IB 300 Test 2 USM

Sir Isaac Newton put England on the gold standard when he

Established the price of gold in terms of British currency.

Changes in an international company's strategy may require changes in the organization's design, but not the reverse. (T/F)

False

Organization by product is most favored by global companies because this type of organization guarantees the firm is a global company. (T/F)

False

Production coordination poses difficult problems in many regionalized organizations, which has led many companies to assign many specialized product managers who have line authority. (T/F)

False

The Bretton Woods meeting in 1944 established a floating rate exchange system among Allied governments that was imposed on the Axis governments. (T/F)

False

The Bretton Woods system led to minimal growth in international trade but helped to reduce inflation levels. (T/F)

False

The U.S. avoids extraterritorial application of its laws. (T/F)

False

The complexity of the gold standard was a part of its appeal. (T/F)

False

The international division is a division in the organization that is responsible for all nonhome country activities and reports to the domestic division (T/F)

False

The international product structure eliminates the duplication of product and area specialists. (T/F)

False

To what degree a country's legal system is based on the rule of law makes no difference to international business; it is personal relationships that matter in foreign environments (T/F)

False

Two of the concerns that management faces in designing the organizational structure for an international company are (1) finding the most effective way to take advantage of geographic differences, and (2) coordinating the activities of departments to enable the firm to meet its overall objectives. (T/F)

False

The World Bank categories countries based on GNI per capita, using the following categories:

High income economies, middle income economies, low income economies.

The ________ includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another.

International environment

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or

The "gold exchange standard" or the "fixed-rate system"

Because of the importance of economic information to the control and planning functions at headquarters the collection of data and preparation of reports is usually the responsibility of

The home office

Which of the following is not correct regarding the skills or competencies a company must develop to achieve a sustainable competitive advantage?

These skills DO achieve competitive advantage: 1) create value for which customers are willing to pay; 2) are rare; 3) are difficult to imitate or substitute for; 4) allow the company to exploit the competitive value of its valuable, rare, and difficult to imitate competencies.

Which of the following is correct regarding the skills or competencies a company must develop in order to achieve a sustainable competitive advantage?

They are difficult to substitute for.

According to the book, what is the purpose of economic analyses?

To asses the overall outlook for the economy and the impact of economic changes on the firm

A choice-of-law clause specifies which law will apply in the event of a dispute and is a good idea to include. (T/F)

True

A company's organizational structure helps to determine where formal power and authority will be located within the organization. (T/F)

True

An evolving structure for an international organization over time is normal, as the company's involvement in foreign markets increases over time. (T/F)

True

As a result of Bretton Woods and the resulting dollar's use as a proxy for gold, the U.S. ran up a balance of payments deficit of around $56 billion, which led to the U.S. going off the gold exchange standard in 1971. (T/F)

True

Both multinational and global companies use regionalized organizations. (T/F)

True

Customary international law draws on practices that have been followed often for centuries. (T/F)

True

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are referred to as emerging market economies. (T/F)

True

In terms of economic development and competencies, India's strength so far has been in services whereas China's has been in manufacturing. (T/F)

True

International economic analyses should provide economic data on both actual and prospective markets. (T/F)

True

Most companies establish worldwide organizations based on product, region, function, or customer classes. (T/F)

True

Organizational structure deals with how an international business should be organized to ensure that its worldwide business activities are integrated in an efficient and effective manner. (T/F)

True

Sir Isaac Newton established the price of gold in 1717 and de facto put England on the gold standard. (T/F)

True

The U.S. enforcement of EEOC law in U.S. companies operating abroad is an example of extraterritoriality. (T/F)

True

The objective of scenario building is to force executives to question their assumptions about the environments in which the company operates and incorporate into their planning the uncertainties that might profoundly affect their strategic and operational performance around the world. (T/F)

True

The purpose of economic analysis is to assess the overall outlook of the economy and the impact of economic changes on the firm. (T/F)

True

When an international manager is considering where to do business, one of the first considerations is the size of the economy. (T/F)

True

Arbitration is a private solution that is

Usually quicker and less expensive than litigation. Instead of going to court, the parties come together and make a binding decision.

When Kraft's earlier efforts to achieve continued growth and efficiencies were hindered, in 2012 it initiated a major reorganization that included

fundamental differences in the operation, strategic focus, and geographic scope of the two businesses (North American Grocery and Global Snacks) for example Oreo cookie to wafer stick for Chinese market

Arbitrage functions to

if price differences exist, it will quickly close any gaps and the markets will be back at equilibrium. (simultaneous buying and selling to make a profit with no risk)

International strategy

is a plan that guides the way firms make fundamental choices about developing and deploying scarce resources to achieve their international objectives.

The geographic region structure seems to be popular with companies that

manufacture products with a rather low technological content

Antitrust law is intended to

prevent inappropriately large concentrations of economic power (such as monopolies)

If the Japanese yen is strengthening against the U.S. dollar, and the Japanese government wanted to boost exports, the Central Bank of Japan (CBJ) might well

sell massive amounts of Japanese yen in the FX markets.

Trademarks can be

shapes, color designs, phrases, abbreviations, or sounds that stand for a company or its products. (Apple logo, Hello Kitty, FedEx, etc.)

A patent gives the inventor

the exclusive right to manufacture, exploit, use, and sell that invention or process for 20 years.

The concept of strict liability, as found in the U.S. legal system, applies

the standard that holds the designer or manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence.

Financial forces such as inflation and taxation are considered uncontrollable because

they are external forces beyond the influence of the firm, around which a manager can manage.

According to the book, economic analyses become more complex when a firm enters overseas markets because, unlike the situation for a company operating domestically

Because now managers must operate in two new environments: foreign and international.

A company's ability to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors, is known as

Competitive Advantage