International Business Midterm

Cultural diversity:

-may help a company gain deeper knowledge about products and services. - is the process of bringing people of different national cultures together is often difficult. -may help companies gain competitive advantages by bringing together people of diverse backgrounds.

Reasons for piracy

-some countries offer little protection for certain products -in some cultures, people see little morally wrong in buying counterfeit goods -technology allows copyrighted material to be reproduced cheaply without much loss of quality

Which of the following is the LEAST likely reason that small countries worry about overdependence caused by globalization?

A large country may substantially increase its demand for the small country's production.

All of the following are international business translation problems EXCEPT which of the following?

All written work requires back translation in order to be understood in a second language.

Which of the following is the MOST accurate statement about culture?

Although most cultural variables are universal, the forms these variables take differ from culture to culture.

________ is a summary of all economic transactions between one country and the rest of the world over a given period of time.

Balance of Payments

The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day.

Base of the Pyramid

Which of the following countries has an individualistic orientation?

Canada

Countries with a totalitarian political system:

China, Russia, Saudi Arabia

Which of the following statements about representative democracies is true?

Citizens elect individuals from political groups to act on their behalf.

________ is based on a codification of what is and is not permissible.

Civil law

What is NOT true about cultural diversity?

Cultural diversity is most successful when domestic and foreign firms establish joint ventures.

Which of the following is most likely a true statement about the global economy today?

Emerging economies are shifting from practices that optimized industrial efficiencies.

Which of the following statements describes an inconsistency of the Foreign Corrupt Practices Act (FCPA)?

Facilitation payments are excluded from the FCPA's definition of bribery.

The same automobile company produces Fiats and Ferraris. The company builds an engine plant in China with low production costs for Fiats but not Ferraris. The probable reason is that

Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focus strategy

Which of the following prohibits U.S. companies from making illegal payments or other gifts or political contributions to foreign government officials for the purposes of influencing them in business transactions?

Foreign Corrupt Practices Act

The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country.

Human Development Index

Which of the following measures would most likely be used to determine whether the standard of living within a country is rising or falling?

Human Development Index (HDI)

What is the role of context in cross-cultural communication?

In high-context cultures, the message is implicit; in low-context cultures, the message is explicit.

________ is a general, sustained rise in prices measured against a standard level of purchasing power.

Inflation

________ refer(s) to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage.

Intellectual property

Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable. Currently, Wharton has production facilities in the United States and China. Wharton executives are trying to determine where the new product should be manufactured. Which of the following best supports a decision to manufacture the new product in the United States instead of China?

Intellectual property rights are strongly protected by U.S. patent laws.

Which of the following best defines international business?

It includes all business transactions involving two or more countries

Which of the following countries has a collectivist orientation?

Japan

Which of the following languages has the most NATIVE speakers?

Mandarin

Which of the following is most typical of a command economy?

Many products are usually in short supply.

Businesspeople seeking to understand more about another culture in order to successfully conduct business within that culture would be best advised to do which of the following?

Observe the behavior of people who have gained respect within that cultural environment.

________ is the belief that both private and public groups play important roles in a nation's political activities.

Pluralism

________ political risks arise from political actions, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers and that can significantly raise the costs of getting things done.

Procedural

In which of the following countries would there be the highest likelihood of encountering a bribery situation?

Russia

Which of the following countries is not an example of a mixed economic model?

Switzerland

What is NOT a common argument for the slowing of future globalization?

Technological, transportation, and communication advances will decline in the near future.

Which of the following is a true statement about China?

The Chinese government manipulates market activities for political purposes.

What is a common argument for the slowing of future globalization?

The growing split between those who succeed in a global environment and those who do not will foster greater antiglobalization sentiments, Major countries have either ignored certain international treaties or have refused to sign them, Antiglobalization interests have been successful in electing parties that oppose freer movement of trade or people.

Which of the following statements is most likely true regarding relationships between MNEs and stakeholders?

The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.

An example of a Japanese service export is a visit by a ________.

U.S. citizen to Tokyo Disneyland in Japan

International Business translation problems:

Words mean different things in different contexts, thus the wrong context may be translated. Because languages and the common meaning of words are constantly evolving, the intended meaning of a word may be different from what the listener or reader understands. Some words in one language simply don't have a direct translation into another language.

A foreign direct investment occurs when...

a company has a controlling interest in a foreign company

Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________.

achieve low unemployment

A manager practicing relativism would most likely ________.

adapt to local conditions instead of implementing home-country practices

The more closed a society is, the more important ________ group membership is.

ascribed

Jack, an American accounts manager, is preparing a presentation for a group of Japanese business people. Jack's presentation would be most effective if he ________.

budgeted extra time for translation and clarification

A ________ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible, detailed, and written law that applies to all citizens.

civil

Ian, a financial manager, is preparing to transfer to Germany where he will serve as an expatriate manager of his employer's European office. Which type of legal system will Ian most likely have to deal with in Germany?

civil

Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She wants to understand Ballston's values and its expectations for employee behavior. Which of the following would most likely provide Monique with this information?

code of conduct

Safe work environments motivate ________; challenges motivate ________.

collectivists; individualists

In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X?

command economy

Which of the following is NOT a key stakeholder group that a company must work to satisfy in order to survive in a global environment?

competitors

According to the teleological approach, individuals base moral decisions on ________.

consequences of an action

In a market economy, the patterns of resource allocation are most directly influenced by ________.

consumers who "vote" by their personal decision to buy or not buy products

The practice of exchanging rings at weddings, which was initially a pagan ritual, is now followed by most people across the world. Which of the following does this illustrate?

cultural diffusion

The fact that an English word such as blue jeans has entered the Spanish language, while a Spanish word such as macho has come into American English illustrates that ________.

cultural diffusion is a two-way process

Cultural change imposed by an alien culture is called ________.

cultural imperialism

What has NOT been a major force increasing globalization in recent decades?

decreasing prices of natural resources

________ typically results when demand decreases and supply increases.

deflation

In a world, ever sensitive to social and environmental issues, more and more firms are embracing social responsibility and sustainability. Such firms are more likely than not to ________.

develop closer relations with foreign stakeholders to better understand their needs and work jointly toward solutions

The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________.

diversity

According to the concept of green economics, measuring a country's economic performance should also take into account ________

ecological costs

Which of the following is most important to the effectiveness of an internal code of conduct?

ensuring that employees understand the code by requiring confirmation in writing

Countries often use local content regulations to determine the proportion of the product that must be made in the local market versus made outside of the local market in order to ________.

favor domestic companies

In high-context cultures...

feelings and thoughts are not explicitly expressed, information is not readily shared, people have low sensory involvement, nonverbal communication is important

When a company wishes to introduce change in a foreign country, its likelihood of success can most likely be improved by ________.

gaining the support of local opinion leaders

The approach a company takes when it bases foreign operations on an informed knowledge of its organizational culture along with home- and host-country needs, capabilities, and constraints is called ________.

geocentrism

The integration of markets, nation-states, and technologies in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before is referred to as ________.

globalization

In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________.

government officials

Communism primarily relies on a system of ________.

government-controlled economic activity

The global financial crisis that happened at the end of the first decade of the century has led to which of the following?

governments seeking to impose more constraints on capitalism

The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its ________.

gross domestic product (GDP)

What has been a major force increasing globalization in recent decades?

growing pressure from consumers, liberalization of cross-border trade, increase in and expansion of technology

An economic system is the set of structures and processes that ________ in a country.

guides the allocation of resources and shapes the conduct of business activities

Language...

has both verbal and nonverbal characteristics, entail facial expressions and gestures

Expatriate managers located in cultures characterized by ________ have noticed that local employees are highly motivated by retirement programs.

high future orientation

In a(n) ________ culture, people tend to regard seemingly peripheral information as pertinent to decision making and infer meanings from things that people say either indirectly or casually.

high-context

Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India, where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following would be the best approach for Quantum?

improving conditions at the subcontract facilities

Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________.

income generated by both total domestic production and the international production activities of national companies

The pushback against democracy has powered a rise in totalitarianism, a situation that is likely to include which of the following?

increasing adoption of the principles of the rule of man

Low dependence on an organization and a desire for personal time, freedom, and challenges

individualism

Although there are different views about the purpose of a political system, most analysts agree that an essential task of a political system is to ________.

integrate the different elements of a society into a functioning unit

Which of the following problems in China is blamed for the annual loss of $250 billion by American MNEs?

intellectual property violations

The owner of a U.S. football team and the owner of a Canadian hockey team purchase a British soccer team. This is an example of a ________.

joint venture

Which term refers to two or more companies that share ownership of an FDI?

joint venture

History suggests that if the economic crisis worsens, we are likely to see more people question the ________.

legitimacy of capitalism

Reebok pays a royalty to the German Soccer League to use the team's logo on t-shirts that it sells. Reebok and the German Soccer League most likely have a __

licensing

Economic freedom is positively correlated with...

literacy, life expectancy, and environmental sustainability

Which of the following most likely complicates ethical behavior for firms that expand overseas?

local laws and values

Cultures scoring high on the dimension of ________ tend to be characterized by personal assertiveness and the accumulation of wealth, typically translating into an entrepreneurial drive.

masculinity

Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________.

minimal government intervention

Market economies are primarily characterized by ________.

minimal governmental participation

In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.

mixed

The primary purpose of the International Labor Organization (ILO)is to ________.

monitor working conditions of factories in developing countries

A culture in which people prefer to finish one task before starting another is most accurately characterized as which of the following?

monochronic

Ethical dilemmas tend to be ________ for MNE managers than for domestic managers.

more complicated

The process of shifting production from a domestic to a foreign location is best known as

offshoring

Social structure is best defined as the ________.

overall framework that helps determine the roles of individuals within a society

People in the port city of Jeddah were less culturally conservative than people in the interior of the country. The most likely reason for this is that ________.

people in the port cities have more contact with foreigners

In the United States, the unemployment rate indicates the ________.

percentage of unemployed workers seeking paid work relative to the total labor force

Organizations which have cultures that score high on ________ tend to be more hierarchical, with power deriving from prestige, force, and inheritance.

power distance

People generally prefer little consultation between superiors and subordinates in cultures where ________ is high.

power distance

When a company does business in another country whose official language is the same as its home country's, the company should most likely ________.

realize that words may have different meanings

Capitalism charcteristics:

right to profit from individual effort, private ownership of assets, private control of investment

Which stakeholder group is most interested in trustworthy behavior by corporate executives and increased corporate taxes?

society

Which of the following is NOT a characteristic of capitalism?

state control of factors of production

The global financial crisis that happened at the end of the first decade of the century has interrupted the trend of national economies ________.

steadily adopting the free market model

In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________.

supporting the local activities of foreign competitors

What BEST explains how a firm reduces risk by operating internationally?

taking advantage of business-cycle differences among countries

Dawson Enterprises, a U.S. firm, conducts business in Saudi Arabia. The MNE recently experienced a business dispute with a local firm and was forced to meet the demands of the local firm without going through due process. Dawson's experience most likely occurred because Saudi Arabia relies on ________.

theocratic law

Expropriation is best defined as the ________.

transference of ownership from private to public sector with compensation to private owners for their losses

Managers should be more precise in their directions to subordinates when ________.

uncertainty avoidance is high

Managing and cultivating diverse teams is facilitated by first encouraging team members to

understand each other's culture before dealing with the tasks at hand

It is most accurate to say that within most nations' borders, people largely share such essential attributes as ________ and ________.

values; language

Nugent Electronics plans to expand into foreign markets. Top executives want the firm to focus only on locations where the rule of law prevails. Which of the following should most likely be considered by Skinner?

wealthier, westernized countries

When companies face the same competitors in almost all countries where they operate,

what they learn about one another in one country is useful in predicting the others' strategies and actions elsewhere

When companies face the same competitors in almost all countries where they operate...

what they learn about one another in one country is useful in predicting the others' strategies and actions elsewhere