international management 2

26. _____ involves analyzing markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market. a. Search retargeting b. Unique selling proposition c. Rebranding d. First-mover advantage e. Market due diligence

e

30. Which of the following refers to the shared principles, standards, and goals of an organization that are included in the mission statement or as a separate statement? a. Differentiation b. Cost leadership c. Vision statement d. Vertical scope e. Organizational values

e

30. _____ is a widely used tool that helps show the big picture of a firm's external environment, particularly as related to foreign markets. a. Supply chain management b. Business process re-engineering c. Balanced Scorecard d. SWOT analysis e. PESTEL analysis

e

32. _____ refers to the using of the organization's strengths in a way that cannot be easily duplicated by other firms or made less valuable by changes in the external environment. a. Offshoring b. Strategy formulation c. Strategic intent d. Synergy e. Sustainable competitive advantage

e

63. _____ refers to a plan with a time horizon of one to three years and specifies concrete ways to implement the strategic plan. a. Controlling b. Organizational design c. Organizing d. Operational planning e. Tactical planning

e

65. _____ is the function of management that involves setting objectives and determining a course of action for achieving these objectives. a. Implementing b. Organizing c. Controlling d. Job design e. Planning

e

69. The _____ located in The Hague hears disputes between nations. a. Secretariat b. Security Council c. UN Trusteeship Council d. European Court of Human Rights e. International Court of Justice

e

1. Market due diligence relies on published research on the markets rather than interviews with potential customers and industry experts.

false

12. Intellectual property rights (IPR) law does not deal with the financial aspect of a creation of an individual.

false

14. The more similar markets in different regions are, the lesser the pressure for an industry to globalize.

false

15. In northern England, KFC stresses gravy and potatoes, while in Thailand, it offers fresh rice with soy or sweet chili sauce. This is an example of a global strategy.

false

15. The goal of NAFTA has been to encourage trade between the South American countries.

false

17. When transportation costs and automation are both high, then the knowledge worker component of the location calculation becomes more important.

false

18. Differentiators help one to determine which particular industry or geographic segments are a firm's prime competitive arenas.

false

2. Strategy formulation is the process of performing all the activities necessary to do what has been planned.

false

20. Staging and pacing refer to how the firm will generate positive returns over and above its cost of capital.

false

21. During operational planning, an organization's top management analyzes their competitive opportunities and threats as well as the strengths and weaknesses.

false

22. The decisions taken by the Security Council are not binding on the rest of the member nations of the UN.

false

23. If the acquiring firm is in a country with a strong currency, acquisitions becomes expensive for the acquiring firm.

false

5. In outsourcing, the company takes a function out of its home country and places the function in another country, generally at a lower cost.

false

5. The business competence of an organization renders concepts like political stability and legal security irrelevant.

false

6. GATT's initial focus was on non-tariff barriers of trade.

false

7. Government procurement and bidding, industrial standards, and subsidies are examples of tariff trade barriers.

false

7. Only the primary activities make up a firm's value chain.

false

9. Differentiation means that the firm seeks to make its products at the lowest cost possible relative to its competitors while maintaining a quality that is acceptable to consumers.

false

8. Firms are more likely to be successful when they exploit a change in the environment rather than simply survive or oppose the change.

true

1. A country borrows money during a recession in order to keep its basic public services operating until the economy improves.

True

27. In _____, the company takes a function out of its home country and places the function in another country, generally at a lower cost. a. offshoring b. co-sourcing c. importing d. open-sourcing e. homesourcing

a

26. Strategy implementation is the process of: a. deciding which strategies to follow in order to diversify. b. performing all the activities necessary to do what has been planned. c. deciding the businesses in which an organization would compete. d. addressing the issue of the kind of strategies an organization would follow. e. devising plans to add value to the existing line of business.

b

27. Companies employ _____ to understand the latent, unarticulated needs of local consumers. a. quantitative methodologists b. ethnographers c. physiologists d. psychiatrists e. statisticians

b

28. _____ refers to work that is contracted to a nondomestic third party. a. Homesourcing b. International outsourcing c. Open-sourcing d. Offshoring e. Importing

b

34. Government policies on foreign-trade regulation and taxation constitute the _____ factors that have a significant influence on business. a. economic b. political c. sociocultural d. technological e. environmental

b

54. The Benelux countries refer to: a. Belgium, Luxembourg, and Norway. b. Belgium, Luxembourg, and the Netherlands. c. Belarus, Luxembourg, and Norway. d. Belgium, Latvia, and Norway. e. Belarus, Latvia, and the Netherlands.

b

61. The _____ makes up the judicial branch of the EU consisting of three different courts. a. European Commission b. European Parliament c. European Council d. European Court of Human Rights e. Court of Justice

e

1. The European Union (EU) consists of the same countries as the continent of Europe.

false

1. A PESTEL analysis helps managers gain a better understanding of the opportunities and threats they face.

true

1. An international strategy has to be adjusted to adapt, overcome, or exploit differences across countries and regions.

true

1. The original intent of the United Nations is to maintain international peace and security, develop friendly relations between nations, and to foster international cooperation in solving economic, social, humanitarian, and cultural issues.

true

35. _____ occurs when a function is taken out of one's country of residence to be performed in another country, generally at a lower cost. a. Open sourcing b. Offshoring c. Exporting d. Importing e. Licensing

b

1. The disadvantage of a global strategy is that the firm faces more uncertainty because of the tailored strategies in different countries.

false

10. WTO functions as a trade facilitator for the member countries but it has no power to hear disputes or suggest a solution.

false

11. Home-market norms tend to remain the same over time irrespective of the shifting demographics due to immigration or aging populations.

false

12. A multidomestic strategy is centralized and controlled by the home office and seeks to maximize global efficiency.

false

24. Acquisition is a bad strategy when an industry is consolidating.

false

24. Global firms in general prosper best in times of conflict.

false

8. Tariffs refer to taxes, which are placed on imports or exports.

true

33. _____ refer(s) to the future-oriented declaration of the organization's purpose. a. Strategic intent b. Goals and objectives c. Organizational values d. Mission statement e. Vision statement

e

9. Political factors are irrelevant as far as consumer confidence, consumer, and business spending is concerned.

false

11. The disadvantage of a multidomestic strategy is that it cannot take advantage of economies of scale that could help decrease costs for the firm overall.

true

25. A greenfield venture has the most potential to provide above-average returns.

true

8. Purchasing, logistics, inventory, and customer service form the key value-chain activities of an organization.

true

9. One of GATT's key provisions stated that if the most-favored-nation clause status was granted by a country to another country, then it was automatically extended to all other member countries.

true

25. Performance standards can be measured through financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals.

true

64. _____ helps leaders develop a detailed, internally consistent picture of a range of plausible outcomes as an industry evolves over time. a. Scenario planning b. Business process re-engineering c. Balanced Scorecard d. SWOT analysis e. PESTEL analysis

a

65. The _____ is the deliberative body of the UN and consists of all of the member countries that meet in regular sessions throughout the year. a. General Assembly b. Security Council c. Economic and Social Council d. Secretariat e. UN Trusteeship Council

a

67. Decisions made about the nature of jobs within the organization are generally called _____ decisions. a. job design b. organizational design c. controlling d. strategic planning e. leading

a

66. The Security Council is responsible for: a. issues related to economics, human rights, and social matters. b. addressing issues related to peace and security. c. the deliberative body of the UN. d. the operations of the UN. e. reviews cases concerning war crimes, genocide, ethnic cleansing, and illegal interference by one country in the affairs of another, among others.

b

67. _____ refer to the forces of change whose direction and sometimes timing can be predicted. a. Uncertainties b. Trends c. Occurrences d. Scenarios e. Forecasts

b

40. _____ refers to a kind of economic cooperation wherein member countries are free to independently determine trade policies with nonmember nations. a. Free zone b. Export processing zone c. Free trade area d. Free port e. Free trade zone

c

38. _____ occurs when a company contracts with a third party to do some work on its behalf. a. Exporting b. Importing c. Joint venture d. Outsourcing e. Insourcing

d

61. _____ refers to the most long-range planning, typically looking three years or more into the future and setting a plan for how best to position the organization to compete effectively in the environment. a. Organizational design b. Organizing c. Operational planning d. Tactical planning e. Strategic planning

e

16. MERCOSUR is committed to the consolidation of democracy and the maintenance of peace throughout the Asian continent.

false

24. Leading involves setting performance standards based on the company's objectives, measuring and comparing actual performance against standards, and taking corrective action when necessary.

false

3. Business strategy is concerned with the kind of business an organization should undertake.

false

4. A country is not allowed to borrow money for investing in domestic projects such as investing in the public sector or building infrastructure.

false

4. Corporate strategy is concerned with the manner in which an organization should compete in the market.

false

10. Economies of scope are similar in concept to economies of scale.

true

10. Managers also need to take into consideration the macroeconomic factors that will have near-term and long-term effects on the success of their strategy.

true

11. The General Agreement on Trade in Services (GATS) requires member nations to treat foreign service companies as they would domestic ones.

true

12. The factors mentioned in the PESTEL framework are inter-related.

true

13. Dumping occurs when a company exports to a foreign market at a price that is either lower than the domestic prices in that country or less than the cost of production.

true

13. In a truly global industry, the core product is standardized, the marketing approach is relatively uniform, and competitive strategies are integrated in different international markets.

true

13. The multidomestic strategy has been more commonly used by European multinational firms because of the variety of cultures and markets found in Europe.

true

14. The primary difference of the customs union from the free trade area is that members agree to treat trade with nonmember countries in a similar manner.

true

17. Decisions about a firm's arenas may encompass its products, services, distribution channels, market segments, geographic areas, technologies, and even stages of the value-creation process.

true

17. The Andean Community is a free trade agreement signed in 1969 between Bolivia, Chile, Colombia, Ecuador, and Peru.

true

18. The advantage of exporting is that firms avoid the expense of establishing operations in the new country.

true

19. The Internet has made exporting easier as even small firms can access critical information about foreign markets, examine a target market, research the competition, and create lists of potential customers.

true

3. Current account deficit refers to imports being greater than exports.

true

3. When an organization plans to expand in a foreign country, it needs to understand what the local consumers look for when making a purchase decision.

true

4. An organization, when it is expanding in a foreign country, enters it through a domestic partner. This would improve the chances of success for the organization.

true

70. Controlling refers to: a. monitoring performance so that it meets the performance standards established by the organization. b. decisions made about the structure of an organization. c. the function of management that involves setting objectives and determining a course of action for achieving these objectives. d. a management function that develops an organizational structure and coordinates human resources within that structure to achieve organizational objectives. e. an organization's analyses of its competitive opportunities and threats as well as the strengths and weaknesses.

a

51. In Holland, KFC makes a potato-and-onion croquette, while in France it sells pastries alongside chicken. KFC: a. has centralized its business processes to enable it to provide the services mentioned. b. assumes that consumer needs and desires vary by country. c. assumes that the world is flat. d. sells the same products in the same way in every country. e. is following the cost-leadership strategy.

b

52. Free trade advocates considered the establishment of _____ as a stepping stone toward the more ambitious grouping for a free trade agreement that would encompass the entire American continent except Cuba. a. GCC b. CAFTA-DR c. CARICOM d. the Andean Community e. MERCOSUR

b

56. Differentiators are that facet of the strategy diamond which: a. relate to the means for participating in targeted arenas, such as alliances, organic growth, or acquisition. b. comprise features and attributes of a company's products or services that help it beat its competitors in the marketplace. c. refer to the timing and speed of strategic moves. d. refer to how a firm will generate positive returns over and above its cost of capital. e. identify the areas in which a firm will be active, such as industry segments, geographic markets, and channels segments.

b

57. The GDP of France is 2.113 trillion USD whereas Sierra Leone's GDP is approximately 4.812 billion USD. According to the CAGE framework, this is a case of: a. emotional distance. b. economic distance. c. cultural distance. d. geographic distance. e. administrative distance.

b

59. Emerging markets lack many of the specialized intermediaries that make financial markets work. The lack of such intermediaries is referred to as: a. intermediary void. b. institutional void. c. infrastructural void. d. market void. e. organizational void.

b

28. _____ is the degree to which the company's existing practices, resources and capabilities fit the new market. a. Market access b. Business fit c. Corporate fit d. Market assimilation e. Market synergy

c

29. Outsourcing involves: a. diversifying into a new business. b. the sale of products or services in one country that are sourced in another country. c. the company delegating an entire process to the outsource vendor. d. guiding the choice of markets that a firm competes in. e. performing a service by staff from within an organization and also by an external service provider.

c

29. The _____ resulted in the end of GATT. a. Geneva Round b. Tokyo Round c. Uruguay Round d. Doha Round e. Annecy Round

c

31. The _____ is a series of rules governing trade that were first created in 1947 by 23 countries. a. Pacific Accord b. G-3 Free Trade Agreement c. General Agreement on Tariffs and Trade d. Southern Common Market e. North American Free Trade Agreement

c

31. _____ refers to an organization's statement of purpose that describes who the company is and what it does. a. Vision statement b. Value chain c. Mission statement d. Geographical scope e. Horizontal scope

c

32. Duties and customs, taxes, and licensing are examples of: a. intellectual trade property rights. b. tariff trade barriers. c. non-tariff trade barriers. d. General Agreement in Trades and Services. e. balance of payments.

c

34. The acronym P-O-L-C is the framework that managers use to understand and communicate the relationship between: a. corporate strategy and business strategy. b. threats and opportunities. c. strategy formulation and strategy implementation. d. the vision statement and mission statement. e. offshoring and international outsourcing.

c

27. Current account deficit refers to: a. the amount of borrowing that a country does from either the private sector or other countries. b. the market value of all final goods and services produced within a country in a given period. c. the accounting record of all monetary transactions between a country and the rest of the world. d. imports being greater than the exports. e. the net inflow of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.

d

57. _____ refer(s) to how a firm will earn a profit; that is, how a firm will generate positive returns over and above its cost of capital. a. Staging and pacing b. Vehicle c. Arenas d. Economic logic e. Differentiators

d

59. Vehicles refer to: a. how a firm will generate positive returns over and above its cost of capital. b. the features and attributes of a company's product or service that help it beat its competitors in the marketplace. c. the areas in which a firm will be active, such as industry segments, geographic markets, and channels segments. d. the means for participating in targeted arenas. e. the timing and speed of strategic moves.

d

60. Acquisitions, alliances, and organic investment and growth are examples of: a. outsourcing to save costs. b. differentiators that help firms beat competitors in the marketplace. c. staging choices which reflect available resources. d. vehicles for entering a new arena. e. threats posed to an organization. d; Easy

d

65. _____ are straight-line, one-factor projections from present to future. a. Estimates b. Opportunities c. Scenarios d. Forecasts e. Plans

d

40. _____ refers to outsourcing work to a nondomestic third party. a. Exporting b. Importing c. Nonentity joint venture d. International outsourcing e. Insourcing

d

37. _____ involves the sale of products or services in one country that are sourced in another country. a. Exporting b. Importing c. Offshoring d. Outsourcing e. Insourcing

b

38. _____ include(s) the geographic markets the company serves, as well as the product and customer segments in which it competes. a. Scale b. Scope c. Critical path d. Company efficiency e. Economies of scale

b

43. _____ is a stealth form of international entry, because the factors that favor globalization can also lead to a higher level of imports. a. Exporting b. Importing c. Franchising d. Business-process outsourcing e. Insourcing

b

32. Local languages, the dominant religions, views toward leisure time, and the age and lifespan demographics constitute the _____ factors that significantly influence business. a. economic b. political c. sociocultural d. technological e. environmental

c

34. If a country finds another country's trade practices unfair or discriminatory, WTO could: a. impose trade sanctions but not a cash fine against the guilty country. b. recommend a suspension from the international body. c. hear from both countries and mediate a solution. d. recommend the guilty country's eviction from other international bodies. e. impose a cash fine but not trade sanctions against the guilty country.

c

36. _____, which are a part of the SWOT analysis, include factors beyond one's control that could place the strategy or even the business itself at risk. a. Strengths b. Efficacies c. Threats d. Opportunities e. Weaknesses

c

41. Differentiation refers to: a. all the activities from the gathering of raw materials to the sale of the finished product that a business goes through to make a product. b. creating products or providing services at the lowest cost possible relative to its competitors while maintaining a quality that is acceptable to consumers. c. creating unique value for the customer through advanced technology, high-quality ingredients or components, product features, and superior delivery time. d. the number of similar businesses or business activities at the same level of the value chain. e. the cost advantages that a business obtains through expanding in size.

c

41. The Gulf Cooperation Council is an example of a customs union because: a. the union frames the economic policies of the member countries individually. b. there are no restrictions on the movement of labor and capital between member countries. c. member countries agree to treat trade with nonmember countries in a similar manner. d. member countries are free to independently determine trade policies with nonmember nations. e. member countries adopt common economic policies.

c

43. Diversification refers to: a. moving from an industry market segment into another, related segment. b. the number of similar businesses or business activities at the same level of the value chain. c. moving from one industry into another. d. cost advantages that a business obtains through expanding in size. e. the sale of products or services in one country that are sourced in another country.

c

41. _____ is the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers, and manages the selected process based on defined and measurable performance criteria. a. Global sourcing b. Importing c. Open sourcing d. Business-process outsourcing e. Insourcing

d

42. Common market refers to the: a. kind of economic cooperation wherein members are free to independently determine trade policies with nonmember nations. b. type of regional economic cooperation wherein countries adopt common economic policies. c. kind of economic cooperation wherein the body regulating the market frames the economic policies of the member countries individually. d. type of regional economic cooperation wherein there are no restrictions on the movement of labor and capital between member countries. e. geographical region which has economic and other laws that are more free-market-oriented than a country's national laws.

d

53. Dell found that it had to suspend its direct model in India for a temporary period because it needed local intermediaries to help develop both a base of business and acceptable levels of customer awareness and sophistication. This is an example of: a. an organization increasing its horizontal scope. b. diversification. c. a cost-leadership strategy. d. international strategy accommodating local environments. e. an organization operating in a flat world.

d

2. An organization, when it is planning to expand in a foreign country, needs to view the country as a monolith.

false

46. _____ refers to the number of different topographical markets in which an organization participates. a. Geographic scope b. Value chain c. Differentiation d. Cost leadership e. Offshoring

a

44. Which of the following questions would help an organization determine the favorability of the economic factors for business expansion in a PESTEL analysis? a. What are the local taxation policies? How do these affect your business? b. What are the local employment levels per capita, and how are they changing? c. What pending legislation could affect corporate social policies? d. What is the level of consumerism, and what are the popular attitudes toward it? e. What is the level and distribution of education and income?

b

47. When it was introduced, NAFTA was highly controversial because: a. it would compromise the national security of the United States. b. it would lead to the sending of U.S. jobs to Mexico. c. it would lead to economic hegemony by Canada. d. it would lead to the dumping of cheap Mexican goods in the United States. e. it would antagonize other regional trading groups in America.

b

44. Trade creation refers to the: a. movement of workers to job markets to gain access to better jobs and wages. b. dilution of the political and economic rights of a country. c. increased number of opportunities for countries to trade with one another by removing barriers to trade and investment. d. tendency of the member countries to trade more with each other than with nonmember nations due to the removal of trade barriers. e. movement of production to cheaper labor markets in member countries.

c

50. Which of the following is an advantage of exporting? a. High control and low transportation costs b. Zero risk of exchange rate fluctuation c. Fast entry and low risk d. Established manufacturing operations in the foreign country e. High local knowledge

c

51. Americans use the English language as the primary means of communication whereas Indians have a host of local languages that serve as the means of communication. This difference between the two countries would be categorized as: a. emotional distance. b. economic distance. c. cultural distance. d. geographic distance. e. administrative distance.

c

54. Which of the following is an advantage of licensing and franchising? a. High control b. Irrelevance of the legal and regulatory environment c. Fast entry and low cost d. Established manufacturing operations in the foreign country e. Negligible chances of licensee becoming a competitor

c

54. _____ refers to the constellation of business, corporate, and international strategy elements, which managers must consider when making decisions. a. Five Forces Analysis b. Cluster model c. Strategy diamond d. Porter's four corners model e. Strategic grouping

c

60. Euro countries refer to those countries that: a. use the pound as their national currency. b. are members of the EU. c. use the euro as their currency. d. are in Europe but not members of the EU. e. have trade agreements with the EU.

c

62. Certification agencies, consumer reports, and regulatory authorities are examples of specialized intermediaries for: a. financial markets. b. markets for managerial talent. c. markets for products. d. auction markets. e. labor markets.

c

28. The trade meetings of GATT were called rounds in reference to the: a. number of times that the representatives had to meet to come to a conclusion. b. number of ministerial levels in which these meetings were held. c. geometrical structure of the GATT headquarters where the meetings took place. d. series of meetings among global peers held at a "roundtable." e. GATT Director General's habit of rounding off trade figures in the meetings.

d

33. The _____ is the only institutional body charged with facilitating free and fair trade between member nations. a. World Bank b. International Monetary Fund c. United Nations Economic and Social Council d. World Trade Organization e. General Agreement on Tariffs and Trade

d

35. Which of the following is true of the General Agreement on Trade in Services (GATS)? a. It eliminated the focus of WTO from the goods sector. b. It introduced service guidelines favoring the developing nations. c. It sought to reduce the movement of high-end professional services. d. It sought to reduce the barriers to trade in services. e. It sought to categorize services and impose tariffs accordingly.

d

6. Product differentiation plays a critical role for companies entering a new market.

true

26. National deficit refers to: a. the amount of borrowing that a country does from either the private sector or other countries. b. the market value of all final goods and services produced within a country in a given period. c. the accounting record of all monetary transactions between a country and the rest of the world. d. imports being greater than the exports. e. the net inflow of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor

a

29. "_____" refers to the presence of and adherence to laws related to business contracts. a. Rule of law b. Rule of lenity c. Rule of logs d. Rule of corporate fit e. Rule of market due diligence

a

68. _____ refer to the forces of change whose direction and pace is largely unknown. a. Uncertainties b. Trends c. Occurrences d. Scenarios e. Forecasts

a

30. The basic underlying principle of GATT was: a. free and equal trade. b. it was unethical to form trade blocs by the developed nations. c. that free trade was unrealistic and damaging to individual nations. d. that tariff barriers were important for the development of a country. e. that the MFN concept was anti-trade and discriminatory in nature.

a

31. Which of the following questions would help an organization determine the favorability of the political factors for business expansion in a PESTEL analysis? a. What are the country's foreign-trade regulations? b. What are the current and forecast interest rates? c. How do the activities of international activist groups affect the business? d. What are the regulations regarding monopolies and private property? e. What is the industry's level of interest and focus on technology?

a

37. _____ refers to the sequence of activities that include the various steps of the supply chain as well as additional activities, such as marketing, sales, and service. a. Value chain b. Differentiation c. Cost leadership d. Scope e. Homesourcing

a

42. The firms following a(n) _____ invest in the activities that create the unique value but look for ways to reduce cost in nonvalue activities. a. integrated cost-leadership and differentiation strategy b. geographic scope c. differentiation strategy d. cost-leadership strategy e. diversification strategy

a

45. Trade diversion refers to the: a. tendency of the member countries to trade more with each other than with nonmember nations due to the removal of trade barriers. b. movement of production to cheaper labor markets in member countries. c. movement of workers to job markets to gain access to better jobs and wages. d. dilution of the political and economic rights of a country. e. increased number of opportunities for countries to trade with one another by removing the barriers to trade and investment.

a

45. _____ refers to the sale of products and services in foreign countries that are sourced from the home country. a. Exporting b. Importing c. Global sourcing d. Outsourcing e. Insourcing

a

46. Firms export mostly to countries that are close to their facilities because: a. of lower transportation costs. b. exported goods can sold for a higher price in these countries. c. of the compulsions of international trade laws. d. of WTO regulations. e. they get raw materials at a subsidized rate from these countries.

a

49. A(n)_____ strategy is centralized and controlled by the home office and seeks to maximize worldwide efficiency. a. global b. differentiation c. multidomestic d. transnational e. cost-leadership

a

50. If the world were flat: a. one could sell the same products and services in the same way in every country. b. one has to sell products and services according to the needs of the host country. c. one needs to decentralize decision-making authority to local business units in each country. d. a firm needs to pursue different strategies in different locations to take advantage of economies of scale. e. a firm would need to focus on maximizing local responsiveness.

a

50. MERCOSUR is an economic trade initiative which: a. is committed to the consolidation of democracy and the maintenance of peace throughout Southern America. b. focuses on economic, social, cultural, and technical cooperation as well as promoting regional peace and stability in Northern Europe. c. focuses on the development of the coal and steel industries in South America for peaceful purposes. d. is a trade agreement between non-NAFTA countries in Central America. e. is the only regional trading group that uses the term "member economies" rather than "countries."

a

55. The purpose of the European Parliament is to: a. debate and amend legislation proposed by the European Commission. b. collectively function as the European Union's "Head of State." c. provide day-to-day leadership and initiate legislation. d. review, interpret, and apply the treaties and laws of the European Union. e. make laws on domestic matters for the member countries.

a

55. Which of the following are what drive potential customers to choose one firm's offerings over those of competitors? a. Differentiators b. Arenas c. Economic logic d. Staging and pacing e. Mission statement

a

56. Institutional differences refer to differences in the: a. political systems of two countries. b. languages of two countries. c. climates of two countries. d. natural resources of two countries. e. social norms of two countries.

a

58. Staging and pacing is that facet of the strategy diamond which: a. refers to the timing and speed of strategic moves. b. relates to the means for participating in targeted arenas, such as alliances, organic growth, or acquisition. c. identifies the areas in which a firm will be active, such as industry segments, geographic markets, and channels segments. d. comprises features and attributes of a company's product or service that help it beat its competitors in the marketplace. e. refers to how a firm will generate positive returns over and above its cost of capital.

a

58. The _____ provides the day-to-day leadership and initiates legislation. a. European Commission b. European Parliament c. European Council d. Council of the European Union e. Court of Justice

a

58. Which of the following is an advantage of an acquisition? a. Established manufacturing operations in the foreign country b. Low cost c. Absence of integration issues with home office d. Eligibility for any financial help from the target company e. Right to ignore the current liabilities associated with the business being acquired

a

59. One of the primary early missions of _____ was to prevent the domination of Southeast Asia by external powers. a. ASEAN b. CEFTA c. APEC d. SAARC e. the Shanghai Cooperation Organization

a

60. Venture-capital firms, private equity providers, and mutual funds are examples of specialized intermediaries for: a. financial markets. b. markets for managerial talent. c. markets for products. d. auction markets. e. labor markets.

a

61. Which of the following is an advantage of a greenfield venture? a. High control b. Low cost c. Low risk d. Fast entry e. Established manufacturing operations

a

68. In the past, _____ meant narrowing a job's tasks so that the individual could be more proficient at those tasks. a. job design b. organizational design c. job analysis d. job description e. tactical planning

a

69. Consumer safari refers to the initiatives taken by Unilever executives to spend a day with consumers in their homes to: a. understand how they use products. b. convince them to use more Unilever products. c. train them to make multiple use of their products. d. estimate how many products they use. e. help them set up cottage industries for their products.

a

69. The _____ function requires monitoring performance so that it meets the performance standards established by the organization. a. controlling b. leading c. planning d. organizing e. job design

a

42. Which of the following question would help an organization determine the favorability of the sociocultural factors for business expansion in a PESTEL analysis? a. What are the country's social-welfare policies? b. What are the dominant local religions, and what influence do they have on consumer attitudes and opinions? c. What is the status of employment, health and safety, and product safety laws? d. What are the regulations regarding waste disposal and energy consumption? e. What is the level to which the local government and industry fund research, and are those levels changing?

b

48. _____ strategy maximizes local responsiveness by giving decentralizing decision-making authority to local business units in each country so that they can create products and services optimized to their local markets. a. Differentiation b. Multidomestic c. Global d. Cost-leadership e. Transnational

b

62. Operational planning refers to: a. planning with a time horizon of one to three years and specifies fairly concrete ways to implement the strategic plan. b. planning with a time horizon of less than one year and specifies concrete action steps to achieve organization-wide strategic and tactical plans. c. planning with a time horizon of three years or more and setting a plan to best position the organization to compete effectively in the environment. d. the decision about the nature of the jobs in an organization. e. a management function that develops an organizational structure and coordinates human resources within that structure to achieve organizational objectives.

b

63. Industrialized countries negotiate free trade and investment agreements with other countries, but exempt _____ from the liberalizing demands of the agreement. a. educational spending b. military spending c. infrastructural spending d. spending on social measures e. spending in the health sector

b

64. The UN is funded by: a. permanent members of the Security Council. b. member countries' assessments and contributions. c. corporate and multinational organizations. d. developed countries that are members of the organization. e. compulsory contributions made by ordinary people.

b

64. _____ is a management function that develops an organizational structure and coordinates human resources within that structure to achieve organizational objectives. a. Decentralizing b. Organizing c. Controlling d. Leading e. Planning

b

66. Management institutes, certification agencies, and headhunting firms are examples of specialized intermediaries for: a. financial markets. b. markets for managerial talent. c. markets for products. d. auction markets. e. labor market.

b

68. Which of the following is true about the UN Trusteeship Council? a. It hears disputes between nations. b. It is charged with overseeing all trustee territories under UN custody. c. It oversees the operations of the UN in the trustee territories and is technically headed by the Secretary-General. d. It deals with issues related to peace and security. e. It is the deliberative body of the UN

b

37. Dumping refers to a situation when a company: a. exports to a foreign market at a price that is either higher than the domestic prices in that country or higher than the cost of production. b. imports to the domestic market at a price that is either higher than the domestic prices in that country or higher than the cost of production. c. exports to a foreign market at a price that is either lower than the domestic prices in that country or less than the cost of production. d. manufactures goods and sells them in the same country at a price which is lower than the prices in that market. e. exports to a foreign market at a price that is either the same or higher than the country from where the goods are being exported.

c

66. The first step in the planning process is: a. establishing organizational objectives. b. formulating and ensuring the effective implementation of plans. c. the SWOT analysis. d. identifying multiple ways of achieving organizational objectives. e. monitoring the progress and evaluating the success of the plans.

c

67. Which of the following is true about the Secretariat? a. It is the deliberative body of the UN. b. It reviews cases concerning war crimes, genocide, ethnic cleansing, and illegal interference by one country in the affairs of another. c. It oversees the operations of the UN and is technically headed by the Secretary-General. d. It deals with issues related to peace and security. e. It oversees all trustee territories under UN custody.

c

70. _____ refers to that arm of the United Nations which is responsible for issues related to economics, human rights, and social matters. a. Amnesty International b. UNICEF c. The Economic and Social Council d. The United Nations Trusteeship Council e. The International Criminal Court

c

35. _____, which are a part of the SWOT analysis, assess the external attractive factors that represent the reason for a business to exist and prosper. a. Strengths b. Weaknesses c. Threats d. Opportunities e. Strategies

d

36. Which of the following questions would help an organization determine the favorability of the legal factors for business expansion in a PESTEL analysis? a. What are the country's foreign-trade regulations? b. What are the regulations regarding waste disposal and energy consumption? c. How do the local taxation policies? d. What are the regulations regarding monopolies and private property? e. What is the industry's level of interest and focus on technology?

d

39. Which of the following questions would help an organization determine the favorability of the environmental factors for business expansion in a PESTEL analysis? a. What are the country's social-welfare policies? b. What are the dominant local religions, and what influence do they have on consumer attitudes and opinions? c. What is the status of employment, health and safety, and product safety laws? d. What are the regulations regarding waste disposal and energy consumption? e. What is the level to which the local government and industry fund research, and are those levels changing?

d

39. _____ means that the firm seeks to make its products or provide its services at the lowest cost possible relative to its competitors while maintaining a quality that is acceptable to consumers. a. Geographical scope b. Differentiation c. Offshoring d. Cost-leadership strategy e. Homesourcing

d

43. _____ refers to a kind of economic cooperation wherein countries enter into an economic agreement to remove barriers to trade and adopt common economic policies. a. Common market b. Customs union c. Free trade area d. Economic union e. Special economic zone

d

48. Maquiladoras refer to the: a. customs duty imposed by the member countries of the North American Free Trade Agreement on the movement of goods and services from nonmember countries. b. customs duty imposed by the European Union on the movement of goods and services from countries which are not the members of this economic body. c. manufacturing units that are located in the border towns of Spain that take imported materials and produce the finished goods for export, primarily to France and Algeria. d. production facilities located in border towns in Mexico that take imported materials and produce the finished goods for export, primarily to Canada or the United States. e. the free trade zones established in Argentina to attract foreign direct investment from companies manufacturing machinery and motor vehicles.

d

49. NAFTA rules state that: a. organizations from communist countries shall be barred from accessing the markets of the NAFTA region. b. at least 50 percent of the employees in an organization should be from the NAFTA region for the organization to have access to the markets of that region. c. organizations which do not source labor or capital from the NAFTA region shall not be allowed to enter the market. d. at least 50 percent of the net cost of most products must come from or be incurred in the NAFTA region. e. the member countries have to establish a common set of trading rules for nonmember countries

d

53. What was the primary goal for the development of the European Union (EU)? a. To use it as a platform to further European military and political goals b. To establish a common financial denomination for the whole world c. To bar non-European countries from trading with European countries d. To create a larger trading platform to compete against the United States, China, and India e. To transform Europe and Asia into a single political and administrative unit

d

55. The United States is separated from Nigeria by 5,840 miles and the Atlantic Ocean. According to the CAGE framework this is a case of: a. emotional distance. b. economic distance. c. cultural distance. d. geographic distance. e. administrative distance.

d

62. _____ is a term that refers to the messy mix of crisscrossing nonlinear strands of global bilateral and multilateral trade agreements, that link countries and trading blocs in self-benefiting trading alliances. a. Maquiladoras b. GATS c. TRIPS d. Spaghetti bowl e. Caciques

d

63. _____ is a strategic-management tool that helps an organization take stock of its internal characteristics and assess the external environmental conditions. a. Scenario planning b. Business process re-engineering c. Balanced Scorecard d. SWOT analysis e. PESTEL analysis

d

70. A _____ works best with one situation or scenario but provides little direction when there is uncertainty about potential changes to critical features of the scenario. a. Scenario planning b. Business process re-engineering c. Balanced Scorecard d. SWOT analysis e. PESTEL analysis

d

33. Which of the following questions would help an organization determine the favorability of the technological factors for business expansion in a PESTEL analysis? a. What are the regulations regarding monopolies and private property? b. What are the dominant local religions, and what influence do they have on consumer attitudes and opinions? c. What is the status of employment, health and safety, and product safety laws? d. What are the regulations regarding waste disposal and energy consumption? e. What is the status of intellectual property issues in the local environment?

e

36. Intellectual property refers to: a. the physical infrastructure of an organization. b. the magazines and journals that are subscribed to by an organization. c. the property acquired by an organization in case of a takeover. d. the skilled manpower of an organization. e. anything that a person or entity creates with the mind.

e

38. A film studio produces a movie whose storyline is borrowed from a book. The film producer had not received permission from the book's author to portray the contents of the book in the movie. This act of the movie producer is: a. fair and above board in the eyes of law. b. considered legal in developing countries. c. an example of an exception to TRIPS. d. attracts capital punishment in developed countries. e. a violation of the intellectual rights of the author.

e

39. The European Union is an example of an economic union because: a. the union frames the economic policies of the member countries individually. b. some areas of the member countries have economic and other laws that are more free-market-oriented than the country's national laws. c. the union frames common administrative policies for the member countries. d. member countries are free to independently determine trade policies with nonmember nations. e. the member countries have adopted common economic policies.

e

40. _____ refers to all the activities, from the gathering of raw materials to the sale of the finished product that a business goes through to make a product. a. Outsourcing b. Offshoring c. Cost leadership d. Differentiation e. Vertical scope

e

44. _____ refer(s) to the cost advantage that a business obtains through expanding in size. a. Economies of scope b. Synergies c. Network externality d. Vertical scope e. Economies of scale

e

45. _____ refer(s) to efficiencies gained from demand-side changes, such as increasing the range of marketing and distribution. a. Scale b. Value chain c. Cost leadership d. Differentiation e. Economies of scope

e

46. The creation of regional trade agreements does not lead to: a. the creation of more trade opportunities for countries. b. economic integration that can help expand job opportunities. c. the facilitation of closer political cooperation. d. the movement of production to cheaper labor markets. e. political and economic centralization

e

47. A(n) _____ involves a contractual agreement between two or more enterprises stipulating that the involved parties will cooperate in a certain way for a certain time to achieve a common purpose. a. merger b. acquisition c. standstill agreement d. demerger e. strategic alliance

e

47. The U.S. fast-food chain Sonic will only open new outlets in states that are adjacent to states where it already has stores. This is an example of: a. differentiation. b. increasing vertical scope. c. diversification. d. offshoring. e. increasing geographic scope.

e

48. A(n) _____ is a transaction in which a firm gains control of another firm by purchasing its stock, exchanging the stock for its own, or, in the case of a private firm, paying the owners a purchase price. a. standstill agreement b. demerger c. strategic alliance d. merger e. acquisition

e

49. Which of the following is true of acquisitions? a. The acquiring company will be eligible for any financial help from the company whose shares it is trying to acquire. b. It affords the firm maximum control and has the most potential to provide above-average returns. c. The acquiring company enters into an agreement with the target business to pursue a set of agreed-upon goals while remaining independent organizations. d. The acquiring firm avoids the expense of establishing operations in the new country. e. The acquiring company gains control of another firm by purchasing its stock.

e

51. Which of the following statements is true about MERCOSUR? a. It was established as a regional trade agreement between Peru and Venezuela. b. It is a part of the Caribbean Community and Common Market. c. It is the world's largest trading bloc. d. It was established as an answer to the Andean Community. e. It is a South American trade initiative with clear political goals.

e

52. Which of the following is an advantage of partnering and strategic alliance? a. Lower cost than exporting, licensing, or franchising b. High control over product quality, operating costs, and employees c. Limited liability d. Absence of integration problems between corporate cultures e. Shared costs reduce investment needed

e

52. _____ strategy is highly desirable and appropriate for many industries, given the differences across markets and the similarities being fostered by the flatteners. a. Differentiation b. Global c. Cost-leadership d. Multidomestic e. Transnational

e

53. Which of the following is affected by the absence of colonial ties in the CAGE framework? a. Emotional distance b. Economic distance c. Cultural distance d. Geographic distance e. Administrative distance

e

56. Which of the following statements is true about the European Council? a. It provides day-to-day leadership and initiates legislation. b. It reviews, interprets, and applies the treaties and laws of the European Union. c. It makes laws on domestic matters for the member countries. d. It debates and amends legislation proposed by the European Commission. e. It collectively functions as the European Union's "Head of State."

e

57. What is CEFTA? a. It is the only regional trading group that uses the term "member economies" rather than "countries." b. It is a trading group that focuses on the development of the coal and steel industries in Europe for peaceful purposes. c. It is a trade agreement between the European countries in Northern and Western Europe. d. It is a trading group that focuses on economic, social, cultural, and technical cooperation as well as promoting regional peace and stability in Northern Europe. e. It is a trade agreement between non-EU countries in Central and Southeastern Europe.

e

15. Organizations that promote coherent images and brands globally, realize economies of scope and scale.

true

16. A global strategy emphasizes economies of scale and offers greater opportunities to utilize innovations developed at the corporate level or in one country in other markets.

true

19. There are more EU member countries than there are countries using the euro.

true

19. Vehicles are the means for participating in targeted arenas.

true

2. The national deficit is the amount of borrowing that a country does from either the private sector or other countries.

true

20. Entrepreneurs and small businesses are most likely to avoid the use of exporting as a way to get their products into markets around the globe because the cost of exporting is higher than that of the other entry modes.

true

20. Global businesses have teams of in-house professionals monitoring the WTO as well as the regional trade alliances.

true

21. One disadvantage of partnering is the possibility that the partner's goals differ from the firm's goals.

true

21. Taiwan has been prevented from membership and has only been granted observer status by the United Nations.

true

22. Acquisitions are appealing because they give the company quick, established access to a new market.

true

22. The controlling function requires monitoring performance so that it meets the performance standards established by the organization.

true

23. Job design involves organizing jobs so that each position makes productive use of an individual's talents.

true

23. The primary impact for businesses in a conflict is in the areas of staffing, operations, regulations, and currency convertibility and financial management.

true

5. A country may resort to reducing the tax rates on its citizens in order to stimulate its economy.

true

6. Business-level strategies are intended to create differences between a firm's position and those of its rivals.

true