International Business (Chapter 1-3)

At the beginning of 2018, the value of the outstanding stock of foreign direct investment of all nations totaled more than

$30.8 trillion

What percentage of global output is now bound for international trade

60 percent

The three largest markets for American exports of goods in 2017 were

Canada, Mexico, and China.

What is Hall's high- and low-context framework based on

Communication styles

What company was the first to issue stock and is often identified as the world's first multinational corporation

Dutch East India Company

Anthropologist E. T. Hall suggests that there are hundreds of ways managers can learn the characteristics of other cultures.

False

Feminine cultures in Hofstede's dimensions care about relationships and are not focused on business success

False

Hofstede is primarily concerned with social values and the dimensions he identified that help parents understand their children

False

International trade includes exports, imports, and foreign direct investment.

False

The MBI model is linked with the global mind-set since it can be used to connect cultures across diversity boundaries

False

The dynamic capability theory states that for a firm to invest overseas, it must have three kinds of advantages: ownership specific location specific internalization

False

The majority of the world's outward FDI has been in the forms of imports and exports

False

The predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases is known as the experience curve

False

When adjusting to other cultures, the first step managers take is to compare their current culture to another to assess its value

False

Which of the environments associated with a company refers to the uncontrollable forces originating outside the home country?

Foreign

Which cultural framework is based on communication styles?

Hall's (high and low context)

Ethnocentricity gets in the way of communication across cultural borders because

People living in their own culture are often unaware of its influence on them

Big Tire Bikes Inc, is headquartered in Maryland and does business within the United States, as well as within many counties in Europe and South America. This company is an example of

international business

Jetson Manufacturing has manufacturing operations in the United States, Germany, Indonesia, and Brazil. This is an example of

international company

Religion is part of a group's culture because

it influences behavior through attitudes and beliefs

Natalie purchases Open Source bottled water from France because it is derived from natural springs and the store brand does say where it comes from. What is influencing Natalie's purchase decision?

Product differentiation

Which characteristic would be typical in a feminine culture?

Quality of work life is important.

Jensen Control Corp. now uses videoconferencing which helps the sales team demonstrate products to prospective international customers while eliminating expensive travel costs. Which of the five drivers of international business does this represent?

Technological

Material culture includes

manufactured goods

How do the dimensions of Kluckhohn and Strodtbeck's framework help us to better understand other cultures

They help us to further understand beliefs and act ions in other cultures

The operation's of a company outside its home or domestic market are known as foreign business

True

The plague known as the Black Death moved west and affected more people as the international trading system expanded

True

The proportion of world trade coming from North America, Latin America, Africa, and the Middle East has decreased since 1983.

True

The argument that free trade is the best strategy for advancing the world's economic development is considered

a proposition with which almost all economists agree.

Supporters of mercantilism would agree that

accumulation of precious metals is an activity essential to a nation's welfare

The increased internationalization of business requires _____________ to have basic knowledge of international business

all managers

An industry that has a limited number of competing firms, such as the U.S. mobile phone market in which four firms controlled 98 percent of the market in 2018, is known as

an oligopolistic industry

A global mind-set is a set of skills that evidience

an openness to diversity and an ability to work across cultural borders

When we use frameworks to help us understand culture, it's important to remember that frameworks

are comparative, with our own culture the reference point

Trompenaar's achievement versus ascription dimension describes social status based on what one does or who one is. In the United States, where people build who they are through work, social status tends to be

based on achievement

According to Trompenaars, a cultures attitude toward the environment can range from:

control over the environment to harmony with it

Hofstedes masculinity-femininity dimension is a measure of a culture's

distribution of roles between the sexes

Five years ago it cost Bernie's Bikes Inc. about $52 dollars to build a single bike. Today, it only costs the company about $31 because they have automated the process and are able to purchase component parts in larger quantities. What allowed the company to reduce the price to build a bike?

economies of scale

One argument against globalization is that it creates a decline in

environmental conditions

In examining the volume of international trade, the proportion of world exports and imports accounted for by the ten largest exporting and importing nations in 2016

exceeded 50 percent

The international product life cycle is used to***********************

explain how the international trade in manufactured goods will be linked to gross national income*************

When gross national income rates drop significantly, it affects a company's environment. Which type of external force does this represent?

external

In 2016, what was the included in the five largest categories of U.S. goods imported from China?

footware

Harrison Manufacturing, based in Toledo, recently purchased a new manufacturing facility and production equipment in Germany that it will use to produce component parts. This purchase is an example of

foreign direct investment

What is one argument in support of globalization

free trade enhances socioeconomic development

Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies:

more liberal

The 17th and 18th centuries have frequently been termed the "Age of Mercantilism" because

national power depended on the sponsorship and control of merchant capital

Culture frameworks are helpful, but their use may

oversimplify and limit our understanding and learning after a point.

The two components of foreign investment include

portfolio investment direct investment

A country ________ when it decides to use its resources to produce only the product in which it has an absolute advantage

specializes

When one of the reasons suggested by Alfred Marshall for why firms tend to cluster together on a geographic basis

technological information can be readily shared

In low-context cultures it is common to find

that communication tends to be explicit

Firms from __________ had the largest total outstanding stock of direct overseas investment at the beginning of 2018

the United States

Accounting controls directly relate to a culture's assumptions about

the basic nature of people.

The kinds of forces in the foreign environment are __________ those in the domestic environment except that they occur in foreign nations.

the same as

Kinship and free association

the two basic types of social institutions

Trompenaar's diffuse cultures are called diffuse because

their differentiation between public and private life is spread out freely (diffused)

Overall, what has occurred with the dollar volume of service exports worldwide

There has been an absolute increase

What is an argument presented by opponents of globalization

A report by the Labor Secretariat for the North American Trade Agreement (NAFTA) reported that more than half of firms surveyed used threats to close U.S. operations as a tool to fight union-organizing efforts

The United States can produce more wheat for the same or lower costs than many other countries. This is an example of

Absolute Advantage

Who advocated the early attempt to develop an international trade theory in response to the practice of mercantilism?

Adam Smith

What is an example of an external force that can affect a company's environment?

The newly-elected governor decides to raise property taxes.

An international manager has three choices when deciding how to employ a technique used in domestic operations to an international operation:

Transfer it intact not use it adapt it to local condition

Currency devaluation helps a nation avoid losing markets and regain competitiveness in world markets

True

Hofstede's pragmatic versus normative dimension reflects an assessment of how individuals handle explainable aspects of their lives

True

In high-context cultures, people tend to form long-lasting relationships that endure over time.

True

Kluckhohn and Strodtbeck developed their cultural values classification system based on universal problems, such as people's relationship to nature

True

Rapid urbanization of populations combined with industrialization in the emerging markets is quickly shifting the world's economic center of gravity from Europe and the Americas back to Asia.

True

International business really began

When Phoenician and Greek merchants sent representatives abroad to sell goods

What is an example of the competitive driver of international business activity

a company that enters a foreign market to distract companies with similar products or services

Mercantillists believed that

a nation should have an export surplus in order to accumulate previous metals

Hofstede's individualism-collectivism measures

the degree to which people in the culture are integrated into groups.

Hofstede's power distance dimension can be described as

the extent to which society expects power to be distributed unequally.

Monochronic times is best illustrated by

the flight schedule at an airport