Test Numero Uno - International Business

Like Christianity and Judaism, Islam is a polytheistic religion.

False

Norms are abstract ideas about what a group believes to be good, right, and desirable.

False

Unlike Hinduism, Buddhism supports the caste system.

False

When country risk is high, costs of doing busness is expected to be lower. True False

False

As described in the reality feature, Swatch's ability to tailor products for national preferences was due to its internationally distributed network of R&D locations.

False

Countries with free market economies in which property rights are protected tend to achieve lower economic growth rates than command economies where property rights are poorly protected.

False

Cross-cultural literacy is vitally important to international managers because it indicates the level to which they are successful implementing US (or home country-based) business practices in foreign environments.

False

Dalian Wanda has expanded internationally through foreign acquisition of movie theater groups and grocery store chains.

False

Economic and political risk always correlate.

False

Ethical systems may be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred.

False

Hofstede's concept of power distance focused on the extent to which different cultures socialized their members into tolerating uncertainty.

False

Hofstede's study found that in masculine cultures, sex roles were less sharply distinguished, and little differentiation was made between men and women in the same job.

False

In today's world of global communications, rapid transportation, and global markets, cultural differences have ceased to exist.

False

India's caste system is prolonged by the hiring practices of such companies as Infosys.

False

Most property in poor countries is owned legally by investors. True False

False

Noblesse oblige refers to payments that ensure receiving the standard treatment that a business ought to receive from a foreign government.

False

People who take food or safety for granted tend to be xenophobic, are wary of political activity, have authoritarian tendencies, and believe that men make better political leaders than women.

False

Since English is often thought of as the global language of business, it is not important for an American business executive to learn foreign languages.

False

Since the late 1980s, there has been a strong move away from a more free market economic model and toward more centrally planned and mixed economies. True False

False

The Turkish location of Kayseri is a progressive example of Islamic work ethic. In Kayseri, women's' portion of hiring and decision-making roles have elevated to comparable levels of Western economies.

False

The disputes in France towards globalization in general, McDonald's and Mondavi in particular, were in protest of globalization. Apparently they were effective since foreign direct investment into France has slowed since that period.

False

The most rigid system of stratification is a class system.

False

To establish moral intent, managers need to stand in the shoes of a stakeholder and ask how a proposed decision might impact that stakeholder.

False

To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows.

False

Woolworth's corporate responsibility is founded on the triple focus of People / Planet / Perseverance.

False

A firm's organizational culture refers to the values and norms that are shared among employees of an organization.

True

According to Max Weber, Protestantism encouraged capitalism's development by emphasizing the importance of wealth creation and frugality.

True

BMW Group shares brand capabilities to target income niches that purchase highest end goods in most global locations.

True

India's economic transformation was marked by each of the following except Across the board tariff reduction Political independence Privatization of key industries Liberalized income tax structure

Across the board tariff reduction

The calculus of political, economic and legal risk assures that: Companies need to continuously monitor their international investment portfolio The past is the best predictor of future business circumstances Foreign policies of companies are most successful when based on the randomness of events Higher risk always leads to lower rewards

Companies need to continuously monitor their international investment portfolio

Several events have been promising for Myanmar's economy. All of the following are true except: Less military intervention in the political system More privatization Floating exchange rate Falling interest rates

Falling interest rates

A primary reason for the success of the Boeing 787 was the company's ability to successfully engage its supply base in early stage research and design of the airplane's component parts and features.

False

Managing an international business is much easier than managing a domestic business.

False A further way in which international business differs from domestic business is the greater complexity of managing an international business. In addition to the problems that arise from the differences between countries, a manager in an international business is confronted with a range of other issues that the manager in a domestic business never confronts.

A multinational enterprise (MNE) is any business that exports or imports products from other countries.

False A multinational enterprise (MNE) is any business that has productive activities in two or more countries.

Critics of globalization suggest that over the last century, the gap between the rich and poor nations of the world has shrunken.

False Critics of globalization argue that despite the supposed benefits associated with free trade and investment, over the past hundred years or so the gap between the rich and poor nations of the world has gotten wider.

Cross-border business transactions have become easier for international businesses because they use a common currency.

False Cross-border transactions also require that money be converted from the firm's home currency into a foreign currency and vice versa. Because currency exchange rates vary in response to changing economic conditions, managers in an international business must develop policies for dealing with exchange rate movements.

Deregulation involves prohibiting private enterprises from operating in most sectors of the economy.

False Deregulation involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate.

Outsourcing is a process that is limited to manufacturing enterprises.

False Early outsourcing efforts were primarily confined to manufacturing activities. Increasingly, however, companies are taking advantage of modern communications technology, particularly the Internet, to outsource service activities to low-cost producers in other nations.

Globalization reduces the risks of global financial contagion.

False Even from a purely economic perspective, globalization is not all good. The opportunities for doing business in a global economy may be significantly enhanced, but as we saw in 1997-1998, the risks associated with global financial contagion are also greater.

Recent evidence indicates that the solution to the problem of stagnant incomes among the unskilled is to be found in increasing government regulation of markets.

False Evidence suggests that technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labor. This suggests that a solution to the problem of slow real income growth among the unskilled is to be found in increasing society's investment in education to reduce the supply of unskilled workers.

World Bank gives an aid of 100 million dollars to Kenya for creating rural health care facilities. This is an example of foreign direct investment.

False Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

Political scientist Samuel Huntington predicts that there will be a more harmonious world dominated by a universal civilization characterized by democratic regimes and free market capitalism.

False Huntington sees a world that is split into different civilizations, each of which has its own value systems and ideology.

The health care sector in the U.S. cannot avail the benefits of outsourcing to low-cost producers in other nations because of the nature of the work.

False In 2008 some 34,000 Filipinos were transcribing American medical files. Some estimates suggest the outsourcing of many administrative procedures in health care, such as customer service and claims processing, could reduce health care costs in America by as much as $70 billion.

In the early 1960s, the United States was by far the world's dominant industrial power. However by 2009, it lost its dominant position and now, is no longer the world's largest industrial power.

False In the early 1960s, the United States was still by far the world's dominant industrial power. In 1963 the United States accounted for 40.3 percent of world economic activity, measured by gross domestic product (GDP). By 2009, the United States accounted for 24.1 percent of world output (measured by gross national income, or GNI), still the world's largest industrial power but down significantly in relative size since the 1960s.

Many totalitarian regimes were able to deliver economic progress to the vast bulk of their populations, which curbed the spread of democracy during the late 1980s.

False One of the causes for the spread of democracy is that many totalitarian regimes failed to deliver economic progress to the vast bulk of their populations.

Privatization reduces the incentive of business owners to increase productivity, enter new markets, and to exit losing ones.

False Privatization is seen as a way to stimulate gains in economic efficiency by giving new private owners a powerful incentive—the reward of greater profits—to search for increases in productivity, to enter new markets, and to exit losing ones.

GNI allows a more direct comparison of living standards in different countries.

False Referred to as a purchasing power parity (PPP) adjustment, it allows a more direct comparison of living standards in different countries.

A current trend in international business is the decline of medium-sized and small multinationals, known as mini-multinationals.

False Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of mini-multinationals.

The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties.

False The World Trade Organization is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. The World Bank was set up to promote economic development.

The most global markets currently are markets for consumer products.

False The most global markets currently are not markets for consumer products—where national differences in tastes and preferences are still often important enough to act as a brake on globalization—but markets for industrial goods and materials that serve a universal need the world over.

"Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade barriers against each other, which contributed to the Great Depression of the 1930s.

False The typical aim of tariffs on imports of manufactured goods was to protect domestic industries from foreign competition. One consequence, however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.

Which of the following is true regarding China's 2007 property law? Assures landowners a fair price to sell their land Guarantees a market-rated interest on property mortgages Increases longer term economic opportunity for property users Has achieved the most favorable relationship between entrepreneurship and property ownership

Increases longer term economic opportunity for property users

A country's economic system and property rights regime are reasonably good predictors of economic prospects. True False

True

According to Hofstede, the concept of Confucian dynamism captures attitudes toward time, persistence, protection of face, and respect for tradition.

True

Bangladesh's economic transformation has been fueled by the following economic factors: booming textile industry, microfinance access for entrepreneurs, increased levels of foreign direct investment, reduced import restrictions, floating currency, and privatization.

True

Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than involvement in this world.

True

Building an organizational culture that places a high value on ethical behavior requires incentive and reward systems.

True

DMG is a particularly successful service company operating in China. Its success, to a large degree, was credited to the company's quanxiwang.

True

Hofstede's research has been criticized because it was culturally bound.

True

If a country's economy is to sustain long-run economic growth, the business environment must be conducive to innovations and entrepreneurial activity.

True

In countries where the value of group identification is considered to be primary, managers and workers are discouraged from moving from company to company.

True

Individualism has led to a high degree of managerial mobility between companies resulting in managers who have good general skills but lack company-specific experience.

True

One effect of India's growing sophistication in software development has been increased foreign direct investment of US technology companies in India

True

Stora Enso created specific, relevant metrics to measure and assess its degree of social responsibility.

True

The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business.

True

The overall attractiveness of a country as a potential market or investment site for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country. True False

True

The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

True

The values and norms of a culture do not emerge fully formed.

True

Unspoken language refers to nonverbal communication.

True

Volkswagen was recently designated the world's largest auto manufacturer. The company went to great lengths to modify its carbon emission control such that it activate only under certain conditions.

True

According to critics of globalization, today's interdependent global economy limits a nation's national sovereignty.

True A concern voiced by critics of globalization is that today's increasingly interdependent global economy shifts economic power away from national governments and toward supranational organizations such as the World Trade Organization, the European Union, and the United Nations.

According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950.

True According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950.

Non-U.S. firms increasingly began to invest across national borders because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

True As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Differences between countries require that an international business vary its practices country by country.

True As their organizations increasingly engage in cross-border trade and investment, managers need to recognize that the task of managing an international business differs from that of managing a purely domestic business in many ways. Differences between countries require that an international business vary its practices country by country.

By identifying and investing early in a potential future economic star, international firms can build brand loyalty and gain experience in that country's business practices.

True By identifying and investing early in a potential future economic star, international firms may build brand loyalty and gain experience in that country's business practices.

Transformation from centrally planned command economies to market-based economies can be attributed to the fact that command and mixed economies failed to deliver the sustained economic performance achieved by countries adopting market-based systems. True False

True Command and mixed economies failed to deliver the kind of sustained economic performance that was achieved by countries adopting market-based systems, such as the United States, Switzerland, Hong Kong, and Taiwan. As a consequence, even more states have gravitated toward the market-based model.

Efficiency gains associated with containerization have caused transportation costs to fall dramatically.

True Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.

Doing business in Russia involves risks because the country has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government.

True Disturbing signs of growing unrest and totalitarian tendencies continue to be seen in several Eastern European and Central Asian states, including Russia, which has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government. Thus, the risks involved in doing business in such countries are high, but so may be the returns.

The shift toward a more integrated and interdependent world economy is referred to as globalization.

True Globalization refers to the shift toward a more integrated and interdependent world economy. It has several facets, including the globalization of markets and the globalization of production.

In mixed economies, in certain sectors the state set prices, owned businesses, limited private enterprise, restricted investment by foreigners, and restricted international trade.

True In mixed economies, the role of the state was more limited; but here too, in certain sectors the state set prices, owned businesses, limited private enterprise, restricted investment by foreigners, and restricted international trade.

The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.

True It has been argued that the economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.

It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

True It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses. At the extreme, an international firm may have to provide its own infrastructure and supporting business, which obviously raises costs.

Current trends indicate the world is moving toward an economic system that is more favorable for international business.

True Over the next few decades, countries such as the Czech Republic, Mexico, Poland, Brazil, China, India, and South Africa may build powerful market-oriented economies. Current trends indicate the world is moving toward an economic system that is more favorable for international business.

The base for the purchasing power parity adjustment of the GNI is the cost of living in the United States.

True Referred to as a purchasing power parity (PPP) adjustment, it allows for a more direct comparison of living standards in different countries. The base for the adjustment is the cost of living in the United States.

Democracy is one of the consequences of economic growth and progress.

True Several of the fastest-growing Asian economies adopted more democratic governments during the past three decades, including South Korea and Taiwan. Thus, although democracy may not always be the cause of initial economic progress, it seems to be one consequence of that progress.

Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts incurred by corrupt and dictatorial predecessors.

True Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts that were incurred and mismanaged long ago by their corrupt and dictatorial predecessors.

The Internet has developed into the information backbone of the global economy.

True The Internet has developed into the information backbone of the global economy. In North America alone, e-commerce retail sales reached $365 billion in 2012 (up from almost nothing in 1998), while global e-commerce sales surpassed $1 trillion for the first time in 2012.

The cost of microprocessors continues to fall, while their power increases. This statement supports the predictions made by Moore's Law.

True The cost of microprocessors continues to fall, while their power increases (a phenomenon known as Moore's Law, which predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months).

Peruvian development economist Hernando de Soto has argued that the chronic inability of property owners to establish legal title to the property they own is a key problem for innovation, and entrepreneurial activity in developing nations.

True The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until property rights are better defined and protected. His arguments are interesting because he says the key problem is not the risk of expropriation but the chronic inability of property owners to establish legal title to the property they own.

The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers. True False

True The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth (purchasing power) of consumers in that market, and the likely future wealth of consumers.

The state can expropriate the profits from innovation through legal means.

True The state can expropriate the profits from innovation through legal means, such as excessive taxation, or through illegal means, such as demands from state bureaucrats for kickbacks in return for granting an individual or firm a license to do business in a certain area (i.e., corruption).

When communism collapsed, many of the communist countries lacked the legal structure required to protect property rights because all the property was earlier held by the state.

True When communism collapsed, many of these countries lacked the legal structure required to protect property rights, all property having been held by the state. Although many nations have made big strides toward instituting the required system, it will be many more years before the legal system is functioning as smoothly as it does in the West.

A well-functioning market economy requires laws protecting private property rights and providing mechanisms for contract enforcement.

True Without a legal system that protects property rights, and without the machinery to enforce that system, the incentive to engage in economic activity can be reduced substantially by private and public entities, including organized crime, that expropriate the profits generated by the efforts of private-sector entrepreneurs.