IBI101 Full

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Design and names by which merchants or manufacturers designate and differentiate their products are known as: A. patents. B. copyrights. C. trademarks. D. licenses.

Due to the high level of interdependence, the costs of controlling firms are higher than the costs of controlling firms that pursue other strategies. A. localized B. transnational C. international D. global

During the 1960s and 1970s, class divisions in _____ raised the cost of doing business there, relative to other European countries. A. Great Britain B. Switzerland C. Norway D. Germany

These strata are typically defined on the basis of characteristics such as family background, occupation, and income. A. Demographic strata B. Economic strata C. Social strata D. Cultural strata

There is low interdependence, performance ambiguity, and costs of control in firms pursuing a(n): A. localization strategy. B. international strategy. C. transnational strategy. D. global strategy.

Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as: A. norms. B. values. C. culture. D. society.

Sources of organizational inertia include all of the following, except: A. the existing distribution of power within the organization. B. environmental influences. C. the existing culture. D. senior managers' preconceptions about the appropriate business model.

The belief in the superiority of one's own culture is known as: A. ethnocentrism. B. egocentrism. C. polycentrism. D. theocentricism.

The benefits of doing business in a country are a function of all of the following except: A. the size of the market. B. its past growth. C. its present wealth. D. its future growth prospects.

The most global markets currently are markets for: A. services. B. consumer goods. C. consumer durables. D. industrial goods.

The need for coordination between subunits is highest in firms pursuing a(n) A. localization strategy. B. international strategy. C. global strategy. D. transnational strategy.

The need for coordination between subunits is lowest in firms pursuing a(n): A. localization strategy. B. international strategy. C. global strategy. D. transnational strategy.

The norms and values systems that are shared among the employees of a company are referred to as: A. processes. B. control systems. C. incentives. D. organizational culture.

These refer to abstract ideas about what a group believes to be good, right, and desirable. A. Values B. Norms C. Thoughts D. Ideas

10. The creation of a global web of value creation activities is the result of: A. location economies. B. diseconomies of scale. C. shortage of skilled labor. D. informal trade barriers.

1. Which of the following is not an element that constitutes a firm's marketing mix? A. Product attributes B. Communication strategy C. Reverse engineering D. Distribution strategy

1. _____ is the activity that controls the transportation of physical materials through the value chain, from procurement through production and into distribution. A. Outsourcing B. Production C. Logistics D. Distribution

10. Which of the following statements is false? A. Product reliability may be a more important attribute in most advanced countries. B.Consumers in highly developed countries tend to build a lot of extra performance attributes into their products. C.Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower prices. DConsumers in the most advanced countries often shun globally standardized products that have been . developed with the lowest common denominator in mind.

11. Contrary to Levitt's suggestions, consumers in the most developed countries are often: A. willing to sacrifice their preferred attributes for lower prices. B. not willing to pay more for products that have additional features customized to their tastes. C. not willing to sacrifice their preferred attributes for lower prices. D.willing to accept globally standardized products that have been developed with the lowest common denominator in mind.

11. Identify the incorrect statement pertaining to exchange rate movements. A. Adverse changes in exchange rates can quickly alter a country's attractiveness as a manufacturing base. B. Currency appreciation can transform a low-cost location into a high-cost location. C. Currency appreciation can cause firms to move their manufacturing offshore to lower-cost locations. D. A low-cost location can be transformed into a high-cost location because of currency depreciation.

12. Being too dependent on one location is particularly risky because of: A. floating exchange rates. B. fixed exchange rates. C. lack of movement in currencies. D. static exchange rates.

12. The means a firm chooses for delivering the product to the consumer is its: A. communication strategy. B. segmentation strategy. C. product attributes. D. distribution strategy.

13. According to the concept of economies of scale: A. as plant output reduces, unit costs decrease. B. as plant output expands, unit costs increase. C. as plant output reduces, unit costs remain static. D. as plant output expands, unit costs decrease.

13. The way a product is delivered is determined by: A. a firm's entry strategy. B. a firm's product positioning. C. the target market. D. market segmentation.

14. Identify an advantage of a low minimum efficient scale. A. Allows the firm to accommodate demands for local responsiveness B. Discounts currency risk by manufacturing all products in one location C. Helps keep overheads low at the expense of fixed costs D. Helps a firm to standardize its products for all markets

14. In a concentrated retail system: A. there are many retailers who have a major share of the market. B. there are many retailers, no one of which has a major share of the market. C. a few retailers supply a small segment of the market. D. a few retailers supply most of the market.

15. A company that wants to reduce set-up time for complex equipment, increase the utilization of individual machines through better scheduling, and improve quality control at all stages of the manufacturing process should adopt: A. standardization. B. diseconomies of scale. C. flexible machine technology. D. minimum efficient scale.

15. A country with high car ownership, a large number of households with refrigerators, and a large number of two income families tend to have: A. retail division. B. retail dispersion. C. retail concentration. D. retail fragmentation.

16. In a _____ retail system, a few retailers supply most of the market. A. fragmented B. dispersed C. focused D. concentrated

16. The term _____ has been coined to describe the ability of companies to use flexible manufacturing technology to reconcile the goals of low cost and product customization. A. assembly-line-like customization B. economies of customization C. mass customization D. standardized customization

17. A _____ retail system is one in which there are many retailers, no one of which has a major share of the market. A. concentrated B. consolidated C. focused D. fragmented

17. Flexible manufacturing technology is also known as: A. mass customization. B. lean production. C. flexible machine cells. D. minimum efficient scale.

18. According to the concept of economies of scale what is the best way to achieve high efficiency and low unit costs? A. Customizing products for each individual market B. Mass producing standardized outputs C. Concentrating on production of small volumes of products D. D. Increasing the product variety dramatically

18. Which of the following statements about retail systems is true? A. One factor contributing to greater retail concentration is an increase in car ownership. B. The number of households with refrigerators leads to lesser retail concentration in developed countries. C. There is a tendency for greater retail concentration in many developing countries. D. Retail systems are very fragmented in developed countries.

19. In terms of retail concentration, developed countries tend to have a higher degree of concentration than developing countries for all of the following reasons except: A. number of households with refrigerators and freezers. B. tradition of established local neighborhoods in which people walk to stores. C. increase in car ownership. D. number of two-income households that accompany development.

19. This allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output. A. Kaizen B. Six Sigma C. Lean production D. TQM

53. The Andean Pact is an example of a(n): A. economic union B. customs union C. common market D. political union

2. The set of choices the firm offers to its targeted market is known as the A. marketing mix. B. marketing concept. C. marketing strategy. D. market promotion.

2. _____ is a management philosophy according to which mistakes, defects, and poor-quality materials are not acceptable and should be eliminated. A. Scientific management B. Total quality management C. ISO 9000 D. Lean manufacturing

20. Which of the following is not a key difference between distribution systems in different countries? A. Channel speed B. Channel length C. Channel exclusivity D. Channel quality

20. _____ challenged the notion that the way to increase efficiency and drive down unit costs is to limit product variety and produce a standardized product in large volumes. A. Bartlett and Ghoshal's theory of a transnational company B. Minimum efficient scale C. Economies of scale D. Flexible manufacturing technology

21. A _____ is a grouping of various types of machinery, a common materials handler, and a centralized cell controller. A. flexible machine cell B. mass customization policy C. lean production system D. minimum efficient scale cluster

21. Developed countries are more likely to have a: A. concentrated retail system. B. fragmented retail system. C. crowded retail system. D. dispersed retail system.

22. All of the following are the major efficiency benefits of flexible manufacturing technologies except: A. it enables companies to customize products to the demands of small consumer groups. B .it helps a company achieve mass customization, which increases its customer responsiveness. C. it requires firms to establish manufacturing facilities in each major market to provide products that . satisfy specific consumer tastes and preferences. D. it improves capacity utilization and reductions in work in progress and waste.

22. The number of intermediaries between the manufacturer and the consumer is referred to as: A. channel reach. B. channel concentration. C. channel exclusivity. D. channel length.

23. If a producer sells through an import agent, a wholesaler, and a retailer, then A. a long channel exists. B. the retail system must be concentrated. C. the Internet probably plays a big role in the economy. D. there is no channel.

23. When a company's product has a low value-to-weight ratio, the company should: A. have a centralized manufacturing location. B. produce the product in multiple locations close to major markets. C. ignore transportation costs. D. produce the product in one optimal location and serve the world from there.

24. The most important determinant of channel length is the degree to which a retail system is: A. concentrated. B. fragmented. C. decentralized. D. globalized.

24. Which of the following statements about products with high value-to-weight ratios is true? A. They are relatively inexpensive and weigh a lot. B. They are expensive and do not weigh very much. C. Transportation costs usually account for a large percentage of their total costs. D. They must be produced in multiple locations close to major markets.

25. Which of the following is a characteristic of manufacturing technology that should be considered by a firm contemplating international production? A. Trade barriers B. Value-to-weight ratio C. Level of fixed costs D. Exchange rates

25. Which of the following statements about fragmented retail systems is true? A. Countries with fragmented retail systems tend to have short channels of distribution. B.The more fragmented the retail system, the less expensive it is for a firm to make contact with each individual retailer. C. Fragmented retail systems tend to promote the growth of wholesalers to serve retailers. D. When the retail sector is very fragmented, it makes sense for the firm to deal directly with retailers.

26. A company might consider decentralizing when: A. a product's value-to-weight ratio is high. B. the product serves universal needs. C. trade barriers are low. D. volatility in important exchange rates is expected.

26. What kind of retail systems do rural India and China have? A. Fragmented B. Direct C. Indirect D. Concentrated

27. By acquiring retailers in different countries, large global retailers such as Carrefour and Wal-Mart have increased: A. retail concentration. B. retail fragmentation. C. retail dispersion. D. retail crowding.

27. The concentration of production makes most sense when: A. volatility in important exchange rates is expected. B. the product's value-to-weight ratio is high. C. location externalities are not important. D. trade barriers are high.

28. The concentration of production is favored when all of the following factors are high except A. fixed costs. B. minimum efficient scale. C. value-to-weight ratio. D. trade barriers.

28. With a concentrated retail sector: A. a relatively large sales force is required. B. the orders generated from each sales call can be large. C. there are long channels of distribution. D. it is expensive for the firm to make contact with each individual retailer.

29. A(n) _____ distribution channel is one that is difficult for outsiders to access. A. selective B. intensive C. exclusive D. multichannel

29. Initially, many foreign factories are established where _____ are low. A. trade barriers B. inventory turnover C. marketing costs D. labor costs

3. Research has long maintained that a major factor of success for new products is the closeness of the relationship between: A. finance and marketing. B. marketing and R&D. C. finance and materials management. D. finance and R&D.

3. The Six Sigma methodology: A. is a direct descendant of the total quality management philosophy. B. is a direct descendant of benchmarking. C. was adopted first by British companies and then Japanese companies during the 1980s. D. was developed by Deming, Juran, and Feigenbaum.

30. Decisions a firm must make about whether to perform a certain value creation activity themselves, or outsource it to another entity are best known as: A. outsource potential decisions. B. in-house potential decisions. C. make-or-buy decisions. D. integration decisions.

30. When a channel is exclusive: A. it carries only high-end products. B. it is controlled by market leaders or by firms who have a niche market. C. it focuses only on elite customers. D. it is often difficult for a new firm to get access to shelf space in supermarkets.

31. The expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses is referred to as their: A. channel exclusivity. B. channel knowledge. C. channel quality. D. channel skill.

31. Which of the following is not an argument that supports making a product in-house? A. Vertical integration may be associated with higher costs. B. Vertical integration may protect proprietary product technology. C. Vertical integration may facilitate investment in highly specialized assets. D. Vertical integration may ease the scheduling of adjacent processes.

32. A _____ is an asset whose value is contingent upon a particular relationship persisting. A. specialized asset B. common asset C. complementary asset D. supplementary asset

32. Which of the following does not affect a firm's international communication? A. Cultural barriers B. Source effects C. Channel exclusivity D. Noise levels

33. A firm will prefer to make the component internally rather than contract it out to a supplier, because of all of the following reasons except: A. it needs to maintain control over its proprietary technology. B. substantial investments in specialized assets are required to manufacture a component. C. the firm completely trusts the independent supplier to play fair. D. it runs the risk that suppliers will expropriate the technology for their own use.

33. To overcome cultural barriers, companies should: A. develop products specifically for each market. B. focus on universal needs. C. focus only on market segments that transcend national boundaries. D. develop cross-cultural literacy.

34. How can firms attain tight coordination between different stages in the production process? A. By using information technology B. By lowering the costs of value creation C. By implementing ISO 9000 D. By minimum efficient scale of output

34. When the receiver of a message evaluates a message based on the status or image of the sender, _____ are said to have occurred. A. sender effects B. noise effects C. source effects D. communication effects

35. The extent to which the place of manufacturing influences product evaluations is known as: A. source effects. B. country of origin effects. C. noise effects. D. location effects.

35. Which of the following is not a reason to outsource production? A. It can give the firm greater flexibility B. It can make planning, coordination, and scheduling of adjacent processes easier C. It can help drive down the firm's cost structure D. It may help the firm capture orders from international customers

36. An advantage of buying component parts, or even an entire product, from independent suppliers is that: A. the firm can maintain its flexibility of switching orders between suppliers as circumstances dictate. B. it can make planning, coordination, and scheduling of adjacent processes easier for the firm. C. it reduces the risk for the firm that suppliers will expropriate the technology for their own use. D. the firm is able to maintain firm control over its proprietary technology.

36. The probability of effective communications is reduced by: A. noise effects. B. location effects. C. country of origin effects. D. source effects.

37. Vertical integration may raise a firm's cost structure for all of the following reasons except: A. the greater the number of subunits in an organization, the more problems coordinating and controlling those units. B. the firm that vertically integrates into component part manufacturing may find that because its internal suppliers have an active customer, they lack the motivation to be more efficient. C. vertically integrated firms have to determine appropriate prices for goods transferred to subunits within the firm. D. it makes planning, coordination, and scheduling of adjacent processes more difficult, as compared to buying from independent suppliers, particularly with just-in-time inventory systems.

37. Which of the following statements about barrier to international communication is true? A.Source effects occur when the receiver of the message evaluates the message on the basis of the location of the sender. B. The best way for a firm to overcome cultural barriers is to use local input. C. Source effects and country of origin effects are always negative. D. Noise is extremely high in highly developed countries such as the United States.

37. _____ refers to the activities an organization carries out to utilize its human resources effectively. A. Organizational behavior B. Strategic management C. Human resource management D. Labor relations

38. Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable in: A. politically unstable developing nations that operate with a mixed or command economy. B. nations where there is a dramatic upsurge in either inflation rates or private-sector debt. C. politically stable developed and developing nations that have free market systems. D. developing nations where speculative financial bubbles have led to excess borrowing.

38. The major costs saving associated with JIT comes from: A. speeding up inventory turnover. B. having materials arrive at a manufacturing plant before they are needed. C. avoiding production slowdowns by ensuring inventory is stockpiled. D. using warehouse space to maintain on-hand inventory.

38. When a firm emphasizes personal selling rather than mass media advertising in the promotional mix, the firm is using a: A. standardized strategy. B. pull strategy. C. push strategy. D. localized strategy.

38. _____ is/are the linchpin of a firm's organization architecture. A. People B. Strategy C. Business processes D. Organizational structure

53. Which of the following is an example of a primary activity in a firm's value chain? A. Information systems B. Research and development C. Logistics D. Human relations

39. Firms should build a strong corporate culture and an informal management network for transmitting information and knowledge within the organization if they are pursuing a(n): A. transnational strategy. B. localization strategy. C. global standardization strategy. D. international strategy.

39. Just-in-time inventory systems: A. can help firms improve product quality. B. are fast becoming obsolete. C. require that parts be warehoused. D. give firms a buffer stock of inventory.

39. Which of the following is not an advantage associated with entering a foreign market before other international businesses? A. Ability to preempt rivals and capture demand by establishing a strong brand name. B. Ability to ride down the experience curve ahead of rivals. C. Ability to create switching costs. D. Ability to avoid pioneering costs.

39. Which of the following statements is true? A. Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a push strategy. B. Mass communication has cost advantages for firms in consumer goods industries that are trying to sell to a large segment of the market. C. Direct selling may be the only way to reach consumers in poor nations with low literacy levels. D. Firms that sell industrial products or other complex products favor a pull strategy.

4. According to Levitt, which of the following statements is true? A. Technology drives the world toward a converging commonalty. B. There are accustomed differences in national preferences. C. The multinational corporation operates in a number of countries at low relative costs. D. The global corporation operates with resolute consistency at high relative costs.

4. Saving time by not producing poor-quality products that cannot be sold, lowering rework costs, lowering scrap costs, and lowering warranty costs are the intended results of: A. total feature management. B. reengineering. C. logistics. D. total quality management.

40. A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using a: A. pull strategy. B. push strategy. C. standardized strategy. D. localized strategy.

40. Switching costs: A. drive early entrants out of the market. B. make it easy for later entrants to win business. C. make it difficult for later entrants to win business. D. give later entrants a cost advantage over early entrants.

40. Which of the following is a drawback associated with a JIT system? A. There are high transportation costs involved B. It leaves a firm without a buffer stock of inventory C. It leaves a firm with scrap costs associated with defective products D. It increases the warranty costs

40. Which of the following is mainly concerned with the selection of employees for particular jobs? A. Retention policy B. Staffing policy C. Incentive policy D. Appraisal policy

41. An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as: A. regional economic integration. B. socioeconomic integration. C. political integration. D. economic-political integration.

41. Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on: A. economies of scale. B. pioneering costs. C. first-mover advantages. D. late-mover advantages.

41. Factors that determine the relative attractiveness of push and pull strategies include all of the following except: A. product type relative to consumer sophistication. B. channel length. C. noise levels. D. media availability.

41. Many Japanese firms prefer expatriate Japanese managers to head their foreign operations because these managers have been socialized into the firm's culture while employed in Japan. This implies that: A. the firm may believe that such managers cannot progress beyond senior positions in their parent company. B. the firm may see an ethnocentric staffing policy as the best way to maintain a unified corporate culture. C. the firm is trying to create value by transferring core competencies to a foreign operation. D. the firm requires host-country nationals to be recruited to manage subsidiaries.

41. The rate at which one currency is converted into another is the: A. replacement percentage. B. resale rate. C. exchange rate. D. interchange ratio.

41. Which of the following is not one of the main instruments of trade policy? A. Tariffs B. Credit portfolios C. Local content requirements D. Administrative policies

41. With _____, suppliers, shippers, and the purchasing firm can communicate with each other with no time delay. A. a CAD system B. a JIT system C. a CAM system D. an EDI system

41. _____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital. A. Profitability B. Performance C. Cash flow D. Efficiency

42. A polycentric approach to staffing is one in which: A. all key management positions are filled by parent company nationals. B. host-country nationals are recruited to manage subsidiaries while parent-company nationals occupy key positions at corporate headquarters. C. the best people, regardless of nationality, are recruited to fill key positions throughout the organization. D. parent-company nationals are recruited to manage subsidiaries while host-country nationals occupy key positions.

42. All of the following are examples of pioneering costs except the costs of: A. business failure. B. educating consumers. C. promoting and establishing a product offering. D. learning from the mistakes of early entrants.

42. Specific tariffs are: A. levied as a proportion of the value of the imported good. B. levied as a fixed charge for each unit of a good imported. C. in the form of manufacturing or production requirements of goods. D. government payment to domestic producers.

42. The movement toward regional economic integration has been most successful in: A. Latin America. B. North America_ C. Europe. D. Asia_

42. The percentage increase in net profits over time measures: A. capital return. B. profitability. C. net profits. D. profit growth

42. The risks that arise from volatile changes in exchange rates are commonly referred to as: A. interest rate risks. B. basis risks. C. operational risks. D. foreign exchange risks.

42. When firms in the consumer goods industry are trying to sell to a large segment of the market they favor a: A. push strategy. B. pull strategy. C. standardized strategy. D. localized strategy.

43. A(n) _____ strategy is favored by firms that sell industrial products or other complex products. A. localized B. indirect C. push D. pull

43. Identify the incorrect statement pertaining to the European Union. A. In 1993, it formally removed many bathers to doing business across borders within the EU B. Its member states have launched a single currency, the elm°. C. It was joined by two countries Switzerland and Norway, in 2007. D. It has expanded to 27 countries in 2007.

43. Tariffs do not benefit: A. consumers. B. domestic producers. C. governments. D. domestic firms.

43. The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as: A. switching costs. B. market development costs. C. pioneering costs. D. promotional development costs.

43. The foreign exchange market serves two main functions. These are: A. collect duties on imported products and convert the currency of one country into the currency of another. B. insure companies against foreign exchange risk and set interest rates charged to foreign investors. C. collect duties on imported products and set interest rates charged to foreign investors. D. convert the currency of one country into the currency of another and provide some insurance against foreign exchange risk.

43. Which of the following is a drawback of the polycentric approach to staffing? A. Firms are likely to suffer from cultural myopia. B. Host-country nationals are vulnerable to cultural misunderstandings. C. This approach increases the cost of value creation. D. Host-country nationals have limited opportunities for advancement beyond senior positions in their subsidiary.

43. Which of the following statements is not true? A. The way to increase the profitability of a firm is to create more value. B . The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. C. The more value customers place on a firm's products, the higher the price the firm is able to charge for those products. D. The price a firm charges for a good or service is typically more than the value the customer places on that good or service

44. A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with: A. demand preemption. B. diseconomies of scale. C. pioneering costs. D. diseconomies of scope.

44. A pair of shoes costs ≤30 in Britain. The identical pair costs $45 in the United States. The exchange rate is ≤1 = $1.80. In terms of cost of the shoes: A. the U.S. offers a better deal. B. the deal is the same in both countries. C. Britain offers a better deal. D. the U.S. deal is comparatively worse.

44. Cultural myopia refers to a firm's failure to: A. adapt to certain ethnocentric cultures through the expatriate. B. permanently implement parent-company culture in the host country. C. understand host-country cultural differences that require different approaches to marketing and management. D. identify countries which are much tougher postings than others because their cultures are more unfamiliar and uncomfortable.

44. Import tariffs: A. reduce the price of foreign goods. B. reduce the overall efficiency of the world economy. C. create efficient utilization of resources. D. are unambiguously pro-consumer and anti-producer.

44. On January 1, 1993 ______ moved toward a single market with 340 million consumers. A. the European Union B. MERCOSUR C. the Andean community D. NAFTA

44. The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because: A. the customer's disposable income is significantly higher than what the market demands. B. the customer captures some of that value in the form of a consumer surplus. C. regulatory mechanisms ensure that the customer is not overcharged for products/services. D. marketers implement psychological pricing tactics to ensure that customers perceive the prices to be low.

44. When distribution channels are short, firms should: A. use a direct channel. B. use a push strategy. C. focus on consumer products or other standardized products. D. focus on industrial products or other complex products.

45. A push strategy is appropriate when: A. there are many choices of electronic media. B. the firm is selling consumer goods. C. distribution channels are long. D. the firm is selling complex new products.

45. All of the following are true of tariffs except: A. they reduce the revenue for the government. B. they can be levied as a proportion of the value of the imported good. C. they can be levied as a fixed charge for each unit of a good imported. D. they impose significant costs on domestic consumers.

45. An exchange rate of €1 = $1.30 indicates that: A. $1 is worth 1.30 euros. B. one could sell 1.30 euros for $1. C. one euro buys $1.30. D. there are 1.30 euros for every dollar.

62. Which of the following is not a main institution in the political structure of the EU? A. The European Parliament B. The European Central Bank C. The European Commision D. Council of the European Union

45. If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquarters, the firm is following a(n): A. ethnocentric staffing policy. B. regiocentric staffing policy. C. polycentric staffing policy. D. geocentric staffing policy.

45. In 1991, Argentina, Brazil, Paraguay, and Uruguay implemented an agreement known as: A. NAFTA B. MERCOSUR C. APEC D. FTAA

45. The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as: A. consumer surplus per unit. B. producer surplus per unit. C. profit growth. D. profit per unit sold.

45. Which of the following statements about small-scale entry is true? A. The commitment associated with a small-scale entry makes it possible for the small-scale entrant to capture first-mover advantages. B. Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale. C. By giving a firm time to collect information, small-scale entry increases the risks associated with a subsequent large-scale entry. D. Small-scale entry limits a firms ability to learn about a foreign market thereby also limiting the firm's exposure to that market.

46. A consumer surplus can be best described as: A. what the consumer has "left-over" after a purchase. B. how much extra a consumer has to pay for a product. C. value for the money. D. the premium charged for a quality product.

46. By lowering production costs, help domestic producers compete against foreign imports. A. tariffs B. duties C. quotas D. subsidies

46. Food and detergents giant Unilever had foreign subsidiaries that had evolved into quasi-autonomous operations, each with its own strong national identity. They objected strenuously to corporate headquarters' attempts to limit their autonomy. Thus, Unilever found it very difficult to shift from a strategic posture that emphasized localization to a transnational posture because of: A. difficulty in achieving the coordination required to pursue experience curve and location economies. B. the difficulty in achieving coordination required to transfer core competencies. C. the federation that resulted from a polycentric approach. D. expensive implementation and increased costs of value creation.

46. If a firm is facing long distribution channels, the firm should choose a _____ strategy. A. competitive advertising B. price discrimination C. predatory pricing D. pull

46. The helps us to compare the relative prices of goods and services in different countries. A. interest rate B. customs rate C. exchange rate D. tariff rate

46. These are the most popular form of regional economic integration, accounting for almost 90% of regional agreements A. Free trade areas B. Customs unions C. Common markets D. Economic unions

46. Which of the following is not an advantage of a small-scale entry? A. A small-scale entrant is more likely to be able to capture first-mover advantages associated with demand preemption, scale economies, and switching costs. B. Small-scale entry is a way to gather information about a foreign market before deciding how best to enter. C. By giving the firm time to collect information, small-scale entry reduces the risks associated with a subsequent large-scale entry. D. Small-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market.

47. If a firm can realize location economies by moving production elsewhere, it should avoid: A. exporting. B. turnkey contracts. C. licensing. D. wholly owned subsidiaries.

47. If media availability is limited, a firm should: A. use a push strategy. B. use a pull strategy. C. consider a longer channel. D. consider a shorter channel.

47. International businesses use foreign exchange markets for all of the following reasons except: A. to receive payments from foreign investments that may be in foreign currencies. B. to pay a foreign company for its products or services in its country's currency. C. to invest for short terms in money markets when they have spare cash. D. to cover themselves from all risks involved in currency speculation.

47. Michael Porter has argued that _____ and _____ are two basic strategies for creating value and attaining a competitive advantage in an industry. A. differentiation; price competition B. economies of scale; diversification. C. low cost; differentiation D. efficiency; promotion

47. What is the most important advantage of using a geocentric staffing policy? A. It enables the firm to build a cadre of international executives who feel at home working in a number of cultures. B. It may be less expensive to implement than other policies, reducing the costs of value creation. C. The higher pay managers on an international fast track enjoy is a source of inspiration within a firm. D. It involves no costs of training and relocation when transferring managers from country to country.

47. Which of the following observations about subsidies is false? A. Government subsidies must be paid for, typically by taxing individuals and corporations. B. They mainly benefit domestic producers, whose international competitiveness is increased. C. Whether they generate national benefits that exceed their national costs is debatable. D. They help foreign producers gain a competitive advantage over domestic producers.

47. Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated? A. Economic union, common market, customs union, free trade area, and full political union. B. Common market, economic union, full political union, free trade area, and customs union. C. Free trade area, customs union, common market, economic union, and full political union D. Full political union, free trade area, common market, customs union, and economic union.

48. A strategy that focuses on increasing the attractiveness of a product is referred to as a(n): A. differentiation strategy. B. low cost strategy. C. effectiveness strategy. D. efficiency strategy

62. _____ makes it difficult to evaluate the performance of expatriate managers objectively. A. Feedback B. Hard data C. Knowledge D. Bias

48. Agricultural subsidies have been criticized for all of the following reasons except: A. they allow inefficient farmers stay in business. B. they discourage countries to overproduce heavily subsidized agricultural products. C. they encourage countries to produce products that could be grown more cheaply elsewhere and imported. D. they reduce international trade in agricultural products.

48. At the Doha Round of the WTO in late 2001, A. the WTO was established. B. GATT was extended to include services. C. world trade volume increased. D. an agenda was established to phase out subsidies to agricultural producers.

48. In a free trade area: A. barriers to the trade of goods and services among member nations are removed. B. a common currency is adopted C. a single parliament determines political and foreign policy. D. a common external trade policy is adopted.

48. The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as: A. currency arbitrage. B. currency speculation. C. currency supposition. D. short selling.

48. Which of the following is a distinct advantage of exporting? A. It avoids the often substantial costs of establishing manufacturing operations in the host country. B. Benefits from a local partner's knowledge of the host country's competitive conditions. C. Avoids the threat of tariff barriers by the host-country government. D. Appropriate if lower cost locations for manufacturing the product can be found abroad.

48. Which of the following is a problem that limits a firm's ability to pursue a geocentric policy? A. The lack of management transfers from home to host countries, and vice versa, can lead to a lack of integration between corporate headquarters and foreign subsidiaries. B. The higher pay managers on an international fast track enjoy may be a source of resentment within a firm. C. The firm fails to understand host-country cultural differences that require different approaches to marketing and management. D. It limits advancement opportunities for host-country nationals.

48. Which of the following is an argument that supports global advertising? A.Standardized advertising lowers the costs of value creation by spreading the fixed costs of developing . the advertisements over many countries. B.Because of concerns about the scarcity of creative talent, some feel that smaller efforts will produce . better results than one large effort to develop a campaign. C .Even though there are cultural differences between nations, a single advertising theme that is effective . worldwide can be easily developed. D. Standardized advertising may be implemented even in the face of advertising regulations.

49. According to the policy, subsidies can help a firm achieve a first-mover advantage in an emerging industry. A. strategic trade B. antidumping C. tariff quota D. free trade

49. An ethnocentric approach to staffing is appropriate for firms that are pursuing a(n): A. international strategy. B. localization strategy. C. global standardization strategy. D. transnational strategy.

49. In a(n)____, no discriminatory tariffs, quotas, subsidies, or administrative impediments are allowed to distort trade between member nations; however, each country is allowed to determine its own trade policies with regard to nonmembers. A. common market B. economic union C. political union D. free trade area

49. One function of the foreign exchange market is to provide some insurance against the risks that arise from changes in exchange rates, commonly referred to as: A. foreign market hazard. B. global jeopardy. C. foreign exchange risk. D. commerce uncertainty.

49. The _____ shows all of the different positions a firm can adopt with regard to adding value to the product and low cost assuming the firm's internal operations are configured efficiently to support a particular position. A. strategic choice curve B. strategy convex C. efficiency frontier D. experience curve

49. When a company charges whatever the market will bear, the company is using: A. strategic pricing. B. price discrimination. C. a push strategy. D. a pull strategy.

49. When a firm faces significant transportation costs, _____ can be uneconomical. A. joint ventures B. greenfield investments C. licensing agreements D. exporting

5. Before a firm is allowed access to the European marketplace, the European Union requires that the quality of the firm's manufacturing processes and products be certified under a quality standard known as: A. total quality management. B. reengineering. C. quality management system. D. ISO 9000.

5. The continuing persistence of _____ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences. A. technological and industrial B. institutional and political C. cultural and economic D. GNP level and growth rate

50. In order for price discrimination to be successful: A. there must be a strong case for arbitrage. B. markets must be kept separate. C. demand must be very elastic. D. a large change in demand must be triggered by a small change in price.

50. The most enduring free trade area in the world is the: A. Asia Pacific Economic Cooperation B. MERCOSUR C. European Free Trade Association D. North American Free Trade Association

50. This is a direct restriction on the quantity of some good that may be imported into a country. A. Specific tariff B. Import quota C. Subsidy D. Ad valorem tariff

50. What is the advantage of using an ethnocentric staffing approach? A. Uses human resources efficiently B. Alleviates cultural myopia C. Inexpensive to implement D. Helps transfer core competencies

63. Cross-licensing agreements are increasingly common in the _____ industry. A. transportation B. high-technology C. construction D. consumer durables

50. When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service. A. wholly owned subsidiary B. franchising arrangement C. turnkey operation D. licensing agreement

50. When two parties agree to exchange currency and execute the deal immediately, the transaction is a: A. point-in-time exchange. B. temporal exchange. C. spot exchange. D. forward exchange.

50. _____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs. A. Efficiency matrixes B. Diminishing returns C. Cost plus curves D. Strategy convex curves

51. A citizen of France who moves to Germany to work at BMW is a(n): A. host-country national. B. local. C. inpatriate. D. acquired citizen.

51. If a _____ change in a price produces a _____ change in demand, then price is elastic. . A. small, large B. small, small C. large, small D. large, large

51. If lots of people want euros and euros are in short supply, and a few people want Japanese yen and yen are in plentiful supply, the euro is likely to against the yen. A. depreciate B. appreciate C. devalue D. stabilize

51. In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. Identify the trade restriction being imposed by the United States. A. Import quota B. Subsidy C. Ad valorem tariff D. Specific tariff

51. The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, except: A. choose, according to strategy, any position on the efficiency frontier as all positions are viable. B. pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice. C. configure its internal operations so that they support the position on the efficiency frontier. D. make sure that the right organization structure is in place to execute the strategy.

51. When local agents carry the products of competing firms and have divided loyalties, _____ is not appropriate. A. franchising B. licensing C. exporting D. greenfield investment

51. Which of the following statements best defines a common market? A. All barriers to trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries. B. It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies C. It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members D. It eliminates trade between member countries and adopts a common external trade policy.

52. A common hybrid of a quota and a tariff is known as a(n): A. quota rent. B. voluntary export restraint. C. ad valorem tariff. D. tariff rate quota.

52. A measure of the responsiveness of demand for a product to change in price is referred to as: A. arbitrage demand. B. predatory pricing. C. price elasticity of demand. D. experience curve pricing.

52. The premature return of an expatriate manager to his/her home country is known as: A. repatriation. B. expatriate failure. C. inpatriate failure. D. foreign manager failure.

52. The threat of tariff barriers by the host government can make _____ very risky. A. greenfield investment B. franchising C. licensing D. exporting

52. Which of the following statements best defines a customs union? A. All barriers to trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries. B. It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies C. It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members D. It eliminates trade between member countries and adopts a common external trade policy.

52. _____ activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service. A. Support B. Subordinate C. Ancillary D. Primary

53. A quota on trade imposed by the exporting country, typically at the request of the importing country's government is referred to as a(n): A. voluntary export restraint. B. specific tariff quota. C. trade reconciliation. D. ad valorem tariff.

53. Assuming the 30-day forward exchange rate were $1 = ×130 and the spot exchange rate were $1 = ×120, the dollar is selling at a on the 30-day forward market. A. premium B. margin C. discount D. subsidy

53. Identify the incorrect statement about turnkey projects. A. The contractor agrees to handle every detail of the project for a foreign client. B. They are most common in industries which use inexpensive production technologies. C. This is a means of exporting process technology to other countries. D. They create efficient global competitors in the process.

53. Mendenhall and Oddou's "others-orientation" dimension, in their study on what predicts success in foreign jobs postings, refers to: A. the expatriate's self-esteem, self-confidence, and mental well-being. B. the expatriate's ability to interact effectively with host-country nationals. C. the expatriate's ability to understand why people of other countries behave the way they do. D. the relationship between the country of the assignment and how well an expatriate adjusts to a particular posting.

53. _____ occurs when an individual or business capitalizes on a price differential for a firm's product between two countries by buying the product in the country where the price is low and reselling it in the country where prices are higher. A. Arbitrage B. Strategic pricing C. Price discrimination D. Market pricing

54. A quota rent is: A. a quota on trade imposed by the exporting country. B. levied as a fixed charge for each unit of a good imported. C. levied as a proportion of the value of the imported good. D. the extra profit producers make when supply is artificially limited by an import quota.

54. Identify the incorrect statement about a common market A. It has no barriers to trade between member countries B. It includes a common external trade policy C. It establishes a central political apparatus coordinating the economic, social, and foreign policy of the member states. D. It allows factors of production to move freely between members

54. In which of the following industries are turnkey projects the most common? A. Fresh fruit, grain, and meat products. B. Chemical, pharmaceutical, and metal refining. C. Consumer durables, computer peripherals, and automotive parts. D. Apparel, shoes, and leather products.

54. The marketing and sales functions of a firm can help to create value through all of the following ways, except: A. creating goods and services. B. brand positioning. C. advertising. D. communicating consumer needs to R&D.

54. The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as a: A. fiscal barter. B. liquid trade. C. currency exchange. D. currency swap.

54. Which dimension of Mendenhall and Oddou's study suggests that an expatriate with high self-esteem, self-confidence, and mental well-being is likely to succeed in a foreign job posing? A. Self-orientation B. Others-orientation C. Cultural toughness D. Perceptual ability

54. Which of the following statements about price discrimination is true? A. It exists whenever consumers in a country are charged different prices for the same product. B. It involves charging whatever the market will bear. C. It is the use of price as a competitive weapon to drive weaker competitors out of a national market. D. It makes economic sense to charge the same prices across countries.

55. A turnkey strategy: A. is always riskier than conventional FDI. B. is never used in a country with unstable political and economic environments. C. is useful where FDI is limited by host-government regulations. D. is a strong indicator of a firm's long-term interest in a foreign country.

55. A(n) _____ involves the free flow of products and factors of production between member countries and the adoption of a common external trade policy, along with a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy. A. free trade area B. economic union C. common market D. customs union

55. Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is ×120 = $1, and the New York yen/dollar exchange rate at the same time is ×125 = $1. A dealer makes a profit by buying a currency low and selling it high. The dealer has engaged in a(n): A. currency swap. B. arbitrage. C. backwardation. D. straddle.

55. Expatriate managers who lack this dimension of predicting success in a foreign posting tend to treat foreign nationals as if they were home-country nationals. A. Others-orientation B. Self-orientation C. Perceptual ability D. Cultural toughness

55. Foreign producers typically agree to voluntary export restrictions because: A. their manufacturing capacity is limited. B. they can divert their exports to other countries and charge more for their products. C. they fear far more damaging punitive tariffs or import quotas might follow if they do not. D. they are required to by the World Trade Organization.

55. What is the most important factor in determining the elasticity of demand for a product in a given country? A. Personal selling B. Logistics C. Operating revenue D. Income level

55. Which of the following is an example of a support activity in a firm's value chain? A. R&D B. Customer service C. Human resources D. Marketing and sales

56. A political benefits of economic integration is that: A. It enables participants to achieve gains from the free flow of trade B. it enables participants to achieve gains from the free flow of investment C. it allow countries to specialize in the production of goods and services that they can produce most efficiently. D. linking neighboring economies creates incentives for cooperation between the neighboring states and reduces the potential for violent conflict.

56. If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen? A. The dollar will appreciate against the yen B. The dollar will depreciate against the yen C. The exchange rates will remain the same D. The yen will appreciate against the dollar

56. Many Western firms that sold oil-refining technology to firms in Gulf states now find themselves competing with these firms in the world oil market. This is an example of: A. the firm entering into a turnkey project with a foreign enterprise, inadvertently creating a competitor. B. the firm entering into a turnkey deal having no long-term interest in the foreign country. C. the country subsequently proving to be a major market for the output of the process that has been exported. D. selling the firm's process technology through a turnkey project which is also selling competitive advantage to potential competitors

56. Mendenhall and Oddou identified cultural toughness as one of the dimensions in their study on dimensions that predict success in foreign jobs postings. This dimension refers to: A. the expatriate's self-esteem, self-confidence, and mental well-being. B. the expatriate's ability to interact effectively with host-country nationals. C. the expatriate's ability to understand why people of other countries behave the way they do. D. the relationship between the country of the assignment and how well an expatriate adjusts to a particular posting.

62. involves dominant enterprises setting different prices in different markets to reflect varying demand conditions. A. Conditional pricing B. Dual pricing C. Price discrimination D. Foreign market pricing

56. Which of the following statements concerning a voluntary export restraint is false? A. It benefits domestic producers by limiting import competition B. In most cases, it benefits consumers C. It raises the domestic price of an imported good D. It is a variant of the import quota

56. Which of the following statements is false? A. The lesser the number of competitors, the higher the elasticity of demand. B. When competitors are limited, consumers' bargaining power is weaker. C. A firm may charge a higher price for its product in a country where competition is limited than in one where competition is intense. D. When there is high elasticity of demand and a firm raises its prices above those of its competitors, . consumers will switch to the competitors' products.

56. _____ activities of the value chain provide inputs that allow the primary activities to occur. A. Complementary B. Basic C. Support D. Core

57. According to some researchers, which of the following is a fundamental attribute of a global manager and is characterized by cognitive complexity and a cosmopolitan outlook? A. A global mind-set B. Cultural toughness C. High self-esteem D. Perceptual ability

57. According to the , in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency. A. law of one price B. principle of consistent pricing C. model of fair pricing D. principle of equitable pricing

57. All of the following are reasons why economic integration has never been easy to achieve or sustain except: A. even though it aids the majority, it has its costs. B. a nation as a whole may benefit significantly, but certain groups may lose. C. There are concerns over loss of national soverignty D. Linking neighboring economies makes them increasingly dependent on each other

57. Firms that lack the capital necessary to develop foreign operations may choose _____ as a means of expanding internationally. A. turnkey projects B. licensing C. greenfield investments D. acquisitions

57. In a country where competition is limited, A. prices will be low. B. there will be low elasticity of demand. C. prices will be high. D. consumers' bargaining power rises.

57. The _____ function creates value by ensuring the company has the right mix of people to perform activities effectively. A. information systems B. company infrastructure C. human resources D. logistics

57. These are requirements that some specific fraction of a good be produced domestically. A. Import quotas B. Voluntary export restraints C. Local content requirements D. Antidumping duties

58. According to the law of one price, if the exchange rate between the British pound and the dollar is ≤1 = $1.50, a jacket that retails for $75 in New York should sell for in London. A. ≤40 B. ≤50 C. ≤60 D. ≤75

58. An arrangement whereby a firm grants the right of intangible property to another entity for a specified time period in exchange for royalties is a(n) _____ agreement. A. wholly owned subsidiary B. turnkey C. licensing D. exporting

58. For to work, the firm must normally have a profitable position in another national market, which it can use to subsidize aggressive pricing in the market it is trying to monopolize. A. multipoint pricing B. value-based pricing C. experience curve pricing D. predatory pricing

58. Global expansion allows firms to achieve all of the following, except: A. standardize their product offering, marketing strategy, and business strategy for all national conditions. B. realize location economies by dispersing value creation activities to the optimal location. C. realize cost economies from experience effects generated by serving a larger market from a central location. D. expand the market for their domestic product offerings by selling those products in international markets.

58. Ping Yee is a manager at a multinational technology firm and is being sent to Japan to head the company's operations there. As a part of training, a familiarization trip to Japan has been planned for her before her formal transfer. What type of training is Ping Yee receiving? A. Language training B. Cultural training C. Practical training D. Transfer training

58. The specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage. A. Buy America Act B. Anti-Dumping Act C. Helms-Burton Act D. D'Amato Act

58. ___ occurs when high-cost domestic producers are replaced low-cost domestic producers within the free trade area. A. A free trade zone B. Trade diversion C. Trade creation D. Trade interpretation

59. A firm focusing on _____ will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. A. organizational advantage B. core competency C. competitive gains D. technical skill sets

59. Administrative trade policies are: A. requirements that some specific fraction of a good be produced domestically. B. quotas on trade imposed by the exporting country. C. bureaucratic rules designed to make it difficult for imports to enter a country. D. designed to punish foreign firms that engage in dumping.

59. Patents, inventions, formulas, processes, designs, copyrights, and trademarks are all forms of A. licensing agreements. B. franchising agreements. C. intangible property. D. tangible property.

59. The suggests that given relatively efficient markets, the price of a "basket of goods" should be roughly equivalent in each country. A. theory of efficient markets B. law of one price C. theory of price inflation D. PPP theory

59. This refers to impact a firm's pricing strategy in one market may have on its rivals' pricing strategy in another market. A. Multipoint pricing B. Experience curve pricing C. Predatory pricing D. Competitive pricing

59. Trade diversion occurs when: A. low-cost producers within the free trade replace high-cost domestic producers. B. lower-cost suppliers replace higher-cost external suppliers within the free trade area C. higher-cost external suppliers replace lower-cost domestic producers within the free trade area. D. higher-cost suppliers replace lower-cost external suppliers within the free trade area.

59. Which of the following statements is true regarding practical training? A. Practical training is provided to foster an appreciation for the host country's culture. B. The local community is a significant source of support in helping an expatriate family adapt to a foreign culture. C. Expatriates should delay the process of establishing a routine as it increases the likelihood of premature return on account of monotony. D. Where an expatriate community exists, firms often devote considerable effort to ensuring that the new expatriate family is quickly integrated into that group.

6. The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as: A. market segmentation. B. market penetration. C. diversification strategy. D. differentiation.

6. The modern successor to TQM is: A. Corporate Quality Commitment. B. ISO 9000. C. Quality Process Realized. D. Six Sigma.

60. Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as: A. factor economies. B. production economies. C. location economies. D. value creation economies.

60. Suppose the price of a Big Mac in New York is $3.00 and the price of a Big Mac in Paris is $3.75 at the prevailing euro/dollar exchange rate, then according to PPP the euro is: A. undervalued by 25 percent against the dollar. B. overvalued by 25 percent against the dollar. C. appreciating relative to the dollar. D. depreciating relative to the dollar.

60. The European Community was established by: A. The Treaty of Rome signed in 1957 B. The Maastricht Treaty signed in 1991 C. The Maastricht Treaty of 1994 D. The Single European Act of 1987

60. Tight cross-functional integration between R&D, production, and marketing can help a company to ensure that all of the following take place except: A. time to market is minimized. B. development costs are kept in check. C. new products are designed for ease of manufacture. D. product development projects are driven by internal needs.

60. What is the primary advantage of licensing? A. It helps a firm avoid the development costs associated with opening a foreign market. B. It gives a firm the tight control over manufacturing, marketing, and strategy. C. It helps a firm achieve experience curve and location economies. D. It increases a firm's ability to utilize a coordinated strategy.

60. Which among the following is seen as the final link in an integrated, circular process that connects good selection and cross-cultural training of expatriate managers with completion of their term abroad and reintegration into their national organization? A. Residency B. Visitation C. Repatriation D. Homecoming

60. Which of the following is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value? A. Export restraint B. Dumping C. Local content requirement D. Ad valorem

61. Antidumping duties are often called: A. special circumstance duties. B. positive duties. C. retroactive duties. D. countervailing duties.

61. Identify the incorrect statement about the PPP theory. A. It predicts that exchange rates are determined by relative prices. B. It yields accurate predictions in the short run. C. It best predicts exchange rate changes for countries with high rates of inflation. D. It assumes away transportation costs and barriers to trade.

61. The European Coal and Steel Community, formed in 1951, was a forerunner of: A. EFTA B. EU C. MERCOSUR D. APEC

61. When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create: A. a differentiated organization. B. a location economy curve. C. economies of scale. D. a global web of value creation activities.

61. Which of the following is a disadvantage of licensing? A. It does not help firms that lack capital to develop operations overseas. B. It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies. C. It cannot be used when a firm possesses some intangible property that might have business applications. D. The firm has to bear the development costs and risks associated with opening a foreign market.

61. Which of the following statements is true regarding management development? A. Management development programs attempt to increase skill levels by focusing mainly on providing management education. B. Management development programs help build a unifying corporate culture by socializing new managers into the norms and value systems of the firm. C. Rotating managers through different jobs in several countries as a part of management development programs leads to adaptation problems. D. Management development programs can be used to foster esprit de corps but is rarely used for developing technical competencies.

62. It has been observed that a product's production costs decline by some quantity about each time, cumulative output: A. increases by twenty five percent. B. quadruples. C. doubles. D. triples

62. The U.S. government using the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws is an example of government intervention based on: A. human rights protection. B. national security. C. consumer protection. D. retaliation.

62. When a company has some intangible property that might have business applications, but the firm does not want to develop those applications itself, _____ makes sense. A. exporting B. a turnkey project C. licensing D. a wholly owned subsidiary

63. If a government grants preferential trade terms to a country it wants to build strong relations with, the government is employing a policy: A. of retaliation. B. of human rights protection. C. to protect national security. D. to further foreign policy objectives.

63. The _____ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. A. European Parliament B. European Commission C. Council of the European Union D. Court of Justice

63. The states that a country's "nominal" interest rate is the sum of the required "real" rate of interest and the expected rate of inflation over the period for which the funds are to be lent. A. PPP theory B. efficient market theory C. inefficient market theory D. Fisher Effect

63. When evaluating expatriates, home-country managers usually rely on: A. the manager's ability to develop cross-cultural awareness. B. hard data such as market share. C. the ability of the expatriate to work with local managers. D. their own international experience.

63. _____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product. A. Experience curve B. Economies of scale C. Location economies D. Production possibility

64. Economic theory suggests that when inflation is expected to be high: A. interest rates will be low. B. exchange rates will be high. C. the International Fisher Effect does not hold. D. interest rates will be high.

64. The______ represents the interests of member states and is clearly the ultimate controlling authority within the EU. A. European Parliament B. European Commission C. European Council D. Court of Justice

64. This act allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution. A. The Buy America Act B. The Anti-Dumping Act C. The Helms-Burton Act D. The D'Amato Act

64. When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through: A. location economies. B. value creation effects. C. experience curve effects. D. learning effects.

64. Which among the following should be done in order to reduce bias in the performance appraisal process for expatriates? A. More weight should be given to an off-site manager's appraisal than to an on-site manager's appraisal. B. The on-site manager should be of a different nationality as the expatriate manager. C. When the policy is for foreign on-site managers to write performance evaluations, home-office managers should be consulted before an on-site manager completes a formal termination evaluation. D. A former expatriates who served in the same location as a current expatriate should not be allowed to participate in the appraisal.

64. Which mode of entry is pursued primarily by manufacturing firms? A. Franchising B. Turnkey C. Licensing D. Strategic alliance

65. According to the argument, governments should temporarily support new industries until they have grown strong enough to meet international competition. A. retaliatory action B. human rights C. infant industry D. anti-dumping

65. Learning effects: A. tend to be less significant when a technologically complex task is repeated. B. will be less significant in an assembly process involving 1,000 complex steps than in one of only 100 simple steps. C. typically disappear after a while, in spite of the complexity of the task. D. are more significant after two or three years of the introduction of a new process.

65. This mode of entry is primarily used by service firms. A. Franchising B. Licensing C. A strategic alliance D. A turnkey project

65. Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body? A. The European Parliament B. The European Commission C. The Council of the European Union D. The Court of Justice

65. Which of the following is the most common approach to expatriate pay? A. Balance sheet approach B. Net-to-net approach C. Host-country approach D. Higher of host or home

66. Economies of scale arise from all of the following sources, except: A. increasing fixed costs by limiting them to small volumes. B. serving domestic and international markets from the same production facilities C. serving global markets. D. bargaining with suppliers to bring down the cost of key inputs.

66. Identify the incorrect statement pertaining to the EU's Court of Justice A. It is comprised of one judge from each country B. It is the supreme appeals court for EU law C. Its judges are required to act as representatives of national interests D. A member country can bring other members to the court for failing to meet EU treaty obligations

66. If a service firm wants to build a global presence quickly and at a relatively low cost and risk, _____ makes sense. A. a wholly owned subsidiary B. exporting C. a turnkey project D. franchising

66. When traders move as a herd in the same direction at the same time such as what occurred when George Soros betted against the British pound in 1992, a(n) occurs. A. efficient market B. inefficient market C. bandwagon effect D. Fisher Effect

66. Which component of a typical expatriate compensation package compensates the expatriate for having to live in an unfamiliar country isolated from family and friends, deal with a new culture and language, and adapt to new work habits and practices? A. Benefit B. Cost-of-living allowance C. Base salary D. Foreign service premium

67. Moving down the experience curve: A. increases the cost of a firm's raw material. B. allows a firm to reduce its cost of creating value. C. decreases a firm's profitability. D. increases the R&D expenditure of a firm.

67. The EU's Common Agricultural Policy is an example of a tax policy designed to benefit: A. consumers. B. taxpayers. C. special-interest politics. D. free trade in developed countries.

67. The ___ , adopted by the member nations of the European Community in 1987, committed member countries to work toward the establishment of a single market by December 31, 1992 A. Maastricht Treaty B. Treaty of Rome C. Single European Act D. Delores Commission

67. The argues that forward exchange rates do the best possible job of forecasting future spot rates and therefore investing in forecasting services would be a waste of money. A. inefficient market school B. efficient market school C. Fisher Effect D. international Fisher Effect

67. Which among the following allowances is paid when the expatriate is sent to a location where basic amenities such as health care, schools, and retail stores are grossly deficient by the standards of the expatriate's home country? A. Housing B. Hardship C. Cost-of-living D. Education

67. Which of the following statements about franchising is true? A. It guarantees consistent product quality. B. It tends to involve more short-term commitments than licensing. C. It is a specialized form of licensing. D. It is employed primarily by manufacturing firms.

68. All of the following are true of the euro except: A. its notes and coins were first issued on January 1, 1999 B. It required participating countries to give up their own currencies C. countries lost control of monetary policy when it was establish D. it created the second largest currency zone in the world

68. Economic problems during the Great Depression were compounded in 1930 when the U.S. Congress passed the , aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products. A. Smoot-Hawley Act B. Anti-Dumping Act C. Helms-Burton Act D. D'Amato Act

68. Firms usually respond to pressures for cost reduction by trying to: A. lower the costs of value creation. B. be locally responsive. C. undertaking product differentiation. D. diversifying product lines.

68. Labor unions generally try to get better pay, greater job security, and better working conditions for their members through _____ with management. A. collective bargaining B. arbitration C. conciliation D. expert determination

68. Which of the following is an advantage of franchising? A. A firm takes profits out of one country to support competitive attacks in another. B. A firm is relieved of many of the costs and risks of opening a foreign market on its own. C. It guarantees consistent product quality. D. It achieves experience curve and location economies.

69. Firms engaging in _____ with a local company can benefit from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems. A. turnkey projects B. joint ventures C. greenfield investments D. licensing arrangements

69. In December 1991, EC members signed this treaty that committed them to adopting a common currency by January 1, 1999. A. The Treaty of Rome B. The Delores Commission C. The Maastricht Treaty D. The Single European Act

69. Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country. A. cost reductions B. experience effects C. lowering the costs of value creation D. being locally responsive

69. Unions' bargaining power is derived largely from their: A. ability to threaten to disrupt production. B. ability to change the organizational culture. C. willingness to adapt to new employment practices. D. ability to show restraint in negotiations.

69. Which of the following is not a reason for the pressure for greater protectionism that occurred during the 1980s and early 1990s? A. The growing U.S. trade surplus with Japan strained the world trading system. B. Japanese economic success strained the world trading system. C. The persistent trade deficit in the United States strained the world trading system. D. Many countries found ways to get around GATT regulations.

7. At six sigma, a production process would be 99.99966 percent accurate, creating just _____. A. 3.4 defects per hundred thousand units B. 3.4 defects per million units C. 34 defects per million units D. 6.8 defects per million units

7. If market segments transcend national borders: A. the company should develop unique products for each national market. B. the company can view the global market as a single entity and pursue a global strategy. C. a localization strategy would be appropriate. D. consumers will have differing purchasing behavior in different nations.

70. A currency is said to be freely convertible when: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

70. Identify the advantage of establishing wholly owned subsidiaries. A. It is the least expensive method of serving a foreign market from a capital investment standpoint. B. Political considerations make it the most feasible entry mode. C. It may be required if a firm is trying to realize location and experience curve economies. D. It is particularly useful where FDI is limited by host-government regulations.

70. In the 1986 Uruguay Round, GATT members sought to write rules for promoting all of the following except: A. intellectual property protection. B. agricultural subsidies. C. GATT's monitoring and enforcement mechanisms. D. GATT rules to cover trade in services.

70. Which among the following is a concern of organized labor regarding multinational firms? A. A company can counter a union's bargaining power with the power to move production to another country. B. An international business will keep low-skilled tasks in its home country and farm out only highly skilled tasks to foreign plants. C. An international business can attempt to export employment practices and contractual agreements to its home country. D. A multinational company is more likely to receive government support in the case of hostile labor relations.

70. Which of the following is seen as a disadvantage of the euro? A. Higher foreign exchange and hedging costs B. National authorities losing control over monetary policy C. It becomes difficult to compare prices across Europe D. Undermines the development of a pan-European capital market.

70. _____ exist when the tastes and preferences of consumers in different nations are similar if not identical. A. Universal needs B. Homogenous needs C. Basic needs D. Bundled needs

71. A currency is said to be externally convertible when: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

71. A wholly owned subsidiary is appropriate when: A. the firm wants to share the cost and risk of developing a foreign market. B. the firm wants 100 percent of the profits generated in a foreign market. C. the firm wants a plant that is ready to operate. D. the firm wants to test a market.

71. Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of: a. the EU B. NAFTA C. APEC D. the Andean Pact

71. Until 1995, GATT rules applied to all of the following except: A. manufactured goods. B. services. C. textiles. D. agricultural products.

71. What is the long-term goal of international trade secretariats (ITSs)? A. To reduce the competition between national unions. B. To be able to bargain transnationally with multinational firms. C. To reduce the ideological gap between union leaders in different countries. D. To get national and international bodies to regulate multinationals.

71. Which of the following is less likely to add to the pressure for a firm to be locally responsive? A. National differences in consumer tastes and preferences B. Differences in infrastructure and traditional practices C. Switching costs for consumers D. Host-government demands

72. A firm that establishes a _____ must bear the full costs and risks of entering a foreign market. A. licensing agreement B. wholly owned subsidiary C. franchise D. joint venture

72. A firm will face intense pressure for cost: A. when competitors are based in low-cost locations. B. where there is persistent excess capacity. C. where industries produce commodity-type products. D. where consumers have low switching costs.

72. According to the 1986 Uruguay Round, the was to be created to implement the GATT agreement. A. World Trade Organization B. International Monetary Fund C. United Nations D. World Bank

72. International trade secretariats (ITSs) have not enjoyed much success for all of the following reasons except: A. national unions compete with each other to attract investment from international businesses. B. the structure and ideology of unions tend to vary significantly from country to country. C. organized labor has had only limited success in its efforts to get national and international bodies to regulate multinationals. D. the codes of conduct developed by International Labor Organization and the Organization for Economic Cooperation and Development prevented the ITSs from exercising absolute power.

72. MERCOSUR originated as a(n)_____ between Brazil and Argentina in 1988 A. open market B. free trade pact C. customs union D. free trade zone

72. When a currency is nonconvertible: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

73. A _____ is the most costly method of serving a foreign market from a capital investment standpoint. A. wholly owned subsidiary B. franchising agreement C. turnkey project D. joint venture

73. According to Alexander Yeats: A. The trade diversion effects of MERCOSUR outweigh its trade creation effects. B. The faster growing items in intra-MERCOSUR trade were capital-intensive goods produced efficiently in the member countries. C. MERCOSUR countries will be able to compete globally once the group's external trade barriers come down D. Countries with more efficient manufacturing enterprises are getting a level playing field because of MERCOSUR's reduction in trade barriers.

73. After the Uruguay Round of GATT extended global trading rules to cover trade in services, the first two industries targeted for reform by the WTO were: A. textiles and technology. B. telecommunications and financial services. C. automotives and aerospace. D. agriculture and consulting services.

73. What is the main difference in the way international businesses approach international labor relations? A. The degree to which organized labor can limit the choices of an international business B. The way work is organized within a plant C. The degree to which labor relations activities are centralized or decentralized D. The way staffing, management development, and compensation activities are organized

73. When a firm has a strategic goal of pursuing a low cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy. A. global standardization B. localization C. international D. customization

74. "Protection of technology and The Ability to engage in global strategic coordination" are advantages of which of the following? A. Franchising B. Turnkey contracts C. Joint ventures D. Wholly owned subsidiarie

74. A range of barter-like agreements by which goods and services can be traded for other goods and services is known as: A. countertrade. B. protracted trade. C. intermediate sales. D. countersale.

74. In early 2006, six CARICOM members abd the United States established the_____, which was modeled on the EU's single market. A. Central American Common Market B. Central America Free Trade Agreement C. Caribbean Single Market and Economy. D. North American Free Trade Area

74. The "millennium round" ended in 1999 with: A. a successful record on agricultural products. B. a new agenda for the next round focusing on financial services. C. no agreement on the reduction of barriers to cross-border trade and investment. D. a decision to avoid FDI.

74. Which of the following is not associated with firms following the global standardization strategy? A. Low pressures for local responsiveness B. Use cost advantage to support aggressive pricing in world markets C. High pressures for cost reductions D. Customize product offering and marketing strategy to local conditions

75. All of the following are seen as stumbling blocks towards the establishment of the Free Trade Area of he Americas exeption A. Brazil and Argentina want the United State to reduce its subsidies to U.S agricultural producers B. The United State wants its southern neighbors to agree to tougher enforcement of intellectual property rights C. Brazil and Argentina want the United State to scrap tariffs on agricultural imports D. The United States want its southern neighbors to increase manufacturing tariffs

75. Countries might be forced to use countertrade when a currency is: A. freely convertible. B. externally convertible. C. internally convertible. D. nonconvertible.

75. If a firm's core competency is based on control over proprietary technological know-how, it should avoid _____ and _____ arrangements if possible, to minimize the risk of losing control over that technology. A. licensing, joint-venture B. wholly owned subsidiary, exporting C. turnkey contracts, exporting D. exporting, joint-venture

75. Which of the following is not a reason why WTO is being criticized by those opposing free trade? A. Its trade laws allow imports from low-wage countries and result in a loss of jobs in high-wage countries. B. Its rules outlawing the ability of nations to stop imports from countries where working conditions are hazardous. C. The adverse impact that some of its rulings have had on environmental policies. D. Its lack of ability to force any member nation to take an action to which it is opposed.

75. Which strategy makes most sense when there are strong pressures for cost reductions and minimal demands for local responsiveness? A. Global standardization strategy B. Transnational strategy C. Localization strategy D. International strategy

76. If a high-tech firm sets up operations in a foreign country to profit from a core competency in technological know-how, which of the following entry strategy is best? A. Joint ventures B. Licensing C. Wholly owned subsidiaries D. Turnkey contacts

76. The WTO argues that by removing all tariff barriers and subsidies to agriculture, all of the following would occur except: A. the overall level of trade would increase. B. there would be overproduction of products that are heavily subsidized. C. prices would fall for consumers. D. global economic growth would rise.

76. The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as: A. economic exposure. B. financial exposure. C. translation exposure. D. transaction exposure.

76. Which of the following is not true of ASEAN? A. Cambodia, Laos, Myanmar, and singapore are among its members. B. Its basic objective is to foster freer trade between member countries and to achieve cooperation in their industrial policies. C. It has been highly successful in achieving cooperation in its industrial policies. D. It is punishing for free trade agreement with China, Japan, and South Korea.

76. _____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences. A. Localization B. Transnational C. Global standardization D. International

77. Most service firms have found that _____ with local partners work best for controlling subsidiaries. A. joint ventures B. licensing agreements C. greenfield investments D. turnkey project

77. The TRIPS regulations established at the 1995 Uruguay Round: A. established regulations on patents and copyrights. B. set a new level of agriculture subsidies. C. organized OECD countries to eliminate tariffs on textiles. D. established new tariff levels on technology.

77. Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)? A. It was founded in 2001 B. It currently has 57 member states C. United States and japan are not members of this body D. Collectively, the member states account for much of the growth in the world economy

77. Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets? A. Global standardization strategy B. Transnational strategy C. Localization strategy D. International strategy

78. Collectively, the _______ member states account for about 55 percent of the world's GNP and 49 percent of world trade. A. APEC B. EU C. NAFTA D. MERCOSU

78. Firms may prefer acquisitions to greenfield investments for all of the following reasons except: A. they allow companies to completely sidestep government regulations on investment. B. they are quick to execute. C. they enable the firm to preempt competitors. D. managers believe acquisitions are less risky.

78. TRIPS regulations oblige WTO members to all of the following except: A. grant and enforce patents lasting at least 20 years. B. grant and enforce copyrights lasting 50 years. C. comply with the rules within five years in the case of rich countries. D. comply with the rules within 10 years in the case of the poorest countries.

78. The extent to which a firm's future international earning power is affected by changes in exchange rates is known as: A. translation exposure. B. financial exposure. C. economic exposure. D. transaction exposure.

78. Which of the following is a disadvantage of the localization strategy? A. Decrease in the value of the product in the local market B. Duplication of functions C. Inability to accommodate varying tastes and preferences in different markets D. Reduced customization

79. A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a _____ strategy. A. localization B. global standardization C. international D. transnational

79. A(n) involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate. A. follower strategy B. interim strategy C. lead strategy D. lag strategy

79. According to the _____, top managers typically overestimate their ability to create value from an acquisition. A. misvaluation theory B. performance extrapolation hypothesis C. market timing theory D. hubris hypothesis

79. For international business, regional economic integration such as the EU: A. Raise the cost of doing business in the region. B. Eliminates differences in culture, allowing companies to standardize marketing activities. C. Opens markets that had formerly been protected. D. Standardizes competitive practics, enabling companies to realize substantial cost economies

79. are the highest rate that can be charged, which is often, but not always, the rate that is charged. A. Ad valorem tariff rates B. Tariff rents C. Specific tariff rates D. Bound tariff rates

8. The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of: A. values. B. traditions. C. norms. D. attitudes.

8. Which of the following statements about Six Sigma is true? A. It is a statistically based philosophy. B. It is easily possible for a company to achieve Six Sigma perfection. C. At six sigma, a production process will have 66 defects per million units. D. At six sigma, a production process would be 100 percent accurate.

80. A(n) _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low. A. global standardization B. international C. localization D. transnational

80. A(n) involves delaying collection of foreign currency receivables if that currency is expected to appreciate and delaying payables if the currency is expected to depreciate. A. follower strategy B. interim strategy C. lead strategy D. lag strategy

80. Identify the incorrect statement about trade barriers. A. They raise the costs of exporting products to a country. B. They may put a firm at a competitive advantage to indigenous competitors. C. They may limit a firm's ability to serve a country from locations outside of that country. D To conform to local content regulations, a firm may have to locate more production activities in a given . market than it would otherwise.

80. To increase the potential for a successful acquisition, a firm should: A. always bid low to allow for partial failure. B. try to acquire a firm with a very different corporate culture so there is no forced "overlap". C. seek companies only from similar national cultures. D. screen the foreign enterprise to be acquired.

80. Which of the following is not a threat that emerges for international business as a result of regional economic integration? A. The business environment within each grouping becomes morecompetetive B. There is a risk of being shut out of the single market by the creation of a "trade fortress" C. It limits the ability of firms to pursue the corporate strategy of their choice. D. The cost of doing business in a single market may fall.

81. A firm that is pursuing a(n) _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects, and trying to differentiate its product offering across geographic markets. A. global customization B. international C. localization D. transnational

81. Which of the following is not important in the acquisition process? A. Firms should strive to limit unwanted management attrition after acquisition. B. An integration plan should quickly be implemented. C. Proper screening of the company to be acquired should take place. D. The hubris hypothesis should be maintained.

82. Firms that pursue a transnational strategy are trying to simultaneously do all of the following except: A. achieve low costs through location economies. B. standardize their product offering for the global market. C. foster a multidirectional flow of skills between different subsidiaries. D. achieve low costs through economies of scale and learning effects.

82. When a firm wants to enter a market where there are already well-established incumbent companies, and where global competitors are also interested in establishing a presence, the firm should consider: A. joint ventures. B. turnkey projects. C. acquisitions. D. greenfield investments.

83. A firm facing low pressures for cost reductions and low pressures for local responsiveness, is most likely to follow a(n) _____ strategy. A. global standardization B. localization C. international D. transnational

83. Firms entering markets where there are no incumbent competitors to be acquired should choose: A. greenfield investments. B. joint ventures. C. acquisitions. D. takeovers.

84. For firms that are selling a product that serves universal needs, and that do not face significant competition, a(n) _____ strategy makes sense. A. localization B. transnational C. international D. global standardization

84. Which of the following is not an advantage of strategic alliances? A. It allows firms to share the fixed costs of developing new products or processes. B. It is a way to bring together complementary skills and assets that neither company could easily develop on its own. C. It will help the firm establish technological standards for the industry that will benefit the firm. D. It gives a firm tight control over operations in different countries.

85. Which of the following is true of the international strategy? A. Product development tends to be highly decentralized. B. Manufacturing and marketing are typically located in the headquarters location. C. Extensive production customization is common. D. The strategy is not viable in the long-run.

9. Consumers in highly developed countries value _____ as compared to their counterparts in less developed nations. A. price B. product reliability C. product attributes D. standardized products

9. Factors that help a firm decide where to locate its manufacturing facilities can be best grouped under three broad headings. These are: A. political factors, social factors, and legal factors. B. country factors, technological factors, and product factors. C. product factors, service factors, and labor factors. D. language factors, cultural factors, and transportation factors.

A condition where people tend to perceive themselves in terms of their class background and this shapes their relationships with members of other classes is known as: A. economic classification. B. social mobility. C. class mobility. D. class consciousness.

A Japanese executive's ritual of presenting a business card to a foreign business executive is an example of: A. mores. B. values. C. attitudes. D. folkways.

A _____ grants the inventor of a new product or process exclusive rights for a defined period of time to the manufacture, use, or sale of that invention. A. copyright B. trademark C. contract D. patent

A _____ is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime. A. caste system B. class system C. social system D. culture system

A _____ system is based on a very detailed set of laws organized into codes. A. democratic law B. theocratic law C. civil law D. common law

A central value of Japanese culture is the importance attached to: A. the individual. B. group membership. C. individual achievement. D. personal accomplishments.

A class system: A. is the same as a caste system. B. is a rigid form of social stratification that does not permit social mobility. C. allows an individual to change his/her position via personal achievements. D. is more rigid than the caste system.

A company using achieves control by comparing actual performance against targets and intervening selectively to take corrective action. A. personal control B. output control C. bureaucratic control D. cultural control

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved is BEST known as a: A. contract. B. business letter. C. memorandum. D. civil code.

A firm that needs greater flexibility should choose for its decision-making. A. vertical differentiation B. centralization C. horizontal differentiation D. decentralization

A firm's determines where in its hierarchy the decision-making power is concentrated. A. integrating mechanism B. vertical differentiation C. knowledge network D. horizontal differentiation

A group of people who share a common set of values and norms form a: A. culture. B. society. C. country. D. caste.

A state where political power is monopolized by a party, group, or individual that governs according to religious principles is best described as following: A. theocratic totalitarianism. B. tribal totalitarianism. C. right-wing totalitarianism. D. communist totalitarianism.

A study by the OECD, whose members include the 20 richest economies in the world, noted all of the following except: A. the gap between the poorest and richest segments of society in some OECD countries widened. B. in almost all countries real income levels rose over the 20-year period studied. C. falling unemployment rates brought gains to low-wage workers and fairly broad-based wage growth. D. the gap between rich and poor had narrowed in all OECD countries.

A theocratic law system is: A. one in which the law is based on religious teachings. B. based on tradition, precedent, and custom. C. based on a detailed set of laws organized into codes. D. the body of law that governs contract enforcement.

A(n) is valuable because it can be used as a nonbureaucratic conduit for information flows within a multinational enterprise. A. liaison network B. matrix structure C. organizational structure D. knowledge network

A(n) tends to be adopted by firms that are reasonably diversified and, accordingly, originally had domestic structures based on product divisions. A. worldwide area structure B. international division structure C. worldwide product division structure D. global matrix structure

According to Islam, those who hold property are regarded as: A. trustees. B. owners. C. tenants. D. speculators.

According to John Rawls: A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others. B. freedom of speech and assembly is the single most important component in a justice system. C. equal basic liberty is only possible in a pure market economy. D. inequalities in a justice system are not to be tolerated under any circumstance.

According to Max Weber: A. principles embedded in Hinduism encourage high levels of entrepreneurial activity. B. Hindu values emphasize that individuals should be judged by their material achievements. C. pursuit of material well-being makes the attainment of nirvana easier. D. devout Hindus would be less likely to engage in entrepreneurial activity than devout Protestants.

According to World Bank numbers, A. developing nations currently account for more than 60 percent of world economic activity. B. rich nations currently account for more than 70 percent of world economic activity. C. today's rich nations may account for 55 percent of world economic activity by 2020. D. today's developing nations may account for more than 60 percent of world economic activity by 2020.

According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law. A. the naive immoralist B. the righteous moralist C. cultural relativism D. the Friedman doctrine

According to sociologists, which of the following branches of Christianity has the most important economic implications? A. Catholic B. Orthodox C. Protestant D. Mormon

According to the Friedman doctrine: A. ethics are nothing more than the reflection of culture. B. a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. C. businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people. A. naive immoralist B. Friedman doctrine C. utilitarian D. Kantian

According to the naive immoralist: A. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. B. the social responsibility of business is to increase profits, so long as the company stays within the rules of law. C. ethics are nothing more than the reflection of a culture. D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there.

According to the text, superior enterprise profitability requires all of the following conditions to be fulfilled except: A. the different elements of a firm's organizational architecture must be internally consistent. B. the organizational architecture must match the strategy of the firm. C. The strategy and architecture of the firm must not only be consistent with each other, but also consistent with the competitive environment of the firm. D. The firm's formal organizational structure must revolve around the indigenous population in each subunit.

All of the following are reasons that would account for the spread of democracy except: A. totalitarian regimes failing to deliver economic progress to the vast bulk of their populations. B. the unchallenged pressure of entrepreneurs and other business leaders for less accountable and closed governments. C. the economic advances of the past quarter century leading to the emergence of increasingly prosperous middle and working classes pushing for democratic reforms. D. new information and communication technologies reducing the state's ability to control access to uncensored information.

An act, as simple as shaking hands when meeting new people is an example of: A. values. B. symbolic behavior. C. mores. D. social stratification.

Antitrust laws in most countires are designed to: A. encourage business practices designed to monopolize a market. B. discourage private ownership. C. restrict privatization. D. outlaw monopolies.

Any person or institution that is capable of moral action such as a government or corporation is a(n): A. moral agent. B. utilitarian. C. righteous moralist. D. naive immoralist.

Article 1 of the United Nations' Universal Declaration of Human Rights states: "All human beings are born free and equal in dignity and rights." This best echoes: A. cultural relativism. B. Friedman doctrine. C. the righteous moralist approach. D. Kantian ethics.

Behavioral scientists have long argued that people are willing to give more to their jobs when they have a greater degree of individual freedom and control over their work. This suggests that: A. motivational research favors decentralization. B. centralization can facilitate coordination. C. centralization can ensure that decisions are consistent with organizational objectives. D. decentralization permits total flexibility with no control.

Budgets and capital spending are the most important in subunits within multinational firms. A. cultural controls B. output controls C. personal controls D. bureaucratic controls

Centralization: A. gives top management time to focus on critical issues by delegating more routine issues to lower-level managers. B. can give top-level managers the means to bring about needed major organizational changes by concentrating power and authority in one individual or a management team. C. permits greater flexibility because decisions do not have to be "referred up the hierarchy" D. unless they are exceptional in nature. E. can be used to establish relatively autonomous, self-contained subunits within an organization.

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralist B. Cultural relativism C. The justice theory D. The rights theory

Control through a system of rules and procedures that directs the actions of subunits is: A. personal control. B. bureaucratic control. C. output control. D. cultural control.

Critics of globalization maintain that the apparent decline in real wage rates of unskilled workers A. owes far more to a technology-induced shift within advanced economies toward jobs that require significant education and skills. B. is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers. C. has been impacted most by technological change. D. can be checked by increasing society's investment in education to reduce the supply of unskilled workers.

Cultural relativism suggests that: A. ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operating. B. the only social responsibility of business is to increase profits. C. managers of a firm should not make decisions regarding social investments. D. a multinational's home-country standards of ethics are always appropriate to follow in foreign countries.

Emphasis on individualism results in all of the following disadvantages except: A. managers tend to develop good general skills but lack the company-specific experience. B. difficulty in building teams within an organization to perform collective tasks. C. executives are not exposed to different ways of doing business. D. difficulty to achieve cooperation both within a company and between companies.

Establishing _____ involves a business' resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. A. a veil of ignorance B. a difference principle C. moral imagination D. moral intent

Ethical dilemmas exist because of all of the following reasons except: A. many real-world decisions are complex and difficult to frame. B. decisions may involve first, second, and third-order consequences that are hard to quantify. C. doing the right thing, or knowing what the right thing might be, is often far too easy. D. they are situations in which none of the available alternatives seem ethically acceptable.

Ethical systems are: A. a set of moral principles, or values, that are used to guide and shape behavior. B. shared beliefs and rituals that are concerned with the realm of the sacred. C. routine conventions of everyday life. D. social rules that govern peoples' actions toward each other.

External stakeholders: A. are individuals or groups who own the business. B. include all employees, the board of directors, and stockholders. C. typically comprise customers, suppliers, lenders, etc. D. are individuals or groups who work for the business.

Facilitating payments are: A. permitted under the amended Foreign Corrupt Practices Act. B. a direct violation of the Foreign Corrupt Practices Act. C. permitted so long as they designed only to gain exclusive preferential treatment. D. used to secure contracts that would otherwise not be secured.

Firms based in _____ accounted for 17.5 percent of the stock of foreign direct investment in 2011, up from only 1.1 percent in 1980. A. Asia B. developing countries C. United Kingdom D. NAFTA region

Firms structured on this basis may encounter significant problems if local responsiveness is less critical than reducing costs or transferring core competencies for establishing a competitive advantage. A. International division structure B. Worldwide area structure C. Global matrix structure D. Worldwide product division structure

Firms traditionally have tried to achieve coordination by adopting: A. informal integrating mechanisms. B. formal integrating mechanisms. C. vertical differentiation. D. horizontal differentiation.

Global learning based on the multidirectional transfer of skills between subsidiaries and the corporate center is a central feature of a firm pursuing a(n) strategy. A. localization B. global standardization C. transnational D. international

Globalization has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap. A. reduced, reduced B. increased, increased C. increased, reduced D. reduced, increased

Grease payments: A. are not the same as facilitating payments or speed money. B. are facilitating payments made to expedite routine government action. C. are payments to gain exclusive preferential treatments. D. can be used to secure contracts that would otherwise not be secured.

Hofstede's dimension of Confucian dynamism: A. captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors. B. focuses on how a society deals with the fact that people are unequal in physical and intellectual capabilities. C. explores the relationship between the individual and his/her fellows. D. looks at the relationship between gender and the ability to accept ambiguous situations.

Hofstede's masculinity vs. femininity dimension examined: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his or her fellows.

Hofstede's uncertainty avoidance dimension considered: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his or her fellows.

Identify the United Nations body that establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations. A. IMF B. GATT C. WTO D. CIGS

In practice, the global matrix structure: A. works as well as the theory predicts. B. is often clumsy and bureaucratic. C. makes it easy to ascertain accountability. D. results in quick decision making.

Identify the correct statement about the rights theories. A. Human beings have fundamental rights and privileges that transcend national boundaries. B. The moral worth of actions or practices is determined by their consequences. C. People should be treated as ends never purely as means to the ends of others. D. Minimum levels of morally acceptable behavior should be established.

Identify the incorrect statement about environmental regulations. A. Environmental regulations are often lacking in developing nations. B. Environmental regulations are similar across developed and developing nations. C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, etc. D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.

Identify the incorrect statement concerning globalization. A. It has been blamed for unemployment in developed nations, environmental degradation and the Americanization of popular culture. B. It has created new threats for businesses accustomed to dominating their domestic markets. C. It is transforming industries and is highly welcomed by those who believed their jobs were protected from foreign competition. D. According to most economists it is a very beneficial process where gains outweigh the losses by a wide margin.

Identify the incorrect statement pertaining to a country's political economy. A. It is independent of the culture of a nation. B. It is a combination of interdependent political, economic, and legal systems. C. Its various systems interact and influence each other. D. Its interacting systems affect the level of economic well-being.

Identify the incorrect statement pertaining to foreign multinationals doing business in countries with repressive regimes. A. Inward investment by multinationals can be a force for economic, political, and social progress that ultimately improves the rights of people in repressive regimes. B. No multinational does business with nations that lack the democratic structures and human rights records of developed nations. C. Multinational investment cannot be justified on ethical grounds in some regimes due to their extreme human rights violations. D. Multinationals adopting an ethical stance can, at times, improve human rights in repressive regimes.

Identify the incorrect statement pertaining to innovation and entrepreneurship. A. They are the engines of growth B. They require state ownership of all means of production C. They require a market economy D. They require strong property rights

Identify the incorrect statement pertaining to intellectual property rights. A. Its violation cost personal computer software firms revenues equal to $48 billion in 2007. B. The protection of intellectual property rights is more or less the same in all countries. C. The enforcement of its regulations has often been lax. D. Its violation has been very bad in China, where the piracy rate in 2007 ran at 82 percent.

Identify the incorrect statement pertaining to the World Wide Web. A. It makes it much easier for buyers and sellers to find each other. B. Viewed globally, it is emerging as an equalizer. C. It rolls back all of the constraints of location, scale, and time zones. D. It allows businesses to expand their global presence at a lower cost than ever before.

Identify the incorrect statement regarding ethical issues in international business. A. They are often rooted in the fact that political systems, law, economic development, and culture of nations vary significantly. B. Human rights and environmental regulations are some of the common ethical issues. C. Ethical practices of all nations are similar in nature. D. Managers in multinational firms need to be particularly sensitive to differences in business practices because they work across national borders.

Identify the incorrect statement regarding individualism. A. It advocates for a socialist political system B. It promotes free market economics C. It creates a pro-business environment D. It translates into an advocacy for democratic political systems

Identify the incorrect statement regarding the former Communist nations of Europe and Asia. A. The economies of most of the former Communist states are very strong and developed. B. Many of the former Communist nations of Europe and Asia share a commitment to free market economies. C. As a result of disturbing signs of growing unrest and totalitarian tendencies, the risks involved in doing business in these countries is very high. D. For about half a century these countries were essentially closed to Western international business.

If the critics of globalization are correct, all of the following things must be shown except: A. the share of national income received by labor, as opposed to the share received by the owners of capital should have declined in advanced nations. B. even though labor's share of the economic pie may have declined, living standards need not deteriorate if the size of the total pie has increased sufficiently to offset the decline in labor's share. C. the decline in labor's share of national income must be due to moving production to low-wage countries, as opposed to improving production technology and productivity. D. economic growth in developed nations has offset the fall in unskilled workers' share of national income, raising their living standards.

In the 1970s, many Japanese firms invested in North America and Europe A. to avoid a highly competitive domestic market. B. to exploit high domestic tariff barriers. C. as a hedge against unfavorable currency movements. D. to take advantage of low labor costs.

In China, class divisions: A. have historically been of no importance. B. were strengthened during the high point of Communist rule. C. increased even during reforms of the late 1970s and early 1980s. D. were weakened because of a rigid system of household registration.

In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning. A. market B. private C. command D. mixed

In a domestic firm with a product divisional structure, each division is responsible for a distinct: A. product line. B. individual product. C. product assortment. D. product design.

In a pure command economy: A. all productive activities are owned by the state. B. all productive activities are privately owned. C. the goods and services that a country produces are not planned by anyone. D. production is determined by the interaction of supply and demand.

In a pure market economy: A. all productive activities are owned by the state. B. all productive activities are privately owned. C. the government plans the goods and services that a country produces. D. resources are allocated for "the good of society."

In all of the following scenarios, the costs of doing business in a country tend to be greater, except where: A. political payoffs are required to gain market access. B. supporting infrastructure is lacking. C. adhering to local laws and regulations is costly. D. there is a highly developed infrastructural support.

In firms pursuing either global or transnational strategies, the usefulness of controls is limited by substantial performance ambiguities. A. bureaucratic B. cultural C. personal D. output

In practice, the dual-hierarchy structure: A. lessens all forms of conflict. B. makes it easy to ascertain accountability. C. results in extremely quick decision making. D. can lead to perpetual power struggles.

In the classic global matrix structure, horizontal differentiation proceeds along two dimensions. These dimensions are: A. hierarchy and overall strategy. B. target returns and sales potential. C. marketing strategy and sales potential. D. product division and geographic area.

Incentives are: A. The metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. B. the devices used to reward appropriate managerial behavior. C. the manner in which decisions are made and work is performed within the organization. D. the norms and value systems that are shared among the employees of an organization.

Individualism can best be described by which of the following statements? A. It as a philosophy suggests that an individual should have freedom over his/her economic and political pursuits. B. It is a political system in which government control over all factors of production is in entirety. C. It is a political system that stresses the primacy of collective goals over individual goals. D. It is a form of government in which one person or political party exercises absolute control over all spheres of human life.

Integration mechanisms are: A. the formal division of the organization into subunits. B. the mechanisms that enable each subunit to operate independently. C. the mechanisms for coordinating subunits. D. the location of decision making responsibilities within a structure.

Interdependent political, economic, and legal systems of a country make up its: A. administrative agenda. B. socioeconomic fabric. C. economic environment. D. political economy.

Internal stakeholders: A. are individuals or groups who work for or own the business. B. do not have any claim on a firm or its activities. C. typically comprise customers, suppliers, lenders, governments, unions, etc. D. are individuals, except employees, board of directors, and stockholders that have some claim on the firm.

It has been argued that the success of Japanese enterprises in the global economy has been based partly on all of the following except: A. the diffusion of self-managing work teams. B. the close cooperation among different functions within Japanese companies. C. the high degree of managerial mobility between companies. D. the cooperation between a company and its suppliers on issues such as design, quality control, and inventory reduction.

Justice theories of business ethics focus on: A. the moral worth of actions or practices. B. minimum levels of morally acceptable behavior. C. fundamental rights and privileges that transcend national boundaries. D. the attainment of a just distribution of economic goods and services.

Managers of international business can do all of the following to make sure ethical issues are considered in business decisions except: A. favor hiring and promoting people with a well-grounded sense of personal ethics. B. build an organizational culture that places a high value on ethical behavior. C. make sure that leaders within the business do not articulate the rhetoric of ethical behavior. D. develop moral courage.

Mechanisms to maintain culture include all of the following except: A. the hiring and promotional practices of the organization. B. reward strategies. C. socialization processes. D. ongoing cultural assessments.

Mores are: A. the norms that are seen as central to the functioning of a society and its social life. B. the routine conventions of everyday life. C. abstract ideas about what a group believes to be right, good, and desirable. D. the social rules and guidelines that prescribe appropriate behavior in particular situations.

Organizational structure means all of the following, except: A. the establishment of integrating mechanisms to coordinate the activities of subunits. B. the location of decision-making responsibilities with a structure. C. the manner in which decisions are made and work is performed by individuals. D. the formal division of the organization into subunits such as product divisions and functions.

Regardless of a firm's domestic structure, its international division tends to be organized on: A. product. B. geography. C. people. D. economy.

Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the: A. inequality principle. B. equity principle. C. difference principle. D. indifference principle.

Religion may be defined as: A. routine conventions of everyday life. B. social rules that govern peoples' actions toward each other. C. shared beliefs and rituals that are concerned with the realm of the sacred. D. a set of moral principles, or values, that are used to guide and shape behavior.

Safety standards to which a product must adhere are set by: A. safety certifications. B. the government standards department. C. product safety laws. D. product liability laws.

Since 1980, the world's containership fleet has more than _____, reflecting in part the growing volume of international trade. A. doubled B. tripled C. quadrupled D. quintupled

Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by encouraging all of the following except: A. privatizing state-owned enterprises. B. regulating markets. C. increasing competition. D. welcoming investment by foreign businesses.

Technological innovations have facilitated all of the following except: A. globalization of production. B. globalization of markets. C. creation of electronic global marketplaces. D. creation of absolutely homogeneous consumer markets.

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes: A. speed payments to secure contracts that would otherwise not be secured. B. grease payments to gain exclusive preferential treatment . C. facilitating payments made to expedite routine government action. D. payments to government officials for special privileges.

The HDI is based on all of the following measures except: A. political freedom. B. life expectancy at birth. C. educational attainment. D. whether average incomes are sufficient to meet the basic needs of life.

The Kantian approach to ethics suggests that: A. human beings have fundamental rights and privileges that transcend national boundaries. B. the moral worth of actions or practices is determined by their consequences. C. people should be treated as ends and never purely as means to the ends of others. D. ethics are nothing more than the reflection of culture.

The TRIPS agreement was designed to: A. exclude China from all intellectual property agreements. B. oversee a much stricter enforcement of intellectual property regulations. C. lobby for more lax intellectual property rights for poor countries. D. support traded software and recorded property among developed markets.

The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except: A. just and favorable work conditions. B. equal pay for equal work. C. prohibition of trade unions. D. protection against unemployment.

The _____ dimension of Hofstede's study explores how a society deals with the fact that people are unequal in physical and intellectual capabilities. A. power distance B. individualism vs. collectivism C. uncertainty avoidance D. masculinity vs. femininity

The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation. A. tragedy of the commons B. noblesse oblige C. ethical dilemma D. Friedman system

The _____ was created in 1944 by 44 nations that met in Breton Woods, New Hampshire to promote economic development. A. World Bank B. International Trade Center C. World Trade Organization D. United Nations

The _____ was established to remove barriers to the free flow of goods, services, and capital between nations. A. UN B. IMF C. GATT D. IDA

The ______ 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 member states. A. International Development Association B. World Bank C. International Court of justice D. World Trade Organization

The common law system: A. lacks the flexibility that other systems have. B. is based on tradition, precedent, and custom. C. gives judges the power only to apply the law. D. is based on a detailed set of laws organized into codes.

The emergence of class consciousness in Great Britain can be attributed to: A. the relative lack of class mobility. B. a high degree of social mobility. C. an extreme emphasis on individualism. D. most of the population perceiving itself to be middle class.

The emphasis on local responsiveness in firms pursuing a local responsiveness strategy creates strong pressures for: A. decentralizing all decisions to foreign subsidiaries. B. decentralizing operating decisions to foreign subsidiaries. C. centralizing all operating decisions. D. centralizing all decisions.

The growing integration of the world economy is: A. increasing the intensity of competition in a wide range of manufacturing and service industries. B. decreasing the intensity of competition in manufacturing industries, and increasing the intensity of competition in services. C. increasing the intensity of competition in manufacturing industries, and decreasing the intensity of competition in services. D. narrowing the scope of competition in a wide range of service, commodity, and manufacturing industries.

The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as: A. business ethics. B. noblesse oblige. C. ethical dilemma. D. social responsibility.

The idea that universal notions of morality transcend different cultures is implicitly rejected by: A. the righteous moralist. B. the naive immoralist. C. the Friedman doctrine. D. cultural relativism.

The implied lack of coordination between domestic operations and foreign operations, which are isolated from each other in separate parts of the structural hierarchy, is a problem encountered with a(n): A. global matrix structure. B. international division structure. C. worldwide product division structure. D. worldwide area structure.

The individualism vs. collectivism dimension of Hofstede's study explored: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his/her fellows.

The institution, created in 1944 at Bretton Woods, responsible for maintaining order in the international monetary system is the A. IMF. B. WTO. C. UN. D. UNESCO.

The main problem with this structure is the limited voice it gives to area or country managers, since it makes them subservient to product division managers. A. Worldwide product divisional structure B. Worldwide area structure C. International structure D. Global matrix structure

The main types of control systems used in MNEs include all of the following, except: A. personal controls. B. bureaucratic controls. C. input controls. D. cultural controls.

The manner in which decisions are made and work is performed within the organization is known as the firm's: A. organizational culture. B. incentives. C. control systems. D. processes.

The reduction in the average tariff rates on manufactured products since 1950 implies all of the following except that A. firms are dispersing parts of their production process to global locations to drive down production costs and increase product quality. B. the economies of the world's nation states are becoming more intertwined. C. nations are becoming increasingly independent of each other for important goods and services. D. the world has become significantly wealthier since 1950.

The righteous moralist suggests that: A. ethics are nothing more than the reflection of culture. B. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. C. the social responsibility of business is to increase profits, so long as the company stays within the rules of law. D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

The share of the total FDI stock accounted for by which of the following countries increased markedly from 1980 to 2000? A. United States B. France C. United Kingdom D. Netherlands

The simplest integrating mechanism in an MNE is: A. direct contact between managers. B. the use of teams. C. the introduction of liaisons. D. the establishment of the matrix structure.

The social organization of Western society tends to emphasize on: A. a group orientation. B. the family. C. individual achievement. D. work groups.

The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines: A. society. B. value systems. C. principles. D. culture.

The utilitarian approach to business ethics suggests that: A. people should be treated as ends and never purely as means to the ends of others. B. the moral worth of actions or practices is determined by their consequences. C. people have dignity and need to be treated as such. D. human beings have fundamental rights and privileges that transcend national cultures.

The worldwide product division structure: A. is weak in local responsiveness. B. inhibits the realization of location economies. C. inhibits the realization of experience curve economies. D. limits the transfer of core competencies between areas.

This is a less rigid form of social stratification in which social mobility is possible. A. Social system B. Caste system C. Cultural system D. Class system

This is an Islamic banking method where banks lend money to a business, and rather than charging that business interest on the loan, they take a share in the profits that are derived from the investment. A. Mudarabah B. Murabaha C. Maysir D. Mudarib

This refers to a political system in which government is by the people, exercised either directly or through elected representatives. A. Totalitarianism B. Authoritarianism C. Democracy D. Dictatorship

This structure encourages fragmentation of the organization into highly autonomous entities. A. Worldwide area structure B. Global matrix structure C. Worldwide product structure D. Global network structure

Three values central to the Confucian system of ethics have very important economic implications. Which of the following is not one among them? A. Loyalty B. Rule-based law C. Reciprocal obligations D. Honesty in dealings with others

To guard against abuse of employment practices in other nations, multinationals should do all of the following except: A. establish minimal acceptable standards that safeguard the basic rights and dignity of employees. B. adhere to working conditions of the host country if they are clearly inferior to those in a multinational's home nation . C. audit foreign subsidiaries and subcontractors on a regular basis to make sure established standards are met. D. take action to correct unacceptable behavior.

Totalitarianism: A. is a form of government in which one person or political party exercises absolute control over all spheres of human life. B. refers to a political system in which government is by the people, exercised either directly or through elected representatives. C. is based on a belief that citizens should be directly involved in decision making. D. is based on the idea that the welfare of society is best served by letting people pursue their own economic self-interests.

Under the veil of ignorance, everyone is imagined to be ignorant of: A. all of his/her particular characteristics. B. fundamental rights and privileges. C. the moral worth of actions or practices. D. the minimum levels of morally acceptable behavior.

What is horizontal differentiation? A. The mechanisms that enable each subunit to operate independently B. The formal division of the organization into subunits C. The location of decision-making responsibilities within a structure D. The mechanisms for coordinating subunits

What is the total cumulative value of foreign investments best referred to as? A. Accumulation of foreign shares B. Portfolio investments C. Stock of foreign direct investments D. Stock market investments

When a company "exports jobs" overseas, the company is: A. helping domestic workers by pushing up wage rates. B. increasing the demand of qualified domestic workers. C. taking advantage of lower wages in foreign markets. D. deceiving the supporters of globalization.

When a company measures the performance of its national operating subsidiaries according to profitability, the company is using: A. control systems. B. lean processes. C. incentives. D. organizational culture.

Which Islamic banking method is the most widely used among the world's Islamic banks, primarily because it is the easiest to implement? A. Mudarib B. Murabaha C. Maysir D. Mudarabah

Which control system is most widely used by small firms? A. Personal B. Output C. Bureaucratic D. Cultural

Which of the following countries has been the largest recipient of foreign direct investment and received about $70 billion a year in inflows in 2005 and 2006? A. Brazil B. Russia C. India D. China

Which of the following decisions is typically centralized at a firm's headquarters? A. Production decisions B. Human resource management C. Marketing decisions D. Overall firm strategy

Which of the following does not help create an economic system that is favorable to international business? A. Decreased privatization B. Widespread deregulation C. Open markets D. Falling trade and investment barriers

Which of the following enables managers to walk away from a decision that is profitable, but unethical? A. Noblesse oblige B. Moral courage C. The difference principle D. The Friedman doctrine

Which of the following is a potential drawback of the worldwide area structure? A. It encourages fragmentation of the organization into highly autonomous entities. B. It is inconsistent with a localization strategy. C. It discourages local responsiveness. D. It is not suitable for firms with a low degree of diversification and a domestic structure based on functions.

Which of the following is a problem that arises due to an international division structure? A. The need to get an area and a product division to reach a decision can slow decision making and . produce an inflexible organization unable to respond quickly to innovate. B. It gives limited voice to area or country managers, since it makes them subservient to product division managers. C. The heads of foreign subsidiaries are not given as much voice in the organization as the heads of domestic functions or divisions. D. The dual-hierarchy structure can lead to conflict and perpetual power struggles between the areas and the product divisions, catching many managers in the middle.

Which of the following is an argument favoring centralization? A. It permits greater flexibility. B. Motivational research favors it. C. It can avoid the duplication of activities. D. It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.

Which of the following is an argument favoring decentralization? A. It can facilitate coordination. B. It can help ensure that decisions are consistent with organizational objectives. C. It can give top-level managers the means to bring about needed major organizational changes. D. It permits greater flexibility.

Which of the following is not an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe? A. Reduced transportation costs. B. Government regulations. C. Issues associated with economic and political risk. D. Barriers to foreign direct investment.

Which of the following is not characteristic of globalization? A. National economies are turning into independent economic systems. B. Material culture is starting to look similar the world over. C. Perceived distance is shrinking due to advances in transportation and telecommunications. D. Barriers to cross-border trade and investment are declining.

Which of the following is not true of a strong corporate culture? A. Almost all managers share a relatively consistent set of values and norms that have a clear impact on the way work is performed. B. A strong culture leads to a high performance. C. Outsiders see firms with a strong culture as having a certain way of doing things. D. A strong culture can be a bad culture.

Which of the following is not true regarding a worldwide area structure? A. It tends to be favored by firms with a low degree of diversification. B. It facilitates local responsiveness. C. It tends to be favored by firms with a domestic structure based on function. D. Decision-making responsibilities are centralized.

Which of the following is not true regarding culture? A. Culture is static B. Culture is evolving C. It is a system of values and norms that are shared among a group of people D. It involves the knowledge and beliefs of people

Which of the following observations about the Foreign Corrupt Practices Act is true? A. The act outlawed the paying of bribes to foreign government officials to gain business. B. There is enough evidence that it put U.S. firms at a competitive disadvantage. C. The act originally allowed for "facilitating payments." D. The Nike case was the impetus for the 1977 passage of this act.

Which of the following observations concerning Latin American countries is true? A. Complete restrictions on direct investment by foreign firms. B. Characterized by low growth, high debt, and hyperinflation. C. Debt and inflation are up compared to previous decades. D. Substantial opportunities exist, but are accompanied by substantial risks.

Which of the following observations is correct? A. None of the economic principles established in the Koran are pro-free enterprise. B. The Koran speaks approvingly of free enterprise. C. The Koran speaks disapprovingly of earning legitimate profit through trade and commerce. D. Protection of the right to private property is not embedded within Islam.

Which of the following provides exclusive legal rights to authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit? A. Patents B. Copyrights C. Trademarks D. Licenses

Which of the following refers to the extent to which individuals can move out of the strata into which they are born? A. Caste stratification B. Class system C. Social mobility D. Individual potential

Which of the following refers to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource? A. Theocratic right B. Property right C. Trade right D. Financial right

Which of the following refers to the values and norms that the employees of an organization share? A. Vision statement B. Cultural relativism C. Organization culture D. Power orientation

Which of the following statement pertaining to changes in the global economy of the 21st century is not true? A. Barriers to the free flow of goods, services, and capital have been coming down. B. Volume of cross-border trade and investment has been growing more rapidly than global output. C. National economies are becoming more independent and moving away from the global economic system. D. As economies advance, more nations are joining the ranks of the developed world.

Which of the following statements about political systems and their interrelated dimensions is false? A. Systems that emphasize collectivism tend toward totalitarianism. B. Systems that place a high value on individualism tend to be democratic. C. Democratic societies can emphasize a mix of collectivism and individualism. D. It is impossible to have totalitarian societies that are not collectivist.

Which of the following statements about socialism is false? A. Modern socialists' intellectual roots can be traced to Karl Marx. B. Elements of socialist thought can be traced to Plato. C. Socialist ideology is split into two camps—communists and individualists. D. Socialism advocates for state ownership of the means of production.

Which of the following statements about the legal systems of countries is false? A. They can affect the attractiveness of a country as an investment site or market. B. They are influenced by the prevailing political system of the country. C. They are almost the same for all countries. D. They are of immense importance to international business.

Which of the following statements about the trade-related aspects of intellectual property rights agreement is false? A. It was designed to oversee enforcement of much stricter intellectual property regulations, beginning in 1995. B. It obliged WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years. C. It directed rich countries to comply with its rules of intellectual property protection within five years. D. It provided the very poorest countries 10 years to comply with its rules of intellectual property protection.

Which of the following statements about the use of spoken language is false? A. The nature of a language structures the way we perceive the world. B. The language of a society can direct the attention of its members to certain features of the world rather than others. C. Countries with more than one language often have more than one culture. D. Most people prefer to converse in English rather than their own language.

Which of the following statements about values and norms of a culture is not true? A. The values and norms of a society do not emerge fully formed B. They are the evolutionary product of a number of factors C. They are influenced by religion D. They do not influence social structure

Which of the following statements regarding cross-border trade and investment is not true? A. "Protection" from foreign competitors has been, at times, demanded by the United States. B. Forecasts indicate a return to the restrictive trade policies of the 1920s and 30s. C. If trade barriers decline no further they will put a brake upon the globalization of both markets and production. D. It is not clear whether the political majority in the industrialized world favors further reductions in trade barriers.

Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A. The righteous moral system B. Sullivan principles C. Noblesse oblige D. Cultural relativism

Which of the following would be a typical responsibility of a product division in a product divisional structure? A. Operating decisions B. Overall strategic development of the firm C. Financial control of the various divisions D. None. All decisions are typically centralized.

Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises? A. Sullivan's principles B. Ethical dilemma C. Tragedy of the commons D. Noblesse oblige

Which of these statements pertaining to cross-border FDI flows is true? A. The growth of FDI resumed in 2004 and continued through 2006. B. A surge in FDI from 1995 to 1997 was followed by a slump from 1998 to 2000. C. Among developing nations, the largest recipient of FDI has been Russia. D. The dramatic increase in FDI reflects the decreasing internationalization of business corporations.

Which of these terms means the totality of a firm's organization, including formal organization structure, control systems and incentives, processes, organizational culture, and people? A. Organizational ethics B. Organizational architecture C. Organizational norms D. Organizational hierarchy

Which system of government generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism? A. Tribal totalitarianism B. Right-wing totalitarianism C. Left wing totalitarianism D. Theocratic totalitarianism

Which term refers to the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits? A. Key processes B. Control systems C. Knowledge networks D. Job assignments

_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like. A. Values B. Beliefs C. Mores D. Folkways

_____ are the routine conventions of everyday life. A. Folkways B. Mores C. Rites D. Beliefs

_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. A product law B. Trade certification C. Deregulation D. A liability law

_____ is consistent with the notion that an individual's right to do something may be restricted because it runs counter to "the good of society" or "the common good." A. Entrepreneurship B. Collectivism C. Free enterprise D. Capitalism

_____ is/are best defined as shared assumptions about how things ought to be. A. Norms B. Values C. Society D. Culture

_____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder. A. Veil of ignorance B. Difference principle C. Moral imagination D. Noblesse oblige

_____ occur(s) when a firm exports goods or services to consumers in another country. A. International trade B. Foreign direct investment C. Inward investment D. Merger and acquisitions

are exchange rates governing some specific future date foreign exchange transactions. A. Spot exchange rates B. Forward exchange rates C. Future exchange rates D. Currency swaps

draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements. A. Efficient market theory B. Inefficient market theory C. Fundamental analysis D. Technical analysis

is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects. A. The bandwagon effect B. The Fisher Effect C. The International Fisher Effect D. Capital flight

is the impact of currency exchange rates changes on the reported financial statements of a company. A. Economic exposure B. Financial exposure C. Translation exposure D. Transaction exposure

states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between the two countries. A. The Fisher Effect B. The International Fisher Effect C. The efficient market theory D. The inefficient market theory

suggests that a government should use subsidies to support promising firms that are active in newly emerging industries. A. The infant industry argument B. Strategic trade policy C. Retaliation policy D. The national security argument

uses price and volume data to determine past trends, which are expected to continue into the future. A. Technical analysis B. Fundamental analysis C. The Fisher Effect D. The International Fisher Effect

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