Chapter 5 Questions

_____ is an example of a high-potential/high-growth economy. a) The Philippines b) India c) South Korea d) Syria e) Kuwait

b) India

Which of the following describes one of the reasons for the establishment of the European Union? a) Eliminate trade barriers between member countries b) Decrease tariffs on products from nonmember countries c) Enhance movement of capital and labor between nonmember nations d) Increase the usage of member labor pools by nonmembers d) Gradually eliminate imports from nonmember nations

a) Eliminate trade barriers between member countries

Which of the following statements can be used to explain the growth of international business? a) Many countries in Europe and Asia were devastated after World War II and had to be rebuilt. b) The postwar population boom decreased demand for products. c) Changes in cultural traditions made the rest of the world open to all of the products made in the United States. d) Infrastructures in Europe and Asia remained sound in spite of World War II. e) All of these choices

a) Many countries in Europe and Asia were devastated after World War II and had to be rebuilt.

People from which of the following countries are in the category of uncertainty acceptance? a) United States b) Israel c) Austria d) Japan e) Germany

a) United States

_____ is the form of international business involvement in which two or more firms have an equity position in an operation. a) a joint venture b) direct investment c) maquiladoras arrangement d) strategic alliance e) international brokering

a) a joint venture

Which of the following is a problem associated with the implementation of a direct investment strategy? a) complexity of decision making b) sharing of profits c) loss of managerial control d) inability to purchase the brand identification of a product e) having to develop an organizational infrastructure

a) complexity of decision making - greater economic and political risk exposure - greater uncertainty of business risk

Compassion International is a children's charity that provides basic necessities, schooling, and job training for poverty-stricken children around the world. This not-for-profit organization would require which type of investment when it enters a new country? a) direct investment b) joint venture c) licensing d) importing/exporting e) franchising

a) direct investment when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country; HIGHEST level of involvement in international business

A nation's oil supply and cost of living is part of its... a) economic environment b) cultural heritage c) infrastructure d) technological environment e) political-legal environment

a) economic environment

A(n) _____ strategy requires little initial investment, is heavily regulated, and provides little opportunity to modify products for local conditions. a) importing/exporting b) licensing c) joint venture d) global sourcing e) direct investment

a) importing/exporting

Which of the following is the least intense level and least risky of international business strategy? a) importing/exporting strategy b) joint venture c) licensing strategy d) direct investment e) global sourcing

a) importing/exporting strategy

Marks & Spencer is an upscale British department store that has a few stores in the United States and two stores in Paris. According to the classification scheme in the text, Marks & Spencer is a(n) ____ business. a) international b) domestic c) multinational d) intercontinental e) global

a) international a business that is based primarily in a single country but acquires some meaningful share of its resources or revenues (or both) from other countries

Which of the following is NOT a reason for using a licensing agreement as a means of entering international business? a) low levels of risk b) high domestic production costs c) government regulation d) increased/extended profitability of technology e) excessive transportation costs

a) low levels of risk

US managers have the least difficultly operating in _____ economies. a) market b) communist c) industrializing d) developing e) pure competition

a) market

Which of the following is the type of economy most countries in the world are striving to attain? a) mature market economy b) industrializing economy c) communist economy d) developing market economy e) command economy

a) mature market economy

Which of the following describes what has occurred in international business during the past three decades? a) Although still increasing, international trade has grown at a slower rate since 1980. b) The volume of international trade increased more than 3000 percent. c) U.S. investment overseas has been on the decline for the past two decades. d) The majority of the world's largest firms are firms with headquarters inside the United States. e) All U.S. firms still earn the majority of their sales and profits in the United States.

b) The volume of international trade increased more than 3000 percent.

An example of the cultural system in China is... a) all postings on Qiangguo, the largest Internet bulletin board in China, are censored. b) bowling is the latest fad in China, with a new bowling alley opening weekly. c) calligraphy is viewed as a higher art form than painting and drama. d) one of China's greatest natural resources is its labor pool. e) the Chinese government has a one-child population control.

b) bowling is the latest fad in China, with a new bowling alley opening weekly.

Starbucks owns one third of its stores outside the US. Those stores are a(n)... a) joint venture b) direct investment c) licensing d) strategic alliance e) franchising

b) direct investment when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country; HIGHEST level of involvement in international business

Opponents to the maquiladoras concept are most critical of its... a) high production cost b) exploitation of human resources c) legality d) waste of raw materials e) high transportation costs

b) exploitation of human resources

A(n) _____ strategy involves a partnership with a long-term commitment that can be used to acquire new technology and information. a) direct investment b) joint venture c) licensing d) importing/exporting e) pure domestic

b) joint venture

Top executives at BBT Corporation set the strategic direction for the firm at corporate headquarters. BBT's local managers are then informed of these strategies and given complete freedom to implement them. Which of the following management functions best describes the freedom provided local managers? a) planning b) organizing c) decision making d) leading e) controlling

b) organizing

A tariff... a) cannot be collected by the exporting country b) can be collected by the importing country c) can be collected by countries through which goods pass d) cannot be used to raise money for a government e) cannot be used to increase the cost of foreign goods

c) can be collected by countries through which goods pass taxes collected on goods shipped across national boundaries

The advantage of direct investing is... a) access to materials and technology b) quick market entry c) enhanced control d) little risk e) small cash outlay

c) enhanced control - allows use of existing infrastructure - no adaption of in-country product or service is necessary

Which of the following is NOT a factor of the political-legal environment for international managers? a) no incentives for international trade b) the use of import quarts and tariffs c) infrastructure d) membership in an economic community e) government instability

c) infrastructure

Nokia sells phones in more than 150 countries and has employees in more than 120 countries. It is a(n) _____ business. a) international b) domestic c) multinational d) intercontinental e) global

c) multinational a business that has a world-wide marketplace from which it buys raw materials, borrows money, where it manufactures its products, and to which it subsequently sells its products

A(n) _____ is the most common form of trade restriction. a) import tariff b) export tariff c) quota d) embargo e) maquiladoras

c) quota limits placed on the number or value of goods that can be traded as exports or imports

The cultural challenges of international management include... a) natural resources b) the infrastructure c) government stability d) language e) all of the above

d) language

A certain developing country in South American offers your firm a construction subsidy if you build your new plant there. This is an example of... a) an economic challenge for international managers. b) a control on international trade. c) a mature infrastructure. d) an incentive for international trade. e) a technological challenge for international managers.

d) an incentive for international trade

The US Department of Defense requires some weapon systems to be made by US companies for national defense reasons. This is an example of... a) a quota b) an export restraint agreement c) nationalization d) buy national legislation e) None of these

d) buy national legislation

American music and movie industries are the largest in the world. These industries use _____ to bring their product around the world. a) importing b) direct investment c) global sourcing d) exporting e) joint venture

d) exporting

An example of the economic system in China is... a) all postings on Qiangguo, the largest Internet bulletin board in China, are censored. b) bowling is the latest fad in China, with a new bowling alley opening weekly. c) calligraphy is viewed as a higher art form than painting and drama. d) one of China's greatest natural resources is its labor pool. e) the Chinese government has a one-child population control.

d) one of China's greatest natural resources is its labor pool.

People who exhibit _____ tend to place a high premium on relationships, quality of life, and concern for others. a) aggressive goal behavior b) power respect orientation c) collectivism d) passive goal behavior e) long-term orientation

d) passive goal behavior

People in the US, Israel, and Ireland are likely to question their supervisors. This is referred to as a(n) _____ orientation. a) individualistic b) power respect c) aggressive goal behavior d) power tolerant e) collective

d) power tolerant

The US government limits how many cars can be imported into the country annually. This is a(n)... a) export restraint agreement b) import tariff c) embargo d) quota e) boycott

d) quota limits placed on the number or value of goods that can be traded as exports or imports

People in Pakistan and West African are more likely to want immediate gratification. This is an example of Hofstede's _____ orientation. a) power b) global c) social d) time e) uncertainty

d) time the extent to which members of a culture adopt long-term versus a short-term outlook on work, life, and other elements of society

Which of the following countries is NOT a member of the EU? a) Belgium b) Luxembourg c) Italy d) Ireland e) Ukraine

e) Ukraine

A manager concerned with time zones differences is worried about... a) planning b) organizing c) decision making d) leading e) controlling

e) controlling

_____ strategy is considered the highest level of involvement in international business. a) importing/exporting b) licensing c) joint venture/strategic alliance d) franchising e) direct investment

e) direct investment when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country

_____ is a device that can help protect domestic producers by directly adding to the cost of foreign goods. a) import quota b) export restraint c) buy domestic law d) export tariff e) import tariff

e) import tariff

In the U.S. Starbucks does not franchise. It has a(n) _____ agreement with Barnes and Noble. a) importing b) exporting c) strategic d) global sourcing e) direct investment

c) strategic a cooperative arrangement between two or more firms for mutual gain

Which management function do differences between domestic and international production quality standards fall under? a) planning b) organizing c) decision making d) leading e) controlling

e) controlling