International Business - Final
Globalization can be viewed as a four-dimensional concept. Each of the following is a recommended dimension for considering globalization except
Consumer Mindset
T/F: Globalization should be considered as a binary variable with only two values: global and nonglobal
False
T/F: In terms of minimum efficient scale of output, the "unit cost curve" rises with output until a certain output level is reached, at which point further increases in output realizes little reduction in unit costs
False
T/F: It is easier for companies based in countries with a high degree of class consciousness to establish a competitive advantage in the global economy.
False
The US accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The US, therefore, imposed trade sanctions against the two. WHich of the following arguments does this exemplify
Corporate security
The country's culture is male dominated, ________ is needed to predict success in foreign postings
Cultural toughness
What can happen if a country's government does not control the rate of growth in money supply?
Currency can depreciate in the future
T/F: Licensing, a mode of entry into a foreign market, gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies
False
T/F: Organizational architecture refers to an organizations norms and value systems
False; Corporate culture
T/F: One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self interest
False; Individualism
T/F: Command economies provide a more favorable environment for innovation and entrepreneurs than market economies
False; Market economies are better
T/F: According to a study by R.L. Tung, the most important reason for expatriate failure among US multinationals was difficulty coping with a new environment
False; Spouse inability to adjust
T/F: By the mid 1990s, communism was rising worldwide
False; it was in decline in the 90s
T/F: Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable
False; looks appealing, is unworkable
T/F: Citizens of a foreign country working in the home country of their multinational employer are known as repatriates
False; should be "inpatriates"
Steven converted $1,000 to ¥105,000 for a trip to Japan. However, he spent only ¥50,000. During this period, the value of the dollar weakened against the yen. Considering a current exchange rate of $1=¥100, how many dollars did Steven spend on the trip?
$450
According to the Fisher effect, if the "real" rate of interest in a country is 4%, the expected annual inflation is 9%. What would the nominal interest rate be?
(i=r+l) 13%
The recent trend to outsource information technology jobs to countries such as India indicates that:
A good education system is a determinant of national competitive advantage
T/F: In terms of expatriate pay, the income statement approach equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home
False; should be balance sheet approach
T/F: When companies wish to convert currencies, they typically enter the foreign exchange market directly
False; they go to their own banks
T/F: By lowering production costs, subsidies help foreign competitors gain export markets
False; they help domestic producers
Which of the following is a step taken to manage foreign exchange risk?
Firms need to develop strategies for dealing with economic exposure
Omega Inc, a US firm entered into an agreement with another party to exchange currency and execute the deal at a specific date in the future. What is Omega engaging in when it insures itself against foreign exchange risk?
Hedging
Dharma, Karma, and Nirvana
Hinduism
Max Weber argued that the ascetic principles embedded in __________ do not encourage entrepreneurial activity in pursuit of wealth creation because it is perceived that such activities make the attainment of Nirvana more difficult
Hinduism
Reincarnation and spiritual progression is with
Hinduism
Which of the following statements is true of Geert Hofstede's work on cultural dimensions?
His work fails to consider that many countries have more than one culture
In 1904, who theorized that there was a relationship between Protestantism and the emergence of modern capitalism?
Max Weber
Which of the following staffing approaches limits career mobility and isolates headquarters from foreign subsidiaries?
Polycentric
________ is a hidden cost to basing production in a foreign location
Poor product quality
In Brendan's home country, senior officers eat in the same cafeteria as the entry level workers while other countries were separated. Which Hofstede dimension is this attributed to?
Power distance
The country of Cadmia, which is a leading producer of bauxite, had to impose trade sanctions on Cerian soda cans in order to get the government of Ceria to enforce export restraints. This imposition by the Cadmian government was undertaken to protect domestic producers of soda cans. Which of the following government intervention is being used by Cadmia?
Retaliation
The philosophy behind intellectual property laws is to
Reward the originator of a new invention, book, musical record, and the like for their idea and effort
Which of the following generally permits individual economic freedom but restricts individual political freedom on the grounds that it would lead to communism?
Right wing totalitarianism
For centuries, Somarya was a capitalist country where the rich became richer and the poor became poorer. A group calling itself the "change brotherhood" sought to convert it to a socialist country by democratic means. This is an example of:
Social democrats
In the video, what is defined as the commanding heights of the economy?
Steel, railroads, coal, and other heavy industry
What is one example from the video that exemplifies the boom of the US economy in the 1920s
Stock market
Which of the following statements is true about Hinduism?
Supports caste system
If a firm possesses proprietary technology, the best option for that firm would be to:
manufacture the product in house so that it does not lose competitive advantage
Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because:
neither the importing country or the exporting country complained to the GATT bureaucracy for it to take action
A principal concern of domestic unions about multinational firms is that a company can counter its bargaining power with ______________
the power to move production to another country
The country of Argonia imposes an ad valorem tariff of 10% on 1 million tons of rice imports, after which an out of quota tariff of 80% is applied. Which trade policy is being used?
Tariff rate quota
_______ has caused proprietary software solutions to implement electronic data interchange systems to become obsolete
The internet
Concentration of production makes most sense when
Trade barriers are low
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)
Which of the following protects the Nike swoosh logo
Trademark
_________ is concerned with the present measurement of past events
Translation exposure
A product's value-to-weight ratio effects location decisions primarily because of its influence on ____________
Transportation costs
Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance?
Trend toward greater protectionism
T/F: An expatriate manager is a citizen of one country who is working abroad in one of the firm's subsidiaries
True
T/F: Currency swaps are transacted between international business and their banks, between banks, in between governments when it is desirable to move out of one currency into another for a limited period without incurring foreign exchange risk
True
T/F: Government intervention in international trade can take the form of reducing restrictions on imports and adopting policies that promote exports
True
T/F: Multidomestic industries involve producing products or services that are tailored to individual countries
True
T/F: Other things being equal, a nation with democratic institutions is clearly more attractive as a place in which to do business than a place that lacks democratic institutions
True
T/F: Paul Krugman asserts that a strategic trade policy is almost certain to be captured by special-interest groups within the economy who will distort it to their own needs
True
T/F: The concept of economies of scale tells us as plant output expands, unit costs decrease
True
T/F; It is important that the spouse of an expatriate manager, and perhaps the whole family, be included in cultural trading programs
True
In the US, the Foreign Corrupt Practices Act was passed during the 1970s following revelations that
US companies had bribed government officials in foreign countries in an attempt to win lucrative contracts
Local content requirement
a requirement that some specific fraction of a good be produced domestically
Licensing is NOT attractive to which of the following firms?
firms requiring tight control of operations for realizing experience curve and location economies
Advantages of turnkey projects when entering foreign markets
it is a useful strategy to earn great returns from the know-how of a technologically complex process
Small-scale entry into a foreign market makes it difficult to build market share because
it is associated with a lack of commitment demonstrated by the foreign firm
Which of the following is an example of a first mover advantage?
Ability to create switching costs that tie customers into one's products or services
One way organized labor responds to the increase bargaining power of multinational corporations is by trying to
Achieve international regulations on multinationals through the UN
If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n):
Acquisition
Which of the following is a benefit of globalization?
All of these hoes
Assume that the yen/dollar exchange rate quoted in London at 3 p.m. is $1 = $125Yen and that the yen/dollar exchange rate quoted in New York at the same time is $1 = 130. Which profit making situation exists here?
Arbitrage
T/F: For price discrimination to work, arbitrage opportunities must be unlimited
False
Why does Taviscon Int. want an ethnocentric staffing policy?
Because it believes the host country lacks qualified individuals for senior management positions
____________ is an example of an industry in which cross-licensing agreements are increasingly becoming common
Biotech
Tyrone believes that he should be loyal to his superior but in turn his superiors should reciprocate his loyalty by bestowing their blessings on him
Confuscianism
Which of the following is a nonreligious ethical system principally in china, korea, and japan
Confuscianism
When residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency, the phenomenon is generally referred to as
Capital flight
The Smoot-Hawley Act had a damaging effect on
Cash flow in the domestic economy of the US
A social system that allows for flexibility in terms of social mobility determined by socioeconomic achievements is what type of system of social stratification?
Class
What are the two main contradicting ideas presented in this video? - ignore this question -
Command vs market economy
Ad valorem tariff
depends on the proportion of the value of the imported good
Which of the following allows suppliers, shippers, and the purchasing firm to communicate with each other via the internet with no time delay?
Electronic data interchange (EDI) system
Which of the following is true about Western societies?
Emphasize individual achievement
Which of the staffing policies requires all the expatriates to be home country nationals who are transferred abroad?
Ethnocentric
T/F: A firm that improves its quality control cannot reduce the cost of value creation simultaneously
False
T/F: By considering advantages and disadvantages, tradeoffs can often be avoided when selecting an entry mode
False
T/F: Compared to a common law system, it is more expensive to draw up contracts in a civil law jurisdiction
False
T/F: Exporting as a mode of entry into foreign markets does not help a firm achieve experience curve and location economies
False
Which of the following includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products?
Flexible machine cell
Which of the following is true of Islam?
Forbids consumption of pork and alcohol
Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know how is not much of a concern and where the firms valuable asset is their brand name?
Franchising
Yamaguchi Media, a Japanese advertising agency, has a policy in its global business of appointing what it believes is the best person for the job in its various locations regardless of a candidates nationality. What is this approach?
Geocentric
A common feature of many right-wing dictatorships is
Governments that are made up of military officers
Which of the following is true of the efficient market school of thought toward exchange rate forecasting
Inaccuracies in predictions will not be consistently above or below future spot rates; they will be random
Producing a standardized product in large volumes will:
Increase production efficiency
Adopting flexible manufacturing technology to produce a wide variety of end products results in:
Increased utilization of individual machines
Cultures where a personal brand is emphasized is _________
Individualism
____________ refers to a subset of expatriates who are citizens of a foreign country working in the home country of their multinational employer
Inpatriates
Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?
It is useful to earn great adjsnf;ajbdf;b
Which is a possible downside of emphasizing the primacy of group identification over individualism?
It leads to a lack of dynamism and entrepreneurship
Which of the following is a characteristic of an ethnocentric staffing policy?
It places parent country nationals in key management positions
Which of the following firms should concentrate its production in a centralized location?
Jupiter Inc. operates in an industry where fixed costs are high and services of supporting industry are of prime importance
Which of the following refers to logistics system designed to deliver parts to a production process as they are needed, not before?
Just in time inventory
____________ was pioneered by Japanese firms during that country's remarkable economic transformation during the 1960's and 1970's
Just in time inventory
Modern socialism traces its intellectual roots to:
Karl Marx
Which of the following foreign exchange trading centers has the highest percentage of activity?
London
Administrative trade policy
Make it difficult for imports to enter a country through bureaucratic policy
The level of output at which most plant-level scale economies are exhausted
Minimum efficient scale
If a country wants to improve its attractiveness as a place for doing business and as an investment site, it should:
Move toward a market based system
In a society, actions of people directed toward one another are governed by a set of social rules called:
Norms
Which of the following best explains the reason for the rise of protectionist pressures around the world during the 1980s?
Persistent trade deficit in the world's largest economy, the US
Which of the following instances indicates that the dollar is selling at a premium at the 30 day forward market?
The current exchange rate is $1 = 120 Yen and the 30 day forward is $1 = 130 Yen
One of the reasons why protectionist pressures arose around the world during the 1980s was
The different ways many countries found to get around GATT regulations
Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market. Which of the following reflects the foreign exchange dealers' expectations about the dollar over the next 30 days?
The dollar will appreciate against the euro
Which of the following is true of high value-to-weight ratio products?
The transportation costs account for a very small percentage of total costs
States that limit the freedom of religious expression with laws based on religious principles most likely follow the political system of:
Theocratic totalitarianism
Spring, an American firm, recently acquired another company, Tazel Inc., in Indonesia. The high-level managers at Tazel quit because they could not cope with the domineering and straightforward approach of their American counterparts. This illustrates how acquisitions may fail because:
There is a clash between the cultures of the acquired and the acquiring firm
Which of the following statements is true of flexible manufacturing technologies?
They allow firms to customize products to national differences at a single facility
Maroji is a major exporter of dairy products. Mipon is a major exporter of heavy machinery but also has a sizeable domestic dairy industry. Since it imports a sizeable amount of heavy machinery from Mipon, Maroji, at the request of Mipon, limited the amount of dairy products it exports to Mipon each year. This is an example of
Voluntary export restraint (VER)
What world event ended the first age of globalization
WWI
When should a firm concentrate its production facilities in a centralized location?
When important exchange rates are expected to remain relatively stable
An expatriate manager refers to
a citizen of one country who is working abroad in one of the firms subsidiaries
Rapid economic advancement and societal changes that are favorable for international business lead to
as the country gets richer, there will be a shift in the society from traditional to secular rational values
A lead strategy involves
attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate.
A country characterized with low uncertainty avoidance and low masculinity will
be less resistant to change and less distinguishing between men and women in the same job
How can a wholly owned subsidiary be established in a foreign market?
by acquiring an established firm in the host nation
An advantage of exporting as a mode of entry into foreign markets is that a firm
can avoid the costs of establishing manufacturing operations in the host country
The nominal interest rate is 9% in Brazil and 6% in Japan, applying the international Fisher effect, the Brazilian real should
depreciate by 3% against the Japanese yen
The effect of improved quality control is to lower the costs of value creation by reducing production costs and __________
decreasing after sales service costs
A lag strategy involves
delaying the collection of foreign currency receivables when a foreign currency is expected to appreciate.
First mover disadvantages refers to
disadvantages associated with entering a foreign market before other international businesses
Over 90% of Damian Auto Products, a US based tier one auto supplier that has operations in 26 countries, senior managers are US Nationals. Which of the following staffing policies relies extensively on the use of expatriate managers?
ethnocentric
If hiring foreign nationals is difficult based on countries' laws, it is a _____________
geocentric policy
The risk of failure ___________ with a need for local adaptation in foreign markets
goes up exponentially
The principal function of the trade sanctions the US has in place against Cuba is to
impoverish Cuba to lead to the downfall of communist government
The law of one price states that
in competitive markets free of transportation costs and trade barriers, identical products sold in different countries must sell for the same price when their price is expressed in terms of in the same currency.
Which of the following is a variable used in exchange rate forecasting models based on fundamental analysis?
inflation rate
Patents, copyrights, and trademarks establish ownership rights over
intellectual
For years, the world had used the country of Votnam as a place to assemble goods because of the country's availability of cheap labor. To shift its manufacturing base from simple assembly to full-fledged manufacture of components and finished goods, Votnam introduced a policy that 35% of the value of a product must be produced locally. This is an example of
local content requirement
Less resistance to change and discouragement of any quality in power and wealth with loose ties and gender roles is __________
low uncertainty avoidance
In terms of training and management development, _____ is aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country.
practical training
A government should use subsidies to support promising firms that are active in newly emerging industries, according to
strategic trade policy
What is the beginning of the video's timeline? - ignore this question -
the start of the 20th century
In the 1960s, organized labor believed that by coordinating union action, across countries through an international trade secretariat, it could counter the power of a multinational corporation by
threatening to disrupt production on an international scale
