Exam 1 MANA 5360
If a person wants to truly understand a foreign culture, he/she needs to: -learn that country's language - read the foreign country's laws and regulations, as ---they comprise most of that culture's beliefs and norms -All other alternatives are INCORRECT -read the commandments of the foreign country's main religion, as they comprise most of that culture's beliefs and norms
-All other alternatives are INCORRECT
Which of the following is an example of a greenfield investment?
A Chinese sugar maker setting up a sugar crushing facility in Cuba
The following statement is NOT TRUE: a)An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants b)Countries adopting a pragmatic stance pursue policies designed to maximize the national benefits and minimize the national costs: they believe that FDI should be allowed so long as the benefits outweigh the costs c) In practice no country has adopted the free market view in its pure form d) According to the pragmatic nationalistic view, the MNE is a tool for exploiting host countries to the exclusive benefit of their capitalist-imperialist home countries
According to the pragmatic nationalistic view, the MNE is a tool for exploiting host countries to the exclusive benefit of their capitalist-imperialist
About offshoring and outsourcing in international business: -offshoring happens when a company implements outsourcing overseas -offshoring and outsourcing are processes limited to manufacturing enterprises -offshoring and outsourcing are processes not limited to manufacturing, and can comprise service provision -offshoring and outsourcing are processes limited to service enterprises
offshoring and outsourcing are processes not limited to manufacturing, and can comprise service provision
Which of the following is a BAD example of a multinational interprise (MNE)
BudaCork, a Hungarian wine producer, sets up sales offices with their own personnel stationed in 15 countries across 4 continents, who visit delicacy stores and distributors, trying to pitch to retailers the superiority of Hungarian wine
Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?
Cultural relativism
It is __________ to have democratic societies that emphasize __________. Furthermore, it is __________:
possible; a mix of collectivism and individualism; possible to have totalitarian societies that are not collectivist
Imagine your country can produce both products A and B more efficiently than any other country. But also assume that you are more efficient in producing A than in producing B. According to the concept of COMPARATIVE ADVANTAGE, your country should:
produce A and not B, and import B from another country
According to the concept of ABSOLUTE ADVANTAGE, countries should:
produce all the products for which they are more efficient than other countries in producing, rather than importing products from a less efficient source market
When states in the world shift away from a mixed economy to a market-based economy, one of the key measures to follow is:
Deregulation of the economy, to increase competition and foster natural selection
__________ is defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value:
Dumping
Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?
FDI has accelerated faster than world trade growth
Which of the following summarizes the total amount of resources invested in an economy in factories, stores, office buildings, and the like?
Gross fixed capital formation
Which of the following theories emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are needed for producing particular goods?
Heckscher-Ohlin theory
The ________ was established to maintain order in the international financial system, and as a ____________ to countries in severe economic distress -WTO (World Trade Organization); negotiation forum - World Bank; source of relief funds -IMF (International Monetary Fund); lender of last resort -Federal Reserve; monetary regulator
IMF (International Monetary Fund); lender of last resort
Licensing would be a good option for firms in which of the following industries?
In fragmented, low-technology industries in which globally dispersed manufacturing is not an option.
Which of the following is a consequence of globalization
Increasing offshoring of production and services
Which of the following is NOT a good example of the globalization of production
IndoSox, an Indonesian producer of sport socks, closes a deal with 12 European distributors, to channel their products in Europe, and with Alibaba.com, to distribute them in the rest of the world.
The following is a good example of foreign direct investment
Intel decides to acquire a local Costa Rican manufacturer, a 100 million dollar deal, to offshore its production of microprocessors
Imagine your spouse works with credit management in a large private bank, but told you that he/she has accepted a job offer in a global organism that has the primary focus of lender of the last resort to countries in need. His/her chances of working for ______ are MUCH higher than working for ______:
International Monetary Fund (IMF); World Bank
Which of the following statements is TRUE regarding totalitarian regimes
It is possible to have a totalitarian state that is hostile to collectivism and where some degree of individualism is encouraged
Most ETHNOCENTRIC managers would believe that:
Lifestyles in other cultures are different, but not as valid as those in their culture
The following is a BAD example of a foreign direct investment
RoundyInc, an Irish Bowling equipment producer, using a long term loan by a Canadian bank, acquires a traditional shoemaker in Ireland, which it plans to convert to start producing bowling shoes it will ship to the US, its major consumer market
Starting in 2018, a trade conflict between the US and China developed after the US imposed tariffs on Chinese imports into the US, as a part of Trump's administration's intent to 'get jobs back' and 'restore fair trade'. Responses and counter responses from both sides escalated and by early 2019 the two nations had swapped tariffs on more than $200 billion of goods. This is an example of:
protectionist US policies triggering retaliatory interventions in free trade responses by the Chinese
The U.S. government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws. This is an example of government intervention based on:
retaliation
The term offshore production refers to FDI undertaken to:
serve the home market from a low-cost production location
A multinational company wants to FDI into a new foreign market. The more the multinational wants a(n) __________ entry, the more likely that the chosen form of FDI would be __________, rather than ___________:
speedy; an acquisition; a greenfield
The _____ of ______ FDI refers to the aggregated amount of FDI made by a foreign multinationals into a country throughout its history, until a point of time:
stock; inward
Strategic trade policy suggests that a government should use _____________ to support promising firms that are active in newly emerging industries, and thus helping them _____________:
subsidies; gain first-mover advantages
The current account of the balance of payments ________ if the purpose of the foreign investment is to serve the ________ market from a low-cost production location:
suffers; home
According to ____, the social responsibility of business is to increase profits, so long as the company stays within the rule of law.
the Friedman doctrine CORRECT! According to the Friedman doctrine, the social responsibility of business is to increase profits, so long as the company stays within the rule of law.
The following is TRUE about the infant industry argument in international trade: -the GATT has recognized the infant industry argument as a legitimate reason for protectionism -the GATT has opposed the infant industry argument as a legitimate reason for protectionism -the GATT has not recognized the infant industry argument as a legitimate reason for protectionism, but the subject is currently under GATT debate -the GATT has recognized the infant industry argument as a legitimate tool for the promotion of unrestricted free trade
the GATT has recognized the infant industry argument as a legitimate reason for protectionism
A Japanese car manufacturer buys an Italian producer of car tires. This is an example of a(n):
acquisition
Starting in 2018, a trade conflict between the US and China developed after the US imposed tariffs on Chinese imports into the US, as a part of Trump's administration's intent to 'get jobs back' and 'restore fair trade'. Responses and counter responses from both sides escalated and by early 2019 the two nations had swapped tariffs on more than $200 billion of goods. Results of this trade war have proven that:
as advocated by new trade theory, escalation of tariffs produce reciprocal retaliations, with all involved countries ultimately losing
The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports, all imply that:
firms are finding their home markets under attack from foreign competitors
You are an international business analyst studying a foreign market entry. You sell luxury goods, such as Masseratti automobiles. In your case, to determine in which country to enter, it is critical to account for the potential for that country to have the best market for that car, meaning comparing the countries in terms of the market of people that can afford it. Assuming the listed variables is all the information you have, you should:
go to the country with the highest GNI per capita at PPP (Gross national income per capita at PPP)
A Norwegian paper manufacturer setting up a new forestry operation in Vietnam is an example of:
greenfield FDI
A multinational company wants to enter into a new foreign market. The more the multinational needs to have tight control over manufacturing, marketing, and strategy, in the new foreign country, the more likely that the chosen form of entry would be a(n)__________, rather than a(n)___________:
greenfield; licensing
Since the 1960s, a current trend in international business is the _______ of medium-sized and small __________, known as __________: -growth; multinationals; mini-multinationals -decline; multinationals; quasi-multinationals -decline; global exporters; multinationals -growth; global exporters; multinationals
growth; multinationals; mini-multinationals
The ________ sector in the U.S. ________ seize the benefits of outsourcing to low-cost producers in other nations, as manufacturing services may do, __________ of the nature of their type of work
health care service provision; can; in spite
When entering a new market, the level of difficulty (and/or the extent of time required) to conquer that new market will most likely be: -much lower for companies coming from developed countries, compared to those coming from less developed countries -the same for both traditionally domestic companies and traditionally international companies - lower for a traditionally domestic company, and higher for a traditionally international company - higher for a traditionally domestic company, and lower for a traditionally international company
higher for a traditionally domestic company, and lower for a traditionally international company
The higher the level of economic freedom, the _______ incentives for _____ and, and thus, the better the chances for economic growth and development
higher innovation, entrepreneurship
New trade theorists argue that a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry tend to:
hurt the citizens of both countries: the interventionist country, and the country retaliating against the interventionist country
Starting in 2018, a trade conflict between the US and China developed after the US imposed tariffs on Chinese imports into the US, as a part of Trump's administration's intent to 'get jobs back' and 'restore fair trade'. Responses and counter responses from both sides escalated and by early 2019 the two nations had swapped tariffs on more than $200 billion of goods. This sort of trade conflict escalation most likely provokes, among other effects:
increased difficulties for US exporters to sell in China, as well increased difficulty of Chinese exporters selling in the US; the consequence is lower foreign competition in each domestic market market, raising local prices and reducing consumption
When _________ is politically emphasized in a society, ________________:
individualism; individual will is generally viewed as being more important than the needs of society as a whole
The concept of comparative advantage explains international trade in terms of:
international differences in productivity WITHIN AND BETWEEN countries
Starting in 2018, a trade conflict between the US and China developed after the US imposed tariffs on Chinese imports into the US, as a part of Trump's administration's intent to 'get jobs back' and 'restore fair trade'. Responses and counter responses from both sides escalated and by early 2019 the two nations had swapped tariffs on more than $200 billion of goods. The automotive industry was particularly impacted as exports became less competitive for most global players. In late 2018, US-based Tesla announced it would build a factory in China to allow it to serve the Asian market without paying the import tariffs imposed to Cars manufactured in the US. This is an example of:
intervention in free trade by US imposition of import tariffs may ultimately back fire and cause outward FDI by US firms into target, or more free-trade oriented, foreign countries
Starting in 2018, the US started several trade conflict with multiple trade partners, from China, Mexico and Canada, to multiple traditional trade partners across the world. For example, when the US imposed heightened import tariffs on steel and aluminum imports, numerous retaliations began, with the trade wars with China being the most salient. An unintended consequence in the US was felt by US manufacturing companies that are dependent on foreign steel or aluminum, and thus had a cost increase, making their products more costly, less competitive, and thus ultimately jeopardizing US-based jobs. Some of such companies, like Harley-Davidson, have lately considered offshoring their production (out of the US), to be able to have lower cost in products they sell worldwide, by circumventing such US import tariffs on their critical raw materials (CNN, 8/12/2018). Companies such as Harley-Davidson are an example of:
intervention in free trade by US imposition of import tariffs may ultimately back fire and cause outward FDI by US firms into target, or more free-trade oriented, foreign countries
A country has an absolute advantage in the production of a product when it ____.
is more efficient than any other country in producing it
A country has an absolute advantage in the production of a product when:
it is more efficient than any other country in producing it
Some traditionally domestic companies attempt to do business abroad by implementing in the target markets the same business model and modus operandi that was successfully applied in their home country. About such type of internationalization strategy:
it tends to be the reason for failure behind many of the first-time internationalization endeavours
A Norwegian paper manufacturer grants permission to another company in Vietnam to use its brand. The Vietnamise then builds a factory from the ground up to initiate production. This is an example of:
licensing.
A little-known law in the United States, the Buy America Act, specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage. This is a real example of:
local content requirement
Under a tariff rate quota, a _____ tariff rate is applied to imports _____ the quota than those _____ the quota:
lower; within; over
By _______ production costs, subsidies help domestic producers in ______________:
lowering; both competing against foreign imports, and gaining export markets
BP, one of the world's largest oil companies, has made it part of the company policy to undertake "social investments" in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP's actions are an example of:
noblesse oblige.
According to the concept of COMPARATIVE ADVANTAGE, countries should
not produce a good, but rather import it, even if they are more efficient than other countries in producing it, in case another good they can produce they can be even more efficient in producing
At one point in time, Japan wanted to put a façade of being pro-free trade, but at the same time it wanted to protect domestic producers of a certain perishable product, and shield them from foreign competition. The Japanese government then decided to eliminate import tariffs for such product, and yet determined that any import of it would need to be quarantined for 40 days before it could be cleared by Japanese customs. As a result, all incoming shipments woudl invariable go to waste, before they could come into Japan and compete with the Japanese producers under protection. This is a classic example of:
Administrative trade policies
Most PAROCHIAL managers would believe that:
Any civilized culture would think and act as we do
It has been proven that privatization may fail to deliver predicted benefits if the newly privatized firms:
Are sheltered from foreign competition
Which of the following is a GOOD example of OFFSHORING
ArgCork, an Argentine wine producer, buys three discontinued Mondavi locations in California and Oregon, to establish its first US-based operation. They will import wine in bulk from its Argentine headquarters, and bottle it in the US, to supply their expanding North America operations, without the need to import finished products from Argentina into the US
When _________ is politically emphasised in a society, _______.
Collectivism; an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society."
In a _______ law system, _________.
Common; a judges ruling may be guided by interpretations made in prior legal cases
A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory. The public relations manager of the company defends the company's actions as being ethically sound; he states that in the host country, paying bribes to government officials is the accepted norm and is in keeping with the social practices in the host country. The public relations manager is using which of the following philosophical doctrines to defend the actions of the company?
Cultural relativism
In a January 2019 WSJ editorial, John D. Stoll argued that "Tesla should pull an Apple, leave 'production hell' to other people". The author meant that Tesla should follow Apple's example and outsource and offshore manufacturing to countries that can do a better job than US in cost-sensitive manufacturing. Stoll recalled that Steve Jobs tried to produce Apple products in California, failed due to high costs and lack of productivity compared to lower cost countries, was then convinced that the US was not equipped to manufacture competitively, and ultimately offshored the manufacturing of iPhones. To Stoll, Tesla (which is trying to produce their cars in the same California town that Jobs once failed in) should rather deal with with its 15-year-long manufacturing cost and efficiency crisis by simply leaving manufacturing to other apt partners, in more competitive countries, so it could concentrate on product design and
Mercantilism and protectionism
Which of the following statements is TRUE about rule of law:
Most countries rule of law can and has been measured over the years by World Bank's Worldwide Governance Indicators
An American manager in Colombia routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it in Colombia in order to stay in business. The manager's argument exemplifies which of the following ethical approaches?
Naive immoralist
The following ARE correct statements about culture: - One is rarely aware and cannot usually fully summarize, when asked, the main elements of their own countries culture - A country's culture is commonly transmitted to new, younger and future members mostly via written documents that summarize the cultures deeply engrained, and taken-for-granted, symbolic meaning and assumptions. -Most of the time one is aware and can usually summarize, when asked, the main elements of their own country'a culture -a country's culture is simply the sum of all its written cultural norms
One is rarely aware and cannot usually fully summarize, when asked, the main elements of their own countries culture
In a January 2019 WSJ editorial, John D. Stoll argued that under Steve Jobs and after many failed attempts to manufacture theirs products in the U.S., Apple made the strategic decision to "leave 'production hell' to other people". The author meant that Apple created an example to other US-based manufacturing companies, to outsource and offshore manufacturing to countries that can do a better job than US in cost-sensitive manufacturing. Stoll recalled that Steve Jobs tried to produce Apple products in California, failed due to high costs and lack of productivity compared to lower cost countries, was then convinced that the US was not equipped to manufacture competitively, and ultimately offshored the manufacturing of iPhones, so it could concentrate on product design and marketing. In a point of view opposite to Stoll's, the Trump administration has argued that companies like Apple should get incentives and protection
Ricardo's Comparative advantage
Which of the following is a GOOD example of a multinational enterprise (MNE):
SoupHeaven, a Vietnamese fast food chain, opens 20 restaurants they will own and operate across Canada, their first international venture
Which of the following factors is likely to make a country a more attractive location for international business?
Strong protection of property rights
Which of the following is a home-country policy aimed at limiting outward FDI flow?
Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings
The following statement is TRUE: a) The WTO is an international court, in which its judges rule and their decisions are binding, and if offenders fail to comply with the WTO judges' recommendations, trading partners have the right to compensation or to impose trade sanctions b)The WTO publishes arbitration panel reports on trade disputes, and such reports are merely used as general guidelines for trading partners; they cannot be used to determine a right to compensation, or to impose trade sanctions c)The WTO does not have the power to determine a right to compensation or to impose trade sanctions d) The WTO publishes arbitration panel reports on trade disputes, but if offenders fail to comply with the panel's recommendations, trading partners have the right to compensation or to impose trade sanctions
The WTO publishes arbitration panel reports on trade disputes, but if offenders fail to comply with the panel's recommendations, trading partners have the right to compensation or to impose trade sanctions
The following are BAD examples of foreign direct investments
The World Bank gives an aid of 100 million dollars to Kenya for building health related manufacturing facilities. Rivers Inc., a U.S. based sports apparel manufacturer, partners with a manufacturer in China (to take advantage of the lower labor costs there) in order to offshore part of their production to them, importing the manufactured items into the US for manufacturing finishing, packaging and distribution. SleepyInn, a budget Canadian hotel chain, starts to serve customers in foreign countries through its franchise units.
Which of the following statements is TRUE about rule of law:
The higher the rule of law in a country, the better the chances laws and contracts will be enforceable.
Which of the following statements is TRUE: Most countries' rule of law can and has been measured over the years by Freedom House's Freedom in the World Index The stronger the rule of law in a country, the higher the chances that most pertinent rules to operate in that country will be found in the legal coded or the legal system Rule of law is a legal principle, which measures the amount and complexity of laws a society has The indication of a country having rule of law is the extent that it is governed by laws and transactions are ruled by contracts
The indication of a country having rule of law is the extent that it is governed by laws and transactions are ruled by contracts
According to the _____ of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.
The radical view
When entering a new market, a traditionally domestic company will most likely attempt to implement in the new market
The same business model and modus operandi that was successfully applied in their home country
About the relationship between political economy and economic growth and development, the following statement is TRUE:
The state can expropriate the profits from innovation, and thus decrease the incentives to innovate, through legal means.
Identify the INCORRECT statement about trade barriers:
They may put a firm at a competitive advantage to indigenous competitors.
Which of the following arises when a country is importing more goods and services than it is exporting?
Trade deficit
Starting in 2018, a trade conflict between the US and China developed after the US imposed tariffs on Chinese imports into the US, as a part of Trump's administration's intent to 'get jobs back' and 'restore fair trade'. Responses and counter responses from both sides escalated and by early 2019 the two nations had swapped tariffs on more than $200 billion of goods. In January 2019, HSBC divulged a synthesis of the results of such trade war for the year of 2018, in the graph below. (If the graph is not visible to you, it depicts the following: the share of the US among China's main import partners decreased more than 40% between early 2017 and early 2019; during the same time, the share of both Brazil and Russia among China's main import partners increased more than 40% in the same exact period) According to such balance and graph:
US protectionist policies backed fired and US jobs suffered the most, particularly among US exporters, as China substituted them with other trade partners
__________ is a direct restriction on trade imposed by the exporting country, typically at the request of the importing country's government:
Voluntary export restraint
The US invents a product. After many years of exporting it globally from the US, they decide to FDI in a poor country, to take advantage of their low production cost, and start serving some overseas markets from that foreign subsidiary. After a few more years, the US operations are shut down, and the US market is serviced solely from foreign production manufacturing operations, importing 100% of the good it once invented. This occurrence is _____ the idea of ____.
a classical illustration of; product life-cycle theory
The righteous moralist suggests that:
a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries
Free trade refers to:
a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country, or what they can produce and sell to another country
Protectionism refers to:
a situation where a government does restrict what its citizens can buy from or sell to another country, to protect domestic interests, such as essential jobs and producers
Mercantilism views trade as:
a zero-sum game
According to the concept of ________, countries should specialize in the production of goods that they are more efficient than any other country in producing, and then trade these for goods produced by other countries:
absolute advantage
According to the Friedman doctrine: -if a manager of a multinational sees that firms from other nations are not following environmental legislation in a host nation, that manager should not either. -businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. -a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. - ethics are nothing more than the reflection of culture.
businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.
Political systems that emphasize __________ , whereas those that place a high value on __________; ___________:
collectivism tend toward totalitarian; individualism tend to be democratic; however, a large gray area exists in the middle
In a _____ law system, ___________:
common; contracts tend to be longer and more complex than in a civil law system, because in civil law contracts do not need to add clauses that are already predicted in legal codes
Local content requirements help domestic producers in ______________, and also affect consumers _________:
competing against foreign imports, but not gaining export markets; negatively
A multinational company wants to FDI into a new foreign market. The more ________ the target country is, the more likely that the chosen form of FDI would be __________, rather than ___________:
developed; an acquisition; a greenfield
An international U.S. based company sets up a production unit in a developing country with poor environmental regulations. This contributes to:
the global tragedy of the commons
Issues at the forefront of the current agenda of the WTO are all of the following, with THE EXCEPTION OF:
the unresolved issue of the infant industry argument as legitimate or illegitimate protectionism
Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons EXCEPT:
they are psychologically and geographically closer to the parent company.
Foreign producers typically agree to voluntary export restrictions because:
they fear far more damaging punitive tariffs or import quotas might follow if they do not
The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.
tragedy of the commons
The concepts of absolute and comparative advantage show:
why it is beneficial for a country to engage in international trade even for products it is able to produce for itself
