International Business Mid-Term Exam Study Guide

Which of the following statements about exchange rates is FALSE?

A country with a currency that is weak will see an increase in the price of its exports and a decrease in the price of its imports.

Regulation designed prevent companies from fixing prices, sharing markets, and gaining unfair monopoly advantages are called ______.

Antitrust laws

What is international business?

Any commercial transaction that crosses the borders of two or more countries.

A westerner says, "I do not like the Japanese purifications ritual because it involves being naked in a communal bath." The westerner quoted here might value modesty and hold conservative beliefs regarding exposure of the body. The westerner in this case would be communicating _______.

Attitudes

According to the Hofstede framework, China's culture ranks high on ______.

Collectivism

Political economies of nations differ in the degree of openness, individualism, equality, transparency, and flexibility. Which of the following political economic systems stresses the primacy of the group over individual needs?

Collectivism

Under __________, the justice system decides cases by interpreting the law on the basis of tradition, precedent, and usage.

Common Law

Which of the following can best describe born global firms?

Companies that adopt a global perspective and engages in international business from the start.

Which of the following philosophies of business ethics and social responsibility support the view that a company should adopt local ethics wherever it operates because all belief systems are determined within a cultural context?

Cultural Relativist View

When doing business in China, it is important to show all EXCEPT:

Cultural imperialism

_________ comes first in any discussion of national business environments because of its pivotal role in all international commercial activity.

Culture

Which of the following is the intentional lowering of the value of a currency by the nation's government?

Devaluation

Which of the following is the belief that one's own ethnic group or culture is superior to that of others?

Ethnocentricity

Which are the two main forces that underlie the globalization of markets and production?

Falling barriers to trade and investment and technological innovation

Which of the following practices is NOT included in corporate social responsibility (CSR)?

Following the Friedman view

Although Ralph Lauren considers itself "an iconic American company," it produced the Olympic merchandise in a low-wage country that maximized profits but cost American jobs. What view is represented by this attitude?

Friedman view

___________ is the name we give to the trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies.

Globalization

What are the benefits of doing business in a totalitarian nation?

International companies can be relatively less concerned with local political opposition to their activities.

Which of the following are features of totalitarianism?

Lack of and/or denying citizens constitutional guarantees; restricts political representations

What is the major flaw of the original GATT, which led to the creation of the WTO?

Lacked the power to enforce world trade rules

The ____________ of a country refers to its set of rules and regulations, including the processes by which its laws are enforced and the ways in which its courts hold parties accountable for their actions.

Legal system

According to Hofstede, which of the following cultural dimensions conveys the degree to which a culture accepts social inequality among its people?

Power distance

Which of the following describes intellectual property?

Property that results from people's intellectual talent and abilities

Which of the following options helps companies reduce costs when they sell consumer goods globally?

Standardizing certain marketing activities

Which of the following best defines culture?

The set of values, beliefs, and rules of society

What are the ideas, beliefs, and customs to which people are emotionally attached?

Values

While Ralph Lauren could legally produce Olympic merchandise in China, outsourcing $1 billion of merchandise didn't "feel right" to the American public. This situation is an example of _______.

an ethical dilemma

The opponents of globalization argue that the increasing income inequality within nations means companies cut the cost of production and that freer trade and investment allows international companies to _________.

close factories in high-wage-area developed nations and move them to low-wage developing countries

The _________ states that prices of financial instruments reflect all publicly available information at any given time.

efficient marker view

In a ___________, currencies float freely against one another without governments intervening in currency markets.

free float system

Most currencies use a _____________, according to supply and demand.

free float system

When IBM USA sources computer materials from different locations around the world to reduce the cost of production, this is called _____.

globalization of production

Multinational corporations are key players in the international business and can be described as companies that __________.

have direct investments in the form of marketing or manufacturing subsidiaries abroad in multiple countries

Globalization's detractors say that it ___________.

homogenizes our world and destroys its rich diversity of cultures

An exchange rate tells us ______.

how much of one currency we must pay to receive a certain amount of another

The ____________ is a collection of agreements and institutions that governs exchange rates.

international monetary system

The _________ stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency.

law of one price

Some of the critics of globalization argue that the relentless pursuit of low-cost goods has led to ____________.

sending manufacturing jobs abroad

Because China ranks high in the cultural dimension of power distance, ______.

there is much inequality between superiors and subordinates

If we compare average incomes in high-income countries with average incomes in middle- and low-income nations, we find a ________ gap.

widening