MGMT 425 Ch1
What statement accurately describes the current membership of the United Nations?
Today, nearly every nation in the world belongs to the United Nations.
True or False: The development of Internet technology has lowered the barriers that small firms face in building international sales.
True Reason: The rise of the Internet is lowering the barriers faced by small firms in building international sales.
The outward stock of foreign direct investment has _____ for the world as a whole since 1995. increased decreased
increased
Based on the fact that the volume of world trade has been growing faster than world GDP implies that the economies of the world's nation-states are becoming
more intertwined.
During the early years of globalization, outsourcing was primarily confined to _____ activities.
manufacturing
What is the best description of the globalization of markets?
Bringing traditionally separate national markets into one cohesive marketplace
Among developing nations, ______ has been the largest recipient of foreign direct investment. China Argentina Indonesia Sudan
China
Based on current trends, the economy of _____ could ultimately be larger than that of the United States.
China
Which country has been the world's largest exporter since 2009?
China
True or False: The International Monetary Fund (IMF) is considered less controversial than the World Bank.
False
True or False: While there are a large number of nations that are members of the WTO, these nations account for only a small portion of world trade.
False
True or false: Small and medium-sized companies do not typically benefit from the globalization of markets.
False
True or False: Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests.
True
True or false: Technological innovations and low-cost transportation have reduced the cultural distance between countries and are bringing about some convergence of consumer tastes and preferences.
True
Which argument favors globalization?
Lowering international trade barriers raises the incomes of consumers.
Which statement accurately describe the global economy in the twenty-first century?
More nations are becoming part of the developed world.
What is an accurate description of Ralph Nader's view of supranational organizations such as the World Trade Organization?
Nader believes these organizations run counter to the basis of democracy.
Which statement accurately describes the globalization of markets?
National differences in tastes and preferences for consumer products is an important factor that acts as a brake on globalization.
Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to _____.
adopt economic policies based on free market economies
Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to _____. 1. increase tariffs on goods coming into the country 2. maximize barriers to free trade 3. increase the total population base 4. adopt economic policies based on free market economies
adopt economic policies based on free market economies
During the 1920s and 1930s, when high tariffs were placed on imported manufactured goods,
an increase in trade barriers resulted.
While U.S. firms accounted for about two-thirds of foreign direct investment in the 1960s, as of 2019, U.S. firms account for _____. more than 90% about 41% less than 2% around 28%
around 28%
The globalization of markets and production implies that
domestic firms are facing intense competition from foreign firms.
Moore's Law predicts that
microprocessor technology power will double approximately every 18 months.
The problems faced while managing an international business are _____ those faced while managing a purely domestic business. about the same as less complicated than more complex than
more complex than
As international trade expands, the economies of the world's nation-states are becoming ______.
more intertwined
By the year 2018, ____ of the world's population were Internet users.
more than half
The decline of the United States' standing as a dominant industrial power is considered a(n) _____ decline because it reflects the faster economic growth of other economies. absolute relative
relative
While studies shw that the share of labor in national income has declined over the past two decades, experts caution that in reality the decline has only affected
unskilled labor
What is one concern voiced by critics of globalization?
An interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations.
Which environmental concern has been found to rise steadily with higher-income levels?
Carbon dioxide emissions
At some point, rising income levels lead to demands for greater environmental protection and, as a result, pollution levels fall. A study by Grossman and Krueger found this generally occurred before per capita income levels reached
8,000
The trade agreement called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system.
Uruguay Round
It is suggested by economists that the richest nations of the world can help struggling nations by reducing trade barriers especially for _____ imports. agricultural automobile services oil and gas
agricultural
It is suggested by economists that the richest nations of the world can help struggling nations by reducing trade barriers especially for _____ imports. automobile agricultural oil and gas services
agricultural
The opponents of globalization argue that falling barriers to international trade
eliminate manufacturing jobs in wealthy economies.
International trade occurs when a company
exports goods or services to consumers in another country.
Company ABC, based in Tennessee, sources goods from Southeast Asia to take advantage of labor cost savings. This is an example of _____.
the globalization of production
According to the critics of globalization, increased free trade and investment over the past few decades have
widened the gap between the rich and poor nations.
Question Mode True or False Question True or false: Many economists maintain that the power of organizations like the WTO is limited to what nation-states collectively agree to grant.
True
Boeing's rationale for outsourcing so much production to foreign suppliers is based on which two factors, according to the text?
1. Increasing the chance to win significant orders from airlines in those countries 2. Using suppliers that are the best in the world at a particular activity
Boeing outsources a large portion of its production. For example, for its most recent jet airliner (the 787), nearly ______ of the total value of the aircraft is outsourced to foreign companies.
65%
In terms of conducting international business in China, it can be said that 1. China-based firms are proving to be poor competitors. 2. China has already achieved industrial superpower status. 3. China represents a large -- basically untapped -- market. 4. foreign direct investment in China has decreased in the past ten years.
China represents a large -- basically untapped -- market.
Select the four reasons that explain why managing an international business is different from managing a purely domestic business
Countries are different. The range of problems in international business is wider. International business must work within government limits. International transactions involve converting money into different currencies.
What is a challenge faced by companies entering the global market?
Differences in consumer tastes and preferences
What is an example of an obstacle to globalization?
Differences in legal regulations among national markets
What issue might be raised at an antiglobalization demonstration?
Falling barriers to international trade results in job losses in those industries targeted by foreign competitors.
______ refers to the shift toward economic international integration.
Globalization.
In the years leading up to the Great Depression, what practice created a barrier to international trade?
High tariffs on imports of foreign goods
The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.
Internet
What is an accurate depiction of the World Bank?
It focuses on helping developing countries fight poverty through investments in the underlying structure of the country.
In the early 1960s, the U.S. was the world's dominant industrial power. How does the U.S. position compare today?
It has diminished in power.
What is an accurate depiction of containerization?
It reduces the costs of shipping goods over long distances.
What is an accurate description of the International Monetary Fund (IMF)?
The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil.
Which organization would help out a cash-strapped government with a low-interest loan to help that country build new roads?
The World Bank
One of the global institutions that emerged over the past 75 years is GATT which stands for the General Agreement on Tariffs and _____
Trade.
What is the best way to characterize the impact of existing impediments to globalization?
The impediments make it difficult for companies to maximize production activities.
When examining the data from 1960 to 2018, how does the value of the world economy compare to the value of international trade?
The value of international trade had a greater increase.
What is an accurate description of microprocessors?
They can decode vast amounts of information.
Why do companies engage in the globalization of production?
To lower their overall cost structure or improve the quality of their product offering
Mallory's US-based lifestyle company decides to invest in an Italian company that specializes in health and wellness. This would be an example of
foreign direct investment.
When a company invests in a company or entity outside its home country, it is participating in
foreign direct investment.
The G20 was originally established to _____.
formulate a coordinated policy response to financial crises in developing countries
An IMF study implies that the earnings gap between skilled and unskilled workers has _____ over the past two decades.
grown by 25%
From the 1990s until today, foreign direct investment inflows can best be described as continually diminishing. steady. surging and slumping. always increasing.
surging and slumping.
Evidence suggests that _____ has impacted the declining share of national income for unskilled labor more so than globalization has.
technological change
The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.
Moore's
Which statement accurately describe the global economy in the twenty-first century
More nations are becoming part of the developed world.
Select all that apply The text lists several reasons that stand out as the cause for economic stagnation in the world's poorest countries, including which three of the following? Poor property rights protection Globalization Free trade among member states Prolonged civil war Totalitarian governments
Poor property rights protection Prolonged civil war Totalitarian governments
What are the two macro factors that underlie the trend toward greater globalization?
1. Decline in goods, services and capital. 2. Technology change
Select the four facts that describe the demographics of the global economy up until the 1960s. (Check all that apply)
1. U.S. dominance in the world economy and world trade 2. Dominance of large, multinational U.S. firms in the international business scene 3. Roughly half of the globe was off-limits to Western international business 4. U.S. dominance in world foreign direct investment
What are the four purposes of the United Nations according to its charter?
1. be a center for harmonizing the actions of nations 2. develop friendly relations among nations 3. maintain international peace and security 4. cooperate in solving international problems
The development of what two transportation modes has effectively reduced the size of our world, hence simplifying the transshipment from one mode of transport to another?
1. superfreighters 2. commercial jets
What are two implications that are derived from the fact that the volume of world trade has been growing faster than world GDP?
1. the world has become significantly wealthier in recent decades 2. more companies are dispersing production processes to different locations around the globe
What are two impediments to globalization that a company might face?
1. transportation costs 2. political risk
The series of democratic revolutions that swept the communist world, led to the downfall of the Soviet Union, and opened markets in other nations occurred around _____. 2010 1990 1950 1970
1990
What is an accurate depiction of Latin America when considering international business? 1. While favorable economic trends have recently occurred, there is no guarantee that they will continue. 2. Latin American firms are very capable competitors in all markets. 3. Latin America is a viable investment because it has historically held well-managed economies. 4. Dictators who rule Latin American countries welcome Western international business as a way to build the economy.
While favorable economic trends have recently occurred, there is no guarantee that they will continue.
Which global institution is the successor to GATT?
World Trade Organization
Which organization is responsible for policing the rules of trade between nations and making sure countries adhere to the rules of trade treaties signed by member states?
World Trade Organization
Current trends indicate that, due to the emerging economies, the world is moving _____ an economic system that is more favorable for international business. further away from similar to closer to
closer
The International Monetary Fund (IMF) has been criticized for
compromising the jurisdiction and decision-making powers of the receiving country.
Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the production. sales. costs. usage.
costs
In order to manage an international business efficiently, managers might have to 1. avoid dispersing production activities across various locations around the world. 2. disregard the cultural, political, and legal differences between countries. 3. always use the firm's home currency rather than foreign currency for cross-border transactions. 4. decide if it is ethical to accept the lower labor and environmental standards found in many less developed nations.
decide if it is ethical to accept the lower labor and environmental standards found in many less developed nations.
As figures for 2019 reflect, the globalization of the world economy has resulted in a relative _____ in the dominance of U.S. firms in the global marketplace. Increase Decline
decline
Distribution of production to separate locations has become more economical for companies because transportation costs have ____
declined
Colin told the management team that their Ohio-based company should produce the textiles for the new line of jackets in China because it would allow them to price the clothing line lower, which would then give consumers more money to spend on other items. Colin is making an argument for ______.
free trade
The globalization of markets is facilitated by the
improvement in transportation technology.
A(n) ______ business is any firm that engages in cross-border trade or investment. international multi-national supranational intranational
international
Michael works at a lawnmower manufacturing company in St. Louis, Missouri, and his company imports component parts from Thailand and also ships final product to various countries. Michael's company is an example of a(n) _____ business. international multi-national domestic
international
A manager in a(n) ______ business faces a wider and more complex range of problems than one in a(n) ______ business. domestic; international international; domestic
international; domestic
A debt relief movement was in full force in the late 1990s; however, in order for these programs to have a long-term impact it is necessary for those nations receiving debt assistance to 1. homogenize consumer tastes and preferences. 2. invest in public projects that boost economic growth. 3. put up barriers to international trade to minimize competitor acts. 4. focus on innovative ideas and technology.
invest in public projects that boost economic growth.
Beginning in the 1970s, European and Japanese firms began to shift labor-intensive manufacturing operations to developing nations with ____
lower labor costs
There have been two notable trends in the demographics of multinational enterprises since the 1960s. These include _____. the decline of non-U.S. multinationals the rise of non-U.S. multinationals the growth of mini-multinationals the decline of mini-multinationals
the rise of non-U.S. multinationals the growth of mini-multinationals
In terms of economic growth, current indicators suggest that 1. there will be stagnation among the world's poorest nations. 2. developing nations will see the greatest growth increases. 3. more developed nations will invest in the poor nations. 4. developed nations will suffer from a lack of growth.
there will be stagnation among the world's poorest nations.
Supporters of globalization suggest that a solution to the problem of slow real income growth among unskilled workers is _____ society's investment in education.
to increase
While the lowering of barriers to trade made globalization a theoretical possibility, it wasn't until the introduction of _____ that it became a reality.
technological change
The text notes that there are two macro factors fueling the trend toward greater globalization. These two factors focus on a decline in trade barriers and
technological change.
Some U.S. hospitals outsource radiology work to India. This is a recent advancement that is possible because of advancements in _____.
technology
When nations lowered trade barriers it made the globalization of markets a possibility. What was needed to make this possibility a reality?
technology
Historically, national markets were distinct and separate entities. Today, these separate national markets have merged. This process is known as _____.
the globalization of markets
True or False: 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 U.S. and other long-established developed nations..
True
What global institution was established on October 24, 1945 and one of its key purposes is to maintain international peace and security?
United Nations (UN)
Through the 1960s, which country dominated world foreign direct investment? United Kingdom Russia United States China
United States
The development of the microprocessor has lead to _____.
a reduction in the cost of global communications
While it is known for its peacekeeping role, the United Nations devotes nearly 70% of its work toward promoting conditions of
a vibrant global economy.
At the shipping port in Charleston, South Carolina, the large shipping boxes that arrive on superfreighters from Indonesia are unloaded directly onto a train car for transport within the United States. This demonstrates how _____ has simplified the transport of products from one mode of shipping to another.
containerization
Due to globalization, firms follow each other around the world, thereby
creating some uniformity across markets.
Creating and managing a globally dispersed production system is facilitated by the ______ real costs of information processing and communication.
decrease in
Opponents of globalization are concerned that manufacturing jobs will be moved to more _____ countries. developed developing
developing
Critics of globalization protest in order to
diminish the impact of the culture of multinational enterprises on the world.
In return for offering loans, the International Monetary Fund (IMF)
enforces its economic policies on nations.
Influential economists, politicians, and business leaders who favor globalization argue that
falling barriers to international trade drive the economy toward greater prosperity.
Influential economists, politicians, and business leaders who favor globalization argue that 1. lowering trade barriers decreases the incomes of consumers. 2. increasing cross-border investment will increase the prices for goods and services. 3. raising barriers to international investments will increase job opportunities in developing nations. 4. falling barriers to international trade drive the economy toward greater prosperity.
falling barriers to international trade drive the economy toward greater prosperity.
The G20 is comprised of ______ from the 19 largest economies in the world.
finance ministers
The risks of doing business in countries that are facing revolutions is lower than in countries not facing revolutions. not impacted by the threat of revolution. the same as countries not facing revolutions. higher than in countries not facing revolutions.
higher than in countries not facing revolutions.
The national differences in the quality of factors of production help companies
improve the quality or functionality of their product offering.
As the barriers to the free flow of goods, services, and capital fell during the 1970s, one motivation for foreign direct investment by non-U.S. firms was the desire to
move production activities to more desirable locations.
A company is involved in foreign direct investment when it
invests in business activities outside of its home country.
When describing the value of FDI over the last 30 years, it can be said that
it has grown significantly.
What are three examples of factors of production?
land, labor, capital
The purpose of the Uruguay Round negotiations was to
lower the trade barriers between various national markets.
A(n) ______ is any business that has productive activities in two or more countries. conglomerate multinational enterprise intrastate corporation transnational union
multinational enterprise
A(n) ______ is any business that has productive activities in two or more countries. transnational union conglomerate multinational enterprise intrastate corporation
multinational enterprise
The number of mini-multinationals involved in international trade and investment is ________. rising falling remaining the same
rising
The presence of McDonald's in Tokyo, the opportunity to easily buy iPads in Rio and Berlin, and the ready availability of Gap jeans in Paris as well as San Francisco are examples of
the emergence of global markets for consumer products.
The outward stock of foreign direct investment refers to the ______ of foreign investments by firms domiciled in a nation outside of that nation's borders. total cumulative value percentage of increase diminished value cross-border flow
total cumulative value