BUSI 1301

What exists when a nation can produce more of a good or service than another country for the same or lower cost of inputs?

absolute advantage

Currency ______ lowers the value of a nation's currency relative to other currencies and therefore effectively lowers the prices of its exports.

devaluation

The foreign investment component known as _________ requires investors to participate in the management of the firm.

direct investment

which element in Porter's diamond model of national advantage distinguishes between the land a company owns and the transportation systems available for it to use?

factor conditions

True or false: Domestic forces do not affect foreign operations.

false

Although the mercantilist era ended, we still define a(n) ______ trade balance to mean that a nation exports more goods and services than it imports.

favorable

The proportion of service exports from the United States has increased or decreased in the past three decades?

increased

Which of the following is an example of a domestic force affecting foreign operations?

A home country suffers a shortage of foreign currency, so its government restricts overseas investment. A union decides to call a strike at a domestic company, and the strike causes disruptions in the supply of parts to a company in another country.

The dynamic capability theory suggests that in order for an international foreign direct investment to be successful, the firm must _______. (Check all that apply.)

have the ability to dynamically create, sustain, and exploit the capability over time have the ability to transfer the capability to international environments in order to produce a competitive advantage have ownership of unique knowledge and resources

The greatest usefulness of the international product life cycle theory in explaining trade comes when companies introduce their new products into (international/home) markets first.

home

is the transportation of any good into a country from a foreign origination point.

importing

Since 1980, the United States proportion of world trade in commercial services has

increase one-third

The initial stage of the international product life cycle is _______.

innovation

Select all that apply The forces influencing the life and development of the firm are classified into which two categories?

internal and external

International businesses differ from domestic businesses in that international businesses must deal with the forces from which three of the following environments?

internationa, foreign, & domestic

A company with operations in multiple nations is referred to as a(n):

international company

The monopolistic advantage theory states that:

FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.

How does the foreign environment operate differently than the domestic environment?

Forces in the foreign environment are difficult to assess. Forces in the foreign environment have different values. Forces in the foreign environment are interrelated.

____ includes both ownership and control of real or physical assets such as plants and other facilities.

Foreign direct investment

Which of the following statements is true regarding gross national income?

Gross national income is a measure of value added, not sales.

A nation's ability to design, produce, distribute, or service products within an international trading context while earning increasing returns on its resources is known as ________.

national competetiveness

Which empire raised the cost of Asian trade for Europeans and drove the search for sea routes to Asia?

ottoman

The forces in the foreign environment differ from the domestic environment in that they originate

outside the firm's home country

What were some of the largest categories of exports to China from the United States in 2016?

passenger cars civilian aircraft soybeans

what competition is the market situation in which there is a sufficiently large number of well-informed buyers and sellers of a homogeneous product such that no individual participant has enough power to determine the price of the product.

perfect

A market situation in which there is a sufficiently large number of well-informed buyers and sellers of a homogeneous product such that no individual participant has enough power to determine the price of the product, resulting in a marketplace that is efficient in production and allocation of products is known as

perfect competition

The trend toward the unification and socialization of the global community is considered a ______ driver.

political

5 drivers of globalization

political, technological, market, cost, competitive

which foreign investment component refers to the purchase of stocks and bonds solely for the purpose of obtaining a return on the funds invested?

portfolio investment

In balance-of-payments accounting, an export that brings money to the country is considered (positive/negative), while imports that cause monetary outflow are labeled (positive/negative).

postive;negative

According to the economic theory of mercantilism, the only source of wealth was _____.

precious metals

Which of the following are contributing to the shift of the world's economic center of gravity back to Asia? (Check all that apply.)

rapid urbanization of populations industrialization in the emerging markets

Which of the following are benefits of a globalized product line?

reduced production costs reduced development costs reduced inventory costs

The EU and ASEAN have reinforced the increasing (regionalization/globalization) of trade.

regionalization

Which of the elements in Porter's diamond model of national advantage takes into consideration companies that locate near the suppliers they need to produce their product?

related and supporting industries

The land, labor, capital, and related production factors that a nation possesses are called _______.

resource endowments

What is the unconscious reference to your own values when judging behaviors of others in a new and different environment? -the unconscious reference to the one's own cultural values.

self-reference criterion

Which of the following statements are accurate regarding an oligopolistic industry?

Interdependence among firms increases the likelihood that firms will imitate their competition. It is an industry with a limited number of competing firms. The actions of one firm can strongly affect the performance of others in the industry.

Which of the following statements are accurate regarding mercantilism?

It viewed precious metals such as gold and silver as the only source of wealth. It tended to create a trade surplus. It is a complex political and economic theory.

Which of the following are reasons why Mexico and Canada are major trading partners with the United States?

Lower freight charges Shorter delivery times Membership in NAFTA

Which of the following statements are true regarding international trade?

Nations should import goods for which they have a comparative disadvantage. Nations will attain a higher standard of living by specializing in goods for which they have a comparative advantage. International trade exists because firms export.

examples of controllable forces

Production, finance, and marketing

For the past 20 years, international trade in (merchandise or services?) has seen the fastest growth.

services

According to the theory of overlapping demand, goods produced for domestic consumption will eventually be exported to countries with _____. (

similar income per capita similar demand

Which of the following industries are examples of the monopolistic advantage theory? (Check all that apply.)

smartphones commercial aircraft manufacturers

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

theory suggests that strategic 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?

strategic behavior theory

A trade _____ is the amount by which the value of a nation's exports exceeds the value of its imports.

surplus

Global communications networks that enable manufacturing workers to coordinate production and design functions worldwide are an example of a(n) _____ driver.

technological driver

The theory of resource endowment explains

that a nation will trade goods that can be produced with the production factor that is most abundant.

the rapid expansion of world exports since 1980 demonstrates that

the opportunity to increase sales by exporting is a viable growth strategy.

Which of the following are reasons why many Asian countries are both import and export partners of the United States?

their governments have been pressured by the u.s. government to lower their trade surplus they are purchasing large amount of capital goods to further their industrial expansion their rising standards of living enable their people to afford more imported products

Mexico and Canada are major U.S. trading partners because they have the benefit of lower freight charges and shorter delivery times. Why do these benefits exist for these two nations?

they share a border with the united states

The book value of all foreign direct investment refers to the value of the _____.

total outstanding stock

Some countries send out buying missions to other countries in order to find products to import because their exports are exceeding the value of their imports. In other words, the nations are experiencing a(n)

trade surplus

A ______ corporation is an enterprise made up of entities in more than one nation, operating under a decision making system that allows a common strategy and coherent policies.

transnational

The first formulation of international trade theory, by Adam Smith, was motivated by political considerations. true or false

true

To ensure a continuous supply of raw materials, industrialized companies are sometimes forced to invest in the developing nations where most new deposits are being discovered. true or false

true

What amount of exports from developed economies go to other industrialized nations?

two thirds

The external forces are commonly called _____ forces.

uncontrollable

World trade tends to be dominated by exchanges ______ geographic regions.

within

Foreign business denotes the operations of a company ________.

within a foreign country

Which of the following are benefits of doing business with major trading partners?

The business climate is already relatively favorable. Satisfactory transportation facilities are already established. Currency from the foreign country is available to pay for the exports.

This theory is demonstrated by the fact that personal computers were initially introduced in the United States but over time their production has moved overseas and they are now imported into the United States.

The international product life cycle theory

Which of the following factors are contributing to the globalization of business operations

The progressive reduction of barriers to trade and foreign investment by governments The privatization of much of the industry in formerly communist nations

Mercantilists believed that

a nation should have an export surplus in order to accumulate precious metals

Which country currently exports the most to the United States?

china

When one nation is less efficient than another nation in the production of two goods, the less efficient nation has a(n) ________ advantage in the production of that good for which its absolute disadvantage is less

comparative

A trade________ is the amount by which the value of imports into a nation exceeds the value of its exports.

deficit

Which of the following are the four variables in Michael Porter's diamond model of national advantage?

demand conditions factor conditions firm strategy, structure, and rivalry related and supporting industries

The idea that a denim manufacturer in the United States can export its products to China while at the same time a Chinese manufacturer in the denim market can export to the United States because each of the product lines has unique qualities demonstrates the idea of product __________

differentiation

A company's managers tend to be most familiar with the forces in the _______.

domestic environment

The _______ environment is all the _______ forces originating in the home country that surround and influence the development of the company.

domestic; uncontrollable

The tendency toward international integration and interdependency of goods, technology, information, labor, and capital is called ______.

economic globalization

Five years ago it cost Bernie's Bikes Inc. about $52 dollars to build a single bike. Today, it only costs the company about $31 because they have automated the process and are able to purchase component parts in larger quantities. What allowed the company to reduce the price to build a bike?

economies of sale

Which term means the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases?

economies of scale

Perfect competition results in _______. (

efficient allocation of products efficient production

The term ________ means all the forces influencing the life and development of the firm.

environment

If Indonesia can produce more clothing products than the United States and do so for a lower cost, then Indonesia is said to have a(n) _________ advantage.

example of an absolute advantage

A(n)________ rate is used to convert from foreign currency to domestic currency

exchange rate

The price of one currency stated in term of another currency is called the _______.

exchange rate

The ______ refers to the rising scale on which efficiency improves as a result of cumulative experience and learning.

experience curve

When considering where to export, advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include the fact that

export and import regulations are not insurmountable.

is the transportation of any domestic good to a destination outside a country

exporting

Nations encounter a trade surplus when the value of

exports exceeds the value of imports.

True or false: Domestic firms are entirely free from foreign or international environmental forces.

false Many domestic companies face competition from foreign imports and foreign competitors.

______ business denotes the operations of a company outside its home market. -the environment refers to all the uncontrollable forces originating outside the home country that surround and influence the firm?

foreign

What term refers to direct investments in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control? -commonly used variable that measures where and how fast internationalization is taking place

foreign direct investment

The total level of outward FDI worldwide increased about ________ between 1990 and 2018.

fourteen fold

______ is the best strategy for advancing the world's economic development.

free trade

According to Theodore Levitt, ______ means selling the same thing in the same way everywhere in the world.

globalization

a __________ investment is the establishment of new facilities from the ground up.

greenfield

Which of the following international organizations affect the international market? (check all that apply)

World Bank European Union OPEC

The amount invested each year into other countries is referred to as __

annual FDI outflow

Place the stages of the international product life cycle (IPLC) in the correct order from first to last.

1. US exports 2. foreign production 3. foreign competition in export markets 4. import competition in US markets

When nations and corporations were ranked by GNI and total sales, respectively, for 2016, how many had GNI greater than the total annual sales of Walmart Stores?

24

In international business, what are the three choices international managers have in deciding what to do with a concept employed in domestic operations?

Adapt it to local conditions. Transfer it intact. Do not use it overseas.

Match the following external forces with the appropriate definition.

Competitive: Kinds and numbers of competitors and their activities Financial: variables such as interest rates, inflation rates and taxation. Economic: Variables such as gross national income, unit labor cost, and personal consumption expenditure. Legal: The many foreign and domestic laws governing operations. Political: Elements of nations' climates such as nationalism and forms of government Physical: Elements of nature such as topography, climate, and natural resources.

which explanation suggests that countries will export products requiring large amounts of their abundant production factors and import products requiring large amounts of their scarce production factors?

Differences in resource endowments

Which of following are considered external forces? (check all that apply)

Distributive Competitive Technological Economic Physical

Internationalization Theory

The theory that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open market is known as

Who advocated the early attempt to develop an international trade theory in response to the practice of mercantilism?

adam smith

The liberalization of trade has been responsible for ____

an increase in political rights greater civil liberties increased spending on public education

Foreign forces are frequently difficult to ______.

assess

Which one of the worst natural disasters in history is associated with international trade?

black death

examples of a _______ driver: -A company defending its home market by entering the competitor's home market -Companies internationalizing their operations to guarantee a supply of key raw materials -A company investing in a downstream market as a way to protect its existing international business -New firms, mainly from newly industrialized countries, entering the world markets in computers and electronics -An OPEC nation investing in filling stations in a foreign country to guarantee a market for its crude oil at a more favorable price is an example of a ______ driver.

competitive driver

internal forces are also called

controllable forces

What are the five major drivers of internationalization listed in the text?

cost competitive technological market political

Management moving production or other parts of the company's value chain to countries where wages are lower is an example of ______ drivers.

cost driver

The purchase of an existing business in another nation is called ________.

cross-border acquisition

The theory of overlapping demand suggests that

international trade in manufactured goods will be more common between countries with similar levels of income. -argues for the existence of similar preferences and demand for products and services among nations with similar levels of per capita income.

The definition of international business includes: (check all that apply)

international trade, foreign manufacturing, & service industries

The forces in the foreign environments are often ______; that is, they are connected to one another.

interrelated

After analyzing which nations account for the most exports and imports, it is evident that international trade

is unevenly distributed across the world

Which of the following foreign forces are especially difficult to assess? (check all that apply)

legal political

A supplier that moves locations to be closer to an original equipment manufacturer is an example of a ______ driver -Harman Advertising Agency, based in Toronto, decided to establish an operation in France because it was concerned that its competition would try to take over their clients in Europe, which represents 65 percent of their business.

market driver examples

Labor standards in developed nations tend to be _____ than in developing nations.

more rigorous