Chapters 1-5 Quiz Questions

5.1 Strategies that not only help the multinational firm make good profits, but that do so without harming the environment while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its stakeholders are called

sustainable strategies

3.1 The present base for the adjustment of purchasing power parity is the cost of living in

the United States

2.16 An individual's right to do something may be restricted on the grounds that it runs counter to "the good of society" when the political system emphasizes

collectivism Explanation: When collectivism is emphasized, the needs of society as a whole are generally viewed as being more important than individual freedoms. In such circumstances, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society" or to "the common good."

5.9 The accepted principles of right or wrong governing the conduct of businesspeople are called

business ethics

3.7 Which of the following has been losing importance globally since the 1980s?

centrally planned command economies

2.4 A legal system which is based on a detailed set of laws organized into codes is referred to as a

civil law system Explanation: A civil law system is based on a detailed set of laws organized into codes.

3.15 Which of the following factors is most likely to make a country unattractive for international business?

closed totalitarian dictatorship

5.14 Moral theorists argue that _____ form the basis for the moral compass that managers should navigate by when making decisions that have an ethical component.

fundamental human rights

4.6 Which of the following is NOT a determinant of culture?

geography

3.4 What is required for the business environment of a country to be conducive to innovation and entrepreneurial activity?

strong property rights protection

5.7 ABC Company, which is headquartered in the U.S., has its production plant located in a less-developed country. In this production plant, working conditions are very poor. For example, employees work 15-hour shifts, are exposed to toxic chemicals, and are forced to work overtime. In addition, the pay is extremely low. What type of behavior is ABC Company exhibiting?

unethical

5.8 Which of the following holds that the moral worth of actions or practices is determined by their consequences, and is committed to the maximization of good and the minimization of harm?

utilitarianism

4.18 Which of the following include a society's attitudes toward such concepts as individual freedom, democracy, truth, justice, honesty, loyalty, and social obligations?

values

1.6 In which of the following ways is managing an international business different from managing a purely domestic business?

An international business must develop policies for dealing with exchange rate movements. Explanation: Cross-border transactions also require that money be converted from the firm's home currency into a foreign currency and vice versa. Because currency exchange rates vary in response to changing economic conditions, managers in an international business must develop policies for dealing with exchange rate movements.

4.14 Which of the following best represents a mores violation?

Bribing a government official in a country where bribery is illegal.

4.13 Within the context of culture, which of the following statements is NOT true of language?

Chinese is increasingly becoming the language of international business.

4.16 Which of the following is a major exception to the principle that ethical systems are grounded in religion?

Confucianism

4.9 Company XYZ is planning to set up a production plant abroad. It has selected five potential countries based on their population size, stage of economic development, labor costs, and access to world markets. Considering the connection between culture and competitive advantage, which of the following countries would be the best investment site for Company XYZ?

Country B, where the education is well-developed and social stratification is lacking.

2.8 The Hourglass, a U.S.-based company, is planning to expand operations to a foreign country. Considering the factors that make a country attractive as a place in which to do business, which of the following countries should The Hourglass enter?

Country D, which has democratic institutions and a market-based economic system. Explanation: For now, other things being equal, a nation with democratic political institutions, a market-based economic system, and strong legal system that protects property rights and limits corruption is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions, where economic activity is heavily regulated by the state, and where corruption is rampant and the rule of law is not respected.

1.4 Which of the following is NOT a factor of production?

Culture Explanation: The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).

4.3 American company Tech-Solutions is planning to expand its operations to the Bangol Republic. In this country, the group is the primary unit of social organization. According to this information, which of the following is a likely outcome for Tech-Solutions from operating in the Bangol Republic?

Employees will achieve close cooperation with others.

2.9 Which of the following is most likely to be the result of a country having lax intellectual property laws?

Firms will be reluctant to enter into such a country. Explanation: Firms may choose to stay out of countries where intellectual property laws are lax, rather than risk having their ideas stolen by local entrepreneurs.

1.3 Which of the following best exemplifies the globalization of markets?

Fluffy Pillows, a U.S.-based pillow company, sells the same pillows worldwide. Explanation: The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross-border trade and investment have made it easier to sell internationally. Consumer products such as Citigroup credit cards, Coca-Cola soft drinks, video games, McDonald's hamburgers, Starbucks coffee, IKEA furniture, and Apple iPhones are frequently held up as prototypical examples of this trend. The firms that produce these products are more than just benefactors of this trend; they are also facilitators of it. By offering the same basic product worldwide, they help create a global market.

4.11 Which of the following is true of folkways?

Folkways are routine conventions of everyday life.

3.12 Which of the following statements is true of the gross national income (GNI)?

GNI per person figures can be misleading because they don't consider differences in the cost of living.

1.15 According to globalization supporters, which of the following is an advantage of globalization?

Globalization helps create jobs in all countries that participate in the global trading system. Explanation: Those who support globalization believe that globalization stimulates economic growth, raises the incomes of consumers, and helps create jobs in all countries that participate in the global trading system.

1.2 According to globalization opponents, which of the following is a disadvantage of globalization?

Globalization results in companies "exporting jobs" to low-wage nations. Explanation: One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and western Europe. In the past few years, the same fears have been applied to services, which have increasingly been outsourced to nations with lower labor costs. The popular feeling is that when corporations such as Dell, IBM, or Citigroup outsource service activities to lower-cost foreign suppliers—as all three have done—they are "exporting jobs" to low-wage nations and contributing to higher unemployment and lower living standards in their home nations (in this case, the United States).

4.10 Which of the following statements is true of Hinduism?

Hinduism supported India's caste system.

3.8 Which index was developed by the United Nations to measure the quality of human life in different nations?

Human Development Index

2.15 Which of the following is true about individualism?

In individualism, private ownership is desirable. Explanation: In contrast to collectivism, individualism stresses that the interests of the individual should take precedence over the interests of the state. Individualism can be traced to an ancient Greek philosopher, in this case Plato's disciple Aristotle (384-322 B.C.). In contrast to Plato, Aristotle argued that individual diversity and private ownership are desirable.

4.1 Which of the following is true about Geert Hofstede's research on cultural dimensions?

Inspired by Confucianism, Hofstede subsequently added a fifth dimension as a function of the data obtained via the Chinese Value Survey (CVS).

1.13 Who is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations?

International Monetary Fund (IMF) Explanation: The International Monetary Fund (IMF) is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations.

2.11 Which of the following is true about the common law system?

Judges in a common law system have the power to interpret the common law so that it applies to the unique circumstances of an individual case. Explanation: Judges in a common law system have the power to interpret the law so that it applies to the unique circumstances of an individual case.

4.8 The mother tongue of the largest number of people is

Mandarin

2.3 Which of the following is true of countries with a market economy?

Production is determined by the interaction of supply and demand. Explanation: In a market economy, production is determined by the interaction of supply and demand and signaled to producers through the price system. If demand for a product exceeds supply, prices will rise, signaling producers to produce more. If supply exceeds demand, prices will fall, signaling producers to produce less.

5.20 Which of the following is the basic position of the Friedman doctrine?

The only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

1.18 Which of the following does Moore's law predict?

The power of microprocessor technology doubles and its cost of production falls in half every 18 months. Explanation: The cost of microprocessors continues to fall, while their power increases (a phenomenon known as Moore's law, which predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months).

3.20 Which of the following statements reflects how the political economy of many of the world's nation-states has changed radically since the late 1980s?

There has been a move away from centrally planned and mixed economies and toward a more free market economic model.

1.17 Which institution was established as a result of the Uruguay Round?

World Trade Organization Explanation: The Uruguay Round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the international trading system.

3.16 People in the West tend to associate a representative democracy with

a market economic system.

5.10 Which of the following is considered ethical in international business?

adopting a zero-tolerance approach toward facilitating payments even if it is considered legal in both home and the host country

4.2 A caste system and a class system fundamentally differ from one another in the

amount of social mobility they allow.

3.3 Rajiv purchased an invention from a group of researchers and was the first to commercialize the innovative new product. According to this information, Rajiv is

an entrepreneur

5.5 John, an American executive, finds that a foreign subsidiary in a poor nation has hired a 12-year old orphan girl to work on the factory floor. He knows that using child labor is in direct violation of the company's own ethical code. At the same time, he does not think that denying the child her only source of income is right. John is facing

an ethical dilemma

2.6 In Nerumbia, all businesses are owned by the state. The Nerumbian government plans production, fixes commodity prices, and also gives directions on investments to ensure they benefit the nation as a whole and not only a few individuals. What type of economy has Nerumbia adopted?

command Explanation: In a pure command economy, the government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold. In addition, all businesses are state owned, the rationale being that the government can then direct them to make investments that are in the best interests of the nation as a whole rather than in the interests of private individuals.

2.7 Those who believe that socialism can be achieved only through violent revolution and totalitarian dictatorship are called

communists Explanation: The communists believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.

2.19 The product liability laws are established to protect the

consumers in case a product causes injury, death, or damage. Explanation: Product safety laws set certain safety standards to which a product must adhere. Product liability involves holding a firm and its officers responsible when a product causes injury, death, or damage.

4.12 With increased economic progress, cultures across the world seem to be moving toward some universally accepted values and norms. This is known as the

convergence hypothesis

1.9 Shannon works as the executive manager of an international business, while Bob is the executive manager of a purely domestic business. Which of the following tasks apply to both Shannon and Bob?

dealing with business attacks from competitors Explanation: Managing an international business is different from managing a purely domestic business for at least four reasons: (1) countries are different, (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business, (3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, and (4) international transactions involve converting money into different currencies.

2.18 Which of the following refers to a political system in which the government is by the people, exercised either directly or through elected representatives?

democracy Explanation: Democracy refers to a political system in which government is by the people, exercised either directly or through elected representatives.

3.19 Which of the following typically involves removing price controls; abolishing laws regulating the establishment and operation of private enterprises; and relaxing or removing restrictions on direct investment by foreign enterprises and international trade?

deregulation

3.9 The Surbeel Republic exercises tight control over prices and output, prohibits private enterprises from operating in most sectors of the economy, and severely restricts foreign direct investment and international trade. Based on this information, the Surbeel Republic is likely against

deregulation

1.19 What was the motivation for non-U.S. firms to begin investing across national borders in the 1970s?

desire to disperse production activities to optimal locations Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

4.17 Which of the following BEST increases a country's competitive advantage and its attractiveness as a location for international business?

education system that is well developed

5.15 Who are considered internal stakeholders of a company?

employees

4.19 A belief in the superiority of one's own ethnic group or culture is called

ethnocentrism

1.11 Which of the following is most likely to be the reason behind the decline in the U.S. share of world output in 2014?

faster economic growth of developing economies, particularly in Asia Explanation: In 1960, the United States accounted for 38.3 percent of world output, measured by gross domestic product (GDP). By 2014, the United States accounted for 22.4 percent of world output, still the world's largest industrial and commercial power but down significantly in relative size. This change in the U.S. position was not an absolute decline because the U.S. economy grew significantly between 1960 and 2014 (the economies of Germany, France, and the United Kingdom also grew during this time). Rather, it was a relative decline, reflecting the faster economic growth of several other economies, particularly in Asia.

1.7 Office Plus, a U.S.-based company, has invested resources in business activities in New Zealand. This is an example of

foreign direct investment Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

1.10 Seeking to lower overall costs, a South Korean car manufacturer sources many of the parts for its cars from other Asian countries. This practice demonstrates the

globalization of production Explanation: The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).

2.17 In a pure command economy, the prices at which goods and services are sold are planned by the

government Explanation: In a pure command economy, the government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold.

2.14 A payment made to expedite or to secure the performance of a routine governmental action is called a

grease payment Explanation: Both the U.S. law and Organization for Economic Co-operation and Development convention include language that allows exceptions known as facilitating or expediting payments (also called grease payments or speed money), the purpose of which is to expedite or to secure the performance of a routine governmental action.

5.3 Which of the following are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official?

grease payments

4.5 Within the context of the individual as the basic unit of a social organization, which of the following is an implication of the emphasis on individualism in many Western societies?

high degree of managerial mobility between companies

4.15 In the Republic of Bokenton, natives are resistant to change and do not like to take risks. They value job security and retirement benefits. In addition, they have a strong need for rules and regulations. Based on this information, the Republic of Bokenton most likely demonstrates

high uncertainty avoidance

5.13 Which of the following is the first step in the process of ethical decision-making?

identifying which stakeholders a decision would affect and in what ways

1.5 Which of the following is an appropriate solution to the problem of slow real income growth among the unskilled workers in the United States?

increasing society's investment in education Explanation: Evidence suggests that technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labor. This suggests that a solution to the problem of slow real income growth among the unskilled is to be found not in limiting free trade and globalization, but in increasing society's investment in education to reduce the supply of unskilled workers.

3.6 The development of new products, processes, organizations, management practices, and strategies is called

innovation

1.16 Canadian company Yummy Snacks exports a number of products to consumers in Peru, Chile, and Argentina. According to this information, Yummy Snacks is most likely involved in

international trade Explanation: International trade refers to the exporting of goods or services to consumers in another country.

5.4 Which ethical approach typically focuses on the attainment of fair and equitable distribution of economic goods and services?

justice theories

3.14 U.S.-based Royal Corporation is hesitant about entering into a licensing agreement with Hexagon, Inc., a company from the Monaslu Republic, due to the likelihood that Hexagon will opportunistically break a contract or expropriate property rights. What type of risk is Royal Corporation trying to avoid?

legal

3.5 Which of the following is one of the three measures used to determine the Human Development Index (HDI) of a country?

life expectancy at birth

3.11 Which of the following factors is most likely to make a country more attractive for international business?

likely economic growth

4.7 According to Geert Hofstede, what dimension captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors?

long-term versus short-term orientation

2.5 Countries that emphasize individual goals over collective goals tend to have what type of economic system?

market Explanation: In countries where individual goals are given primacy over collective goals, we are more likely to find market-based economic systems.

1.8 As a result of globalization, we have been moving toward a world in which

material culture is starting to look similar the world over. Explanation: We are moving toward a world in which barriers to cross-border trade and investment are declining; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into an interdependent, integrated global economic system.

5.2 Which of the following gives employees the integrity to go public to the media and blow the whistle on persistent unethical behavior in a company?

moral courage

5.11 XYZ Company was considering moving its operations to a less-developed country. As part of the decision-making process, the executive managers of the company stood in the shoes of the current employees and asked themselves how it might feel to lose their jobs as a result of the proposed action. The executive managers of XYZ Company were demonstrating

moral imagination

1.12 Green Cleaners Inc., a U.S.-based company that specializes in environmentally-friendly cleaning supplies, has production facilities in Poland and Spain. Based on this information, Green Cleaners can be classified as what type of enterprise?

multinational Explanation: A multinational enterprise (MNE) is any business that has productive activities in two or more countries.

5.19 Which of the following asserts that 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?

naive immoralism

4.4 The social rules and guidelines that prescribe appropriate behavior in particular situations are called

norms

2.10 ABC Medical Corporation has developed a new medication to treat a rare disease. Which type of legal protection grants ABC Medical Corporation exclusive rights for a defined period to the manufacture, use, or sale of the new medication?

patent Explanation: A patent grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention.

3.17 ABC Company is hesitant about entering Ukraine, because the country has been experiencing social unrest in recent years. Based on this information, what type of risk is ABC Company trying to avoid?

political

4.20 Which Geert Hofstede dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities?

power distance

3.18 Which of the following factors is most likely to contribute toward lowering the risk of doing business in a country?

presence of a strong legal system in the country

5.16 Which of the following is a root cause of unethical behavior in business?

pressure to meet unrealistic performance goals

3.2 The government of Kimmurak is selling state-owned assets such as TeleKimmurak, a state-owned telecommunications enterprise, to private investors. This is an example of

privatization

2.13 In the context of violation of property rights, which of the following refers to the extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats?

public action Explanation: Public action to violate property rights occurs when public officials, such as politicians and government bureaucrats, extort income, resources, or the property itself from property holders.

3.10 Which of the following is a measure of economic development that allows for a direct comparison of living standards in different countries?

purchasing power parity

2.12 The United Nations Convention on Contracts for the International Sale of Goods (CIGS) was introduced to

resolve disputes that arise in international trade regarding which country's laws to apply. Explanation: When contract disputes arise in international trade, there is always the question of which country's laws to apply. To resolve this issue, a number of countries, including the United States, have ratified the United Nations Convention on Contracts for the International Sale of Goods (CIGS).

2.2 The government of Batwi, which is made up of military officers, permits some individual economic freedom. However, it restricts individual political freedom on the basis that it could lead to the rise of communism. According to this information, which political system is found in the country of Batwi?

right-wing totalitarianism Explanation: Right-wing totalitarianism 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 common feature of many right-wing dictatorships is an overt hostility to socialist or communist ideas. Many right-wing totalitarian governments are backed by the military, and in some cases, the government may be made up of military officers.

5.18 Which of the following is typically associated with managers from developed nations, and claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries?

righteous moralism

5.17 Which of the following are NOT considered external stakeholders of a company?

shareholders

1.14 A macro factor underlying the trend toward greater globalization is

the decline in trade barriers since the end of World War II. Explanation: Two macro factors underlie the trend toward greater globalization. The first is the decline in barriers to the free flow of goods, services, and capital that has occurred since the end of World War II. The second factor is technological change, particularly the dramatic developments in recent decades in communication, information processing, and transportation technologies.

5.6 By moving production to locations where they are free to pump pollutants into the atmosphere, corporations contribute to

the global tragedy of the commons.

1.1 Which of the following is NOT a technological change that affects globalization?

the introduction of tougher environmental and labor laws Explanation: The lowering of trade barriers made globalization of markets and production a theoretical possibility. Technological change has made it a tangible reality. Since the end of World War II, the world has seen major advances in communication, information processing, and transportation technology, including the explosive emergence of the Internet.

3.13 The spread of democracy among countries is most likely to lead to

the promotion of greater competition.

5.12 A number of employees at Sports Plus Inc., which is headquartered in a country where masculinity and power distance are high, do not behave in an ethical manner. In this context, the roots of unethical behavior can be traced to

the societal culture

2.1 A form of government in which political power is monopolized by a party, group, or individual that governs according to religious principles is called what type of totalitarianism?

theocratic Theocratic totalitarianism is found in states where political power is monopolized by a party, group, or individual that governs according to religious principles.

1.20 Why was the World Trade Organization established?

to police the international trading system Explanation: The World Trade Organization (WTO) (like the GATT before it) 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 WTO member states.

2.20 Vintage Incorporated is going to do business with a company that is located in the Pabul Republic, a common law country. The companies have agreed to draft the business contract in the Pabul Republic. Since the contract will be drafted under a common law framework, which of the following best characterizes the contract?

very detailed with all contingencies spelled out Explanation: Because common law tends to be relatively ill specified, contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. In civil law systems, however, contracts tend to be much shorter and less specific because many of the issues are already covered in a civil code.