IB 300 Midterm

The three largest markets for American exports of goods in 2017 were Canada, Mexico, and China Japan, Mexico, and the United Kingdom Japan, the United Kingdom, and China Canada, Japan, and the United Kingdom

Canada, Mexico, and China

Which country currently exports the most to the United States? China Canada Mexico India

China

_____ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840. China India Germany Persia

China

A government nationalizes a firm when it shifts the ownership from public to private T or F

False

Economic cooperation often begins with a common market as in the case of the EU. T or F

False

In high-context cultures, nonverbal language plays a minor role. Business professionals rely more on the spoken word. T or F

False

Incoterms are established by the UN Commission on International Trade. T or F

False

Leadership traits may vary some by culture, but underneath, they all build on the basic idea that all people want to be led and directed. T or F

False

The World Bank is made up of one large institution, the International Development Association, and three smaller institutions. T or F

False

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. T or F

False

There are three main classes of social institutions, based on the conditions of their formation: family, kinship, and free association. T or F

False

When people are kidnapped for ransom, all governments agree that the right response is to pay the ransom, get the hostages released, and then retaliate. T or F

False

What is one of the reasons suggested by Alfred Marshall for why firms tend to cluster together on a geographic basis? Technological information can be readily shared. Competition will not enter the market. Efficiency improves as the result of cumulative experience. Production costs decline as facilities get larger.

Technological information can be readily shared.

According to the theory of comparative advantage, international trade can still be a positive-sum game that benefits both countries having an absolute advantage over one another. T or F

True

Civil law is the most widespread system in use globally T or F

True

Customary international law draws on practices that have been followed often for centuries. T or F

True

International business differs from domestic business in that a firm operating across borders must deal with the forces of three kinds of environments—domestic, foreign, and international. T or F

True

International institutions provide nations the opportunity to build multilateral solutions through collaborative communication. T or F

True

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

True

One of the significant differences between formal and informal institutions is how they gain compliance. T or F

True

Policy continuity and government stability are more important to a business than the type of political system. T or F

True

The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in U.S. companies operating abroad is an example of extraterritoriality. T or F

True

The United Nations operates with voluntary agreements, so it is essentially an informal institution. T or F

True

Understanding how religion affects cultural attitudes is important for marketing professionals to know. T or F

True

Unfair international competition for a company can be minimized through the enaction of national laws. T or F

True

When a manager unconsciously imparts his or her own cultural values on a situation without taking into account the possibility that the culture might vary in a foreign environment, that manager is exhibiting a self-reference criterion. T or F

True

An informal cognitive institution is an approach to exploring ideas, such as Aristotelian dialogue a culturally determined way of thinking, such as inductive a way to approach thinking challenges, such as brainstorming or tree diagrams a collection of shared ideas that define reality

a collection of shared ideas that define reality

Mercantilists believed that a nation should have an export surplus in order to accumulate precious metals a nations should produce goods for which there is a comparative advantage governments should lower import duties merchants should import goods to raise the level of living

a nation should have an export surplus in order to accumulate precious metals

An international manager has three choices when deciding how to employ a technique used in domestic operations to an international operation: transfer it intact, not use it, or adapt it to local conditions produce it in mass quantities adapt it to customization provide it to the competition

adapt it to local conditions

Some countries impose both an ad valorem duty and a specific duty on a single import. What type of duty are these countries using? elite duplex secondary compound

compound

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 primary and secondary domestic and foreign representative and democratic

controllable and uncontrollable

Since 1983, the proportion of world trade coming from the United States has decreased overall increased by 20 percent tripled not changed

decreased overall

Which of the elements in Porter's diamond model of national advantage takes into consideration the sophistication of a company's customers? demand conditions factor conditions export conditions government

demand conditions

A nation that is struggling to remain competitive in the world market may decide to reduce the value of the country's currency relative to other currencies. This process is called currency devaluation customization deficit surplus

devaluation

A major portion of the exports from developing countries go to ________ countries, and this proportion has been ________. developed; decreasing developed; increasing developing; increasing developing; decreasing

developed; decreasing

The first principle of the WTO's five basic principles is trade without discrimination competition economic reform negotiation

discrimination

The purpose of the International Financial Corporation (IFC) is to invest in companies and financial institutions in developing countries to build domestic capital markets domestic logistics trade agreements infrastructure

domestic capital markets

Tariffs often are set to stimulate imports decrease consumer costs encourage local input decrease the import costs

encourage local input

A patent gives the inventor the right to use the invention until development costs are recouped. the right to keep the patented process but no the product for five years. property rights for 10 years. exclusive right to manufacture, exploit, use, and sell the invention for a given time period

exclusive right to manufacture, exploit, use, and sell the invention for a given time period

In a low power distance culture, first names are likely to be used in the office because the ideal is equality relatives will be welcomed into the workforce seniority, rank, and title are important people will want direction, so top-down leadership styles are appropriate

first names are likely to be used in the office because the ideal is equality

Harrison Manufacturing, based in Toledo, recently purchased a new manufacturing facility and production equipment in Germany that it will use to produce component parts. This purchase is an example of foreign direct investment (FDI) economies of scale importing and exporting intrastate commerce

foreign direct investment (FDI)

Among the cybercrimes that most often target businesses are accessing unauthorized accounts prospecting and phishing hacking and data espionage check kiting

hacking and data espionage

A business would obtain KRE insurance to cover losses associated with kidnapping situations associated with a foreign involvement unpredictable international real estate investments manufacturing operations that do not meet host country standards higher tariffs when exporting to developing countries

kidnapping situations associated with a foreign involvement

Material culture includes manufactured goods the services associated with marketable goods objects of which the culture is proud produced goods that affect the symbolism of a culture

manufactured goods

The Bali Package, proposed in 2013, focuses in part on infrastructure in developing countries security and technology market access for goods from the least-developed countries subsidies for food supplies

market access for goods from the least-developed countries

The 17th and 18th centuries have frequently been termed the "Age of Mercantilism" because national power depended on the sponsorship and control of merchant capital the merchant class was created during this time individual states were able to support themselves as more merchants were established the Americas were discovered

national power depended on the sponsorship and control of merchant capital

A basic cultural concept is our way is not the only way power goes to those who take it Western culture leads others our way is the best way

our way is not the only way

Culture frameworks are helpful, but their use may oversimplify and limit our understanding and learning after a point give too much emphasis on culture result in too much empathy for a different culture lead to further frameworks and further complication

oversimplify and limit our understanding and learning after a point

The Foreign Corrupt Practices Act (FCPA) is U.S. legislation that outlines bribery practices that are allowed abroad but not in the United States. prohibits bribery by American companies abroad. outlines and prohibits foreign bribery practices by foreign nationals in foreign nations. allows bribery in foreign dealings when culturally sanctioned.

prohibits bribery by American companies abroad.

The rise of the Ottoman Empire before 1300 influenced trade as it promoted a search for sea routes from Europe to Asia reduced the cost of European trade for Asians reduced the cost of Asian trade for Europeans eliminated trade between Europe and Asia

promoted a search for sea routes from Europe to Asia

Governments provide stability by supporting imports fostering competition and enforcing nontariff barriers protecting business from unfair competition and from attacks and theft pursuing open market values

protecting business from unfair competition and from attacks and theft

Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is less bureaucratic than litigating in any country easier to influence an arbiter than a judge more discreet, although more costly than litigation quicker, cheaper, and more private than litigation

quicker, cheaper, and more private than litigation

Smaller nations would like patent protection to be reduced, so that they can make money sooner. dissolved, so that they can increase their profits. extended, so that they can recoup development costs. extended, to allow for them to build their competitive advantage

reduced, so that they can make money sooner.

The Qur'an is associated with Islam and indicates the presence of which form of law? civil international religious common

religious

An achievement culture is one in which members are rewarded for what they do, what they have accomplished, so what they are not rewarded at all because achievement is a doing mentality rewarded for their lineage rewarded with social status for who they are in a spiritual sense

rewarded for what they do, what they have accomplished, so what they are

In high-context cultures, direct conversations that "tell it like it is" would be viewed as rude appropriate expected humorous

rude

An argument against using sanctions to punish an offending nation is that sanctions decrease the cost of doing business sanctions are not condoned by the U.N. sanctions are relatively harmful to the citizens of the offending country sanctions seldom achieve their goal of forcing change in the offending country

sanctions seldom achieve their goal of forcing change in the offending country

Kendall was recently assigned to a management role in his company's overseas operation. He has been taken off guard several times when his employees responded negatively because they said he didn't take their culture into consideration when he made decisions. His employees are referring to a self-reference criterion production orientation self-fulfilling prophecy marketing orientation

self-reference criterion

When the value of imports into a nation exceeds the value of its exports, that nation is experiencing a(n) trade deficit competitive advantage fixed market economy of scale

trade deficit

When the value of imports into a nation exceeds the value of its exports, that nation is experiencing a(n) trade deficit fixed market competitive advantage fixed market

trade deficit

Hamlin Millworks is frustrated with the lobbyists who are currently trying to influence Congress to raise taxes for all corporations in the wood products industry. In the environment of Hamlin Millworks, these lobbyists are an example of uncontrollable forces controllable forces a domestic environment a foreign environment

uncontrollable forces

One of the problems associated with the "cheap foreign labor" argument for restricting trade is that wages don't account for all production costs the national defense must be kept at maximum levels inflicting economic damage might have reverse affects foreign competition will achieve an unfair advantage

wages don't account for all production costs

International business really began when Phoenician and Greek merchants sent representatives abroad to sell goods when Singer Sewing Machine put up a factory in Scotland in 1868 with the East India Company chartered in 1600 when Colt Fire Arms set up a plant in England

when Phoenician and Greek merchants sent representatives abroad to sell goods

Does the IMF lend money? yes, but as a last resort no, that is left up to the World Bank yes, with few conditions yes, on a regular basis

yes, but as a last resort

What effect has the FCPA had on American business? It has brought the discussion of bribery into the open, which has, overall, been positive. It has resulted in American foreign business going to Japanese and German businesses. It has challenged the creativity of American managers and consultants to develop ways to work around the FCPA. It has hurt American business because managers cannot use bribes anymore.

It has brought the discussion of bribery into the open, which has, overall, been positive.

What is the role of the home country in risk assessment? It is a significant consideration It has no role. What matters is the country in which the business is conducted It is used initially, but then more micro issues become the focus of CRA Country risk does not involve political considerations at all

It is a significant consideration

Which statement describes economies of scale? They are the predictable decline in the average cost of producing each unit output as a production facility gets larger and output increases. They refer to the rising scale on which efficiency improves as a result of cumulative experience and learning. They are only relevant to manufacturing industries. They occur due to the presence of abundance resource endowments within a nation.

They are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.

How do the dimensions of Kluckhohn and Strodtbeck's framework help us to better understand other cultures? They help us to further understand beliefs and actions in other cultures. They help us decode evil. They present choices that cultural members make when they act They are meant to help us decode kinship patterns

They help us to further understand beliefs and actions in other cultures

Mexico and Canada are major U.S. trading partners because they have the benefit of lower freight charges and shorter delivery times. Why do these benefits exist for these two nations? They share a border with the United States They established these parameters in the NAFTA agreement They source production materials from China They have established economies of scale for goods and services

They share a border with the United States

The WTO has made progress on trade-related intellectual property rights (TRIPS). An example of this progress is an agreement that governments should hold all pharmaceutical trade secrets. a shared recognition that private property is a basic human right. an agreement that copyrights are inviolate. an agreement that property rights should not take precedence over public health.

an agreement that property rights should not take precedence over public health.

Aesthetics is an area of philosophy that deals with beauty a measurement used in the Middle East, similar to a hectare an area of psychology that deals with truth the area of medicine concerned with hygiene

an area of philosophy that deals with beauty

Intellectual property includes anything that is the result of creative work that can be protected by legal means. anything that is a result of a creative process that does not have material qualities. intangibles, which is why it is a difficult area. thoughts and ideas, but not tangible products.

anything that is the result of creative work that can be protected by legal means.

The most important sources of international law are common and civil law the U.S. Supreme Court and the EU Court of Justice bilateral and multilateral treaties, along with customary law the UN International Court of Justice

bilateral and multilateral treaties, along with customary law

During the trial, the judge openly questioned the defendant and her lawyers and often challenged the presented evidence. There wasn't a jury and the judge made the final decision. Which type of legal system would include this scenario? civil criminal religious common

civil

At the end of the trial, the judge stated that his decision for the case was based on a decision made in a similar case twenty years ago. Which form of law is indicated by the use of previous cases? common religious international civil

common

Trompenaars's specific-diffuse dimension has to do with patterns for public and private life social patterns for child-rearing regard for the individual or the collective whether rules or relationships regulate behaviors

patterns for public and private life

A market situation in which there is a sufficiently large number of well-informed buyers and sellers of a homogeneous product such that no individual participant has enough power to determine the price of the product, resulting in a marketplace that is efficient in production and allocation of products is known as perfect competition absolute advantage mercantilism trade deficit

perfect competition

Honest Yogurt Company of Denver, Colorado, was relieved when trade barriers on dairy products were lifted in Europe and the company could sell its products there. Which type of driver was affecting the company's ability to do business in Europe? political social technological market

political

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 progressive increases in barriers to foreign investment by most governments increased public ownership of much of the industry in formerly communist nations expanded barriers to trade by most governments

preferential trading arrangements that group several nations into a single market

A manager from a U.S. company is negotiating with a Japanese company for goods. What is most likely to be the American's most important criteria in the purchasing decision? logistics the follow-up price the relationship

price

The EU's impact on international business is not significant, because the EU members need to trade with other developed economies negligible, given that the EU members tend to trade with each other significant, since EU standards, especially in the areas of the environment and sustainability, impact any firm that wants to do business in the EU significant, because the EU is a major exporter into developing nations

significant, since EU standards, especially in the areas of the environment and sustainability, impact any firm that wants to do business in the EU.

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 the US to South America Europe and Asia to Africa China to India

the Americas and Europe to Asia

Examples of expropriation without compensation involve the following governments China with Hong Kong and Japan with the Kuril Islands. the Unite States confiscated Iranian property in the United States and Cuba confiscated property during the Cuban revolution of the 1950s, and Zimbabwe confiscated land owned by white Zimbabwean citizens. the United Kingdom with the Falklands. Canada with northern Maine.

the Unite States confiscated Iranian property in the United States and Cuba confiscated property during the Cuban revolution of the 1950s, and Zimbabwe confiscated land owned by white Zimbabwean citizens.

Some nontariff barriers are difficult to discourage because they build on nationalism and patriotism their development has been supported by local politicians they consist of government subsidies and standards they are established by consumers

they consist of government subsidies and standards

The legal system of a country is composed of the collection of governing principles, and the legislation and regulations enacted to provide for the welfare of the country. local laws that are interpreted for federal use. a collection of folkways, rules, and regulations whose goal is to support civil harmony. the laws and their interpretation by citizens, but not noncitizens.

the collection of governing principles, and the legislation and regulations enacted to provide for the welfare of the country.

Referring to Hall's high- and low-context framework, in a high-context culture the context carries much of the communication communication is explicit communication is direct and focused on the topic the context is irrelevant

the context carries much of the communication

Hofstede's individualism-collectivism measures the degree to which people in the culture are integrated into groups the tendency to differentiate male roles the degree to which social inequality is tolerated the amount of social distance between relatives

the degree to which people in the culture are integrated into groups

Unlike quotas, voluntary export restraints (VERs) are imposed by the importing company the exporting country's government the importing country's government either the importing or exporting country's government

the exporting country's government

Foreign environmental forces often operate differently than domestic environmental forces because the forces are interrelated the two forces do not affect each other they are easier to assess than domestic forces they typically carry the same value as domestic forces

the forces are interrelated

International Development Association's purpose is to loan to the poorest nations developing nations needing capital any nation with collateral developed nations for use in trade stimulus efforts

the poorest nations