. and read the sales figures. Calculate the airfare and travel costs of the vice president and the commission.

Find out the situation of property rights, patents and labor laws.

Which of the following organizations is most likely to have low power distance? a. Finox Inc., where managers ask the opinions of and take feedback from their team members b. Giraw Inc., where managers foresee the needs of their team members and fulfill those needs c. Pilred Inc., which has a top-down leadership where managers make important decisions without consulting their team members d. Hillos Inc., which has a hierarchical structure where employees refrain from interacting openly with their managers

Finox Inc., where managers ask the opinions of and take feedback from their team members

6.___ Which of the following is NOT one of the three main problems associated with foreign aid, according to critics?

First, it may undermine innovation in those countries that receive it. Second, it frequently goes to corrupt leaders who build personal wealth rather than the infrastructure their countries need. Third, aid creates an unnatural reliance on foreign donors. Some countries even use it to enhance their efforts to get more aid rather than to make economic or social progress

The _____ is a law signed by President Jimmy Carter in 1977 that made it illegal to pay foreign government officials for their assistance in obtaining or retaining business.

Foreign Corrupt Practices Act (FCPA)

FCPA

Foreign Corrupt Practices Act (FCPA) into law on December 19, 1977. This law, the first of its kind, made it illegal to pay foreign government officials for their assistance in obtaining or retaining business.

In the context of poverty-stricken countries, which of the following statements is aligned with the views of economists with capitalistic beliefs, such as Dambisa Moyo? a. Poverty-stricken countries can be lifted using the funds provided by developed countries. b. Foreign aid is a waste of resources when it is used to alleviate poverty. c. Poverty stricken countries cannot be helped by promoting innovation. d. Free Health camps that are conducted by foreign countries help alleviate poverty significantly.

Foreign aid is a waste of resources when it is used to alleviate poverty.

Adam, a student of business administration, participates in a debate competition about the role of foreign aid in alleviating poverty. If Adam's views are aligned with the views of capitalistic economists, such as Dambisa Moyo, which of the following arguments would Adam support? a. Foreign aid may undermine innovation in those countries that receive it. b. Foreign aid creates a natural, healthy reliance on foreign donors. c. Providing free education and healthcare facilities to the poverty-stricken countries is the key to alleviate poverty. d. Like a car with a dead battery, poor countries require a "jump start"—an infusion of foreign aid

Foreign aid may undermine innovation in those countries that receive it.

Marriott International, an American hospitality company that owns several hotel brands, often chooses to enter new markets by allowing another company to use its brands and trademarks, but only under strict guidelines from Marriott on how the hotel or lodging facility will be operated. This is an example of which foreign market entry mode?

Franchising

Brazil, Russia, India, and China are notable for their:

Free Market Developments. Their primary attraction for businesses is population size; together, these countries represent more than one-third of the world's population—a vast market for products and services.

Nations are increasingly connected by trade, technology, and economic trends. Which of these set of developments influenced an increase in globalization?

Freetrade agreements, express shipping and broadband

Real/adjusted GDP

GDP that has been adjusted to account for the effect of inflation on its value

Nominal/raw GDP

GDP that has not been adjusted to account for inflation

Global Convergence

Global convergence represents the spread of common preferences across national borders. Coca-Cola, McDonald's hamburgers, Apple iPhones, Honda Accords, Microsoft Windows, IKEA bookshelves, and Disney movies are a few examples of global convergence.

Which of the following is the process of sourcing land, labor, and capital from different nations rather than obtaining everything locally?

Globalization

Cora, an American citizen, is a critic of globalization. She believes that globalization has done more harm than good. She contends that globalization has detrimental effects on developed markets. Which of the following statements supports her contention?

Globalization makes it easy for employers to move jobs to cheaper locations.

Sean, a lecturer at Oxford University, is a staunch advocate of globalization. He asserts that globalization has benefited many people scientifically, culturally, and economically. Which of the following statements supports his assertion?

Globalization makes products such as lifesaving devices, medicines, and technology less expensive, so they can be made available to a greater portion of the world population.

___ Which of the following is a working environment difference likely to be found between high power distance and low power distance?

Higher power distance means little consultation is likely to occur between managers and subordinates. Either the managers will act with unlimited authority (exercising autocratic, top-down leadership), or they will manage by anticipating and supplying the needs of those under them, as a parent does for a child (using paternalistic leadership). On the other hand, low power distance results in a more collaborative environment. Managers are open to and may solicit the ideas and opinions of their subordinates, who usually feel they are on a more equal footing with their manager. Yet, while low power distance may increase collaboration, it may also increase inefficiency

Which of the following is a difference in employee motivation between individualistic cultures and collectivist cultures? a. Unlike employees in individualistic cultures, employees in collectivist cultures want money rather than benefits as compensation. b. In collectivist cultures, job security is a principal motivator, whereas in individualistic cultures, the opportunity to overcome challenges and grow is often a main motivator for employees. c. Unlike employees in individualistic cultures, employees in collectivist cultures take more responsibility for their life independent of the organization. d. In collectivist cultures, employees are more likely to look outside the organization for training and to satisfy personal needs such as friendship, whereas in individualistic cultures, employees are more likely to rely on the organization for training and socialization.

In collectivist cultures, job security is a principal motivator, whereas in individualistic cultures, the opportunity to overcome challenges and grow is often a main motivator for employees.

A country is transitioning from a command to a market economy through deregulation of industries. How will this decision impact the market?

Increased competition

Titus Inc., a Canadian car manufacturer, is planning to start its operations in Romania, a country in Eastern Europe, and Paraguay, a country in South America. Paraguay is nearly double the size of Romania in terms of geographic area, but about 1/3 the population. Before starting its operations in the two countries, Titus wants to compare the potential opportunities in both countries in terms of economic output. Which of the following measures can Titus use for this purpose?

It allows international businesses to predict the level of discretionary income consumers are likely to have in a country and is a rough first attempt to measure the potential opportunity

Which of the following statements is true of the infant industry theory? a. It argues that adoption of the free trade policy is the best way to empower infant industries. b. It proposes the idea that new industries generate more revenue than existing ones. c. It states that all new industries need to be well established from the start to compete against foreign firms. d. It argues that certain emerging industries need to be protected for a period of time.

It argues that certain emerging industries need to be protected for a period of time.

In the context of foreign exchange rates, which of the following statements best describes the process of dollarization?

It is the process of a country abandoning its currency and using another currency instead.

In which of the following ways can an organization be structured horizontally?

It can base its subunits on specific geographic locations. Horizontal structuring reflects the way a company decides to subdivide itself. Because running a large organization with only one decision maker is impossible, companies organize subunits and then choose how decisions are delegated among them. One common practice is to base subunits on specific geographic locations. For example, some international businesses have in each country a separate division with its own decision-making power. Or a division may consist of an entire region of the world whose manager makes all major decisions and the managers in given countries of that region make minor decisions. Other companies are divided into subunits based on function, such as finance, marketing, information technology, human resources, and operations. Still others subdivide according to their various business missions, customers, or products. For example, some of IBM's divisions are Global Technology Services, Global Business Services, Systems and Technology, Software, and Global Financing.32 Each is responsible for its own business activities worldwide, and decisions are made to manage the individual product families at a global level.

Which of the following statements is true of a corporate social responsibility (CSR) approach to doing business?

It can maximize long-term profitability

Which of the following is NOT a benefit of the Rule of Law?

It clearly establishes who is the one individual with the ultimate authority and discretion to set and enforce laws

Which of the following is true of the G20?

It consists of finance ministers and central bank governors of the 19 largest economies in the world

Which of the following is true of a joint venture?

It ensures that neither of the two original companies is directly harmed by failure.

Which of the following is true of arbitrage?

It involves searching for deals on resources by exploiting differences in perceived values across geographic boundaries.

Which of the following is true of the International Monetary Fund?

It is often considered a lender of last resort to nations whose economies are in trouble and whose currencies are losing value

Which of the following statements is true of poverty science?

It is the application of scientific methods to objectively evaluate the effectiveness of activities and interventions in alleviating poverty.

Which of the following is true of the UN General Assembly?

It meets during yearly sessions to discuss issues and vote on resolutions. The General Assembly is the main assembly and meets during yearly sessions to discuss issues and vote on resolutions. Each member country has one vote. Resolutions agreed upon by the General Assembly are not binding, although a member country's reputation can be marred if it goes against a UN resolution. Issues on which the General Assembly might make recommendations include peace and security, human rights, economic development, and humanitarian assistance.

Which of the following is true of horizontal structuring?

It reflects the way a company decides to subdivide itself.

A technology firm receives a contract from the government of a developing economy to establish operations in its largest city. The firm will support the nation's goal of providing high-speed internet to every citizen. After the company has relocated, the nation experiences a period of hyperinflation brought on by government policy. How will this affect the firm? a. It will decrease in value of its assets. b. It will increase their cost of raw materials. c. It will help to increase in real wages of workers. d. It will increase the number of competitors.

It will decrease in value of its assets. ?

Jason is an artist who has over two decades of experience creating wonderful sculptures. He has obtained several copyrights for his sculptural masterpieces. In this context, which of the following statements is true of a copyright? a. Jason must have been required to register before obtaining copyrights for his work. b. Jason's copyrights must have been granted by the national government. c. Jason's copyrights will be considered active 60 days after their registrations. d. Jason's work will be protected during his lifetime, plus an additional 70 years after his death.

Jason's work will be protected during his lifetime, plus an additional 70 years after his death.

Neon Inc. wants to engage in international business to increase its sales. Travis, a manager at Neon, feels that licensing is the best way through which the company can enter a foreign market. However, Isaac, another manager at the company, is skeptical of licensing. Which of the following statements supports Isaac's skepticism? Licensing often increases the risks of not knowing the local market. Licensing transfers the ownership of the child company to the parent company. Licensing can result in lost opportunities for parent companies. Licensing can prevent companies from receiving royalties.

Licensing can result in lost opportunities for parent companies.

As a result of a public health crisis, the United Nations passed a resolution calling on its members to maintain open borders, and to support the efforts by helping the affected countries. The resolution urged member nations to collaborate with other multilateral organizations to provide humanitarian, economic, and technical support. What is a consequence of a member nation that does not participate as requested?

Loss of positive reputation in global community. can file a complaint alleging that the United States has breached one of the agreed-upon trade rules. If the ensuing investigation by the WTO shows that the United States has indeed violated the rules, it will require the United States to pay for the damage caused or risk losing its status as a member.

Which of the following is a workplace difference which might be found between low-assertiveness and highly assertive cultures?

Low-assertion cultures place greater value on teamwork and relationships than on results. Their communication tends to be more indirect and vague in order to avoid placing blame and causing confrontation

Which of the following is a difference between low-context cultures and high-context cultures?

Low-context cultures rely on the words themselves to convey messages, whereas high-context cultures use more implicit messaging.

Sustainable Practices

Many organizations are now turning to sustainable methods, meaning practices that reduce waste, such as responsible packaging and eliminating the use of plastic bags; that recycle metal, glass, plastics, and electronics; and that cut greenhouse gas emissions, such as by using solar or wind power instead of fossil fuels

Which of the following is enacted through control of interest rates, banking rules, or the volume of currency in a country?

Monetary policy

Neptune Inc., an American consumer electronics company, wants to start its operations in Bolivia, a country in South America. Bolivia has a moderately low degree of rule of law. Given this information, it can be said that:

Neptune Inc. is more likely to face the risk of having its overseas property and goods confiscated at the whim of a politician.

All of the following are resources that can benefit a company if obtained from foreign sources EXCEPT

Not only can a company sell to people in foreign countries; it may also gain specific types of resources from foreign sources that it might not be able to get in its home country, such as new knowledge about how to do something; minerals or other natural resources that cannot be found in the home country; lower costs for labor, equipment, or land; and higher-quality goods and services. In fact, most companies don't go abroad looking for just one of these resources, but for many or all of them

OECD

OECD - The Organization for Economic Co-operation and Development is an intergovernmental economic organization with 37 member countries, founded in the early 1960's to stimulate economic progress and world trade. [It is a great source for national level economic and development data]

A U.S. firm would like to enter a foreign market but wants to avoid exposure to political instability that could limit ownership of assets. The firm s priority is accessing the increasing number of consumers who value foreign products like the goods it sells, but it must be positioned as a regional entity. Which approach to market entry should the firm use for large-scale product adoption?

Operate in adjacent country and sell to target market.

Of the following, which is a result of increased international sales?

PEST factors affect the risks and opportunities of doing business in different countries and change the way companies manage their international operations in those markets. By shifting and adapting to compensate for differences in these factors across countries, companies can more effectively increase international sales, acquire valuable resources and knowledge, and reduce risk.

Which of the following would the Foreign Corrupt Practices Act (FCPA) NOT prohibit?

Payments to foreign officials to decrease the wait time for a construction permit.

Nebula Inc. is an American smartphone manufacturer that sells smartphones in 36 countries across the globe. There is a high demand for Nebula's low-end smartphones chiefly in developing nations. Its high-end smartphones have buyers mostly in developed nations. Which of the following is one of the challenges that Nebula faces as a producer of consumer products rather than industrial products?

Planning its sales strategy to suit different markets.

As stated on its website, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions "establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions." This is an example of which type of international law? a. Supranational, governing state actions. b. Private, governing individual and organizations. c. Public, governing state actions. d. Maritime, governing piracy at sea.

Private, governing individual and organizations.

According to the theory of the international product life cycle, which of the following happens when a product becomes standardized?

Production shifts from the innovating company to lower-cost competitors.

A nation offers financial incentives to its domestic firms to remain in-country rather than out source production to emerging economies. The government also institutes tariffs for firms competing with domestic market leaders. As a result, a large percent of the country's firms decide to move their investments from foreign markets to their home market. Economists would refer to this as

Protectionist policy

You want to start a bank in Nicaragua providing loans and other financial services to poor rural Nicaraguans. However, you know the risk of loan default is high due to lack of collateral that can be seized in the event of default. Which of the following might allow you to overcome this problem most effectively? a. Provide individual-based loans that contract the borrower to unpaid labor in the event of default. b. Lobby government to insure loans again default. c. Provide loans on good faith that borrowers will repay. d. Provide group-based based loans that rely on social capital and peer pressure to mitigate default risk.

Provide group-based based loans that rely on social capital and peer pressure to mitigate default risk

Which of the following is most closely related to the cost of living when making decisions in market selection? a. Law of one price b. Gross domestic product c. Purchasing power parity d. Gini coefficient

Purchasing power parity

A small drug manufacturer in the United States invents a therapeutic drug designed to prevent the spread of cancer in a patient's body. The company needs time to profit from the sale of the drug to pay off the expensive research process, so that it can compete effectively against copy-cat pharmaceutical manufacturers overseas. How might the government respond to protect the company? a. Restricting imports of competing drugs with tariffs b. Work to secure global partnerships for domestic supply of similar drugs c. Grow imports of medical equipment d. Buy a large quantity of the drug for the government stockpile.

Restricting imports of competing drugs with tariffs

CSR

Some of the tools that proactive firms use to increase their reputation as highly ethical companies include engaging in corporate social responsibility (CSR) initiatives

GNP

Specifically, GNP adds net income from foreign assets owned by nationals, also called net income receipts (NRs), and subtracts net payments to foreign owners, also called net payment outflows (NPs): GNP-GDP+NR-NP

Davos

Swiss mountain resort where Each year, WEF members gather

not-invented here

The NIH syndrome is a process in which a person or group resists accepting new ideas from culturally different persons or groups inside or outside the organization

The Philippines is a republican country in South Asia. It is a presidential democracy. It can be said that:

The Philippines has a constitution which outlines the separation of political power into branches, such as executive, judicial, and legislative.

Which of the following defines reserve requirement ?

The amount of money the nation's banks must keep on hand as a safety measure

Irwin Inc. is a currency trader company. One of the analysts just read that Japan will buy back the government bonds they released five years ago in order to release money into the economy. What can you infer from their actions? a. The central bank wants to depreciate the currency to make Japanese products cheaper for exporting. b. The central bank wants to appreciate the currency to make Japanese products cheaper for exporting. c. The central bank wants to depreciate the currency to make Japanese products more expensive for exporting. d. The central bank wants to appreciate the currency to make Japanese products more expensive for exporting.

The central bank wants to depreciate the currency to make Japanese products cheaper for exporting.

The Tata Group in India developed the Nano, the "world's cheapest car". They failed because their target market already had cheap transportation, and the Nano did not serve as a good status symbol as other cars did. Which of the following summarizes the failure in Tata's strategy?

The company assumed that a base of customers willing to pay for the car already existed, instead of working to build a lifestyle around the Nano.

The Tata Group in India developed the Nano, the "world's cheapest car". They failed because their target market already had cheap transportation, and the Nano did not serve as a good status symbol as other cars did. Which of the following summarizes the failure in Tata's strategy? a. The company was not equipped to meet the demand of the large consumer base. b. The company could not make profit under any circumstances. c. The market for the poor consisted of consumers who demand highly customized products. d. The company assumed that a base of customers willing to pay for the car already existed, instead of working to build a lifestyle around the Nano.

The company assumed that a base of customers willing to pay for the car already existed, instead of working to build a lifestyle around the Nano.

Which of the following is one of the reasons why the United States and other developed countries no longer dominate the global market the way they once did?

The ease of becoming a multinational While these huge companies are the most recognizable, they are not the most common. The majority of multinationals are actually smaller companies, often with operations in only one or two countries beyond their home market. Global trends such as political reform and technological innovation have made it easier for these smaller companies to operate as micromultinational corporations. These represent global companies with lower staffing costs, greater access to talent and expertise, and a wider choice of markets than they might find at home. They are able to capitalize on speed and agility while still communicating and coordinating across borders using low-cost (or free) products such as Skype and Zoom for conference calls, Dropbox for sharing files, LinkedIn for finding talent, PayPal for making transactions, and eBay and Amazon for sales. In fact, even individuals working out of their homes can now be multinational businesses. Thanks to globalization and the ease of becoming a multinational, the United States and other developed countries no longer dominate the global market the way they once did.

Which BEST defines transaction exposure?

The extent to which income from foreign transactions is exposed to currency fluctuations before payment is made

Sweden, a country in Northern Europe, is a social democracy. It holds democratic elections to determine who should govern. It can be said that:

The focus of the government of Sweden is promoting egalitarianism and regulating opportunistic individual behavior.

Authoritarianism

a political system characterized by concentrated power in the hands of a leader or small group of leaders with centralized power who are not constitutionally responsible to citizens for their actions

Shadow Economy

The percentage of the GDP that is underground, or "shadow" economic activity, is difficult to measure but may be an important part of a country's output. if you are paid in cash and operate outside a lawn care business, your output is difficult to track. Such informal cash transactions are generally not reported on tax forms or anywhere else where their value can be tallied. This kind of "shadow" economic activity is estimated to account for about 7 percent of the U.S. economy and about 26 percent of Greece's economy (see Figure 5.6)—and even those values are small compared with the estimated 62 percent of the Bolivian economy that operates "underground."13

Affordability Trap

The poor can afford only low-priced products because they have very little purchasing power and many competing demands on their meager income.

4.___ What does the book suggest is the main reason 50% of all outsourced projects fail?

The problem is that companies often fail to assess the operational and structural risks of offshoring jobs.

Lacord Inc., a fictitious wires and cables manufacturing company, produces water-resistant cables. It has now been ten years since the cables were first introduced in the market and five years since Lacord off-shored the manufacturing to Colombia. The product is now in its decline phase. In the context of the international product life cycle, which of the following is likely to be true in this case? a. The product will continue to be sold only in developed countries rather developing countries. b. The product will experience a decrease in sales in more affluent countries. c. The investment on the production of the product will increase. d. There will be increased focus on creating repeat buyers.

The product will experience a decrease in sales in more affluent countries.

European Union(EU)

a politico-economic union made up of 28 countries in Europe

Adam, an entrepreneur, believes that a product's life cycle is important in determining trade patterns. His company's product is currently in the introduction stage of the product life cycle. According to the theory of the international product life cycle, which of the following is most likely to be true in this case? a. The production will be the most expensive at this stage. b. There will be focus on foreign consumers. c. There will be increased competition and capital intensity. d. The per-unit manufacturing cost of the product will be less.

The production will be the most expensive at this stage.

In 2015, Iqbal and his family were displaced from their home in Syria in the wake of civil war. They sought asylum in Germany. However, Iqbal could not find employment in Germany because of a difficult political situation there. Which of the following political events is illustrated in this scenario?

The refugee crisis

In a survey conducted on the rule of law index by the World Justice Project, Denmark, a country in Western Europe, received a high score. Given the information, which of the following is most likely to be true of Denmark? a. The rule of law in Denmark reduces transactional risks, such as fraud, negligence, and bad debts. b. The rule of law in Denmark gives companies the discretion to set and enforce laws. c. The rule of law in Denmark varies according to the status of any who violate the law. d. The rule of law in Denmark states that Queen Margrethe II of Denmark is the ultimate authority.

The rule of law in Denmark reduces transactional risks, such as fraud, negligence, and bad debts.

Which of the following answers best describes the term global convergence?

The spread of common preferences across country borders

Which of the following is true of a state-supported company?

The state provides incentives, grants, tax breaks, or subsidies to the company.

Burkina Faso, a country in West Africa, has an unstable government. A Canadian mining company wants to purchase risk insurance to safeguard its interests while operating in Burkina Faso. Nate believes that the company should not purchase risk insurance. Which of the following statements might Nate use to support his belief? a. Risk insurance is usually ineffective in safeguarding the interests of companies in politically at-risk countries. b. Risk insurance often fails to protect companies against adverse events in the host country. c. The cost of buying risk insurance is high for all degrees of political risks in a given country or industry. d. There is no guarantee that Carmine Inc. will receive immediate compensation following an adverse event

There is no guarantee that Carmine Inc. will receive immediate compensation following an adverse event

Glinmer Inc. is a fictitious medium-sized company that sells car cleaning products. A few years ago, the company launched a line of air conditioner cleaning foams that is now in the maturity phase of its life cycle. According to the theory of the international product life cycle, which of the following statements is most likely to be true in this case?

There will be increased competition and investment, supporting greater exports.

Command-based System

These systems differ from market-based systems in that they value the collective above the individual; eliminate or reduce private ownership; and allocate investment, production, and consumption based on a central plan

A computer accessories manufacturer started operation a few years ago in a small city in the United States. It began as an importer of computer peripherals, but last year it started to manufacture their own. They realized a few months ago that revenues were growing, but the cost was high, leaving very little profits. Which of the following, if accomplished, would MOST likely strengthen the company's potential profit strategies?

They could move manufacturing to another country by designing the products in the U.S. and outsourcing production in Asia.

Bharti Airtel, a leading telecommunications company with operations primarily in India, changed its business model after nearing bankruptcy in 2001 to focus on less profitable, poor clients. Which of the following explains the result of Airtel's efforts in targeting the poor as consumers? a. They failed because the poor don't have any unmet needs. b. They failed because the company could not make any profit under any circumstances. c. They succeeded by making strategic and operational changes necessary to serve the larger market of the poor with lower profit per customer. d. They initially succeeded, but the market for the poor is so big that the company will never be able to meet all the demand.

They succeeded by making strategic and operational changes necessary to serve the larger market of the poor with lower profit per customer.

Which of the following is a compounding effect of the Internet and globalization?

They triggered billion-dollar investments in fiber-optic telecommunications cables.

Multilateral Aid Agency

collectively owned aid agencies

Cost of Capital Trap

To be sustainable in the long term, a business has to earn more profits than the opportunity cost of capital employed in the business. It is not enough to just cover operating costs.

Undervalued

To keep its currency cheap, China historically pegged the renminbi (renminbi is also called yuan (CNY)) to the U.S. dollar at what many Western observers considered an undervalued rate

Although Japan is a manufacturing-dependent nation, it has preferred to have an overvalued currency. Which of the following is most likely a reason why Japan would want a strong Japanese yen?

To make imports cheaper

What term is best described as a positive trade balance?

Trade surplus

The Walt Disney Company spent more than 11 years negotiating with China to obtain the necessary permissions to build a new theme park in Shanghai. Ultimately a joint venture was created between Disney and the state-controlled Shanghai Shendi Group. Disney owns 43 percent of the venture and Shanghai Shendi, 57 percent. To safe-guard its IP in a country notorious for counterfeits and poor enforcement of IP protections, Disney insisted that China improve its IP protection practices before an agreement could be made. Ultimately, Disney's biggest bargaining chip in protecting its property rights lies in the fact that both the Shanghai municipal government and the Chinese central government recognize that the park's success means increased income and tourism for them both. Which of the following did NOT occur as part of the deal to open the park in 2016?

Ultimately a joint venture was created between Disney and the state-controlled Shanghai Shendi Group. Disney owns 43 percent of the venture and Shanghai Shendi, 57 percent. To safe-guard its IP in a country notorious for counterfeits and poor enforcement of IP protections, Disney insisted that China improve its IP protection practices before an agreement could be made. In response, China granted special trademark protection to Disney, and Chinese authorities agreed to carry out a year-long campaign to eradicate Disney counterfeits as part of a wider effort to improve its reputation for safeguarding IP.55 The trademark protection agreement also designates a 2.7-square mile area around the Shanghai amusement park as a "Disney trademark key protected area," with extra enforcement.56 Ultimately, Disney's biggest bargaining chip in protecting its property rights lies in the fact that both the Shanghai municipal government and the Chinese central government recognize that the park's success means increased income and tourism for them both.57 The park opened in the summer of 2016 and has been a boom for the economy currently hosting over 10 million visitors a year—it even started driving up property prices in the city of Shanghai

Which of the following is a difference in risk-taking behavior between high uncertainty avoidance and low uncertainty avoidance cultures?

Unlike low uncertainty avoidance, high uncertainty avoidance suggests that employees are more risk averse. High uncertainty avoidance suggests that employees are more risk averse. They prefer to avoid the unknown by following established rules and regulations—even when those rules are perceived to be ineffective. Managers in cultures with high uncertainty avoidance are often more successful when they provide detailed instructions and clear guidelines. On the other hand, employees in cultures with low uncertainty avoidance typically are less loyal to their current employers because they are willing to face the uncertainty of unemployment in an attempt to find more favorable work conditions. Consumers also display their degree of uncertainty avoidance in their willingness to adopt new products early. Those with high uncertainty avoidance are less likely to try products that have not been proven safe, effective, or desirable by the majority of the market.

Internet Book DS is a large corporation that was founded less than a decade ago. It has grown in revenue, and has finally hit more than $5 billion in sales. This corporation could easily join what organization?

WEF World Economic Forum

Which of the following statements is true if a country runs a long-standing trade deficit?

When a country runs a trade deficit (importing more than it exports), it loses capital. When a country runs a trade surplus (exporting more than it imports), it gains capital. From a global perspective, payments are always balanced. The equation for the balance of payments is as follows:

Which of the following is true of regulations governing international business?

When countries improve their laws, they likely open up more opportunities for business in the country.

subsidiary

a "child" company to parent company; the parent company owns 100% of the subsidiary's operations

The rights that cover the creative works of individuals, companies and countries are increasingly important today due to the global economic shift and advancements in technology. As companies continue to expand their markets internationally, they bring with it new technology that is often the result of a tremendous amount of time and resources dedicated to creating it. These concerns are typical of most global companies in an evolving and more connected international business environment. With which international organization can these companies seek help in obtaining legal protection for their work?

World Intellectual Property Organization (WIPO)

As part of the ongoing difficulties in business relations between the U.S. and China, the U.S felt that China was exporting shrimp to the U.S. at a cost below market price which threatened U.S. shrimpers. The U.S. imposed anti-dumping duties on Chinese shrimp and China did not agree. Which organization would resolve such a dispute?

World Trade Organization

Islamic Shari'a law

a broad set of laws that govern crime, politics, contracts, and religious observances.

Which of the following BEST describes a joint venture?

a business arrangement in which two or more companies own a third, separate company

A first mover is

a business that successfully enters a new market first.

uncertainty avoidance

a business-related aspect of culture that measures how persons deal with an unknown future

Anti-dumping Actions

a class of protective tariffs imposed by a domestic government on foreign imports that are thought to be priced below fair market value

Most Favored Nation Clause

a clause applying to members of WTO which states that any deal reached between WTO member countries extends to every other member as well

Socialism

a collective form of government in which the means of production and the distribution of production are owned collectively by the community as a whole

MNC

a company with operations in more than one country

individualism

a concept that gives preference to individual freedoms, liberties, and rights

host country

a country in which an international business operates

Flat Currency

a currency that the government has declared to be legal tender but is not backed by any physical commodity

Gold Standard

a currency where the value is determined by the ability to trade it for a specified amount of gold (i.e., $1 for 1/35 of an ounce) at a government-approved ban

Corporate Social Responsibility

a form of corporate self-regulation used to further some social good beyond the requirements of law

Theocratic Government

a form of totalitarian government in which leaders rule by a mandate from God by interpreting religious law

Common Law

a legal system in which judges interpret law and set precedent for subsequent interpretation and usage

Content Requirements

a minimum level of materials, parts, or inputs that must originate in the local country rather than be imported

Poverty Science

a movement by economists, policy researchers, and business researchers to understand what types of activities and interventions might more effectively alleviate poverty

WTO

a multilateral organization designed to foster the rules of trade between nations

UN

a multilateral organization designed to increase economic and political cooperation among member countries

World Bank

a multilateral organization designed to provide financing, advice, and research to developing nations to aid their economic advancement

IMF

a multilateral organization designed to standardize global financial relations and exchange rates

OPEC

a multinational organization with the goal to unify oil producers

Recession

a period of GDP contraction that lasts for at least two consecutive quarters within 1 year

Terrorist Organization

a political group that uses unlawful violence and intimidation as a weapon to achieve its goals

Communism

a political system characterized by collective ownership of the factors of production and allocation of goods and services to workers according to their needs, argue for revolutionary means to establish a communal society

Before starting its operations in Argentina, a country in South America, Kite Inc., an American consumer electronics company, wants to assess the overall well-being of Argentina. The factors that Kite is considering are health, education, and economics. Which of the following measures can help Kite in this scenario? a. The Human Development Index b. The purchasing power parity c. The Gini coefficient d. The Consumer Price Index

a. The Human Development Index

According to some economists, such as Jeffrey Sachs, the key to lift poverty-stricken countries is provide a "jump-start" by: a. infusing foreign aid in those countries. b. undermining the incentives built into market economies. c. promoting development and innovation by its governments. d. creating a reliance on domestic donors.

a. infusing foreign aid in those countries.

In Denmark, a country in Western Europe, there is a relatively equal distribution of wealth. Given this information, it can be said that Denmark has a Gini coefficient of close to _____. a. zero (e.g. .24) b. one (e.g. 65) c. hundred (e.g. 93) d. fifty (e.g. 41)

a. zero (e.g. .24)

Macro Political Risk

adverse political actions that affect all foreign investments and operations in a host country

7.___ In the process of designing a business model to sell profitably to the poor, FoodLoaf, a fictional food processing company, aims to launch low-priced meals. The product is designed in consideration of the meager income and low purchasing power of its target market. It is evident that FoodLoaf aims to avoid the _____ in its business model to sell to the poor.

affordability trap

Unlike market-based systems, command-based systems, such as those in authoritarian states:

allocate investment, production, and consumption based on a central plan.

For more than 50 years, the U.S. has imposed limits on all forms of trade on all categories of goods or services to Cuba in an effort to weaken the Cuban government led by Fidel Castro, and now his brother Raul Castro. This strict closing off of trade is called _____.

an embargo

Peg

an exchange rate system where the price of the currency is fixed against another currency or against a basket of other currencies

Managed Float

an exchange rate system where the price of the currency is largely determined by the supply and demand in the foreign exchange market but where central banks attempt to influence the rate by actively buying and selling currencies

Totalitarianism

an extreme form of autocratic political system in which the government regulates every aspect of public and private life

WEF

an independent non-profit organization designed to improve global economic and social conditions

Consumer Price Index (CPI)

an index that tracks the price of a specific set of consumer goods across time to identify general price increases or decreases

David belongs to a faction of individualists who believe that people should be free from any system of control or government. Given this information, it can be said that this faction is most likely a group of _____.

anarchists?

Intellectual Property (IP)

any creation of the human mind

Because judicial courts in India can take years to reach a litigation decision, multinational enterprises will often use a third party to resolve disputes with suppliers or other stakeholders. This process is known as

arbitration

Foundation

are non-profit organizations that channel a wealthy donor's resources toward his or her aims

A Big Mac costs 320 pesos in Argentina but $5.66 in the United States. At the exchange rate of 80 pesos to the dollar, you would expect to pay the equivalent of $4.00 for the Big Mac. Hence, the Big Mac Index would imply that: a. the forward exchange rate is likely to decrease. b. the Argentine peso is overvalued. c. the Argentine peso is undervalued. d. the spot exchange rate is likely to decrease.

b. the Argentine peso is undervalued.

In June 2020, Novartis AG, which is a global pharmaceutical company based in Switzerland, agreed to pay fines of $345 million to the U.S. Department of Justice and the Securities and Exchange Commission (SEC) for their part in making illicit payments to position the company at an advantage to secure business deals dating as far back as 2007. Although this behavior occurred in jurisdictions outside of the United States, it was enforced under the Foreign Corrupt Practices Act (FCPA) ____ a. because Novartis is listed (NVS) on the New York Stock Exchange (NYSE). b. incorrectly since is not illegal as the company is based, and transactions occurred, outside the jurisdiction of the United States. The appeal is pending in WTO courts. c. Novartis has facilities in the United States. d. the current CEO of Novartis is a U.S. citizen.

because Novartis is listed (NVS) on the New York Stock Exchange (NYSE)

"Zombie" Company

businesses that should be dead but have been kept alive by government intervention.

First-Mover

businesses that successfully enter new markets first

In the context of managing exchange rate risks, when companies take advantage of spot exchange rates, they:

buy foreign currency at present-day rates to mitigate future transaction exposure risk.

Different economies attract various levels of foreign investment. One nation has supported foreign investment through tax cuts for many decades, which has ultimately increased their trade deficit (increased exports, decreased imports). When measuring national output, which economic indicator would BEST demonstrate these results? a. GOP b. GAP c. GNP d. GDP

c. GNP

Unlike capitalism, communism:

calls for the workers themselves to organize the economy.

A country is transitioning from a command to a market economy through deregulation of industries. How will this decision impact the market?

can sometimes affect international businesses in markets outside the country.

acquired/achievement

characteristics an individual takes on through experience

Cameroon, a country in East Africa, operates under a system of law that aims to prevent litigation and promote confidence in transactions. The law has ancient Roman origins. Under this law, judges in Cameroon are bound not by earlier rulings, but by a written constitution and detailed statutory code that is always binding. Given this information, it can be said that Cameroon operates under _____.

civil law

Bolivia, a country in South America, has a political orientation that focuses on improving the welfare of all members of society. The government believes that people should prioritize the good of society above the advancement of the individual. Given this information, it can be said that Bolivia has a(n) _____ political orientation. a. anarchist b. individualist c. collectivist d. fascist

collectivist

Legal Systems of the World North America, the United Kingdom and Australia operate under

common law

India is the world's leading producer of cotton. China is the world's top textile manufacturer due to its low labor costs and supporting industries. India is an exporter of cotton to China and an importer of designer clothing from China. Which theory explains this trade relationship? a. Regional cluster b. Comparative advantage c. Market congruence d. Product life cycle

comparative advantage

Poland has better access to skilled labor than its Central European neighbor the Czech Republic. As a result, Poland produces good quality automobiles at a lower cost than the Czech Republic. From this information, one might say that Poland has a(n) _____ to the Czech Republic in auto manufacturing

comparative advantage

The country of Thailand has been in serious foreign debt for quite some time. It has large amounts of debt denominated in dollars, euros, and pounds. In the given scenario, the government of Thailand is most likely to: a. consider overvaluing the national currency. b. make its exports cheaper. c. reduce purchase of foreign goods. d. stop employment drives in the manufacturing sector.

consider overvaluing the national currency.

Unlike fiscal policy, monetary policy: a. is enacted by Congress and the president in the United States. b. includes taxation and spending actions, such as increasing government spending or encouraging private spending. c. consists of government actions intended to spark or diminish consumption. d. consists of setting interest rates, banking rules, and the volume of currency in a country

consists of setting interest rates, banking rules, and the volume of currency in a country

The recently negotiated USMCA agreement includes changes to NAFTA to encourage regional production of automobiles by requiring that 75% of each auto be produced in North America. It also supports better jobs for U.S. manufacturing by requiring that 40-45% of each auto be made by workers earning at least $16/hour. These conditions are known as _____. a. resource requirements b. reciprocal requirements c. external interface requirements d. content requirements

content requirements

_____ allows international businesses to estimate the level of discretionary income consumers are likely to have in a country and is a rough first attempt to measure the potential opportunity? a. Net domestic product per capita b. Net national income per capita c. Gross national income per capita d. Gross domestic product per capita

d. Gross domestic product per capita

Sovereign Nation

countries that govern themselves rather than being controlled by a foreign power

Unlike gross domestic product (GDP), gross national product (GNP):

counts the output that domestic companies make abroad.

low-context culture

cultures that rely on the direct means of conveying messages with little background information

Which of the following is NOT one of the three different levels of law? a. Commercial law b. Constitutional law c. Criminal law d. Environmental law

d. Environmental law

A market-based economy is a model used by the majority of nations in the world, in which prices of goods are determined by supply and demand. What is a characteristic of this system? a. Government leaders control investment. b. Resources are owned by the state. c. Resources are controlled by private owners. d. Production and distribution are controlled done by the government.

d. Production and distribution are controlled done by the government.

In Chile, a country in South America, its citizens can own capital, make decisions about how to use it, and reap the returns or losses of their business activities. Given this information, it can be said that Chile has a _____. a. mercantilist economy b. traditional economy c. command-based economy d. market-based economy

d. market-based economy

In France and Germany, public buses are run by private companies. The government does monitor how a bus company should start-up, the kinds of licenses they need for each vehicle, the number of stops buses should make, the requirements that buses should run in government established routes, etc. Yet, in the United Kingdom, private companies can have buses that are not required to pause in every bus stop, and companies can have alternative routes. The United Kingdom s model is an example of which political system strategy?

deregulation

wthnocentrism

describes the attitude of those who operate from the assumption that thier ways of doing things are best-not matter where or under what conditions they are applied

vertical structuring

determines where in a hierarchy a company's decisions are made

Fiscal Policy

government actions intended to spark or diminish consumption

ethnocentrism

evaluation of other cultures according to preconceptions originating in the standards and customs of one's own culture.

As a result of a global pandemic, the U.S. government institutes a federally funded program to provide payments to small and medium size enterprises that pay their employees during the economic interruption. This is an example of a(n) _____ a. tax based approach. b. monetary practice. c. equity buy back. d. fiscal policy method

fiscal policy method

Some perceive that there is a return to neo-mercantilism due to the policies implemented recently by several major world powers, including the United States and India: a rise of tariffs, opposition to immigration, and tax cuts and subsidies for domestic businesses. These actions indicate that these countries are _____. a. using protectionist policies. b. focused on maintaining a trade balance rather than a trade surplus. c. focused on military development rather than economic development. d. encouraging more imports than exports

focused on maintaining a trade balance rather than a trade surplus.

Bill and Melinda Gates created a humanitarian organization that contributes to fighting diseases that primarily afflict the poor, such as polio, malaria, tuberculosis, and HIV/AIDS. The organization pays salaries to its employees and has other operating costs, but the bulk of its funds are used to help reduce poverty. This is an example of which type of poverty-fighting organization?

foundation

Which of the following is an agreement in which a parent company allows another company to use its trademarks, patents, and copyrights, but only according to a strict template?

franchising

Citron Corp., a German car manufacturer, wants to start its operations in Southeast Asia. By engaging in international business, Citron can:

gain acccess to minerals or other natural resources that cannot be found in the home country.

Ethiopia, a country in East Africa, is suppressing dissent in the Tigray region, leading to increasing tensions with Eritrea with whom they just signed a peace agreement in 2018 to end the previous war between the two nations. Should war again be declared, which of the following laws is most likely to govern the military conflict between the two nations? a. Shari'a law b. The Foreign Combat Practices Act c. The Code of Hammurabi d. The Geneva Convention

geneva convention

A firm has locations in the United States and Canada, and sells the same product in both markets. The firm has identified a new market opportunity in Asia that will require no product adaptations because of similar product preferences. What is the firm experiencing?

global convergence

What was the pre-1973 standard in which a dollar has intrinsic value because anyone holding it could trade it for a specified amount of gold at a government-approved bank?

gold standard

Currency Controls trade controls

government action to regulate the amount of currency and goods that can be traded or purchased; includes tariffs and taxes, export/import volumes, restrictions on licenses and permits, restrictions on currency exchange, fixed exchange rates, and bans on using foreign currency within the country

Cryptocurrency

have no physical form and are not backed by any government; rather they are electronic currencies that are monitored by distributed peer networks that simultaneously keep track of currency ownership and trades.

Trade Surplus

he result when a country engaged in trade exports more than it imports, also called positive trade balance exporting more than it imports

A U.S. firm wants to purchase a fleet of 500 German vans for its commercial business. The firm plans to buy Euros today to lock in the exchange rate for the future payment, which will _____. a. increase the demand for U.S. currency. b. hedge against foreign currency appreciation. c. decrease the demand for Euros. d. create peer-to-peer foreign exchange.

hedge against foreign currency appreciation.

A PEST analysis is a tool used to

help manage a company's external environment.

Fair Trade USA

helps to certify products such as tea, coffee, and sugar that come from developing countries as Fair Trade products. a trade movement which pays a guaranteed price to farmers in exchange for commodities

n American manager complains to his boss about one of his employees, who is Chinese. "She never chimes in during meetings or tells me what she thinks of the direction we are taking the division when asked." This manager likely misunderstands the Correct Answer:

high power distance in China

Shyam, a manager in a company, prefers using straightforward and concise messages to convey information to his subordinates. He does not believe in providing much background information and believes that direct communication gives him more control over a situation and allows him to take responsibility for his actions. In this scenario, Shyam most likely belongs to a:

high-assertion and low-context culture.

Vermilion Inc. is a multinational conglomerate. It has three subdivisions that deal with apparel, consumer electronics, and healthcare products. Each subdivision has the authority to make its own business decisions. This scenario illustrates _____.

horizontal structuring

As part of its business, Casper Inc., an Australian smartphone company, has opened its manufacturing plant in Sao Paulo, Brazil. In this scenario, Brazil is the _____.

host country

Translation exposure is the

impact of exchange-rate fluctuations on the company's financial statements.

Trade Deficit

importing more than it exports), it loses capital

A difference between Islam and Christianity affecting business decisions is that:

in Islam, there is a prohibition on paying or receiving interest.

Communism

in which the workers collectively owned the factors of production, and the production outputs—goods and services—were allocated to workers based on their needs.

Operational risk comes from a firm's:

inability to manage the work remote employees do.

Businesses engage in alleviating poverty with the goal of:

increasing the poor's capabilities necessary to participate in society.

In the Netherlands, personal liberties and rights are highly valued. Citizens have the right to own property and decide how to use the property. The goals of the Dutch citizens and society are often congruent. The government believes that a person pursuing his or her own self-interest most effectively promotes the good of society as well. Given this information, it can be said that the Netherlands is governed by _____ philosophy.

individualistic

In contrast to digital forms of money, a fiat currency: a. is backed by a physical commodity. b. is declared to be legal tender by a nation's government. c. represents the value of a government's store of gold. d. can be traded for a precious metal.

is declared to be legal tender by a nation's government.

Unlike monetary policy, fiscal policy:

is enacted by Congress and the president in the United States.

Future

is similar to a forward contract, but rather than purchasing it from a bank, it is traded on an exchange.

functional excellence

is the ability to work across different functions (such as finance, marketing, information technology) to ensure corporate-level operations work in different countries.

Option

is the purchase of the right to buy a certain amount of currency at a given exchange rate, but is not an obligation to buy.

Gross National Product

is the total value of final goods and services provided by a country; it equals the gross domestic product plus the net payment outflows of a country

The European Union (EU) ratified the Treaty of Lisbon in 2007 which acts as a form of international law called supranational law. Given this information, it can be said that these laws ____.

it adopted laws governing the movement of goods, persons, and services; the movement of capital; and the creation of a customs union, a unified industrial policy, and a common currency.32 New laws are enacted by the European Parliament together with the Council (a group that represents the governments of the 28 EU member states). These laws bind the member countries into the world's largest common market. EU law has the same standing as national law, granting rights to and placing obligations on the authorities in each member country as well as individuals and businesses. Authorities in each country implement EU legislation in national law and are responsible for enforcing it and guaranteeing citizens' rights under these laws

Identify a true statement about the world trade organization:

it ensures that member nations impose the minimal number of restrictions on each other

Franchising is similar to licensing in that:

it requires the franchisee to pay a royalty in return for using the franchiser's intellectual property and receiving managerial support.

Delish Inc., an American convenience food company, formed a new company called Sapid in collaboration with Alpha Foods Inc., an Indian food and beverages company as part of its global expansion strategy. The purpose of this collaboration was to develop breakfast cereals that would specifically target the needs of Indian consumers. Given this information, it can be said that Sapid is a _____. a. turnkey project c. joint venture b. franchisee d. subsidiary

joint venture

Civil Law is a type of legal system that provides a comprehensive code of written law; however, it differs from other legal systems such as Common law and Customary law because

judges are not bound by earlier rulings, and instead interpret the law based upon a written constitution and detailed statutory code that is always binding.

Mozambique, a country in Southeastern Africa, is governed by customary law. It can be said that in Mozambique, _____ a. judges are bound by a written constitution and detailed statutory code that is always binding, making business easy for foreigners. b. laws are derived from long-standing experience and practice, based on collective wisdom and shared philosophy, making business uncertain for foreigners. c. laws rely on religious doctrine and belief and are adjudicated by religious leaders, which has no effect on business practices. d. judges interpret law and set precedent for subsequent interpretation and usage, making business easy for foreigners.

laws are derived from long-standing experience and practice, based on collective wisdom and shared philosophy, making business uncertain for foreigners.

Commercial Law

laws specifying the rights and duties of individuals in their business dealings, how businesses are created and organized, and how business is transacted

Multilateral Organization

organizations formed between three or more nations to work on issues that relate to their joint interests

Primera Inc. is an American oil company. It uses the process of hydraulic fracturing for drilling natural gas from several thousands of feet below the surface of the Earth. Although hydraulic fracturing complies with business regulations, Primera Inc. has faced angry protests from environmental groups who claim that this process adversely affects the environment. Given this information, it can be said that the protesters consider Primera Inc.'s actions to be: a. ethical but illegal b. illegal and unethical c. ethical and legal d. legal but unethical

legal but unethical

Consumers in countries with relatively free markets are:

likely to have more leisure time in which to spend income.

The European Union (EU) ratified the Treaty of Lisbon in 2007 which acts as a form of international law called supranational law. Given this information, it can be said that these laws ____.

limits the rights of the soverign member states

3.___ Which of the following is NOT one of the three-fold risks of targeting poor people as consumers or employees?

low to no work ethic the actual risks are: low to no consumption, low to no cost savings, low to no respect

One of the key objectives of any international strategy is to help a company:

manage the wide differences that exist across countries and regions

The government of Georgia generally does not interfere in the value of the nation's currency. However, in 2012 the government decided to explicitly intervene by increasing the supply of money. In this scenario, the Georgian government can be said to be engaging in a _____.

managed float

Monetary Policy

manipulations in the interest rates, the banking rules, and the volume of currency in a country, with a goal to spark or diminish consumption

Non-profit Organization

many individuals are directly trying to eliminate poverty, often through special types of private organizations all profits made (if any) must be put back into the organization to further its charitable goals.

market savvy

market savvy represents a deep understanding of local context and customer needs, and the ability to cultivate that knowledge in new contexts and locations.

The United States contributes about 0.2% of our GNI as foreign aid, which, relative to other countries, is _____. a. more than any other country in total and as a percentage of GNI. b. lower than other industrial nations in total but higher than any other country and as a percentage of GNI. c. lower than other industrial nations in total and as a percentage of GNI. d. more than any other country in total but lower than most industrial nations as a percentage of GNI.

more than any other country in total but lower than most industrial nations as a percentage of GNI.

Which of the following is true of countries with low masculinity? a. more women in high-level jobs b. increase in work-related stress c. lack of concern for others d. more job conflicts

more women in high-level jobs

In the process of designing a business model to sell profitably to the poor, Zencorp, a fictional electronics manufacturer, aims to launch affordable cell phones for the poor. The company intends to provide a wide area of coverage, free damage replacement, a HD display, and high-speed mobile Internet access so that poor children can have consistent access to educational resources. It is evident that Zencorp may fail due to the _____. a. the unmet needs trap b. to cost of capital trap c. multiple objective trap d. adaptability trap

multiple objective trap

A company plans to sell its products in a foreign market. If a business analyst is examining trades agreements between the home and potential target countries, which terms would be most favorable to possible double-digit growth in profitability from increased economies of scale for the company? a. Strict quotas b. National treatment c. Moderate tariffs d. Antidumping acts

national treatment

affective

opens displays of emotion are acceptable, even in business

Open Market Operations

operations by a central bank to buy or sell government bonds, corporate bonds, or equities

In Iran, a country in the Middle East, Islamic doctrines form the basis of the government. It can be said that Iran has a(n) _____ government.

political ideology

South Sudan, a country in East Africa, has an authoritarian government. Given this information, it can be said that:

power is concentrated in the hands of a leader or a small group of leaders in South Sudan who are not constitutionally responsible to citizens for their actions.

The government of the United Kingdom, transferred the ownership of British Rail to the nongovernment sector in 1993, renouncing its own control. This is an example of _____.

privatization

The increased promotion of free-market policies in China refocused national investment toward sectors that are strategically important to the country s economic stability. The result has been

privatization of state-owned enterprises.

A common reason for a government to limit international trade is to: a. develop friendly relations with other nations that are being difficult. b. protect its infant or vital industries. c. reduce the cost of goods that are being imported. d. increase the exportation of goods while decreasing the importation of goods.

protect its infant or vital industries.

Trademark

protection agreement

importing

purchasing goods or services from another country to be sold in a company's home market

Romania and Ukraine are two countries in Eastern Europe. The price of corn in US dollars is lower in Ukraine than in Romania. This means that the consumers in Ukraine can get more corn for the same amount of money than consumers in Romania can. Which measure would be most likely to show this difference?

purchasing power parity

Despite political unrest in Pusalk, a ficticious country in South Asia, Azure Inc., a ficticious Spanish footwear company, wants to open a manufacturing plant in Pusalk, because of the availability of cheap labor in the country. Azure Inc. can safeguard its interests in Pusalk by:

purchasing risk insurance.

The government of Saudi Arabia, a country in the Middle East, created Saudi Aramco, a legal organization to carry out petroleum-related business activities on behalf of the government with the sole aim to make profits. Given this information, it can be said that Saudi Aramco is a _____.

state-owned enterprise

When the value of a currency increases relative to other currencies, it is said to have

strengthened.

corporate vision

strong corporate vision is a larger understanding of the global company and its mission and values, including how different localities can contribute strengths to compensate for one another's weaknesses

neutral

suppression of emotions in business situations; 'hard to read' in negotiations

Which of the following is a political factor examined in a PEST analysis?

tax rates, tariffs, overnment efficiency and corruption, ip laws, industrial policies, FDI policies, political risk

In January of 2018, President Trump approved the application of safeguard tariffs on$8.5 billion imports of solar panels and $1.8 billion of washing machines. For international producers of solar panels and washing machines, this move would most likely be viewed as an external economic opportunity. political threat. technological threat. socio-cultural opportunity.

technological threat?

Boko Haram is a political group with extreme religious views. It is on the U.S. Department of State s watch list. It is notorious for its acts of violence and kidnapping. It has been involved in bombings and public executions in various places, predominantly in Africa. Given this information, it can be said that Boko Haram is a(n) _____.

terrorist organization

Socialism

the central government plans the economy, owns the factors of production, and distributes the goods and services made.

National Treatment

the equal treatment of foreign and local goods

Globalization

the evolution of an integrated and interdependent world economy.

Transaction Exposure

the extent to which income from foreign transactions is exposed to currency fluctuations before payment is made

Deflation

the general decline in prices in an economy

Inflation

the general rise in prices in an economy

Which of the following is an internal management factor that companies need to consider as they decide to do business internationally?

the mode of entry into new countries, the overall strategy or reason for entering the country, the company's organizational structure, and its leadership capabilities.

Anita is an Indian who works for a multinational firm in Germany. Georgina, a German native and Anita's supervisor, never accepts the ideas proposed by Anita and is always condescending of them. Georgina is unwilling to accept the ideas of another culture and apply new knowledge during the process of idea generation. In this scenario, Georgina most likely suffers from _____. a. discrimination b. ethnocentrism bias c. low self-esteem d. the not-invented-here syndrome

the not invented here syndrome

Personal Consumption

the output consumed by private individuals and businesses; a good measure of likely demand for international businesses focused on selling goods and services to consumers

Business Investment

the output invested into future output and that will be consumed later; a good measure for international businesses that sell goods and services focused on factors of production such as manufacturing plants and equipment as well as education and training,

In a greenfield venture, _____.

the parent company builds new plants or offices and then hires employees when it enters the market

Micro Political Risk

the possibility of adverse political actions that affect only a specific sector, firm, or project

North Korea is considered a poor candidate for a strong and widely traded currency. This is because of: a. the presence of authoritarian leadership. b. the country's open economy. c. the country's high political stability. d. the country's abundant wealth.

the presence of authoritarian leadership.

10 Percent presumption

the presumption that 10 percent of activity is conducted globally, with 90 percent being domestic

Political System

the principles, laws, and procedures relating to a particular form of government

Dollarization

the process of a country abandoning their currency and using U.S. dollars or another currency instead

Deregulation

the process of removing government regulations, oversight, and involvement from an industry

Property Rights

the rights of companies and individuals to own resources, make decisions about how to use it, and reap the returns or losses of business activities

Macro political risk is

the risk associated with adverse political actions affecting all foreign investments and operations in a host country.

Political Risk

the risk that political conditions in a host country might change, negatively affecting foreign businesses

France, a country in Western Europe, has policies and regulations that govern politics and commercial transactions and punish crime. These policies and regulations are based on fairness and justice as they are understood by the people being governed. This scenario exemplifies _____.

the rule of law

Arbitrage

the search for deals on production factors across geographic boundaries

When you travel overseas, you take out money from an ATM to get locally denominated currency. When you later check your bank statement, you find that you received less of the local currency than what you expected based on the Interbank exchange rate. This is most likely due to _____. a. an ATM error. b. international bank fraud. c. being hacked. d. the spread.

the spread

Exchange Rate

the value of one currency when being converted to another currency

In Iran, a country in the Middle East, Islamic doctrines form the basis of the government. It can be said that Iran has a(n) _____ government.

theocratic

_____ is adjudicated by religious leaders.

theocratic law

Legal System

these comprise the procedures, institutions, and routines used to interpret and enforce the law

Standardized Stage

through widespread use, several things happen: production by the innovating company declines, global sales taper off, and prices fall.

MineralT, a fictional beverage company, prices its bottled water in proportion to the income levels in the countries where they are sold. It is evident that MineralT has adopted the strategy of:

tiered pricing

The Democratic People's Republic of Korea (North Korea) is a country in East Asia in which the government regulates every aspect of public and private life. The government maintains complete control over military, law, media, social organizations, education, religion, and the economy. It often uses a combination of terror tactics and propaganda to control the ways people think and feel. Given this information, it can be said that North Korea is a(n) _____ state.

totalitarian

The Democratic People's Republic of Korea (North Korea) is a country in East Asia in which the government regulates every aspect of public and private life. The government maintains complete control over military, law, media, social organizations, education, religion, and the economy. It often uses a combination of terror tactics and propaganda to control the ways people think and feel. Given this information, it can be said that North Korea is a(n) _____ state. a. republic b. anarchic c. totalitarian d. democratic

totalitarian

Free Trade

trade without government intervention or restrictions

Reproducing, distributing, and/or sharing of legally protected movies, even if the perpetrator receives no financial gain, is an example of infringement on which type of intellectual property protection? a. Trade secret b. Trademark c. Copyright d. Patent

trademark

The Nike swoosh is a well-recognized brand logo throughout the world. Several companies over the year have tried to mimic Nike's logo for their own products. If Nike brought a lawsuit against these companies, it would claim which type of intellectual property protection infringement?

trademark infringement

Privatization

transfer or sale of ownership of a certain property or industry by a government to the private (non-government) sector

Globalization has placed a pressure on companies to find the lowest cost labor in order to compete and increase profit share. A number of companies from Nike and Adidas have been accused over the years of engaging with subcontractor factories around the world at low prices due to very low wages paid to labor, in factories commonly referred to as sweatshops. Which type of practice is the use of subcontractor "sweatshops" MOST likely considered to be?

unethical conduct

greenfield venture

using the analogy of breaking ground in an empty field. When a company decides to go abroad with a wholly owned subsidiary, it can set up that subsidiary in two ways. First, the parent firm can build new plants or offices and then hire employees when it enters the market. This is known as a greenfield venture