3660 Test 1 - IB Ch 1-5
_____ are the accepted principles of right or wrong governing the conduct of businesspeople.
Business ethics
A civil law system tends to be more adversarial than a common law system.
False - A civil law system tends to be less adversarial than a common law system, since the judges rely upon detailed legal codes rather than interpreting tradition, precedent, and custom.
A common feature of many right-wing dictatorships is that they support socialist or communist ideas.
False - A common feature of many right-wing dictatorships is an overt hostility to socialist or communist ideas.
Carl is a naive immoralist, which means he believes a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.
False - A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.
The globalization of the world economy has resulted in a relative increase in the dominance of U.S. firms in the global marketplace.
False - By 2017, some 27 percent, or 540 firms, of the Top 2000 global firms are now U.S. multinationals, a drop of 236 firms in only about a decade and a half. Japanese and U.K. firms also saw declines in inclusion among the Top 2000 firms in the world. The globalization of the world economy has resulted in a relative decline in the dominance of U.S. firms in the global marketplace.
Outsourcing is a process that is limited to manufacturing enterprises.
False - Early outsourcing efforts were primarily confined to manufacturing activities. Increasingly, however, companies are taking advantage of modern communications technology, particularly the Internet, to outsource service activities to low-cost producers in other nations.
"Not free" countries are characterized by some restrictions on political rights and civil liberties, often in the context of corruption, weak rule of law, ethnic strife, or civil war.
False - In "not free" countries, the political process is tightly controlled and basic freedoms are denied.
Since the demise of communism in the late 1980s, the number of command economies has risen dramatically.
False - In a command economy, the government plans the goods and services that a country produces and all businesses are state owned, the rationale being that the government can direct the businesses to make investments that are in the best interests of the nation. Since the demise of communism in the late 1980s, the number of command economies has fallen dramatically.
In calculating GNI data in some countries, the official figures take into account the barter agreements that take place as part of daily business transactions.
False - In some countries, the "official" figures do not tell the entire story about gross national income. Large amounts of economic activity may be in the form of unrecorded cash transactions, or barter agreements. People engage in such transactions to avoid paying taxes.
Managing an international business is quite similar to managing a domestic business.
False - International business differs from domestic business because of the greater complexity of managing an international business. In addition to the problems that arise from the differences between countries, a manager in an international business is confronted with a range of other issues that the manager in a domestic business never confronts.
A current trend in international business is the decline of medium-sized and small multinationals, known as mini-multinationals.
False - Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of mini-multinationals.
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member states to make payments to expedite routine government action a criminal offense.
False - The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member states and other signatories to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.
When Cyprus had a financial crisis, it went to the World Bank, known as the lender of last resort, to bail it out.
False - The IMF was established to maintain order in the international monetary system. It is often seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.
The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties.
False - The World Trade Organization is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. The World Bank was set up to promote economic development.
"Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade barriers against each other, which contributed to the Great Depression of the 1930s.
False - The typical aim of tariffs on imports of manufactured goods was to protect domestic industries from foreign competition. One consequence, however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.
The Uruguay Round, finalized in December 1993, reduced protection for patents, trademarks, and copyrights.
False - Under the umbrella of GATT, the most recent negotiations to be completed, known as the Uruguay Round, were finalized in December 1993. The Uruguay Round provided enhanced protection for patents, trademarks, and copyrights.
Which of the following is true about planned economies?
In a planned economy, the state owns all means of production.
NAFTA was passed only after
Mexico committed to tougher enforcement of environmental protection regulations.
Which of the following focuses on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments?
The World Bank
Which is true about trademarks?
Trademarks are designs and names by which businesses differentiate their products.
Apple has a formal statement of the ethical priorities that employees must follow. This is called a code of ethics.
True
Because Russia has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government, doing business in Russia is considered risky.
True
Building an organizational culture that places a high value on ethical behavior requires incentive and reward systems that reward people who engage in ethical behavior.
True
Deregulation involves the establishment and operation of private enterprises.
True
In the early twentieth century, the socialist ideology split into two broad camps: communists and social democrats.
True
Foreign direct investment by non-U.S. firms increased because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.
True - As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to disperse production activities to optimal locations and to build a direct presence in major foreign markets.
GNI per person figures can be misleading because they don't consider differences in the cost of living.
True - GNI measures the total annual income received by residents of a nation
Suzanne was working in Rwanda for a multinational firm, and she was told that she would need to bribe government officials if she wanted to get her raw materials on time. She was uncomfortable with this as she had always felt bribes were unethical. This kind of pressure sometimes happens with expatriates who work abroad.
True - Home-country managers working abroad in multinational firms (expatriate managers) may experience more than the usual degree of pressure to violate their personal ethics.
In a market economy, a supply restriction occurs when a single firm monopolizes a market.
True - In a market economy, production is determined by the interaction of supply and demand and signaled to producers through the price system. For a market to work in this manner, supply must not be restricted. A supply restriction occurs when a single firm monopolizes a market.
It can be more costly to do business in a country where there are laws and regulations with regard to product safety.
True - It can be more costly to do business in a country where local laws and regulations set strict standards with regard to product safety, safety in the workplace, environmental pollution, and the like (since adhering to such regulations is costly).
The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market.
True - The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market.
It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.
True - With regard to economic factors, one of the most important variables is the sophistication of a country's economy. It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.
Innovation and entrepreneurial activity help increase economic activity by
creating new markets and products
From an international business perspective, some argue that what is ethical
depends on ones cultural perspective
The role of the government in a market economy involves
encouraging vigorous free and fair competition among private producers.
Countries with free market economies in which property rights are protected tend to have ________ than command economies or economies where property rights are poorly protected.
greater economic growth rates
Toyota is a multinational enterprise (MNE), which is a firm that
has production activities in more than two countries.
Early outsourcing efforts were primarily confined to
manufacturing activities
If China continues to move toward greater free market reforms it
may move from third-world to industrial superpower status.
Josiah wanted to move his company to a state with lower taxes, but he was concerned about how that would impact his employees. Josiah is demonstrating the concept of
moral imaginiation
During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments that were typically ________ than their predecessors had been.
more committed to free market than capitalism
The volume of world trade in merchandise is growing faster that world GDP. This implies that
more firms are dispersing their production processes to global locations.
The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, and environmental pollution are
not always clear cut
Which of the following exemplifies privatization?
A country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding.
Which of the following is a more attractive place to do business?
A nation with a market based economic system
Which of these is characteristic of a pure command ecomony?
All businesses are owned by the state.
A firm needs to become a multinational enterprise to engage in international business.
An international business is any firm that engages in international trade or investment. A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses.
Which of the following philosophies can be traced back to the ancient Greek philosopher Plato?
Collectivism
The growth of international trade in service activities has been driven by advances in
Communications
Historically, command economies were found in ________ countries, where collectivist goals were given priority over individual goals.
Comunist
Over the last 30 years, while democracy has spread, it has been natural for totalitarianism to also spread.
False
Using Hofstede's dimensions of social culture, research has shown that companies headquartered in cultures where masculinity and power distance are important attributes were more likely to emphasize the importance of behaving ethically.
False - Using Hofstede's dimensions of social culture, the study found that enterprises headquartered in cultures where individualism and uncertainty avoidance are strong were more likely to emphasize the importance of behaving ethically than firms headquartered in cultures where masculinity and power distance are important culture attributes.
In a command economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.
False - this is mixed economy
Which of the following is a consequence of globalization?
Increasing outsourcing of services
________ refers to a philosophy that a person should have freedom in his or her economic and political pursuits.
Individualism
Which of the following is true of the IMF?
It has emerged as a significant player in the global economy.
After the United States, the second-largest source country of MNEs is
Japan
Kantian ethics hold that the moral worth of actions or practices is determined by their consequences.
Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others. People have dignity and need to be respected as such.
What hinders globalization of the consumer goods market?
National differences and taste preferences
Which of the following is a feature of right-wing totalitarianism?
Provision of partial individual economic freedom along with restricted individual political freedom.
________ is the extortion of income or resources of property holders by public officials such as politicians and government bureaucrats.
Public action
The ________ committed themselves to achieving socialism without resorting to violent revolution and dictatorship.
Social democrats
Which of the following is true about the economic risks of doing business in a country?
The inflation rate in a country is an indicator of the economic risks of doing business in a country.
Which of the following statements is true about the righteous moralist approach to ethics?
The righteous moralist approach is typically associated with managers from developed nations.
Many of the national markets of Eastern Europe, Latin America, Africa, and Asia may still be underdeveloped, but they are potentially enormous. Which of the following is a risk to businesses moving into these regions?
There is no guarantee that democracy will thrive in many of the world's newer democratic states.
The common law system is
based of tradition, precedent, and custom
The downside of increased globalization is
a severe crisis in one region can effect the entire globe.
The Foreign Corrupt Practices Act was amended in order to
allow for "facilitating payments"
An American executive of a multinational home-furnishings chain finds that one of the company's production units in Philippines employs children to work in its factories. However, most of the children employed at the factory are orphans who will be sold as forced labor or pushed into prostitution if they lose their jobs. The executive finds that all the available alternatives seem ethically unacceptable. In this example, the American executive faces
an ethical delimma
The practice of "gift-giving" between the parties in a business negotiation is considered right and proper behavior in many Asian cultures, while some Westerners view the practice as a form of bribery. What is this an example of?
an ethical delimma
According to Rawls' just distribution theory, all economic goods and services should be distributed equally except when
an unequal distribution would work to everyone's advantage
Which of the following is a factor of production?
captial
In Samuel Huntington's thesis, global terrorism is a product of the
clash of value systems and ideology
Amazon.com was the earliest, major online bookstore, which allowed it to generate brand awareness and have a significant presence in the market. Amazon.com had a head start on later entrants to the online bookstore market. In this example, Amazon.com has ________ advantages.
first-mover
ABC Global has decided to invest resources in business activities outside its home country. This is called
foreign direct investment (FDI).
Globalization of markets results in markets becoming
less diverse
The term _____ refers to the values and norms that are shared among employees of an organization.
organizational culture
The General Agreement on Tariffs and Trade (GATT) was responsible for
policing the global marketplace.
The benefits, costs, and risks associated with doing business in a country are a function of that country's
political, economic, and legal systems.
United Nations has developed the Human Development Index (HDI) to measure the
quality of human life in different nations
In the case of command economies, deregulation involves
removing price controls
General Motors' stand against apartheid in South Africa was based upon what came to be known as
the Sullivan principals
The government of Iran is ruled by religious figures and they ensure that citizens adhere to Islamic teachings. Iran is a ________ law system.
theocratic
Newly privatized entities often have little incentive to restructure their operations to become more efficient when
they continue to receive subsidies from the state
Which of the following is a reason for the spread of democracy?
totalitarian regimes failing to deliver economic progress to the majority of their populations
The All-Emissions Corporation moved its automobile production plant to a country in South America because it could freely dump waste products into the nearby ocean. By doing this, the corporation was contributing to the concept of
tragedy of commons
What impedes firms from achieving the optimal dispersion of their productive activities to locations around the globe?
transportation costs
Contracts drafted under a common law framework tend to be
very detailed w contingencies spelled out
As a philosophy for business ethics, utilitarianism focuses attention on the need to
weigh carefully all social benefits and costs of a business action.
In the last two decades, Latin American countries such as Brazil, Mexico, and Chile have
welcomed foreign investment
