Intro to International Business Final Exam

NAFTA is in which stage of the economic integration process?

First stage (free trade area)

Of the following, which is NOT true of expatriates?

Host-country national expatriates, in particular, may represent a cheaper source of labor than other alternatives

Of the following, which is NOT an advantage of the functional structure?

It ensures that organizations will engage in socially responsible efforts.

Which of the following is NOT true regarding globalization?

It guarantees that quality of life for all people will increase.

How does Porter's model of national competitive advantage differ from the Heckscher-Ohlin theory?

It looks more closely at the quality of factor endowments

Of the following, which is NOT true about international banking and payments?

Payment in advance does not expose the importer to some risk concerning delivery of the goods.

Of the following, which is NOT an advantage of making?

People producing the component or raw material have the incentive to improve their product

Of the following statements about trade, which is NOT true?

Trade does not influence culture.

An Export-Import Bank is a(n)

U.S. government export finance agency that seeks to level international competition.

Hofstede's dimension of uncertainty avoidance refers to

a culture's desire for predictability, or the lack of predictability in the workplace and elsewhere

According to the text, which of the following is the second stage of regional integration?

a customs union

Buying a currency in a currency futures contract and profiting on an increase in the value of the currency over time is called _____.

a long position

_____ refers to the added return required by investors for risk associated with a security or asset.

a risk premium

Selling a currency in a currency futures contract and profiting on a decrease in the value of the currency over time is called _____.

a short position

While many major corporations have a global presence, stateless corporations are different because they ______

attempt to transcend nationally altogether

The difference between bid and ask prices of a currency, or the fee earned by the bank is called the _____.

bid-ask spread

Moody's and Standard and Poor's issue _____.

bond ratings

Organizational _____ involves implementation of a different business or cultural path for an organization.

change

The weighted average of different interest rates paid on long-term borrowings is called the _____.

cost of debt

Taxes on imports that are collected by a designated government agency responsible for regulating imports are called _____.

custom duties

Bonds that are sold in any country outside the home country, but in the home country's currency, are called _____.

eurobonds

The impact of random change in the value of one currency with respect to other currencies is called the _____ risk.

exchange rate

Knowledge that is codifiable and easy to communicate or write down is called _____knowledge.

explicit

The initial step toward globalization is _____

exporting

A specific tariff describes a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good

false

All 28 EU countries are permitted to use the euro as their currency.

false

Critics argue that open trade and foreign direct investment always take jobs from workers in developing economies and transfer them to workers in advanced industrial countries which leave the workers in the developing country, out of work.

false

The system in which the country pegs its currency at a fixed rate to a major currency or basket of currencies, while the exchange rate fluctuates within a narrow margin around a central rate is called a(n) _____.

fixed exchange rate system

Acquisitions of a foreign company, creation of new manufacturing or research facilities abroad, and expansion of an existing plant in a foreign country are all examples of _____.

foreign direct investment

The _____ market is an informal OTC market run by banks.

forward

Most of the activities in operations management can be grouped into ____ business functions.

four

The forex market consists of spot, forward, and _____ markets.

futures

Limited Clothing Inc. has a corporate headquarters with three divisions. North American Division, Europe Division, and Asia Division. Limited Clothing Inc. has a _____ structure.

geographical region

Using currency derivatives to reduce potential transaction, translation, and economic risks of currency movements that could lead to losses for a firm or investor is called_____.

hedging

Someone who believes in the infant industry argument would be MOST likely to support ______ for a new industry.

high tariffs

According to the authors, which of the following is NOT true regarding globalization lessons for developing countries?

import oriented nations must switch to concentrate on domestication

Hofstede's dimension of _____ relates to the extent that people think of themselves as members of a group or collective, rather than discrete individuals.

individualism vs. collectivism

The large oil exploration company, Anadarko Petroleum Corporation, takes a(n) _____ toward strategy formulation, placing a very clear emphasis in strategy formulation upon how its business decisions will help deliver and ongoing and competitive rate of return to its owners

shareholder

While ____ are the owners of the given business, _____ are individuals or groups that have a vested interest in the business

shareholders; stakeholders

_____ refers to the process of allowing efficient geographic distribution of business activities within and among countries.

spatial transformations

A basket of currencies consisting of dollars, euros, pounds, and yen created by the International Monetary Fund is known as the _____.

special drawing right

A British firm may need dollars to pay for U.S. imports. It can work with banks in London to exchange pounds for dollars to make this payment via electronic transfer. This is an example of a(n) _____ market.

spot

An office uses printer paper made primarily of recycled paper. This is an example of a ______ policy.

sustainable development

Hofstede's dimension of power distance refers to

the degree of equality of authority distribution in a given society and its workplaces, and employee expectations related to the same.

Hofstede's dimension of individualism vs. collectivism refers to

the extent that people think of themselves as members of a group or collective, rather than discrete individuals.

In the production system model, all of the following would be considered inputs EXCEPT _____.

the finished product

An agreement where a large number of developed counties permit duty-free imports of a selected list of products that originate from specific countries is known as _____.

the generalized system of preferences

Of the following, which is NOT a consideration for the one-versus-many production facilities decision?

the local culture

Which of the following would NOT be considered a factor of production?

trade

Two kinds of short-term effects of currency movements are _____ risk and _____ risk.

transactions; translation

Both common markets and economic unions abolish restrictions on factor movements

true

Generally, countries within trading blocs that have significantly lowered trade barriers have done better economically than others

true

Key aspects of globalization include the elimination of barriers to trade and information technology.

true

The appropriate approach for countries interested in regional integration could include the following three fundamentals: start small, think global, and compensate the least fortunate.

true

Under a preferential duties system, goods imported from a country outside the preferred group are subject to a higher tariff.

true

A manager who makes occasional trips to a foreign office but who manages mainly through ongoing e-mails, videoconferences, and web-based collaboration can BEST be described as a(n) ______.

virtual expatriate

An expatriate is someone who

works in a country other than his or her native country

Assume that because of soil and climatic conditions, Brazil is more efficient in the production of coffee than the United States. At the same time, the United States is more efficient in the production of apples than Brazil. Each of these countries can be said to have a(n) _____.

absolute advantage

Forward contracts

are less standardized than futures contracts.

Of the following statements regarding the euro, which is NOT true?

The U.K., Denmark, and Sweden use the euro as their currency.

The process that takes place when the expatriate employee returns home is called _____.

repatriation

ERP systems aim to

represent each business function by a module

Most of the activities in operations management can be grouped into the following business functions EXCEPT:

selling

During the mid-18 th century, British economist ________, who came to be known as the father of free market and open trade systems, recognized the absurdity of Mercantilism.

Adam Smith

Which of the following is NOT true regarding competitive markets?

Antitrust laws must be eliminated if competitive markets re to be sustained.

According to the text, _____ countries' exports are growing the fastest.

Asian

In which country is the EU headquartered?

Belgium

Of the following statements about mercantilism, which is NOT true?

During the time it was practiced, wealth was largely determined by the amount of land one had access to.

Of the following, which is NOT a cost of regional integration?

Enhancing the flow of capital, labor, and technology

Which of the following is NOT an objective of NAFTA?

The creation of a uniform currency in North America

Of the following, which is NOT a disadvantage of making?

The firm has less control over quality

Of the following, which is NOT a disadvantage of global procurement?

The firm has to invest the money that is associated with making products

What is dollarization?

Using the dollar or some other foreign currency together with or instead of a domestic currency

Of the following, which is NOT listed in the text as a reason why currency values can change?

WTO mandates

A group of states with convergent social, economic, and monetary policies is called a(n) _____.

economic union

One output control measure frequently used by global businesses is productivity or ______

efficiency

Countries that have been moving toward more open trade and free market policies are known as _____.

emerging economies

The primary goal of labor unions is to engage in negotiations with _____.

employers

A production system in which services dominate the value of the product is known as a(n) _____ system.

service

Increasingly, emerging economies are

innovative and technologically advanced

All of the following are arguments against globalization EXCEPT:

it may lead to an increase in the appearance of old industries.

Determining which components and raw materials should be produced in-house and which components and raw materials should be acquired from suppliers is known as the _____ decision.

make-or-buy

In this system, a currency's value depends partly upon active government intervention in the foreign exchange market.

managed floating exchange rate system

Hofstede's dimension of _____ relates to values that are traditionally associated with one gender or the other.

masculinity vs. femininity

The oldest form of trade theory is called _____.

mercantilism

A Japanese user of Sony's ERP system can view the company's financial information in Japanese yen, while a British user of the system is able to see the same information in British pounds. This ERP system is _____.

multi-currency

Negotiations in which a number of employers jointly bargain with a given labor union is known as _____.

multi-employer bargaining

Ford's ERP system follows the American accounting standards in its U.S. subsidiaries, and follows the Mexican accounting standards in its Mexico subsidiaries. This ERP system is _____.

multi-national

The net of services exports and imports is called the ______.

services balance

______ communication refers to tone of voice, gestures, eye contact, body positions, facial grimaces, and other body language that accompanies verbal communication.

nonverbal

A simple agreement wherein the exporter sends an invoice with the goods and the exporter pays upon the receipt is called a(n) _____.

open account

_____ controls involve establishing specific goals given metrics and then measuring to what extent these goals are being achieved at certain time intervals.

output

A U.S. company that hires another U.S. company, such as Automatic Data Processing Corporation (ADP) to process all of its corporate payroll functions is engaging in _____.

outsourcing

Employees from the home countries who are sent to work for their companies overseas are known as _____.

parent country nationals

The union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country is known as a(n) _____.

political union

Steps in the production process are called _____.

production stages

In the banking industry, a particular bank's efficiency ratio is a closely monitored metric. If one bank can achieve a profit of $2 million per year with 90 employees, and another bank needs to employ 200 employees to achieve the same level of profits, the first bank's employees are more efficient than the second. Which of the following output controls and measurement is the banking industry using?

productivity

Organizations that have basic strategic implementations involving extending their success through global expansions and finding new market opportunities are called _____

prospectors

All of the following statements about regional integration are true EXCEPT:

regional integration should initially address a broad, ill-defined area of cooperation