Test Bank Int Business

On an island nation, citizens are restricted in how much land they can own if it creates opposition to the rule of the "common good." What is the political system of the island based on?

collectivism

In one country, people are traditionally conscious about their socioeconomic backgrounds. This in turn regulates their relationships with members of other classes. What will most likely result from this heightened class consciousness?

An antagonistic relationship will exist between management and labor classes

Which statement best supports the claim that greater uniformity replaces diversity in the context of global markets?

As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating some homogeneity across markets.

A decade ago, the government of a developing country decided to democratize the country's economy. As a result, today the country is experiencing rapid economic advancement and societal changes favorable to international business. Which change is most likely to occur next in this country?

As the country gets richer, there will be a shift in the society from "traditional" to "secular rational" values.

As a result of globalization, international businesses can avoid the haggle of currency exchanges during cross-border transactions.

False

The lowering of trade and investment barriers creates fewer opportunities for companies to have the world as their market.

False

In order to purchase the parts from its supplier, Fromer Manufacturing had to agree with all of the terms set forth in the document the supplier provided which detailed the rights and obligations, of the supplier and Fromer Manufacturing's rights and obligations. This document is a type of

contract

Salty 'n Crunchy Popcorn Inc. believes that the sole purpose of its existence is to maximize profits for its stockholders. The firm has often been criticized for not engaging in any social investments. However, the firm has been praised for abiding by the laws while earning profits. Which philosophical approach to ethics does this demonstrate?

Friedman doctrine

Gross national income figures should be carefully evaluated because they don't take into account differences in

cost of living

Which of these situations shows how concerns over national sovereignty can act as an impediment to regional economic integration?

Great Britain refusing to adopt the common currency of the European Union, the euro

Water Wonders is a manufacturing company that makes large-scale fish tanks. It has customers, investors, vendors, and competitors from all across the globe. Which of these Water Wonders business associates would be an internal stakeholder?

Gretchen, a prominent member of the top management at Water Wonders

Cost reduction pressures tend to be particularly intense in industries that

create products that serve universal needs.

What is considered a support activity in the operations of a firm?

creation and maintenance of information systems

Three South American countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common external trade policy and charge the same tariffs. Which level of economic integration best describes this arrangement?

customs union

Sanjay purchased a computer for $500 in 2018. Compared to the $900 computer that he purchased in 2011, the new one seems better in terms of the price he has paid and the power of the microprocessor technology. This is best explained by

Moores law

One drawback of a countertrade agreement is that

One drawback of a countertrade agreement is that

If Italy exports vast quantities of footwear to Germany, selling them at below their costs of production, it would be an example of

d

A company is a devout follower of Confucian ethics. Hence, it hires people who live by similar principles. What is most likely to be a characteristic of this company?

The cost of doing business will be low for those companies that enter into a business with it.

A country emphasizes individual performance and achievements in every sphere of society. How might this affect the business environment in this country?

The employees in this country may lack loyalty and commitment to a company.

What is the first step in a typical international trade transaction?

The importer places an order with the exporter and asks the exporter if they would be willing to ship under a letter of credit.

While the countries of Canada and Mexico are committed to removing all barriers to the free flow of goods and services between each other, they are independent in their trade policy dealings with other countries. This represents a(n)

free trade area.

Firms that pursue a(n) __________ strategy focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies.

global standardization

Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.

True

One criticism of globalization is that falling trade barriers encourage companies to locate manufacturing activities in another country to take advantage of lower wage rates.

True

The range of problems that a manager in an international business faces is typically more complex than those faced by a manager in a domestic business.

True

Which statement reflects the changing demographics of the global economy?

U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports.

In Samuel Huntington's thesis, global terrorism is a product of the

clash of value systems and ideology between civilizations.

A country follows a system of social stratification that allows for flexibility in terms of social mobility. In this system of open stratification, the status of a person is solely determined by his or her own socioeconomic achievements. This country is most likely to be following what system of social stratification?

class

Trish is leading the team at SunBelt Sports in creating a formal statement of the ethical priorities the business will adhere to. What type of document is Trish and her team working on?

code of ethics

Ivory Piano is headquartered in Michigan and has production plants in Mexico and Indonesia. Ivory Piano is an example of

a multinational enterprise.

If Switzerland decides it wants to make it difficult for other countries to export cheese to Swiss businesses and creates pasteurization standards that don't exist anywhere else in the world, it would be implementing __________ policies as a way to restrict these imports.

administrative trade

During the 1970s and 1980s, Japan had one of the most dynamic economies in the world. Since that time, economic growth has stagnated due to

an aging population

To calculate purchasing power parity, gross national income is adjusted based on

average daily exchange rates in the selected nation.

In one country, citizens are restricted from moving out of the stratum they are born into. Also, individuals are allowed to engage only in the same occupation as their parents. The system of social stratification being practiced is a __________ system

caste

According to economist Hernando de Soto, the key issue in the relationship between capitalism and property rights is the inability of owners to

establish legal title to the property they own.

The risks of doing business are most likely to be the highest in a country that

faces frequent changes in government and government policy.

A strategy that focuses primarily on increasing the manufacturing rate of a product is referred to as a low-cost strategy.

false

Moving down the experience curve means higher costs of increasing value and lower levels of profitability for a firm.

false

Morning Fresh Skin Care, a U.S.-based beauty products manufacturer, has set up a manufacturing plant in Hong Kong. This is an example of

foreign direct investment

Shondra Watson, a U.S.-based business executive, paid the equivalent of $30 to an official of a European country to expedite the overnight delivery of critical documents necessary to expedite a work permit. When questioned, Shondra claimed this was a way to facilitate the performance of an obligation that was already agreed upon. The $30 is an example of

grease payment

When Sheng converses with his colleagues in the multinational company that he works for, he finds that he is the only one who believes in and talks about things such as reincarnation and the spiritual progression of each person's soul. Sheng's religion is most likely

hinduism

A tiny South Pacific island nation produces large quantities of honey-based products. To protect this industry, the island government mandates that only designated trading companies can import the crop, each of which is allocated the right to import a maximum number of pounds of honey each year. This is an example of a(n)

import quota.

A company can increase its growth rate by taking goods or services developed at home and selling them internationally. The returns from such a strategy are likely to be greater if

indigenous competitors in the nations that the company enters lack comparable products.

A government of a European nation believes that its citizens should have complete freedom in their economic and political pursuits, and the ideology is "private profit over public good." It can be said that this nation follows the philosophy of

individualism

Mosha, who works for a multinational company, is often put in teams consisting of people from different cultures. Mosha finds it difficult to function in these teams because, unlike the others, he comes from a culture where building his personal "brand" is emphasized. His culture emphasizes

individualism.

When considering innovations and entrepreneurship, it can be said that

innovations in production and business processes lead to an increase in the productivity of labor and capital.

Monique, a French fashion designer, sells her merchandise by exporting it to retail stores in the United States, United Kingdom, and Brazil. According to this information, Monique is participating in

international trade.

A woman recently quit her job in a bank because her religion considers the payment or receipt of interest as exploitative and unjust. According to this information, she is a follower of

islam

A drawback of countertrade is that

it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

Monique learned that the company she works for didn't report to their supplier that they received a double shipment of parts but were only charged for a single shipment. Knowing this, she doesn't feel guilty at all when she doesn't report that human resources reimbursed her twice for the same hotel stay she incurred last month while attending a work seminar. In this situation, the unethical choice of the employee is the result of

leadership choices.

On Track Limited has an order to sell 50,000 pieces of fitness equipment to Brazil, but the Brazilian government stipulated that 35 percent of the component parts of the equipment must be produced in Brazil. This stipulation is an example of a(n)

local content requirement.

The price of a fitness tracker in France is 83 euros. Tyler Xin, a frequent international traveler, found that a similar fitness tracker cost only 77 euros in Germany. This demonstrates that the benefit of adopting the euro as a common currency is that it

makes it easier to compare prices across Europe.

Recent global changes in political and economic systems show that

many undeveloped and impoverished national markets of eastern Europe, Latin America, Africa, and Asia are potentially enormous for international business.

A European government took Scottish Alliance, a domestic energy firm, into state ownership to save the company from bankruptcy. However, the other private competitors in the energy industry were enraged by this decision. As a result, the government had to reduce the tax burden on all private energy firms so that both the state-owned enterprise and private firms could coexist. What type of economy does this portray?

mixed

At one time, economic stagnation resulted in Great Britain because the coal mining and telecommunications industries were

monopolies owned by the state.

When her manager asked Talia if she would "lose" the invoice that came in with the extra shipment of parts because the supplier wouldn't know any difference, Talia replied "No." Her response is an example of

moral courage

Joshua decided that the only way he could pay back his auto loan was to transfer funds from the company where he worked directly into his personal account. He also knows that if he gets caught, he will probably spend time in jail. Joshua's choice represents a violation of

mores

Tomorrow's Tech Inc., a U.S.-based company, has productive activities in more than two countries. Tomorrow's Tech is what type of enterprise?

multinational

Baruth has been asked by his manager to directly contact the CEO of the foreign company they are trying to do business. However, Baruth knows that this is not a socially acceptable practice there, and it is better to wait for the company to contact him. Which aspect of culture is guiding Baruth's decision?

norms

Two neighboring countries have the same wage rates, tax regimes, and business cycles. In addition, the two countries have reacted similarly to past economic shocks. These two countries can adopt a common currency because they form a(n)

optimal currency area.

The chairman of the board of Eagle's Way Entertainment engages in corruption and uses his power in the company to enrich himself and his family members. Consequently, his employees also engage in the same behavior. In this case, the roots of unethical behavior can be traced to

organizational leadership.

Big Top Boxes has developed a new type of recycled packaging. Which type of legal protections can grant the company exclusive rights for a defined period to the manufacture, use, or sale of the new packaging?

patent

Jeremy invented a portable blood pressure machine that has generated some interest from major medical supply retailers. Before he agrees to work with the retailers, he wants to protect his invention so it is his sole property to manufacture and sell. What does Jeremy need to help him do this?

patent

Amartya Sen believed that __________ should also be a factor in the human development index.

political freedom

The goal of a new Central American group formed as an economic union is to have a Council of Ministers that would coordinate the economic, social, and foreign policy of the member-states. This group wants to be a

political union.

In Maria's company, senior officers eat in the same cafeteria as the entry-level workers. On a trip to an office of the company in Brazil, she was surprised to find that the company had different cafeterias for managers and workers as well as different parking lots. The difference that Maria perceived can be attributed to which of Hofstede's dimensions?

power distance

Nolan is a lawyer representing Killian Auto Group in a lawsuit. During the trial, Nolan referred to a court case from twenty years ago and asked the witness if she felt Killian Auto Group had acted in a similar manner as the company in the previous case. When Nolan referred to the previous court case, he was relying on __________ to make his case.

precedent

After the collapse of communism in Russia, successful business owners often had to pay "protection money" to the mafia or face violent retribution. In the context of property rights, the behavior of the mafia is an example of

private action

What started in Great Britain in the early 1980s when Prime Minister Margaret Thatcher started to sell state-owned assets such as the British telephone company?

privatization

The deregulation of an economy involves

privatizing state-owned enterprises

Jenner works for a mountain bike manufacturing company. His company is being sued by hundreds of customers who have been injured when the front wheel of the Columbia 4X model becomes loose and makes the bike difficult to control. The customers are demanding monetary damages. This lawsuit is based on

product liability

Racquel has dry patches on the back of her hands after using a psoriasis serum manufactured by LMC Pharmaceutical. She learned that the serum's steroid levels were beyond the standard levels permitted by the government and the damage caused is irreversible. Which standards will address Racquel's grievances?

product liability laws

Future Electric Corp. wants to establish operations in Europe but decides against it when officials demand a bribe in order for the company to open the office. This bribe is an example of

public action

CoverColor makes high-end hair color for women. This hair color is manufactured and patented in France. Manufacturers in Indonesia create counterfeit CoverColor hair color and sell it in local markets at nearly similar prices to the original CoverColor hair color sold in other countries. This lack of intellectual property protection is like to result in

reduction in the export opportunities for CoverColor hair color in Indonesia.

Kipson Energy unloaded two tankers worth of toxic waste at a port in a foreign nation. Two hundred men and boys worked four days in their shorts and sandals to unload the barrels from the tankers for $7 a day. They were not told about the content of the barrels. Some observers felt that it was the obligation of not just the government, but also of Kipson Energy to ensure that no harm was done to the workers. These observers are most likely

rights theorists.

A group calling itself the "Change Brotherhood" sought to convert a socialist country by democratic means. The "Change Brotherhood" is an example of

social democrats

In order to build large production units and expedite certain routine government actions related to this, Freeman Corp. made legal payments to the government officials of the host nation. Such payments are typically referred to as

speed money

Texas Star Oil won the bid to build an oil facility for a host country government. However, the execution of the contract has been delayed due to bureaucratic procedures in the less-developed nation. In order to legally overcome this problem, Texas Star Oil could resort to the payment of

speed money

A South American nation imposes an ad valorem tariff of 10 percent on 1 million tons of wheat imports, after which an out-of-quota tariff of 80 percent is applied. What trade policy instrument is this nation using?

tariff rate quota

The distinctive culture of a small country has been losing its relevance among the citizens of the country. This is due to the fact that the people of this country are extensively adopting certain universally accepted values and norms. This behavior of these citizens demonstrates

the convergence hypothesis.

When considering the economic prospects of a country, it can be said that

the economic system and property rights regime are reasonably good predictors of economic prospects of a country.

An exporter might have to forgo a letter of credit when

the importer is playing competing suppliers against each other.

Exporting is nearly always a way to increase the revenue and profit base of a company because

the international market is much larger than the domestic market.

During the 1960s, the then-communist states of eastern Europe relied on countertrade to purchase imports because

their currencies were generally nonconvertible.

After the formation of a free trade area for its member countries, the United States found that its high-cost clothing producers in Ohio were replaced by low-cost producers from another country within the free trade area. This is an example of

trade creation

Two foreign nations decided to impose tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Country A now begins to import wheat from Country B. Prior to this, Country A was producing wheat at a higher cost so it now benefits from this transaction. This is an example of

trade creation.

Suppose the countries of Portugal and Belgium set up a free trade area, eliminating all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now, Portugal begins to import metal from Belgium. However, Portugal had previously been importing metal from England, which produced metal more cheaply than both Portugal and Belgium. What is this an example of?

trade diversion

As a result of the formation of a free trade area between six member countries in the Pacific Rim, one member country found that its lower-cost external suppliers were replaced by higher-cost suppliers within the free trade area. This is an example of

trade diversion.

While he was shopping for new clothes, Sanjay noticed there was a sale on shirts by Tommy Hilfiger. The Tommy Hilfiger name is an officially registered __________ in menswear clothing.

trademark

A firm should use a(n) __________ strategy when it simultaneously faces both strong cost pressures and strong pressures for local responsiveness.

transnational

A dislocating event, such as the pandemic of 2020, increases the attractiveness of a localization strategy for business.

true

Consumer surplus captures some of the value of a product, which reduces the price a firm can charge for it.

true

Firms that implement a globalization standardization strategy typically do not customize their products to local conditions.

true

The experience curve reflects a decrease in production costs that occur over the life of a product.

true

Varying distribution channels among countries may make it necessary for a company to place marketing functions within national subsidiaries.

true

Job security and retirement benefits are extremely important to an entry-level employee. Hofstede would say this employee exhibits high

uncertainty avoidance.

Shondra works as a sales representative for Solar Corp. Last year her sales target was $2 million and this year in an aggressive bid for growth, the company increased the sales quota for all its salespeople to $4 million, although the market for Solar Corp.'s product has slowed. In order to meet her target, Shondra bribed an official of a potential customer. The roots of her unethical behavior most likely are the result of

unrealistic performance goals.

Managers at World Imports/Exports, an international company with operations in China and the United States, are often heard complaining about the difficulties in achieving synergy and cooperation between the employees of both the countries. After extensive research it was concluded that the cultural differences between these countries, which resulted in different work-related values, caused the lack of cooperation. In order to effectively tackle this problem, World Imports/Exports should

vary its management processes and practices to account for these differences.

If a country is experiencing a surge of construction machinery from a trading partner, it might ask that country to set a limit on how much can be exported. This limit is known as a

voluntary export restraint (VER).

When a time draft is presented to a drawee, the company signifies acceptance of it by

writing or stamping a notice of acceptance on its face.