Global Environment of Business Ch 1

According to the International Trade Administration, more than 300,000 small- and mid-sized firms account for _____ of U.S. companies that export. A. 98 percent B. 11 percent C. 57 percent D. 25 percent

A. 98 percent

Among developing nations, ______ has been the largest recipient of foreign direct investment. A. China B. Sudan C. Argentina D. Indonesia

A. China

In order to best benefit from the globalization of markets, a company needs to be a multinational giant like the McDonald's Corporation. A. True B. False

B. False

It's a fact that the volume of world trade has been growing faster than world GDP. Based on this, it can be inferred that the world has become significantly poorer in recent decades. A. True B. False

B. False

The first web browser was introduced to the public in the 1970s and started the explosive growth of the Internet in foreign transactions. A. True B. False

B. False

Which two items have reduced the cultural distance between countries? A. Increased tariff barriers B. Global communication networks C. Low-cost transportation D. Westernized products

B. Global communication networks C. Low-cost transportation

During the 1960s, which country was the predominant world power in terms of foreign direct investment? A. Germany B. The United States C. China D. The United Kingdom

B. The United States

The G20 was originally established to _____. A. provide democratic reforms in developing countries B. formulate a coordinated policy response to financial crises C. provide low-interest loans to developing countries D. implement trade barriers and regulations

B. formulate a coordinated policy response to financial crises

Advances in information processing and communication are two ways _____ has made the globalization of markets a reality. A. logistics B. technology C. production D. media

B. technology

Globalization naturally leads to firms following each other around the world, which then _____. A. replaces conformity in markets with greater diversity in markets. B. increases barriers to cross-border trade C. creates some uniformity across markets D. reduces foreign direct investment

C. creates some uniformity across markets

One reason why a global market does not fully exist is _____. A. an increase in cross-border trade B. similarities in the business systems prevalent in national markets C. differences in legal regulations among national markets D. a decrease in the overhead expenses incurred by firms

C. differences in legal regulations among national markets

Critics of globalization protest in order to A. lower the barriers to cross-border investments. B. increase the number of enterprises that offshore their business activities. C. diminish the impact of the culture of multinational enterprises on the world. D. encourage a shift toward a more integrated and interdependent global economy.

C. diminish the impact of the culture of multinational enterprises on the world.

The International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system. A. mini-multinationals B. federal mandates C. global institutions D. foreign markets

C. global institutions

During the 1960s, U.S. firms created just over _____ of worldwide foreign direct investment and British firms were second accounting for just over 10 percent. A. 35 percent B. 80 percent C. 20 percent D. 65 percent

D. 65 percent

The World Trade Organization (WTO) is the successor to ______. A. the United Nations B. the IMF C. G20 D. GATT

D. GATT

What can be an impediment to the globalization of production? A. Consumer preferences B. Containerization C. Free trade D. Transportation costs

D. Transportation costs

The Uruguay Round negotiations resulted in A. reducing protection for patents, trademarks, and copyrights. B. establishing the G20 to police the international trading system. C. restricting GATT from covering services. D. lowering the trade barriers between various national markets.

D. lowering the trade barriers between various national markets.

Early outsourcing efforts were mostly limited to _____ activities while today numerous business activities can be outsourced. A. financial B. technology C. communication D. manufacturing

D. manufacturing

The stock of foreign direct investment refers to the ______ of foreign investments. A. diminished value B. percentage of increase C. return of goods D. total cumulative value

D. total cumulative value

Advances in _____ technology make it possible for companies to outsource customer service operations to another country. A. sales B. communication C. marketing D. consumer

B. communication

According to the World Trade Organization, the COVID-19 pandemic will affect world trade and cross-border investment may fall by as much as _____. A. 75 percent B. 15 percent C. 40 percent D. 90 percent

C. 40 percent

Why would a company engage in the globalization of production? A. To lower their overall cost structure B. To increase the barriers to cross-border trade C. To move closer to their competition D. To foster government intervention

A. To lower their overall cost structure

As emerging economies such as China, India, Russia, and Brazil continue to grow, forecasts predict a further relative decline in the share of world output and world exports accounted for by the United States and other long-established developed nations. A. True B. False

A. True

It is common practice for people today to use products that are produced or assembled in various nations around the world. This is a reflection of _____. A. globalization B. centralization C. nationalism D. dynamism

A. globalization

The globalization of markets is facilitated by the A. improvement in transportation technology. B. increased barriers to cross-border trade. C. restriction on the use of communication technology. D. current inefficiencies in exchange rates.

A. improvement in transportation technology.

Foreign direct investment occurs when a(n) _____. A. investment is made by a company based in one country into a company or entity based in another country B. firm exports goods or services to consumers in another country C. expatriate manager is sent to work in a foreign subsidiary but is directed by the home company D. stock holding is presented in both domestic and foreign currency

A. investment is made by a company based in one country into a company or entity based in another country

According to the supporters of globalization, falling barriers to international investment A. will significantly raise the prices for goods and services. B. help to create employment opportunities in countries that participate in the global trading system. C. will lower the incomes of consumers. D. restrict the formation of an integrated and interdependent global economy.

B. help to create employment opportunities in countries that participate in the global trading system.

Global markets for industrial goods such as oil and wheat are more typical than those for consumer products because _____. A. industrial goods have similar pricing structures B. industrial goods serve universal needs C. there are fewer consumer choices D. there is greater homogeneity in consumer products

B. industrial goods serve universal needs

A(n) ______ is any entity that conducts business in at least two countries. A. intrastate corporation B. transnational union C. multinational enterprise D. conglomerate

C. multinational enterprise

What is a challenge faced by companies entering the global market? A. Increased homogeneity of products across national markets B. Falling barriers to cross-border trade C. Diversity being replaced by uniformity D. Differences in consumer tastes and preferences

D. Differences in consumer tastes and preferences

What is one impact of globalization? A. Companies in global markets never confront the same firms as their competitors. B. Nations establish a self-sufficient economy without requiring external assistance. C. Cross-border trade is restricted. D. Greater uniformity replaces diversity.

D. Greater uniformity replaces diversity.

In return for offering loans, the International Monetary Fund (IMF) A. enforces its economic policies on nations. B. maintains the sovereignty of nation-states. C. raises barriers to cross-border trade. D. settles trade disputes.

A. enforces its economic policies on nations.

If you were to describe the global economy of the twenty-first century, it would be accurate to say that A. more nations are becoming part of the developed world. B. barriers to the free flow of goods have been increasing. C. fewer nations are adopting liberal economic policies. D. globalization limits a country's movement toward greater economic development.

A. more nations are becoming part of the developed world.

As the barriers to the free flow of goods, services, and capital fell during the 1970s, one motivation for foreign direct investment by non-U.S. firms was the desire to A. move production activities to more desirable locations. B. limit the use of communication technology. C. raise the barriers to cross-border investments. D. decrease their shares of world output.

A. move production activities to more desirable locations.

The development of the microprocessor has A. reduced the cost of global communications. B. increased the cost of technology overall. C. minimized technological advancements. D. limited the amount of information that can be shared.

A. reduced the cost of global communications.

The change in the U.S. economic position since 1960 has been labeled a(n) _____ decline because it reflected the faster growing economy of several other economies. A. relative B. circular C. absolute D. linear

A. relative

Within the past 10 years, China's share of world exports of goods and services ______ the United States. A. surpassed B. became equal to C. stayed behind

A. surpassed

Boeing outsources a large portion of its production. For example, for its most recent jet airliner (the 787), nearly ______ of the total value of the aircraft is outsourced to foreign companies. A. 10 percent B. 65 percent C. 25 percent D. 95 percent

B. 65 percent

Which statement regarding conducting international business in China is accurate? A. The market in China is saturated with fewer opportunities for FDI. B. China represents a large and basically untapped market. C. Foreign direct investment in China has decreased in the past 10 years. D. China-based firms are proving to be poor competitors.

B. China represents a large and basically untapped market.

The negotiations called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system. A. Free Trade B. Uruguay Round C. Doha Talks D. G20 Agreement

B. Uruguay Round

When global institutions were introduced in the 1940s, governments in struggling nations would turn to the _____ for low-interest loans needed for infrastructure projects such as building roads. A. International Monetary Fund B. World Bank C. G20 D. United Nations

B. World Bank

Creating and managing a globally dispersed production system is made easier by the ______ in costs of information processing and communication. A. elimination B. decrease C. increase

B. decrease

Boeing's rationale for outsourcing so much production to foreign suppliers is based on which two factors, according to the text? A. Capitalizing on its advanced foreign exchange mechanism to minimize risk B. Being recognized as having a multinational staff C. Increasing the chance to win significant orders from airlines in those countries D. Using suppliers that are the best in the world at a particular activity

C. Increasing the chance to win significant orders from airlines in those countries D. Using suppliers that are the best in the world at a particular activity

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law. A. Maslow's B. Keyne's C. Moore's D. Skinner's

C. Moore's

Which organization ensures that nation states comply to the rules associated with trade treaties signed by member states? A. The International Monetary Fund B. The United Nations C. The World Trade Organization D. The World Bank

C. The World Trade Organization

In terms of innovation in transportation technology occurring since the 1950s, the development of _____ has essentially reduced the size of our entire world. (Check all that apply.) A. semi-trucks B. subways and railroads C. superfreighters D. commercial jets

C. superfreighters D. commercial jets

Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the A. usage. B. sales. C. production. D. costs.

D. costs.

Former communist nations present opportunities to Western international business as these nations show continued commitment to _____. A. tyranny B. monarchy C. plutocracy D. democracy

D. democracy

A refrigerator parts manufacturer in China receives an order and loads the goods into a large receptacle that is then loaded on a ship headed for the United States. When the ship docks, this receptacle is placed onto a truck and the goods are delivered to a warehouse in Iowa. This scenario shows how _____ made the delivery of goods in the global marketplace much easier. A. demographics B. factors of production C. containerization D. JIT inventory

C. containerization

The Johnson Automotive Group recently closed two of its U.S. manufacturing facilities and opened a new facility in Asia to take advantage of lower labor costs and savings in energy costs. The company made this change in order to benefit from _____. A. consumer preferences B. first-mover advantages C. factors of production D. home-country advantage

C. factors of production

The globalization of _____ is the term used to describe the merging of national markets into one large global place. A. consumers B. production C. markets D. institutions

C. markets

As international trade expands, the economies of the world's nation-states are becoming ______. A. less intertwined B. more independent C. more intertwined D. less interdependent

C. more intertwined

Land, labor, capital, and energy are all examples of factors of _____. A. preference B. tariffs C. production D. markets

C. production

Companies rely on containerization to _____. A. outsource component parts from more than one country B. integrate manufacturing operations C. simplify the transfer of shipments from one form of transport to another D. determine exchange rates when collecting funds from foreign operations

C. simplify the transfer of shipments from one form of transport to another

Based on predictions for the future share of world output, businesses should seek economic opportunities in _____. A. nations with a clear form of democratic government B. those nations that are developed C. the developing nations of the world D. nations that are currently prosperous

C. the developing nations of the world

How did nation-states react to the economic environment of the 1920s and 1930s? A. Domestic firms were left unprotected from foreign competition. B. Foreign direct investments were encouraged. C. First-mover advantage was enhanced. D. Trade barriers were increased.

D. Trade barriers were increased.

Which of these companies is facing an impediment to the globalization of production? A. Jameson Grills buys component parts from a European company that will only ship via aircraft. B. Europe recently dropped its trade barriers and now Kleen-Source Corp. can take advantage of a low-cost supplier. C. Roll-Fast Skate Inc. plans to market its product globally but source parts domestically. D. U.S. law dictates that Tru-Brite Dental cannot send X-rays electronically to be read by an overseas company.

D. U.S. law dictates that Tru-Brite Dental cannot send X-rays electronically to be read by an overseas company.

The globalization of the world economy has resulted in a relative _____ in the dominance of U.S. firms in the global marketplace. A. increase B. expansion C. upturn D. decline

D. decline

The globalization of markets and production implies that A. there is a decrease in interdependency between nations. B. there is a decrease in cross-border trade. C. firms are limiting their production activities to their local regions. D. domestic firms are facing intense competition from foreign firms.

D. domestic firms are facing intense competition from foreign firms.

International trade occurs when a firm _____. A. invests in business activities inside its home country B. purchases a foreign company C. removes a foreign supplier from its supply chain D. exports goods or services to consumers in another country

D. exports goods or services to consumers in another country

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes, which creates a _____. A. stock of FDI B. globalization of production C. mini-multinational D. globalization of markets

D. globalization of markets

When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the United States and the product was assembled in the United States. Today, he sources the components from China. The change at this company is an example of the _____. A. Sullivan principle B. purchasing power parity C. tragedy of the commons D. globalization of production

D. globalization of production

A country's stock of foreign direct investment is the total cumulative value of foreign investments that are taken as a percentage of that country's _____. A. overall immigration rates B. live birth rates C. gross national income D. gross domestic product

D. gross domestic product

The risks of doing business in countries that are facing revolutions are A. lower than in countries not facing revolutions. B. the same as countries not facing revolutions. C. not impacted by the threat of revolution. D. higher than in countries not facing revolutions.

D. higher than in countries not facing revolutions.

Global institutions are needed to _____. A. promote the raising of barriers to cross-trade and investment B. prevent firms from offshoring their production activities C. shift economic power away from national governments D. stabilize and monitor the global marketplace

D. stabilize and monitor the global marketplace

From the 1990s until today, foreign direct investment inflows can best be described as A. always increasing. B. steady. C. continually diminishing. D. surging and slumping.

D. surging and slumping.

The decline of the United States standing in industrial power since the 1960s is considered a relative decline because it is a reflection of A. a significant drop in forward exchange rates. B. the lack of effective transportation modes. C. a return to isolationism. D. the faster economic growth of other economies.

D. the faster economic growth of other economies.

Which statement accurately describes the prediction for changes in the share of world output? A. There will be a decline in the share of world output associated with rich, industrialized nations. B. India and China will have a smaller share of world output compared to the BRIC nations. C. There will be a decline in the share of world output associated with developing nations. D. The U.S. economy will surpass the Chinese economy by 2030.

A. There will be a decline in the share of world output associated with rich, industrialized nations.

The development of Internet technology has lowered the barriers that small firms face in building international sales. A. True B. False

A. True

True or False: The International Monetary Fund (IMF) was established to ensure the stability of the international monetary system. A. True B. False

A. True

While lowering trade barriers initially made global production possible, the advent of technology made globalization a reality. A. True B. False

A. True

The ______ was established on October 24, 1945. Today, one of its key purposes is to maintain international peace and security. A. United Nations B. G20 C. International Monetary Fund D. World Bank

A. United Nations

In terms of international business, which statement accurately describes Latin America? A. While favorable economic trends have recently occurred, there is no guarantee that they will continue. B. Latin American firms are very capable competitors in all markets. C. Dictators who rule Latin American countries welcome Western international business as a way to build the economy. D. Latin America is a viable investment because it has historically held well-managed economies.

A. While favorable economic trends have recently occurred, there is no guarantee that they will continue.

Current trends indicate that, due to the emerging economies, the world is moving _____ an economic system that is more favorable for international business. A. closer to B. further away from

A. closer to

In today's marketplace, distribution of production to separate locations has become more economical because transportation costs have _____. A. declined B. remained steady C. increased D. doubled

A. declined

The International Monetary Fund (IMF) has been criticized for A. helping only those nations that wish to undertake infrastructure investment. B. minimizing a nation's sovereignty. C. lowering the barriers to cross-border trade. D. calculating factors of production.

B. minimizing a nation's sovereignty.

Paragon Corp., based in Ohio, sources goods from Southeast Asia to take advantage of labor cost savings. This company is benefiting from _____. A. domestic production B. the globalization of production C. a franchise operation D. intrastate investment

B. the globalization of production

Containerization made the process of moving goods from one country to another less labor intensive. A. True B. False

A. True

While the United States was the dominant industrial power in the early 1960s, by 2018, _____ took over that role. A. China B. France C. Germany D. Italy

A. China

What can be an impediment to the globalization of production? A. Consumer preferences B. Transportation costs C. Free trade D. Containerization

A. Consumer preferences

Which organization did nations turn to for a coordinated policy response during the 2008-2009 financial crisis? A. G20 B. GATT C. World Bank D. International Monetary Fund

A. G20

Based on rankings by Forbes in 2003, the second-largest source country of multinational enterprises was _____. A. Japan B. the United Kingdom C. the United States D. China

A. Japan

What are some companies reportedly considering regarding their production efforts and minimizing catastrophes like the COVID-19 pandemic? A. Moving production closer to home to avoid future disruptions B. Stopping production of all services and focusing on goods C. Increasing their production efforts to become the leader in their product line D. Moving production to an overseas location to take advantage of international opportunities

A. Moving production closer to home to avoid future disruptions

FlexFabric is a medium-sized company based in Virginia. Over the past five years, the company has increased its international trade efforts and now 35 percent of its business takes place overseas. FlexFabric is an example of a(n) _____. A. franchisee B. mini-multinational C. licensor/licensee D. expatriate

B. mini-multinational

Select the four facts that described the demographics of the global economy up until the 1960s. A. Roughly half of the globe was off-limits to Western international business B. U.S. retraction from all global agreements C. The dominance of large, multinational U.S. firms in the international business scene D. U.S. dominance in underdeveloped, third-world countries E. U.S. dominance in world foreign direct investment F. U.S. dominance in the world economy and world trade

A. Roughly half of the globe was off-limits to Western international business C. The dominance of large, multinational U.S. firms in the international business scene E. U.S. dominance in world foreign direct investment F. U.S. dominance in the world economy and world trade

Which statement best describes the International Monetary Fund (IMF)? A. The IMF is often seen as the lender of last resort to nation states whose economies are in turmoil. B. The IMF is less controversial than the World Bank. C. In return for loans, the IMF does not mandate nation states to adopt specific economic policies. D. Unlike the World Trade Organization, the IMF does not usurp the sovereignty of nation states.

A. The IMF is often seen as the lender of last resort to nation states whose economies are in turmoil.

According to the critics of globalization, which of the following are results of falling trade barriers? (Check all that apply.) A. The destruction of manufacturing jobs in advanced economies B. A reduction in the pool of global labor C. A depression of wages in developed nations D. Greater opportunities for manufacturing in developed countries

A. The destruction of manufacturing jobs in advanced economies C. A depression of wages in developed nations

What are the four basic purposes of the United Nations? A. Creating a vibrant and sustainable economy B. Developing friendly relations between nations C. Being a center for harmonizing the actions of nations D. Maintaining international peace E. Fostering trade agreements between competitor nations F. Solving humanitarian, cultural, and social issues

B. Developing friendly relations between nations C. Being a center for harmonizing the actions of nations D. Maintaining international peace F. Solving humanitarian, cultural, and social issues

Trade agreements between nations are another way in which trade barriers have been reduced. Which statement accurately depicts the current state of trade agreements in the world? A. There are fewer trade agreements in place today than there were in the 1950s. B. Since the 1990s, trade agreements have increased dramatically. C. While fewer nations are entering into trade agreements, they are lowering their barriers to trade through bartering. D. More nations are practicing isolationism than becoming involved in a trade agreement.

B. Since the 1990s, trade agreements have increased dramatically.

Influential economists, politicians, and business leaders who favor globalization argue that A. raising barriers to international investments will increase job opportunities in developing nations. B. falling barriers to international trade drive the economy toward greater prosperity. C. increasing cross-border investment will increase the prices for goods and services. D. lowering trade barriers decreases the incomes of consumers.

B. falling barriers to international trade drive the economy toward greater prosperity.

Why are consumer products less likely than industrial products to be a source for the global marketplace? A. Legal regulations prevent distribution of consumer goods B. Fewer consumers use industrial products C. Differences in consumer tastes D. More expensive to promote industrial products

C. Differences in consumer tastes

What are three things that result from the fact that the volume of world trade has been growing faster than world GDP? A. Developed countries have faced economic turmoil. B. Fewer countries are willing to become part of trade agreements. C. Economies of nation-states are becoming more intertwined. D. World has become significantly wealthier. E. More firms are dispersing parts of their production process around the globe.

C. Economies of nation-states are becoming more intertwined. D. World has become significantly wealthier. E. More firms are dispersing parts of their production process around the globe.

What is an accurate description of the globalization of production? A. Reducing the carbon footprint caused by the transportation of goods throughout the world B. Reducing cross-border trade due to increased barriers C. Locating each stage of production where it can be done most economically D. Making countries economically self-sufficient without requiring help from external sources

C. Locating each stage of production where it can be done most economically

How have tariff rates for manufactured goods been affected by the global efforts of GATT? A. Tariff rates were not affected by the GATT policies. B. Tariff rates have been suspended by most democratic nations. C. Tariff rates fell significantly since 1950. D. Tariff rates tripled when GATT was implemented.

C. Tariff rates fell significantly since 1950.

Which of the following are notable trends in the demographics of multinational enterprises since the 1960s? (Check all that apply.) A. The decline of non-U.S. multinationals B. The decline of mini-multinationals C. The rise of non-U.S. multinationals D. The growth of mini-multinationals

C. The rise of non-U.S. multinationals D. The growth of mini-multinationals

During the 1920s and 1930s, many of the world's nation-states put formidable trade barriers in place. What was the main reason behind these actions? A. To implement a first-mover advantage B. To enhance their ability to trade with foreign countries C. To protect domestic industries from foreign competition D. To encourage domestic business to consider international trade

C. To protect domestic industries from foreign competition

Moore's law predicts that A. costs for production of microprocessors doubles continually. B. software is surpassing hardware in terms of speed and efficiency. C. computer power will double every 18 months. D. software is getting slower more rapidly than hardware becomes faster.

C. computer power will double every 18 months.

Just a few decades ago, it would have cost a business much more money to find buyers in a foreign country. What has helped lower the cost of this process and allows buyers and sellers to easily find each other regardless of their location? A. Tariffs B. Transportation C. JIT inventories D. Internet

D. Internet

What is an accurate description of the World Bank? A. It was established to maintain order in the international monetary system. B. It is more controversial than the International Monetary Fund (IMF). C. It provides financial assistance only to countries whose currencies are losing value against those of other nations. D. It focuses on helping developing countries to fight poverty through investments in the underlying structure of the country.

D. It focuses on helping developing countries to fight poverty through investments in the underlying structure of the country.

What is an accurate description of microprocessors? A. Their main purpose is to regulate sales. B. Their power has been the same since their invention. C. They continue to increase in cost. D. They can decode vast amounts of information.

D. They can decode vast amounts of information.