Multinational Management
Which scenario demonstrates the concept of guanxi?
A Chinese businessman would not commit to a project with an American company until he established a relationship with the local representative.
The three largest markets for American exports of goods in 2017 were
Canada, Mexico, and China
What is a downside of flexible manufacturing?
Changes in the production line cost money.
________ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840.
China
What is the correlation between population density and bodies of water?
Densely populated regions coincide with rivers, lakes, and seacoasts.
Companies pursuing a multidomestic strategy typically have
high levels of local market customization.
The common characteristic of multinationals that are organized by function is a narrow and
highly integrated product mix.
Kya believes an annual review should be a reflection of an employee's accomplishments from the year while Marcus believes an annual review should be used to motivate an employee to work harder. Their beliefs are based on the culture in which they were raised. Which business function is being affected by culture in this scenario?
human resources
From comparisons of income distribution studies over time, it generally appears that
income is more evenly distributed in the richer nations.
An LCA conducted for a T-shirt convinced Patagonia that
industrially produced cotton used excessive amounts of water compared to organic cotton.
After Nike built a plant in a rural area, it discovered that families were taking their children out of school to work in these plants. Instead of getting an education, these children were put to work which wasn't Nike's intent. Which characteristic of environmentally sustainable businesses does this demonstrate?
interdependence of ecological, social, and economic systems
When interacting with an international affiliate, business professionals should remember that ethnocentrism
is detrimental and noninclusive.
Nations whose mountains divide them into smaller regional areas include
Switzerland, Afghanistan, China, and Colombia.
What is a disadvantage of bottom-up planning?
There is no guarantee that the sum total of all the affiliates' goals will coincide with those of headquarters.
How does Starbucks adapt the design of its stores to local conditions in China?
large tables and movable furniture
Companies pursuing a home replication strategy
limit availability of local customization.
Companies pursuing a global strategy typically have
low operating costs and high efficiency.
Economic analyses become more complex when a firm enters overseas markets because unlike the situation for a company operating domestically,
management must operate in two new environments, foreign and international.
The focus group participants were asked if they liked the website for Welby Appliance Corp. The majority responded that they did. Months later, the manufacturer was surprised when people in certain parts of the world were angry that no instructions came with the appliance they purchased and were told they could find them on the website. However, these particular customers didn't have access to a computer. In this instance, what department of Welby Appliance failed to take into account culture?
marketing
How do barriers to trade affect the citizens of a country?
They cost consumers billions of dollars per year.
What is an accurate description of an IC's structures and systems?
They need to be able to evolve over time.
What is one of the reasons an international company might adopt the horizontal organization format?
They spark innovation and new product development.
Joshua realized the company's marketing materials should avoid the color red in South Africa because it is the color of mourning in that country. What part of culture is Joshua taking into consideration?
aesthetics
In designing the organizational structure, management knows that two concerns, __________ and __________, run counter to each other.
an effective way to departmentalize; coordinating activities
The Chinese concept of guanxi is an example of
an informal, cognitive institution.
Which item is least likely to be a cost of importing for a company?
an international sales force
Regarding a sustainable competitive advantage, the company must have skills or competencies that
are difficult to imitate or substitute for.
With respect to the current state of global problems, Mark Malloch Brown, former deputy secretary-general of the United Nations, suggests that
as the world becomes more closely connected, it becomes less governable at the national level.
The output of a synchronized manufacturing system is set
at the output of the slowest operation that is working at full capacity.
According to the theory of comparative advantage, trade can benefit
both countries involved in a trade
A nation having absolute disadvantages in the production of two goods with respect to another nation has a(n) ___________ in the production of the good in which its absolute disadvantage is less.
comparative advantage
Primary reasons for relative changes in labor costs include increases or decreases in
compensation
A company's ability to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors, is known as
competitive advantage.
Jefferson Materials Corp. has developed a fire-resistant fabric that no one else has been able to replicate. It is used throughout the world in firefighting equipment and supplies. Since it is the only company making the product, customers are willing to pay a premium for the fabric. In this scenario, the fire-resistant fabric has helped the company develop a(n)
competitive advantage.
Which item or service is least likely to be included within indirect procurement?
components
When Corinne was introduced to the manager from the overseas office, she noticed he tended to lean in as he spoke with her. This made her uncomfortable, so she did her best to put some space between them during the meeting. What is causing Corinne to feel uncomfortable?
conversational distance
The two main issues for management to consider in designing an international company's structure include:
coordinating departments' activities to meet the firm's overall objectives.
To create a competitive advantage that is sustainable over time, the international company should try to develop competencies that
create value for customers and for which they are willing to pay.
According to supporters of the globalization of trade and investment, free trade
creates more and better jobs
From a business perspective, bodies of water often coincide with
densely populated areas along seacoasts, lakes, and rivers.
The two components of foreign investment include portfolio investment and
direct investment
After the taxes are taken out of her pay, Sharon takes home $1,254 in her paycheck. This dollar amount represents her
disposable income.
Keenan worked in his company's international office in Indonesia for many years. During his time there, political unrest caused many U.S. citizens, like Keenan, to have questions. What do governments put in place to represent their citizens in situations like this?
embassies
Economies with per capita incomes in the low to middle range that are in a transition toward developed status are known as
emerging market economies.
Outsourcing has become an increasingly common option for companies because it
enhances flexibility and improves speed of response.
Environmental sustainability is both local and global because
environmental conditions do not recognize national borders.
A country that can sell its products at a lower cost because it has lower standards for emissions from manufacturing facilities is making use of
environmental dumping
Gwyn works for a paper manufacturer and recommended to the product development team that sourcing from recycled goods would help preserve the forests for future generations. What is Gwyn referring to?
environmental sustainability
Informal normative institutions
establish standards and propagate humanitarian principles.
As their overseas operations have increased in importance, larger multinationals have felt the need to
establish worldwide organizations based on product, customer class, function, or region at the top level.
A corporation would implement a country risk assessment in order to
estimate the risk to business employees, property, and investment.
The international product life cycle is used to
explain how international trade in manufactured goods will be linked to gross national income.
Low-context cultures such as the United States tend to have these kinds of communication patterns:
explicit
Gabriel Industries is located near a port city which allows it to ship products easily overseas to its international customers. The geographic location of the company is an example of a(n)
external force
When governments nationalize a firm, they don't seek to
extract more money from the firm.
In a low power distance culture,
first names are likely to be used in the office because the ideal is equality.
Real Country Boots was surprised when its marketing campaign featuring a cowboy fell flat in some South American countries but prospered in the United States. They later determined that a cowboy was considered "just another job" in parts of South America so it held little appeal to consumers. In this instance, the company used what aspect of aesthetics incorrectly?
folklore
International business differs from domestic business in that a firm operating across borders must deal with the forces associated with which three kinds of environments?
foreign, domestic, international
Which type of institution operates through laws and regulations, with coercion as the regulative mechanism?
formal
Japan has been one of China's largest sources of imports, along with South Korea and the United States. Because there is still political enmity between China and Japan due to the Japanese occupation of parts of China during World War II, the best explanation for the present Japanese trade relationship with China is
geographical proximity.
According to opponents of the globalization of trade and investment,
globalization has contributed to a decline in environmental and health conditions
As a general rule, the underground economy in a country will be bigger when
government red tape is oppressive.
A measure of an economy's size based on the market value of goods and services produced within a nation in a year is
gross domestic product.
A just-in-time supply chain requires
materials and parts to arrive at each point in the production process when they are needed.
One advantage of companies with global structures is that they
may obtain lower production costs by promoting worldwide product standardization.
Under new institutional theory, institutions can be categorized as formal and informal, and the informal institutions can be further categorized as
normative and cognitive
Tariffs on some products no longer serve their original purpose of protecting domestic producers but they are still levied by the government. What are these types of tariffs called?
nuisance
Countervailing duties are put in place to
offset the effects of a subsidy.
Apple makes use of factories in other countries to supply parts for its phones. This refers to
offshoring
Industry-based B2B exchanges can create value with
optimized supply chains across an entire network of organizations.
After acquiring two new foreign affiliates, Henson Manufacturing created a new organizational chart to indicate where formal authority would lie within the organization. This organizational chart is an indication of
organizational structure.
Prada's employees were overwhelmed with work, so she sent some accounting functions to India and kept the rest in-house. Prada was engaging in
outsourcing
Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have the following kinds of advantages:
ownership-specific, location-specific, and internalization.
Following the merger of Hintz Corp. and Minor Holdings Corp., the new company issued a list of broad guidelines that managers should use when dealing with problems. These were viewed as general guides that were left to the interpretation of managers. These guidelines are an example of
policies
Holly is a multitasker and prefers to work on more than one project at a time at work. Edward Hall would say that Holly favors which approach to time?
polychronic
A manager from a U.S. company is negotiating with a Japanese company for goods. What is most likely to be the American's most important criteria in the purchasing decision?
price
An argument against using sanctions to punish an offending nation is that
sanctions seldom achieve their goal of forcing change in the offending country.
Informal institutions work on the principle of
shared norms and values
According to the theory of comparative advantage, a nation
should produce the goods for which its absolute disadvantage is less
The Food and Drug Administration in the United States works to protect citizens from harmful products and companies must meet the regulations it sets. Which classification of nonquantitative nontariff barrier does this represent?
standards
The theory suggesting that rivalry between firms in an oligopolistic industry will result in firms closely following and imitating each other's international investments in order to keep a competitor from gaining an advantage is known as
strategic behavior theory
Jensen Control Corp. now uses videoconferencing which helps the sales team demonstrate products to prospective international customers while eliminating expensive travel costs. Which of the five drivers of international business does this represent?
technological
Sanjay is the director of operations for Fresh Farm Produce Corp. and is now able to sell his product to the international market thanks to a new computer system that is specifically designed for businesses in the fresh food industry. Which driver helped Sanjay's company internationalize?
technological
In low-context cultures it is common to find
that communication tends to be explicit
NAFTA and other treaties are the main reasons that most of Canada's exports go to
the United States
Referring to Hall's high- and low-context framework, in a high-context culture
the context carries much of the communication
New institutional theory suggests that institutions provide
the rules of the game, reducing uncertainty.
The kinds of forces in the foreign environment are ________ those in the domestic environment except that they occur in foreign nations.
the same as
A government or the police are formal institutions that gain compliance through
the threat of force
Michelle has been tasked with the job of analyzing the economy of three South American countries to determine if they have business potential. In her final report, she makes note of national income that may not be reported because it involves illegal activity. This indicates that Michelle is accounting for what?
the underground economy
Country risk assessment is a measure of the
threat of losing an investment or not being paid
Managers of international companies that are attempting to develop a competitive advantage face a formidable challenge because
time, talent, and money are scarce.
Examples of socioeconomic data are
total population, age distribution, and population density and distribution.
A clear, concise description of the fundamental beliefs and priorities expected of the organization's members, reflecting how they are to behave with each other and with the company's customers, suppliers, and other members of the global community is known as a
values statement.
The most important element of the economic forces that impede production standardization is the
wide range of market sizes.
Overall, what has occurred with the dollar volume of service exports worldwide?
There has been an absolute increase
If Ecuador has an absolute advantage in coffee and Argentina in wheat, then, according to trade theory
Ecuador should focus production on coffee and trade for other goods
Which is a description of the sourcing arrangement overseas joint venture?
Established where labor costs are lower, or quality higher, than in the home country to supply components or other inputs to the home country.
How are exchange rates used in international trade?
Exchange rates are used to convert from foreign to domestic currency.
What method do companies often use when initially entering a foreign market? This method would create the least amount of risk.
Export product to the foreign market.
Big Tire Bikes Inc. is headquartered in Maryland and does business within the United States, as well as within many countries in Europe and South America. This company is an example of a(n)
International Business
What is a benefit of global standardization of operations?
It allows home office personnel to quickly spot deviations from the norm.
What is a disadvantage of the geographic region organizational structure?
It can make product coordination across regions challenging.
What is a disadvantage of top-down planning?
It restricts initiative at lower levels of the organization.
Jamie lives in a country with oppressive tax rates and overwhelming government red tape that a company must go through to export its products. How might these factors affect the underground economy in this country?
The underground economy would be bigger.
Why is every western coast between 20 and 30 degrees north or south of the equator dry?
The winds blow away from the land, carrying moisture with them.
An informal cognitive institution is
a collection of shared ideas that define reality.
The United Nations is a worldwide organization that is
a forum for the promotion of peace and global stability.
International strategy can be described as
a plan that guides the way firms makes choices about developing and deploying resources.
Organizational design is best described as
a process that deals with how an international business should be organized to ensure that its global business activities are integrated efficiently and effectively.
The argument that free trade is the best strategy for advancing the world's economic development is considered
a proposition with which almost all economists agree
World Bank studies have shown that underdevelopment in tropical nations is often due to
factors such as parasites and viruses that expand unchecked because of the lack of winter temperatures.
Most strategic business units are organized based on
product line.
One reason a government chooses to restrict trade would be to
protect domestic infant industries
International economic analyses should
provide economic data on actual and prospective markets.
Strong institutions are vitally important to international business decision makers because they
provide ways to avoid or settle conflicts.
Stakeholder theory pushes managers to be clear about how they want to do business, so it forces a business to
recognize underlying values and principles.
It has been argued that the ultimate goal of effective supply chain management systems is to
reduce inventory
Historically, international business as a business practice is considered
relatively new
Hofstede's individualism-collectivism measures
the degree to which people in the culture are integrated into groups.
The theory of overlapping demand explains
the existence of similar preferences and demands among countries with similar income levels.
Hofstede's power distance dimension can be described as
the extent to which society expects power to be distributed unequally.
Foreign environmental forces often operate differently than domestic environmental forces because
the forces are interrelated
Counterarguments to the "protect domestic jobs from cheap foreign labor" argument include that
the labor rate is not all of the labor cost.
Generally, we can assume that the higher the GNI/capita value
the more advanced the economy.
