CH4 TF

Managing an international business is much easier than managing a domestic business.

FALSE A further way in which international business differs from domestic business is the greater complexity of managing an international business. In addition to the problems that arise from the differences between countries, a manager in an international business is confronted with a range of other issues that the manager in a domestic business never confronts.

The globalization of the world economy has resulted in a relative increase in the dominance of U.S. firms in the global marketplace.

FALSE By 2012 some 22 of the world's 100 largest nonfinancial multinationals were now U.S. enterprises; 14 were British; 14 French; 10, German; and 7, Japanese. The globalization of the world economy has resulted in a relative decline in the dominance of U.S. firms in the global marketplace.

Outsourcing is a process that is limited to manufacturing enterprises.

FALSE Early outsourcing efforts were primarily confined to manufacturing activities. Increasingly, however, companies are taking advantage of modern communications technology, particularly the Internet, to outsource service activities to low-cost producers in other nations.

World Bank gives an aid of 100 million dollars to Kenya for creating rural health care facilities. This is an example of foreign direct investment.

FALSE Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

1 In today's world of global communications, rapid transportation, and global markets, cultural differences have ceased to exist.

FALSE In these days of global communications, rapid transportation, worldwide markets, and global brands, when the era of the global village seems just around the corner, it is easy to forget just how different various cultures really are. Underneath the veneer of modernism, deep cultural differences often remain.

A current trend in international business is the decline of medium-sized and small multinationals, known as mini-multinationals.

FALSE Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of mini-multinationals.

According to supporters of free trade, as countries get richer they commit greater violation of environmental and labor regulations.

FALSE Supporters of free trade and greater globalization argue that tougher environmental regulations and stricter labor standards go hand in hand with economic progress. In general, as countries get richer, they enact tougher environmental and labor regulations.

The World Bank is known as the lender of the last resort.

FALSE The IMF was established to maintain order in the international monetary system. It is often seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.

The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties.

FALSE The World Trade Organization is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. The World Bank was set up to promote economic development.

The most global markets currently are markets for consumer products.

FALSE The most global markets currently are not markets for consumer products—where national differences in tastes and preferences are still often important enough to act as a brake on globalization—but markets for industrial goods and materials that serve a universal need the world over.

"Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade barriers against each other, which contributed to the Great Depression of the 1930s.

FALSE The typical aim of tariffs on imports of manufactured goods was to protect domestic industries from foreign competition. One consequence, however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.

The Uruguay Round, finalized in December 1993, reduced protection for patents, trademarks, and copyrights.

FALSE Under the umbrella of GATT, the most recent negotiations to be completed, known as the Uruguay Round, were finalized in December 1993. The Uruguay Round provided enhanced protection for patents, trademarks, and copyrights.

According to critics of globalization, today's interdependent global economy limits a nation's national sovereignty.

TRUE A concern voiced by critics of globalization is that today's increasingly interdependent global economy shifts economic power away from national governments and toward supranational organizations such as the World Trade Organization, the European Union, and the United Nations.

According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950.

TRUE According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950.

One of the UN's central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development.

TRUE Although the UN is perhaps best known for its peacekeeping role, one of the organization's central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development—all issues that are central to the creation of a vibrant global economy.

A firm does not have to become a multinational enterprise to engage in international business.

TRUE An international business is any firm that engages in international trade or investment. A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses.

Non-U.S. firms increasingly began to invest across national borders because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

TRUE As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Doing business in Russia involves risks because the country has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government.

TRUE Disturbing signs of growing unrest and totalitarian tendencies continue to be seen in several Eastern European and Central Asian states, including Russia, which has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government. Thus, the risks involved in doing business in such countries are high, but so may be the returns.

Evidence suggests that technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labor.

TRUE Evidence suggests that technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labor.

Rivers Inc., a U.S. based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. This is an example of foreign direct investment.

TRUE Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

Globalization critics argue that the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.

TRUE Globalization critics argue that the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.

Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts incurred by corrupt and dictatorial predecessors.

TRUE Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts that were incurred and mismanaged long ago by their corrupt and dictatorial predecessors.

The cost of microprocessors continues to fall, while their power increases. This statement supports the predictions made by Moore's Law.

TRUE The cost of microprocessors continues to fall, while their power increases (a phenomenon known as Moore's Law, which predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months).

Companies hope to lower their overall cost structure or improve the quality or functionality of their product offering through globalization of production.

TRUE The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production. By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.

The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market.

TRUE The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market.