Chapter 1 - Globalization

The ________ is often seen as the lender of last resort.

International Monetary Fund

Which of the following expresses one of the reasons why managing an international business is different from managing a purely domestic business?

An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system.

Globalization resulted in a decrease in non-U.S. firms' investment across national borders.

False. 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.

Cultural differences have no effect on the way an international firm conducts its business around the globe.

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

Since the 1960s, a notable trend in the demographics of the multinational enterprise has been the rise of U.S. 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.

Which of the following statements pertaining to changes in the global economy of the 21st century is true?

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

One concern frequently voiced by those opposed to globalization is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe.

True. One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. The critics argue that falling trade barriers allow firms to move manufacturing activities to countries were wage rates are much lower.

Supporters of globalization believe that tougher environmental regulations and stricter labor standards are a natural aspect of economic progress.

True. Supporters of free trade and greater globalization argue that tougher environmental regulations and stricter labor standards go hand in hand with economic progress. In general, as countries get richer, they enact tougher standards.

Today, nearly every nation in the world belongs to the United Nations.

True. The United Nations was established October 24, 1945, by 51 countries and today, nearly every nation in the world belongs to the United Nations. Membership now totals 193 countries.

A small country is short on cash for much needed infrastructure development projects. It could go to the World Bank for assistance.

True. The World Bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments (such as building dams or roads).

The ________ was created in 1944 by 44 nations that met in Bretton Woods, New Hampshire to promote economic development.

World Bank

Opponents of globalization argue that falling trade barriers

allow firms to move manufacturing activities to countries with lower wage rates. One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. Critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.

An international business is defined as

any firm that engages in international trade.

Foreign direct investment occurs when a firm invests resources in

business activities outside its home country.

The commercial jet aircraft market

can best be described as a global market.

Which of the following factors contributed to the Great Depression of the 1930s?

countries progressively raising trade barriers against each other

Globalization has enabled organizations to reduce their costs of production by

creating manufacturing units in developing countries.

Boeing's 787 aircraft is produced by 50 suppliers spread around the world, a huge increase in global outsourcing as compared to the past. Boeing's strategy, like that of other multinational companies, suggests that

declining barriers to trade and investment are facilitating global production strategies.

Which of the following actions was implemented in the Uruguay Round, finalized in December 1993?

establishment of the World Trade Organization

Globalization critics argue that the decline in unskilled wage rates is due to the

migration of low-wage manufacturing jobs offshore. The decline in unskilled wage rates may be due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.

The purpose of the U.N.'s Millennium Development Goals that were established in 2000 was to

reduce the number of people living in extreme poverty.

The growth of trade as a percentage of global GDP

reflects the globalization of markets.

Boeing produced just 5 percent of its original 737 and 747 outside the United States but produces 65 percent of its newer 787 in foreign locations. Boeing's production strategy

reflects the globalization of production.

The stock of foreign direct investment refers to

the total cumulative value of foreign investments as a percentage of the country's GDP.