1
Q
1) As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities.
A
False
2
Q
2) Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.
A
True
3
Q
3) After World War II, the advanced industrial nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations.
A
False
4
Q
4) By the mid-1990s, communism was rising worldwide.
A
False
5
Q
5) The Cold War was in many respects a war between collectivism, championed by the former Soviet Union, and individualism, championed by the United States.
A
True
6
Q
6) Judges under a civil law system have less flexibility than those under a common law system.
A
True
7
Q
7) During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments.
A
True
8
Q
8) In general, command and mixed economies failed to deliver the kind of sustained economic performance that was achieved by countries adopting market-based systems.
A
True
9
Q
9) Values provide the context within which a society’s norms are established and justified.
A
True
10
Q
10) Under the Islamic banking method of mudarabah, when an Islamic bank lends money
to a business, rather than charging that business interest on the loan, it takes a share in
the profits that are derived from the investment.
A
True
11
Q
11) The term ethics refers to accepted principles of right or wrong that govern the conduct
of a person, the members of a profession, or the actions of an organization.
A
True
12
Q
12) Leon Sullivan argued that it was ethically justified for Western businesses to operate in
South Africa so long as the companies obeyed the apartheid laws.
A
False
13
Q
13) Mercantilism, propagated in the sixteenth and seventeenth centuries, advocated that countries should simultaneously encourage both imports and exports
A
False
14
Q
14) Factor endowments refer to the extent to which free trade impacts the wealth of a
country.
A
False
15
Q
15) Some countries argue that government intervention to protect certain domestic
industries can compromise national security.
A
False
16
Q
16) Import tariffs protect domestic producers against foreign competitors.
A
True
17
Q
17) Dumping is variously defined as selling goods in a foreign market at below their costs
of production, or as selling goods in a foreign market at below their “fair” market value.
A
True
18
Q
18) When a firm exports its products to a foreign country, foreign direct investment occurs.
A
False
19
Q
19) Historically, most FDI has been directed at the least developed nations of the world.
A
False
20
Q
20) Franchising is essentially the service-industry version of licensing, although it normally
involves much longer-term commitments than licensing.
A
True
21
Q
21) In a free trade area, all barriers to the trade of goods and services among member
countries are removed and a common external trade policy is adopted.
A
False
22
Q
22) Economic theories suggest that free trade and investment is a positive-sum game, in
which all participating countries stand to gain.
A
True
23
Q
23) By adopting the euro, the European Union has created the second most widely traded
currency in the world after that of the U.S. dollar.
A
True
24
Q
24) What happens in the foreign exchange market does not directly impact the sales, profits,
and strategy of a multinational enterprise.
A
False
25
25) Inflation occurs when the money supply in a country increases faster than output
increases.
True
26
26) In countries where inflation is expected to be high, interest rates also will be high.
True
27
27) A pegged exchange rate means the value of the currency is fixed relative to a reference
currency, and then the exchange rate between that currency and other currencies is
determined by the reference currency exchange rate.
True
28
28) When the Bretton Woods participants established the World Bank, the need to lend
money to developing nations was foremost in their minds.
False
29
29) Since March 1973, currency exchange rates have become less volatile and more
predictable than they were between 1945 and 1973.
False
30
30) The actions that managers take to attain the goals of the firm are referred to as a firm's
strategy.
True
31
31) A localization strategy involves some duplication of functions and smaller production
runs.
True
32
32) A firm contemplating expansion should choose a foreign market based on an
assessment of the nation's long-run profit potential.
True
33
33) The attractiveness of a country as a potential market for an international business
depends solely on the size of its consumer market.
False
34
34) In international business, an early entrant to a foreign market may be at a disadvantage
relative to a later entrant, if regulations change in a way that diminishes the value of an
early entrant's investments.
True
35
35) A risk-averse international firm that enters a foreign market on a small scale will
increase its potential losses.
False
36
36) In a joint venture, a firm benefits from a local partner's knowledge of the host country's
competitive conditions, culture, language, political systems, and business systems.
True
37
37) Only large companies have benefited significantly from the moneymaking opportunities
of exporting.
False
38
38) While small firms tend to be proactive about seeking opportunities for profitable
exporting, large firms are very reactive.
False
39
39) German and Japanese firms are relatively more information-disadvantaged than U.S.
firms.
False
40
40) Lack of trust in international trade is exacerbated by the distance between the two
parties in space, language, and culture.
True
41
41) Countertrade's main attraction is that it can give a firm a way to finance an export deal
when other means are not available.
True
42
42) In recent years, the trend among U.S. firms is to outsource the "production" of certain
service activities to developing nations where labor costs are lower.
True
43
43) The drawback of a just-in-time inventory system is that it leaves a firm with excess
unsold inventory that it has to write off against earnings or price low to sell.
False
44
44) In international business, when consumer demand is prone to large and unpredictable
shifts, the firm that can adapt most quickly to these shifts will gain an advantage.
True
45
45) A global marketing strategy that views the world's consumers as similar in their
preferences is consistent with the mass production of a standardized output.
True
46
46) A critical aspect of the marketing function is identifying gaps in the market so that a
firm can develop new products to fill those gaps.
True
47
47) A concentrated retail system is one in which there are many retailers, none of which has
a major share of the market.
False
48
48) The human resource management function can help a firm achieve its primary strategic
goals of reducing the costs of value creation and adding value by better serving
customer needs.
True
49
49) An expatriate manager is a citizen of one country who is working abroad in one of the
firm's subsidiaries.
True
50
50) Historically, most international businesses have centralized international labor relations
activities.
False
51
51) What is the shift toward a more integrated and interdependent world economy called?
A) foreign direct investment
B) international trade
C) Moore's Law
D) containerization
E) globalization
Answer: E
52
52) Why was the World Bank set up?
A) to maintain order in the international monetary system
B) to formulate a coordinated policy response to financial crises
C) to preserve peace through international cooperation
D) to police the world trading system
E) to promote economic development
E) to promote economic development
53
53) Which of the following is a macro factor underlying the trend toward greater
globalization?
A) increase in diversity in consumer tastes and preferences
B) increase in nationalization of private organizations
C) dramatic developments in information processing and other technologies
D) rise of communism across the globe
E) increase in trade regulations across the globe
C) dramatic developments in information processing and other technologies
54
54) The North American Free Trade Agreement (NAFTA) was formed in 1994 among
A) the United States, Brazil, and Argentina.
B) Uruguay, Colombia, and Costa Rica.
C) Canada, Mexico, and the United States.
D) Canada, Argentina, and Mexico.
E) Colombia, Venezuela, and Brazil.
C) Canada, Mexico, and the United States.
55
55) Which of the following refers to an economic system in which the interaction of supply
and demand determines the quantity in which goods and services are produced?
A) regulated
B) market
C) centrally planned
D) command
E) barter
B) market
56
56) The sale of state-owned enterprises to independent, nonpublic investors is referred to as
A) collectivism.
B) privatization.
C) public action.
D) nationalization.
E) communalism
B) privatization.
57
57) Which of the following legal systems is most likely to be based on tradition, precedent,
and custom?
A) autocracy law
B) common law
C) universal law
D) monarchy law
E) civil law
B) common law
58
58) Both China and India have achieved high growth rates despite relatively weak property
rights regimes and high levels of corruption, because of
A) their high consumer purchasing power.
B) the shift toward a market-based economic system.
C) their large population.
D) their high living standards.
E) the shift toward a communist ideology.
B) the shift toward a market-based economic system.
59
59) In the context of political economy, one notable development of the past 30 years has
been the spread of
A) mixed economies.
B) democracy.
C) centrally planned economies.
D) totalitarian governments.
E) communism.
B) democracy.
60
60) Which of the following measures the total annual income received by residents of a
country and is regarded as a yardstick for the economic activity of a country?
A) cash reserve ratio
B) income elasticity of demand
C) gross national income
D) net cash flow ratio
E) income equity ratio
C) gross national income
61
61) In a society, actions of people directed toward one another are governed by a set of
social rules called
A) norms.
B) manifestoes.
C) dialects.
D) structures.
E) scriptures
A) norms.
62
62) Who initially isolated four dimensions—power distance, uncertainty avoidance,
individualism versus collectivism, and masculinity versus femininity—that he claimed
summarized different cultures?
A) B. F. Skinner
B) Max Weber
C) Abraham Maslow
D) Michael Porter
E) Geert Hofstede
E) Geert Hofstede
63
63) The term global commons refers to
A) a group of nations that share similar ideologies on globalization.
B) natural resources from which everyone benefits but for which no one is specifically responsible.
C) common laws to be obeyed by companies involved in international business.
D) social norms and values that are common across the globe.
E) arrangements, like common currencies, between countries to simplify international trading.
B) natural resources from which everyone benefits but for which no one is specifically responsible
64
64) Which of the following refers to the idea that businesspeople should consider the social
consequences of economic actions when making business decisions, and that there
should be a presumption in favor of decisions that have both good economic and social
consequences?
A) corporate dissonance
B) economies of scale
C) corporate dynamism
D) corporate social responsibility
E) tragedy of the commons
D) corporate social responsibility
65
65) Which of the following terms best represents a situation in which a government does
not attempt to influence through quotas or duties what its citizens can buy from another
country, or what they can produce and sell to another country?
A) positive-sum game
B) free trade
C) socialism
D) zero-sum game
E) absolute advantage
B) free trade
66
66) Which of the following asserts that countries should simultaneously encourage exports
and discourage imports?
A) collectivism
B) ethnocentrism
C) capitalism
D) socialism
E) mercantilism
E) mercantilism
67
67) Which of the following are unit cost reductions associated with a large scale of output?
A) economies of scale
B) absolute advantages
C) comparative advantages
D) diminishing returns
E) factor endowments
A) economies of scale
68
Which of the following groups would benefit the most from receiving subsidies?
A) foreign competitors
B) domestic producers
C) importers
D) governments
E) international organizations such as the WTO
B) domestic producers
69
69) Which of the following is considered to be the ultimate objective of antidumping
policies?
A) protecting consumers from high prices
B) preventing foreign products from entering domestic market
C) protecting domestic producers from unfair foreign competition
D) protecting consumers from substandard and hazardous products
E) preventing domestic firms from unloading their excess production in domestic markets
C) protecting domestic producers from unfair foreign competition
70
70) Which of the following is one of the limitations of exporting that leads companies to
prefer FDI over exporting?
A) presence or threat of trade barriers
B) possibility of diminishing returns
C) risk of giving away valuable technological know-how to a potential foreign
competitor
D) costs of acquiring a foreign enterprise
E) costs of establishing production facilities in a foreign country
A) presence or threat of trade barriers
71
71) Which of the following are national accounts that track both payments to and receipts
from other countries?
A) balance-of-payments
B) balance of trade
C) dematerialized
D) asset
E) equity
A) balance-of-payments
72
72) Which of the following is defined as a group of countries committed to removing all
barriers to the free flow of goods and services between each other, but pursuing
independent external trade policies?
A) foreign exchange market
B) free trade area
C) command economy
D) location economy
E) efficient market
B) free trade area
73
73) Which of the following is considered to be the ultimate controlling authority within the
European Union?
A) European Council
B) European Parliament
C) European Community
D) Court of Justice
E) European Commission
A) European Council
74
74) Which of the following institutions has a monopoly in proposing European Union
legislation?
A) European Commission
B) Court of Justice
C) European Parliament
D) Council of the European Union
E) European Community
A) European Commission
75
75) Which of the following occurs when two parties agree to exchange currency and
execute the deal at some specific date in the future?
A) carry trade
B) currency swap
C) arbitrage
D) spot exchange
E) forward exchange
E) forward exchange
76
76) Which of the following foreign exchange trading centers has the highest percentage of
activity?
A) Sydney
B) Paris
C) Frankfurt
D) London
E) Hong Kong
D) London
77
77) Which of the following refers to the institutional arrangements that govern exchange
rates?
A) general agreement on trade in services
B) generally accepted accounting principles
C) international monetary system
D) general agreement on tariffs and trade
E) financial management information system
C) international monetary system
78
78) Many of the world's developing nations peg their currencies, primarily to the
A) Japanese yen.
B) Saudi riyal.
C) Chinese yuan.
D) U.S. dollar.
E) German deutsche mark.
D) U.S. dollar.
79
79) Which of the following shows all of the different positions that a firm can adopt with
regard to value creation and low cost assuming that its internal operations are
configured adequately to support a particular position?
A) efficiency frontier
B) optimal output model
C) demand-value model
D) surplus curve
E) experience curve
A) efficiency frontier
80
80) The appropriateness of the strategy that a firm chooses to use in an international market
varies with the extent of pressures for
A) cost reductions and local responsiveness.
B) product standardization and cost reductions.
C) customer surplus and quality improvements.
D) quality improvement and product standardization.
E) customer surplus and product standardization.
A) cost reductions and local responsiveness.
81
81) First-mover disadvantages refer to
A) imperfections in the operation of the market mechanism.
B) a direct restriction on the quantity of a good that can be imported into a country.
C) disadvantages associated with entering a foreign market before other international
businesses.
D) costs that a late entrant to a foreign market has to bear.
E) disadvantages experienced by being a late entrant in a foreign market
C) disadvantages associated with entering a foreign market before other international
businesses
82
82) In which of the following modes of entry into foreign markets does a firm agree to set
up an operating plant for a foreign client and hand over the plant when it is fully
operational?
A) wholly owned subsidiary
B) franchising agreement
C) turnkey project
D) joint venture
E) licensing agreement
C) turnkey project
83
83) In terms of licensing, which of the following is an intangible property?
A) leased equipment
B) machinery
C) patent
D) infrastructure
E) advanced computing systems
C) patent
84
84) How can a wholly owned subsidiary be established in a foreign market?
A) by acquiring an established firm in the host nation
B) through franchising
C) through a licensing agreement
D) by exporting
E) through a turnkey operation with a local partner
A) by acquiring an established firm in the host nation
85
85) While seeking opportunities for profitable exporting, large firms generally tend to be
A) proactive.
B) risk averse.
C) wary.
D) neutral.
E) passive.
A) proactive.
86
86) The sogo shosha of Japan
A) consider export only when there is excess production at home.
B) exclusively serve the largest and most prestigious companies in Japan.
C) have offices concentrated in the business district of Tokyo.
D) proactively and continuously seek export opportunities for their affiliated
companies.
E) have monopolized the export market in the country.
D) proactively and continuously seek export opportunities for their affiliated
companies
87
87) Which of the following is issued to an exporter by a common carrier transporting the
merchandise and serves as a receipt, a contract, and a document of title?
A) bill of lading
B) bill of exchange
C) draft
D) letter of credit
E) collateral
A) bill of lading
88
88) The direct exchange of goods and/or services between two parties without a cash
transaction is referred to as
A) buyback.
B) barter.
C) offset.
D) switch trading.
E) counterpurchase.
B) barter.
89
89) Financing aid that will facilitate exports, imports, and the exchange of commodities
between the United States and other countries is provided by the
A) World Bank.
B) Export Credit Insurance Association.
C) sogo shosha.
D) Ex-Im Bank.
E) Overseas Commercial Service
D) Ex-Im Bank.
90
90) The type of countertrade where a firm agrees to purchase a certain amount of materials
back from a country to which a sale is made is called
A) barter.
B) switch trading.
C) counterpurchase.
D) buyback.
E) compensation.
C) counterpurchase.
91
91) Mass customization reconciles the two goals of
A) low cost and product customization.
B) product standardization and economies of scale.
C) high fixed costs and multiple production facilities.
D) centralized production and long production runs.
E) local responsiveness and decentralized production.
A) low cost and product customization.
92
92) A product's value-to-weight ratio affects location decisions primarily because of its
influence on
A) shelf life.
B) capacity utilization.
C) inventory turnover.
D) transportation costs.
E) work-in-progress inventory.
D) transportation costs.
93
93) Which of the following statements is true of industrial products such as steel? 93)
A) They serve needs that are the same all over the world.
B) A plant must operate at the highest minimum efficient scale of output for these
products.
C) They have drastic national differences in consumer taste and preference.
D) It makes sense to produce these products in multiple locations close to major
markets.
E) The need for local responsiveness for these products is more than consumer
products.
A) They serve needs that are the same all over the world.
94
94) Which of the following is an objective of logistics? 94)
A) reduce a firm's customer responsiveness
B) increase inventory holding costs
C) increase the cost of value creation
D) reduce inventory turnover
E) manage a firm's global supply chain at a low cost
E) manage a firm's global supply chain at a low cost
95
95) The number of intermediaries between the product (or manufacturer) and the consumer
is referred to as
A) channel fragmentation.
B) channel concentration.
C) channel length.
D) channel quality.
E) channel exclusivity.
C) channel length.
96
96) In terms of communication strategy, refers to the situation when the receiver
of a message evaluates the message based on the status or image of the sender.
A) source effects
B) pull strategy
C) push strategy
D) cultural barriers
E) noise levels
A) source effects
97
97) Which of the following communication strategies relies primarily on personal selling
rather than mass media advertising?
A) pull strategy
B) visual merchandising
C) copy testing
D) standardized advertising
E) push strategy
E) push strategy
98
98) Which of the following marketing strategies relies on access to advertising media?
A) push strategy
B) personal selling
C) copy testing
D) direct selling
E) pull strategy
E) pull strategy
99
99) An expatriate manager refers to
A) a host-country national who works in the host country.
B) a citizen of one country who is working abroad in one of the firm's subsidiaries.
C) any person who lives in a foreign country.
D) a person willing to work in different departments of a foreign firm.
E) a parent-country national who works in the parent country.
B) a citizen of one country who is working abroad in one of the firm's subsidiaries.
100
100) International businesses differ markedly in their approaches to international labor
relations. Which of the following current trends reflects international firms' attempts to
rationalize their global operations?
A) greater centralized control
B) national legislation
C) decentralized labor activities
D) lateral relationships
E) autonom
A) greater centralized control
Global Business
flashcards
Decks in class (3)
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