Chapter 1

health care

The largest multinational firms are found in each of the following industries except ________. a. retailing b. health care c. automobiles d. oil and gas

country risk

Which of the following type of risk is also known as political risk? a. currency risk b. cross-cultural risk c. commercial risk d. country risk

the establishment of GATT

Which of the following was a landmark for major growth in international trade and investment? a. the establishment of NAFTA b. the establishment of NATO c. the end of World War II d. the establishment of GATT

cross-border purchase of stocks

Which of the following would not be considered an example of foreign direct investment (FDI)? a. cross-border purchase of a textile plant b. cross-border purchase of stocks c. purchase of capital assets of a foreign company d. purchase of land for foreign business operations

International Investment

_______ refers to the transfer of assets to another country or the acquisition of assets in that country. a. International investment b. International trade c. Importing d. Exporting

GDP

________ is the total value of products and services produced in a country over the course of a year. a. GDP b. PNP c. GDR d. GNP

Belgium

Another attendee represents a country whose annual value of international products trade (imports and exports) is greater than 60 percent of the country's GDP. This attendee is ________. a. United States b. China c. Belgium d. Italy

the firm itself is crossing international borders to purchase foreign assets

At the meeting, Dan explains to the attendees that Freehold investment projects differ from international trade in that ________. a. the firm itself is crossing international borders to purchase foreign assets b. the firm is restricting its investments to stocks and does not purchase mutual funds c. the firm has chosen to focus strictly on the technology sector d. the firm is engaging in the transfer of products across national borders

active

Bethany presents another opportunity that involves the purchase of a manufacturing plant in South Korea. She explains that this type of strategy will involve ________ ownership on the part of the firm. a. indirect b. passive c. short-term d. active

focal firms

Businesses that directly initiate and implement international business activity are known as ________. a. focal firms b. multinational enterprises c. SMEs d. NGOs

international portfolio

Dan discusses an investment opportunity that involves the purchase of selected securities from the Chinese stock market. This opportunity represents which type of international investment? a. indirect production b. international portfolio c. foreign direct d. domestic securities

the increase in trade barriers

Each of the following has contributed to the rapid integration of world economies except ________. a. the growth of emerging market countries b. the increase in trade barriers c. advances in information technology d. the liberalization of markets

Hiring policies

Each of the following represents a factor of production except ________. a. manufacturing infrastructure b. technology c. hiring policies d. managerial talent

RND

Each of the following types of organizations can be active in international business except ________. a. MNE b. SME c. RND d. NGO

cross-border conflict

Increases in international trade and investment are accompanied by increases in all of the following except ________. a. literacy rates b. individual affluence c. cross-border conflict d. national prosperity

The economic isolation of developing countries

Globalization has helped increase all of the following except ________. a. the variety of capital flows across national borders b. the economic isolation of developing countries c. the rate at which products are diffused worldwide d. the volume of cross-border transactions

a joint venture with the largest Indian automobile distributorship

In discussing the expansion effort to India, the CEO reminded shareholders of Black and Decker's move to partner with the Indian retailer Bajaj to increase its long-term sales in the Indian market. The CEO was most likely attempting to justify which of the following? a. a joint venture with the largest Indian automobile distributorship b. a marketing effort targeted to American citizens living in India c. a price drop to ward off competition from an emerging Indian auto retailer d. a new manufacturing protocol based on an efficient Indian production method

currency risk

Inflationary pricing is an example of which of the following? a. country risk b. commercial risk c. currency risk d. cross-cultural risk

Trade and Investment

International business involves the performance of ________ activities by firms across national borders. a. marketing and fiduciary b. trade and investment c. finance and operational d. manufacturing and sales

Cross-border business

International business is also known as which of the following? a. born global business b. global trade business c. cross-border business d. multi-local business

currency risk

LeShaun Golding researched the risks linked to establishing the plant in Country C. He cited government intervention, potential economic problems such as high inflation, and unethical business practices as the most prominent risks for this location. LeShaun noted all of the following types of risks except ________. a. currency risk b. political risk c. country risk d. commercial risk

Germany

One of the attendees represents a nation with a products trade (imports and exports) valued at over 800 billion dollars. This representative attends on behalf of which of the following countries? a. Italy b. Germany c. Belgium d. Canada

seeking opportunities for growth through market diversification

One shareholder questioned the CEO's rationale for beginning an exploratory effort to establish a new manufacturing plant in India. The CEO responded by explaining that India was an untapped market with a high demand for products such as those produced by Sterling. His rationale represented an example of which of the following? a. investing in a potentially rewarding relationship with a foreign partner b. gaining access to lower-cost or better-value factors of production c. seeking opportunities for growth through market diversification d. better serving key customers that have relocated abroad

developing economies of scale

One shareholder wanted clarification about a research effort that investigated the possibility of setting up a plant in China. The CEO explained that serving China's rapidly growing middle class population would enable Sterling to increase the size of its customer base dramatically. In China, the CEO was most likely interested in ________. a. avoiding government intervention b. reducing production volume c. implementing reactive strategies d. developing economies of scale

Netherlands

One summit attendee pointed out that although the total value of her country's products trade was low, it typically accounted for more than 100 percent of her nation's GDP. This attendee most likely represents _________. a. Japan b. United Kingdom c. France d. Netherlands

country risk

Philip Baxter reported on the risks associated with establishing the plant in Country A. The most significant risk, in his view, was posed by the country's complex bureaucratic structure. Philip reported the likelihood of significant administrative delays in opening the plant. The risk identified by Philip is an example of which of the following? a. country risk b. commercial risk c. currency risk d. cross cultural risk

the Freehold Eastern Growth Fund, which purchases Eastern European growth stocks

Phillip Hardy, one of the potential investors, expresses the desire to purchase only those types of assets in which he can maintain a relatively short-term interest. Which of the following investment opportunities would be most suited for Mr. Hardy? a. a venture that gives investors ownership of the equipment used by multiple South African mining companies b. an initiative to purchase the technology assets of an Indian consulting firm c. the Freehold Eastern Growth Fund, which purchases Eastern European growth stocks d. the Freehold World Climb Project, which maintains partial ownership of an Australian hiking equipment production plant

protectionism

Rosa Santos reported on the risks associated with establishing the plant in Country B. In her analysis, Rosa emphasized the financial risks involved. Which of the following was most likely not included in Rosa's analysis? a. transfer pricing b. protectionism c. currency exposure d. asset valuation

a distribution center established in London to preempt the growth of a British car manufacturer

The CEO introduced another overseas effort by noting that it represented an attempt to confront an international competitor. The CEO was most likely referring to which of the following efforts? a. a new plant established in Vietnam to benefit from low-cost labor b. a sales outlet established in Indonesia, where Sterling could charge more for its products c. a marketing and advertising partnership established with a successful French car retailer d. a distribution center established in London to preempt the growth of a British car manufacturer

international firms often have more than one motive for international expansion

The CEO justified one of the company's moves by pointing out that it not only enabled Sterling to benefit from global sourcing advantages, but it also provided access to new ideas about business methods. The shareholders viewed this justification positively most likely because they understood which of the following? a. Sourcing advantages are usually more important to growth than obtaining new business ideas. b. International firms often have more than one motive for international expansion. c. The most compelling motive for international expansion is to gain new ideas from other markets. d. This expansion strategy would enable the company to better manage cross-cultural risk.

The globalization of markets

The growth of international business activity coincides with which of the following? a. the decline of Soviet communism b. the advent of computer technology c. the growth of developing countries d. the globalization of markets

market diversification

The process of targeting and serving markets outside the home country is known as ________. a. market diversification b. competition intensity c. reactive internationalization d. trade protectionism

all of the above

Which of the following are subject to importing and exporting? a. finished products b. raw materials c. intermediate goods d. all of the above

It has existed in some form for centuries

Which of the following best characterizes the development of international business? a. It has existed in some form for centuries. b. It first started two decades ago. c. It developed after the year 2000. d. Its development has slowed in recent years.

Advanced economies now source many of their consumable products from low-cost manufacturing nations.

Which of the following best explains the recent rapid increase in exports worldwide? a. World exports have grown more than tenfold over the past thirty years. b. Emerging markets are largely dependent on the import of consumable items. c. Growth in gross domestic product in most countries has declined d. Advanced economies now source many of their consumable products from low-cost manufacturing nations.

low cost labor

Which of the following best explains why the Japanese firm Canon relocated much of its production to China? a. low cost financial capital b. low cost labor c. access to raw materials d. Lack of skilled managerial talent in home country

increasing global competition

Which of the following contributes least to increasing a company's profit margins? a. increasing demand b. increasing global competition c. slow market growth d. underserved economies

United States

Which of the following countries hosts the greatest number of MNEs? a. Germany b. Japan c. Netherlands d. United States

global sourcing

Which of the following is another term for importing? a. capital investment b. supply side development c. global sourcing d. unilateral procurement

competitive intensity

Which of the following is not an example of a cross-cultural risk factor? a. negotiation patterns b. decision-making styles c. competitive intensity d. ethical practices