International Business Midterm Exam

Which of the following explains how firms can use FDI to gain and sustain competitive advantage? A. new trade theory B. monopolistic advantage theory C. factor proportions theory D. Leontief paradox

B. monopolistic advantage theory

Each of the following has contributed to the rapid growth of trade among nations EXCEPT ________. A. advances in information technology B. the increase in trade barriers C. the liberalization of markets D. the growth of emerging market countries

B. the increase in trade barriers

Economic interests refer to a firm's economic impact on ________. A. the society as a whole B. the localities where it does business C. the middle management of the firm D. the top management of the firm

B. the localities where it does business

A countervailing duty is a tariff on products imported into a country to offset subsidies given to producers or exporters in the exporting country. True False

True

A nontariff trade barrier is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs. True False

True

Born globals have emerged in large numbers for two main reasons: globalization and advances in communication and transportation technologies. True False

True

Business jargon unique to a culture can impede communication. True False

True

David Ricardo advanced the comparative advantage theory. True False

True

Differences in language and national character have similar effects as trade barriers. True False

True

Expropriation is the term used to describe a host-country government seizing the assets of a foreign corporation and providing compensation in return. True False

True

Failure to adopt CSR behaviors can have high detrimental effects on a company. True False

True

Maquiladoras refer to export-assembly plants in northern Mexico along the U.S. border that produce components and typically finished products destined for the United States on a tariff-free basis. True False

True

Religion belongs to the folk cultural makeup that we are aware of. True False

True

The innovativeness of a nation's firms has a significant impact on the national competitive advantage. True False

True

Describe four advantages of regional integration. Provide an example to illustrate each point.

1. Trade creation: leads to an increase in consumer surplus and economic welfare. 2. Job creation: could cure regional employment, wage imbalances and also labour market. 3. Attract direct investments internationally : can boost the economy of a country as well as offers more buying powers. 4. Have political cooperation: helps overcome flow of goods, capital, services, ideas, and people.

What is a collaborative venture? In a short essay, describe the two major types of international collaborative ventures.

A collaborative venture are partnerships between two or more firms. One major international collaborative venture is contractual joint venture which is between two or more parties who share the same objective in carrying out a certain task or tasks. The other major type is joint enterprise which is an activity joined into by two or more people, with common interests and level of control.

One summit attendee pointed out that the total value of her country's products trade typically accounted for more than 100 percent of her nation's GDP. This attendee most likely represents ________. A. Netherlands B. France C. Japan D. United Kingdom

A. Netherlands

Which of the following terms indicates potential loss or adverse effects on company operations and profitability caused by developments in a country's political and/or legal environments? A. country risk B. cross-cultural risk C. currency risk D. commercial risk

A. Country Risk

Which of the following characterizes country risk? A. Country risk is always present, but its nature and intensity vary over time and from country to country. B. Country risk will change only after the creation of laws and regulations that affect foreign firms. C. The political and legal systems of adjacent nations greatly impact the country risk of nations that host foreign firms. D. A nation's country risk level remains fairly constant until the election and installation of a new political leader.

A. Country risk is always present, but its nature and intensity vary over time and from country to country.

Which of the following entry strategies do most firms use in the absence of high tariffs? A. exporting B. FDI C. licensing D. joint ventures

A. Exporting

Businesses that directly initiate international business transactions are known as ________. A. focal firms B. business affiliates C. fiduciary trusts D. fiscal enterprises

A. Focal Firms

Who among the following managers is most likely to raise concern over the ban on advertising directed at children in his/her country? A. Luis B. Geoff C. Jang D. Marta

A. Luis

________ are the most transformative technology in developing economies. A. Mobile phones B. Televisions C. Intranets D. E-mails

A. Mobile phones

Subjective Dimensions of Culture (Scenario)In the last two years, the sales of consumer electronics in China have risen by 9.4 percent. Moreover, the market is becoming increasingly competitive since a large number of Japanese, European, and American manufacturers are building factories to face the competition from low-cost Chinese manufacturers. Grande Co. is a U.S.-based consumer electronics manufacturer that has been negotiating with Chinese authorities for eight years to open a factory in the country. Since Grande has spent significant time and energy on negotiation in the past eight years, they should quit and set up a factory in a more responsive society. Which of the following can be inferred from the above passage? A. The Chinese culture is more likely than not to be relationship-oriented. B. The Chinese culture is more likely than not to be deal-oriented. C. The American culture is more likely than not to be relationship-oriented. D. The American culture is less likely to take an impersonal approach to business.

A. The Chinese culture is more likely than not to be relationship-oriented.

An individual who believes in ethical normativism is most likely to view ethical behavioral standards as ________. A. universal B. dependent on societal norms C. superior to religious beliefs D. constantly changing

A. Universal

Over time, the GATT evolved into the ________. A. World Trade Organization B. World Intellectual Property Organization C. World Bank D. International Monetary Fund

A. World Trade Organization

A(n) ________ is a voluntary refusal to engage in commercial dealings with a nation or a company. A. boycott B. sanction C. expropriation D. confiscation

A. boycott

Business dealings in low-context cultures are characterized by ________. A. efficient negotiations B. complex rituals C. a high degree of sensitivity to the context D. a high degree of mutual respect

A. efficient negotiations

A proactive economic development plan initiated by the government, often in collaboration with the private sector, that aims to develop or support particular industries within the country is referred to as ________. A. national industrial policy B. national endowment policy C. national fiscal policy D. policy on national industrial relations

A. national industrial policy

Which of the following is a societal consequence of market globalization? A. offshoring and the flight of jobs B. greater emphasis on proactive internationalization C. internationalization of firm's value chain D. new risks and instant rivalry from foreign competitors

A. offshoring and the flight of jobs

A flat fee or fixed amount per unit imposed by a government on an imported product is called a(n) ________. A. specific tariff B. ad valorem tariff C. protective tariff D. export tariff

A. specific tariff

Common and Civil Law (Scenario)Zane Computer Corporation is considering the possibility of building a new manufacturing facility in a foreign country in order to lower labor and production costs. The legal department of Zane has raised some issues regarding two countries that are the top contenders for the new facility. The legal system of Country A is based on civil law, while the legal system of Country B is based on common law. Other than the legal systems of the two countries, all other aspects are virtually identical. Zane's legal experts must determine which system would be the most beneficial to Zane in the long term. Which of the following statements supports Country B over Country A? A. Laws are primarily legislative in origin and based on laws passed by national and local legislatures. B. The flexibility of common law allows for judicial interpretation in unique cases. C. Rules and principles form the starting point for legal reasoning and administering justice. D. Common law nations administer justice based on a structured set of rules.

B. The flexibility of common law allows for judicial interpretation in unique cases.

Polycentric orientation refers to ________. A. a collectivist mind-set, which emphasizes conformity, duty, prescribed roles, and sacrifice for the greater good B. a host-country mind-set in which the manager develops a strong affinity with the country in which she or he conducts business C. the tendency to rely on elaborate verbal explanations, putting much emphasis on spoken words D. the use of one's own culture as the standard for judging other cultures

B. a host-country mind-set in which the manager develops a strong affinity with the country in which she or he conducts business

According to relativists ________. A. ethical truths are absolute B. ethical truths differ from group to group C. firms and individuals should seek to uphold ethical behavioral standards consistently around the world D. a passive acceptance of others' values is unethical

B. ethical truths differ from group to group

Which of the following can extend legal protection to Hudson's proprietary software used in its toys? A. a patent B. a trademark C. a copyright D. a users' license

C. A copyright

Which of the following best explains why export growth has outpaced the growth of domestic production during the last few decades? A. Both world exports and domestic production have grown significantly over the past 30 years. B. The cost to import products is generally higher than the cost to produce domestic products. C. Advanced economies now source many of their consumable products from low-cost manufacturing nations. D. Growth in gross domestic product in most countries has steadily increased since 1970.

C. Advanced economies now source many of their consumable products from low-cost manufacturing nations.

________ is the most common primary language in the world. A. Arabic B. Spanish C. Chinese D. English

C. Chinese

Which of the following is TRUE with regard to protectionism? A. It increases the availability of products sold in the home market. B. It decreases the cost of products sold in the home market. C. It can trigger retaliation from foreign governments, which reduces sales prospects for exports. D. It increases the availability of raw materials for domestic industries.

C. It can trigger retaliation from foreign governments, which reduces sales prospects for exports.

Each of the following types of organizations is active in international business EXCEPT ________. A. NGO B. MNE C. RND D. SME

C. RND

One of the attendees represents a leading nation in the international services trade. This attendee is most likely from which of the following countries? A. Greece B. Brazil C. Singapore D. South Africa

C. Singapore

Which of the following is most important for Tag-Mart's top management to determine while making a choice between Sato and Aoki as the new store manager? A. How many locally owned stores will Tokyo Tag-Mart compete against? B. What is the average age and annual income of Tokyo Tag-Mart shoppers? C. Would customers at the Tokyo Tag-Mart prefer strong customer service or a U.S.-style shopping experience? D. How many shoppers are expected at the Tokyo Tag-Mart grand opening sale?

C. Would customers at the Tokyo Tag-Mart prefer strong customer service or a U.S.-style shopping experience?

Which of the following is an example of a new global challenger? A. an SME from Canada that began international operations early in its development B. a U.S. nonprofit that focuses on fundraising for children's health care C. a firm from Russia that is rapidly growing in the communications industry D. an MNE from France with large-scale operations across the globe

C. a firm from Russia that is rapidly growing in the communications industry

Which of the following is a method used by some manufacturers to avoid paying high tariffs? A. employ highly skilled workers in the export location regardless of the cost B. produce a large number of less expensive items in the target market C. assemble products in the target market D. ship products to fewer international locations

C. assemble products in the target market

Which of the following refers to a typical CSR value? A. sustaining sweatshops B. upholding market monopolies C. engaging in philanthropy D. increasing profits

C. engaging in philanthropy

All of the following are reasons to study international business EXCEPT ________. A. international business provides an opportunity to support sustainability and corporate citizenship B. international trade is a critical engine for job creation C. international trade and investment have experienced unprecedented decline D. international business contributes to economic prosperity

C. international trade and investment have experienced unprecedented decline

International business is also known as which of the following? A. born global business B. multi-hub business C. laissez-faire business D. cross-border business

D. Cross-border business

Which of the following, if TRUE, implies that Freedom has a strong social interest? A. Freedom considers that the key to success for MNCs lie in their ability to tap resources effectively and at a lower cost. B. According to Freedom, a firm that fails to institute a green purchasing policy in sourcing its inputs is more likely than not to fail in the long run. C. The top management of Freedom actively engages in positively contributing to the disadvantaged communities in the society. D. Despite the overseas vendor's effectiveness, Freedom decides not to enter into a contract with it because according to Freedom, tolerating sweatshop conditions is unethical.

D. Despite the overseas vendor's effectiveness, Freedom decides not to enter into a contract with it because according to Freedom, tolerating sweatshop conditions is unethical.

A(n) ________ is an official ban on exports to or imports from a particular country, in order to isolate it and punish its government. A. confiscation B. expropriation C. sanction D. embargo

D. Embargo

Which of the following statements is TRUE about value chain and international business? A. Exporting firms perform most of the research and product development and production abroad. B. Exporting firms perform most of the downstream value chain activities in the home market. C. Exporting firms perform most of the upstream value chain activities abroad. D. Exporting firms perform most of the upstream value chain activities in the home market.

D. Exporting firms perform most of the upstream value chain activities in the home market.

Which type of religious practices will Harold most likely have to study? A. Confucian B. Christian C. Jewish D. Islamic

D. Islamic

Which of the following terms refers to the existence of a legal system based on clear rules and fair enforcement? A. conciliation B. culture of law C. arbitration D. rule of law

D. Rule of law

Which of the following best supports the selection of Sato over Aoki? A. Sato is clearly more relationship-oriented than Aoki. B. Sato is likely to discourage homogenization of cultures. C. Sato is no more skilled in employee training techniques than Aoki. D. Sato is familiar with both Tag-Mart operations as well as the local customs in Japan.

D. Sato is familiar with both Tag-Mart operations as well as the local customs in Japan.

Fluctuating exchange rates are an example of which of the following? A. cross-cultural risk B. political risk C. country risk D. currency risk

D. currency risk

Trademarks, copyrights, and patents are examples of ________. A. ethical rights B. tangible property rights C. fundamental rights D. intellectual property rights

D. intellectual property rights

Feminine cultures tend to emphasize ________. A. competitiveness B. accumulation of wealth C. ambition D. interdependence among people

D. interdependence among people

A ________ is one or more resources or capabilities a company possesses that few other firms have. A. comparative advantage B. country-specific advantage C. factor endowment D. monopolistic advantage

D. monopolistic advantage

An underground economy ________. A. refers to the formal economic sector B. is characterized by dominantly legal transactions C. is regulated and monitored by public authorities D. refers to the informal economic sector

D. refers to the informal economic sector

The ability of a nation to govern its own affairs is known as ________. A. liberalization B. homogenization C. interdependence D. sovereignty

D. sovereignty

Self-reference criterion is ________. A. the tendency to understand a culture without regard to country boundaries B. the tendency to assume that all people from one culture are the same C. the propensity to understand culture as an inherited trait D. the propensity to view other cultures through the lens of one's own culture

D. the propensity to view other cultures through the lens of one's own culture

Define ethics. Provide examples of unethical behavior exhibited by firms.

Ethics is the a source of moral judgements within a given situation. Examples of unethical behavior exhibited by firms include a breach of contract and failure to maintain a safe work environment.

According to the comparative advantage principle, what matters most is the absolute cost of production of the product and not the relative efficiency with which a country can produce the product. True False

False

Common law originated in the United States. True False

False

Firms expand abroad mainly as a reaction to market globalization. True False

False

Improper ethical behavior is unlikely to result when bad means are justified by good ends. True False

False

In the past, international trade and investment activities were mainly conducted by companies that sold services. True False

False

Large multinationals are not constrained by market forces because they can exert considerable influence on governments through lobbying. True False

False

MERCOSUR, an economic bloc in Latin America, is an example of an economic union. True False

False

Of the five types of participants that are active in transforming political and legal systems, the private sector is the most important. True False

False

The globalization of capital refers to the aggregate activities of firms that gives rise to economic integration. True False

False

Why do nations trade? What would the world be like without international trade?

Nations trade because of different resources available in other parts of the world and to gain a surplus of resources needed to take care of business. Without international trade, businesses would struggle to meet product demands and would have limited supplies and resources to conduct products to sell.

In a short essay, explain why nonprofit organizations might conduct cross-border activities.

Nonprofit organizations may conduct cross-border activities because having a network and gaining more personnel can make the nonprofit organization larger and more involved in the world.

How has the adoption of free markets worldwide served as a driver of market globalization? Provide three examples to support your answer.

The adoption of free markets worldwide served as a driver of market globalization in the economics side by keeping inflation in check. Examples of this broadly are zero or low tarrifs, social factors as well as expansion of the financial sectors.

In a short essay, explain the five-step framework for making ethical decisions.

The first step is to identify what the ethical issue was as a whole to see all perspectives of where the incident went wrong. The next step is to gather facts on where the decision could go right or wrong. This step is to mainly support what decision to make. The next step is to evaluate the alternate actions by each lense to see what is most practical for all parties. Next is to test an action of choice to see how this will affect the situation. Lastly, take action on the decision and reflect on the outcome. This step is to evaluate how the decision went for the situation.

Describe the fourth phase of globalization. What is contagion?

The fourth phase of globalization is where the firms then seek to increase cost savings by reengineering processes for local markets. Contagion is the spread of an economic crisis between market nations.

What is implied by industrialization? How does it bring about economic development?

Transformation from resourced based economy into a manufacturing economy is implied by industrialization. This brings about economic development by innovation, production capacity as well as having job creation ideas.