Exam 1
The volume of international trade in services exports in 2017, worldwide, was
$5.4 trillion.
Which country ranked the highest in 2016 in terms of merchandise exports?
China
________ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840.
China
An international company (IC) is a company headquartered in another nation.
False - An international company (IC) is a company with operations in multiple nations.
The domestic environment includes all the controllable forces originating in the home country that surround and influence the life and development of the firm.
False - The domestic environment includes all the uncontrollable forces originating in the home country that surround and influence the life and development of the firm.
The five major drivers of international business include political, sociocultural, technological, market, and competitive drivers.
False - The five major kinds of drivers, all based on changes that are leading international firms to the globalization of their operations, include political, technological, market, cost, and competitive drivers. Sociocultural drivers are not part of these identified forces.
The international environment refers to all the uncontrollable forces originating outside the home country that surround and influence the firm.
False - The foreign environment refers to all the uncontrollable forces originating outside the home country that surround and influence the firm.
Adam Smith argued against mercantilism by claiming that
market forces, not government controls, should determine direction, volume, and the composition of international trade. - Adam Smith argued against mercantilism by claiming that market forces, not government controls, should determine the direction, volume, and composition of international trade. He advocated free, unregulated trade, in which each nation should specialize in making those goods it could produce most efficiently—goods for which it had an absolute advantage, either natural or acquired.
Understanding a person's body language and facial expressions would be especially important during business conversations in which type of culture?
high context
What is an example of an internal force that can affect a company's environment?
human resources - External forces include competitive, technological, legal, labor, and political forces, among others, but do not include activities of the organization such as human resources, finance, or production that are all examples of internal forces.
What is the second stage in the international product life cycle theory?
Foreign production begins. - The four stages of the international product life cycle theory include: The United States innovates and exports; foreign production begins; foreign competition appears in export markets; and import competition appears in the United States.
Many opponents of globalization believe that the gap between rich and poor has
increased.
The theory of overlapping demand suggests that
international trade in manufactured goods will be more common between countries with similar levels of income. - In contrast to resource endowment-based theory, economist Stefan Linder proposed his theory of overlapping demand, which argues for the existence of similar preferences and demand for products and services among nations with similar levels of per capita income.
Which characteristic would be typical in a feminine culture?
Quality of work life is important.
Why would companies that don't have any foreign operations still need to acquire a global perspective?
This would help the companies be more aware of new foreign competitors. - Even companies with no foreign operations should acquire a global perspective because it will help them not only to be alert for both sales and sourcing opportunities in foreign markets but also to be watchful for new foreign competitors preparing to invade their domestic market.
The argument that free trade is the best strategy for advancing the world's economic development is considered
a proposition with which almost all economists agree.
Supporters of mercantilism would agree that
accumulation of precious metals is an activity essential to a nation's welfare.
Joshua realized the company's marketing materials should avoid the color red in South Africa because it is the color of mourning in that country. What part of culture is Joshua taking into consideration?
aesthetics
A nation having absolute disadvantages in the production of two goods with respect to another nation has a(n) ___________ in the production of the good in which its absolute disadvantage is less.
comparative advantage
The automobile manufacturer decided it had to enter the European market because if it didn't, then all of the other car companies that were already there would get the business. Which driver is indicating internationalization for the manufacturer?
competitive
According to Trompenaars, a culture's attitude toward the environment can range from
control over the environment to harmony with it.
Environment as used in the textbook involves the forces surrounding and influencing the life and development of the firm and is classified as
controllable and uncontrollable.
When Corinne was introduced to the manager from the overseas office, she noticed he tended to lean in as he spoke with her. This made her uncomfortable, so she did her best to put some space between them during the meeting. What is causing Corinne to feel uncomfortable?
conversational distance
A company that decides to go abroad as a way to increase economies of scale is basing this decision on which driver of international business activity?
cost
A major portion of the exports from developing countries go to ________ countries, and this proportion has been ________.
developed; decreasing - A major portion of the exports from developing nations do go to developed countries, but this proportion has declined from 72 percent in 1970 to about 43 percent by 2015 as developing nations participate more extensively in trade with other developing nations.
The theory that for a firm to successfully invest overseas, it must have not only ownership of unique knowledge or resources, but also the ability to dynamically create, sustain, and exploit these capabilities over time, is known as
dynamic capabilities theory.
The international product life cycle is used to
explain the role of innovation in trade patterns.
Low-context cultures such as the United States tend to have these kinds of communication patterns:
explicit.
According to opponents of the globalization of trade and investment
globalization has produced uneven results across nations and people.
The fact that almost everyone in the United States self-identifies as middle class suggests that the United States
measures low on the power distance dimension. - Power distance is a measure of social inequality; it focuses on how much inequality seems right. The United States measures low on this dimension.
Compared to 1980, service exports in 2017 can best be described as
more than thirteen times larger.
Connor's manager told him not to make the "OK" sign with his hand when meeting with the representatives from France as that gesture is viewed as vulgar and inappropriate in their culture. Which aspect of culture is his manager referring to?
nonverbal communication
The forces in the foreign environment differ from the domestic environment in that they originate
outside the firm's home country. - The foreign environment refers to all the uncontrollable forces originating outside the home country that surround and influence the firm. The forces in the foreign environment are the same as those in the domestic environment except that they occur outside the firm's home country.
Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have the following kinds of advantages:
ownership-specific, location-specific, and internalization.
Jay-yeong is the finance director of a firm in Seattle. He often attends meetings for work and it is not uncommon for these meetings to overlap one another so he is finishing up with one while he should be at another. Trompenaars would say that Jay-yeong works at a company that reflects what dimension of time?
polychronic
When Maddie got to her manager's office, she noticed the door was closed and decided the manager was busy so she should come back later. What aspect of culture is affecting her decision to return later?
spatial relationships
The theory suggesting that rivalry between firms in an oligopolistic industry will result in firms closely following and imitating each other's international investments in order to keep a competitor from gaining an advantage is known as
strategic behavior theory.
Sanjay is the director of operations for Fresh Farm Produce Corp. and is now able to sell his product to the international market thanks to a new computer system that is specifically designed for businesses in the fresh food industry. Which driver helped Sanjay's company internationalize?
technological - Technological drivers include advances in computers and communication technology that permit an increased flow of ideas and information across borders.
Rapid urbanization of populations combined with industrialization in the emerging markets is quickly shifting the world's economic center of gravity from
the Americas and Europe to Asia.
When the value of imports into a nation exceeds the value of its exports, that nation is experiencing a(n)
trade deficit
Who advocated the early attempt to develop an international trade theory in response to the practice of mercantilism?
Adam Smith - A profoundly influential early attempt to develop an international trade theory was actually politically motivated. Adam Smith, a Scottish philosopher and economist, was incensed by British government intervention and control over both domestic and foreign trade. In 1776, he published An Inquiry into the Nature and Causes of the Wealth of Nations, in which he attacked the mercantilist philosophy that prevailed at that time.
The impact of COVID 19 "Uncertainty" on international business as of mid-July 2020 may be characterized by which, if any, of the following?
All of the above - A rapidly changing international business climate - To some extent the textbook presents "...the way it was". - The comparing and contrasting of theories with current information generated by revelations of the COVID contaminations spread. - A potential turn towards "protectionism".
What is an example of the competitive driver of international business activity?
a company that enters a foreign market to distract companies with similar products or services
Mercantilists
a nation should have an export surplus in order to accumulate precious metals. - Mercantilists viewed precious metals such as gold and silver as the only source of wealth, and their accumulation as essential to a nation's welfare. Because England had no gold or silver mines, mercantilists looked to exploration and international trade to supply these metals. The government established restrictions such as import duties to reduce imports, and subsidies to exporters to increase exports. In addition to protecting jobs within the mercantilist nation, those acts created a trade surplus meant to generate increased holdings of gold and silver. Of course, mercantilism also generated benefits for certain economic groups, such as domestic merchants, artisans, and shippers, though at a cost to other groups including consumers and emerging industrialists.
Which element in Porter's diamond model of national advantage distinguishes between the land a company owns and the transportation systems available for it to use?
factor conditions - Porter's diamond model of national advantage includes factor conditions as one of its four primary kinds of variables that influence a firm's ability to use its country's resources to gain a competitive advantage. Porter distinguishes between basic factors (inherited factors, such as land, location, or natural resources) and advanced factors (those created from investments made by individuals, companies, or governments, such as a nation's transportation systems, or university research institutes).
Historically, international business as a business practice is considered
relatively new.
Theory based on ________ states that international and interregional differences in production costs occur because of differences in the supply of production factors.
resource endowments
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 all of the following EXCEPT
the cultures of the two countries should be relatively similar and compatible. - Why should we know which countries are our own nation's major trade partners? Here are some of the advantages: (1) the business climate in these importing nations is already relatively favorable, (2) export and import regulations are not insurmountable, (3) there should be no strong cultural objections at home to buying that nation's goods, (4) satisfactory transportation facilities have already been established, (5) import channel members (merchants, banks, and customs brokers) are experienced in handling import shipments from the exporter's area, (6) currency from the foreign country is available to pay for the exports, (7) the government of a trading partner may be applying pressure on its importers to buy from countries that, like the United States, are good customers for that nation's exports.
Hofstede's individualism-collectivism measures
the degree to which people in the culture are integrated into groups.
The rapid expansion of world exports since 1980 demonstrates that
the opportunity to increase sales by exporting is a viable growth strategy.