IBUS 330: Quiz 1
Cultural differences have no effect on the way an international firm conducts its business around the globe
False Explanation: Differences among countries require that an international business vary its practices country by country.
Which statement expresses one of the reasons why managing an international business is different from managing a purely domestic business?
An international business must find ways to work within the limits imposed by government intervention in the international trade and Investment system. Explanation: Managing an international business is different from managing a purely domestic business for at least four reasons: (1) countries are different. (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business, (3) an international business must find ways to work within the limits imposed by government intervention in the International trade and investment system, and (4) international transactions involve converting money into different currencies.
Globalization resulted in a decrease in non-U.S. firms' investment across national borders.
False Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders
Since the 1960s, a notable trend in the demographics of the multinational enterprise has been the rise of U.S. multinationals.
False Explanation: Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S, multinationals and (2) the growth of mini-multinationals.
Which statement pertaining to changes in the global economy of the 21st century is true?
The world is moving toward an economic system that is more favorable for international business. Explanation: Current trends indicate the world is moving toward an economic system that is more favorable for international business.
One concern frequently voiced by those opposed to globalization is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe.
True Explanation: One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. The critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.
Supporters of globalization believe that tougher environmental regulations and stricter labor standards are a natural aspect of economic progress.
True Explanation: Supporters of free trade and greater globalization argue that tougher environmental regulations and stricter labor standards go hand in hand with economic progress. In general, as countries get richer, they enact tougher standards.
Today, nearly every nation in the world belongs to the United Nations.
True Explanation: The United Nations was established October 24, 1945, by 51 countries and today, nearly every nation in the world belongs to the United Nations. Membership now totals 193 countries.
A small country is short on cash for much needed infrastructure development projects. It could go to the World Bank for assistance.
True Explanation: The World Bank has focused on making low-interest loans to cash-strapped goverments in poor nations that wish to undertake significant infrastructure investments (such as building dams or roads).
Foreign direct investment occurs when a firm invest resources in
business activities outside its home country. Explanation: The advanced industrial nations of the West committed themselves after World War Il to progressively reduce barriers to the free flow of goods, services, and capital among nations. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home countr
As it pertains to trade policy, what does a "beggar thy neighbor" policy represent?
countries progressively raising trade barriers against each other Explanation: During the 1920s and 1930s, many of the barriers to international trade took the form of high tariffs on imports of manufactured goods. The typical aim of such tariffs was to protect domestic industries from foreign competition. One consequence, however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.
Globalization critics argue that the decline in unskilled wage rates is due to the
migration of low-wage manufacturing jobs offshore. Explanation: The decline in unskilled wage rates may be due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers
The ___________ is often seen as the lender of last resort.
International Monetary Fund Explanation: The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.
The _________ was created in 1944 by 44 nations that met in Bretton Woods, New Hampshire, to promote economic development.
World Bank Explanation: The International Monetary Fund and the World Bank were both created in 1944 by the 44 nations that met at Bretton Woods, New Hampshire. The IMF was established to maintain order in the international monetary system; the World Bank was set up to promote economic development.
Opponents of globalization argue that falling trade barriers
allow firms to move manufacturing activities to countries with lower wage rates. Explanation: One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. Critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.
An international business is defined as
any firm that engages in international trade or investment. Explanation: A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are International businesses. All a firm has to do is export or import products from other countries. Differences among countries require that an international business vary its practices country by country. An international business must find ways to work within the limits Imposed by government intervention in the international trade and investment system.
Globalization has enabled organizations to reduce their costs of production by
creating manufacturing units in developing countries. Explanation: The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital. By doind this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them is compete more effectively.
Which action was implemented in the Uruguay Round, finalized in December 1993?
establishment of the World Trade Organization Explanation: The Uruguay Round further reduced trade barriers, extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the International trading system.
Recently, which factor has led to a decline in world trade and has significantly impacted global supply chains?
the COVID-19 global pandemic Explanation: In 2020, the COVID-19 global pandemic led to a decrease in both world trade and foreign investment. Additionally, the pandemic has had a significant Impact upon global supply chains, forcing many companies to rethink their globalization stretegy. Some companies are reportedly considering moving production closer to home on the theory that local production is less likely to be disrupted by the current pandemic or other adverse events such as future pandemics, war, terrorism, trade disputes, and the like.
The outward stock of foreign direct investment refers to
the total cumulative value of foreign investments by firms domiciled in a nation outside of that nation's borders. Explanation: The outward stock of foreign direct Investment is the total cumulative value of foreign investments by firms domiciled in a nation outside of that nation's borders.
