International Business
What is a disadvantage of the global capital market?
Foreign investments may be driven by speculative flows in the market.
Which of the following was developed by the United Nations to measure the quality of life in different nations?
Human Development Index
An equity loan is made when
a corporation sells stock to investors.
A Japanese executive's ritual of presenting a business card to a foreign business executive is an example of
a folkways
Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove all barriers to the trade of goods and services. They, however, are free to determine their own trade policies with regard to nonmembers. Which level of economic integration is this an example of?
a free trade area
________ a requirement that some specific fraction of a good be produced domestically.
a local content requirement is
The development of microprocessor has lead to
a reduction in the cost of global communications
Ethical systems are
a set of moral principles, or values, that are used to guide and shape behavior.
The political economy of many of the world's nation-states has changed radically since the late 1980s. Which of the following is a trend that has been evident?
a wave of democratic revolutions has swept the world
Developing nations currently account for ________ of FDI in the form of cross-border mergers and acquisitions.
about 1/3 or less
________ are levied as a proportion of the value of the imported good.
ad valorem tariffs
A number of econometric studies have found consistent evidence of a hump-shaped relationship between income levels and pollution levels. According to this, as an economy grows and income levels rise
after a while, the population levels decrease
Critics of globalization point out the free trade
allows firms to abide the weak labor and environmental laws in developing countries
A citizen of France who moves to the United States to work at Ford is a(n)
an acquired citizen
________ eliminates trade barriers between member nations, adopts a common external policy, and permits factors of production to move freely between member countries but it also requires a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.
an economic union
________ entails even closer economic integration and cooperation than a common market.
an economic union
________ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.
an economic union
______ can help new exporters identify opportunities and avoid common pitfalls.
an export management company
In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. This is an example of
an import quota
Which of the following is a safeguard that representative democracies use to ensure that their elected officials are held responsible for their actions?
an individual's right to freedom of expression, opinion, and organization
Bringing managers together in one location for extended periods and rotating them through different jobs in several countries helps the firm build
an informal management network
Which of the following is a concern voiced by critics of globalization?
an interdependent global economy shifts economic power away from national government and toward organizations such as the United Nations
An ethnocentric approach to staffing is appropriate for firms that are pursuing
an international strategy.
Cross-cultural literacy refers to
an understanding of how cultural differences can affect business.
Which of the following is a factor that transforms a low-cost location to a high-cost location?
appreciation of local currency
Transportation costs (blank) a potential impediment to globalization of production
are
While US firms accounted for about 2/3 of foreign direct investment in the 1960's, as of 2017 US firms account for
around 25 %
A country's ________ keep track of its payments to and its receipts from other countries.
balance-of-payments accounts
In a letter of credit transaction, the importer secures the letter of credit
before product shipment
The establishment of the euro required participating countries to
both wrong: maintain their own currency in parallel to the euro. 2nd, create national banks at which citizens can convert their existing currency
According to ________, suffering originates in people's desires for pleasure.
buddhism
The ________ specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.
buy America act
How has the euro contributed to increasing competition in the European region?
by making price comparisons easy
Porter contends that government
can influence each of the four components of the diamond either positively or negatively
Which of the following involves borrowing in one currency where interest rates are low, and then using the proceeds to invest in another currency where interest rates are high?
carry trade
Which of the following is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime?
caste system
________ gives top-level managers the power and authority to be able to bring about needed major organizational changes.
centralization
Since the 1980s, there has been a transformation from ________ economies to ________ economies.
centrally planned command; market-based
An upper-middle-class manager tends to have hostile relationships with the working-class employees in the firm because of his tendency to perceive himself as superior to them based on his class background. In this example, the manager exhibits
class consciousness
A ________ is a less rigid form of social stratification in which social mobility is possible.
class system
Current trends indicate that, due to the emerging economies, the world is moving (blank) an economic system that is more favorable for international business
closer to
When ________ is emphasized, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society."
collectivism
Systematic increases in sales that have been observed to occur over the life of the product are referred to as the experience curve.
false
Tangible property includes patents, designs, copyrights, and trademarks.
false
Tariff barriers lower the costs of exporting products to a country.
false
Tariffs are generally pro-consumer and anti-produce
false
Tariffs are generally pro-consumer and anti-producer.
false
Tariffs on industrial goods remain higher than tariffs on services
false
The Council of the European Union is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states.
false
The European Union is an example of a perfect economic union.
false
The Foreign Credit Insurance Association is part of the U.S Department of Commerce and guides the activities of the Export-Import Bank.
false
The Japanese sogo shosha have offices all over Japan, and companies wishing to trade with Japan must go through them.
false
The Small Business Administration organizes trade events that help potential exporters make foreign contacts and explore export opportunities, held in major cities worldwide.
false
The WTO does not have the power to impose trade sanctions.
false
The bill of lading does not serve as a document of title as such.
false
The choice of which international markets to enter should be driven by an assessment of absolute short-run growth and profit potential.
false
The cost of capital is the difference between cost of inputs and outputs.
false
The cost of recording, transmitting, and processing information has doubled with advancements in technology since 1964.
false
The geocentric approach is the most popular because it is the least expensive to implement.
false
The globalization of capital has been universally seen as a positive development.
false
The infant industry argument is the latest argument for government intervention in trade
false
The most important trading centers for currencies are Zurich, Frankfurt, Paris, Hong Kong, and Sydney.
false
The most typical joint venture is a 60-40 venture, in which one party holds most of the ownership stake.
false
The need for coordination between units is greatest in firms pursuing a localization strategy.
false
The purchasing power parity (PPP) theory is a strong predictor of short-run movements in exchange rates covering time spans of five years or less.
false
The relatively low correlation between the movements of stock markets in different countries indicates that countries face different economic conditions.
false
The skills within the firm that a competitor cannot easily match or imitate are known as the core knowledge base.
false
The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.
false
There are many impediments to the free flow of goods and services in an efficient market.
false
Time drafts cannot be sold to investors at a discount from face value.
false
Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.
false
Unlike other trade policies, local content regulations tend to benefit consumers and not producers.
false
Using floating exchange rates will help countries reduce the risk of investing in foreign assets.
false
When consumer tastes and preferences differ significantly between countries, there is low pressure for local responsiveness.
false
Many countries in Africa score below 0.5 on the Human Development Index. This means that these countries have
few political freedom?
Prior to the introduction of the euro, many EU countries participated in a ________ system, in which the values of a set of currencies are fixed against each other at some mutually agreed upon exchange rate.
fixed exchange rate
The world's four major trading currencies, the Japanese yen, the U.S. dollar, the British pound, and the European Union's euro, are all free to float against each other. What is this an example of?
floating exchange rate regime
The ________ of FDI refers to the amount of FDI undertaken over a year.
flow
The ________ refers to the institutional arrangements that govern exchange rates.
international monetary system
_____ perform a direct connection function in capital markets.
investment banks
The Six Sigma methodology
is a direct descendant of the total quality management philosophy.
A draft used in international transactions
is a document requesting payment.
Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers
is due to technological changes that create greater demand for skilled workers.
___ seeks the best people for key jobs throughout the organization, regardless of nationality.
A geocentric staffing policy
Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?
political pressure
The move toward economic union raises the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations. Which of the following offers a solution to this problem?
political union
If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquarters, the firm is following ________ staffing policy.
polycentric
Which of the following statements regarding conducting international business in China is true
China represents a large- basically untapped- market
According to Levitt, which of the following statements is true?
Technology drives the world toward a converging commonalty.
The United States had large and growing trade deficits between 1980 and 1985. Despite this, the value of the U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?
The United States attracted heavy inflows of capital from foreign investors during this period.
A pair of shoes costs £40 in Britain. An identical pair costs $50 in the United States when the exchange rate is £1 = $1.50. Which of the following is correct?
The Us offers a better deal
Which of the following is a reason that command economies tend to stagnate?
The abolition of private ownership means there is no incentive for individuals to look for better ways to serve consumer needs.
The ultimate controlling unit within the EU is the
Council of the European Union.
Which of the following observations is correct?
The economic principles of Islam prohibit the payment or receipt of interest.
Organizational structure includes several elements. Which of the following is one of them?
The establishment of integrating mechanisms to coordinate the activities of subunits.
Japan's ________ have offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small.
sogo sosha
When an investor purchases a corporate bond, he purchases the right to receive a
specified fixed stream of income from the corporation
Currency ________ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.
speculation
When two parties agree to exchange currency and execute the deal immediately, the transaction is a
spot exchange
When a tourist goes to a bank in a foreign country to convert money into the local currency, the exchange rate used is the
spot rate
________ is required for a business environment to be conducive to innovation and entrepreneurial activity.
strong legal protection of property rights
In theory, the advantage of export management companies is that they are
subsidized by the department of commerce
A ________ helps domestic producers to compete against foreign imports.
subsidy
In terms of transportation technology, the development of blank has effectively reduced the size of our world
super freighters and commercial jets
An act as simple as shaking hands when meeting new people is an example of
symbolic behavior
A draft is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time.
t
An export packer can advise companies who are unfamiliar with exporting on appropriate design and materials for the packaging of their items.
t
Exporters often face voluminous paperwork and complex formalities.
t
Hiring an export management company (EMC) will help a novice exporter identify opportunities and navigate the paperwork involved in exporting.
t
Ignorance of the potential opportunities is a huge barrier to exporting.
t
Lack of knowledge is one of the biggest impediments to a company becoming a successful exporter.
t
Nearly every state in the United States maintains active trade commissions to promote exports.
t
The bank promises to pay on behalf of the importer when a bank is used as a third party in international transactions.
t
The bill of lading can function as collateral against which funds may be advanced to the exporter by its local bank.
t
The most comprehensive source of information for U.S. firms on exporting opportunities is the U.S. Department of Commerce.
t
U.S. organizations can get financing aid from the Export-Import Bank.
t
When a time draft is drawn on and accepted by a business firm, it is called a trade acceptance.
t
Which of the following is one of the main instruments of trade policy?
tariffs
What is double taxation in the context of FDI?
taxation of income in both home and host country
Evidence suggests that blank has impacted the declining share of national incomes for unskilled labor more so than globalization has
tech change
Differences in ________ constrain the globalization of markets.
technical standards
While the lowering of barries to trade made globalization a theoretical possibility. IT was not until the introduction of blank that it became a reality
technological changes
Some U.S. hospitals outsource radiology work in India. This is a recent advancement that is possible because of advancements in
technology
The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of
traditions
In firms pursuing ________, some operating decisions are relatively centralized, while others are relatively decentralized
transnational
What impedes firms from achieving the optimal dispersion of their productive activities to locations around the globe?
transportation cost
Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.
true
Some of the arguments made by the product life-cycle theory seem ethnocentric and increasingly dated when viewed from an Asian or European perspective.
true
Tax concessions, low-interest loans, and grants or subsidies are all incentives that governments offer to foreign firms to invest in their countries.
true
The Eurocurrency market has been one cause of a decrease in global financial regulations.
true
The WTO supports the promotion of international trade in services.
true
The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.
true
The amount of foreign direct investment (FDI) undertaken over a given time period is known as the flow of FDI.
true
The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country.
true
The basic principle behind incentive systems is to ensure that the incentive scheme for an individual employee is linked to an output target that he or she has some control over and can influence.
true
The development of internet technology has lowered the barries that small firms face in building international sales
true
The forward exchange market does not provide adequate coverage for long-term borrowings.
true
The global capital market often lacks information about the fundamental quality of foreign investments.
true
The greater the pressures for cost reductions, the more likely a firm will want to pursue some combination of exporting and wholly owned subsidiaries.
true
The international monetary fraud was established to ensure the stability of the international monetary system
true
The international monetary system refers to the institutional arrangements that govern exchange rates.
true
The success of many multinational corporations is based not just upon the goods or services that they sell in foreign nations, but also upon the core competencies that underlie the development, production, and marketing of those goods or services.
true
Threats of protectionism, economic nationalism, and local content rules dictate that international businesses manufacture locally.
true
To conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise.
true
To leverage subsidiary skills, companies should establish incentive systems that encourage local employees to acquire new skills.
true
Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical.
true
When determining the value of a foreign market, an international firm must consider both its products and the competition.
true
World Bank offers low-interest loans to risky customers whose credit rating is often poor.
true
________ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.
true
A firm's ________ determines where in its hierarchy the decision-making power is concentrated.
vertical differentitation
Investors are able to reduce risks by diversifying an investment portfolio internationally, and the risk reduction effects would be greater if not for
volatile exchange rates associated with the current floating exchange risk regime.
In terms of international business, which of the following statements accurately describes Latin America
while favorable economic trends have recently occurred, there is no guarantee that they will continue
According to the critics of globalizations, increased free trade and investment over the past few decades have
widened the gap between the rich and poor nations
Which of the following factors has had a positive effect on the volume of foreign trade investments?
world economy globalization
A ________ tends to be adopted by firms that are reasonably diversified and originally had domestic structures based on product divisions.
worldwide product division structure
Which of the following is a factor that initiated the collapse of the fixed exchange rate system?
worsening of the US foreign trade position
Three long-term EU members, Great Britain, ________, and Sweden, have not adopted the euro.
wrong: Greece, 2nd denmark
The strategy, operations, and organization of a firm must all be consistent with each other if the firm is to ________ and achieve superior profitability.
wrong: attain a comparative advantage
The relatively low correlation between the movement of stock markets in different countries indicates that
wrong: countries pursue different macroeconomic policies.
Analysts who believe globalization of capital has serious risks argue that
wrong: deregulation of trade is helpful for the economic growth in a country. 2nd individual nations are becoming more vulnerable to speculative capital flows.
A key goal of the 1986 Uruguay Round was to
wrong: extend GATT to cover trade in commodities. 2nd: extend GATT rules to cover trade in services
Michael Porter argues that
wrong: it is necessary for a firm to have the lowest cost structure or create the most valuable product.
Even if a ________ can be characterized as having a single homogeneous culture, often that national culture is a mosaic of subcultures.
wrong: society
Hindus believe
wrong: that there is but the one true omnipotent God, 2nd in reincarnation, or rebirth into a different body, after deat
Which of the following is a risk associated with globalization?
global financial contagion
________ refers to the shift toward a more integrated and interdependent world economy
globalization
It is estimated that by 2020 the value of world trade will have blank growth rate than the world economy
greater
The downside of increased globalization is
a severe crisis in one region can affect the entire globe.
Small and medium companies do not typically benefit from the globalization of markets
False
Small and medium sized companies do not typically benefit from the globalization of markets
False
Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the
costs
which of the following statements are true about containerization?
it reduced the costs of shipping goods over long distance
Identify the true statement about global markets from the following
national differences in tastes and preferences for consumer products is an important factor that acts as a brake on globalization
In several Western democracies, the poor performance of state-owned enterprises, because of protection from competition and guaranteed government financial support, led to
privatization.
In a pure market economy,
production is determined by the interaction of supply and demand.
From the 1990's until today, foreign direct investment inflows can be best be described as
surging and slumping
The globalization of markets is facilitated by the
improvements in transportation technology
(blank) refers to the shift toward economic international integration
-centralization -repatriation -disintermediation -globalization
What are the four purposes of the United Nations according to its charter?
-maintain international peace and security -cooperate in solving international probelms -develop friendly relations among nations -be a center for harmonizing the actions of nations
Select the four facts that describe the demographics of global economy up until the 1960's
-roughly half of the globe was off limits to western international business -US dominance in the world economy and word trade -US dominance in world foreign direct investment -dominance of large, multinational US firms in the international business scene
The globalization of (Blank) refers to the fact that producers can source goods and services from anywhere in the world to take advantage of cost savings
-service -production -marketing -logistics
Historically, national markets were distinct and separate national markets have merged. This process is known as
-the globalization of markets -cottage industries -tragedy of the commons -mass customization
Boeing outsource a large portion. For example, for its most recent jet airliner (the 787) nearly blank of the total value of the aircraft is outsourced foreign companies
65%
As of 2017, blank held the highest % of world exports of goods and services
China
Which of the following is a challenge faced by companies entering the global market
Differences in consumer tastes and preferences
Which of the following statements is true about world bank
IT focus on helping developing countries fight poverty through investment in the underlying structure of the country.
What is a benefit of the internet?
It makes it easier for buyers and sellers to connect
Boeing's rationale for outsourcing so much production to foreign suppliers is based on which of the following factors, according to the text?
Increasing the chance to win significant orders from airlines in those countries Using suppliers that are the bestt in the world at a particular
Select the four reasons that explain why managing an international business is different from managing a purely domestic business
International business must work within government limits International transactions involve converting money into different currencies Countries are different The range of problems in international business is wider
What is true about the International Monetary Fund?
It is seen as the lender of last resort to nation-states whose economies are in turmoil.
Which of the following arguments favor globalization?
Lowering international trade barriers raises the incomes of consumers
The doubling of the power of microprocessor technology while the costs of its production decreases by half is called blank law
Moore's
Technological innovations and low-costs transportation have reduced the cultural distance between countries and are bringing about some convergence of consumer tastes and preferences
True
The ________ was established on October 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security.
United Nations
The trade agreement called the blank finalized in dec 1993, established the world trade organization to police the international trading system
Uruguay Round
Which of the following organizations is responsible for policing the rules of the trade between nations and making sure countries adhere to the rules of the trade treaties
World Trade Organizations
Which country has been the worlds largest exporter since 2009
China
Assume that the current exchange rate is €1 = $1.50. If you exchange 1,000 euros for dollars, you will receive
1,500
at some point, rising income levels lead to demands for greater environment protection and as a result pollution levels fall. A study by grossman and krueger found this generally occurred before per capita income levels reaches
8,000
Governments normally are concerned when their country is running a surplus on the current account of their balance of payments
A Chinese sugar maker sets up a sugar crushing facility in Cuba.
The number of intermediaries between the producer and the consumer is known as the
Channel length
Country A can produce product X, but it can also buy it at a cheap rate from Country B. Which of the following courses of action is suitable in this situation according to Adam Smith's theory of absolute advantage?
Country A should import product X from Country B and it should not attempt to produce it at home.
Which of the following statements is true of the gold standard?
Currencies were pegged to gold under the gold standard.
According to Mendenhall and Oddou, poorly adjusted expatriates tend to be nonjudgmental and nonevaluative in interpreting the behavior of host-country nationals.
False
Adopting a pegged exchange rate regime increases the inflationary pressures in a country.
False
Four main institutions make up the political structure of the EU. Which of them is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws?
European Commission
There are two main trading blocs in Europe, the European Union and the
European Free Trade Association
The emphasis on individualism in the United States results in which of the following advantages?
Executives are exposed to different ways of doing business
Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?
FDI has accelerated faster than world trade growth.
Which of the following observations is consistent with Michael Porter's theory of national competitive advantage?
Factors such as domestic demand and domestic rivalry explain nations' dominance in production.
A company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy.
False
A firm that adopts a polycentric approach to staffing is likely to suffer from cultural myopia.
False
A geocentric approach tends to weaken local responsiveness.
False
An expatriate needs to have language fluency to show willingness to communicate.
False
An increase in car ownership, the number of two-income households, and the number of households with a refrigerator have all contributed to the more fragmented retail system found in developed countries.
False
Buying a product from external vendors is highly appropriate when a firm intends to protect proprietary technology.
False
Concentrated retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels.
False
Firms based in less-developed nations tend to build a lot of extra performance attributes into their products.
False
Firms may choose an ethnocentric approach to staffing as opposed to a polycentric approach because of the cost savings it promotes.
False
Firms would prefer buying component parts, or an entire product, from independent suppliers to protect proprietary product technologies.
False
Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.
False
If a firm manufactures its product in a particular country, it can sell directly to the consumer, to the retailer, or to the wholesaler. The same options are not available to a firm that manufactures outside the country.
False
Import agents are typically limited to independent trading houses.
False
In a competitive market, prices have to be higher than in a market where the firm has a monopoly.
False
In a seminal study, R.L. Tung revealed that for European firms, the top reason for expatriate failure was the inability of the manager to cope with larger overseas responsibilities.
False
In highly developed countries, in the context of communication, noise tends to be low.
False
Logistics includes the buying of raw materials and component parts.
False
Make-or-buy decisions are decisions that concern the components to be used in a production process.
False
Managers in a source factory operate in essentially the same way that managers in an offshore factory operate. They have very little say in purchasing or logistics decisions.
False
Markets can be segmented in only one way—by sociocultural factors.
False
Mercantilist doctrine advocates unrestricted free trade between countries.
False
Most managers believe that knowledge of a foreign language is necessary to succeed in an international posting.
False
Organizations are under pressure to produce products in the optimal location and to serve the world market from there if their products have low value-to-weight ratios.
False
Products such as electronic components and pharmaceuticals have low value-to-weight ratios.
False
Source effects occur when the receiver of the message evaluates the message based on the context of the message.
False
The argument for centralizing production will be greater if the minimum efficient scale of a plant relative to total global demand is low.
False
The gold standard called for fixed exchange rates against the U.S. dollar.
False
The most popular staffing policy is the ethnocentric approach.
False
Trade wars benefit countries with interventionist governments.
False
XYZ Toys manufactures and sells small quantities of each of its products, but it can still benefit from economies of scale.
False
___ is essentially the service-industry version of licensing, although it normally involves much longer-term commitments.
Franchising
_______ in agriculture could jump-start economic growth among the world's poorer nations and alleviate global poverty.
Free Trade
per person figures can be misleading because they don't consider differences in the cost of living
GNI
Which of the following is a drawback of the polycentric approach to staffing?
Host-country nationals have limited opportunities for advancement beyond senior positions in their subsidiary.
Which of the following statements about individualism is true?
Individualism and democracy go hand in hand.
The agreement reached at Bretton Woods established the
International Monetary Fund.
What is an advantage of the geocentric staffing policy?
It enables the firm to grow its human resources department.
Which of the following is a major benefit of engaging in free trade?
It gives countries access to products that they cannot produce.
Which of the following statements is true of exporting?
It helps a firm achieve economies of scale.
The most recent attempt to reenergize the free trade movement in Africa occurred in early 2001, when ________, Uganda, and Tanzania, member states of the East African Community (EAC), committed themselves to relaunching their bloc, 24 years after it collapsed.
Kenya
Which of the following established the second largest currency zone in the world?
Maastricht Treaty
________ supports the idea that countries should export more than they import.
Mercantilism
When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?
Mergers and acquisitions are quicker to execute than greenfield investments
Identify the theory that supports the view that, in some cases, countries export for the reason that the world market can support only a limited number of firms.
New Trade Theory
The ________ adjustment allows for a more direct comparison of living standards in different countries.
PPP
Max Weber theorized that there was a relationship between Protestantism and the emergence of modern capitalism because
Protestant ethics emphasize the importance of hard work and wealth creation and frugality.
What is a disadvantage of the integration of the international capital market facilitated by technology?
Shocks that occur in one financial center will spread globally.
A citizen of Japan who moves to the United States to work at Microsoft would be classified as an inpatriate.
T
A manager might be sent on several foreign postings over a number of years to build his or her cross-cultural sensitivity and experience as part of a management development program.
T
A push strategy makes sense when distribution channels are short.
T
An executive who performs well in a domestic setting may not be able to adapt to managing in a different cultural setting.
T
An expatriate manager is a citizen of one country who is working abroad in one of the firm's subsidiaries.
T
Cultural myopia refers to a firm's failure to understand host-country cultural differences that require different approaches to marketing and management.
T
Cultural toughness refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular posting.
T
Decentralization of production is appropriate when the product does not serve universal needs.
T
Flexible manufacturing technologies enable companies to customize products to the demands of small consumer groups.
T
Four elements comprise the marketing mix: product attributes, distribution strategy, communication strategy, and pricing strategy.
T
Global learning refers to the idea that valuable knowledge does not reside just in a firm's domestic operations.
T
HRM professionals have a critically important strategic role.
T
Historically, most international businesses have been more concerned with training than with management development, focusing on preparing home-country nationals for foreign postings.
T
In a concentrated retail system, there are many retailers, none of which has a significant share of the market.
T
In the case of an ethnocentric approach, it is possible that managers may make decisions that are ethically suspect because they do not understand the culture in which they are managing.
T
Mass customization facilitates product customization at low costs.
T
Modern consumer products such as personal computers serve universal needs.
T
Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of those activities
T
Poor product quality and low productivity are hidden costs associated with basing production in a foreign location.
T
Production is also sometimes referred to as operations as part of a global supply chain.
T
Products sell well when their attributes match consumer needs.
T
Selection is the first step in matching a manager with a job.
T
Six Sigma is a qualitative alternative to total quality management that focuses primarily on managing human resources to improve profitability.
T
The entry of large discount superstores such as Tesco and Carrefour has shortened channel length in some countries.
T
The firm that sources from independent suppliers has less inventory to manage.
T
The four main differences between distribution systems worldwide are retail concentration, channel length, channel exclusivity, and channel quality.
T
The longer the distribution channel, the more intermediaries there are that must be persuaded to carry the product for it to reach the consumer.
T
The more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer.
T
The set of choices the firm offers to its targeted markets is known as the marketing mix
T
The structure of market segments may differ significantly from country to country.
T
The upstream portion of the global supply chain includes all of the organizations and resources in the supply chain.
T
If, for example, the textile industry in a nation is characterized by vigorous domestic rivalry, which of the following observations of this nation's international competency is most likely to be true?
The nation's textile firms will have a competitive advantage in international trade.
________ refers to a state where political power is monopolized by a party, group, or individual that governs according to religious principles.
Theocratic totalitarianism
Which of the following statements about the legal systems of countries is true?
They can affect the attractiveness of a country as an investment site or market.
Which of the following is a trade barrier that affects a firm's strategy?
To conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise.
A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.
True
According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.
True
After the agreement reached at Bretton Wood, the dollar was the only currency that could be convertible into gold.
True
Apple's iPhone was unique when it first came out, with many features that no other phones had. As such, it enjoyed great success and dominated the cell phone market. This demonstrates the first-mover advantage.
True
Gadgets, Inc., wants to enter a foreign market on a small scale. This will allow it to learn about the market while limiting the firm's exposure to that market.
True
The International Fisher Effect states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between the two countries.
True
The World Trade Organization was created as part of the Uruguay Round
True
The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the U.S. dollar.
True
The foreign exchange market converts the currency of one country into that of another country.
True
The theories of Smith and Ricardo show that a country should engage in international trade, even for products that it is able to produce for itself.
True
The value of a currency is determined by the interaction between the demand and supply of that currency relative to the demand and supply of other currencies.
True
To minimize the risk of an unanticipated change in exchange rates, a company can protect itself by entering into a forward exchange contract.
True
Since World War II, the largest source country for FDI has been
US
________ makes it difficult to evaluate the performance of expatriate managers objectively.
Unintentional bias
Three countries agree to remove barriers to trade between member countries and adopt a common external trade policy toward nonmembers. They also agree to allow people and other factors of production to move freely across their borders. Which level of economic integration is this an example of?
common market
Manchu believed that socialism could be achieved only through violent revolution and totalitarian dictatorship. Manchu was likely a
communist
The international monetary fund has been criticized for
compromising the jurisdiction and decision making powers of the receiving country
________ are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits.
control systems
What are the two main functions of the foreign exchange market?
converting currency and providing some insurance against foreign exchange risk
An organization's norms and value systems are known as its
corporate culture
An important drawback of a purely domestic capital market is that the
cost of capital tends to be higher than it is in a global market.
The continuing persistence of ________ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences.
cultural and economic
___ refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular posting.
cultural toughness
The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as
currency speculation
Which level of economic integration eliminates trade barriers between member countries and adopts a common external trade policy?
customs union
Which of the following statements is true of debt loans?
debt loans should be repaid at regular intervals
In order to manage an international business efficiently, managers must
decide if it is ethical to accept the lower labor and environment standards found in many less developed nations
What are two macro factors that underline the trend toward greater globalization
decline in trade barries tech. change
Creating and managing a globally dispersed production system is facilitated by the blank real costs of information processing and communications
decrease in
The risk associated with a portfolio
decreases as the investor increases the number of stocks in her portfolio.
Several of the fastest-growing Asian economies adopted more ________ governments during the past three decades, including South Korea and Taiwan.
democratic
A free market economy in which property rights are protected leads to subsequent economic growth that often leads to the establishment of
democratic regime
The value of U.S. dollar increased between 1980 and 1985
despite running a growing trade deficit
There is a tendency for greater retail concentration in
developed countries
Opponents of globalization are concurred that manufacturing jobs will be moved to more blank counties
developing
Plato ________; he believed that society should be stratified into classes, with those best suited to rule administering society for the benefit of all
did not equate collectivism with equality
Critics of globalization protest in order to
diminish the impact of the culture of multinational enterprises on the world
Support activities are always less important than the primary activities in achieving a competitive advantage.
false
When a country tries to hold the value of its currency within some range against an important reference currency such as the U.S. dollar without adopting a formal pegged rate, it is referred to as a
dirty float
The means a firm chooses for delivering the product to the consumer is its
distribution strategy
A major difference between Buddhism and Hinduism is that unlike Hinduism, Buddhism
does not support the caste system
The globalization of markets and production implies that
domestic firms are facing intense completion from foreign firms
Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on
domestic market
A market economy encourages innovation because
economic freedom leads to greater incentives for innovation.
The variety of goods that a country can produce is limited by the size of the market in industries where ________ are important.
economies of scale
Walmart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors. This allows Walmart to offer greater discounts to its customers. In this case, Walmart benefits from
economies of scale
The general assertion is that nations investing more in ________ will have higher economic growth rates.
education
The ________ all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position.
efficiency frontier shows
The opponents of globalization argue that falling barriers to international trade
eliminate manufacturing jobs in wealthy economies
In return of offering loans, the international monetary fraud
enforced its economic policies on nations
The Uruguay Round provided
enhanced protection for patents, trademarks, and copyrights.
Which of the following is a legal means by which the state can expropriate the profits from innovation?
excessive taxation
The ________ helps consumers compare the relative prices of goods and services in different countries.
exchange rate
The international monetary system refers to the institutional arrangements that govern
exchange rates
The premature return of an expatriate manager to his or her home country is known as
expatriate failure
Which of the following observations about tariffs is true?
export tariffs are used to raise revenue for the government
International trade occurs when a company
exports goods or services to consumers in another country
Expatriate failure refers to a manager's failure to understand host-country cultural norms and values, leading to ineffective work.
fAlse
Influential economists, politicians, and business leaders who favor globalization argue that __________.
falling barriers to international trade drive the economy towards greater prosperity
Which of the following issues are raised by antiglobalization demonstrations
falling barriers to international trade results in job losses in those industries targeted by foreign competitors
A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if the U.S. dollar appreciates against the Chinese currency.
false
A good ally will expropriate the firm's technological know-how while giving away little in return.
false
A knowledge network is a network for transmitting information within an organization that is based on formal organizational structure.
false
A letter of credit states that an exporter has availed credit from the bank to manufacture goods.
false
A sight draft allows for a delay in payment.
false
A wholly owned subsidiary limits a firm's control over marketing and sales in different countries.
false
Acquisitions rarely produce disappointing results.
false
As competition intensifies, global standardization strategies and transnational strategies tend to become less viable, and managers need to direct their companies toward either an international strategy or a localization strategy.
false
Because of the fact that everyone benefits from economic integration, it is easy to achieve and sustain.
false
Concentration of production should be avoided when important exchange rates are expected to remain relatively stable.
false
During the 1980s and early 1990s, the world trading system erected by the GATT gained momentum as protectionist demands generally decreased across the world.
false
Economist Martin Feldstein has coined the term "hot money" to pertain to long-term capital flows.
false
Enterprises that pursue an international strategy tend to decentralize control over marketing and product strategies.
false
Establishment of the euro created the largest currency zone in the world, replacing the position the U.S. dollar had held for decades.
false
Eurobonds are usually offered to residents of the country in whose currency they are denominated.
false
Eurobonds fall within the regulatory domain of the European Economic Community.
false
Firms pursuing a localization strategy tend to operate with an array of formal and informal integrating mechanisms.
false
Fixed exchange rates lead to speculation and uncertainty in the value of currencies.
false
For a firm, all positions on the efficiency frontier are viable.
false
Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.
false
GATT has not recognized the infant industry argument as a legitimate reason for protectionism.
false
Governments give banks less freedom when they deal in foreign currencies.
false
Heckscher-Ohlin theory stresses that comparative advantage arises from differences in productivity.
false
If $1 bought more yen with a spot exchange than with a 30-day forward exchange, it indicates the dollar is expected to depreciate against the yen in the next 30 days. When this occurs, we say the dollar is selling at a premium on the 30-day forward market.
false
If a firm's core competence is proprietary technological knowledge, a joint venture is preferable.
false
If the international capital market continues to grow, financial intermediaries likely will provide less quality information about foreign investment opportunities.
false
If the spot exchange rate is £1 = $1.50 when the market opens, and £1 = $1.48 at the end of the day, the pound has appreciated, and the dollar has depreciated.
false
If the spot rate is $1 = 120, and the 30-day forward rate is $1 = ×130, the dollar is selling at a discount in the forward market.
false
Implementing a fixed exchange rate regime increases the price inflation in countries.
false
In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade policies.
false
In a multinational enterprise, skills are typically generated at the home location and are then dispersed to the rest of the organization.
false
It is important to realize that organizational change will occur regardless of the commitment of senior managers to it.
false
Licensing involves the establishment of a new operation in a foreign country.
false
Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.
false
Market forces have produced a stable dollar exchange rate under a floating exchange rate regime.
false
Once the barriers to trade and investment are removed, companies are able to realize cost economies by centralizing production in key locations and producing a standardized product for a single multiple-country market.
false
One of the sources of economies of scale is the ability to spread fixed costs over a small volume.
false
One way countries have encouraged firms to undertake FDI is through double taxation.
false
Organizational structure refers to the totality of a firm's organization.
false
Porter's theory of national competitive advantage recommends unrestricted free trade between countries.
false
Proactive firms do not consider exporting until their domestic market is saturated.
false
Protecting industries deemed important for national security and retaliating against unfair foreign competition are economic arguments for government intervention.
false
Pursuing a global standardization strategy is appropriate when a firm is facing low pressures for cost reduction but high pressure for local responsiveness
false
Pursuing a global standardization strategy is appropriate when a firm is facing low pressures for cost reduction but high pressure for local responsiveness.
false
Research has shown that in the modern multinational enterprise, core competencies and skills typically reside in the home country.
false
Resources always move easily from one economic activity to another.
false
A Japanese firm prefers expatriate Japanese managers to head its foreign operations because these managers have been socialized into the firm while employed in Japan. This indicates that the firm
follows an ethnocentric staffing policy to maintain a unified corporate culture.
ABC Global has decided to invest resources in business activities outside its home country. This is called
foreign direct investment (FDI).
When a company invest in a company or entity outside its home country. it is participating in
foreign direct investments
_______ arises from volatile changes in exchange rates.
foreign exchange risk
The G20 was originally established to
formulate a coordinated policy response to financial crises in developing countries
Countries with ________ retail systems tend to have long channels of distribution.
fragmented
What term refers to a situation in which a government does not attempt to restrict what its citizens can buy or sell to another country?
free trade
________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country.
free trade
From least integrated to most integrated, the levels of economic integration are a:
free trade area, a customs union, a common market, an economic union, and a political union.
A ________ market benefits investors by providing a wider range of investment opportunities, thereby allowing them to build portfolios of international investments that diversify their risks.
global capital
Many firms, of all national origins, increasingly depend on ________ for their competitive advantage.
globally dispersed production systems
The amount of a currency needed to purchase one ounce of gold was referred to as the
gold par value
Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include
governments
In countries where the value of ________ identification is considered to be primary, managers and workers are discouraged from moving from company to company.
group
The ________ theory argues that the pattern of international trade is determined by differences in factor endowments.
heckscher-Ohlin
Which of the following factors form a barrier to international trade
high tariffs on imports on foreign goods
The cost of capital is
higher in a purely domestic capital market than in a global market.
the risks of doing business in countries that are facing revolution is
higher than in countries not facing revolutions
From the perspective of a firm negotiating the terms of an investment with a host government, the firm's bargaining power is high when the
host government places a high value on what the firm has to offer.
If a domestic industry lacks the capacity to meet demand, an ________ can raise prices for both the domestically produced and the imported good.
import quota
Studies exploring the share of labor in nation income over the last two decades show that the share of national income accounted for by skilled labor has
increases
Which of the following is a consequence of globalization?
increasing outsourcing of services
One of the reasons for the spread of democracy is the emergence of ________ who have pushed for democratic reforms.
increasingly prosperous middle and working classes
In a(n) ________ society, the welfare of society is best served by letting people pursue their own economic self-interest.
individualist
James work at a lawn mower manufacturing company in st.Lousis, Missouri, and his company imports component parts from Thailand and also ships product to various countries. Example of
internation business
In the early 1960's the US was the worlds dominate industrial power. How does the US position compare today?
it has diminished in power
Under the mudarabah banking system, when an Islamic bank lends money to a business
it takes a share in the profits that are derived from the investment.
What are three examples of factors of production?
labor capital sales
In some countries, the official GNI per capita measured at PPP data does not reflect the actual total annual income because
large amounts of economic activity may be in the form of barter agreements.
Those who support globalization argue that increasing globalization will
lead to reduced prices for goods and services
___ allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.
lean production
A ________ states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.
letter of credit
The systematic risk of the stock market is the
level of nondiversifiable risk in an economy.
As transportation costs or trade barriers increase, exporting becomes unprofitable, and the choice is between FDI and
licensing
Which of the following is one of the measures that HDI is based on?
life expectancy at birth
The liquidity of the market is ________ in a purely domestic capital market.
limited
A purely domestic capital market faces the problem of
limited liquidity
A polycentric approach may be effective for firms pursuing
localization
A firm pursuing ________ will have a strong incentive to decentralize decision making.
localization strategy
________ arise(s) from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets.
location specific advantages
Beginning in the 1970's European and Japanese firms began to shift labor-intensive manufacturing operations to developing nations with
lower labor cost
The concept of mobility between castes within an individual's lifetime
makes no sense to traditional hindus
In a ________, any individual who has an innovative idea is free to try to make money out of that idea by starting a business (by engaging in entrepreneurial activity).
market economy
The economic freedom associated with a ________ creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.
market economy
In a ________, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more.
market econoomy
The process of identifying distinct groups of consumers whose purchasing behavior differs from others in important ways is known as
market segmentation
A major factor of success for new products is the closeness of the relationship between
marketing and R&D
New trade theory suggests that nations
may benefit from trade even when they do not differ in resource endowments or technology.
If China continues to move toward greater free market reforms it
may more from third-world to industrial superpower status
The majority of cross-border investment in the developed world is in the form of
mergers and acquisitions.
In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government
mixed
In which of the following economies would the government be most likely to take into state ownership troubled firms whose continued operation is thought to be vital to national interests?
mixed economies
What are two implications derived from the fact that the volume of world trade has been growing faster than world GDP?
more companies are dispersing production processes to different locations around the globe the world has become significantly wealthier in recent decades
As international trade expands, the economics of the world's nation-state are becoming
more interwined
________ include such factors as indictments against theft, adultery, incest, and cannibalism.
mores
Which of the following factors hinders globalization of consumer goods market?
national differences in tastes and preferences
Which of the following theories stress the role of luck, entrepreneurship, and innovation in the production and export of a good or service by the firms in a country?
new trade theory
Which of the following theories suggests that first-mover advantage is significant in the export of a good?
new trade theory
Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as
norms
A firm's organizational culture refers to the
norms and value sysF
Which of the following is a reason the European Union is considered an imperfect economic union?
not all members of the union have adopted the euro
Culture is
not static
FDI undertaken to serve the home market is known as
offshore production
Regardless of a firm's domestic structure, its international division tends to be
organized on geography.
A U.S. investment firm set up a customer service call center in India to take advantage of lower labor costs. This is called
outsourcing
A ________ means the value of a currency is fixed relative to a reference currency.
pegged exchange rate
Expatriate managers who lack ________ tend to treat foreign nationals as if they were home-country nationals.
perceptual ability
The two most common methods of restricting inward FDI are ownership restraints and
performance requirements
International Monetary Fund members were ________ in the Jamaica agreement.
permitted to sell their own gold reserves at the market price
The text list several reasons that stand out as the cause for economical stagnation in the worlds poorest countries, including which three of the following?
poor property rights protection prolonged civil war totalitarian governments
Research and development, production, marketing and sales, and customer service are all examples of
primary activities
The abolition of ________ in a command economy means there is no incentive for individuals to look for better ways to serve consumer needs
private ownership
The manner in which decisions are made and work is performed within the organization is known as the firm's
processes
Consumers in highly developed countries value ________ as compared to their counterparts in less developed nations.
product attributes
The ________ argues that a large proportion of the world's new products had been developed by U.S. firms.
product life-cycle
Country X, a poor country, invents a revolutionary electronic product. The country markets this new product in other poor countries to garner large profits. This occurrence is against the idea o
product life-cycle theory
The ________ and Knickerbocker's theory of FDI tend to be less useful from a business perspective because they are descriptive rather than analytical.
product life-cycle theory
According to the concept of economies of scale, as plant output expands
productivity declines.
________ is measured by the percentage increase in net profits over time
profit growth
_ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital.
profitabilty
What term is used to describe a state in which authoritarian elements have captured some or much of the machinery of state and use this in an attempt to deny basic political and civil liberties?
pseudo-democracies
To account for differences in the cost of living, one can adjust GNI per capita by ________, which allows for a more direct comparison of living standards in different countries.
purchasing power
The extra profit that producers make when supply is artificially limited by an import quota is referred to as a
quota rent
What is the primary reason Africa has attracted FDI in recent years?
raw material availability
Inadequate protections for intellectual property
reduce the incentive for innovation
Over the past 20 years, more countries have been blank barries to foreign direct investments
removing
When a company brings capital and/or technology to a host country, the host country benefits from the
resource-transfer effect of FDI
A country with high car ownership, a large number of households with refrigerators, and a large number of two-income families tends to have
retail concentration
Economies of scale arise from which of the following sources?
serving domestic and international markets from the same production facilities
The rise in the number of mini-multinationals means that:
small businesses are becoming increasingly involved in international trade and investment.
On average, studies indicate that NAFTA's overall impact has been
small but positive
The term ________ stresses that the political, economic, and legal systems of a country are interdependent.
socialism
The presence of McDonald's in Tokyo, the opportunity to easily buy iPads in Rio and Berlin and the rest availability of Gap jeans in Pars as well as San Francisco are examples of
the emergence of global markets for consumer products
A study published in 2011 by the OECD noted that
the gap between the poorest and richest segments of society in some OECD countries had widened.
The relative decline of the United States in the share of world output and world exports reflects
the growth in the economic development of the world economy
A country is said to be in balance-of-trade equilibrium when
the income its residents earn from exports is equal to the money its residents pay to other countries for imports.
Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects
the increasing internationalization of business corporations
There have been two notable trends in the demographics of multinational enterprises since the 1960's. These include
the rise of non-U.S. multinationals the growth of mini-multinationals
Which of the following focuses on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments?
the world bank
Which of the following statements pertaining to innovation and entrepreneurship is true?
they are the engines of growth
Which of the following statements is true about microprocessors
they can decode vast amounts of information
supporters of globalization suggest that a solution to the problem of slow real income growth among unskilled workers is blank society investment in education
to increase
Why did many Japanese firms invest in North America and Europe in the 1970s?
to provide a hedge against unfavorable currency movements
What statements accurately describes the current membership of the united nations
today, nearly every nation in the world belongs to the united nations
The stock for foreign direct investments refers to the blank of foreign investments as a % of country's GPA
total cumulative value
Some ________ have fostered a market economy and strong property rights protection and have experienced rapid economic growth.
totalitarian regimes
Systems that emphasize collectivism tend toward
totalitarianism.
________ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.
trade creation
Which system of government generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism?
tribal totalitarianism
________ occurs when a political party that represents the interests of a particular tribe (and not always the majority tribe) monopolizes power.
tribal totalitarianism
A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.
true
A capital market brings together those who want to invest money and those who want to borrow money.
true
A currency swap deal enables companies to insure themselves against foreign exchange risk.
true
A decentralized organization allows managers to respond to environmental changes more quickly than in a centralized organization.
true
A joint venture is often politically more acceptable than a wholly owned subsidiary and brings a degree of local knowledge to the subsidiary.
true
A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.
true
A manager receives a bonus because the national operating subsidiary that she is in charge of exceeds its performance target. This is an example of an incentive.
true
A strategic commitment can be reversed by the top management at will.
true
According to Paul Samuelson's critique, a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.
true
According to Porter, the way to create superior value is to drive down the cost structure of the business and/or differentiate the product in some way so that consumers value it more.
true
An oligopoly is an industry composed of a limited number of large firms.
true
Antidumping actions are concentrated in certain sectors of the economy such as basic metal industries, chemicals, plastics, and machinery and electrical equipment.
true
Antidumping policies are designed to punish foreign firms that are engaged in dumping.
true
Arbitrage opportunities in foreign exchange markets tend to be small and disappear quickly.
true
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 US and other long established developed nations
true
Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.
true
Brand names such as Starbucks and Subway are well protected by international laws pertaining to trademarks.
true
By producing its product in a centralized location, licensing limits a firm's ability to realize experience curve and location economies.
true
By using the global capital market, investors have a much wider range of investment opportunities than in a purely domestic capital market.
true
Charlyce lives in a country where there are no barriers to the trade of goods and services. This is called a free trade area.
true
Concerns about national sovereignty in the EU have been a major impediment to economic integration.
true
Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.
true
Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.
true
Depositors are not protected against bank failures in the Eurocurrency market.
true
Export tariffs are far less common than import tariffs.
true
Exporting from a firm's home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad.
true
Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.
true
Firm ABC is pursuing a localization strategy that is focused on local responsiveness. Therefore, the need for integration and coordination between self-contained country subsidiaries is low.
true
Franchising enables a firm to quickly build a global presence
true
Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.
true
Greenfield ventures are less risky than acquisitions in the sense that there is less potential for unpleasant surprises.
true
Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.
true
If the law of one price were true for all goods and services, the purchasing power parity (PPP) exchange rate could be found from any individual set of prices.
true
Mergers and acquisitions are quicker to execute than greenfield investments.
true
New processes that might lead to a competitive advantage can be developed anywhere within the organization's global network of operations.
true
Overpayment for assets of an acquired firm is one reason acquisitions fail.
true
Political turmoil in several African nations has persistently impeded any meaningful progress in economic integration.
true
