Final Multiple Choice Flashcards
The likelihood that a trading partner will opportunistically break a contract or expropriate
property rights is called a(n)
legal risk
Countries with ________ economies in which property rights are protected tend to
achieve greater economic growth rates than other economies where property rights are poorly
protected.
market
Without a strong legal system in a market economy
private and public entities can expropriate the profits generated by the efforts of
private-sector entrepreneurs.
Many states in Asia, Latin America, and Western Europe have shifted away from a mixed
economy to a market-based economy. Which measure is most likely to be promoted by such
states?
deregulation of the economy
The economic freedom associated with a _____ creates greater incentives for innovation
and entrepreneurship than either a planned or a mixed economy.
market economy
The term ________ stresses that the political, economic, and legal systems of a country
are interdependent.
political economy
When ________ is emphasized, an individual’s right to do something may be restricted
on the grounds that it runs counter to “the good of society.”
collectivism
An economy in which the interaction of supply and demand determines the quantity in
which goods and services are produced is called a
market economy
Which of the following is a characteristic of a command economy?
limited international trade
Which of the following are more conducive to economic growth?
democratic regimes
In a(n) ________ society, the welfare of society is best served by letting people pursue
their own economic self-interest.
individualist
Manchu believed that socialism could be achieved only through violent revolution and
totalitarian dictatorship. Manchu was likely a
communist
Modern socialists trace their intellectual roots to ________, although socialist thought
clearly predates this individual.
Karl Marx
Which factor hinders globalization of consumer goods market?
national and cultural differences in tastes and preferences
Which statement is true about the International Monetary Fund (IMF)?
It is seen as the lender of last resort to nation-states whose economies are in turmoil.
The World Trade Organization promotes
the lowering of barriers to cross-border trade and investment.
The ______ is primarily responsible for policing the world trading system and making
sure nation-states adhere to the rules laid down in trade treaties signed by member states.
World Trade Organization
Which institution focuses on making low-interest loans to cash-strapped governments in
poor nations that wish to undertake significant infrastructure investments?
the World Bank
The G20 was originally established to
formulate a coordinated policy response to financial crises in developing nations.
In 2008 and 2009, the ________ became the forum through which major nations
attempted to launch a coordinated policy response to the global financial crisis, which started in
America.
Group of Twenty (G20)
Culture is
constantly evolving.
Cross-cultural literacy refers to
an understanding of how cultural differences can affect business.
Social rules and guidelines that prescribe appropriate behavior in particular situations are
best described as
norms
Hofstede’s masculinity versus femininity dimension looked at the relationship between
gender and work roles and found that in
masculine cultures, gender roles were differentiated, and traditional “masculine
values” determined cultural ideals.
The ________ refers to the extent to which a culture programs its citizens to accept
delayed gratification of their material, social, and emotional needs.
long-term versus short-term orientation dimension
The core idea behind ________ is that an organization’s actions will not exert a negative
impact on the ability of future generations to meet their own economic needs and that its actions
impart long-run economic and social benefits on stakeholders.
sustainability
What is the term for a company’s formal statement of the ethical priorities it expects all
of its employees to follow?
code of ethics
Miranda is a cultural relativist, which means she likely believes
a firm should adopt the ethics of the culture in which it is operating.
According to the _____ point of view, a firm should adopt the ethics of the culture in
which it is operating.
cultural relativism
A ________ asserts that if a manager of a multinational sees that firms from other nations
are not following ethical norms in a host nation, that manager should not either.
naive immoralist
Justice theories of business ethics focus on
the attainment of a fair and equitable distribution of goods and services.
Regarding the four components of the diamond, Porter contends that government
can influence each of the four components of the diamond either positively or
negatively.
_____ supports the idea that countries should export more than they import.
mercantilism
Which of the following theories emphasizes the interplay between the proportions in
which the factors of production are available in different countries and the proportions in which
they are needed for producing particular goods?
Heckscher-Ohlin theory
New trade theory suggests that nations
may benefit from trade even when they do not differ in resource endowments or
technology.
One of the advantages of being the first mover in a market is
the ability to capture scale economies ahead of later entrants.
According to the product life-cycle theory, the high cost of U.S. labor gave U.S. firms an
incentive to
develop cost-saving process innovations.
As a trade theory, mercantilism was based on the idea that a trade surplus would lead to
accumulations of gold and silver.
Walmart makes bulk purchases from its vendors and as a result it is able to get better
deals than its competitors. This allows Walmart to offer greater discounts to its customers. In this
case, Walmart benefits from
economies of scale
The ________ argues that for most of the twentieth century, a very large proportion of
the world’s new products had been developed by U.S. firms and sold first in the U.S. market.
product life-cycle theory
From least integrated to most integrated, the levels of economic integration are a
free trade area, a customs union, a common market, an economic union, and a
political union.
Three Latin American countries enter into an agreement to remove all tariffs and trade
barriers between them. They have adopted a common external trade policy as well. Which level
of economic integration best describes this arrangement?
customs union
________ entails even closer economic integration and cooperation than a common
market.
an economic union
Why doesn’t Great Britain use the euro as its national currency?
It would have to relinquish control of its monetary policy to the EU.
How does NAFTA seem to increase the international competitiveness of U.S. and
Canadian firms?
It allows them to take advantage of lower labor costs in Mexico.
What was the main objection raised by those in the United States and Canada who
opposed the ratification of the NAFTA?
job losses
The short-term movement of funds from one currency to another in the hopes of profiting
from shifts in exchange rates is known as
currency speculation
A pair of earrings costs £40 in Britain. An identical pair costs $50 in the United States
when the exchange rate is £1 = $1.50. Which statement is correct?
The United States offers a better deal.
An exchange rate of €1 = $1.30 indicates that
one euro buys 1.30 dollars.
Which of the following arguments strengthen the idea of floating exchange rates?
Trade deficits can be corrected through changes in exchange rates.
Assume that the current exchange rate is $1 = €1.25. If you exchange 1,000 euros for
dollars, you will receive
$800
A pair of shoes costs £40 in Britain. An identical pair costs $50 in the United States when
the exchange rate is £1 = $1.50. Which of the following is correct?
The United States offers a better deal.
________ is quoted for 30 days, 90 days, and 180 days into the future.
a forward exchange rate
Suppose a government increases the money supply. As a result, there is a surge in the
demand of goods as consumers rush to spend their extra money, but producers cannot keep up
with demand. What will be the result?
price inflation
The currency of Lebanon is fixed relative to the U.S. dollar. This means that the
exchange rate between the Lebanese pound and other currencies is determined by the dollar
exchange rate. This reflects a
pegged exchange rate
Which level of economic integration eliminates trade barriers between member countries
and adopts a common external trade policy?
customs union
A country is said to be in balance-of-trade equilibrium when
the income its residents earn from exports is equal to the money its residents pay
to other countries for imports.
________ exchange rates were declared as acceptable in the Jamaica agreement of the
International Monetary Fund
floating
When the foreign exchange market determines the relative value of a currency, we say
that the country is adhering to a ________ regime
floating exchange rate
Supporters of floating exchange rates
argue that floating rates help adjust trade imbalances.
_____ include the design, creation, and delivery of a product.
primary activities
Which is an example of a support activity in a firm’s value chain?
human resources
The term ________ refers to skills within the firm that competitors cannot easily match
or imitate and that may exist in the firm’s value creation activities.
core competence
A manufacturer of electric stand mixers wants to better compete in this highly
competitive market. It decides to offer its mixer in over 50 different colors so customers will be
able to match the appliance to their kitchen décor. What type of value creation strategy does this
represent?
differentiation
________ can be defined as the rate of return that the firm makes on its invested capital,
which is calculated by dividing the net profits of the firm by total invested capital.
profitability
The amount of value a firm creates is measured by the
difference between its costs of production and the quality that consumers
perceive in its products.
There are several disadvantages of franchising as an entry mode. Which is one of them?
Franchising may inhibit the firm’s ability to take profits out of one country to
support competitive attacks in another.
Which of the following statements is true of turnkey projects?
A turnkey strategy is particularly useful where FDI is limited by host-
government regulations
________ agreements enable firms to hold each other “hostage,” thereby reducing the
risk they will behave in an opportunistic manner toward each other
cross-licensing
Which statement is true of licensing?
The firm does not have to bear the development costs and risks associated with
opening a foreign market.
An advantage of ________ with a local partner is the knowledge of the local environment
that the local partner contributes to the venture
joint ventures
A disadvantage of ________ is that the firm that enters into such an arrangement usually
will have no long-term interest in the foreign country
turnkey projects
Super Safe Sunscreen products is based in the United States and is looking to distribute
its products in South America. Rather than build and maintain a manufacturing facility in Brazil,
the company decides to ship its products directly from its location in California. What type of
entry mode does this represent?
exporting
If a firm is trying to enter a market where there are already well-established companies,
and where global competitors are also interested in establishing a presence, the firm should
choose
an acquisition
This type of factory—often with the same standards as the top factories in the global
firm’s system—is set up to overcome intangible and tangible barriers in the global marketplace.
server factory
When a company’s product has a low value-to-weight ratio, the company should
produce the product in multiple locations close to major markets.
According to the concept of economies of scale, as plant output expands
unit cost decrease
Which statement is true of the country factors that govern international business?
Relative factor costs should be considered when selecting a country for
production.
_____ allows the company to produce a wider variety of end products at a unit cost that
at one time could be achieved only through the mass production of a standardized output
lean production
Which of the following products will most likely have high value-to-weight ratios?
pharmaceuticals
What term describes the means by which firms use information to communicate their
financial position to the providers of capital, enabling them to assess the value of their
investments and make decisions about future resource allocations?
accounting
Namrata is gathering evidence to determine if the firm’s financial accounts conform to
required accounting standards. In what activity is Namrata engaged?
auditing
Every time a firm changes cash from one currency into another currency it must bear
a transaction cost
Which of the following was formed in March 2001 to replace the International
Accounting Standards Committee (IASC)?
International Accounting Standards Board
Compliance to IASB standards is
voluntary
What is an advantage of the geocentric staffing policy?
It enables the firm to build a cadre of international executives who feel at home
working in a number of cultures
Lorelle works in the human resource department for her firm. She is responsible for
selecting individuals who have the skills required to do a particular job. Lorelle’s job is
staffing policy
What is the difference between an ethnocentric and a polycentric staffing approach?
An ethnocentric staffing approach may be more expensive compared to a
polycentric staffing approach
Cultural myopia refers to a firm’s failure to
understand host-country cultural differences.
If a company recruits host-country nationals to manage subsidiaries while parent-country
nationals occupy key positions at corporate headquarters, the firm is following ________ staffing
policy.
polycentric
Presser Auto Works, a German auto parts manufacturer, has a policy of appointing the
best person for the job in its various locations regardless of the candidate’s nationality. Which
staffing policy best describes Presser Auto Works’ approach?
geocentric
A ________ may be paid to ensure that the expatriate enjoys the same standard of living
in the foreign location as at home.
cost-of-living allowance
Expatriate failure refers to
the premature return of an expatriate manager to his or her home country.
The set of choices the firm offers to its targeted market is known as the
marketing mix
The identification of distinct groups of consumers whose purchasing behavior differs
from others in important ways is known as
market segmentation
Lamar is a business analyst for a chain of coffee shops in the greater Chicago area. He
has created a simple bar chart that shows the most popular coffee drinks customers ask
for at various times of the day. Which application of business analytics does the bar chart
represent?
descriptive
When a company emphasizes personal selling, the company is probably using a
________ strategy
push
The extent to which the place of manufacturing influences product evaluations is known
as
country of origin effects
To overcome cultural barriers, companies should
develop cross-cultural literacy.
_____ pricing refers to the fact that a firm’s pricing strategy in one market may have an
impact on its rivals’ pricing strategy in another market.
multipoint
