FINAL EXAMMMM

Question 1

Which statement about the effects of globalization is accurate?
-Citizens from more globally integrated countries have, on average, fewer civil liberties and political rights.

-Life expectancy in the developing world has nearly doubled since WWII.

-International trade results in less than $1 trillion annually in the U.S.

-In economically advanced countries, most of the benefits from international trade go to the upper income segments of the population.

Answer 1

Life expectancy in the developing world has nearly doubled since WWII.
“The only accurate statement is life expectancy in the developing world has doubled since WWII. Infant mortality has also increased.”

Question 2

You are interested in expanding your business into a foreign country. The government of that country exercises strict control over types and quantities of products that can be imported, so you may be limited in how much you can export. Which driver is most impacting your decision to expand?
-cost
-technological
-political
-market

Answer 2

• political
  “Political drivers relate to actions by governments that create barriers to trade and foreign investment.”

Question 3

Multinational firms first appeared after World War I, and the level of intracompany trade of multinationals in 1930, as a percentage of overall world trade, was nearly half the level achieved at the beginning of the 21st century.
(true/false)

Answer 3

false
“Multinational firms existed well before World War I, and the level of intracompany trade of multinationals in 1930, as a percentage of overall world trade, may have exceeded the proportion at the beginning of the 21st century.”

Question 4

A difficulty caused by NAFTA and the maquiladora program that began before NAFTA, was
-a loss of jobs across the border in Mexico.

-substantial increases in water and air pollution at the border.

-language barriers.

-increased tariffs on American goods.

Answer 4

-substantial increases in water and air pollution at the border.
“A difficulty caused by NAFTA and the maquiladora program that began before NAFTA is the substantial increases in ground, water, and air pollution along the Mexico–U.S. border. Damage to the environment has been caused by the many new production facilities and the movement of thousands of Mexicans to that area to work in them.”

Question 5

Tesla recently built a factory in Shanghai to build and sell cars in China. This demonstrates the concept of
-exporting.

-foreign acquisition.

-foreign direct investment.

-importing.

Answer 5

foreign direct investment.
“Foreign direct investment (FDI) refers to direct investments in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control.”

Question 6

Adam Smith’s publication An Inquiry into the Nature and Causes of the Wealth of Nations was an attack on
-free trade.
-mercantilism.
-foreign direct investment.
-slavery.

Answer 6

mercantilism
“Adam Smith was incensed by British government intervention and control over both domestic and foreign trade. In 1776, he published An Inquiry into the Nature and Causes of the Wealth of Nations, in which he attacked the mercantilist philosophy that prevailed at that time.”

Question 7

Strategic behavior theory argues that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open market.(true/false)

Answer 7

false
“This describes the internalization theory. Strategic behavior theory suggests that strategic rivalry between firms in an oligopolistic industry will result in firms closely following and imitating each other’s international investments in order to keep one competitor from gaining an advantage.”

Question 8

Stefan Linder’s theory of overlapping demand explains the direction of trade for minerals and agricultural products.
(true/false)

Answer 8

false
“Linder’s theory attempted to explain how demand for products was affected by nations’ income per capita, and therefore exports will be influenced by similarity in income levels across countries.”

Question 9

Argentina has a large supply of a rare mineral that is used in automobile manufacturing. No other country is able to produce it in the same quantity at a lower cost. As such, Argentina demonstrates
-an absolute advantage.
-perfect competition.
-a mercantile philosophy.
-a comparative advantage.

Answer 9

an absolute advantage
“Absolute advantage exists when a nation can produce more of a good or service than another country for the same or lower cost of inputs.”

Question 10

If a nation is continuing to receive appreciable amounts of foreign investment, its investment climate must be favorable. (true/false)

Answer 10

true
“This is true. The political forces of the foreign environment must be relatively attractive and the opportunity to earn a profit must be greater there than elsewhere.”

Question 11

Pablo prefers wine from the Marlborough region of New Zealand because he feels it has a nicer taste and finish than those from the United States. This demonstrates how wineries use ________blank to build a market for their products.

-overlapping demand
-absolute advantage
-product differentiation
-resource endowments

Answer 11

product differentiation
“This shows how product differentiation produces unique differences in wine products to influence demand.”

Question 12

Reflecting their continued economic expansion, developing countries have dramatically increased their share of FDI stock. (true/false)

Answer 12

true
“As stated directly in the text, developing countries have dramatically increased their share of FDI stock, from 1 percent in 1980 to over 22 percent at the beginning of 2020.”

Question 13

According to the article “Takeaways From Our Investigation Into Banned A.I. Chips in China”, what is the primary reason the United States has restricted the export of advanced A.I. chips to China?

-To protect U.S. intellectual property rights.
-To prevent China from using A.I. technology to modernize its military.
-To encourage domestic production of A.I. technology in China.
-To reduce trade imbalances between the U.S. and China.

Answer 13

To prevent China from using A.I. technology to modernize its military.

Question 14

In the article “Takeaways From Our Investigation Into Banned A.I. Chips in China”, how have businesses in China been able to circumvent U.S. export restrictions on Nvidia’s A.I. chips?

-By developing their own A.I. chips independently.
-By purchasing directly from Nvidia.
-By using underground markets and front companies to obtain the chips.
-By obtaining special export licenses from the U.S. government.

Answer 14

By using underground markets and front companies to obtain the chips.

Question 15

According to the McKinsey Global Institute’s report, “Global Flows in an Interconnected World”, which types of flows are now driving global integration?
A)

B)

C)

D)
-Data, services, intellectual property, and international students
-Capital and agricultural products
-Manufactured goods and energy resources
-Labor and transportation services

Answer 15

Data, services, intellectual property, and international students

Question 16

The McKinsey Global Institute’s “Global Flows in an Interconnected World” highlights that no region is self-sufficient. Which of the following regions imports over 50% of its energy resources, according to the report?

-Asia-Pacific
-North America
-Latin America
-Europe

Answer 16

Europe

Question 17

In the McKinsey Global Institute’s report, “Global Flows in an Interconnected World”, what is one major risk associated with the concentration of global trade in specific regions or sectors?

-Lower innovation rates due to specialization
-Increased transportation costs for interregional trade
-Disruption of trade flows leading to difficulties in replacing products
-Reduced efficiency in production

Answer 17

Disruption of trade flows leading to difficulties in replacing products

Question 18

According to the AI-generated responses from the article “Mexico Beats China”, what was the main driver for the shift in U.S. imports from China to Mexico?

-U.S.-China tensions and a strategy to diversify import sources
-Increased demand for agricultural products from Mexico
-Higher tariffs on Mexican goods
-Lower labor costs in Mexico

Answer 18

U.S.-China tensions and a strategy to diversify import sources

Question 19

Based on the AI’s analysis of the “Mexico Beats China” article, how have some Chinese manufacturers responded to the U.S. trade policies?

-They have increased exports directly to the U.S.
-They have sought trade agreements with Latin American countries
-They have moved operations to Mexico to benefit from the U.S. Mexico-Canada Trade Agreement
-They have focused on reducing production costs in China

Answer 19

They have moved operations to Mexico to benefit from the U.S.-Mexico-Canada Trade Agreement

Question 20

In the AI-generated responses to the “Mexico Beats China” article, what is one challenge Mexico might face due to its increased role as the top source of U.S. imports?

-Increased reliance on Chinese imports
-Decreased foreign investment
-Declining job opportunities in manufacturing
-Environmental concerns and social impacts from expanding manufacturing

Answer 20

Environmental concerns and social impacts from expanding manufacturing

Question 21

When Georgio accepted a job in the U.S.-based subsidiary of his Spanish multinational company, he was surprised to learn that wage rates were

-lower than the national average.
-equal to the national average.
-double the national average.
-30 percent higher than the national average.

Answer 21

30 percent higher than the national average.

“Additional jobs have been created by foreign investment linked to globalization of markets and trade, with many of these new jobs being well-compensated. Indeed, wage rates in U.S.-based subsidiaries of foreign multinationals are about 30 percent above the national average.”

Question 22

Sankha is the director of operations for Farm Fresh Produce Corporation and is now able to sell his product to the international market thanks to a new computer system that is specifically designed for businesses in the fresh food industry. Which driver helped Sankha’s company internationalize?

-technological
-cost
-market
-political

Answer 22

technological
“Technological drivers include advances in computers and communication technology that permit an increased flow of ideas and information across borders.”

Question 23

A bicycle designer and manufacturer is headquartered in Illinois. It does business in the United States and exports to Europe and South America. This company is an example of a(n)

-domestic corporation.
-foreign subsidy.
-global partnership.
-international company.

Answer 23

international company
“An international company has operations in multiple nations. International companies may not have any investment in nations other than their home nation, which might be the case for a company that is only involved in exporting and selling its goods or services in other nations.”

Question 24

A nation’s GNI and a company’s sales are directly comparable because GNI is a measure of value added, as are sales. (true/false)

Answer 24

false
“A nation’s GNI and a company’s sales are not directly comparable because GNI is a measure of value added, not sales. If a nation’s total sales were computed, the result would be far greater than its GNI because there would be triple and quadruple counting.”

Question 25

According to opponents of the globalization of trade and investment,

-free trade benefits all nations and workers.
-globalization has caused a dramatic decline in both the proportion and the absolute number of destitute people in the world.
-globalization has contributed to a decline in environmental and health conditions.
-globalization enhances preservation of the uniqueness of different cultures.

Answer 25

globalization has contributed to a decline in environmental and health conditions.
“While many of the antiglobalizers concede that globalization “increases the size of the pie,” they also claim that it has been accompanied by a broad array of injurious social implications. Among their concerns are (1) that globalization has produced uneven results across nations and people, (2) that globalization has had deleterious effects on labor and labor standards, and (3) that globalization has contributed to a decline in environmental and health conditions.”

Question 26

Compared to 1980, service exports in 2017 can best be described as

-decreasing due to more international corporations.
-struggling to flourish based on government restrictions.
-lower than they were in 1980.
-more than 15 times larger.

Answer 26

more than 15 times larger.
“The level of service exports worldwide grew from $396 billion in 1980 to $6.1 trillion in 2019. This means that services exports in 2019 were 15.5 times larger than they were in 1980.”

Question 27

The term globalization was first coined in a Harvard Business Review article in which the author maintained that

-new technologies were creating opportunities for creating mass customization of products.
-governments would be threatened by the emergence of global companies and would limit their development.
-the future belonged to global companies that sold the same things the same way, everywhere.
-increased differentiation of products would mean that costs of production would become a steadily declining proportion of the selling price.

Answer 27

the future belonged to global companies that sold the same things the same way, everywhere.

“The term globalization was first coined by Theodore Levitt in a Harvard Business Review article in which he maintained that new technologies had “proletarianized” communication, transport, and travel, creating worldwide markets for standardized consumer products at lower prices. He maintained that the future belonged to global corporations that did not cater to local differences in taste but, instead, adopted strategies that operated “as if the entire world (or major regions of it) were a single entity; [such an organization] sells the same things in the same way everywhere.”

Question 28

The domestic environment is composed of all the uncontrollable forces originating in the ________ that surround and influence the life and development of the firm.

-international arena
-host nation
-home country
-foreign country

Answer 28

home country
“The domestic environment is all the uncontrollable forces originating in the home country that surround and influence the life and development of the firm.”

Question 29

The argument that free trade is the best strategy for advancing the world’s economic development is considered

-one of the most contentious issues associated with economic globalization.
-one that has very little support in research studies.
-a proposition with which most economists agree.
-the basis for much protectionist legislation in emerging markets.

Answer 29

a proposition with which most economists agree.

“That free trade is the best strategy for advancing the world’s economic development is one of the few propositions on which almost all economists agree, not only because it is theoretically compelling but also because it has been demonstrated in practice.”

Question 30

An international company (IC) is a company headquartered in another nation. (true/false)

Answer 30

false
“An international company (IC) is a company with operations in multiple nations.”

Question 31

International business differs from domestic business in that a firm operating across borders must deal with the forces associated with which three kinds of environments?

-geographic, political, economic
-foreign, domestic, international
-initial, secondary, primary
-multicultural, ethnocentric, stereotypical

Answer 31

foreign, domestic, international

“International business differs from domestic business in that a firm operating across borders must deal with the forces of three kinds of environments—domestic, foreign, and international. In contrast, a firm whose business activities are carried out within the borders of one country needs to be concerned essentially with only the domestic environment.”

Question 32

International business as a business practice is considered

-relatively new.
-to have existed before the Roman Empire.
-to have begun in China in the 18th century.
-a result of the rise of the Ottoman Empire.

Answer 32

to have existed before the Roman Empire.

“While international business as a discipline is relatively new, as a business practice it is not. Well before the Roman Empire was established, Phoenician and Greek merchants were sending representatives abroad to sell their goods.”

Question 33

Gentille Manufacturing, based in California, recently purchased a new manufacturing facility and production equipment in Germany that it will use to produce component parts. This purchase is an example of

-intrastate commerce.
-economies of scale.
-importing and exporting.
-foreign direct investment.

Answer 33

foreign direct investment.
“Foreign direct investment refers to direct investments in equipment, structures, and organizations in a foreign country.”

Question 34

When a government sees that local industry is threatened by imports, it can threaten to erect import barriers to stop or reduce these imports. This is an example of a _________driver of international business activity.

-technological
-market
-political
-cost

Answer 34

political
“Trade barriers are political barriers to international business.”

Question 35

Unconscious reference to one’s own ________when judging behavioral actions of others in a new and different environment is called the self-reference criterion.

-work experience
-personality traits
-cultural values
-physical characteristics

Answer 35

cultural values
“Unconscious reference to your own cultural values when judging behaviors of others in a new and different environment is known as the self-reference criterion.”

Question 36

Relatively inexpensive international communication enables firms to “body shop,” that is, transmit computer-oriented tasks worldwide to a cheap but skilled labor force. This is an example of a _________blank driver of international business activity.

-political technological
-market
-technological
-cost

Answer 36

technological
“This demonstrates a technological driver of international business.”

Question 37

Environment involves the forces surrounding and influencing the life and development of the firm and is classified as

-primary and secondary.
-controllable and uncontrollable.
-domestic and foreign.
-representative and democratic.

Answer 37

controllable and uncontrollable
“The term environment as used here means all the forces influencing the life and development of the firm. The forces themselves can be classified as external or internal. The external forces are commonly called uncontrollable forces, which are the external forces that management has no direct control over, although it can exert influence. The internal forces over which management does have some control and that management administers to adapt to changes in the uncontrollable forces are called the controllable forces.”

Question 38

A company that decides to engage in exporting as a way to increase economies of scale is basing this decision on which driver of international business activity?

-cost
-political
-competitive
-market

Answer 38

cost
“In this situation, a cost driver is affecting the decision to conduct international business.”

Question 39

Which of the elements in Porter’s diamond model of national advantage takes into consideration the sophistication of a company’s customers?

-Export conditions
-Factor conditions
-Demand conditions
-Government

Answer 39

demand conditions
“Demand conditions refer to the nature of domestic demand matters, rather than merely the size. If a firm’s customers are sophisticated and demanding, the firm will strive to produce high-quality and innovative products and, in doing so, will obtain a global competitive advantage over companies located where domestic pressure is less.”

Question 40

The international product life cycle theory may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in home markets first. (true/false)

Answer 40

true
“The international product life cycle theory may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in home markets first. For example, personal computers were initially introduced in the United States, then exported to other countries. Over time, production moved to lower-cost locations such as Taiwan and China, and now almost all computers sold in the United States are imported from abroad.”

Question 41

What is one of the reasons suggested by economist Alfred Marshall for why firms tend to cluster together on a geographic basis?

-Production costs decline as facilities get larger.
-Efficiency improves as the result of cumulative experience.
-Competition will not enter the market.
-Technological information can be readily shared.

Answer 41

Technological information can be readily shared.

“He suggested three reasons: (1) the pooling of a common labor force means staffing requirements can be met quickly, even with unexpected fluctuations in demand; (2) specialized local suppliers can coordinate their operations and skills with the needs of the buyers; and (3) technological information can be readily shared, enhancing the rate of innovation.”

Question 42

Government administrations get concerned when the number and value of imports into the country are greater than the value of the country’s exports. In other words, the administration is concerned about

-product differentiation.
-a trade deficit.
-absolute advantage.
-economies of scale.

Answer 42

a trade deficit
“This difference is a trade deficit—the amount by which the value of imports into the nation exceeds the value of its exports. Trade deficits can be the source of economic, political, and other concerns, as suggested by the Trump administration’s recent efforts to renegotiate trade treaties, impose tariffs, or engage in other actions to reduce the deficit between the United States and many of its trading partners, including China.”

Question 43

U.S.-based Play-On has been selling audio and video equipment to the international market for six years. Recently, the company decided to stop producing its line of televisions because the United States is importing televisions at a lower cost than the company can make its television. Which stage of the product life cycle is the product currently in?

-stage 1
-stage 2
-stage 3
-stage 4

Answer 43

stage 4
“In the fourth stage of the product life cycle, import competition appears in the United States”

Question 44

USMCA and other treaties are the main reasons that most of Canada’s exports go to

-the EU.
-South America.
-Asia.
-the United States and Mexico.

Answer 44

the United States and Mexico.
“Nearly 80 percent of Canada’s exports go to the United States and Mexico.”

Question 45

What event in 2020 caused a temporary decline in exports globally?

COVID-19 pandemic

oil shortage that resulted in increased petroleum prices

hurricanes and draughts caused by climate change

government policy against exporting

Answer 45

COVID-19 pandemic
“Exporting took a brief decline in 2020 during the pandemic when many companies had to shut down or rethink how they conducted their business, particularly in the service sector—travel, movies, and restaurants for instance.”

Question 46

What are economies of scale?

They refer to the rising scale on which efficiency improves as a result of cumulative experience and learning.

They are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.

They are only relevant to manufacturing industries.

They occur due to the presence of abundant resource endowments within a nation.

Answer 46

They are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.
“Economies of scale are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.”

Question 47

The experience curve refers to

the rising scale on which efficiency improves as a result of cumulative experience and learning.

the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.

the plateau stage in the product life cycle where companies export products for the first time.

the sloping curve that designates the end of the product life cycle.

Answer 47

the rising scale on which efficiency improves as a result of cumulative experience and learning.

“Experience curve refers to the rising scale on which efficiency improves as a result of cumulative experience and learning.”

Question 48

Some countries send out buying missions to other countries in order to find products to import because their exports are exceeding the value of their imports. In other words, the nations are experiencing a(n)

economy of scale.
absolute advantage.
trade surplus.
product differentiation.

Answer 48

trade surplus.
“When the value of a country’s exports exceeds the value of the imports, the country is experiencing a trade surplus.”

Question 49

The predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases is known as the experience curve.
True or False

Answer 49

false
“The predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases is known as an economy of scale. An experience curve refers to the rising scale on which efficiency improves as a result of cumulative experience and learning.”

Question 50

Mexico and Canada are major U.S. trading partners because they have the benefit of lower freight charges and shorter delivery times. Why do these benefits exist for these two nations?

They established these parameters in the USMCA agreement.

They share a border with the United States.

They source production materials from China.

They have established economies of scale for goods and services.

Answer 50

They share a border with the United States.
“Mexico and Canada are major U.S. trading partners in great part because they are part of USMCA. They also each share a common border with the United States, which means lower freight charges, shorter delivery times, and easier and less expensive contacts between buyers and sellers than would otherwise be the case.”

Question 51

The theory of overlapping demand suggests that

international trade in services will be more common between countries with high and low relative levels of labor costs.

countries with similar geography will have similar demand traits

trade wars will usually occur between countries that have similar levels of income.

international trade in manufactured goods will be more common between countries with similar levels of income.

Answer 51

international trade in manufactured goods will be more common between countries with similar levels of income.
“The theory of overlapping demand argues for the existence of similar preferences and demand for products and services among nations with similar levels of per capita income.”

Question 52

World trade is dominated with exchanges ________

among nonbordering countries.

between geographic regions.

between state-owned enterprises.

within geographic regions.

Answer 52

within geographic regions.
“World trade continues to be dominated by exchanges within—not between—geographic regions.”

Question 53

The proportion of world trade coming from North America, Latin America, Africa, and the Middle East has decreased since 2003.

True or False

Answer 53

true
“Although the absolute value of their merchandise exports increased, the proportion of world trade coming from North America, Latin America, Africa, and the Middle East decreased since 2003, reflecting the greater level of export growth in other regions”

Question 54

The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to _________blank foreign direct investment when they have technical and other advantages over indigenous firms.

increase
reduce
ignore
not change

Answer 54

increase
“The monopolistic advantage theory suggests that foreign direct investment is made by firms in industries with relatively few competitors, due to their possession of technical and other advantages over indigenous firms. Therefore, developing these advantages makes such firms likely to increase their FDI to exploit these advantages.”

Question 55

When examining the volume of international trade, how are goods and services currently represented?

-Exports of goods and services quadrupled between 1990 and 2013.
-Exports of services grew faster than trade in merchandise for the last 20 years.
-There are fewer goods traded than services.
-Goods and services have reached equal levels of trading volumes.

Answer 55

Exports of services grew faster than trade in merchandise for the last 20 years.
“Physical goods, such as automobiles, food, and clothing, accounted for $19.1 trillion of the $25 trillion in international trade in 2019. Services, including such activities as insurance, travel, consulting, movies, and music, made up the remaining $5.9 trillion of international trade. Trade in services has been growing faster than trade in merchandise for the last 20 years.”

Question 56

American Canine wanted to expand its market into Europe, so it purchased a dog supply company in France and merged it with American Canine. What type of federal direct investment did American Canine choose?

cross-border acquisition
strategic alliance
greenfield investment
home country expansion

Answer 56

cross-border acquisition
“The purchase of an existing business in another nation is known as a cross-border acquisition.”

Question 57

The three nations that exported the largest amount of goods to the United States in 2017 were

-China, Canada, and Mexico.
-China, Mexico, and the United Kingdom.
-China, Japan, and Saudi Arabia.
-Canada, Mexico, and Japan.

Answer 57

“Figure 2.2 shows the major trading partners of the United States. China, Canada, and Mexico were the largest sources for U.S. imports of goods.”

Question 58

The fact that almost everyone in the United States self-identifies as middle class suggests that the United States

-is a successful meritocracy.
-measures low on the uncertainty avoidance dimension.
-economy has failed to support an aristocracy.
-measures low on the power distance dimension.

Answer 58

measures low on the power distance dimension.
“Power distance is a measure of social inequality; it focuses on how much inequality seems right. The United States measures low on this dimension.”

Question 59

In low-context cultures it is common to find

-subtlety and innuendo during conversations.
-that communication tends to be explicit.
-indirection is prized because it recognizes the ability of the other.
-leadership is mostly from behind, allowing the workgroup to self-direct.

Answer 59

that communication tends to be explicit.
“In low-context cultures, communication tends to be explicit, so what you say tends to be what you mean.”

Question 60

After college, Tomas moved from California to take a job overseas. He was surprised to find that the city he moved to had strict curfew laws and all the shops and restaurants closed by 10 pm. The culture he moved into seems to want to minimize unpredictable situations which reflects which of Hofstede’s dimensions?

-uncertainty avoidance
-masculinity-femininity
-power distance
-individualism-collectivism

Answer 60

uncertainty avoidance
“Hofstede’s uncertainty avoidance measures a society’s discomfort with uncertainty.”

Question 61

Everything we do is influenced by culture, both our own and others’.
True or False

Answer 61

true
“Everything we do is influenced by culture, a fact most of us realize about other cultures, but not always about our own.”

Question 62

Hofstede’s masculinity-femininity dimension suggests that, as an international manager, you might

-avoid feminine cultures because their production levels will lag.
-avoid highly masculine cultures because they violate EEOC standards.
-find men and women equally ready to assume leadership roles in a feminine culture.
-find women too competitive in a feminine culture.

Answer 62

-find men and women equally ready to assume leadership roles in a feminine culture.
“In a feminine culture, there is relatively less variation between male and female roles, which suggests that leadership and decision-making roles would be equally open to men and women.”

Question 63

Qing Yuan is the finance director of a firm in Seattle. He often attends meetings for work and it is not uncommon for these meetings to overlap one another so he is finishing up with one while he should be at another. Trompenaars would say that Qing Yuan works at a company that reflects what dimension of time?

ethnocentric
polychronic
theocentric
monochronic

Answer 63

polychronic
“In polychronic cultures, many actions can occur at more or less the same time.”

Question 64

Latrell decided not to take the overseas management position because he knew managers worked alongside their staff and did not have private offices in this particular international culture. He thought this made managers look less important and inconsequential. What aspect of culture is he concerned with?

verbal communication
aesthetics
unspoken language
folklore

Answer 64

unspoken language
“Unspoken language includes spatial relationships, such as office size and location.”

Question 65

According to Trompenaars, a culture’s attitude toward the environment can range from

-peaceful to war-like.
-overwhelmed by aesthetics to dominating the environment.
-control over the environment to harmony with it.
-focus on all aspects of the environment or just one.

Answer 65

control over the environment to harmony with it.
“The dimension is described as moving from control to harmony.”

Question 66

In high-context cultures, direct conversations that “tell it like it is” would be viewed as

appropriate.
expected.
appreciated.
rude.

Answer 66

rude
“In high-context cultures, directness is considered brash or rude.”

Question 67

The assembly line found in automobile manufacturing facilities is an example of how culture affects

accounting.
marketing.
procurement.
-production.

Answer 67

production.
“The assembly line is a reflection of how culture affects production in a business. The assembly line was devised by minds socialized in a sequential, linear culture, in which the task receives primary focus, not the social relationship.”

Question 68

In a small power distance culture,

-people will want direction, so top-down leadership styles are appropriate.
-seniority, rank, and title are important.
-first names are likely to be used in the office because the ideal is equality
-company executives are highly rewarded.

Answer 68

first names are likely to be used in the office because the ideal is equality
“Small power distance suggests informality, such as the use of first names in work relationships.”

Question 69

In high-context cultures, nonverbal language plays a minor role. Business professionals rely more on the spoken word.
True or False

Answer 69

false
“In high-context cultures, meaning is conveyed through context rather than the words themselves.”

Question 70

Anthropologist E. T. Hall suggests that there are hundreds of ways managers can learn the characteristics of other cultures.
True or False

Answer 70

false
“Hall suggests there are only two ways to do this: either spending a lifetime in the culture or undergoing extensive training, including language.”

Question 71

A business with tight accounting controls suggests a culture with low levels of trust.
True or False

Answer 71

true
“Both accounting and finance are influenced by the culture’s notion of the basic nature of people. Are controls needed to keep people honest? Tight accounting controls suggests a culture with low levels of trust.”

Question 72

Monochronic time is best illustrated by

-the flight schedule at an airport.
-a rock concert.
-the multitude of activities required by new parents.
-on-duty nurses’ roles in an emergency room.

Answer 72

-the flight schedule at an airport.
“Monochronic time is linear and divisible into blocks, reflecting an economic approach.”

Question 73

Low-context cultures such as the United States tend to have these kinds of communication patterns:

-subtle.
-nondirective.
-loudly voiced.
-explicit.

Answer 73

explicit
“Low-context cultures are explicit in their communication. The act itself has to carry the communication because the context is not contributing to the conveyance of meaning (see Figure 3.3).”

Question 74

Chavez’s manager told him not to make the “OK” sign with his hand when meeting with the representatives from France as that gesture is viewed as vulgar and inappropriate in their culture. Which aspect of culture is his manager referring to?

-spoken language
-material culture
-nonverbal communication
-religion

Answer 74

nonverbal communication
“Both body language, a part of nonverbal communication, and spoken language demarcate cultures.”

Question 75

Trompenaars’s neutral vs. affective dimension is used to determine how a culture

-regulates behaviors.
-respects individual or group behaviors.
-expresses emotions.
-values work over social life.

Answer 75

expresses emotions.
“This dimension is used to determine how a culture expresses emotions.”

Question 76

Hofstede is primarily concerned with social values and the dimensions he identified that help parents understand their children.
True or False

Answer 76

false
“Hofstede is primarily concerned with work values and his dimensions help managers understand how cultural differences affect organizations.”

Question 77

Trompenaars’s achievement versus ascription dimension describes social status based on what one does or who one is. In the United States, where people build who they are through work, social status tends to be

-based on achievement.
-ignored because the United States does not have classes.
-based on ascription.
-a subtle form of prejudice.

Answer 77

based on achievement.
“Ascription is status based on who you are, not what you’ve done. Ascription could consider family lineage, age, or other attributes. Status via work is achievement oriented.”

Question 78

James realized the company’s marketing materials should avoid the color red in South Africa because it is the color of mourning in that country. What part of culture is James taking into consideration?

-stereotypes
-spoken language
-gift-giving
-aesthetics

Answer 78

aesthetics
“Aesthetics reveal a country’s sense of beauty and taste”

Question 79

Studies conducted by the World Bank indicate that tropical climates allow for

-the unimpeded reproduction and growth of weeds, viruses, birds, insects, and parasites.
-the lack of need to provide heat and shelter that is present in northern climates.
-unparalleled trade.
-cultivation of citrus and four crops per year.

Answer 79

-the unimpeded reproduction and growth of weeds, viruses, birds, insects, and parasites.
“Weeds, birds, insects, viruses, and parasites result in destroyed crops, dead cattle, and people infected with debilitating diseases.”

Question 80

What is the current status of nuclear power?

-It is growing insignificantly, except in developing countries.
-It has been growing.
-It has been rejected by France.
-It has been abandoned by all nations.

Answer 80

-It has been growing.
“Although nuclear power as an energy source was expected to decline because of safety and security, it has grown substantially. The majority of new construction is occurring in China (13), India (7), Russia (4), South Korea (4), and the United Arab Emirates (4).”

Question 81

World Bank studies have shown that underdevelopment in tropical nations is often due to

-factors such as parasites and viruses that expand unchecked because of the lack of cold winter temperatures.
-mental slowness in people of the climates around the equator.
-socialist political regimes.
-lack of government investment in education.

Answer 81

factors such as parasites and viruses that expand unchecked because of the lack of cold winter temperatures.
“Continuous heat and no cold winter temperatures offer an ideal environment for parasites, viruses, weeds, and insects, all of which contribute to factors responsible for underdevelopment.”

Question 82

Which statement about ethanol is most accurate?

-The use of ethanol as fuel has risen steadily over the past decade in the U.S. and is expected to continue to increase as it raises no major concerns from environmentalists.
-Ethanol sales in the U.S. have risen, but are decreasing in China and Sweden, once major users of the product.
-Because it is made from corn, ethanol is widely available and the best substitute for all other fuels.
-The use of ethanol as fuel reduces corn availability as a food source.

Answer 82

-The use of ethanol as fuel reduces corn availability as a food source.
“Environmentalists, who once thought ethanol part of the solution to our environmental problems, now see it as a concern because corn, one major source of ethanol, has taken acreage away from food crops, especially in countries that need the food.”

Question 83

In more dense populations, international managers can expect

-increased political discord.
-markets that respond well to word-of-mouth promotion.
-contrasting topographical features.
-lower marketing and distribution costs.

Answer 83

lower marketing and distribution costs.
“International managers know that in more densely populated nations, marketing and distribution cost less because population centers are closer together, communication systems are more efficient, and more people are available for employment.”

Question 84

Coal and natural gas are forms of renewable energy because they cannot be replenished.
True or False

Answer 84

false
“Coal and natural gas are considered nonrenewable energy since they cannot be replenished.”

Question 85

From a business perspective, bodies of water often coincide with

-densely populated areas along seacoasts, lakes, and rivers.
-reduced manufacturing and increased tourism.
-higher levels of pollution.
-more rural, farming areas and fewer urban areas.

Answer 85

-densely populated areas along seacoasts, lakes, and rivers.
“Bodies of water have increased populations along seacoasts, lakes, and rivers. Water attracts populations, the opposite of mountains and deserts.”

Question 86

Mountains tend to impede trade, whereas flat areas tend to facilitate trade relationships.
True or False

Answer 86

true
“Topography contributes to differences in economies, and mountains and flatlands are a part of that.”

Question 87

A company wants to understand how much water the company is using when manufacturing its energy-efficient cars. What type of measure should the company take?

water waste
water footprint
water pressure
water emissions

Answer 87

water footprint
“A water footprint is a measure of the amount of water used in a product’s manufacture and use.”

Question 88

Bodies of water, much like deserts and mountains, also serve as barriers to trade.
True or False

Answer 88

false
“Unlike mountains, deserts, and tropical forests, bodies of water attract people and facilitate transportation. Historically, navigable waterways with connections to the ocean have been important because they permit low-cost transportation of goods and people from a country’s coast to its interior.”

Question 89

Triple-bottom-line accounting is a good way for a business to

-share the results of its social, environmental, and economic performance with its stakeholders.
-compare its sustainability results with other firms in the same sector.
-receive government assistance for environmental issues.
-justify sustainability expenses when they impact the bottom line.

Answer 89

-share the results of its social, environmental, and economic performance with its stakeholders.
“One way a company can measure its activities in this larger context and share the results of its social, environmental, and economic performance with its stakeholders is to use triple-bottom-line accounting.”

Question 90

Traditional approaches to business focus on the goal of creating profits, while the stakeholder approach forces a business

-to address its underlying values and principles.
-into a dialogue with unions and environmentalists.
-to dialogue with banks to establish community policies.
-to lay claim to territories of expertise.

Answer 90

-to address its underlying values and principles.
“Stakeholder theory requires that a business address underlying values and principles, because they are the basis for the resolution of conflicting stakeholder needs and values.”

Question 91

Environmental sustainability is both local and global because

-environmental conditions do not recognize national borders.
-governments are not prepared to address environmental issues beyond the UN.
-business has become global, so sustainability must follow the trend.
-it is a political issue as well as an academic one.

Answer 91

environmental conditions do not recognize national borders.
“For example, New England is a low polluter, yet the area is afflicted by acid rain caused by Midwest carbon emissions. France is a low polluter, yet shares Europe’s pollution.”

Question 92

Which country has the largest amount of recoverable coal reserves?

China
Russia
Canada
United States

Answer 92

united states
“The United States leads the world in recoverable coal reserves,with enough to last more than 350 years at projected rates of consumption.”

Question 93

Above-ground issues, such as political unrest, impact territories available for oil exploration.
True or False

Answer 93

true
“Above-ground issues such as political unrest, financial crises, and natural disasters impact territories available for exploration and production. Political unrest limits access to potential sites, and governments control access to their natural resources.”

Question 94

Stakeholder theory pushes managers to be clear about how they want to do business, so it forces a business to

-address underlying values and principles of managers and stakeholders.
-discuss profit center margins.
-strategize development from the top down.
address profit as the primary driver of the company.

Answer 94

-address underlying values and principles of managers and stakeholders.
“Stakeholder theory forces businesses to recognize their underlying values, including what kind of relationships they want to create with their stakeholders.”

Question 95

Tropical rain forests are

-a barrier to economic development.
-an important source of agriculture, due to their fertile soil.
-the equivalent of marshes along coasts.
-locations of significant rural population centers due to their bodies of water.

Answer 95

-a barrier to economic development.
“Tropical rain forests tend to have harsh climate and poor soil, so they function as a barrier to economic development.”

Question 96

At a manufacturing company, the company identifies its purpose by having discussions with employees, vendors, community members, and other groups pertinent to the business. Which theory for a sustainable business does this company follow?

stakeholder theory
footprinting
limits theory
natural capital

Answer 96

stakeholder theory
“To achieve the balance among competing tensions that characterize the stakeholder approach, a company needs to see itself in relation to its stakeholders and also in a societal context Taking this view of itself leads the company to clearly identify its larger purpose, principles, and responsibilities through discussions both within the company and in its larger social context.”

Question 97

Deserts and tropical forests seem to be opposites, but have what trait in common?

-They are good vacation spots so are an economic stimulator.
-They have small populations on their edges.
-They separate markets, thereby increasing transportation costs.
-They are hospitable to insects.

Answer 97

-They separate markets, thereby increasing transportation costs.
“Both deserts and tropical forests separate markets.”

Question 98

Because it is a high polluter, coal is expected to decline as an energy source.
True or False

Answer 98

true
“Coal, much like nuclear power, has been projected to decline as an energy source, largely because it pollutes heavily.”

Question 99

In the McKinsey Global Institute article,what is the main challenge associated with harnessing the benefits of global interconnection?

-Reducing international trade
-Increasing local production
-Managing risks from interdependency
-Focusing solely on knowledge-intensive flows

Answer 99

Managing risks from interdependency

Question 100

According to the provided data, which category of manufactured goods saw positive year-on-year growth in trade during 2021?

-Clothing
-Machinery
-Pharmaceuticals
-Automotive products

Answer 100

-Pharmaceuticals

Question 101

In the McKinsey Global Institute article: Which region saw a sharp decline in imports and GDP in 2022 due to reliance on Russian energy and the impact of sanctions?

Asia
Middle East
Europe
Commonwealth of Independent States (CIS)

Answer 101

Commonwealth of Independent States (CIS)

Question 102

In the McKinsey Global Institute article: What impact did the outbreak of war in Ukraine have on the WTO’s projections for world merchandise trade volume growth in 2022?

-The projections remained unchanged.
-The projections increased.
-The projections decreased.
-The projections became more certain.

Answer 102

The projections decreased

Question 103

Which flow experienced the most substantial decrease during the COVID-19 pandemic?

-Flows of data
-Trade in manufactured goods
-Flows of international students
-Capital flows

Answer 103

-Flows of international students

Question 104

As articulated by Edward Hall, which, if any, of the following is (are) correct?

-High context correlates with Emotions
-High Context correlates with Rationality.
-High context provides Direct information.
-Low Context correlates with Emotions.

Answer 104

-High context correlates with Emotions

Question 105

In class, an emphasis was made to “culture” consisting of which, if any, of the following?

-National culture.
-Organizational Culture
-“Individual Culture”
-All of the above.
-None of the above.

Answer 105

All of the above.

Question 106

From a cultural perspective, management’s objectives and aspirations are associated with:

-Profitability, Transferability of Knowledge, Productivity and Power and Achievement.

-Security and mobility; Personal life, Affiliation and Social Acceptance, Power and Achievement

-Profitability, Transferability of Knowledge, Mobility of Labor and Capital

-Personality, Organizational awareness, National Culture and Economic Integration

Answer 106

Security and mobility; Personal life, Affiliation and Social Acceptance, Power and Achievement

Question 107

As presented in class, the concept of a “Nation-State” and Sovereignty are not directly linked to the concept of Economic Integration.
True or False

Answer 107

false

Question 108

The direction of trade is favored among major trading partners (economically integrated) when which of the following, if any, is (are) present?

-The business climate in these importing nations are already relatively favorable.
-Export and import regulations are not insurmountable.
-There should be no strong cultural objections at home to buying that nation´s good .
-All of the above.
-None of the above.

Answer 108

-All of the above.

Question 109

“Born global” is best defined as engaging in export activities from the very beginning of a firm´s existence.
True or False

Answer 109

true

Question 110

Which, if any, of the following are more closely related with Economic Integration and Sovereignty?

Regionalization as an economic integration vehicle. I.e. USMCA
The concept of the “nation-state” and sovereignty.
All of the above
None of the above.

Answer 110

All of the above

Question 111

The initial introduction to the course suggests that “international business” may best be characterized as a complex, dynamic “system”.
True or False

Answer 111

True

Question 112

“Cultural Distance” refers to, among other factors, the distance a culture is geographically distant from the United States. And the linguistic distance from English.
True or False

Answer 112

true

Question 113

Factors driving globalizatiion include which, if any, of the following?
-Economic, which includes international trade and investment.
-Technological, including Internet connectivity.
-Personal Contacts, such as international travel and tourism, international telephone traffic and personal transers of funds internationally.
-Political, such as the participation in international organizations and government monetary transfers.
-All of the above.

Answer 113

all of the above

Question 114

Rapid growth in world exports since 1980 presents positive and negative consequences. It demonstrates that increasing sales through exporting is a viable growth strategy and creates jobs in exporting nations. In addition, it acts as a warning to managers that they must be prepared to meet increased competition from exports in their own domestic markets.
True or False

Answer 114

True

Question 115

In the textbook “International Business” by Geringer, (the author of the textbook), proposes that “culture is a learned behavior transmitted across generations to solve societal problems.”
True or False

Answer 115

false

Question 116

The World Trade Organization was originally founded as

-the General Assembly on Transactions and Trade.
-the North American Free Trade Agreement
-the international economic arm of the United Nations.
-the General Agreement on Tariffs and Trade

Answer 116

-the General Agreement on Tariffs and Trade

Question 117

Which of the following statements about economic integration is true?

-It has been associated in class with “non-equilibrium thermodynamics”
-It is one of the first mass production / distribution concepts.
-Economic integration is not applicable within a globalized enviroment.
-It has no implications within international business.

Answer 117

It has been associated in class with “non-equilibrium thermodynamics”

Question 118

The mobility of capital, labor and the transfer of knowledge have been described as the drivers of globalization.
True or False

Answer 118

true

Question 119

Basic threats to environmental sustainability include rich nation consumerism and developing country economic growth because world population growth has slowed considerably, it is no longer a problem.
True or False

Answer 119

false

Question 120

In the video on Costa Rica: What does the speaker suggest as the key to developing without fossil fuels in developing countries like Costa Rica?

-Choosing between development and environmental protection.
-Investing in fossil fuel-based transportation
-Developing renewables and integrating clean energy into the economy
-Maintaining a focus on traditional energy sources

Answer 120

Developing renewables and integrating clean energy into the economy

Question 121

Under Prime Minister Cameron, the British government sold the Royal Mail; shares can now be purchased on the London Stock Exchange. This is an example of

centralization.
expropriation.
privatization.
nationalization.

Answer 121

privatization.

Question 122

Businesses are unlikely to profit from any political change or instability.
True or False

Answer 122

false
“Business does not crave stasis; often businesses can profit from opportunities that accompany change. Besides, stasis is unlikely in our increasingly complex global environment.”

Question 123

Firms are nationalized when the goal of the government is to spread a socialist-communist ideology.
True or False

Answer 123

false
“One fundamental motivation for nationalization is the belief that governments can better ensure equal access to and control over basic services we consider public goods, such as education and health care, than private owners could do. In addition, government ownership can protect against corruption, put social goals ahead of profit, and reliably provide vital services like national defense.”

Question 124

When the U.S. military contracts out support functions in war zones, it is engaged in nationalization.
True or False

Answer 124

false
“When any government contracts out government work to the private sector, it is engaged in privatization.​”

Question 125

Information that firms need in order to accurately assess a country’s risks varies according to what two major factors?

-time needed for initial market entry and size of anticipated workforce
-presence of competitors and presence of terrorist or criminal operations
-qualifications of workforce and type of government
-type of business and time needed to gain a satisfactory return on investment

Answer 125

-type of business and time needed to gain a satisfactory return on investment
“The types of information a firm will need to judge country risks vary according to the nature of its business and the length of time required for the investment, loan, or other involvement to yield a satisfactory return.”

Question 126

To avoid the risk of cybercrime, the best approach is to stay out of foreign markets.
True or False

Answer 126

false
“Cybercrime is borderless, no one government or legal system can control it.”

Question 127

What should managers be aware of regarding the relationship between a risk analysis and the time period required for satisfactory return on investment opportunities?

-Risk analysis is only useful for long-term opportunities in other countries.
-A brief time horizon for investment return does not require risk analysis.
-The longer the time horizon, the more reliable the risk analysis.
-The longer the time horizon, the less reliable the risk analysis.

Answer 127

-The longer the time horizon, the less reliable the risk analysis.
“Problems often increase over the time of the investment and cannot be resolved. The longer the time horizon, the less reliable the risk analysis can be.”

Question 128

The U.S. Foreign Corrupt Practices Act was designed to increase accounting transparency and to

-punish foreign bribery of U.S. officials.
-increase foreign competition for U.S. goods.
-prohibit bribery of foreign officials.
-drive down consumer prices in the United States.

Answer 128

-prohibit bribery of foreign officials.
“Congress passed the Foreign Corrupt Practices Act (FCPA) in response to questionable payments by U.S. companies to foreign officials. Key provisions of the act prohibit bribery of foreign officials and set requirements for transparency of accounting transactions.​”

Question 129

What legal advantage does the international business community perceive in conducting business in Hong Kong compared to other regions in China?

-It follows a religious law tradition.
-It operates according to the common law system.
-It strictly adheres to civil law.
-It has a less developed legal system.

Answer 129

-It operates according to the common law system.

Question 130

Legal uncertainties do not constrain the growth of international business.
True or False

Answer 130

true
“Despite legal uncertainties of doing business in other countries, international business activities will continue to increase in the future.”

Question 131

Protecting a trade secret is usually less costly and time-consuming for businesses than initiating a patent.
True or False

Answer 131

true
“Trade secrets are the most common form of IP protection that international businesses pursue. Protecting a trade secret is usually less costly and time-consuming than initiating a patent; all you need to do is show you are making an effort to keep the confidential information secret.​”

Question 132

Which statement is accurate regarding international patent rights?

-The legal rights of patent holders are universally applied.
-A patent is viewed narrowly as a property right in most countries.
-In the U.S., a utility patent lasts for 20 years.
-In the EU, applicants must file separately for a patent in each member country.

Answer 132

-In the U.S., a utility patent lasts for 20 years.
“Each country administers and handles patents differently. In the United States, a patent is viewed more narrowly as a property right that “excludes others from making, using, offering for sale, or selling the invention” and is divided into three types: utility, design, and plant. In the U.S., a utility patent is for an innovative, useful invention or process, and it gives the patent holder 20-year protection against use by others.”

Question 133

Tran’s company has just offered him a position in the London office. He will live and work there for the next two years but retain his U.S. citizenship. Tran is surprised to learn that he must still pay U.S. employment taxes. This is an example of

-international contract enforcement.
-public international law.
-UK/U.S. arbitration.
-extraterritorial application of laws

Answer 133

-extraterritorial application of laws
“A country’s attempt to apply its laws to nonresidents and foreigners, and to activities that take place beyond its borders is referred to as the extraterritorial application of laws.”

Question 134

The accounting standards followed by U.S. companies are guided by

-the SEC.
-the AACSB.
-the Fed.
-the IASB.

Answer 134

-the SEC.
“U.S. accounting practice is guided by the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) and follows standards known as generally accepted accounting principles (GAAP).”

Question 135

What was the immediate impact of Russia’s warning regarding ships sailing around Ukrainian ports?

-Global grain prices rose sharply.
-Ukraine’s grain exports remained unaffected.
-Ukraine resumed its grain exports to the Black Sea.
-Global grain prices dropped significantly.

Answer 135

-Global grain prices rose sharply.

Question 136

Which countries could potentially pressure Russia to accept a renegotiated deal?
-Ukraine and Turkey
-The European Union and the United Nations
-Turkey and China
-China and the United Nations

Answer 136

Turkey and China

Question 137

What are Ukraine’s alternatives for transporting its grain?

-Transporting by air to neighboring countries
-Shipping via the Black Sea only
-Using road, rail, and river routes
-Exporting through Russian-controlled ports

Answer 137

-Using road, rail, and river routes

Question 138

How did Russia’s attacks on Ukrainian ports affect the situation?

-They had no impact on the grain waiting to be loaded onto ships.
-They resulted in a decrease in grain exports.
-They led to successful negotiations between Russia and Ukraine.
-They destroyed grain waiting to be loaded onto ships.

Answer 138

-They destroyed grain waiting to be loaded onto ships.

Question 139

In the video “Geopolitics in Global Trade”, what can geopolitical rivalries lead to?

-Geopolitical rivalries may disrupt global supply chains and increased costs but no effect on businesses.
-Trade barrier is a tool to protect global supply chain.
-Geopolitical tensions only relate to developed countries.
-Restrictions on technology transfers and access to key markets

Answer 139

-Restrictions on technology transfers and access to key markets

Question 140

Why geopolitics plays a significant role in global trade and business landscape?

-Geopolitics has no effect on international regulations or trade -agreements.
-Geopolitics only influences small, local businesses and has no impact on global corporations.
-Geopolitics could result in sudden changes in trade policies, necessitating companies to adapt their strategies to navigate the evolving landscape.
-Geopolitical changes do not affect technological innovation or global supply chains.

Answer 140

-Geopolitics could result in sudden changes in trade policies, necessitating companies to adapt their strategies to navigate the evolving landscape.

Question 141

A country that can sell its products at a lower cost because it has lower standards for emissions from manufacturing facilities is making use of

subsidy dumping.
predatory dumping.
environmental dumping.
social dumping.

Answer 141

environmental dumping.
“Environmental dumping occurs when an exporter can sell at lower costs due to the country’s lax environmental standards.”

Question 142

Economists believe that using trade restrictions for national defense is an effective way of protecting certain industries that are important to national defense.
True or False

Answer 142

false
“Economists suggest that the national defense arguments are weak and use a call to patriotism to gain emotional advantage. Direct government subsidies would be a better way to protect such industries and also would clearly indicate to taxpayers the cost of maintaining these companies in the name of national security.”

Question 143

A flavored water company imports fruit flavors for use in its products. The company pays $.86 per pound on every shipment. Which type of tariff does the company pay?

specific
compound
ad valorem
countervailing

Answer 143

specific
“A specific duty is a fixed sum of money charged for a specified physical unit of the product. A company importing fruit flavors pays $.86 per pound, regardless of the shipment’s invoice value.”

Question 144

One reason a government chooses to restrict trade would be to

protect domestic infant industries.
foster relations with other nations.
eliminate domestic jobs.
indicate an isolationist stance.

Answer 144

protect domestic infant industries.
“The main reasons a government restricts trade are to promote the national defense, to impose sanctions on other countries, to protect domestic infant industries, to create or preserve domestic jobs, to ensure fair competition, and to retaliate for the trade restrictions or unfair practices of other governments.”

Question 145

Trade barriers create costs that are paid ultimately by the

consumer.
exporter.
country exporting the goods.
government erecting the barrier.

Answer 145

consumer.
“The costs of trade barriers are ultimately paid by the consumer.”

Question 146

Counterarguments to the “protect domestic jobs from cheap foreign labor” argument include that

-the labor rate is not all of the labor cost.
-wage rates are incidental.
-cheap foreign labor is a natural occurrence.
-comparative advantage recognizes -cheap labor as a competitive right.

Answer 146

the labor rate is not all of the labor cost.
“Hourly labor rates are not the full story, and productivity is what really matters.”

Question 147

In some countries, when an import of a product reaches the government-specified amount, then no further imports of that product are allowed for the year. What type of quota does this represent?

absolute
allocated
variable
tariff-rate

Answer 147

absolute
“If the quota is absolute, once the specified amount has been imported, further importation for the rest of the period (usually a year) is prohibited.”

Question 148

Tariffs on some products no longer serve their original purpose of protecting domestic producers but they are still levied by the government. What are these types of tariffs called?

nuisance
variable
countervailing
nontariff

Answer 148

nuisance
“Tariffs assessed at very low rates are sometimes referred to as nuisance tariffs because importers are still required to go through the frequently lengthy process of paying them, even though their low levels may no longer serve the original intention, such as protecting domestic producers.”

Question 149

A government chooses to protect its agricultural industry through the use of subsidies. This is considered to be a nonquantitative nontariff barrier.
True or False

Answer 149

true
“Nonquantitative Nontariff Barriers (NTBs) can be classified into three major groupings: direct government participation in trade, customs and other administrative procedures, and standards. The most common form of direct government participation in trade is the subsidy. Besides protecting industries through subsidies, as we have seen earlier, nearly all governments subsidize agriculture.”

Question 150

Fair competition is a strong rationale for import duties.
True or False

Answer 150

false
“Fair competition argues that import duties should be used to bring the imported item up to the cost of the domestic one. It eliminates any “unfair” advantage a foreign competitor might have gained through superior technology, lower taxes, lower raw material costs, or lower labor costs. This barrier eliminates the competition’s comparative advantage.”

Question 151

The Food and Drug Administration in the United States works to protect citizens from harmful products and companies must meet the regulations it sets. Which classification of nonquantitative nontariff barrier does this represent?

customs
VER
direct participation
standards

Answer 151

standards
“NTBs can be classified into three major groupings: direct government participation in trade, customs and other administrative procedures, and standards. Governmental and private standards to protect the health and safety of a nation’s citizens are both certainly desirable, but exporting firms are plagued by many standards that are complex and discriminatory.”

Question 152

Algeria was a prosperous country until the effects of military rule, poor economic policies, and a civil war in the 1990s devastated its economy. Now it is a haven for Al Qaeda. This illustrates the effect of an unstable government.
True or False

Answer 152

true
“Instability occurs when a government cannot maintain itself in power or makes sudden, unpredictable, or radical policy changes.”

Question 153

How does a variable levy affect domestic producers?

-It raises the cost to develop a domestic good compared to the cost of developing an imported good.
-It lowers the cost of an imported good compared to the cost of the domestic good.
-It eliminates any competition from imported goods.
-It prevents an imported good from being priced lower than the domestic good.

Answer 153

-It prevents an imported good from being priced lower than the domestic good.
“A variable levy guarantees that the market price of the import will be the same as that of domestically produced goods; the European Union has used this levy for imported grains.”

Question 154

A corporation would implement a country risk assessment in order to

-analyze the impact of diversity in a country’s workforce.
-estimate the risk to business employees, property, and investment.
-predict responses of citizens to new product lines.
-predict risk of marketing errors, given cultural variables.

Answer 154

-estimate the risk to business employees, property, and investment.
“CRA focuses on the risk a business takes within the country of losing workers, property, and assets.”

Question 155

The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) often pursue companies in situations that might encourage corruption, in a process called sweeping.
True or False

Answer 155

true
“When a company is reported to have engaged in corruption, DOJ and SEC will look closely at it and at other companies in the industry and related industries, and the travel and expense claims of their agents. This is called sweeping.”

Question 156

Sharone and her husband have developed a pizza pan that is guaranteed to keep the crust from sticking to the pan and washes clean with just water. They have applied to have exclusive rights to this product. What did they apply for?

a trademark
a patent
a copyright
a trade name

Answer 156

a patent
“A patent is government grant giving the inventor of a product or process the exclusive right to manufacture, exploit, use, and sell that invention or process.”

Question 157

Under the Foreign Corrupt Practices Act, facilitating payments are allowed for

patent approvals.
building construction.
production standards.
import approvals.

Answer 157

import approvals.
“Facilitating payments for routine government actions such as visa issuance, import approvals, and the processing of government papers are permissible under the FCPA.”

Question 158

Sharia law and Halakha are both forms of religious law.
True or False

Answer 158

true
“Both of these are religious law. In Islam, Sharia law’s fundamental documents are the Qur’an and Sunnah. Jewish Halakha is based on the Torah and Jewish tradition and informs the law of Israel.”

Question 159

Civil law is based on
-a collection of codes.
-religious law associated with the area.
-common law.
-precedents found in judgments made by judges.

Answer 159

-a collection of codes.
“The civil law approach is based on codification, that is, a systematic collection of laws designed to cover all areas of concern. It is derived from Ancient Roman law and influenced by codified religious law.”

Question 160

All nations in the world must recognize decrees and judgments from other nations.
True or False

Answer 160

false
“Each nation in the world is sovereign and has its own rules for recognizing decrees and judgments from other nations.”

Question 161

Nancy knew her package had arrived because she saw the truck with the Amazon logo stop in front of her house. The logo she recognized is an example of a

patent.
trademark.
copyright.
trade name.

Answer 161

trademark.
“A trademark is a shape, color, design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company’s sole use.”

Question 162

Keene’s favorite restaurant sells sandwiches that have a “kicker sauce.” Everyone loves the sauce, but the company won’t reveal what’s in it. This sauce is an example of a

patent.
trademark.
trade secret.
copyright.

Answer 162

trade secret.
“A trade secret is any information not generally known to the public and that a business wishes to hold confidential.”

Question 163

In U.S. accounting law, the Sarbanes-Oxley Act

-seeks to establish barriers to foreign listings on the U.S. stock exchanges.
-attempts to establish GAAP practices for foreign companies.Incorrect
-is a response to reduced corporate earnings due to corruption.
-holds corporate officers personally responsible for their corporate filings.

Answer 163

-holds corporate officers personally responsible for their corporate filings.
“Sarbanes-Oxley was in response to scandals and was an attempt to establish higher ethical standards. One of the means is to hold corporate officers personally responsible for their filings.”

Question 164

During a trial, the judge openly questioned the defendant and her lawyers and often challenged the presented evidence. There wasn’t a jury and the judge made the final decision. Which type of legal system would include this scenario?

religious
civil
common
criminal

Answer 164

civil
“The civil law approach is inquisitorial; that is, judges often actively question the prosecution, the defense, and their witnesses during proceedings and may challenge evidence in their efforts to track down the truth. The judge also issues the decision. Trial by jury is less frequent in civil law systems.”

Question 165

The Sarbanes-Oxley Act (SOX) was created to increase ethical behavior by public company boards, their management, and their accounting firms.
True or False

Answer 165

true
“Congress passed the Sarbanes-Oxley Act (SOX) in 2002. This effort to increase ethical behavior requires higher standards for public company boards, their management, and their accounting firms that list in the United States, whether they are domestic or international.”

Question 166

Soejin has written a cookbook. What form of legal protection can he obtain for his book?

trade name
copyright
trademark
patent

Answer 166

copyright
“Copyrights are exclusive legal rights of authors, composers, software creators, playwrights, artists, and publishers to publish and dispose of their work.”

Question 167

Product liability is an area of torts in which the U.S. courts can make large awards, unlike in some other countries.
True or False

Answer 167

true
“Other countries restrict the amount of money that can be obtained in tort actions.”

Question 168

Arbitration tends to be less private than litigation.
True or False

Answer 168

false
“Arbitration is usually quicker, less expensive, and more private than litigation, and it is usually binding on all parties.”

Question 169

A market analyst may determine a country is not a good market by making a simple calculation based on

-GNI, total population, and income distribution.
-GDP and PPP.
-GNI/capita, population by state or province, and the number of businesses.
-GNI/capita, total population, and the size of the hidden economy.

Answer 169

-GNI, total population, and income distribution.
“A simple calculation based on GNI, total population, and income distribution may be enough to indicate a particular country is or is not a good market.”

Question 170

If a nation’s GNI is small, but a small percentage of its population receives a large percentage of that income, it may be a good market for

-low-priced, high-volume discretionary goods.
-high-priced industrial products.
-low-volume, high-priced luxury products.
-high-volume, high-priced consumer products.

Answer 170

-low-volume, high-priced luxury products.
“Depending on the type of product and the total population, both relatively even and relatively uneven income distribution can suggest market opportunities. Although South Africa’s GDP was $761 billion in 2019 in PPP terms, about half the total income is received by only the top 10 percent of the population, indicating sizable numbers are potential customers for low-volume, high-priced luxury products.”

Question 171

The ________environment includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another.

foreign
host country
international
global

Answer 171

international
“The international environment includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another.”

Question 172

Olivia is a human resource manager, and she is interested in the increase in the number of working women at her company. This is most likely because

-it increases the overall wage and benefit calculation.
-more working women means fewer working men.
-it causes changes to employee rules and regulations.
-it causes a larger labor supply that may change production processes.

Answer 172

-it causes a larger labor supply that may change production processes.
“Human resource managers are interested in this increase because it results in a larger labor supply but also brings changes in production processes, employee facilities, and human resource policies.”

Question 173

The amount of income left after paying taxes and making essential purchases is known as

-disposable income.
-personal savings.
-gross income.
-discretionary income.

Answer 173

discretionary income
“The amount of income left after paying taxes and making essential purchases is known as discretionary income.”

Question 174

A measure of an economy’s size based on the market value of goods and services produced within a nation in a year is

-gross national product.
-gross national income.
-gross domestic product.
-net national income.

Answer 174

-gross domestic product.

“Gross domestic product is the total monetary value of all goods and services produced within a nation.”

Question 175

What is predicted to happen with the population of many developed countries?

-Population levels will become static as younger generations remain childless.
-Population levels will continue to move upward and downward as a reflection of political involvement.
-Population levels will soar as the result of economic upturn.
-Population levels will fall by mid-century due to low birthrates.

Answer 175

-Population levels will fall by mid-century due to low birthrates.
“The population of many developed countries is projected to fall by mid-century due to low birthrates, resulting in a shortage of workers to pay for an increase in medical care for the older population.”

Question 176

Incomes measured by the Atlas conversion factor are generally

-impossible to stabilize.
-not ready to be stabilized.
-more stable over time.
-less stable over time.

Answer 176

-more stable over time.
“Incomes measured by the Atlas conversion factor are generally more stable over time than PPP, and changes in income rankings are more likely to be due to relative economic performance than to fluctuations in the exchange rate.”

Question 177

A marketing manager has been tasked with the job of analyzing the economy of three South American countries to determine if they have business potential. In her final report, she makes note of national income that may not be reported because it involves illegal activity. This indicates that the marketing manager is accounting for

-litigation and arbitration
-shadow production
-the gray market
-the underground economy

Answer 177

-the underground economy
“Included in this underground economy are undeclared production of goods and services that are legal (unreported income or assets) and illegal (drugs, pirated copies of copyrighted music or video, gambling, use of undocumented workers, human trafficking, and prostitution) along with their corresponding activities (money laundering by drug smugglers or terrorist organizations), and concealed income in kind (barter).”

Question 178

Economic analysts work solely with government-published data.
True or False

Answer 178

false
“Analysts do not work solely with government-published data. Private economic consultants—such as the Economist Intelligence Unit, IHS Markit, and International Economics provide economic forecasts to which many multinationals subscribe.”

Question 179

Analysts know that a country with a large population is always a better market than a country with fewer people.
True or False

Answer 179

false
“The fact that many developed nations have fewer than 10 million inhabitants shows that population size alone is a poor indicator of economic strength and market potential. Only for a few low-priced products, such as soft drinks, cigarettes, and soap, might population size alone provide a basis for estimating consumption.”

Question 180

Kory has been asked to determine how many people live in the 50 square miles surrounding the location of the proposed building project. What does Kory need to measure?

birthrate
population distribution
age distribution
population density

Answer 180

population density
“Population density is a measure of the number of inhabitants per area unit (inhabitants per square kilometer or square mile).”

Question 181

What benefit does population size provide when determining market potential?

-Population size alone is an excellent indicator of economic strength.
-Population size alone is an excellent indicator of market potential.
-Population size alone is a poor indicator of market potential.
-Population size alone is a good predictor of demand for consumer durables.

Answer 181

-Population size alone is a poor indicator of market potential.
“The fact that many developed nations have fewer than 10 million inhabitants shows that population size alone is a poor indicator of economic strength and market potential. Only for a few low-priced products, such as soft drinks, cigarettes, and soap, might population size alone provide a basis for estimating consumption.”

Question 182

Dissatisfaction with both the purchasing power parity (PPP) and conversions using official exchange rates caused the World Bank to adopt what methodology to derive per capita GNI estimates?

Atlas conversion factors
GINI coefficients
inflation-growth coefficient
Zurich formula

Answer 182

Atlas conversion factors
“Dissatisfaction with both the PPP and conversions using official exchange rates caused the World Bank to adopt the Atlas methodology to derive per capita GNI estimates.”

Question 183

When a country experiences a sustained increase in prices, it is feeling the effects of

a depression.
recession.
capital gains.
inflation.

Answer 183

inflation.
“Inflation is a sustained increase in prices. Some economists hold that it is caused by demand exceeding supply, while others view the cause to be an increase in the money supply.”

Question 184

Historically, gold has been used as a way for people to store value because of its

purity and scarcity.
lack of interest-earning ability.
accessibility and convenience.
high transportation and security costs.

Answer 184

purity and scarcity.
“Based on gold’s scarcity and purity, gold has been trusted as a way to store value.”

Question 185

Three of the main approaches to exchange rate forecasting are

-PPP approach, the pragmatic approach, and the basic approach.

-the random market approach, the Big Mac hypothesis, and the pragmatic approach.

-the law of one price, the Fisher effect, and the forward currency approach.

-the efficient market approach, the fundamental approach, and the technical analysis.

Answer 185

the efficient market approach, the fundamental approach, and the technical analysis.
“There are several approaches to forecasting, and three of the main ones are the efficient market approach, the fundamental approach, and technical analysis.”

Question 186

How did the Jamaica Agreement affect IMF members?

-It created guidelines for the gold standard.
-It led to the free trade agreement in the Caribbean.
-It controlled exchange rates in the South Atlantic region.
-It established the rules for the floating exchange rate system.

Answer 186

-It established the rules for the floating exchange rate system.
“The Jamaica Agreement that established the rules for the floating system was both worked out and accepted by IMF members after the fact, in 1976.”

Question 187

When a government requires a permit to purchase foreign currency, the exchange rates

are market-driven.
are unpredictable.
can be negotiated by the firm.
are often above the free market rate.

Answer 187

are often above the free market rate.
“When a government requires the firm to have permission to purchase foreign currency, exchange rates are often above the free market rate.”

Question 188

In a managed float currency arrangement, the currency fluctuates while

-the country uses the currencies of trading partners as ballast.
-gold is used to stabilize the currency values, hence, managed.
-the country’s monetary authority privately intervenes on the exchange market.
-a group of nations decide to manage their currencies jointly and publicly, relying on the market.

Answer 188

-the country’s monetary authority privately intervenes on the exchange market.
“In a managed float, the currency fluctuates, while the country’s monetary authority actively intervenes on the exchange market without specifying or making public its goals and targets. Peru, Korea, Argentina, Brazil, Indonesia, Switzerland, the Philippines, South Africa, Turkey, and India are among the many countries that follow this arrangement.”

Question 189

The balance of payments account is divided into the following three major subaccounts:

current, capital, and official reserves.
services, cash flow, and debt.
cash flow, assets, and official reserves.
trade, capital, and debt.

Answer 189

current, capital, and official reserves
“The three major accounts are current account, capital account, and official reserves account. This is illustrated in Figure 8.3.”

Question 190

In order to strengthen the U.S. dollar, the Federal Reserve might sell yen and buy dollars, in which case the yen functions as

none of these alternatives.
an arbitrage currency.
an intervention currency.
a stronger currency than the dollar.

Answer 190

an intervention currency.
“This would make the dollar scarcer, so its value would increase.”

Question 191

The Triffin paradox refers to what occurs when

-a reserve currency replaces a national currency.
-a national currency that is also a reserve currency runs a deficit.
-inflation occurs as the result of a lower currency rating.
-spot exchange rates replace forward exchange rates.

Answer 191

a national currency that is also a reserve currency runs a deficit.
“The Triffin paradox refers to a problem in which a national currency that is also a reserve currency will eventually run a deficit, leading to lack of confidence in the reserve currency and a financial crisis.”

Question 192

The U.S. current account deficit can be explained partially by

-citizens of other nations wanting to avoid the dollar.
-a lack of investment opportunities in the United States.
-U.S. citizens exporting more than they are importing.
-citizens of other nations wanting to own dollars, and invest in the United States.

Answer 192

-citizens of other nations wanting to own dollars, and invest in the United States.
“In the case of the United States, a current account deficit could occur because investments in the United States are secure and profitable, so that many foreigners want to own them (foreign direct investment, an import of capital) and export their earnings (repatriation).”

Question 193

Sir Isaac Newton put England on the gold standard when he

-brought the matter to Queen Anne, who declared Britain would follow the gold standard.
-declared, as master of the English mint, that he would sell gold for 1 pound, 1 shilling, 1 pence, under the law of one price.
-set a market price for gold, the British pound and the U.S. dollar.
-established a fixed equivalency between gold and the British currency.

Answer 193

-established a fixed equivalency between gold and the British currency.
“Newton established the gold standard for Britain by fixing 3 pounds, 17 shillings, and 10.5 pence as the price for 1 ounce of gold. Previously, silver had been used commonly.”

Question 194

What is a characteristic of the FX markets?

-They are governed by trading partners.
-They are largely unregulated.
-They tend to be small but highly competitive.
-They operate from 7:00 am to 7:00 pm even on weekends.

Answer 194

They are largely unregulated.
“The FX markets are large, liquid, and quite competitive, with trading occurring 24 hours a day through international banks. The global average daily turnover for FX is $3 trillion to $5 trillion. FX markets are largely unregulated as well.”

Question 195

A value-added tax is actually a sales tax that is
-paid by the government.
-voluntarily paid on exports.
-paid by the firm rather than the consumer.
-paid in stages along the process from raw materials to consumer

Answer 195

-paid in stages along the process from raw materials to consumer
“A value-added tax (VAT) is a tax charged on the value added to a good as it moves through production from raw materials to final purchaser.”

Question 196

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System, also called the
-floating rate system.
-French rate system.
-India Accord system.
-gold exchange standard.

Answer 196

-gold exchange standard.
“In establishing the International Monetary Fund (IMF), representatives also set up the new Bretton Woods system, also called the gold exchange standard and the fixed-rate system.”

Question 197

The firm’s ultimate manager of strategic planning is the firm’s

-chief executive officer.
-chief operating officer.
-vice president for planning.
-board of directors.

Answer 197

-chief executive officer.
“The ultimate manager of strategic planning and strategy making is the firm’s chief executive officer.”

Question 198

Tactical plans are also known as

-strategic plans.
-global plans.
-operational plans.
-contingency plans.

Answer 198

-operational plans.
“Tactical (also called operational) plans are a requisite for spelling out in detail how the objectives will be reached. In other words, very specific, short-term means for achieving the goals are the objective of tactical planning.”

Question 199

What are two important differentiators of strategic plans?

-the size of the company and the plan’s time horizon
-the level of the organization for which it is made and the plan’s time horizon
-the company’s organizational structure and the company’s competitive strategy
-what nation and culture the company is from and the organizational structure of the company

Answer 199

-the level of the organization for which it is made and the plan’s time horizon
“Two important differentiators of strategic plans are the time horizon of the plan and the level of the organization for which it is made.”

Question 200

The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is known as

-strategic planning
-scenario analysis.
-value chain analysis.
-international strategy.

Answer 200

-strategic planning
“The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is strategic planning.”

Question 201

An itemized projection of revenues and expenses for a future time period is a

budget.
strategic plan.
sales forecast.
marketing plan.

Answer 201

budget.
“An itemized projection of revenues and expenses for a future time period is a budget.”

Question 202

International firms have found it necessary to institute formal global planning

-to serve as an input for scenario building.
-to promote different courses of action among the firm’s managers worldwide.
-to eliminate the practice of informal planning.
-to provide top management with a means to identify threats and opportunities worldwide.

Answer 202

-to provide top management with a means to identify threats and opportunities worldwide.
“In response to increasingly complex environmental forces, many international firms have found it necessary to institute formal global strategic planning so top management can identify opportunities and threats from all over the world, formulate strategies to handle them, and stipulate how to finance and manage the strategies’ implementation. Strategic plans help ensure that decision makers have a common understanding of the business, the strategy, the assumptions behind the strategy, the external business environment pressures, and their own direction. They also promote consistency of action among the firm’s managers worldwide and encourage them to consider the ramifications of their actions in the firm’s other geographic and functional areas. Strategic planning is also intended to increase the likelihood of strategic innovations, promoting the development, capture, and application of the new ideas needed to succeed in a challenging competitive environment.”

Question 203

When developing and assessing strategic alternatives, companies competing in international markets confront which two opposing goals?

-Reduce investment and increase profits.
-Reduce costs and adapt to local markets.
-Standardize policies and reduce complexity.
-Reduce complexity and improve effectiveness.

Answer 203

-Reduce costs and adapt to local markets.
“When developing and assessing strategic alternatives, companies competing in international markets confront two opposing goals: to reduce costs and adapt to local markets.”

Question 204

According to a survey by Bain & Company, since 1993 the management tool most commonly used among global executives is

-strategic planning.
-value chain analysis.
-environmental analysis.
-industry and competitor analysis.

Answer 204

-strategic planning.
“Bain & Company’s “Management Tools and Trends” survey has consistently reported that strategic planning continues to be among the most commonly used management tools among global executives, and it is the tool with one of the highest reported levels of satisfaction.”

Question 205

When managers are analyzing the corporate controllable variables, the three key questions they must address about their business include

-How much will the company be able to charge?
-Who are the company’s target customers?
-What will be the costs that the company will incur in delivering value to its target customers?
-Where should the company’s production facilities be located?

Answer 205

-Who are the company’s target customers?
“When the managers are analyzing the corporate controllable variables, the three key questions managers must address about their business include (1) Who are the company’s target customers? (2) What value does the company want to deliver to these customers? and (3) How will this customer value be created?”

Question 206

Historically, more aspects of ________have been standardized and coordinated worldwide by companies than has been the case for other value chain activities such as ________.

-marketing; research and development
-manufacturing; marketing
-marketing; manufacturing
-research and development; manufacturing

Answer 206

-manufacturing; marketing
“Historically companies have standardized more aspects of research and development and manufacturing than of marketing.”

Question 207

Value chain analysis focuses primarily on what question?

-What is the best way for the company to enter a market?
-What does the customer value and how much is the customer willing to pay for this value?
-How will this customer value be created?
-Who are the company’s target customers?

Answer 207

-How will this customer value be created?
“Value chain analysis focuses primarily on the question of how customer value will be created, and it refers to the set of value-creating activities in which the company is engaged, from sourcing basic raw materials or components to delivering the product or service to the final customer.”

Question 208

The planning method that appears to be becoming more popular is

-top-down.
-sequential.
-iterative.
-bottom-up.

Answer 208

-iterative.
“Iterative planning consists of repetition of the bottom-up or top-down planning process until all differences have been reconciled. Iterative planning appears to be becoming more popular, especially in global companies that seek to have a single global plan while operating in many diverse foreign environments.”

Question 209

According to the text, what is the primary value of scenario planning efforts?

-the ability to control external forces that impact the firm
-the ability to eliminate uncertainty that arises
-the strategic plans that are created
-the transformation in strategic thinking that results

Answer 209

-the transformation in strategic thinking that results
“It is not so much the strategic plans that are created but rather the transformation in strategic thinking that results from this activity.”

Question 210

Which of the following best describes Expropriation and the concept of Confiscation in the context of international business?
-Expropriation involves a government seizing foreign assets with immediate compensation, while confiscation involves voluntary asset transfer.

-Expropriation is a government action that dispossesses a foreign company or investor, typically with compensation, while confiscation occurs when assets are taken without any compensation.
-Expropriation is a government action that allows foreign companies to freely operate without intervention.

-Expropriation occurs when a foreign company takes control of local industries, with compensation required only in certain cases.

Answer 210

-Expropriation is a government action that dispossesses a foreign company or investor, typically with compensation, while confiscation occurs when assets are taken without any compensation.

Question 211

Which of the following best describes types of trade barriers used in international business?

-Import controls are a minor part of international trade policy, while arbitrary monetary policies encourage free trade.

-Nontariff barriers are limited to customs procedures and do not affect procurement policies.

-Trade barriers include tariffs, import controls, nontariff barriers, quotas, discriminatory procurement policies, restrictive customs procedures, arbitrary monetary policies, and restrictive regulations.

-Tariffs only apply to exports, while quotas are not used in international trade.

Answer 211

-Trade barriers include tariffs, import controls, nontariff barriers, quotas, discriminatory procurement policies, restrictive customs procedures, arbitrary monetary policies, and restrictive regulations.

Question 212

Which of the following best describes the typical definition of intellectual property rights?

-The legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention
-The right to duplicate products without authorization.
-A right limited to physical, tangible assets only.
-The right to sell any product regardless of origin.

Answer 212

-The legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention

Question 213

Purchasing power parity refers to the amount of adjustment required in the exchange rates between two currencies to ensure they have equivalent purchasing power.
True or False

Answer 213

true

Question 214

Which of the following best describes Nationalization and the conditions under which it is acceptable according to international law?
-Nationalization involves a government taking control of certain enterprises, with international acceptance only if it serves a public purpose and includes just compensation.

-Nationalization is when a government temporarily manages an industry during periods of economic crisis.
-Nationalization occurs when a government privatizes an industry to encourage foreign investment.

-Nationalization allows a government to take control of an industry without any requirement for compensation.

Answer 214

-Nationalization is when a government temporarily manages an industry during periods of economic crisis.

Question 215

Which of the following best describes “Regular Uncertainty” in decision-making contexts?

-A scenario where probabilities cannot be assigned to potential outcomes.

-A scenario in which one outcome dominates, making it easier to predict results.

-A type of uncertainty where all feasible outcomes are known, information is available, there is agreement on probabilities, and no single outcome dominates.

-An uncertainty where only a few outcomes are possible, but no probabilities can be agreed upon.

Answer 215

-A type of uncertainty where all feasible outcomes are known, information is available, there is agreement on probabilities, and no single outcome dominates.

Question 216

Dumping refers to the sale of merchandise in export markets at unfair prices, and anti-dumping duties are imposed to counteract this practice.
True or False

Answer 216

true

Question 217

Which of the following are types of trade agreements used in international business?

-Regional Trade Agreements
-Multilateral Trade Agreements
-Bilateral Agreements
-All of the above

Answer 217

All of the above

Question 218

Nonconvertible currencies are typically valued at a rate lower than their free market value, with governments imposing exchange controls.
True or False

Answer 218

false

Question 219

Which of the following best describes the strategic planning process for a company?

-A formal structure involving steps such as analyzing external and internal environments, defining business and mission, setting objectives, quantifying goals, formulating strategies, and making tactical plans.
-A loosely structured approach focusing only on setting goals and making tactical plans.
-A process focused solely on analyzing a company’s external environment without setting objectives or quantifying goals.
-A reactive plan that addresses only immediate challenges without a structured analysis or goal-setting approach.

Answer 219

-A formal structure involving steps such as analyzing external and internal environments, defining business and mission, setting objectives, quantifying goals, formulating strategies, and making tactical plans.

Question 220

Which of the following is NOT a common type of trade barrier in international business?

Tariffs
Import controls
Discriminatory procurement policies
Free trade agreements
Quotas

Answer 220

Free trade agreements

Question 221

Some advocates claim Islamic finance is socially responsible because it bans investors from funding campaigns that sell or promote products such as alcohol, tobacco, pornography, gambling and even pork. Others claim that it creates a system that funds terrorism.
True or False

Answer 221

true

Question 222

Which of the following statement best describes the approach taken by central banks of major currencies such as the U.S. dollar, British pound sterling, Japanese yen, and Euro?

-Major currencies are pegged to the U.S. dollar to ensure consistent trade flows.
-Major currencies are fixed to each other by central banks to maintain stable exchange rates.
-Major currencies are allowed by their central banks to fluctuate freely against each other.
-Major currencies are adjusted monthly by central banks to control inflation rates.

Answer 222

-Major currencies are allowed by their central banks to fluctuate freely against each other.

Question 223

Which of the following is true about the relationship between inflation and interest rates?

-Rising inflation leads to a decrease in interest rates, making borrowing less costly.

-Interest rates remain stable regardless of inflation, affecting only long-term borrowing costs.

-Inflation causes the cost of goods and services to decrease, making them more competitive globally.

-Inflated currencies tend to weaken, and rising inflation typically leads to higher interest rates.

Answer 223

-Inflated currencies tend to weaken, and rising inflation typically leads to higher interest rates.

Question 224

Which of the following best describes Confiscation in international business?
-A government taking possession of a foreign company’s assets without providing any compensation
-A foreign company voluntarily donating assets to a host country
-A corporate restructuring that consolidates assets within a host country
-A situation where a government compensates a foreign company for taking its assets

Answer 224

-A government taking possession of a foreign company’s assets without providing any compensation

Question 225

The professor agrees with the following statement: In organizational design, structure follows strategy, and strategy follows structure. (Hint: Culture?)
True or False

Answer 225

false

Question 226

How does the relationship among the international environment, competitive strategy, and organizational structure influence a multinational company’s effectiveness?

-The international environment, competitive strategy, and organizational structure interact to shape how a company adapts, competes, and structures its operations in global markets.

-The international environment has little impact on a company’s competitive strategy or organizational structure.

-A company’s competitive strategy is solely determined by its organizational structure, regardless of the international environment.

-Organizational structure is independent of the international environment and competitive strategy, focusing only on internal efficiency.

Answer 226

-The international environment, competitive strategy, and organizational structure interact to shape how a company adapts, competes, and structures its operations in global markets.

Question 227

If all countries had strong, freely convertible currencies, there probably wouldn’t be a need for international countertrade.
True or False

Answer 227

true

Question 228

Convertible currencies can be exchanged for other currencies without any restrictions.
True or False

Answer 228

true

Question 229

Potential losses or gains when financial statements are converted from one currency to another are known as:

translation risk
hedging
transaction risk
swaps

Answer 229

transaction risk

Question 230

Which of the following best describes the Balance of Payments (BOP) for a country?

-BOP exclusively measures a country’s exports and imports.
-BOP reveals the interest rates and inflation levels within a country.
-BOP is a record of a country’s transactions with the rest of the world, indicating the flow of capital and demand for its currency.
-BOP only tracks the domestic transactions within a country.

Answer 230

-BOP is a record of a country’s transactions with the rest of the world, indicating the flow of capital and demand for its currency.

Question 231

Which of the following statements best describes the current approach to strategic planning in organizations?

-Top management believes strategic planning should only involve ideas generated at the executive level.

-Strategic planning has become more flexible, with less structured formats, shorter documentation, and openness to ideas from any level within the organization.

-Strategic planning excludes contributions from lower-level employees and relies solely on top management’s decisions.

-Strategic planning is strictly structured, with a rigid format and extensive documentation.

Answer 231

-Strategic planning has become more flexible, with less structured formats, shorter documentation, and openness to ideas from any level within the organization.

Question 232

What is Expropriation in the context of international business?

-A corporate action that transfers assets to shareholders
-A voluntary sale of assets by a foreign company to a local buyer
-A situation where a foreign company is invited to invest in a local industry
-A governmental action that dispossesses a foreign company or investor, usually without just compensation

Answer 232

-A governmental action that dispossesses a foreign company or investor, usually without just compensation

Question 233

Which of the following correctly pairs national legal systems with their origins or traditions?

-Common Law - English Tradition; Civil Law - French Tradition; Shariah Law - Compliance Focused

-Socialist Law - English Tradition; Common Law - French Tradition; Civil Law - Compliance Focused

-Common Law - French Tradition; Civil Law - English Tradition; Shariah Law - Compliance Focused

-Civil Law - English Tradition; Socialist Law - Compliance Focused; Shariah Law - French Tradition

Answer 233

-Common Law - English Tradition; Civil Law - French Tradition; Shariah Law - Compliance Focused

Question 234

Which of the following statements about Balance of Payments (BOP) accounts is accurate?

-BOP accounts only record transactions involving goods and services, excluding financial transfers.

-BOP accounts use single-entry bookkeeping, recording payments only when they leave a country.

-Payments to other countries are recorded as credits, while payments from other countries are recorded as debits.

-BOP accounts use double-entry bookkeeping, where payments to other countries are debits and payments from other countries are credits.

Answer 234

-BOP accounts use double-entry bookkeeping, where payments to other countries are debits and payments from other countries are credits.

Question 235

Which of the following statements correctly describes the Fisher effect in relation to exchange rate movements?

-The Fisher effect demonstrates the relationship between real and nominal interest rates.
-The nominal interest rate is the real interest rate minus the expected inflation rate.
-Arbitrage is the process of buying and selling instantaneously to make a profit with no risk.
-Exchange rates are unaffected by inflation expectations in the Fisher effect.

Answer 235

-The Fisher effect demonstrates the relationship between real and nominal interest rates.

Question 236

Which of the following best describes an International Strategy for a firm?

-A plan focused solely on managing a firm’s domestic operations.

-A comprehensive plan guiding how a firm develops and deploys scarce resources to achieve its international objectives, requiring consistency across the company.

-A short-term plan for managing immediate resource needs in foreign markets.

-A flexible plan that allows each division to independently decide how to use resources without alignment with broader company goals.

Answer 236

-A comprehensive plan guiding how a firm develops and deploys scarce resources to achieve its international objectives, requiring consistency across the company.

Question 237

Which of the following best describes “Bounded Subjective Uncertainty”?

-Only a single outcome is considered, as it is highly likely to occur.

-Probabilities are assigned to each outcome, but there is significant disagreement about their accuracy.

-Outcomes and probabilities are unknown, relying instead on opinions about the most important outcomes and their relative likelihood.

-All possible outcomes and probabilities are known, and decisions are based on objective data.

Answer 237

-Outcomes and probabilities are unknown, relying instead on opinions about the most important outcomes and their relative likelihood.

Question 238

Outsourcing means:

-moving manufacturing offshore
-Moving services off shore
-Moving either manufacturing or services offshore
-None of the above

Answer 238

Moving either manufacturing or services offshore

Question 239

Which of the following exchange rate systems is characterized by a flexible structure, is responsive to market forces, and allows for free or managed floating as well as pegging, while also being suitable for handling large trade volumes?

Gold Standard
Bretton Woods Fixed Gold Exchange
Floating System
Fixed Rate System

Answer 239

Floating System

Question 240

An elephant is basically gray, square and large because if it were small, black and figure-eight you would confuse it with an ant.
True or False

Answer 240

True

Question 241

The United States can be considered politically unstable compared to many countries.
True or False

Answer 241

true; “If we measure political stability in terms of changes in leadership at the top, the United States is politically unstable compared with many countries, since top leadership can change every four years! However, there is a distinction between political stability and policy stability.”

Question 242

When a government allows the repatriation of earnings, it is considered an entry barrier.
True or False

Answer 242

false; “A host government not permitting repatriation of earnings is considered an entry barrier.”

Question 243

Romaine’s company sent her and 3 other executives from her company to Thailand to assess business opportunities there. The Thai government publicized the visit and arranged for them to meet with various groups. This is called a field trip.
True or False

Answer 243

false
“This is a trade mission. The purpose is to send executives from firms in the industry to a country or group of countries to learn firsthand about the market, meet important customers face-to-face, and make contact with people interested in representing their products.”

Question 244

When a company examines import data, what does it learn about basic need potential in a country?

-immediate market potential at going -price
-potential demand for brand new -products
-underserved needs for specialized products
-complete picture of market potential

Answer 244

immediate market potential at going -price
“Imports do not completely measure a market’s potential. They indicate only that a market has been buying certain products from abroad. Import data do provide the firm with a conservative estimate of the immediate market potential at the going price.”

Question 245

Market indicators are economic data that correlate highly with market demand for a product.
True or False

Answer 245

false
“Market indicators correlate with economic market strength.”

Question 246

What is the main role of an agent in the market country?

-Quality control
-Legal representative
-Produce development
-Marketing and sales

Answer 246

legal representative

Question 247

Exporting companies should always quote their prices as FOB rates.
True or False

Answer 247

false

Question 248

What is a key challenge for a late entrant in a country market?
-Language barriers
-Technological limitations
-High marketing costs
-Difficulty in finding a good distributor

Answer 248

Difficulty in finding a good distributor

Question 249

Direct exporting involves transportation to the border and clearing through customs.
True or False

Answer 249

true

Question 250

What does CIF in international trade stand for?

-Carrier, Insurance and Fee
-Carrier, Insurance and Freight
-Carrier, Insurance, Flight
-Cost, Insurance, Freight

Answer 250

Cost, Insurance, Freight

Question 251

CIF is convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.
True or False

Answer 251

true
“CIF and CFR areconvenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.”

Question 252

With a documentary draft, an unscrupulous buyer could refuse to pay the draft when presented and then attempt to bargain with the seller for a lower price.
True or False

Answer 252

true; “With a documentary draft, an unscrupulous buyer could refuse to pay the draft when presented and then attempt to bargain with the seller for a lower price. The seller would then have choices: agree, try to find another buyer, pay a large freight bill to bring back the goods, or abandon them.”

Question 253

The export bill of lading serves three purposes: it is a contract for carriage between the shipper and the carrier; a receipt from the carrier for the goods shipped; and a certificate of ownership.
True or False

Answer 253

true; “This describes an export bill of lading.”

Question 254

Some nations, especially in Asia, have historically followed the Calvo Doctrine, which protects them against fraud.
True or False

Answer 254

false
“Many nations, especially those of Latin America, have historically followed the Calvo Doctrine, which holds that cases should be tried under local, not foreign, law.”

Question 255

Which statement about the Ex-Im Bank is least likely to be true?

-The Ex-Im Bank competes with institutions in the private sector.
-The Ex-Im Bank helps small businesses obtain working capital to cover their export sales.
-The Ex-Im Bank offers export credit insurance to reduce political risks.
-Most of the Ex-Im Bank’s transactions support U.S. businesses.

Answer 255

-The Ex-Im Bank competes with institutions in the private sector.
“The Ex-Im Bank does not compete with private sector institutions.”

Question 256

What is a major concern in joint ventures regarding technology transfer?

-Language barriers
-Risk of know-how dilution
-Legal issuess
-High costs

Answer 256

Risk of know-how dilution

Question 257

Toyota first exported to which region?

-Southeast Asia
-Australia
-United States
-Europe

Answer 257

Southeast Asia

Question 258

Which factor is crucial for a firm interested in global expansion and control?

-Foreign Direct Investment (FDI)
-Outsourcing
-Exporting
-Local partnerships

Answer 258

Foreign Direct Investment (FDI)

Question 259

Joint ventures do not involve transfer of capital.
True or False

Answer 259

false

Question 260

In a control posture, acquiring a local firm is often the best strategy in emerging markets.
True or False

Answer 260

True