MGMT Exam 1 Review (Ch. 5)

In contrast to MNCs, medium-size organizations doing business abroad are much more selective about the markets they enter. (A) True (B) False

True

Magna International Inc., a Canadian company, offered to buy Opel, a German company, from GM. This is an example of direct investment. (A) True (B) False

True

Maquiladoras face competition in China. (A) True (B) False

True

Market systems are clusters of countries that engage in high levels of trade with one another. (A) True (B) False

True

No organization is insulated from the effects of foreign markets and competition. (A) True (B) False

True

Stability can be viewed in two ways⎯as the ability of a given government to stay in power in the country and as the permanence of government policies toward business. A country that is stable in both respects is preferable because managers have a higher probability of successfully predicting how government will affect their businesses. (A) True (B) False

True

There is currently a strong movement around the world to reduce many trade barriers. (A) True (B) False

True

To effectively plan and make decisions in a global economy, managers need to understand local market conditions and technological factors that will affect their operations. (A) True (B) False

True

People from which of the following countries are in the category of uncertainty acceptance? (A) United States (B) Israel (C) Austria (D) Japan (E) Germany

United States

____ is the cultural belief that the person comes first. (A) Individualism (B) Power respect (C) Aggressive goal behavior (D) Power tolerant (E) Collectivism

individualism

People in Pakistan and West Africa are more likely to want immediate gratification. This is an example of Hofstede's ____ orientation. (A) power (B) global (C) social (D) time (E) uncertainty

time

____ is the least risky type of international business in which firms usually become involved. (A) Importing/exporting (B) Licensing (C) Joint venture (D) Global sourcing (E) Direct investment

importing/exporting

Which of the following is the least intense level of international business strategy? (A) Importing/exporting strategy (B) Joint venture (C) Licensing strategy (D) Direct investment (E) Global sourcing

importing/exporting strategy

Japanese firms give managers of their foreign operations relatively great responsibility. As a result, top executives frequently travel to the foreign operations. (A) True (B) False

False

MNC stands for multiple nations and continents. (A) True (B) False

False

We can identify four distinct levels of international activity that differentiate organizations. (A) True (B) False

False

Which of the following countries is NOT part of Pacific Asia? (A) China (B) The Philippines (C) India (D) South Korea (E) Australia

India

Which of the following is NOT one of the environmental challenges that complicates international management? (A) Technological (B) Political (C) Economic (D) Cultural (E) Legal

Technological

A country's culture includes all the values, symbols, beliefs, and language that guide behavior. (A) True (B) False

True

Every country and indeed many regions within any given country are unique. (A) True (B) False

True

Opponents to the maquiladoras concept are most critical of its (A) high production cost. (B) exploitation of human resources. (C) legality. (D) waste of raw materials. (E) high transportation costs.

exploitation of human resources

United States farmers are the biggest producers of corn. China's demand for corn has increased. The U.S. is a corn ____. (A) importer (B) direct investor (C) global sourcer (D) exporter (E) joint venturer

exporter

Satellites, shipping ports, railroads, and airports are part of a nation's (A) natural resources. (B) political system. (C) cultural environment. (D) infrastructure. (E) technological environment.

infrastructure

Which of the following is NOT a factor of the political-legal environment for international managers? (A) No incentives for international trade (B) The use of import quotas and tariffs (C) Infrastructure (D) Membership in an economic community (E) Government instability

infrastructure

A(n) ____ business is one that is primarily based in a single country but that acquires some meaningful share of its resources and/or revenues from other countries. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

international

eBay is based in San Jose. Buyers and sellers on the site are located around the world. eBay is a(n) ____ business. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

international

Which of the following is a disadvantage of joint ventures/strategic alliances? (A) More rapid market entry (B) Access to technology (C) Access to raw materials (D) Reduced risk (E) Shared control over operations

shared control over operations

Fewer and fewer small organizations are also finding that they can benefit from the global economy. (A) True (B) False

False

In 2002, ______ of the EU members eliminated their home currencies. (A) all (B) 28 (C) 3 (D) 11 (E) 6

11

With whom is the United States involved in a mature market system? (A) The European Union (B) The Latin American Integration Association (C) The Caribbean Common Market (D) Canada and Mexico (E) Pacific Asia

Canada and Mexico

Which of the following countries does NOT have a mature market economy? (A) Germany (B) Korea (C) Sweden (D) Iran (E) Spain

Iran

Which of the following describes one of the reasons for the establishment of the European Union? (A) It eliminates trade barriers between member countries. (B) It decreases tariffs on products from nonmember countries. (C) It enhances movement of capital and labor between nonmember nations. (D) It increases the usage of member labor pools by nonmembers. (E) It gradually eliminates imports from nonmember nations.

It eliminates trade barriers between member countries.

Which of the following statements about maquiladoras is FALSE? (A) Maquiladoras are light-assembly plants built in northern Mexico. (B) There are more than 1000 maquiladoras employing workers. (C) Maquiladoras are a form of licensing. (D) Maquiladoras are owned by major corporations from the United States, Japan, and South Korea. (E) Maquiladoras are a form of direct investment.

Maquiladoras area form of licensing

____ economies are recognizable by their tendency to allow market forces to determine business strategies and to have private ownership of property. (A) Communist (B) Market (C) Industrializing (D) Pure competition (E) Socialist

Market

Which of the following countries is NOT a member of the European Union (EU)? (A) Russia (B) Romania (C) Hungary (D) Poland (E) Sweden

Russia

Which of the following is NOT an example of an economic challenge faced by international managers? (A) Government ownership of all property (B) Unstable government (C) Absence of power plants (D) Lack of educational facilities (E) Few natural resources

Unstable government

Starbucks owns one third of its stores outside the U.S. Those stores are (A) a direct investment. (B) a joint venture. (C) licensing. (D) a strategic alliance. (E) franchising.

a direct investment

____ is the form of international business involvement in which two or more firms have an equity position in an operation. (A) A joint venture (B) Direct investment (C) A maquiladoras arrangement (D) A strategic alliance (E) International brokering

a joint venture

China requires foreign companies to form ____ with Chinese companies so that the Chinese get access to the latest technology. (A) an importing/exporting coalition (B) a licensing agreement (C) an outsourcing strategy (D) a direct investment pact (E) a joint venture/strategic alliance

a joint venture/strategic alliance

Which of the following is an example of an economic challenge faced by international managers? (A) Government ownership of all property (B) Absence of natural resources (C) Lack of communication capabilities (D) Poor transportation system (E) All of these choices

all of these choices

Which of the following statements about tariffs is TRUE? (A) Tariffs can be collected by the exporting country. (B) Tariffs can be collected by the importing country. (C) Tariffs are taxes collected on goods shipped across national borders. (D) Import tariffs are the most common kind of tariff used. (E) All of these choices

all of these choices

A developing country in South America offers your firm a construction subsidy if you build your new plant there. This is an example of (A) an economic challenge for international managers. (B) a control on international trade. (C) a mature infrastructure. (D) a bribe. (E) an incentive for international trade.

an incentive for international trade.

Companies from all over the world are embracing the maquiladoras concept mainly because of (A) lower transportation costs. (B) its efficient use of raw materials. (C) its ability to avoid regulatory problems. (D) improved technology. (E) cheap labor.

cheap labor

Labor unions in the United States would like to see Congress pass domestic content laws that would require, for example, that all automobiles sold in the United States contain at least a specified percentage of parts that were manufactured in the United States. Such laws would fall under the heading of (A) import tariffs. (B) buy national legislation. (C) quotas. (D) export tariffs. (E) economic disincentives.

buy national legislation

The United States Department of Defense requires some weapon systems to be made by U.S. companies for national defense reasons. This is an example of (A) a quota. (B) an export restraint agreement. (C) nationalization. (D) buy national legislation. (E) None of these choices

buy national legislation

____ gives preference to domestic producers through content or price restrictions. (A) A maquiladora (B) Nationalization (C) Privatization (D) Buy national legislation (E) A boycott

buy national legislation

Which of the following is a problem associated with the implementation of a direct investment strategy? (A) Complexity of decision making (B) Sharing of profits (C) Loss of managerial control (D) Inability to purchase the brand identification of a product (E) Having to develop an organizational infrastructure

complexity of decision making

In Japan, apples are very expensive and traditionally are presented as gifts. Each apples is grown with wrapping to prevent insects and to ensure perfect color. When Washington Apples wanted to export to Japan, it faced ____ barriers. (A) economic (B) political-legal (C) cultural (D) infrastructure (E) technological

cultural

When Starbucks operates in other countries, it customizes snacks to local tastes. This is a(n) ____ challenge for international managers. (A) technological (B) cultural (C) political (D) economic (E) legal

cultural

Compassion International is a children's charity that provides basic necessities, schooling, and job training for poverty-stricken children around the world. This not-for-profit organization would require which type of investment when it enters a new country? (A) Direct investment (B) Joint venture (C) Licensing (D) Importing/exporting (E) Franchising

direct investment

____ strategy is considered the highest level of involvement in international business. (A) Importing/exporting (B) Licensing (C) Joint venture/strategic alliance (D) Franchising (E) Direct investment

direct investment

Renata is a tax attorney in Germany. Her service is a(n) ____ business. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

domestic

The advantage of direct investing is (A) access to materials and technology. (B) quick market entry. (C) enhanced control. (D) little risk. (E) small cash outlay.

enhanced control

A(n) ____ business transcends national boundaries and is not committed to a single home country. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

global

Coca-Cola is based out of Atlanta but reaches into hundreds of countries. The product is locally packaged, but the cola inside is essentially the same throughout the world. Coca-Cola is edging closer to being a(n) ____ business. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

global

A disadvantage of importing/exporting is (A) inflexibility. (B) competition. (C) shared ownership. (D) complexity. (E) government restriction.

government restriction

During a recession, governments tend to increase ____ to help protect domestic producers by directly adding to the cost of foreign goods. (A) import quotas (B) export restraints (C) buy domestic laws (D) export tariffs (E) import tariffs

import tariffs

Which of the following is NOT a part of a nation's infrastructure? (A) Its natural resources (B) Its highway system (C) Its airports (D) Its commercial distribution system (E) Its power plants

its natural resources

A(n) ____ strategy involves a partnership with a long-term commitment that can be used to acquire new technology and information. (A) direct investment (B) joint venture (C) licensing (D) importing/exporting (E) pure domestic

joint venture

Boeing sells planes to commercial airlines around the world. It has suppliers around the world too. The defense side of Boeing sells primarily to the federal government. It is a(n) ____ business. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

multinational

An example of the economic system in China is (A) all postings on Qiangguo, the largest Internet bulletin board in China, are censored. (B) bowling is the latest fad in China, with a new bowling alley opening weekly. (C) calligraphy is viewed as a higher art form than painting and drama. (D) one of China's greatest natural resources is its labor pool. (E) the Chinese government has a one-child population control.

one of China's greatest natural resources is its labor pool.

A U.S. recording company that wanted to take advantage of the fact that European teens love everything American would find it difficult to get its music played on French radio stations. French stations are required to play at least 40 percent French-made music. This requirement indicates one way that the ____ environment challenges international management. (A) technological (B) cultural (C) political-legal (D) economic (E) natural

political-legal

One of the primary challenges facing those who would like to enter a high-potential/high-growth economy is (A) more infrastructure than can be used. (B) a large upper class. (C) a communist government. (D) potential consumers are poor. (E) None of these choices

potential consumers are poor

The first mall in Mumbai, India was successful. Builders proceeded to construct three more right away. However, they have more than 50% vacancies because they lack customers. The builders failed to properly account for which challenge of operating in developing countries? (A) Underdeveloped infrastructure (B) Stagnant political policies (C) Firms have to invest heavily in distribution systems (D) Firms have to train consumers how to use their products (E) Potential consumers' lack of wealth

potential consumers' lack of wealth

A(n) ____ is the most common form of trade restriction. (A) import tariff (B) export tariff (C) quota (D) embargo (E) maquiladoras

quota

The U.S. government limits how many automobiles can be imported into the United States annually. This is a(n) (A) export restraint agreement. (B) import tariff. (C) embargo. (D) quota. (E) boycott.

quota

In the U.S. Starbucks does not franchise. It has a(n) ____ agreement with Barnes and Noble. (A) importing (B) exporting (C) strategic (D) global sourcing (E) direct investment

strategic

McDonalds operates restaurants in airports around the world. The agreement between McDonalds and the airports is a(n) (A) global sourcing agreement. (B) strategic alliance. (C) global business. (D) exporting agreement. (E) direct investment.

strategic alliance

Rest stops in New Jersey have Burger King restaurants. The NJ Transit Authority and Burger King use a(n) ____ strategy. (A) importing/exporting. (B) licensing. (C) outsourcing. (D) direct investment. (E) strategic alliance.

strategic alliance

Germany is a mature market economy. One major problem GE expected to face when it began operating in Germany was (A) cultural barriers. (B) fluctuations in political relations. (C) taking market share from established firms. (D) government regulation of trade. (E) an underdeveloped infrastructure.

taking market share from established firms

According to the text, which of the following is a factor of the political-legal environment for international managers? (A) Infrastructure (B) The use of import quotas and tariffs (C) Natural resources (D) Language spoken (E) Religious beliefs

the use of import quotas and tariffs

Which of the following is NOT a characteristic of a mature market economy? (A) They employ market forces in the allocation of resources (B) Their GDP comes largely from oil revenue (C) They have mostly private ownership of property (D) U.S. managers have relatively few problems operating there (E) Markets in these economies are typically quite mature

their GDP comes largely form oil revenue

A strategic alliance and a joint venture are the same thing. (A) True (B) False

False

Dumping is selling items for more than fair market value. (A) True (B) False

False

France has a relatively low level of government ownership among the market economies. (A) True (B) False

False

Geert Hofstede identified five fundamental differences that can be used to characterize people in different cultures. They are time, power, age, race, and gender. (A) True (B) False

False

High-potential/high-growth economies have been relatively underdeveloped and immature and, until recently, were characterized by weak industry, weak currency, and relatively wealthy consumers. (A) True (B) False

False

Importing involves merchandise but not services. (A) True (B) False

False

International licensing agreements involve regulations for truckers transporting products between countries. (A) True (B) False

False

Licensing is the easiest way of entering a new market. (A) True (B) False

False

Most MNCs use direct investment exclusively because they are so big they can afford to buy companies. (A) True (B) False

False

Packaging for rice should be green because all countries think green is healthy. (A) True (B) False

False

People who exhibit short-term outlook behaviors tend to place a high premium on material possessions, money, and assertiveness. (A) True (B) False

False

Political stability in the Middle East makes it a less risky place to conduct business. (A) True (B) False

False

The education system is not part of the infrastructure of a country. (A) True (B) False

False

When a local manager is given autonomy and responsibility in dealing with job design, he or she has freedom in global (A) planning and decision making. (B) organizing. (C) leading. (D) controlling. (E) None of these choices

organizing

In which country do people tend to exhibit relatively aggressive goal behavior? (A) Japan (B) United States (C) Germany (D) Norway (E) Mexico

Japan

Top executives at BBT Corporation set the strategic direction for the firm at corporate headquarters. BBT's local managers are then informed of these strategies and given complete freedom to implement them. Which of the following management functions best describes the freedom provided local managers? (A) Planning (B) Organizing (C) Decision making (D) Leading (E) Controlling

Organizing

Which of the following statements about medium-sized international business organizations is TRUE? (A) Many are still primarily domestic organizations. (B) They are much more selective about the markets they enter than are MNCs. (C) They depend more on international specialists to help them manage their foreign operations than do MNCs. (D) They tend to compete with foreign businesses in their own domestic market. (E) All of these choices

all of these choices

As a manufacturing firm builds a plant in Bolivia, it also has to build an airstrip so that it can get the building supplies and the component parts it needs for operation to the Bolivian facility. The building of the airstrip was necessary because Bolivia has (A) limited natural resources. (B) an underdeveloped infrastructure. (C) too many competing airports. (D) no international trade incentives. (E) None of these choices

an underdeveloped infrastructure

Which of the following is an example of the cultural system in China? (A) All postings on Qiangguo, the largest Internet bulletin board in China, are censored. (B) Bowling is the latest fad in China, with a new bowling alley opening weekly. (C) China has budgeted 240 million Yuan ($29 million) to clean up the public toilets. (D) One of China's greatest natural resources is its labor pool. (E) The Chinese government has a one-child population control. Answer : (B)

bowling is the latest fad in China, with a new bowling alley opening weekly.

A tariff (A) cannot be collected by the exporting country. (B) can be collected only by the importing country. (C) can be collected by countries through which goods pass. (D) cannot be used to raise money for a government. (E) cannot be used to increase the cost of foreign goods.

can be collected by countries through which goods pass

A manager concerned with time zone differences is worried about (A) planning. (B) organizing. (C) decision making. (D) leading. (E) controlling.

controlling

Under which management function do differences between domestic and international production quality standards fall? (A) Planning (B) Organizing (C) Decision making (D) Leading (E) Controlling

controlling

A French ministry has banned the word e-mail from official communication. Instead, the French words for quick and mail have been combined to form a new word. This is an official attempt to protect the French (A) political-legal system. (B) economic system. (C) cultural environment. (D) economic community. (E) natural resources.

cultural environment

TransFair USA promotes fair trade programs so farmers in developing countries can earn high enough wages to afford adequate nutrition and basic health care. TransFair is trying to change the ____ environment of international management. (A) technological (B) cultural (C) political (D) economic (E) legal

economic

A nation's cost of living is part of its (A) economic environment. (B) cultural heritage. (C) task environment. (D) technological environment. (E) political-legal environment.

economic environment

Trees are a part of a country's (A) economic environment. (B) sociocultural environment. (C) infrastructure. (D) technological environment. (E) political-legal environment.

economic environment

The oil-exporting countries present mixed models of all of the following EXCEPT (A) resource allocation. (B) property ownership. (C) infrastructure development. (D) political stability. (E) energy revenue.

energy revenue

Geert Hofstede identified all of the following fundamental differences that can be used to characterize people in different cultures EXCEPT (A) power orientation. (B) global orientation. (C) social orientation. (D) time orientation. (E) uncertainty orientation.

global orientation

Two U.S. companies Cargill and Archer Daniels Midland purchase 25% of the world cocoa supply from farmers in West Africa. These companies use (A) importing. (B) direct investment. (C) global sourcing. (D) exporting. (E) joint venture.

importing

A(n) ____ strategy requires little initial investment, is heavily regulated, and provides little opportunity to modify products for local conditions. (A) importing/exporting (B) licensing (C) joint venture (D) global sourcing (E) direct investment

importing/exporting

American Eagle is a regional airline that flies in the United States and Canada. It is an example of a(n) ____ business. (A) international (B) domestic (C) multinational (D) intercontinental (E) global

international

The cultural challenges of international management include (A) natural resources. (B) the infrastructure. (C) government stability. (D) language. (E) All of these choices

language

The National Football League and team owners allow shirts, hats, blankets, and many other products to be sold with team logos on them. The teams and league get a percentage of the sale. The teams have chosen to use a(n) ____ strategy to generate more income. (A) joint venture (B) licensing (C) direct investment (D) exporting (E) global involvement

licensing

Which of the following is NOT a reason for using a licensing agreement as a means of entering international business? (A) Low levels of risk (B) High domestic production costs (C) Government regulation (D) Increased/extended profitability of technology (E) Excessive transportation costs

low levels of risk

Which of the following statements can be used to explain the growth of international business? (A) Many countries in Europe and Asia were devastated after World War II and had to be rebuilt. (B) The postwar population boom decreased demand for products. (C) Changes in cultural traditions made the rest of the world open to all of the products made in the United States. (D) Infrastructures in Europe and Asia remained sound in spite of World War II. (E) All of these choices

many countries in Europe and Asia were devastated after world war II and had to be rebuilt.

The U.S. government became the majority shareholder in GM. The U.S. was moving away from a ____ economy. (A) command (B) developing (C) mixed (D) communist (E) market

market

U.S. managers have the least difficulty operating in ____ economies. (A) market (B) communist (C) industrializing (D) developing (E) pure competition

market

The United States, Canada, and Mexico are major trading partners with one another. They are an example of a(n) (A) mature market. (B) market system. (C) market economy. (D) high potential/high growth economy. (E) other economy.

market system

People in the United States, Israel, and Ireland are likely to question their supervisors. This is referred to as a(n)____ orientation. (A) individualistic (B) power respect (C) aggressive goal behavior (D) power tolerant (E) collective

power tolerant

Which of the following is an example of how cultural differences directly impact international business practices? (A) Government stability (B) Schools (C) Buy national legislation (D) Hospitals (E) Religious practice that separates men and women

religious practice that separates men and women

People in the U.S., Canada, and the Netherlands tend to believe that the person comes first. This refers to Hofstede's ____ orientation. (A) power (B) global (C) social (D) time (E) uncertainty

social

Which of the following statements does NOT describe a characteristic of importing/exporting? (A) Importing/exporting is an easy way to enter a market. (B) There is very little risk involved with importing and exporting. (C) The cost of importing/exporting may be high due to transportation costs. (D) Due to government restrictions, not all products can be imported or exported. (E) The costs of initiating an import/export strategy are high.

the costs of initiating an import/export strategy are high

Which of the following describes what has occurred in international business from 1960-2000? (A) Although still increasing, international trade has grown at a slower rate since 1980. (B) The volume of international trade increased more than 3000 percent. (C) U.S. investment overseas has been on the decline for the past two decades. (D) The majority of the world's largest firms are firms with headquarters inside the United States. (E) All U.S. firms still earn the majority of their sales and profits in the United States.

the volume of international trade increased more than 3000 percent

Which of the following is NOT a potential disadvantage associated with an import/export operation? (A) Products are unrestricted; anything can be imported or exported. (B) Importing and exporting requires a large cash outlay from organizations. (C) There is a great deal of risk involved compared to other strategic alternatives. (D) Imports/exports are subject to taxes, tariffs, and higher transportation expenses. (E) All of these choices

there is a great deal of risk involved compared to other strategic alternatives