Mgnt test 1

Michael Porter claims that demand conditions, factor conditions, related and supporting industries, and firm strategy, structure, and rivalry, rather than government and chance, are factors that affect national competitiveness.

false- Porter's theorizing about his Diamond Model of national advantage also acknowledged that competitiveness could be affected by government and chance.

Portfolio investment is the purchase of sufficient stock in a firm to obtain significant management control.

false- Portfolio investment is the purchase of stocks and bonds to obtain a return on the funds invested. Direct investment is the purchase of sufficient stock in a firm to obtain significant management control.

Direct investment refers to overseas purchases of stocks and bonds to gain a return on the funds invested.

false- Portfolio investment refers to overseas purchases of stocks and bonds to gain a return on the funds invested.

The EU is administered by the European Commission, a group composed of 27 commissioners, elected at the EU-level.

false- The European Commission is nominated at the country-level, one member per country, and approved by the European Parliament.

An important assumption that the IMF makes is that a strong organization with rules and penalties for their violation is necessary to support trade.

false- The common interests of all nations exceed their conflicting national interests. The idea here is that a rising tide raises all boats; collaboration will pay off.

According to the text, the self-absorption criterion is probably the biggest cause of international business blunders.

false- The correct term is "self-reference criterion,"

The dollar value of total world exports in 2007 was greater than the gross national product of every nation in the world except Japan.

false- The dollar value of total world exports in 2008 was greater than the gross national product of every nation in the world except the U.S

When operating in other cultures, if we realize that, underneath it all, we are all the same, we will be fine.

false- The first step to adjustment across cultural borders is to recognize that there are other cultures

The forces in the international environment are the same as those in the domestic environment except that they occur in foreign nations.

false- The forces in the foreign environment are the same as those in the domestic environment except that they occur in foreign nations.

According to the text, the international environment is all of the uncontrollable forces originating outside the home country that surround and influence the firm.

false- The international environment is the interaction between domestic and foreign environmental forces or between sets of foreign environmental forces. Foreign environment is all the uncontrollable forces originating outside the home country that surround and influence the firm.

In Human Resources, the American employee protection laws (Equal Employment Opportunity Commission-EEOC) allow an American company to be successful on the cultural front in all foreign labor markets

false- The motivation and evaluation of employees is based on cultural values, so the U.S. EEOC approach would violate some foreign cultural norms. U.S. law is not universal (although the U.S. government may apply it beyond U.S. borders)

The reasons international firms enter foreign markets are all linked to either (1) the desire to increase profits or (2) the desire to increase sales.

false- The reasons international firms enter foreign markets are all linked to either (1) the desire to increase profits and sales, or (2) the desire to protect these profits and sales from being eroded by competitors.

In organizing their international activities, there are five dimensions along which management can globalize or standardize these activities.

false- There are at least seven dimensions along which management can globalize or standardize

Transnational corporations account for approximately 25 percent of total global output and nearly 50 percent of world trade

false- Transnational corporations account for approximately two-thirds of world trade, not 50 percent.

If a Chinese worker earns $1.00 a day, then goods produced by this worker will cost less than the same goods produced by an American earning $18.00 an hour.

false- Wage costs are neither all of the production costs nor all of the labor costs, and labor can also exhibit differences in productivity.

Importing and foreign direct investment are two approaches to meeting overseas demand.

false-EXPORTING and foreign direct investment are two approaches to meeting overseas demand

Opponents of globalization argue that globalization has produced:

globalization has produced uneven results across nations and people and deleterious effects on labor and labor standards.

Most developed nations have:

high individualism

_______________ occurs primarily because of relative price differentials among nations.

international trade

Management has no direct control over the external environment of the firm but can exert influence by ________.

lobbying for a change in a law and heavily promoting a new product to change cultural attitude.

According to the text, the dimensions along which management can globalize (standardize) their company's international activities include:

markets and competitive strategy

Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies _______________.

more liberal

Many of the same Asian countries that are major exporters to the United States are also significant importers of American goods because:

of their rising standards of living, their purchasing of large amounts of capital goods and their importing raw materials and components.

When the context is considered, when we consider relationships as we make decisions about the application of rules, we are in a ____________.

particularist

If Ecuador has an absolute advantage in coffee and Argentina in wheat, then, according to trade theory:

Ecuador should focus on production of coffee and trade for other goods, it should not import coffee and should increase trading its coffee and also produce other goods

The IMF initially played a central role in:

setting fixed exchange rates among nations' currencies with an established par value based on gold.

The characteristics of Hofstede's long-term orientation include:

social order and hierarchical relationships

The common interest of all nations in a workable international exchange rate system transcends their conflicting international interests is the premise of:

the International Monetary Fund/IMF

According to the text, the level of intracompany trade of multinationals in 1930, as a percentage of world trade, may have exceeded the proportion at the end of the 20th century.

true

Hall's high and low context framework is based upon communication styles

true

Hofstede describes his Confucian dynamism dimension as dealing with Virtue regardless of Truth.

true

If a nation is continuing to receive appreciable amounts of foreign investment, its investment climate must be favorable.

true

Importing refers to the transportation of any good or service to a destination into a country or region, from a foreign origination point.

true

Institutions are constructed to provide meaning and stability to social life, regulate the relations of individuals to each other; and limit behavior of individuals and firms.

true

Low context cultures such as the U.S. have explicit communication patterns

true

New institutional theory suggests that institutions be understood as collections of rules and codes of conduct that limit behavior.

true

Supporters of globalization generally argue that it is the best strategy for advancing the world's economic development.

true

That free trade is the best strategy for advancing the world's economic development is one of the few propositions on which almost all economists agree.

true

The first formulation of international trade theory, by Adam Smith, was motivated by political considerations

true

The world stock of outward foreign direct investment was $16.2 trillion in 2008, which was 9 times what it was in 1990.

true

The benefits of liberalized trade so far have been:

uneven for developing and developed economies

The Trompenaars dimension that describes a society whose rules regulate behaviors for all members, applied evenly is ___________.

universalist

The monopolistic advantage theory states that:

FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.

Regarding economic and social development:

For the Trade and Development Index, the best regional performance among developing countries was that of the countries of the East Asia and Pacific region.

The only cultural framework we describe in this text that is based on communication styles is:

Hall's (high and low context)

More than half of the exports from developing nations go to developed nations and:

The proportion of exports from developing nations that go to developed nations is on decline over the past 35 yrs and apporx 70% of exports from developed nations go to other industrialized nations.

In examining the volume of international trade:

The proportion of manufacturing value added generated by South and East Asia has quadrupled since 1980

The capability of one nation to produce more of a good with the same amount of input than another country is a/an __________ __________.

absolute advantage

The specific-diffuse dimension looks at:

attitudes toward public/private life

The theory of overlapping demand:

deduces that international trade in manufactured goods will be greater between nations with similar levels of per capita income.

In examining the volume of international trade:

exports of merchandise and exports of services grew nearly fivefold from 1990-2008 and tenfold from 1980-2008 respectively.

A multidomestic company is an organization that attempts to standardize and integrate operations worldwide in all functional areas.

false- A global company is an organization that attempts to standardize and integrate operations worldwide in all functional areas.

The term international business is used to describe an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

false- A multidomestic company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

An arrangement where one or more activities that could be provided in-house are instead provided by another company is offshoring.

false- An arrangement where one or more activities that could be provided in-house are instead provided by ANOTHER company is outsourcing.

An international company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

false- An international company can be either a global or a multidomestic company. A multidomestic company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences

Trompenaar's achievement vs. ascription dimension describes social status based on what one does or who one is. The U.S. is a culture in which people build who they are through work, so its social status tends to be based on ascription.

false- Ascription is status based on who you are, not what you've done. Ascription could consider family lineage, age, or other attributes. Status via work is achievement-oriented.

Although India is a member of the WTO and has benefited greatly from increased trade as a result of WTO agreements, China is not yet a member.

false- Both China and India are WTO members and have benefited greatly from increased trade facilitated by the WTO.

The Bretton Woods Conference established the European Union currency, the euro.

false- Bretton Woods established the IMF and the World Bank.

China, Mexico, and Japan are the three largest trading partners of the U.S., in terms of the total volume of imports and exports.

false- China, Mexico and CANADA

Foreign business is business whose activities are carried out across national borders

false- Foreign business denotes the operations of a company outside its home or domestic market. International business is business whose activities are carried out across national borders.

International business differs from domestic business in that a firm operating across borders must deal with the forces of two kinds of environments-domestic and foreign.

false- International business involves three kinds of environments-domestic, foreign, and international.

International trade includes exports, imports, and foreign direct investment.

false- International trade includes exports and imports, not foreign direct investment.

Foreign direct investment may be an attempt by foreign companies to establish competitive advantage over potential competitors in other markets, due to possession of advantages not available to local firms. Such advantages possessed by foreign companies over their local competitors include knowledge about local market conditions and cost efficiencies from operating at a distance

false- Lack of knowledge about local market conditions and increased costs of operating at a distance are usually liabilities, rather than advantages, for ICs

Critics of large global firms compare these firms' sales with nations' total sales to illustrate the tremendous size of these firms

false- Large global firms' sales are compared with nations' gross national incomes (GNIs)

Linder's theory of overlapping demand explains the direction of trade for minerals and agricultural products.

false- Linder's theory attempted to explain how demand for products was affected by income levels, and therefore a nation's income per capita, and therefore exports will be influenced by similarity in income levels across countries

The dynamic capability theory states that for a firm to invest overseas, it must have three kinds of advantages: ownership specific, internalization, and location specific.

false- Ownership specific, internalization, and location specific advantages are part of Dunning's Eclectic Theory of International Production

Lack of folklore knowledge is illustrated by:

A and B A. Smirnoff's use of a Che Guevara image in Cuba, because Che is a national hero there and B. Apple's use of an image of the Dalai Lama, because it offended China, where the government sees the Dalai Lama as a political dissident.

Trompenaars' particularist dimension describes a culture in which:

B and C B. Context is considered when rules are applied. C. Relationships rather than rules regulate behaviors.

When considering where to export, advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include:

Satisfactory transportation facilities have already been established.

Firms that have substantial operations in more than one country are called _______.

International Company (An international company (IC) is a global or multi domestic company)

The major function of the World Bank is to serve as a:

Non-profit banking cooperative for its members to meet development needs.

Culture includes everything but:

None of the above (includes Religion, politics, higher education & universal values)

The trend toward unification and socialization of the global community is illustrated by which of the following:

Preferential trading arrangements that group several nations into a single market.

According to the theory of comparative advantage,

a nation should produce the goods at which it is most efficient