MGMT 371 Ch. 6

Which of the following is a major disadvantage of the multinational model? a. lack of response to local political conditions b. duplication of efforts c. inability to customize products d. centralized decision making e. rigid procedures

b. duplication of efforts

The most significant disadvantage concerning franchising is brand name recognition.

False

When pressures for local responsiveness are high and pressures for global integration are low, the global model is appropriate.

False

Companies both large and small now view the world, rather than a single country, as their marketplace.

True

Ethnocentrism is the tendency to judge others by the standard of one's own culture or group, which are seen as superior

True

Family issues are the main reason for expatriates to return home early.

True

One advantage of exporting is that it provides scale economies.

True

One of the consequences of an increasingly integrated global economy is that imports are penetrating deeper into the world's largest economies.

True

Using host-country nationals at an overseas subsidiary is generally less expensive than using expatriates.

True

Which of the following is the preferred strategy when a company's competitive advantage is based on technology and the company wishes to enter the global marketplace? a. exporting b. licensing c. franchising d. creating a joint venture e. creating a wholly owned subsidiary

e. creating a wholly owned subsidiary

Which of the following is true of the global model? a. it is highly responsive to consumer taste b. decision making is done at a local level c. customer satisfaction d. large amount of discretion is given to the subsidiaries e. the products are standardized

e. the products are standardized

Which of the following is a disadvantage of franchising? a. there is a large amount of risk for the franchisor b. the franchisor has to put in a large amount of capital c. the cost of development is high d. there is a high amount of political risk e. there are chances to lose quality control

e. there are chances to lose quality control

Which model involves fostering communication among subsidiaries to permit transfer of skills? a. international b. multinational c. intranational d. global e. transnational

e. transnational

The organizational model that enables managers to "think globally but act locally" is the a. intranational model b. international model c. multinational model d. global model e. transnational model

e. transnational model

Which of the following methods of entering global competition best allows a company to have operations in other countries and maintain tight control over them? a. exporting b. licensing c. join venture d. franchising e. wholly owned subsidiary

e. wholly owned subsidiary

A disadvantage of the global model is that it a. is less responsive to consumer tastes and demands b. has high manufacturing costs c. requires spending more money on product customization d. limits its subsidiaries to market and service functions e. provides too much freedom to its subsidiaries

a. is less responsive to consumer tastes and demands

Which of the following existing agreements includes Costa Rica, Nicaragua, and the United States? a. NAFTA b. CAFTA-DR c. FTAA d. APEC e. ASEAN

b. CAFTA-DR

Which of the following is the largest export market of the United States? a. Brazil b. Canada c. China d. Germany e. Mexico

b. Canada

___ is an arrangement by which an organization in another country buys the rights to manufacture a company's product in its own country for a negotiated fee a. franchising b. international licensing c. entering a joint venture d. exporting e. patenting

b. international licensing

In companies that adopt the ___ model of organizational structure, functioins are centralized where it makes sense to do so, but a great deal of decision making also takes place at the local level. a. international b. multinational c. global d. transnational e. intranational

d. transnational

In order to achieve cost economies, Peak Manufacturing bases its production plants in Mexico and gets its engineering services from skilled workers in Japan. In this case, Peak is using the ___ model of organizational structure a. international b. multinational c. global d. transnational e. intranational

d. transnational

Colas have become available around the globe, and they are used in similar ways worldwide. The situation in which consumer tastes and preferences regarding a product are similar in many different countries is an example of a. local demand b. customized products c. traditional practices d. universal needs e. political demands

d. universal needs

Research suggests that regardless of nationality or religion, most people embrace a set of five core values. Which of the following is one of the five core values? a. ambition b. competitiveness c. greed d. submission e. compassion

e. compassion

Which of the following is a reason that companies adopt a common global strategy? a. significant differences in consumer tastes among countries b. differences in traditional practices among countries c. varying sales practices among countries d. political demands by host countries e. competitive pressures to reduce costs

e. competitive pressures to reduce costs

Companies that adopt the global model tend to base their global competitive strategy on a. local tastes b. decentralized structures c. local politics d. traditional practices e. cost considerations

e. cost considerations

The practice followed bu some companies of moving jobs to another country is called A. offshoring B. outsourcing C. insourcing D. offsourcing

A. offshoring

NAFTA had an immediate and negative effect on the US automobile industry

False

Which country has received the most foreign direct investment in recent years? A. Brazil B. China C. The United States D. Vietnam

C. The United States

For the past several years, FuturaCloud hired a firm in India to handle its technical customer support. Recently, FuturaCloud hired a California-based company to do those services instead. This change is an example of A. offshoring B. outsourcing C. inshoring D. insourcing E. offsourcing

C. inshoring

Gerard's company used to have one of its clothing lines manufactured by an outside supplier. That line is now manufactured at a new factory build by Gerard's company. This change is an example of A. offshoring B. outsourcing C. inshoring D. insourcing E. offsourcing

D. insourcing

Ethical behavior and decision making are surprisingly harder in a purely domestic situation than in the international arena

False

What caused Mexico to emerge as the third-largest trading partner of the United States? a. NAFTA b. The World Train Organization c. APEC d. The International Monetary Fund e. ASEAN

a. NAFTA

Which of the following countries is a member of the Asia-Pacific Economic Cooperation Group? a. Russia b. Germany c. Brazil d. Nigeria e. Italy

a. Russia

Strong pressures for local responsiveness emerge when a. consumer tastes and preferences differ significantly b. competitive pressures to reduce costs are high c. traditional practices among countries are similar d. competitors engage in global strategic coordination e. sales practices are uniform from country to country

a. consumer tastes and preferences differ significantly

Which of the following entry modes do most manufacturing companies use to begin global expansion? a. exporting b. wholly owned subsidiaries c. franchising d. licensing e. joint ventures

a. exporting

An organization's economic environment includes a. growth of developing nations b. anticorruption laws c. free-trade agreements d. bribery concerns e. climate change

a. growth of developing nations

NewGen Communications Technology has subsidiaries in each country which it does business. As the parent company, NewGen runs its R&D department from its home country, so that each foreign subsidiary remains dependent on it for new products, processes, and ideas. This illustrates the ________ model for global strategy a. international b. multinational c. global d. transnational e. intranational

a. international

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the ____ model. a. international b. multinational c. global d. transnational e. contingency

a. international

Which of the following is an advantage of the international model? a. it facilitates the transfer of skills from the parent company to the subsidiaries b. it provides maximum latitude to research and development functions c. it provides the opportunity to achieve a low-cost position via scale economies d. it requires a minimum amount of effort and coordination by the parent company e. it transfers ultimate control to the subsidiaries

a. it facilitates the transfer of skills from the parent company to the subsidiaries

What is an advantage of exporting as a global expansion entry mode? a. it is consistent with a pure global strategy b. low cost sites are available c. transportation costs are generally lower d. it is considered responsive to local needs e. trade barriers may be removed

a. it is consistent with a pure global strategy

An advantage of licensing as a method of entering global competition is that the a. licensee bears most of the costs and risks associated b. licensing company has control over its technology c. licensing company has control over quality levels d. licensing company has lower communication costs e. licensee has lower production costs

a. licensee bears most of the costs and risks associated

A disadvantage of licensing is that the licensing company a. may lose control over its technology b. takes on greater political risk c. takes on greater development costs d. realizes higher profit margins e. bears most of the risks associated

a. may lose control over its technology

Threats to China's economic future include a. political instability b. aging population c. small labor force d. decreasing consumer demand e. high labor costs

a. political instability

NAFTA combined the economies of ______ into one of the world's largest trading blocs a. the United States, Canada, and Mexico b. Canada, Mexico, and South America c. South America, the United States, and Central America d. the United States, the European Union, and Canada

a. the United States, Canada, and Mexico

Which of the following factors would increase the pressure for local responsiveness? a. the existence of widely torn traditional clothing styles b. a food product that has international popularity c. a technical component used in electronic devices worldwide d. pressure on a company to reduce costs significantly e. the existence of competitors engaged in global strategic coordination

a. the existence of widely worn traditional clothing styles

___ are natives of a country other than the home country of the host country of an overseas subsidiary a. third-country nationals b. host-country nationals c. immigrants d. expatriates e. inpatriates

a. third-country nationals

____ create strong pressure for a global strategy a. universal needs b. traditional practices c. political demands imposed by host countries d. varied consumer preferences e. legal demands imposed by host countries

a. universal needs

Which of the following is an effective way to prevent failed global assignments? a. using validated screening criteria b. keeping the assignment structure open c. avoiding the assignment of mentors d. delaying the creation of job objectives e. reducing the dependency by communicating rarely

a. using validated screening criteria

In the integration-responsiveness grid the a. vertical axis measures pressures for global integration and the horizontal axis measures pressures for local responsiveness b. horizontal axis measures pressures for local interaction and the vertical axis measures pressures for global responsiveness c. horizontal axis measures financial viability and the vertical axis measures employee satisfaction d. vertical axis measures employee satisfaction and the horizontal axis measures management credibility e. vertical axis measures pressures for global systems capacity and the horizontal axis measures pressures for local financial success

a. vertical axis measures pressures for global integration and the horizontal axis measures pressures for local responsiveness

Under the ___, member countries of the European Union agreed to adopt a common European currency called the euro. a. NAFTA b. Maastricht Treaty c. GATT agreement d. APEC Treaty e. European Unification Act

b. Maastricht treaty

Which of the following is a major exporter of petroleum, or oil? a. Australia b. The Middle East c. Japan d. The South Pacific e. India

b. The Middle East

US business people working abroad may face ethical challenges, in particular because of cultural differences regarding a. murder b. bribery c. marriage d. bureaucracy e. etiquette

b. bribery

Which of the following is a reason why some companies prefer to use expatriates at their overseas operations? a. it can cost three to four times as much to use host-country nationals, compared to expatriates b. expatriates often tend to transfer the corporate culture and best practices to other countries c. the personal security of host-country nationals may be an issue in some developing countries d. governments may provide incentives to employ expatriates e. expatriates tend to be more available than the local employees

b. expatriates often tend to transfer the corporate culture and best practices to other countries

Which of the following characteristics is most likely associated with an international executive? a. ethnocentric b. flexible c. overconfident d. prefers familiarity e. avoids criticism

b. flexible

Jamila is a native of the country where Regal Industries is building its new plant. If Jamila goes to work at Regal's factory, she will be considered a(n): a. third-country national b. host-country national c. immigrant d. expatriate e. inpatriate

b. host-country national

To be competitive in a global economy, Europeans must a. reduce their population density b. increase their level of productivity c. work for fewer hours d. increase the average workers' wages e. tighten immigration rules

b. increase their level of productivity

While Cork Commercial Containers was planning how it was going to open a plant in the Phillipines, it brought in Rodrigo, a native of the country, to teach the development team about the country's culture and economy. Rodrigo is an example of a(n) a. expatriate b. inpatriate c. third-country national d. host-country national e. global transnational

b. inpatriate

Which of the following is a consequence of an increasingly integrated global economy? a. world output and trade have decreased to dramatically low levels b. many companies find their home markets under attack from foreign competition c. companies are making foreign direct investments in home companies d. imports are failing to penetrate deeper into the world's largest economies e. there are reduced opportunities for global trade

b. many companies find their home markets under attack from foreign competition

The strategy model that uses subsidiaries in each country and provides each a great deal of discretion to respond to local conditions is the _____ model a. international b. multinational c. global d. transnational e. domestic

b. multinational

____ occurs when the organization contracts with an external provider to produce one or more of an organization's products or services. a. inpatriation b. outsourcing c. offshoring d. expatriation e. franchising

b. outsourcing

The international model of organization structure involves a. large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries b. subsidiaries located in countries where the company does business with much of the control exercised by the parent company c. subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries d. manufacturing various components at appropriate sites and assembling the components at national subsidiaries e. farming out core function, such as research and development, to subsidiaries around the world

b. subsidiaries located in countries where the company does business with much of the control exercised by the parent company

What did the Maastricht Treaty establish? a. the NAFTA trade zone b. the European Union c. the CAFTA-DR trade zone d. the Association of Southeast Asian Nations e. the Asia Pacific Economic Cooperation group

b. the European Union

A disadvantage of exporting is that a. it does not provide scale economies b. the company may face tariff barriers c. it is the most expensive method of expanding globally d. the company risks losing control of its intellectual property e. it is inconsistent with a pure global strategy

b. the company may face tariff barriers

Which of the following is true of the multinational approach to international competition? a. the subsidiaries are completely under the control of the parent comapny b. the parent company allows the subsidiaries to respond to local conditions c. the companies have centralized manufacturing facilities d. the subsidiaries depend completely on the parent company for new products e. the system lowers manufacturing costs by eliminating duplication of effort

b. the parent company allows the subsidiaries to respond to local conditions

Which of the following models of organization structure depends heavily on communication and coordination between subsidiaries? a. the global model b. the transnational model c. the international model d. the worldwide model e. the multinational model

b. the transnational model

An organizational model that consists of a company's overseas subsidiaries and is characterized decision making and tight control by the parent company over more aspects of worldwide operations is known as the a. international model b. multinational model c. global model d. transnational model e. intranational model

c. global model

Which of the following has become an important provider of online technological support for the United States? a. Egypt b. Great Britain c. India d. Mexico e. Taiwan

c. India

Dan is sent on short-term work assignment from the United States to Great Britain, where traffic laws require driving on the left side of the road. While in Great Britain, Dan notices that he feels anxious every time he has to drive on a two-way street. What is Dan experiencing? a. offshoring b. failure rate c. culture shock d. ethnocentrism e. panic attack

c. culture shock

The disorientation and stress associated with being in a foreign environment is termed a. international mores b. nostalgia c. culture shock d. expatriation e. cognitive dissonance

c. culture shock

When One-World Fashion tries to open its clothing stores in a new country, it learns that local rules require a certain percentage of its products to be manufactured locally. This example fits into which category of pressures for local responsiveness? a. differences in distribution channels b. differences in traditional practices c. economic and political demands d. differences in consumer tastes e. global market integration

c. economic and political demands

Exporting, licensing, franchising, joint ventures, and wholly owned subsidiaries are all methods of a. identifying lucrative consumers on a global scale b. operating a transnational business c. entering overseas markets d. optimizing global profit e. reducing costs

c. entering overseas markets

The ___ organizational model is designed to enable a company to market a standardized product in the worldwide marketplace and to manufacture that product in a limit number of locations where the mix of costs and skills is most favorable a. international b. multinational c. global d. transnational e. decentralized

c. global

Tres Chic, a cosmetics manufacturer, assumes that all people will view and use its products in the same way. Therefore it produces exactly the same makeup products, using the same color palettes, in several countries with attractive labor rates, and offers them to all of its markets around the world. Tres Chic uses the ___ model of international competition. a. international b. multinational c. global d. transnational e. intranational

c. global

A major disadvantage of operating a wholly owned subsidiary is that a. a loss of control over technology is likely to occur b. a wholly owned subsidiary offers too much flexibility over operations c. high costs and risk are associated with this type of operations d. overseas consumers are often resentful of foreigners e. host countries can impose higher tariffs on the firm

c. high costs and risk are associated with this type of operation

What does an integration-responsiveness grid help a manager to do? a. determine the profit-loss ratio for a new product b. choose a price point by graphing a product's supply and demand c. identify the best strategy for completing in a global marketplace d. do a cost-benefit analysis of outsourcing e. compare the economic advantages of outsourcing versus inshoring

c. identify the best strategy for competing in a global marketplace

Which of the following methods of entering global competition runs the biggest risk of conflict between partners over who controls what? a. exporting b. licensing c. join venture d. franchising e. wholly owned subsidiary

c. join venture

Companies that decentralize their operations throughout the globe in order to appeal to the varying tests and preferences of global consumers are utilizing a(n) _____ model a. domestic b. international c. multinational d. intranational e. global

c. multinational

Foam Cutters is a speedboat manufacturing company based in California. The Company operates a subsidiary in Australia, marketing products that are customized to appeal to Australian tastes. In this case, Foam Cutters is following the ______ a. domestic b. international c. multinational d. contingency e. global

c. multinational

Which model should a company adopt when pressures for local responsiveness are high and pressures for global integration are low? a. global b. international c. multinational d. transnational e. intranational

c. multinational

The two strategic models that have relatively high manufacturing costs are a. global and transnational b. international and transnational c. multinational and international d. global and international e. multinational and transnational

c. multinational and international

Superior Appliances moved some of its manufacturing operations to another country where wages are lower. This is an example of which of the following? a. franchising b. outsourcing c. offshoring d. expatriation e. inpatriation

c. offshoring

Collaborating with other countries in trade a. leads to increased prices b. narrows down the market for managers c. raises the standards of living d. leads to reduced efficiency e. causes countries to produce more varied goods

c. raises the standards of living

Which of the following core values do most people embrace despite differences across cultures, and regardless of nationality or religion? a. individualism b. competiveness c. responsibility d. persistence e. sincerity

c. responsibility

Which of the following is an advantage of a multinational model? a. manufacturing costs are low b. launching coordinated global attacks against competitors is easy c. subsidiaries can customize products according to local preferences d. it reduces the duplication of efforts e. it increases profits because of economies of scale

c. subsidiaries can customize products according to local preferences

Which of the following has been an unexpected effect of offshoring? a. companies who use offshoring find that their travel costs decrease b. energy costs for the company rise, increasing the benefits of offshoring c. wages in the foreign countries rise, reducing the expected cost savings d. it helps reduce wage stagnation of workers in the home country e. it has reversed the trend of increased automation

c. wages in the foreign countries rise, reducing the expected cost savings

When a company sets up its own overseas operations, independent of foreign partners or governments, it has established a(n) a. purely global strategy b. competitive venture c. wholly owned subsidiary d. independent venture c. multinational contract

c. wholly owned subsidiary

Which of the following is one of the three regions that dominate the global economy? a. South America b. Australia c. Middle East d. Asia e. Eastern Europe

d. Asia

Which of the following countries is on its way to becoming the largest producer and consumer of the world's goods? a. Japan b. Canada c. Mexico d. China e. Vietnam

d. China

Which of the following companies is an example of a transnational company? a. Sony b. IBM c. Heineken d. Panasonic e. Unilever

d. Panasonic

Which of the following businesses is the most likely to use the franchising model? a. an automative plant b. a smartphone manufacturer c. a pipe fabricator d. a restaurant chain e. a clothing factory

d. a restaurant chain

A disadvantage of a multinational model is that it a. cannot easily transfer core skills among international operations b. does not give any freedom to its subsidiaries to respond to local conditions c. standardizes its goods and services ignoring customers' preferences d. cannot easily launch a coordinated global attack against competitors e. centralizes functions of research and development to the parent company

d. cannot easily launch a coordinated global attack against competitors

Heinrich is a German engineer working in Africa. he often complains that Africans do not have the efficiency or punctuality of Germans. What characteristic is Heinrich displaying? a. individualism b. centralism c. uncertainty avoidance d. ethnocentrism e. hypocrisy

d. ethnocentrism

Parent company nationals who are sent to work at a foreign subsidiary are known as a. third-country nationals b. host-country nationals c. immigrants d. expatriates e. inpatriates

d. expatriates

Bob's Better Burgers sells small business owners the rights to use the company's brand name in return for a lump-sum payment and a share of the buyer's profits. This practice is referred to as a. offshoring b. international licensing c. exporting d. franchising e. royalty facilitation

d. franchising

One of the drawbacks of exporting is a. loss of scale economies b. decreased scale volume c. loss of control over quality d. high transportation costs e. loss of control over technology

d. high transportation costs

___ are foreign nationals who are brought in to work at the parent company a. expatriates b. third-level nationals c. second-party nationals d. inpatriates e. foreign cohorts

d. inpatriates

The main cause of failure of overseas managers is a. a low salary level b. lack of adequate housing c. inadequate access to health benefits d. personal and social issues e. lack of proper training

d. personal and social issues