MOB Chapter 3: Managing in a Global Environment

21) Monolingualism is one sign that a nation suffers from ________. A) parochialism B) ethnocentrism C) polycentrism D) geocentrism

A Page Ref: 71 Objective: 1 Difficulty: Easy

As manager of the international department of your company, you have been asked by the local Chamber of Commerce to deliver a speech on foreign trade. The chamber president even goes so far as to say "and be sure to include the EU, NAFTA, and all that stuff because we're afraid that Ross Perot is rightall the good jobs will leave the United States." As you pour over your notes, you try to choose the best information to present in the allotted half hour. 83) You plan to explain during your talk that the acronyms EU, NAFTA, and ASEAN refer to ________. A) regional trade alliances B) foreign airlines C) soccer teams in Europe D) new multinational corporations

A Page Ref: 72 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 2 Difficulty: Easy

32) Which of the following countries is a member of the European Union? A) Ireland B) Iceland C) Norway D) Switzerland

A Page Ref: 73 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

33) The North American Free Trade Agreement includes ________. A) Mexico, Canada, and the United States B) Canada, Mexico, and Costa Rica C) the United States, Canada, and Honduras D) Columbia, Mexico, and the United Sates

A Page Ref: 74 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

39) The World Trade Organization was formed in the year ________. A) 1995 B) 1967 C) 1971 D) 1983

A Page Ref: 76 Objective: 2 Difficulty: Easy

47) The ________ decentralizes its management and other decisions to the local country. A) multidomestic corporation B) global company C) transnational organization D) borderless organization

A Page Ref: 78 Objective: 3 Difficulty: Easy

52) A ________ centralizes its management and other decisions in the home country. A) global company B) multidomestic corporation C) multicultural company D) multifaceted corporation

A Page Ref: 78 Objective: 3 Difficulty: Easy

As business expansion director, Shana's goal is to scout for potential locations and provide input on how her company should proceed with its planned expansion to Europe. There are many options, which include maintaining the company's head office in the United States and sending over company representatives when necessary or establishing a separate operations facilities abroad and hiring locals as managers. 87) If Shana's company dropped its organizational structure based on country and reorganized into industry groups, it would best be considered a ________. A) borderless organization B) foreign subsidiary C) global company D) multidomestic corporation

A Page Ref: 78 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

46) According to the text, which of the following is a typical definition of a multinational corporation? A) It is a company that maintains operations in multiple countries. B) It is a company that maintains franchises in multiple countries. C) It is a company that has multiple home bases and manufacturing plants. D) It is a company that pays corporate taxes in at least two countries.

A Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

58) An organization decides to go international. Which of the following steps should it take to do so with a minimal investment? A) It should indulge in global sourcing. B) It should indulge in licensing. C) It should indulge in franchising. D) It should indulge in forming strategic alliances.

A Page Ref: 79 Objective: 3 Difficulty: Easy

68) A ________ economy is one in which resources are primarily owned and controlled by the private sector. A) free market B) planned C) command D) technocratic

A Page Ref: 81 Objective: 4 Difficulty: Easy

71) A country with ________ is comfortable with risks and is tolerant towards different behavior and opinions. A) low uncertainty avoidance B) short-term orientation C) low power distance D) performance orientation

A Page Ref: 83 Objective: 4 Difficulty: Easy

76) Which of the following two dimensions of the Global Leadership and Organizational Behavior Effectiveness program fit directly with Hofstede's dimensions? A) power distance and uncertainty avoidance B) power distance and gender differentiation C) uncertainty avoidance and in-group collectivism D) gender differentiation and in-group collectivism

A Page Ref: 83 Objective: 4 Difficulty: Easy

74) Christopher, who is based in the U.S. has been offered a chance to work in Thailand. He finds that in this society people are expected to look after others in their family (or organization) and protect them when they are in trouble. This society tends to support ________. A) collectivism B) parochialism C) individualism D) monotheism

A Page Ref: 83 Topic: Managing in a Global Environment AACSB: Analytic Skills Objective: 4 Difficulty: Moderate

100) Discuss four economic issues that affect management.

A global manager must be aware of economic issues when doing business in other countries. First, it's important to understand a country's type of economic system. a. Type of economy - The two major types of economies are market economies and command economies. A market economy is one in which resources are primarily owned and controlled by the private sector. A command economy is one in which economic decisions are planned by a central government. Managers need to know about a country's economic system because it has the potential to constrain decisions and actions. Other economic issues a manager might need to understand include currency exchange rates, inflation rates, and diverse tax policies. b. Currency strength - A global firm's profits can vary dramatically depending on the strength of its home currency and the currencies of the countries in which it operates. Any revaluation of a nation's currency can affect the managers' decisions and the level of a company's profits. c. Inflation - It means that prices for products and services are going up. But it also affects interest rates, exchange rates, the cost of living, and the general confidence in a country's political and economic system. Managers need to monitor inflation trends so that they can make good decisions and anticipate any possible changes in a country's monetary policies. d. Diverse tax policies - Diverse tax policies are a major worry for a global manager. Some host countries are more restrictive than the organization's home country. Others are far more lenient. Managers need exact information on the various tax rules in countries in which they operate to minimize their business's overall tax obligation. Page Ref: 81 Topic: Managing in a Global Environment Objective: 4 Difficulty: Moderate

Global firms normally carry three global perspectives or attitudes for work approaches and practices. These perspectives include ethnocentric, polycentric, and geocentric attitudes. 91) Which of the following statements, if true, would support an ethnocentric attitude for a global firm? A) The firm is extremely flexible and responsive to the needs and demands of local markets in host countries. B) The firm's hierarchical structure ensures that data flows extensively from the subsidiaries to the home location reducing the potential for duplication. C) The firm uses a loose federation of associated business units, each of which is rather independent in their strategic decisions. D) The firm has been successful in striking the right balance between centralization and decentralization of resources.

B Page Ref: 71 AACSB: Reflective Thinking Skills Objective: 1 Difficulty: Difficult

24) An ethnocentric attitude ________. A) prompts managers to have a global view and look for the best approaches and people regardless of origin. B) is the belief that the home country has the best work approaches and practices C) is the view that employees in the host country know the best work approaches and practices D) gives a manager a much broader understanding of what it takes to manage in a global environment

B Page Ref: 71 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

30) The ________ was formed by twelve original members with the primary motivation of reasserting the region's economic position against the United States and Japan. A) African Union B) European Union C) Central America Free Trade Agreement D) Association of South-East Asian Nations

B Page Ref: 72 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

27) Managers with a(n) ________ attitude view every foreign operation as different and hard to understand. A) geocentric B) polycentric C) ethnocentric D) regiocentric

B Page Ref: 72 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

28) A(n) ________ attitude is the view that employees in the host country know the best practices for running their operations. A) ethnocentric B) polycentric C) geocentric D) regiocentric

B Page Ref: 72 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

34) Which of the following is currently under negotiation by 34 countries in the Western Hemisphere? A) African Union B) Free Trade Area of the Americas C) Mercosur D) African Community

B Page Ref: 74 Topic: Understanding the Global Environment Objective: 2 Difficulty: Moderate

37) How many members does The African Union have? A) 78 B) 53 C) 64 D) 49

B Page Ref: 76 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

38) Nepal belongs to which of the following regional trade alliances? A) Asia-Pacific Economic Cooperation B) South Asian Association for Regional Cooperation C) Common Wealth of Independent States D) Association of Southeast Asian Nations

B Page Ref: 76 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

40) The World Trade Organization evolved from which of the following? A) Mercosur B) General Agreement on Tariffs and Trade C) Truman Doctrine D) Marshall Plan

B Page Ref: 76 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

43) The ________ is a group of five closely associated institutions, all owned by its member countries, that provides vital financial and technical assistance to developing countries around the world. A) International Chamber of Commerce B) World Bank Group C) Organization for Economic Cooperation and Development D) World Economic Forum

B Page Ref: 77 Objective: 2 Difficulty: Easy

53) A global company reflects the ________. A) regiocentric attitude B) ethnocentric attitude C) geocentric attitude D) polycentric attitude

B Page Ref: 78 Objective: 3 Difficulty: Easy

As business expansion director, Shana's goal is to scout for potential locations and provide input on how her company should proceed with its planned expansion to Europe. There are many options, which include maintaining the company's head office in the United States and sending over company representatives when necessary or establishing a separate operations facilities abroad and hiring locals as managers. 85) If Shana's company decides to open another company in France but centralizes its management in the United States, it would be considered a ________. A) transnational corporation B) global company C) borderless organization D) multidomestic corporation

B Page Ref: 78 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

Theodore and James have formed an entrepreneurial venture to develop software for banks and other financial institutions. Their company is growing, and in exploring future opportunities decides to initiate international operations. 89) The international operations of their firm continues to grow. Theodore and James have realized that decentralized management using foreign nationals to run operations in the host countries works best. Their firm has developed into a ________ organization. A) transnational B) multidomestic C) borderless D) global

B Page Ref: 78 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

48) Multidomestic corporations reflect the ________. A) ethnocentric attitude B) polycentric attitude C) geocentric attitude D) xenophobic attitude

B Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

57) Which of the following types of global organizations reflects the geocentric attitude? A) multidomestic corporation B) transnational organization C) global company D) regional organization

B Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

59) When an organization makes products domestically and sells them abroad, it indulges in ________. A) importing B) exporting C) licensing D) franchising

B Page Ref: 79 Objective: 3 Difficulty: Easy

63) A(n) ________ is a specific type of strategic alliance in which the partners form a separate, independent organization for some business purpose. A) equity strategic alliance B) joint venture C) global venture D) nonequity strategic alliance

B Page Ref: 80 Objective: 3 Difficulty: Easy

65) A domestic firm and a foreign firm sharing the cost of developing new products or building production facilities in a foreign country constitute a ________. A) franchising agreement B) joint venture C) foreign subsidiary D) brokering agreement

B Page Ref: 80 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

69) Geert Hofstede's research found that countries varied on ________ dimensions of national culture. A) eleven B) five C) seven D) nine

B Page Ref: 82 Objective: 4 Difficulty: Easy

73) A country where people look to the future and value thrift and persistence is said to ________. A) have an individualistic attitude B) have a long-term orientation C) be nurturing D) be achievement oriented

B Page Ref: 83 Objective: 4 Difficulty: Easy

78) Which of the following dimensions of the Global Leadership and Organizational Behavior Effectiveness program is similar to Hofstede's nurturing dimension? A) in-group collectivism B) humane orientation C) future orientation D) institutional collectivism

B Page Ref: 83 Objective: 4 Difficulty: Easy

79) ________ is a measure of the degree to which people rely on social norms and procedures to alleviate the unpredictability of future events. A) Power distance B) Uncertainty avoidance C) Achievement D) Nurturing

B Page Ref: 83 Topic: Managing in a Global Environment Objective: 4 Difficulty: Easy

60) When an organization acquires products made abroad and sells them domestically, it indulges in ________. A) global sourcing B) licensing C) importing D) franchising

C Page Ref: 79 Objective: 3 Difficulty: Easy

42) The International Monetary Fund is an organization of ________ countries that promotes international monetary cooperation and provides member countries with policy advice, temporary loans, and technical assistance to establish and maintain financial stability and to strengthen economies. A) 193 B) 172 C) 160 D) 185

D Page Ref: 77 Objective: 2 Difficulty: Easy

23) Bill Sanderson, a manager in a manufacturing firm in New York has a tendency to view the world only through his U.S.-based perspective. What can be deduced about his attitude? A) He has an elitist attitude. B) He has a polycentric attitude. C) He has a parochialistic attitude. D) He has a geocentric attitude.

C Page Ref: 71 Topic: What's Your Global Perspective? AACSB: Analytic Skills Objective: 1 Difficulty: Moderate

Jane wants to expand her career opportunities in the international operations of a company. She is 19 years old and currently attends a university. She has only lived in her home country and has never traveled to any foreign country. 81) While talking with her advisor at the university, Jane deduces that she has a(n) ________ attitude, as she has never traveled abroad and only relates well to people from her home country. A) regiocentric B) polycentric C) ethnocentric D) geocentric

C Page Ref: 71 Topic: What's Your Global Perspective? AACSB: Analytic Skills Objective: 1 Difficulty: Moderate

22) Parochialism is a tendency to ________. A) think highly of the foreign country in which the organization is doing business B) focus on best approaches and people from around the globe C) view the world solely through one's own eyes and perspectives D) let employees in the host country figure out how best to do things

C Page Ref: 71 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

25) A manager who wishes to be successful in international business should avoid a(n) ________ attitude. A) multicultural B) multiracial C) ethnocentric D) geocentric

C Page Ref: 71 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Moderate

Global firms normally carry three global perspectives or attitudes for work approaches and practices. These perspectives include ethnocentric, polycentric, and geocentric attitudes. 92) Which of the following statements, if true, would support a polycentric attitude for a global firm? A) The firm has been successful in striking the right balance between centralization and decentralization of resources. B) The firm utilizes multiple networks between the home office and the subsidiaries to facilitate both communication and data sharing. C) The firm is extremely flexible and responsive to the needs and demands of local markets in host countries. D) The firm's hierarchical structure ensures that data flows extensively from the subsidiaries to the home location reducing the potential for duplication.

C Page Ref: 72 AACSB: Reflective Thinking Skills Objective: 1 Difficulty: Difficult

As manager of the international department of your company, you have been asked by the local Chamber of Commerce to deliver a speech on foreign trade. The chamber president even goes so far as to say "and be sure to include the EU, NAFTA, and all that stuff because we're afraid that Ross Perot is rightall the good jobs will leave the United States." As you pour over your notes, you try to choose the best information to present in the allotted half hour. 84) One of the hottest topics of your talk will be the North American Free Trade Agreement. One of the points that you will emphasize is that ________. A) between 1994 and 2007, merchandise trade between the United States, Canada, and Mexico has decreased from 6.6 percent to 4.4 percent B) a large number of people have started migrating from the United States to Mexico in search of jobs and prosperity C) as of 2010, it remains the largest trade bloc in the world in terms of combined gross domestic product of its members D) the United States, Canada, Mexico, Costa Rica and El Salvador are its members

C Page Ref: 74 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 2 Difficulty: Moderate

35) The Association of Southeast Asian Nations is a trading alliance of ________. A) eight Southeast Asian nations and Japan B) eight Southeast Asian nations C) ten Southeast Asian nations D) ten Southeast Asian nations and China

C Page Ref: 75 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

41) The World Trade Organization has ________ member countries and ________ observer governments. A) 176; 50 B) 188; 60 C) 153; 30 D) 161; 40

C Page Ref: 76 Objective: 2 Difficulty: Easy

44) The forerunner of the Organization for Economic Cooperation and Development was the ________ that was formed in 1947 to administer American and Canadian aid under the Marshall Plan for the reconstruction of Europe after World War II. A) Organization of European States B) Organizational Council of Europe C) Organization for European Economic Cooperation D) Organization for European Investment

C Page Ref: 77 Objective: 2 Difficulty: Easy

49) Which of the following is a multinational corporation that tailors marketing strategies to the host country's unique characteristics? A) borderless organization B) global company C) multidomestic corporation D) transnational organization

C Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

50) Multidomestic corporations ________. A) maintain operations in multiple countries, but do not allow managers in each country to make their own decisions B) reflect ethnocentric attitudes C) decentralize management and other decisions to the local country D) attempt to replicate their domestic successes by managing foreign operations from the home country

C Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

54) Which of the following is the basic difference between multidomestic corporations and global companies? A) Multidomestic corporations typically do business with more countries than global companies. B) Multidomestic corporations are run by global companies but must be owned by a local, national company. C) Multidomestic corporations decentralize management to the local country, while global companies centralize management in the home country. D) Multidomestic corporations reflect an ethnocentric attitude, while global companies reflect a polycentric attitude.

C Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

55) An organization drops its organizational structure based on countries and reorganizes into industry groups. This is an example of the company becoming a(n) ________. A) ethnocentric company B) polycentric organization C) borderless organization D) global company

C Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

56) Transnational organizations are also known as ________. A) ethnocentric organizations B) polycentric organizations C) borderless organizations D) multidomestic organizations

C Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

62) Adam has been hired by an organization that has a partnership with a foreign company. Both the partners share resources and knowledge while developing new products. Adam's organization has formed a ________. A) licensing company B) franchising company C) strategic alliance D) foreign subsidiary

C Page Ref: 79 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

Theodore and James have formed an entrepreneurial venture to develop software for banks and other financial institutions. Their company is growing, and in exploring future opportunities decides to initiate international operations. 90) Theodore and James decide to enter into an agreement with a firm in Europe allowing them to use the rights to their software, brand name, and software specifications in return for a lump sum payment. The firm is a service organization that plans to use the software to assist its customers. Their agreement is a(n) ________. A) export agreement B) licensing agreement C) franchise agreement D) import agreement

C Page Ref: 79 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

66) Which of the following is a method that companies might adopt in order to increase their direct foreign investment? A) exporting B) global sourcing C) strategic alliances D) licensees

C Page Ref: 79 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

67) Which of the following arrangements involves the greatest commitment of resources and poses the greatest amount of risk? A) exporting B) franchising C) foreign subsidiary D) global sourcing

C Page Ref: 80 Objective: 3 Difficulty: Easy

As business expansion director, Shana's goal is to scout for potential locations and provide input on how her company should proceed with its planned expansion to Europe. There are many options, which include maintaining the company's head office in the United States and sending over company representatives when necessary or establishing a separate operations facilities abroad and hiring locals as managers. 88) One section of Shana's company's business plan involves setting up a foreign subsidiary. This arrangement involves ________. A) making products domestically and selling them abroad B) Shana's company giving the foreign subsidiary the right to use its brand name C) directly investing in a foreign country D) minimum global investment

C Page Ref: 80 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

72) A country that is assertive, believes in acquiring money and goods, and is competitive in nature is said to ________. A) be a collectivist B) have a high power distance C) be achievement oriented D) have a long-term orientation

C Page Ref: 83 Objective: 4 Difficulty: Easy

77) The Global Leadership and Organizational Behavior Effectiveness program's ________ dimension is similar to Hofstede's achievement-nurturing dimension. A) uncertainty avoidance B) humane orientation C) assertiveness D) power distance

C Page Ref: 83 Objective: 4 Difficulty: Easy

80) ________ is the extent to which a society encourages people to be tough, confrontational, and competitive rather than modest and tender. A) Future orientation B) Institutional collectivism C) Assertiveness D) Humane orientation

C Page Ref: 83 Objective: 4 Difficulty: Easy

70) ________ is a cultural dimension in which people expect others in their group to look after them and protect them. A) Low uncertainty avoidance B) Achievment C) Collectivism D) High power distance

C Page Ref: 83 Topic: Managing in a Global Environment Objective: 4 Difficulty: Easy

75) The Global Leadership and Organizational Behavior Effectiveness program identified ________ dimensions on which national cultures differ. A) five B) seven C) nine D) eleven

C Page Ref: 83 Topic: Managing in a Global Environment Objective: 4 Difficulty: Easy

26) A(n) ________ attitude is characterized by parochialism. A) geocentric B) acculturated C) multilinguistic D) ethnocentric

D Page Ref: 71 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

Jane wants to expand her career opportunities in the international operations of a company. She is 19 years old and currently attends a university. She has only lived in her home country and has never traveled to any foreign country. 82) Jane joins an international student association in order to better understand the views of students from other countries. She is trying to become more ________ in her attitude. A) parochialistic B) polycentric C) ethnocentric D) geocentric

D Page Ref: 72 Topic: What's Your Global Perspective? AACSB: Analytic Skills Objective: 1 Difficulty: Moderate

29) In today's global environment, managers must have a(n) ________ attitude in order to be successful. A) ethnocentric B) parochial C) bigoted D) geocentric

D Page Ref: 72 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Easy

31) The single European Union currency is called the ________. A) krone B) krona C) pound D) euro

D Page Ref: 73 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

36) Which of the following is a member of the Association of Southeast Asian Nations? A) China B) Japan C) South Korea D) Myanmar

D Page Ref: 75 Topic: Understanding the Global Environment Objective: 2 Difficulty: Easy

45) The ________ is a Paris-based international economic organization whose mission is to help its 30 member countries achieve sustainable economic growth and employment and raise the standard of living in member countries while maintaining financial stability in order to contribute to the development of the world economy. A) Organization for European Economic Cooperation B) Organizational Council of Europe C) Organization of European States D) Organization for Economic Cooperation and Development

D Page Ref: 77 Objective: 2 Difficulty: Easy

As business expansion director, Shana's goal is to scout for potential locations and provide input on how her company should proceed with its planned expansion to Europe. There are many options, which include maintaining the company's head office in the United States and sending over company representatives when necessary or establishing a separate operations facilities abroad and hiring locals as managers. 86) If Shana's company decides to open a completely new operation in Germany, tailoring the company to local customs and marketing strategies and hiring local managers, it would be then considered a ________. A) transnational corporation B) global company C) borderless organization D) multidomestic corporation

D Page Ref: 78 Topic: Understanding the Global Environment AACSB: Analytic Skills Objective: 3 Difficulty: Moderate

51) Which of the following is a feature of a multidomestic corporation? A) decisions are taken in the home country B) reflects an ethnocentric attitude C) eliminates artificial geographic borders D) has a decentralized management

D Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

61) ________ is the practice wherein an organization gives another organization the right to use its brand name, technology, or product specifications in return for a fee usually based on sales. A) Global sourcing B) Exporting C) Subsidizing D) Licensing

D Page Ref: 79 Objective: 3 Difficulty: Easy

64) Joint ventures are a type of ________. A) licensee B) franchisee C) foreign subsidiary D) strategic alliance

D Page Ref: 80 Topic: Understanding the Global Environment Objective: 3 Difficulty: Easy

101) List and explain Hofstede's five dimensions of national culture.

Geert Hofstede developed one of the most widely referenced approaches to helping managers better understand differences between national cultures. His research found that countries vary on five dimensions of national culture. a. Individualism versus collectivism - Individualism refers to a social framework where people look after their own interests and those of their immediate family. The opposite of this is collectivism, that is characterized by a social framework where people expect others in the group that they are a part of to look after them and to protect them when they are in trouble. b. Power distance - A high power distance society accepts wide differences in power in organizations. Employees show a great deal of respect for those in authority. On the other hand, a low power distance society plays down inequalities. Employees in a low power distance organization are not afraid to approach their boss. c. Uncertainty avoidance - A society that is high in uncertainty avoidance is threatened with ambiguity and characterized by a high level of anxiety among its people. A society that is low in uncertainty avoidance is comfortable with taking risks and is also tolerant of different behavior and opinions. d. Achievement and nurturing - Achievement is the degree to which values such as assertiveness, the acquisition of money and material goods, and competition prevail. Nurturing is an attribute that emphasizes relationships and concern for others. e. Long-term and short-term orientation - People in a long-term orientation society look to the future and value thrift and persistence. People in short-term orientation societies value the past and emphasize respect for tradition. Page Ref: 83 Topic: Managing in a Global Environment Objective: 4 Difficulty: Moderate

99) Describe the different approaches that a company may use when it decides to go international.

Managers who want to get into a global market with minimal investment may start with global sourcing (also called global outsourcing). This involves purchasing materials or labor from around the world wherever it is cheapest. The goal here is to take advantage of lower costs in order to be more competitive. The next step in going international may involve exporting the organization's products to other countries—that is, making products domestically and selling them abroad. In addition, an organization might do importing, which involves acquiring products made abroad and selling them domestically. Both usually entail minimal investment and risk, which is why many small businesses often use these approaches to doing business globally. Managers also might use licensing or franchising, which are similar approaches involving one organization giving another organization the right to use its brand name, technology, or product specifications in return for a lump sum payment or a fee usually based on sales. The only difference is that licensing is primarily used by manufacturing organizations that make or sell another company's products and franchising is primarily used by service organizations that want to use another company's name and operating methods. When an organization has been doing business internationally for a while and has gained experience in international markets, managers may decide to make more of a direct foreign investment. One way to increase investment is through a strategic alliance, which is a partnership between an organization and a foreign company partner or partners in which both share resources and knowledge in developing new products or building production facilities. Finally, managers may choose to directly invest in a foreign country by setting up a foreign subsidiary as a separate and independent facility or office. This subsidiary can be managed as a multidomestic organization (local control) or as a global organization (centralized control). This arrangement involves the greatest commitment of resources and poses the greatest amount of risk. Page Ref: 78-80 Objective: 3 Difficulty: Moderate

93) Define parochialism. Discuss why parochialism is a problem for U.S. managers and discuss reasons why it is important to overcome parochialism in today's business environment.

Parochialism is typically defined as viewing the world solely through one's own eyes and perspectives. People with a parochial attitude do not recognize that others have different ways of living and working. Parochialism is a significant obstacle for managers working in a global business world. If managers fall into the trap of ignoring others' values and customs and rigidly keep on applying an attitude of "ours is better than theirs" to foreign cultures, they'll find it difficult to compete with other organizations around the world. Therefore, it is important to overcome parochialism in order to succeed in today's global environment. Page Ref: 71 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Moderate

102) Discuss the dimensions of the Global Leadership and Organizational Behavior Effectiveness (GLOBE) framework. Describe how each dimension compares to Hofstede's five dimensions of national culture.

The GLOBE research team identified 9 dimensions on which national cultures differ: a. Assertiveness: The extent to which a society encourages people to be tough, confrontational, assertive, and competitive versus modest and tender. This is essentially equivalent to Hofstede's achievement-nurturing dimension. b. Future orientation: The extent to which a society encourages and rewards future-oriented behaviors such as planning, investing in the future, and delaying gratification. This is essentially equivalent to Hofstede's long-term and short-term orientation. c. Gender differentiation: The extent to which a society maximizes gender role differences as measured by how much status and decision-making responsibilities women have. This dimension is an additional dimension to Hofstede's framework. d. Uncertainty avoidance: Similar to Hofstede's description, the GLOBE team defined this dimension as a society's reliance on social norms and procedures to alleviate the unpredictability of future events. e. Power distance: As did Hofstede, the GLOBE team defined this as the degree to which members of a society expect power to be unequally shared. f. Individualism/collectivism: Again, this term was defined, as Hofstede did, as the degree to which individuals are encouraged by societal institutions to be integrated into groups within organizations and society. g. In-group collectivism: This dimension encompasses the extent to which members of a society take pride in membership in small groups, such as their family and circle of close friends, and the organizations in which they're employed. This dimension has no equivalent in Hofstede's framework. h. Performance orientation: This refers to the degree to which a society encourages and rewards group members for performance improvement and excellence. This dimension is similar to Hofstede's achievement orientation. i. Humane orientation: This is defined as the degree to which a society encourages and rewards individuals for being fair, altruistic, generous, caring, and kind to others. This is similar to Hofstede's nurturing dimension. Page Ref: 83-84 Topic: Managing in a Global Environment Objective: 4 Difficulty: Moderate

96) Write a short essay on the North American Free Trade Agreement and other Latin American Agreements.

The North American Free Trade Agreement (NAFTA) - When agreements in key issues covered by the NAFTA were reached by the Mexican, Canadian, and U.S. governments in 1992, a vast economic bloc was created. As of 2010, it remains the largest trade bloc in the world in terms of combined gross domestic product of its members. Between 1994 and 2007 merchandise trade between the United States and Canada and Mexico increased from 4.4 percent to 6.6 percent. Eliminating the barriers to free trade (tariffs, import licensing requirements, customs user fees) has strengthened the economic power of all three countries, but not equally. Mexico, especially, has struggled to prosper from free trade. Although Mexico's exports increased dramatically under NAFTA, large numbers of people still migrate to the United States in search of jobs and prosperity. Other Latin American nations have become part of the free trade blocs, as well. Colombia, Mexico, and Venezuela led the way when all three signed an economic pact in 1994 eliminating import duties and tariffs. Another agreement, the U.S.--Central America Free Trade Agreement (CAFTA), promotes trade liberalization between the United States and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. However, only El Salvador and Costa Rica have joined. The other countries have yet to change laws to be in line with the agreement. Negotiators from 34 countries in the Western Hemisphere continue work on a Free Trade Area of the Americas (FTAA) agreement, which was to have been operational no later than 2005, a missed targeted deadline. However, another free trade bloc of 10 South American countries known as the Southern Common Market or Mercosur already exists. Some South Americans see Mercosur as an effective way to combine resources to better compete against other global economic powers, especially the EU and NAFTA. Page Ref: 74-75 Topic: A Manager's Dilemma Objective: 2 Difficulty: Moderate

97) Create short notes on the World Trade Center (WTO), the International Monetary Fund (IMF), the World Bank Group, and the Organization for Economic Cooperation and Development (OECD).

The World Trade Organization (WTO) is a global organization of 153 countries that deals with the rules of trade among nations. Formed in 1995, the WTO evolved from the General Agreement on Tariffs and Trade (GATT), a trade agreement in effect since the end of World War II. Today, the WTO is the only global organization that deals with trade rules among nations. Its membership consists of 153 member countries and 30 observer governments (which have a specific time frame within which they must apply to become members). The goal of the WTO is to help countries conduct trade through a system of rules. The International Monetary Fund (IMF) is an organization of 185 countries that promotes international monetary cooperation and provides member countries with policy advice, temporary loans, and technical assistance to establish and maintain financial stability and to strengthen economies. The World Bank Group is a group of five closely associated institutions, all owned by its member countries, that provides vital financial and technical assistance to developing countries around the world. The goal of the World Bank Group is to promote long-term economic development and poverty reduction by providing members with technical and financial support. The forerunner of the OECD, the Organization for European Economic Cooperation, was formed in 1947 to administer American and Canadian aid under the Marshall Plan for the reconstruction of Europe after World War II. Today, the Organization for Economic Cooperation and Development (OECD) is a Paris-based international economic organization whose mission is to help its 30 member countries achieve sustainable economic growth and employment and raise the standard of living in member countries while maintaining financial stability in order to contribute to the development of the world economy. When needed, the OECD gets involved in negotiations with OECD countries so they can agree on "rules of the game" for international cooperation. Page Ref: 76-77 Objective: 2 Difficulty: Moderate

98) Explain the differences between a multidomestic corporation, a global company, and a borderless organization. Include examples of companies for each of the types of organizations discussed.

a. A multidomestic corporation is a multinational corporation (MNC) that decentralizes management and other decisions to the local country. This type of organization doesn't attempt to replicate its domestic successes by managing foreign operations from its home country. Instead, local employees are hired to manage the business and marketing strategies are tailored to that country's unique characteristics. This type of globalization reflects the polycentric attitude. Many consumer companies manage their global businesses using this approach because they must adapt their products and services to meet the needs of the local markets. For example, Switzerland-based Nestle can be described as a multidomestic corporation. With operations in almost every country on the globe, its managers match the company's products to its consumers. In parts of Europe, Nestle sells products that are not available in the United States or Latin America. b. A second type of MNC, called a global company centralizes its management and other decisions in the home country. These companies treat the world market as an integrated whole and focus on the need for global efficiency. Although these companies may have considerable global holdings, management decisions with company-wide implications are made from headquarters in the home country. This approach to globalization reflects the ethnocentric attitude. Some examples of companies that can be considered global companies include Sony, Deutsche Bank AG, and Merrill Lynch. c. Other companies are going international by eliminating structural divisions that impose artificial geographical barriers. This type of MNC is called a transnational or borderless organization, and reflects a geocentric attitude. Managers choose this form of international organization to increase efficiency and effectiveness in a competitive global marketplace. For example, IBM dropped its organizational structure based on country and reorganized into industry groups. Spain's Telefonica eliminated the geographic divisions between Madrid headquarters and its widespread phone companies. The company will be organized, instead, along business lines such as Internet services, cellular phones, and media operations. Page Ref: 78 Topic: Understanding the Global Environment Objective: 3 Difficulty: Moderate

94) List and discuss the three attitudes managers might have toward international business.

a. Ethnocentric attitude - This is the parochialistic belief that the best work approaches and practices are those of the home country. Managers with an ethnocentric attitude believe that people in foreign countries do not have the needed skills, expertise, knowledge, or experience to make the best business decisions as people in the home country do. They don't trust foreign employees with key decisions. b. Polycentric attitude - This is the view that employees in the host country know the best work approaches and practices for running their business. Managers with a polycentric attitude view every foreign operation as different and hard to understand. Thus, these managers are likely to leave their foreign facilities alone and let foreign employees figure out how best to do things. c. Geocentric attitude - This is a world-oriented view that focuses on using the best approaches and people from around the globe. Managers with this type of attitude believe that it's important to have a global view both at the organization's headquarters in the home country and in the various foreign work facilities. Major issues and decisions are viewed globally by looking for the best approaches and people regardless of origin. Page Ref: 71-72 Topic: What's Your Global Perspective? Objective: 1 Difficulty: Moderate