Global Business with an Ethical Lens Final (CH. 8-17)

What percentage of M&As are mergers? a. 3% b. 9% c. 16% d. 27%

a. 3%

Industry demand that facilitates a pool of specialized suppliers and buyers is an example of a location-specific advantage. a. True b. False

a. True

It is important that the entry mode into a foreign market match the strategic goals of the company. a. True b. False

a. True

One way a company can gain a competitive advantage is by undertaking a marketing campaign. a. True b. False

a. True

The Doha Round failed to accomplish its goals of promoting economic development in developing countries. a. True b. False

a. True

The cost of doing business abroad has declined in recent years, making it easier for entrepreneurs to think globally when it comes to launching their business. a. True b. False

a. True

The stakeholder groups of investors, top management, frontline employees, and customers may have concerns about a merger between Cisco and Huawei. a. True b. False

a. True

The three stages in the formation of an alliance are: decide whether to cooperate, choose equity or contractual alliance, and specify the relationship. a. True b. False

a. True

To improve the odds for a strategic alliance success, companies should identify symptoms of frequent criticism and find mechanisms to avoid unwarranted escalation of conflicts. a. True b. False

a. True

When considering whether to form a strategic alliance, a firm will address the following questions: To cooperate or compete? Contractual or equity approach? a. True b. False

a. True

Assume that a firm is looking to expand into a foreign market, but it needs an opportunity that has low development costs and little risk. What would the best option be? a. a contractual agreement b. a wholly owned subsidiary c. a partially owned subsidiary d. a greenfield project

a. a contractual agreement

What is a business model? a. a firm's way of doing business and creating and capturing value b. a firm's core principles that guide and direct it c. a firm's promise of value to be delivered, communicated, and acknowledged d. a firm's explanation of why an organization exists and what its overall goal is

a. a firm's way of doing business and creating and capturing value

What has the slowdown in multilateralism led to? a. an acceleration of regionalism b. an acceleration of globalism c. an acceleration of localism d. no change in the status quo

a. an acceleration of regionalism

In what two primary areas do formal institutions affect alliances? a. antitrust concerns and entry mode requirements b. normative and cognitive pillars c. mergers and cross-shareholding d. value and rarity

a. antitrust concerns and entry mode requirements

What is the name of the organization for regional economic integration involving 21 member economies around the Pacific Ocean? a. ASEAN b. Mercosur c. APEC d. CAFTA

c. APEC

Which statement about dumping is correct? a. An exporter sells below cost abroad but then plans to raise them once the local competition has been eliminated. b. An exporter plans to raise prices after eliminating local competition. c. An exporter sells below cost abroad and plans to keep prices low regardless of the local competition. d. An exporter colludes with local companies to set prices higher than competitive level.

a. An exporter sells below cost abroad but then plans to raise them once the local competition has been eliminated.

Which countries are founding members of the Eurasian Economic Union (EAEU)? a. Belarus, Kazakhstan, and Russia b. Belarus, Ukraine, and Russia c. Poland, Ukraine, and Russia d. Russia, Kazakhstan, and Estonia

a. Belarus, Kazakhstan, and Russia

Which of the following is a benefit of adopting the euro? a. It imposes monetary disciplines on governments. b. It creates obstacles to direct price comparison. c. It increases currency conversion costs. d. It limits the flexibility in fiscal policy (in areas such as deficit spending).

a. It imposes monetary disciplines on governments.

What is managerial hubris? a. Managers' overconfidence in their capabilities. b. Managers' lack of familiarity with foreign cultures. c. Managers' failure to address multiple stakeholder groups' concerns. d. Managers' inadequate preacquisition screening.

a. Managers' overconfidence in their capabilities.

Mutual suspicion and rivalry are common between which two custom unions? a. The Andean Community and Mercosur b. The Union of South American Nations and the United States-Dominican Republic-Central America Free Trade bloc c. The Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN) d. The Association of Southeast Asian Nations (ASEAN) and the European Union (EU)

a. The Andean Community and Mercosur

Why would firms in a multimarket competitive situation want to avoid engaging in cross-market retaliation? a. They might discover that a price war may be too costly for all involved. b. They might fear getting caught in illegal activity. c. They might draw the scrutiny of government regulators who may impose industry restrictions. d. They might lose employees to their competitors.

a. They might discover that a price war may be too costly for all involved.

Elon Musk has founded Tesla, SpaceX, PayPal, and the Boring Company to name a few. Musk is an example of a serial entrepreneur. a. True b. False

a. True

Disneyland Tokyo became immensely popular because it played up its U.S. image. What concept does this best illustrate? a. asset of foreignness b. regional geographic diversification c. liability of foreignness d. reciprocity

a. asset of foreignness

How can managers offset the liability of foreignness? a. by developing overwhelming capabilities b. by matching market entry and geographic diversification to the firm's strategic goals c. by eliminating all local competition d. by understanding the rules of the game

a. by developing overwhelming capabilities

What factor may influence alliance performance? a. equity b. language of majority partner c. sales d. cash flow

a. equity

Which of the following is considered an equity mode of foreign market entry? a. greenfield projects b. exports c. service outsourcing d. contractual agreements

a. greenfield projects

An entrepreneurial firm internationalizing while remaining in their home country is an example of what concept? a. indirect exporting b. licensing c. franchising d. direct exporting

a. indirect exporting

Miami is ideal for both North American firms looking to expand their businesses to Central and South America and for Latin American companies to grow their businesses to North America. What concept does this best describe? a. location-specific advantage b. regulation advantage c. timing advantage d. efficiency advantage

a. location-specific advantage

In which type of country is an entrepreneur likely to have to spend more money to launch a company? a. low income b. easy income c. high income d. It costs the same in all three types of countries.

a. low income

All of the following are viewed as hindrances to regional trade EXCEPT which example? a. lower tax rates between regional trading members b. low-interest loans c. coverage of furloughed employees' pay d. cash subsidies

a. lower tax rates between regional trading members

In the decision between equity- and non-equity-based alliances, which of the following is a driving force? a. potential as real options b. the level of strategic investments c. influence of nonformal institutions d. learning by doing

a. potential as real options

People tend to associate entrepreneurship with what type of business? a. small and medium size enterprises (SMEs) b. large firms c. partnerships d. sole proprietorships

a. small and medium size enterprises (SMEs)

What does a firm need to be successful in managing market dynamics? a. strong skills in competitor analysis b. adequate capabilities c. ability to ignore the "rules of the game" d. use warlike language to show you are a serious competitor

a. strong skills in competitor analysis

In the integration-responsiveness framework, what is the crucial difference between a global standardization strategy and a home replication strategy? a. A global standardization strategy has lower pressure for local responsiveness than a home replication strategy. b. A global standardization strategy has higher pressure for cost reduction than a home replication strategy. c. A global standardization strategy has higher pressure for local responsiveness than a home replication strategy. d. A global standardization strategy has lower pressure for cost reduction than a home replication strategy.

b. A global standardization strategy has higher pressure for cost reduction than a home replication strategy.

An industry with many competitors offers an environment conducive to collusion. a. True b. False

b. False

Developing new markets where there is less competition is a method used by competitors to signal their intention to other competitors to reduce competitive intensity. a. True b. False

b. False

Efforts to achieve regional economic integration in Africa has proven highly effective. a. True b. False

b. False

FDI as an entry mode for entrepreneurs can be costly, but is simple to undertake. a. True b. False

b. False

Factors behind alliance performance include equity, learning and experience, nationality, and tangible and intangible resources. a. True b. False

b. False

From an institution-based view, imitability affects a firm's ability to enter a foreign market. a. True b. False

b. False

Globally, SMEs make up the smallest number of firms. a. True b. False

b. False

In practice, managers should focus their attention more on a global level than a regional level. a. True b. False

b. False

The resource-based view of entrepreneurship believes the success or failure of entrepreneurial firms lies in how well those firms take advantage of formal and informal institutional resources. a. True b. False

b. False

From a manager's perspective, what does Sun Tzu's advice of "know yourself" mean? a. It is important to know your individual limitations. b. It is important to know what your division, firm, and industry are capable of doing. c. It is important to know your individual strengths and competencies. d. It is important to know what your firm can do if attacked by a rival.

b. It is important to know what your division, firm, and industry are capable of doing.

What does the Triad region include? a. Europe, Africa, Asia, and Australia b. North America, Asia, and Europe c. Asia, North America, and South America d. North America, Europe, and Asia, and Australia

b. North America, Asia, and Europe

Imagine that a German electronics manufacturer and a Swiss cellphone manufacturer agree to set up a joint venture in the Czech Republic. This new manufacturing plant will produce a unique type of telecommunications device. What is this an example of? a. a merger b. an equity-based alliance c. cross-shareholding d. a contractual alliance

b. an equity-based alliance

Which of the following is a first-mover advantage? a. resolve technological and market uncertainty b. avoid clashing with dominant firms in their home market c. provide an opportunity for a free ride on pioneering investments in the market d. difficulty adapting to market changes

b. avoid clashing with dominant firms in their home market

What does global economic integration seek to build? a. unity b. confidence c. profitability d. alliances

b. confidence

The European Union (EU) is an example of what type of regional economic integration? a. political union b. economic union c. monetary union d. free trade area

b. economic union

What is a benefit of being a late mover into a foreign market? a. relationships with key stakeholders such as governments b. first mover's difficulty to adapt to market changes c. pre-emption of scarce resources d. proprietary, technological leadership

b. first mover's difficulty to adapt to market changes

Imagine that the leadership team at a large pharmaceutical company learns that a small firm is developing an interesting new weight-loss product. Rumor has it that the product has extraordinary potential, although little concrete information has been released. The large firm's leaders decide to buy the small firm for a substantial amount, confident that they can market the product more effectively and realize huge profits. This is a type of what kind of motive? a. managerial strategy b. hubris c. synergy d. drive for innovation

b. hubris

Some people believe that anything made in a certain country is poorly made and therefore not worth much money. This bias may have a negative impact on those firms when they attempt to sell well-made, quality, valuable products in foreign markets. What would these firms be facing in this situation? (Choose as many as possible) a. encountering trade barriers b. location-specific advantage c. suffering from the liability of foreignness d. nonequity mode of entering a foreign market

b. location-specific advantage c. suffering from the liability of foreignness

What is an effective method for growing strong informal institutional norms that an entrepreneur can engage in to promote entrepreneurship? a. make political contributions to politicians who support entrepreneurship b. provide seed money as angel investors for new ventures c. push for entrepreneur-friendly rules governing new firms d. pay higher business tax rates

b. provide seed money as angel investors for new ventures

The resource-based view of entrepreneurship suggests that an entrepreneur needs to create value and possess rare, inimitable resources. What else should an entrepreneur need from the resource perspective? a. resources that are not value-added b. resources that are embedded in the organization c. resources that are the same for everyone d. resources that are easy to copy

b. resources that are embedded in the organization

What factors have contributed to entry barriers being lowered for many entrepreneurs? a. higher business tax rates b. sharing economy c. greater interest in entrepreneurship d. decline in venture capital investing

b. sharing economy

Firms indirectly coordinate actions by signaling their intentions, often in an attempt to reduce output and maintain pricing above competitive levels. When this occurs, what is it called? a. competitor analysis b. tacit collusion c. explicit collusion d. dumping

b. tacit collusion

In the post-acquisition phase, integration is crucial. What is the most optimal way to integrate acquired targets? a. the deal price is high, and the goal is to acquire knowledge assets b. the "low road" to integration or the "high road" to integration c. the "high road" is the only way because it is the most effective way to overcome target firm resistance d. integration is most optimal when an acquisition was an alliance first

b. the "low road" to integration or the "high road" to integration

Firms can create value when engaging rivals in all of the following ways EXCEPT for which approach? a. launching products in multiple markets b. undertaking advertising campaigns that highlight the inferiority of rivals' products c. holding a dominant position in key markets d. securing patents on key products

b. undertaking advertising campaigns that highlight the inferiority of rivals' products

What are two methods allied firms can use to combat opportunism? a. influencing formal and informal institutions b. walling off or swapping critical capabilities c. choosing strategic or contractual alliances d. cross-shareholding and swapping critical capabilities

b. walling off or swapping critical capabilities

Which statement is TRUE about competitive advantage? a. Achieving a dominant market position is easy, but maintaining it is hard. b. Having a competitive advantage is not necessary. c. Achieving and maintaining a dominant market position is a dynamic and ever-changing process. d. Once a dominant position is achieved, maintaining that position is assured.

c. Achieving and maintaining a dominant market position is a dynamic and ever-changing process.

If a country's competition and antitrust policies are "proincumbent" and "proproducer," which of the following is a likely outcome? a. There will be few competitors in each market segment. b. There will be many international competitors in each market segment. c. Domestic consumers will most likely pay higher prices. d. The country will be subject to heavy trade embargoes from other countries.

c. Domestic consumers will most likely pay higher prices.

Which region has the largest economy? a. United States-Dominican Republic-Central America Free Trade Agreement (CAFTA) b. Union of South American Nations (USAN/UNASUR) c. European Union (EU) d. Association of Southeast Asian Nations (ASEAN)

c. European Union (EU)

Which statement is TRUE about trade politics? a. Managers must be experts in trade politics to navigate changes in the external environment that affect business success. b. Managers can ignore trade politics as it has no bearing on business decision-making. c. Managers that ignore trade politics may find themselves ill-equipped to handle changes in the external environment that impact business. d. Managers should stay out of trade politics and stick to business.

c. Managers that ignore trade politics may find themselves ill-equipped to handle changes in the external environment that impact business.

The GATT, GATS, and TRIPS agreements assisted in defining the responsibilities of which organization? a. World Bank b. International Monetary Fund c. World Trade Organization d. European Union

c. World Trade Organization

Which of the following is the correct description of a free trade area (FTA)? a. an integration of political and economic affairs b. a group of countries that blend their economies into a single economic entity c. a group of countries that remove trade barriers among themselves d. a common market permitting free movements of goods and people

c. a group of countries that remove trade barriers among themselves

Cross-border merger and acquisition problems include all the following EXCEPT which one? a. a lack of familiarity with foreign cultures b. an inadequate number of worthy targets c. a multitude of worthy targets d. clashes of organizational cultures compounded by clashes of national cultures

c. a multitude of worthy targets

What is a learning race? a. the ability to successfully learn to manage inter-firm relationships b. a method for quickly organizing an alliance in a way that is difficult to replicate c. a situation in which alliance partners aim to outrun each other by learning the "tricks" from the other side as fast as possible d. an investment in real operations, such as r&d, as opposed to financial capital

c. a situation in which alliance partners aim to outrun each other by learning the "tricks" from the other side as fast as possible

What is the stage model of internationalization? a. a way for SMEs to reach overseas customers by FDI b. a way for SMEs to reach overseas customers by licensing c. a slow step-by-step process a SME must go through to internationalize their business. d. a way for SMEs to reach overseas customers through alliances

c. a slow step-by-step process a SME must go through to internationalize their business.

Imagine that an international college textbook publisher purchases a small firm that specializes in educational software. This is an example of what? a. cross-shareholding b. strategy c. an acquisition d. a merger

c. an acquisition

Which of the following is an example of explicit collusion? a. as a market leader, deciding to set your price above the industry average b. signaling to competitors your intent to reduce output and maintain prices above competitive levels c. directly negotiating an agreement with competitors to fix prices d. creating a directory of all competitors and prices for a product so consumers can compare to the product you offer

c. directly negotiating an agreement with competitors to fix prices

Which of the following entry modes is considered a non-equity method? a. joint venture b. acquisition c. exports d. greenfield projects

c. exports

According to the text, Walmart's failure in India could be attributed to which of the following factors? a. failure to find employees b. failure to access the capital needed to expand in India c. failure to understand the rules of the game d. failure to match its market entry and geographic diversification with existing strategic goals

c. failure to understand the rules of the game

Which of the following strategies can a firm utilize to enter a foreign market? a. FDI, franchising, and becoming a supplier of foreign firms b. FDI, direct exporting, and becoming a supplier of foreign firms c. franchising, direct exporting, and FDI d. franchising, FDI, and indirect exporting

c. franchising, direct exporting, and FDI

Which of the following is an example of a strategic investor? a. founders b. family c. government agencies d. friends

c. government agencies

Firms can create value by engaging in all of the following EXCEPT which activity? a. launch a product offering simultaneously in multiple countries b. respond rapidly to a challenge when it arises c. imitate the business model of your strongest competitor d. gain a dominant position in key markets

c. imitate the business model of your strongest competitor

Some MNEs in emerging economies are using the LLL framework to challenge the conventional wisdom on international growth. What elements comprise the LLL framework? a. leverage, location, and logistics b. linkage, location, and labor c. linkage, leverage, and learning d. linkage, leverage, and logistics

c. linkage, leverage, and learning

What are the advantages of forming a strategic alliance with a partner? a. nurturing competitors b. choosing wrong partners c. reducing risks and access complementary assets d. having a potential partner opportunism

c. reducing risks and access complementary assets

What do opponents argue is a barrier to global integration? a. nongovernmental agencies b. political unions c. regional agreements d. economic unions

c. regional agreements

Why do companies "dump" products in foreign markets? a. to drive up demand in the domestic market. b. because they know it is difficult to prove. c. to gain market share and establish the brand. d. to gain trust in the marketplace.

c. to gain market share and establish the brand.

According to the text, entrepreneurs who perform the best tend to possess what resources? a. strong formal institutional support and imitable resources b. access to capital and a strong network c. unique knowledge and deep insights about opportunities d. a diverse product portfolio and good leadership

c. unique knowledge and deep insights about opportunities

What are three examples of regional integration in the Asia Pacific? a. USMCA, ASEAN, APEC b. ASEAN, EU, APEC c. ASEAN, ANZCERTA, MERCOSUR d. ASEAN, ANZCERTA, APEC

d. ASEAN, ANZCERTA, APEC

Which of the following statements is true as to why collusion fails? a. Collusion often fails because colluding parties refuse to accept lower profits. b. Collusion often fails because colluding parties do not like each other. c. Collusion often fails because it is inherently wrong and unethical. d. Collusion often fails because it has incentive problems associated with the "prisoners' dilemma.

d. Collusion often fails because it has incentive problems associated with the "prisoners' dilemma.

What does the WTO's nondiscrimination policy mean? a. If country A lowers a trade barrier for country B, country B should do the same for country A. b. If country A lowers a trade barrier for country B, all WTO member countries should do the same for country B. c. If country A lowers a trade barrier for country B, the U.S. should do the same for country B. d. If country A lowers a trade barrier, it has to do the same for all WTO member countries.

d. If country A lowers a trade barrier, it has to do the same for all WTO member countries.

Below are the implications for action that determine success with alliances and acquisitions EXCEPT for which one? a. When managing acquisitions, do not overpay, focus on both strategic and organizational fit, and thoroughly address integration concerns. b. Understand and master the rules of the game governing alliances and acquisitions around the world. c. When managing alliances, pay attention to the "soft" relationship aspects. d. Ignore firm-specific capabilities and concentrate on the new capabilities of the new alliance or acquisition as a whole.

d. Ignore firm-specific capabilities and concentrate on the new capabilities of the new alliance or acquisition as a whole.

How does the WTO enforce trade dispute settlements? a. The WTO reports the settlements to the International Court of Justice. b. The WTO requires the losing country to change its laws. c. The WTO increases the tax rate in the countries involved. d. The WTO authorizes the winning country to use tariff retaliation.

d. The WTO authorizes the winning country to use tariff retaliation.

Which of the following is an example of a free trade area (FTA)? a. European Union (EU) b. International Monetary Fund (IMF) c. World Trade Organization (WTO) d. United States-Mexico-Canada Agreement (USMCA)

d. United States-Mexico-Canada Agreement (USMCA)

Foreign governments analyze acquisitions to ensure they do not violate what? a. antidumping laws b. predatory pricing laws c. unfair trade laws d. antitrust laws

d. antitrust laws

What is the strategy of creating unexplored new markets referred to as? a. red ocean b. green ocean c. yellow ocean d. blue ocean

d. blue ocean

Why are cross-border M&As more difficult to integrate? a. legal issues b. political issues c. hard to find buildings d. clashes of organizational culture and national culture

d. clashes of organizational culture and national culture

What is price setting by a monopolist at a level higher than the competitive price level called? a. predatory pricing b. dumping c. fair pricing d. collusive price setting

d. collusive price setting

Why might an organization choose an alliance over an acquisition? a. easier to merge cultures b. easier to define leadership c. foreign countries prefer alliances d. costs less

d. costs less

All of the following are benefits of global economic integration EXCEPT for which example? a. builds confidence in a multilateral trading system b. free trade and investment raises incomes and stimulates economic growth c. promotes peace by fostering trade and investment d. creates a universal taxation system for business

d. creates a universal taxation system for business

Creating a wholly owned subsidiary as a means of entering a foreign market is an example of which type of entry mode? a. strategic alliance b. direct export c. non equity d. equity mode

d. equity mode

What are the primary stages in the dissolution of an alliance? a. initiation, going public, mediation, uncoupling, aftermath b. initiation, reconciliation, going public, uncoupling, aftermath c. initiation, uncoupling, aftermath d. initiation, going public, uncoupling, aftermath

d. initiation, going public, uncoupling, aftermath

What is microfinance? a. lending institutions providing loans to large corporations b. the IMF giving money to large corporations c. the IMF giving money to entrepreneurs in developing countries d. lending institutions providing tiny loans to start small businesses in developing countries

d. lending institutions providing tiny loans to start small businesses in developing countries

Which of the following industry characteristics makes collusion difficult? a. homogeneous products b. a high concentration of a few firms in the market c. the existence of a price leader in the industry d. low entry barriers

d. low entry barriers

According to the AMC framework, what prompts a competitor to launch a counterattack? a. motivation, market access, and awareness b. motivation, capabilities, and capital c. awareness, resources, and capabilities d. motivation, awareness, and capabilities

d. motivation, awareness, and capabilities

Which of the following is a disadvantage of strategic alliances? a. reducing costs and risks b. possibilities to use alliances as real options c. accessing complementary assets d. potential partner opportunism

d. potential partner opportunism

What is meant by the term "born global"? a. firms getting listed on a foreign stock exchange b. firms that are established only in the foreign markets but not in the home markets c. firms having a good global reputation d. start-up firms that attempt to do business abroad from inception

d. start-up firms that attempt to do business abroad from inception

What is entrepreneurship? a. ownership of a business that has fewer than 25 employees b. ownership of a business that is less than one year old c. the identification and exploitation of existing opportunities d. the identification and exploitation of previously unexplored opportunities

d. the identification and exploitation of previously unexplored opportunities