IB midterm review
_____ are the moral principles of right and wrong that guide personal and organizational decision making.
Ethics
Which BEST relates to industrialization?
The building of businesses and industry on a large scale
Which BEST defines an ascribed characteristic?
A quality of a person assigned at birth gender, age, ethnicity, or family
Which description BEST relates to the concept of an acquired characteristics?
A quality of a person assigned through activities and choices
Which region of the world is ranked most globalized?
Europe
The World Trade Organization member countries have committed to reduce their barriers to global trade. This includes:
auditing national trade policies
In a command-based economic system, the government determine ________.
supply but not demand
Which of the following BEST defines socialism?
A political system in which the central government plans the economy, owns the factors of production, and distributes the goods and services made
If the current spot exchange rate for trading U.S. dollars for Japanese Yen is ¥108 to US$1, then the related exchange rate for trading Yen for dollars is:
0.0093
The term globalized market best fits which of the following descriptions?
A combination of separate national markets to create one big market
The term "deflation" is BEST defined by which of the following?
A general fall in prices in an economy
Which of the following BEST defines religion?
A system of shared beliefs and rituals expressing the way adherents interpret their place in the universe
A nation plans to spend more money on housing projects for the poor. It will also increase expenditures on road infrastructure. Overall, these increases are substantial changes to its budget year-over-year. This nation MOST likely is implementing what change to its economic strategy?
Adjusting fiscal policy to increase consumption
Which of the following statements about Bitcoins is not true?
Bitcoins have a physical currency.
What is a popular scale for figuring out whether currency is over- or under-valued?
Big Mac Index
Which of the following is currently the world's largest religion?
Christianity
What is the knowledge to function effectively across cultural contexts?
Cultural intelligence
Define culture.
Culture is a society's unique set of values and norms that govern how people live and interact with each other.
Which of the following is true?
Currencies under the gold standard have intrinsic value.
A farmer seeking compensation for alleged livestock theft petitions his community leaders to help mediate with the offending party. The leaders then determine, based on previous experience and practice, the proper restitution payment. This is an example of which of the following legal systems?
Customary law
________ is BEST described as the process by which you take what you have learned about another culture and then use that knowledge to adapt your own behavior and thinking.
Decentering
In the United States, the _____ regulates all forms of online advertising, data collection, and sales, and imposes penalties for companies making false claims or violating customers' rights.
Federal Trade Commission
Which of the following is NOT one of the three types of risk exposure?
Financial exposure
Which of the following BEST describes "recentering"?
Finding or creating shared ground, or areas of overlap between old and new behaviors and understanding
A marketing company specializes in internet ads and search engine optimization of corporate websites. They were founded in the mid-nineties and started out in the Midwest with their town's programmers and marketing specialists. In the 2000s, they moved their operations to India to lower labor costs, because the internet speed infrastructure improved in that country. The marketing company followed what globalized phenomenon?
Flat-world development
All but which of the following should be assessed under the economic factor in PEST?
Foreign property rights
Political liberty is measured by a number of factors. Some international organizations collect and compile data for the measurements and release annual reports. Which are the two MOST important organizations that publish such reports?
Freedom House and Heritage Foundation
A multinational corporation determines that a prospective market offers a high level of private ownership. What does this factor suggest about potential business operations in that country?
Freedom to own capital
Which global barrier did the Internet eliminate for people and businesses alike?
Geography
Coca-Cola relied on the global convergence of markets to expand to other countries. What does global convergence mean?
Global convergence represents the spread of common preferences across country borders
Which of the following is not an external factor affecting international business?
Human resources
What are the reasons a company may decide to engage in international business? (select all that apply)
Increase sales; Obtain access to resources; Reduce risk
If your company wants to go abroad in order to reduce its per-unit costs, which objective is it being motivated by?
Increased sales
Which of following is NOT one of the main types of legal systems in the world?
Individual law
Which of the following is a general rise in prices in an economy?
Inflation
How does globalization affect you as a producer or worker?
It enables others outside your country to do your job
How does capital increase output per person?
It enables work to be done more efficiently.
Which of the following is true of the United Nations?
It was established as a way to get countries to resolve their differences through diplomacy, with the goal of maintaining and promoting global peace.
What are three cultural factors which are measurable?
Language, religion, and education
What is the principle that any good would carry the same price everywhere if goods and services could move freely across national borders?
Law of One Price
Which is the BEST description of criminal law?
Law that regulates social conduct, including personal protections, property protections, and basic human-rights protections
Lack of freedom for international businesses can result in all the following EXCEPT:
Limited public ownership
Argon Inc., a designer handbag company, is planning to open its stores in Mexico. Which of the following is a technological factor that is likely to affect Argon's modes of operation in Mexico?
Mexico's intellectual infrastructure
An American tourist was traveling in China and became hungry around dinner time. They quickly noticed an American fast food restaurant among many other well-known local restaurants that were recommended to them by their hotel concierge. The tourist decided to eat at the familiar American fast food chain. This tourist would be considered low on what cultural intelligence quotient?
Motivational
What is GDP that has NOT been adjusted to take inflation into account?
Nominal GDP
Which of the following is NOT one of the imperfections of GDP and GNP?
Only applicable to capitalist economies
A nation is buying corporate bonds and shares with its newly printed currency from the central bank. The Secretary of Finance will in two years slowly sell these securities off. This central bank decision is an example of what strategy?
Open market operations
The third and final step of improving cultural intelligence is
Organize daily tasks to align with training
A country's ability to protect intellectual property falls under which section of the PEST analysis?
Political
Chimelia, a country in West Africa, has declared war on its neighboring country of Hinelis. Which of the following laws is most likely to govern the war between the two nations?
Public international law
Examples of political risk include all the following EXCEPT:
Stock market crash
A developing nation adopted a new currency in an attempt to move away from hyperinflationary problems. Their central bank is going to base the value on currency reserves they have stored. What is the function of the currency reserves?
The currency reserves will back up the paper money issued by the government.
What is the general relationship between freedom and income?
They are positively correlated.
A computer accessories manufacturer started operations a few years ago in a small city in the United States. It began as an importer of computer peripherals, but last year it started to manufacture their own. They realized a few months ago that revenues were growing, but the cost was high, leaving very little profits. Which of the following, if accomplished, would MOST likely strengthen the company's potential profit strategies?
They should move manufacturing to another country by designing the products in the U.S. and outsourcing production in Asia.
What is the purpose of the WTO?
To ensure that international trade runs fairly and freely across countries
Commercial banks make money in foreign exchange by marking up their currency in what is known as a spread.
True
How can high uncertainty avoidance be displayed by consumers?
Unwillingness to try new products
Which of the following would NOT be considered a visible aspect of culture?
Values
___________ are a society's backbone, identifying what the members of that society believe is good, right, and desirable; whereas _________ are the social rules that govern people's interactions within that culture, both in terms of customs or social mores.
Values; norms
Which of the following is true of regulations governing international business?
When countries improve their laws, they likely open up more opportunities for business in the country.
The gold standard ________.
allowed US dollars to be traded for gold at a fixed rate
What does the 10% Presumption mean?
You can presume that 90 percent of all U.S. economic activity is domestic
The Human Development Index is
a broad measure of well-being focused on health, education, and economics.
A spread is
a retail markup on currency.
Corruption is ________.
an abuse of public office for personal gain
Macro political risk differs from micro political risk because it affects all foreign investments and operations, while micro political risk ________.
affects a specific firm, sector, or project
The term "open-market operation" is BEST defined as
an operation by a central bank to buy or sell government bonds, corporate bonds, or equities.
Autocratic forms of government include all but _______.
anarchy
When the value of a currency increases relative to other currencies, it is said to have
appreciated.
Sienna Inc., a cosmetics company, recently started its business in the United States. It has experienced fast growth in the first eight months. To continue its success in the international market, Sienna has decided to open its branches in Europe. Given this information, it can be said that Sienna is a _____ firm.
born global
All of the following are areas of common ethical issues facing international businesses EXCEPT
breaches of contract.
When a country abandons its own currency and instead adopts another currency, this practice is MOST likely referred to as
dollarization.
The formula for determining exchange rates is:
e = P*/P
Mixed political systems use ________.
elements of democratic and autocratic rule
Argon Inc. is an Australian telecommunications company operating in Kimeria, a country in West Asia. Recently, the government of Kimeria passed a legislation that ordered the confiscation of all telecommunications companies in Kimeria. This scenario is an example of _____.
expropriation
The purpose of Transparency International is to ________.
fight corruption among governments
Dasom Inc., a South Korean smartphone manufacturer, sells its smartphones in 64 countries around the world and has offices in 36 counties. Dasom's business expansion best exemplifies _____.
globalization
Steel manufacturers use limestone as one of the raw materials in the production of steel. It can be said that limestone is a(n) _____.
industrial product
Chris is the global operations manager at Asterisk Inc., a Canadian apparel company. The company is planning to start operations in Brazil and Japan. Chris believes that Asterisk has the potential to boost its overall sales by setting up operations in Brazil and Japan if:
it can persuade people in these two countries to buy its products.
A fiat currency has value because ________.
it is backed by a commodity
In Kiseria, a country in South Asia, labor laws require laborers to work in factories for 12 hours a day. Atlas Inc., a mining company, is planning to open its operations in Kiseria. However, Atlas Inc. feels that laborers are being exploited by making them work for unusually long hours. This scenario illustrates that Kiseria's labor practices are:
legal but unethical
If the Mexican peso is considered undervalued relative to the U.S. dollar, shoes produced in the United States and exported to Mexico are MOST likely to be
more expensive than they should be if the currency was appropriately valued.
In an effort to reassure the market and foreign investors, the Hong Kong government "fixes it currency," or holds the price steady in relation to the U.S. dollar. This is referred to as a
peg.
Fiat currency is BEST defined as a
piece of paper or a coin that has value merely because the issuing government says it does.
A manager who understands cultural differences, but makes fun of those that are not her own
recognizes differences, but does not respect them.
One of the major objectives that motivates companies to engage in international business is to:
reduce the risk of being exposed to a given market.
Of the following, which is a result of increased international sales?
reduced per-unit costs
Raising the reserve requirement ________.
reduces the availability of credit for businesses
Deregulation affects international business by _______.
removing a regulatory burden
In the context of international business, unlike firms that are reactive, firms that are proactive _____.
seek to build capabilities that build a reputation for ethical conduct
"Stare Decisis," or "stand on decided cases," means that earlier judgments _______.
set a precedence and should be upheld
Many organizations are now turning to practices that reduce waste, recycle metal, glass, plastics, and electronics, and cut greenhouse gas emissions. These practices are called _____ business practices.
sustainable
NAD is a political group with extreme religious views. It is on the U.S. Department of State's watch list. It is notorious for its acts of violence. It has been involved in suicide bombings and public executions in various places around the world. Given this information, it can be said that NAD is a(n) _____.
terrorist organization
Which BEST defines "appreciation"?
the process of currency rising in value relative to other currencies
Bulhevia, a country in Western Europe, has policies and regulations that govern politics and commercial transactions and punish crime. These policies and regulations are based on fairness and justice as they are understood by the people being governed. This scenario exemplifies _____.
the rule of law
Saudi Arabia, a Middle Eastern country, implemented strict laws adhering to Islamic law, also known as "Sharia Law," that is adjudicated by religious leaders. This type of law would be considered
theocratic law.
If a Big Mac costs 19.90 reals in Brazil and US$5.67 in the United States, and the current spot exchange rate is 4.14 (US dollar is the domestic currency), the Brazilian real is
undervalued.
In 2015, Iqbal and his family were displaced from their home in Syria in the wake of civil war. They sought asylum in Germany. However, Iqbal could not find employment in Germany because of a difficult political situation there. Which of the following political events is illustrated in this scenario?
The refugee crisis
Bella, a professor at the University of California, believes that the rule of law promotes international business. Which of the following statements supports her beliefs?
The rule of law puts a check on governmental power in a country.
Which of the following is true of a state-supported company?
The state provides incentives, grants, tax breaks, or subsidies to the company.
In general, manufacturing-dependent nations prefer to have their currency undervalued in an effort to help drive exports.
True
Pristine Inc., a French athletic footwear company, has started its operations in Argentina. In this scenario, Argentina is the _____.
host country
The rights that belong to every person are called _____.
human rights
Mica Inc., an American mining company, issued false financial statements to evade taxes. Given this information, it can be said that Mica Inc.'s actions are:
illegal and unethical
We can increase the supply of labor by all the following EXCEPT:
Extending vacation time
Customs are all but which of the following?
Morally significant
Apricot Inc., an American food and beverage company, is devising strategies to expand its business in Austria. Jonathan, a manager at Apricot, believes that a PEST analysis is the best way to get a picture of the competitive landscape in Austria. Which of the following statements supports his belief?
A PEST analysis can be used to implement appropriate practices from local Austrian cultures while avoiding problematic ones.
Which of the following would NOT be considered a product safety restriction?
A ban in the European Union on foreign hormone-treated beef products because it creates competition for local cattle farmers.
Which BEST describes a multilateral organization?
A body that establishes and enforces guidelines governing the interactions of individuals, businesses, and governments in a globalized world
Which of the following BEST describes an integrated technology platform?
A common operating system that can be used across multiple computers connected through the Internet
Which description best fits the definition of a sovereign nation?
A country that governs itself rather than being controlled by a foreign power
Which of the following BEST describes high-context culture?
A culture that uses more implicit messaging and contextual elements to convey information
Which of the following defines "hyperinflation"?
A general rise in prices in an economy exceeding 50 percent in one month
A nation recently changed the government administration. The current president is trying to nationalize foreign-held corporate private property in certain industries. The government is interested in nationalizing mining enterprises, but they are doing it subtly by disrupting normal business practices or imposing new taxes. This behavior will MOST likely create which of the following results?
A greater country risk, which will lower the nation's freedom ratings and negatively effect the GDP per capita.
What is a "living language"?
A language that is spoken by a native population
The term "uncertainty avoidance" is MOST applicable to which of the following descriptions?
A measure of how we deal with an unknown future
Which BEST describes "total factor productivity"?
A measure of the efficiency with which labor and capital come together
Which is MOST applicable to the Consumer Price Index?
A measure that tracks the price of a specific set of consumer goods across time
Which of the following BEST defines the term "recession"?
A period of GDP contraction lasting for at least two consecutive quarters
Which of the following is the BEST explanation of economic depression?
A period of GDP contraction that is particularly long-lived or very severe in nature
Which of the following BEST relates to the term "market-based economy"?
An economic system that encourages individuals and businesses to determine how much private consumption and investment to make in the economy.
Which description BEST defines the term "command-based economy"?
An economic system that values the collective above the individual, eliminates or reduces private ownership, and allocates investment, production, and consumption based on a central plan
Culture, which is society's unique set of values and norms that govern how people live and interact, is often compared to an iceberg for what reason?
An iceberg can be seen above water (i.e., visual aspects), while part of it is hidden under the water (i.e., influences more difficult to discern).
Which of the following BEST describes the term "intellectual property"?
Any creation of the human mind
Global measures of freedom include all the following EXCEPT:
Artistic expression
Why did the IMF provide a $54 billion loan to South Korea during the Asian financial crisis?
As a lender of last resort, the IMF was trying to ensure Korea's currency value did not go too low
Which of the following is NOT one of the three major objectives that motivates companies to engage in international business?
Avoid external factors in their domestic market
Which of the following is true of international business?
By diversifying the places where its products are made, a company can soften the impact of price increases or supply shortages that may occur in any one country.
Which type of cultural intelligence quotient allows you to adapt your actions to demonstrate to people in another culture that you understand their world?
Behavioral
Waldorf Inc., an oil company, is faced with an ethical dilemma of whether or not to continue to use the process of hydraulic fracturing to drill petroleum from thousands of feet below the surface of the Earth. The company is facing social pressures from environmental groups to discontinue the process of hydraulic fracturing as it has adverse effects on the environment. Waldorf Inc. wants to use a proactive approach to deal with these social pressures. In which of the following ways can Waldorf Inc. improve its reputation as a highly ethical company?
By engaging in corporate social responsibility (CSR) initiatives
Amanda, a marketing manager at Xenon Inc., believes that the company should engage in international business as it will benefit the company in multiple ways. However, Kyle, an operations manager of the company, feels that it should concentrate on conducting business domestically. Which of the following statements supports Amanda's beliefs?
By engaging in international business, Xenon can acquire new resources and knowledge.
Polikesa, a country in North Africa, has vast reserves of uranium. However, due to strict business laws in Polikesa, most international firms are skeptical of starting mining operations in the country. Which of the following techniques can Polikesa use to attract foreign investment?
By making regulatory reforms
How does engaging in international business reduce risk?
By spreading sales across multiple markets and avoiding the risk that an entire market base will be affected by a recession
A factory's equipment, a stock certificate of a company and a plot of land are all examples of resources of wealth that can produce revenue. What is the name of this revenue generating resource?
Capital
Social stratification is
Clustering people based on characteristics
A corporate cultural training specialist is hired to train management who will be working in a new country about the local culture. This specialist has been tasked to prepare them with a program highlighting the similarities and differences between their cultures, so that they can implement strategies to become effective managers in the new location. This type of training would be considered which type of cultural intelligence quotient?
Cognitive
An American manager at a subsidiary office in Brazil has a Brazilian employee, João, who is always very punctual. The rest of his Brazilian employees are not punctual like João, which, although he is not surprised, upsets him. This is an example of a manager with a high level of which factor(s) of cultural intelligence?
Cognitive but not behavioral CQ
The following question requires use of the map below. The map below is divided into 4 sections, and numbered accordingly. Match the described section to the most prevalent legal system of the area (mixed system is not an option). The area covered by number 1 on the map matches which legal system? (North America)
Common law
Which is BEST described as a legal system in which judges interpret law and set precedent for subsequent interpretation and usage?
Common law
Which of the following is a political system in which the workers collectively own the factors of production and the production outputs are allocated to workers based on their needs?
Communism
What is the FIRST step a company should take when considering opening operations in a foreign country with potentially high political risk?
Conduct a political risk analysis
Which of the following is NOT a common legal system?
Continental Law
Which of the following defines "depreciation"?
The process of currency falling in value relative to other currencies
What term is BEST described as an abuse of public office for personal gain?
Corruption
Which of the following is an example of a multinational corporation?
Crayola Inc., an American smartphone company, operates in 36 countries across the globe.
Which of the following is a legal system that is derived from long-standing experience and practice, based on collective wisdom and shared philosophy?
Customary law
Mary owns a U.S. based company and wants to open a store in Japan. She will have to exchange her USD for Yen in order to finance the rent and payroll. Which of the following situations would put her at the greatest advantage as far as the exchange rates go?
Depreciating yen relative to USD
In France and Germany, public buses are run by private companies. The government does monitor how a bus company should start-up, the kinds of licenses they need for each vehicle, the number of stops buses should make, the requirements that buses should run in government established routes, etc. Yet, in the United Kingdom, private companies can have buses that are not required to pause in every bus stop, and companies can have alternative routes. The United Kingdom's model is an example of which political system strategy?
Deregulation
Which of the following is a difference between developed markets and emerging markets?
Developed markets experience average economic growth of around 2 percent/year, whereas emerging markets experience economic growth of at least 4 percent/year.
Which of the following is not a form of democracy?
Dictatorial democracy
Your workplace is very assertive. Which of the following do you expect?
Direct communication
Country A has undervalued currency and is exporting products to Country B. This leads to which of the following?
Discounted goods for Country B
Finding a country's projected growth in trade falls under which section of the PEST analysis?
Economic
Which of the following is a company's exposure to unexpected changes in foreign exchange rates?
Economic exposure
Which of the following is a set of moral principles or values to guide and shape behavior, ensuring that people can interact and live together effectively?
Ethical system
Which of the following is the ratio that tells us how much of one currency we need in order to buy the equivalent amount of purchasing power in a different currency?
Exchange rate
Finney Co. sells phone accessories such as cases and chargers. They had an order from a large retailer in East Asia, that will consist of 25,000 cases and 30,000 charger cables. It will be delivered at five different dates in the next six months. Finney contacted a financial institution that drafts a contract for buying Finney's dollars now, and sells them Yen at the five different dates. This contract represents what kind of transactional exposure protection?
FX swaps
A market-based economy is a model used by the majority of nations in the world, in which prices of goods are determined by supply and demand. Market-based economies work well if nations enforce a capitalist economic system. What is a characteristic of this system?
Factors of production are controlled by private owners.
A currency's exchange rate only changes once a day.
False
All unethical acts are illegal.
False
The _____ is a law signed by President Jimmy Carter in 1977 that made it illegal to pay foreign government officials for their assistance in obtaining or retaining business.
Foreign Corrupt Practices Act
A global firm enters into an agreement with a host government to produce industrial goods using minerals sourced from the country's national mine. The firm owns a patent on a proprietary process that extracts minerals more quickly than competitors but during the mining process, pollution will be created that will limit local citizens' access to clean water. What will be the MOST likely result of the process?
Generate direct micro risk
Corporation DDD likes to manufacture their phones in low-wage countries to save labor costs. They also look for cheaper commodities made in emerging economies. What is the name of this corporate phenomenon?
Globalization of production
Which of the following is the process of sourcing land, labor, and capital from different nations rather than obtaining everything locally?
Globalization of production
What is a standard in which a dollar has intrinsic value because anyone holding it could trade it for a specified amount of gold at a government-approved bank?
Gold standard
An international business that specializes in military jets will be most interested in which category of output?
Government spending
The United States has several computer manufacturers. These manufacturers buy the chipsets, processors, ram memory, exterior cases and other components from factories in Asia, and then they assemble the final products in America. This increases the output of the U.S., and it is an element of which economic indicator?
Gross Domestic Product
Different economies attract various levels of foreign investment. One nation has supported foreign investment through tax cuts for many decades, which has ultimately increased the net-payment outflows, and decreased net-income receipts. When measuring national output, which economic indicator BEST reflects these changes?
Gross National Product
What factor enables emerging-market multinationals to flourish in the global market?
Growing consumption levels in their home markets
Japanese people rarely use the word "no," instead relying on circuitous responses, alternative reasoning, and follow-up questions to convey a negative response. This is an example of which cultural dimension?
High-context
The following figure portrays the interplay of legality and ethics, numbered from 1 to 4. Transparency in supply chains, with the purpose of discovering and ending forced labor, falls under which area of common ethical issues?
Human rights
In a recent speech, a political candidate talked about democracy and human rights. The candidate said that the "average citizen knows what's best for him...the government doesn't need to design or plan his life..." These musings are MOST likely indicative of which political ideology?
Individualism
According to author Thomas Friedman, which of the following is true of the flat world?
Individuals in poor countries with limited infrastructure are able to compete with people in rich, well-developed countries.
What term is best described as a global company with lower staffing costs, greater access to talent and expertise, and a wider choice of markets than they might find at home?
Micro-multinational corporation
A nation experiences an economic period of hyperinflation and rapidly declining foreign direct investment due to an ongoing conflict with a neighboring country. Which source of support should the country seek to help stabilize its currency?
International Monetary Fund
A company planned to build a new plant in Industrial Town, but civil unrest in the area has delayed their plans indefinitely. This directly affects which variable of GDP?
Investment
Identify changes brought about by the internet (select two).
It allowed people to share information in digital format; Fiber-optic cables were laid all over the world to ensure information could travel anywhere instantaneously
How does globalization affect you as a consumer of products and services?
It allows you to have access to more types of products made outside your domestic market
Which of the following is true of globalization of production?
It helps companies take advantage of national differences in cost and quality.
A consumer products manufacturer identifies a foreign market that reports a Gini coefficient close to zero. What does this suggest to the company?
Its products will be affordable to the general market.
Civil Law is a type of legal system that provides a comprehensive code of written law; however, it differs from other legal systems such as Common law and Customary law based upon one key distinction. What differentiates Civil Law from the other legal systems?
Judges are not bound by earlier rulings, and instead interpret the law based upon a written constitution and detailed statutory code that is always binding.
Sharon is the chief executive officer of Kacey Cosmetics, a leading cosmetics brand in Australia. She is in consultation with the company's board of directors to plan strategies about expanding the company's operations to Europe. Which of the following can help Kacey Cosmetics in successfully engaging in international business?
Knowing how to manage activities when differences arise
Which is a manipulation of interest rates, banking rules, or the volume of currency in a country?
Monetary policy
Which of the following BEST defines constitutional law?
Law that sets the bounds of government and governmental procedures, including creating the authorities that establish laws
The Ease of Doing Business report help international businesses by (select all that apply):
Measuring the availability of critical resources such as electricity; Measuring the ease of trade and customs; Measuring the enforcement of laws and regulations; Measuring how long it takes to start a business in that country
Explain how global trends, political reforms, and technological shifts have changed the make-up of the group of multinational companies.
Multinationals can be much smaller and come from anywhere
Neptune Inc., an American consumer electronics company, wants to start its operations in Javaheria, a country in South America. Javaheria has a low degree of rule of law. Given this information, it can be said that:
Neptune Inc. is more likely to face the risk of having its overseas property and goods confiscated at the whim of a politician.
The following figure portrays the interplay of legality and ethics, numbered from 1 to 4. Select the example that matches square #1 (unethical but legal)
Nike outsourced its production to factories with appalling conditions.
Billboard Inc., an American producer of outdoor advertising signs and displays, wishes to construct billboards in a medium-sized city in Guatemala. In order to receive the official signature on the permit by the time they are ready to begin construction, the company is petitioned for a bribe. The company is unsure whether or not this type of bribe is a violation of the Foreign Corrupt Practices Act (FCPA). How would you advise them?
No, it provides a facilitation payment to speed up the process of a securing a construction permit, which is not a violation of the FCPA.
Which of the following would the Foreign Corrupt Practices Act NOT prohibit?
Payments to foreign officials to decrease the wait time for a construction permit.
Bank MNO is tagging the countries it does business with, and labeling each country in categories. There have been some recent incidents with nations that have political instability, arbitrary regulation changes, and money laundering. Fitch Ratings and other rating companies publish lists of countries according to their likelihood of corruption scenarios. The bank will use these rating systems to determine the category of each nation. Bank MNO is categorizing according to which government phenomenon?
Political risk
As stated on its website, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions "establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions." This is an example of which type of international law?
Private
What is law that governs the interactions of nation states?
Public international law
A country's Ministry of Finance is trying to update the data on prices of goods and services in the economy. The ministry already conducted the research and is now comparing these prices to the prices in the U.S. for the same goods and services. The ministry research process is an example of what economic measurement model?
Purchasing power parity
The amount of output in an economy is affected by all the following EXCEPT:
Quality
What are the three Rs of managing cultural differences which can provide a leader or company with the steps necessary to managing a diverse group?
Recognition, Respect, Reconciliation
A tsunami in Japan damaged many of the production factories for Toyota resulting in a shortage of supplies and price swings. Which objective should Toyota have been more focused on?
Reduced risk
Arbitrage is
Searching for deals on production factors internationally
A company desires to enter a country where their brand name is a clever play on words that may not translate correctly. Which external factor relates to this circumstance? Select the best answer.
Socio-cultural
Understanding a country's education level falls under which section of the PEST analysis?
Sociocultural
For which of the following reasons is India an attractive place for U.S. companies to locate their call centers, as discussed in the text?
Sociocultural factors: language similarities and low labor costs
Which of the following is NOT a type of government involvement in business?
State privatization
A private firm wants to establish joint ventures in Africa, Europe, and Asia. The firm will be required to operate as a partially state-owned enterprise in Africa, but will be able to operate as a private entity in Europe and Asia. What is the MOST likely result in Africa?
State will earn a portion of the profits
FP Mining Company was founded with public funds in 1977, and it generates more than $4B profit each year. The government owns 85% of the company's stock and the rest of the shares are held by investors. When it was founded, the company was wholly owned by the state. This company is an example of which form of corporation?
State-owned enterprise
Supranational law does all the following EXCEPT:
Supersedes international law
Which of the following best illustrates global convergence?
Swedish company IKEA that sells and manufactures its bookshelves in many countries.
Harold, an economist, asserts that international businesses are likely to be significantly affected by Great Britain's exit from the European Union. Which of the following statements supports Harold's assertion?
The British are likely to find it difficult to move money, people, and products across Europe.
Which of the following defines "reserve requirement"?
The amount of money the nation's banks must keep on hand as a safety measure
Which of the following is one of the reasons why the United States and other developed countries no longer dominate the global market the way they once did?
The ease of becoming a multinational
Which description best fits the definition of globalization?
The evolution of an integrated and interdependent world economy
Which BEST defines transaction exposure?
The extent to which income from foreign transactions is exposed to currency fluctuations before payment is made
Which of the following BEST defines "spot exchange rate"?
The immediate rate to exchange one currency for another
Which of the following BEST describes the term "gross national product"?
The international income of a country
English is the unofficial language of business and the Internet, as the number of people learning this language worldwide over the past few decades has increased dramatically. How is this different than other major languages in the world, such as Arabic, Spanish, or Japanese?
The majority of people who speak English do not necessarily live in countries that are part of English culture.
Which BEST describes assertiveness?
The measure of how competitive and aggressive a culture is
Which of the following BEST defines currency exchange?
The process by which countries and companies swap one nation's currency for that of another
Many Arab countries practice Gharar, which prohibits the sale of items with uncertain existence or characteristics. This is an accepted practice under Islamic law because according to numerous hadiths (teachings of the prophet Muhammad), it should be forbidden. This is an example of which of the following legal systems?
Theocratic law
Omeria, a country in West Asia, has an unstable government. Carmine Inc., a Canadian mining company, wants to purchase risk insurance to safeguard its interests while operating in Omeria. Nate, a manager at Carmine Inc., believes that Carmine Inc. should not purchase risk insurance. Which of the following statements supports Nate's beliefs?
There is no guarantee that Carmine Inc. will receive immediate compensation following an adverse event.
How can companies, like General Electric, take advantage of new resources within the global market?
They can build R&D and manufacturing operations in strategic locations throughout the world.
Why are multilateral agencies needed?
To promote greater economic and political cooperation
What are the purposes of money? (Select all that apply)
To store wealth; To facilitate exchange
What does "decenter" mean?
To take what you have learned about another's culture to adapt your own behavior and thinking
Globalization has placed a pressure on companies to find the lowest cost labor in order to compete and increase profit share. A number of companies from Nike and Adidas have been accused over the years of engaging with subcontractor factories around the world at low prices due to very low wages paid to labor, in factories commonly referred to as "sweatshops". Consumer sentiment and negative media coverage has influenced many of these companies to change their labor practices in terms of monitoring their subcontractors and provide transparency to their corporate policies. Which type of practice is this MOST likely considered to be?
Unethical conduct
A developing nation wants to attract foreign direct investment to advance its economic development. The country possesses natural resources that are important to many industries and a population with a strong work ethic, but offers minimal infrastructure for the private sector. Which source of support should the country seek to continue its advancement?
World Bank
The rights that cover the creative works of individuals, companies and countries are increasingly important today due to the global economic shift and advancements in technology. As companies continue to expand their markets internationally, they bring with it new technology that is often the result of a tremendous amount of time and resources dedicated to creating it. These concerns are typical of most global companies in an evolving and more connected international business environment. Select which international organization these companies can seek help in obtaining legal protection for their work:
World Intellectual Property Organization
UX chip company released a new processor that consumes less energy than the competition's comparable products. Yet, it was proven by a famous mass media publication that the competition was stealing the technology. UX should use what international organization's rules and courts to accuse the competition of theft? ?
World Trade Organization
Like presidential democracies, in parliamentary democracies, _____.
a constitution outlines the separation of political power into branches
A low-context culture is
a culture that relies on direct means of conveying messages with little background information.
The rule of the individual is
a legal system in which one individual is the ultimate authority and has discretion to set and enforce laws.
Because judicial courts in India can take years to reach a litigation decision, multinational enterprises will often use a third party to resolve disputes with suppliers or other stakeholders. This process is known as
arbitration.
Hexagram Inc., an American car-manufacturer, recently started its operations in India. To successfully carry out its operations in India, Hexagram should:
consider all the assumptions and culture-specific knowledge about India.
Desktop computers are used by people all around the world. One of the challenges faced by computer manufacturing companies is to overcome the cultural and economic differences across communities that make it difficult for them to sell their products. Given this information, it can be said that desktop computers are _____.
consumer products
The term "fiscal policy" is BEST explained as
government action intended to spark or diminish consumption.
For IRUN, a company that produces athletic footwear, if a decrease in the supply of workers significantly increased manufacturing wage rates in a country where the company has production facilities, this increase would likely be viewed as an external ________ threat.
economic
Global firms use freedom indices to evaluate a country's openness to trade, protection of foreign investment, government involvement in business, and
enforcement of laws.
In contrast to public international law, private international law:
establishes legal jurisdiction and procedures for people and organizations, including businesses.
As a result of a global pandemic, the U.S. government institutes a federally funded program to provide payments to small and medium size enterprises that pay their employees during the economic interruption. This is an example of a(n)
fiscal policy method.
A PEST analysis is a tool used to
help manage a company's external environment.
An American manager complains to his boss about one of his employees, who is Chinese. "She never chimes in during meetings or tells me what she thinks of the direction we are taking the division when asked." This manager likely misunderstands the
high power distance in China.
All of the following are resources that a company can gain from foreign sources EXCEPT
higher land costs.
Translation exposure is the
impact of exchange-rate fluctuations on the company's financial statements.
If the Mexican peso is considered overvalued relative to the U.S. dollar, dollar denominated debt held by the Mexican government is MOST likely
less expensive than it should be if the currency was appropriately valued.
Poskelis, a country in Eastern Europe, has a relatively free market. Customers in Poskelis are:
likely to have more leisure time in which to spend income.
Prism Inc., a German athletic footwear company, had to close its manufacturing plant in Nibellus, a country in East Asia, after a war broke between ethnic groups in Nibellus. Given this information, it can be said that Prism Inc. was subjected to _____.
macro political risk
The term "purchasing power parity" is BEST defined as a(n)
measure used to standardize the cost of living in each country.
Hexagon Inc. is a small advertising start-up with a global presence. It relies on LinkedIn to find talent and uses social media to conduct its day-to-day business operations. Its staffing costs are low. Given this information, it can be said that Hexagon Inc. is most likely a _____.
micro-multinational corporation
Bennington Inc., an American computer technology company, is planning to expand its business in South American and Southeast Asian countries. By operating in multiple countries, Bennington is most likely to:
minimize the impact of economic swings it may experience over the years.
What makes a market "emerging"?
moving toward more open trade and free-market policies
The World Trade Organization is an example of which type of organization?
multilateral
Unlike domestic business, international business:
necessarily places greater emphasis on differences between countries.
Despite restricted foreign investment in Nikopia, a country in Eastern Europe, Phoenix Inc., an American mining company, wants to operate in Nikopia because of its vast mineral deposits. In such a case, Phoenix Inc. can attempt to prepare for potential problems by:
negotiating some form of contract with Nikopia to establish an avenue of recourse in case something happens to disrupt the company's operations.
The European Central Bank wants to encourage consumer spending. The institution plans to accelerate economic growth through the purchase of equities that will create cash flow for lending institutions through
open market operations.
If a Big Mac costs SFr6.50 in Switzerland and US$5.67 in the United States, and the current spot exchange rate is 0.97 (U.S. dollar is the domestic currency), the Swiss franc is
overvalued.
The government of Lekistan, a country in West Asia, has 58% holdings of Olive Inc., an oil company. Olive Inc. gives some percentage of its profits to the government. Given this information, it can be said that Olive Inc. is a _____.
partial state-owned enterprise
The increased promotion of free-market policies in China refocused national investment toward sectors that are strategically important to the country's economic stability. The result has been
privatization of state-owned enterprises.
Despite political unrest in Pusalk, a country in South Asia, Azure Inc., a Spanish footwear company, wants to open a manufacturing plant in Pusalk, because of the availability of cheap labor in the country. Azure Inc. can safeguard its interests in Pusalk by:
purchasing risk insurance.
A real quantity is a
quantity that has been adjusted to account for the effect of inflation on value.
Bianca is a student of international business at the University of Phoenix. She is of the opinion that the world is not fully connected. She believes that the global financial markets are controlled only by a few cities and that most businesses still operate in domestic markets. Bianca's views are consistent with the _____ argument.
round world
Piracy is ________, and counterfeiting is _______.
unauthorized production of another's work; copying something with the intention of passing it off as original
The Big Mac index measures local currency in relation to ______________.
the US dollar
A group of pirates from Sukleis, a country in Southern Europe, seized an oil tanker for ransom, off the Mediterranean Sea. The oil tanker belonged to Kidero, another country in Southern Europe. The pirates were captured by the navy of Kidero. In the context of international law, it can be said that:
the captured pirates can be prosecuted under the law of the sea.
Privatization is the process in which ________.
the government converts government resources to private resources
"Discount rate" is BEST described as
the interest rate that central banks decide to charge commercial banks for borrowing money.
In June 2020, Novartis AG, which is a large global pharmaceutical company, agreed to pay fines of $345 million to the U.S. Department of Justice and the Securities and Exchange Commission for their part in making illicit payments to position the company at an advantage to secure business deals dating as far back as 2007. Although this behavior occurred in jurisdictions outside of the United States, it
would be enforced under the Foreign Corrupt Practices Act (FCPA), which makes it illegal for any company or individual to pay foreign government officials for their assistance in obtaining or retaining business.
