Chapter 5 navigating the global environment

What is a tariff?

a tax collected on goods shipped across national boundaries

A disadvantage of direct investment is _____.

greater economic risk.

Julius owns a business where he sets a business strategy based on factors such as supply and demand. Which type of economic system is Julius in?

market economy

Which type of economy is based on the private ownership of business?

market economy

Which of the following is a typical characteristic of a market economy?

private ownership

Which economy has become the second largest economy in the world, behind the United States?

China

Which economic community is considered to be one of the most important in the world?

European Union

Which was the first, and often considered the most important, economic community in the world?

European Union

When governments voluntarily limit the amount of goods exported to or imported from a particular country, what are they establishing?

Export restraint agreements

In what way is a global business different from a multinational business?

A global business is not committed to a single home country.

An import/export operation is advantageous because it _____.

A. Is an easy way to enter a market with a small outlay of capital.

International managers _____.

A. Need to organize to implement their plans.

Apoorva works for a multinational organization, and she is in charge of the local division. Which type of work will be expected of her?

Addressing local and regional issues

BritTrek is a British bicycle company. It produces its mountain bikes in England and sells them throughout North America. Which of the following best characterizes this arrangement?

BritTrek is exporting its products to North America.

While performing the function of organizing in a global economy, managers should _____.

Deal with human resources.

Which trade agreement practices the use of the most favored nation principle, whereby members of the agreement receive preferential treatment?

General Agreement on Tariffs and Trade (GATT)

Which trade agreement was a major stimulus to international trade after it was first ratified in 1948 by 23 countries?

General Agreement on Tariffs and Trade (GATT)

Tate Inc. designs and produces a trendy line of small home appliances. International expansion is an important component of the company's growth strategy. As the management team considers the best approach for entering the Asian marketplace, what is one of the disadvantages of direct investment?

Greater political risk

Woojin is looking at expanding his organization to overseas markets. Part of his consideration on where to open a new facility is based on the ability to move goods in and out of the country. Woojin needs to look carefully at _____.

Infrastructure

Nita's organization has been doing business in foreign countries for many years, and it has built plants in the local communities overseas. Recently, her company has been nationalized. What does that mean for Nita?

It was taken over by the government.

Jewel wants to expand into the South America market by purchasing a small production company in a South American country to handle production and distribution. Which of the following best characterizes this arrangement?

Jewel wants to buy a subsidiary in South America.

The light assembly plants built in Northern Mexico close to the U.S. border, which are given tax breaks by the Mexican government, are referred to as _____.

Maquiladoras

The United States, Canada, and Mexico entered into which agreement to eliminate barriers to trade among them?

NAFTA

During a recent staff meeting, Arayla's employees had questions about one of her decisions, and they discussed alternatives even though the decision had already been made. What is this an indication of?

Power tolerance orientation

What can a government do to encourage international trade?

Provide tax incentives

What is an advantage of importing or exporting over other approaches to internationalization?

Small cash outlay and little risk

Which of the following is true of multinational corporations (MNCs)?

They transfer capital and information from one market to another.

Which of the following is a goal of the World Trade Organization?

To establish impartial procedures for resolving trade disputes

What was the goal of GATT when it was developed?

To promote trade by reducing barriers

What is one of the key questions that must be addressed by a manager who wants to be effective in the international market?

Whether the firm should focus on regionalism or globalization

How is a medium-sized organization likely to work with international markets?

buying and selling products

Which aspect of social orientation is the belief that the group comes first?

collectivism

Geert has managers who work all over the world. Each month, all managers are included in an online meeting. In order to accommodate the time differences for all managers, Geert varies the time of day or evening these meetings take place. Which management function is used when considering the needs of all his international employees?

controlling

The language, values, symbols, and beliefs that guide behavior in a country are that country's _____.

cultural environment

Keane Industries is a privately owned firm that manufactures and installs large, deep well digging equipment that can be operated with little technical expertise. The company has a cash surplus due to a highly profitable decade of sales in its domestic market. Now ready to enter foreign markets, the biggest priority for the owners is to maintain full control of any new operations. Which level of international business activity is Keane Industries seeking?

direct investment

Which of the following occurs when a firm headquartered in one country purchases operating facilities in a foreign country?

direct investment

Kamiya has a small business and buys all of her supplies locally. While she does some online business, all of the sales are within the country. Which type of business does Kamiya have?

domestic

Into which environmental challenge would natural resources and infrastructure issues fall?

economic

A country's infrastructure, supply of natural resources, and the conditions of its natural environment combine to form its _____.

economic environment

Darian has a profitable software company in his home country, but he wants to sell his software in international markets. He knows he can make modifications to his current facility that will work in other markets. Which type of approach to internationalization should Darian pursue?

exporting

What is the key element for managers in a mature market economy?

freedom of choice

Yui prefers to use a pay system that rewards her employees based on their contribution to the success of the organization. Which type of social orientation does Yui support?

individualism

What is a key disadvantage of licensing agreements as an approach to internationalization?

inflexibility

Which type of organization is primarily based in one country, but it acquires some resources or revenues from other countries?

international

Excessive transportation costs, government regulations, and home production costs might lead a firm to choose which approach to internationalization?

licensing

Montazar has formed an agreement with an international firm in which he can use its brand name and technology on his products. In return, he pays the other firm a royalty, based on sales. Which type of arrangement has Montazar entered into?

licensing

Nour's organization buys raw materials from all over the world, and in turn, sells finished goods worldwide. Which type of organization does Nour run?

multinational

Payal has just accepted a three-year assignment to run the overseas division of her organization. Before she transfers, Payal and her family are required to take several classes on culture, housing, language, and lifestyle. Which element of management is Payal's organization preparing her for?

organizing

Aisha's firm is expanding internationally, and it is determining the benefits of buying an existing firm in the new location, building one, or finding a strategic alliance. Which management function is Aisha's firm using?

planning

Having a broad-based understanding of both environmental issues and competitive issues is an essential function of _____.

planning and decision making in a global environment

In which type of economic system does the government own and operate the companies that conduct business?

public

Armen runs a profitable jewelry manufacturing company and sells in many international markets. However, one country he sells to has just placed a limit as to how his company can sell in that country. Which of the following will now limit how much Armen can sell?

quota

Dezmon, a small parts manufacturer, is looking for quick entry into foreign markets with access to materials available in those markets. Which approach to internationalization would best fit his needs?

strategic alliances

Nila's construction firm was awarded a contract to build a new hospital in a Middle Eastern country. However, the construction project was already three months behind schedule because they could not secure the required permits. When Nila met with her local counterparts, they seemed very unconcerned about this delay. Which of the following accounts for this different perspective about the delay?

time orientation

Why would a country enact a "buy national" law?

to protect domestic businesses

When receiving a new project form his manager, Manoj likes to know all the details and expectations up front. If some information is unavailable, Manoj finds this very stressful. Which of Hofstede's orientations would Manoj have a low level of?

uncertainty acceptance