International Business - Final

Globalization can be viewed as a four-dimensional concept. Each of the following is a recommended dimension for considering globalization except

Consumer Mindset

T/F: Globalization should be considered as a binary variable with only two values: global and nonglobal

False

T/F: In terms of minimum efficient scale of output, the "unit cost curve" rises with output until a certain output level is reached, at which point further increases in output realizes little reduction in unit costs

False

T/F: It is easier for companies based in countries with a high degree of class consciousness to establish a competitive advantage in the global economy.

False

The US accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The US, therefore, imposed trade sanctions against the two. WHich of the following arguments does this exemplify

Corporate security

The country's culture is male dominated, ________ is needed to predict success in foreign postings

Cultural toughness

What can happen if a country's government does not control the rate of growth in money supply?

Currency can depreciate in the future

T/F: Licensing, a mode of entry into a foreign market, gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies

False

T/F: Organizational architecture refers to an organizations norms and value systems

False; Corporate culture

T/F: One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self interest

False; Individualism

T/F: Command economies provide a more favorable environment for innovation and entrepreneurs than market economies

False; Market economies are better

T/F: According to a study by R.L. Tung, the most important reason for expatriate failure among US multinationals was difficulty coping with a new environment

False; Spouse inability to adjust

T/F: By the mid 1990s, communism was rising worldwide

False; it was in decline in the 90s

T/F: Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable

False; looks appealing, is unworkable

T/F: Citizens of a foreign country working in the home country of their multinational employer are known as repatriates

False; should be "inpatriates"

Steven converted $1,000 to ¥105,000 for a trip to Japan. However, he spent only ¥50,000. During this period, the value of the dollar weakened against the yen. Considering a current exchange rate of $1=¥100, how many dollars did Steven spend on the trip?

$450

According to the Fisher effect, if the "real" rate of interest in a country is 4%, the expected annual inflation is 9%. What would the nominal interest rate be?

(i=r+l) 13%

The recent trend to outsource information technology jobs to countries such as India indicates that:

A good education system is a determinant of national competitive advantage

T/F: In terms of expatriate pay, the income statement approach equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home

False; should be balance sheet approach

T/F: When companies wish to convert currencies, they typically enter the foreign exchange market directly

False; they go to their own banks

T/F: By lowering production costs, subsidies help foreign competitors gain export markets

False; they help domestic producers

Which of the following is a step taken to manage foreign exchange risk?

Firms need to develop strategies for dealing with economic exposure

Omega Inc, a US firm entered into an agreement with another party to exchange currency and execute the deal at a specific date in the future. What is Omega engaging in when it insures itself against foreign exchange risk?

Hedging

Dharma, Karma, and Nirvana

Hinduism

Max Weber argued that the ascetic principles embedded in __________ do not encourage entrepreneurial activity in pursuit of wealth creation because it is perceived that such activities make the attainment of Nirvana more difficult

Hinduism

Reincarnation and spiritual progression is with

Hinduism

Which of the following statements is true of Geert Hofstede's work on cultural dimensions?

His work fails to consider that many countries have more than one culture

In 1904, who theorized that there was a relationship between Protestantism and the emergence of modern capitalism?

Max Weber

Which of the following staffing approaches limits career mobility and isolates headquarters from foreign subsidiaries?

Polycentric

________ is a hidden cost to basing production in a foreign location

Poor product quality

In Brendan's home country, senior officers eat in the same cafeteria as the entry level workers while other countries were separated. Which Hofstede dimension is this attributed to?

Power distance

The country of Cadmia, which is a leading producer of bauxite, had to impose trade sanctions on Cerian soda cans in order to get the government of Ceria to enforce export restraints. This imposition by the Cadmian government was undertaken to protect domestic producers of soda cans. Which of the following government intervention is being used by Cadmia?

Retaliation

The philosophy behind intellectual property laws is to

Reward the originator of a new invention, book, musical record, and the like for their idea and effort

Which of the following generally permits individual economic freedom but restricts individual political freedom on the grounds that it would lead to communism?

Right wing totalitarianism

For centuries, Somarya was a capitalist country where the rich became richer and the poor became poorer. A group calling itself the "change brotherhood" sought to convert it to a socialist country by democratic means. This is an example of:

Social democrats

In the video, what is defined as the commanding heights of the economy?

Steel, railroads, coal, and other heavy industry

What is one example from the video that exemplifies the boom of the US economy in the 1920s

Stock market

Which of the following statements is true about Hinduism?

Supports caste system

If a firm possesses proprietary technology, the best option for that firm would be to:

manufacture the product in house so that it does not lose competitive advantage

Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because:

neither the importing country or the exporting country complained to the GATT bureaucracy for it to take action

A principal concern of domestic unions about multinational firms is that a company can counter its bargaining power with ______________

the power to move production to another country

The country of Argonia imposes an ad valorem tariff of 10% on 1 million tons of rice imports, after which an out of quota tariff of 80% is applied. Which trade policy is being used?

Tariff rate quota

_______ has caused proprietary software solutions to implement electronic data interchange systems to become obsolete

The internet

Concentration of production makes most sense when

Trade barriers are low

The WTO's Agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Which of the following protects the Nike swoosh logo

Trademark

_________ is concerned with the present measurement of past events

Translation exposure

A product's value-to-weight ratio effects location decisions primarily because of its influence on ____________

Transportation costs

Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance?

Trend toward greater protectionism

T/F: An expatriate manager is a citizen of one country who is working abroad in one of the firm's subsidiaries

True

T/F: Currency swaps are transacted between international business and their banks, between banks, in between governments when it is desirable to move out of one currency into another for a limited period without incurring foreign exchange risk

True

T/F: Government intervention in international trade can take the form of reducing restrictions on imports and adopting policies that promote exports

True

T/F: Multidomestic industries involve producing products or services that are tailored to individual countries

True

T/F: Other things being equal, a nation with democratic institutions is clearly more attractive as a place in which to do business than a place that lacks democratic institutions

True

T/F: Paul Krugman asserts that a strategic trade policy is almost certain to be captured by special-interest groups within the economy who will distort it to their own needs

True

T/F: The concept of economies of scale tells us as plant output expands, unit costs decrease

True

T/F; It is important that the spouse of an expatriate manager, and perhaps the whole family, be included in cultural trading programs

True

In the US, the Foreign Corrupt Practices Act was passed during the 1970s following revelations that

US companies had bribed government officials in foreign countries in an attempt to win lucrative contracts

Local content requirement

a requirement that some specific fraction of a good be produced domestically

Licensing is NOT attractive to which of the following firms?

firms requiring tight control of operations for realizing experience curve and location economies

Advantages of turnkey projects when entering foreign markets

it is a useful strategy to earn great returns from the know-how of a technologically complex process

Small-scale entry into a foreign market makes it difficult to build market share because

it is associated with a lack of commitment demonstrated by the foreign firm

Which of the following is an example of a first mover advantage?

Ability to create switching costs that tie customers into one's products or services

One way organized labor responds to the increase bargaining power of multinational corporations is by trying to

Achieve international regulations on multinationals through the UN

If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n):

Acquisition

Which of the following is a benefit of globalization?

All of these hoes

Assume that the yen/dollar exchange rate quoted in London at 3 p.m. is $1 = $125Yen and that the yen/dollar exchange rate quoted in New York at the same time is $1 = 130. Which profit making situation exists here?

Arbitrage

T/F: For price discrimination to work, arbitrage opportunities must be unlimited

False

Why does Taviscon Int. want an ethnocentric staffing policy?

Because it believes the host country lacks qualified individuals for senior management positions

____________ is an example of an industry in which cross-licensing agreements are increasingly becoming common

Biotech

Tyrone believes that he should be loyal to his superior but in turn his superiors should reciprocate his loyalty by bestowing their blessings on him

Confuscianism

Which of the following is a nonreligious ethical system principally in china, korea, and japan

Confuscianism

When residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency, the phenomenon is generally referred to as

Capital flight

The Smoot-Hawley Act had a damaging effect on

Cash flow in the domestic economy of the US

A social system that allows for flexibility in terms of social mobility determined by socioeconomic achievements is what type of system of social stratification?

Class

What are the two main contradicting ideas presented in this video? - ignore this question -

Command vs market economy

Ad valorem tariff

depends on the proportion of the value of the imported good

Which of the following allows suppliers, shippers, and the purchasing firm to communicate with each other via the internet with no time delay?

Electronic data interchange (EDI) system

Which of the following is true about Western societies?

Emphasize individual achievement

Which of the staffing policies requires all the expatriates to be home country nationals who are transferred abroad?

Ethnocentric

T/F: A firm that improves its quality control cannot reduce the cost of value creation simultaneously

False

T/F: By considering advantages and disadvantages, tradeoffs can often be avoided when selecting an entry mode

False

T/F: Compared to a common law system, it is more expensive to draw up contracts in a civil law jurisdiction

False

T/F: Exporting as a mode of entry into foreign markets does not help a firm achieve experience curve and location economies

False

Which of the following includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products?

Flexible machine cell

Which of the following is true of Islam?

Forbids consumption of pork and alcohol

Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know how is not much of a concern and where the firms valuable asset is their brand name?

Franchising

Yamaguchi Media, a Japanese advertising agency, has a policy in its global business of appointing what it believes is the best person for the job in its various locations regardless of a candidates nationality. What is this approach?

Geocentric

A common feature of many right-wing dictatorships is

Governments that are made up of military officers

Which of the following is true of the efficient market school of thought toward exchange rate forecasting

Inaccuracies in predictions will not be consistently above or below future spot rates; they will be random

Producing a standardized product in large volumes will:

Increase production efficiency

Adopting flexible manufacturing technology to produce a wide variety of end products results in:

Increased utilization of individual machines

Cultures where a personal brand is emphasized is _________

Individualism

____________ refers to a subset of expatriates who are citizens of a foreign country working in the home country of their multinational employer

Inpatriates

Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?

It is useful to earn great adjsnf;ajbdf;b

Which is a possible downside of emphasizing the primacy of group identification over individualism?

It leads to a lack of dynamism and entrepreneurship

Which of the following is a characteristic of an ethnocentric staffing policy?

It places parent country nationals in key management positions

Which of the following firms should concentrate its production in a centralized location?

Jupiter Inc. operates in an industry where fixed costs are high and services of supporting industry are of prime importance

Which of the following refers to logistics system designed to deliver parts to a production process as they are needed, not before?

Just in time inventory

____________ was pioneered by Japanese firms during that country's remarkable economic transformation during the 1960's and 1970's

Just in time inventory

Modern socialism traces its intellectual roots to:

Karl Marx

Which of the following foreign exchange trading centers has the highest percentage of activity?

London

Administrative trade policy

Make it difficult for imports to enter a country through bureaucratic policy

The level of output at which most plant-level scale economies are exhausted

Minimum efficient scale

If a country wants to improve its attractiveness as a place for doing business and as an investment site, it should:

Move toward a market based system

In a society, actions of people directed toward one another are governed by a set of social rules called:

Norms

Which of the following best explains the reason for the rise of protectionist pressures around the world during the 1980s?

Persistent trade deficit in the world's largest economy, the US

Which of the following instances indicates that the dollar is selling at a premium at the 30 day forward market?

The current exchange rate is $1 = 120 Yen and the 30 day forward is $1 = 130 Yen

One of the reasons why protectionist pressures arose around the world during the 1980s was

The different ways many countries found to get around GATT regulations

Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market. Which of the following reflects the foreign exchange dealers' expectations about the dollar over the next 30 days?

The dollar will appreciate against the euro

Which of the following is true of high value-to-weight ratio products?

The transportation costs account for a very small percentage of total costs

States that limit the freedom of religious expression with laws based on religious principles most likely follow the political system of:

Theocratic totalitarianism

Spring, an American firm, recently acquired another company, Tazel Inc., in Indonesia. The high-level managers at Tazel quit because they could not cope with the domineering and straightforward approach of their American counterparts. This illustrates how acquisitions may fail because:

There is a clash between the cultures of the acquired and the acquiring firm

Which of the following statements is true of flexible manufacturing technologies?

They allow firms to customize products to national differences at a single facility

Maroji is a major exporter of dairy products. Mipon is a major exporter of heavy machinery but also has a sizeable domestic dairy industry. Since it imports a sizeable amount of heavy machinery from Mipon, Maroji, at the request of Mipon, limited the amount of dairy products it exports to Mipon each year. This is an example of

Voluntary export restraint (VER)

What world event ended the first age of globalization

WWI

When should a firm concentrate its production facilities in a centralized location?

When important exchange rates are expected to remain relatively stable

An expatriate manager refers to

a citizen of one country who is working abroad in one of the firms subsidiaries

Rapid economic advancement and societal changes that are favorable for international business lead to

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

A lead strategy involves

attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate.

A country characterized with low uncertainty avoidance and low masculinity will

be less resistant to change and less distinguishing between men and women in the same job

How can a wholly owned subsidiary be established in a foreign market?

by acquiring an established firm in the host nation

An advantage of exporting as a mode of entry into foreign markets is that a firm

can avoid the costs of establishing manufacturing operations in the host country

The nominal interest rate is 9% in Brazil and 6% in Japan, applying the international Fisher effect, the Brazilian real should

depreciate by 3% against the Japanese yen

The effect of improved quality control is to lower the costs of value creation by reducing production costs and __________

decreasing after sales service costs

A lag strategy involves

delaying the collection of foreign currency receivables when a foreign currency is expected to appreciate.

First mover disadvantages refers to

disadvantages associated with entering a foreign market before other international businesses

Over 90% of Damian Auto Products, a US based tier one auto supplier that has operations in 26 countries, senior managers are US Nationals. Which of the following staffing policies relies extensively on the use of expatriate managers?

ethnocentric

If hiring foreign nationals is difficult based on countries' laws, it is a _____________

geocentric policy

The risk of failure ___________ with a need for local adaptation in foreign markets

goes up exponentially

The principal function of the trade sanctions the US has in place against Cuba is to

impoverish Cuba to lead to the downfall of communist government

The law of one price states that

in competitive markets free of transportation costs and trade barriers, identical products sold in different countries must sell for the same price when their price is expressed in terms of in the same currency.

Which of the following is a variable used in exchange rate forecasting models based on fundamental analysis?

inflation rate

Patents, copyrights, and trademarks establish ownership rights over

intellectual

For years, the world had used the country of Votnam as a place to assemble goods because of the country's availability of cheap labor. To shift its manufacturing base from simple assembly to full-fledged manufacture of components and finished goods, Votnam introduced a policy that 35% of the value of a product must be produced locally. This is an example of

local content requirement

Less resistance to change and discouragement of any quality in power and wealth with loose ties and gender roles is __________

low uncertainty avoidance

In terms of training and management development, _____ is aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country.

practical training

A government should use subsidies to support promising firms that are active in newly emerging industries, according to

strategic trade policy

What is the beginning of the video's timeline? - ignore this question -

the start of the 20th century

In the 1960s, organized labor believed that by coordinating union action, across countries through an international trade secretariat, it could counter the power of a multinational corporation by

threatening to disrupt production on an international scale