International Business Chapter 5-8

Which of the following are unit cost reductions associated with a large scale of output?

economies of scale

Direct effects of FDI on employment in the host country arise when a foreign MNE

employs a number of host country citizens.

The Foreign Corrupt Practices Act was subsequently amended to allow for speed money or grease payments, which are payments made to

ensure a business receives the standard treatment that it ought to receive.

Which of the following refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization?

ethics

The strategic behavior theory is used to

explain the patterns of FDI flows based on the idea that FDI flows are a reflection of strategic rivalry between firms in the global marketplace.

In a business setting, managers sometimes do not realize they are behaving unethically, primarily because they

fail to take into account the ethical dimension of business decisions.

The economic and strategic advantages that accrue to early entrants in an industry are called

first-mover advantages.

Which of the following refers to the amount of FDI undertaken over a given period (normally a year)?

flow

When an employee says no to a supervisor because what he or she was asked to do was unethical, it exhibits the employee's

moral courage.

Diminishing returns to specialization occur when

more units of resources are required to produce each additional unit.

Which of the following arises when two or more enterprises encounter each other in different regional markets, national markets, or industries?

multipoint competition

An American manager of a multinational company who is working in one of the company's production plants located in the country of Cadmia employs child labor at the manufacturing unit he is in charge of. On being criticized as unethical, the manager argues that such actions are ethically defensible because everyone in Cadmia is doing it. Which of the following straw men approaches to ethics is most likely demonstrated by the manager?

naive immoralist

The CEO of Gold Chip Software engages in corruption and uses his power in the company to enrich himself and his family members. Consequently, his employees also engage in the same behavior. In this case, the roots of unethical behavior can be traced to

organizational leadership.

Which of the following is the most common political argument for government intervention in international trade?

protecting jobs and industries from unfair foreign competition

The code of ethics of a company draws heavily upon documents such as the UN Universal Declaration of Human Rights, which itself is grounded in Kantian and rights-based theories of moral philosophy. In the context of this information, this company is most likely to

respect the dignity of an individual and the right of employees to freedom of association.

Which of the following is the term for when a lower tariff rate is applied to imports within the quota than those over the quota?

tariff rate quota

Which of the following is a trade policy instrument that the GATT and WTO have been most successful in limiting?

tariffs

Which of the following best indicates the motive for foreign firms to engage in dumping?

unloading excess production in foreign markets

Which of the following approaches to ethics holds that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences?

utilitarian

Location-specific advantages for a firm are those that arise from

utilizing resource assets that are tied to a particular foreign location and valuable enough to be combined with the firm's own unique assets.

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

It would disperse its productive activities to those countries where they can be performed most efficiently.

Palladia specializes in the production of beef and produces beef more efficiently than any other country. It buys wheat, which it produces less efficiently than beef, from Rhodia, even though it produces wheat more efficiently than Rhodia. Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia?

Ricardo's theory of comparative advantage

Which of the following suggests that consumers in all nations can consume more if there are no restrictions on trade?

Ricardo's theory of comparative advantage

Which of the following is consistent with the central beliefs of mercantilism?

A country's government should intervene to achieve a surplus in the balance of trade.

Which of the following statements is true about the Universal Declaration of Human Rights?

According to this declaration, it is unethical to employ child labor in sweatshops even if that happens to be common in some countries.

Which of the following specifies that U.S. government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage?

Buy America Act

Which of the following statements best indicates Samuelson's criticism of free trade?

By importing cheap goods from a poor country a rich country may not be able to produce a net gain if the dynamic effect of free trade is to lower real wage rates in the rich country.

Which of the following is true of the relationship between trade and economic growth?

Countries open to international trade display higher growth rates than those that close their economies to trade.

Suburbia Electronics follows a "when in Rome, do as the Romans" philosophy when it comes to ethics. According to this information, which of the following approaches to ethics is most likely being adopted by Suburbia Electronics?

Cultural relativism

According to new trade theory, which of the following is most likely to be a result of market expansion due to trade?

Each nation may specialize in producing a narrower range of products, importing goods that it does not make.

Which of the following statements is true regarding foreign direct investment?

FDI has grown more rapidly than world trade and world output.

When a firm exports its products to a foreign country, foreign direct investment occurs.

False

Which of the following multilateral agreements was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like?

General Agreement on Tariffs and Trade (GATT)

Which of the following statements is true about import quotas?

Import quotas benefit domestic producers by limiting import competition.

According to new trade theory, how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?

Trade increases the variety of goods available to consumers and lowers the costs of those goods.

The WTO's Agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules?

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Although mercantilism is an old and largely discredited doctrine, its echoes remain in modern political debate and in the trade policies of many countries.

True

By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing.

True

Dumping is variously defined as selling goods in a foreign market at below their costs of production, or as selling goods in a foreign market at below their "fair" market value.

True

Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors.

True

Import tariffs protect domestic producers against foreign competitors.

True

Many of the ethical issues in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation.

True

Multipoint competition arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.

True

The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business.

True

The concept of corporate social responsibility (CSR) refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions.

True

The stock of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.

True

Porter, in his diamond model, suggested that there is a strong association between ________ and the creation and persistence of competitive advantage in an industry.

Vigorous domestic rivalry

Which of the following statements is true about voluntary export restraints (VERs)?

When imports are limited to a low percentage of the market by a VER, the price is bid up for that limited foreign supply.

In a business setting, the term noblesse oblige refers to

a benevolent behavior that is considered the responsibility of successful enterprises

A righteous moralist is most likely to claim that

a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?

ability to capture scale economies ahead of later entrants

India is the largest exporter of information technology services to the U.S. In turn, the U.S. exported $3 billion worth of aircraft to India. Which of the following is illustrated by this form of trade between India and the U.S.?

absolute advantage

If one firm in an oligopoly cuts prices, then most likely, its competitors will

also respond with similar price cuts.

A zero-sum game is a situation in which

an economic gain by one country results in an economic loss by another.

Which of the following are national accounts that track both payments to and receipts from other countries?

balance-of-payments

Which of the following refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and social consequences?

corporate social responsibility

Who falls into the category of external stakeholders of an organization?

customers

Which of the following components of Porter's diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality?

demand conditions

According to the product life-cycle theory, the high cost of U.S. labor gave U.S. firms an incentive to

develop cost-saving process innovations.

According to the U.S. Department of Commerce, which of the following, occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity?

foreign direct investment

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan. This is an example of

foreign direct investment.

Which of the following terms best represents a situation in which a government does not attempt to influence through quotas or duties what its citizens can buy from another country, or what they can produce and sell to another country?

free trade

By lowering production costs, subsidies help domestic producers to

gain export markets.

General Electric (GE) built an operation from scratch in Nigeria. This is an example of a(n)

greenfield investment

The process of ethical decision-making or ethical algorithm typically begins with

identifying which stakeholders a decision would affect and in what ways.

Governments impose quotas to limit

importing

Which of the following is NOT a constraint on a firm's ability to disperse its productive activities to foreign countries?

increasing integration of the world economy

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to

infant industry argument.

What is the result of the threat of antidumping action?

limits the ability of a firm to use aggressive pricing to gain market share in a country

Jingo Products is a market leader in playground equipment which is typically large and bulky and weighs a lot. Because of competitive reasons, Jingo Products sells its entire line at very low prices. Although its products can be produced anywhere, it is considering exporting as a way to grow in overseas markets. The viability of Jingo Products' exporting strategy could be constrained by transportation costs, particularly of products that can be produced in almost any location and have a

low value-to-weight ratio.

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

mercantilism

Vernon theorizes that as the market in the United States and other advanced nations matures

the product becomes more standardized, and price becomes the main competitive weapon.

The main benefits of inward FDI for a host country arise from

the resource-transfer effect, the employment effect, and the balance-of-payments effect.

A firm will favor FDI over exporting as an entry strategy when

the transportation costs or trade barriers are high.

The practice of "gift giving" between the parties to a business negotiation is considered right and proper behavior in many Asian cultures. However, some Westerners view the practice as a form of bribery, and therefore unethical, particularly if the gifts are substantial. This reflects that

what is ethical depends on one's cultural perspective.