Final T/F

Question 1

Since Mercury Machine is a medium-size business, it would not benefit from
globalization.

Answer 1

false

Question 2

Globalization of production can help companies lower their overall cost structure or
improve the quality or functionality of their product offering.

Answer 2

true

Question 3

Thera-sure Incorporated, a U.S.-based manufacturer of temperature regulators, sets up a
production unit in Korea to take advantage of the lower labor costs there. This is an example of
foreign direct investment.

Answer 3

true

Question 4

Nations faced with a financial crisis can turn to the World Bank, known as the lender of
last resort, to bail it out.

Answer 4

false

Question 5

The value of foreign direct investment has steadily declined over the past few decades
due in part to increased barriers placed on companies wanting to invest overseas.

Answer 5

false

Question 6

Managing an international business is quite similar to managing a domestic business.

Answer 6

false

Question 7

According to globalization critics, the decline in unskilled wage rates is due to the
migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for
unskilled workers.

Answer 7

true

Question 8

In terms of the socialist ideology, the communists believed that socialism could be
achieved by democratic means and turned their backs on violent revolution and dictatorship

Answer 8

false

Question 9

Democracy is a form of government that prohibits opposing political parties.

Answer 9

false

Question 10

In mixed economies, governments tend to take into state ownership troubled firms whose
continued operation is thought to be vital to national interests.

Answer 10

true

Question 11

Contracts under a civil law system tend to be very detailed with all contingencies spelled
out

Answer 11

false

Question 12

A theocratic law system is one in which the law is based on religious teachings.

Answer 12

true

Question 13

Johan wanted to protect his screenplay from piracy, so he copyrighted it. Patents,
copyrights, and trademarks establish ownership rights over intellectual property.

Answer 13

true

Question 14

GDP allows a more direct comparison of living standards in different countries than other
measures.

Answer 14

false

Question 15

If a country’s economy is to sustain long-term economic growth, the business
environment must be conducive to innovations and entrepreneurial activity

Answer 15

true

Question 16

Totalitarian states promote human freedom and human development, which facilitates
economic progress.

Answer 16

false

Question 17

A country’s economic system, property rights regime, and education systems are
reasonably good predictors of economic prospects.

Answer 17

true

Question 18

To improve airport security following a major terrorist attack, the government of a
country takes over the airport security industries. This is an example of privatization.

Answer 18

false

Question 19

Transformation from centrally planned command economies to market-based economies
can be attributed to the economic failure of command and mixed economies compared to market-
based systems.

Answer 19

true

Question 20

Economist Amartya Sen argues that development is an economic process that should be
assessed primarily by material output measures such as GNI per capita.

Answer 20

false

Question 21

Virtually all scholars agree on a simple definition of culture—that is, the collective
system of values of a people.

Answer 21

false

Question 22

Norms are abstract ideas about what a group believes to be good, right, and desirable.

Answer 22

false

Question 23

Education plays an important role, from an international business perspective, as a
determinant of national competitive advantage.

Answer 23

true

Question 24

Hofstede’s research has been criticized because it appears to be based on gender
stereotypes about masculinity and femininity, which seem inappropriate.

Answer 24

true

Question 25

Because of its individualistic mind-set, Japanese culture is more supportive of entrepreneurial activities than American culture

Answer 25

false

Question 26

Islam is a polytheistic religion

Answer 26

false

Question 27

Being born into a class system does ultimately determine your social standing.

Answer 27

false

Question 28

Guanxi is an important mechanism for building long-term business relationships and getting business done in China.

Answer 28

true

Question 29

International business executives find that making payments to corrupt government officials never results in economic advantages.

Answer 29

false

Question 30

There is no excuse for multinational corporations to ignore the ethical obligations placed upon them as it pertains to employment conditions, human rights, environmental pollution, and the use of power, since these obligations are well-known and are always clear-cut.

Answer 30

false

Question 31

Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and to address employees’ questions about issues that may be ethical or unethical.

Answer 31

true

Question 32

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

Answer 32

true

Question 33

Personal ethics are unique to the individual and have no effect on societal business ethics.

Answer 33

false

Question 34

Cultural relativism suggests that even if slavery is culturally acceptable in a country, a foreign firm operating in that country should avoid using slave labor.

Answer 34

false

Question 35

Fostering ethical behavior in a company is easily achieved by simply providing a company-specific code of ethics.

Answer 35

false

Question 36

Utilitarian philosophy, based on the principle of justice, is considered fair and equitable.

Answer 36

false

Question 37

Porter’s theory of national competitive advantage recommends unrestricted free trade between countries.

Answer 37

false

Question 38

As a trade theory, the strongest feature of mercantilism is that it views trade as a negative -sum game in which all countries can benefit.

Answer 38

true

Question 39

A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.

Answer 39

false

Question 40

According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.

Answer 40

true

Question 41

The past two decades have shown a marked decrease in the number of regional trade agreements.

Answer 41

false

Question 42

In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade policies.

Answer 42

false

Question 43

A regional free trade agreement will benefit the world only when the amount of trade it diverts exceeds the amount of trade it creates.

Answer 43

false

Question 44

Brigitte lives in France and is in the market for a new car. Because of the adoption of the euro, Brigitte cannot easily compare car prices across countries in Europe.

Answer 44

false

Question 45

A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.

Answer 45

true

Question 46

A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.

Answer 46

true

Question 47

A currency swap deal enables companies to insure themselves against foreign exchange risk.

Answer 47

true

Question 48

To minimize the risk of an unanticipated change in exchange rates, a company can protect itself by entering into a spot exchange contract.

Answer 48

false

Question 49

The efficient market school argues that investing in exchange rate forecasting services would be a waste of money.

Answer 49

true

Question 50

There are many impediments to the free flow of goods and services in an efficient market.

Answer 50

false

Question 51

There is no evidence that psychological factors play an important role in determining the expectations of market traders as to likely future exchange rates.

Answer 51

false

Question 52

If the spot rate is $1 = 120, and the 30-day forward rate is $1 = ×130, the dollar is selling at a discount in the forward market.

Answer 52

false

Question 53

If the spot exchange rate is £1 = $1.50 when the market opens, and £1 = $1.48 at the end of the day, the pound has appreciated, and the dollar has depreciated

Answer 53

false

Question 54

Implementing a fixed exchange rate regime increases price inflation in countries.

Answer 54

false

Question 55

The IMF does not expect governments to meet any obligations except to pay back the money it borrows

Answer 55

false

Question 56

The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.

Answer 56

true

Question 57

The International Monetary Fund’s original function was to provide a pool of money from which members could borrow in the short term

Answer 57

true

Question 58

An effective business strategy to reduce economic exposure is to contract out high-value- added manufacturing.

Answer 58

false

Question 59

Fixed exchange rates lead to speculation and uncertainty in the value of currencies.

Answer 59

false

Question 60

Adopting a floating exchange rate regime increases the inflationary pressures in a country.

Answer 60

true

Question 61

The preeminent strategic goal for most firms is to maximize the firm’s presence in the global marketplace.

Answer 61

true

Question 62

Support activities are always less important than the primary activities in achieving a competitive advantage.

Answer 62

false

Question 63

The skills within the firm that a competitor cannot easily match or imitate are known as the core knowledge base.

Answer 63

false

Question 64

When consumer tastes and preferences differ significantly between countries, there is high pressure for local responsiveness.

Answer 64

true

Question 65

According to Porter, the way to create superior value is to drive up the cost structure of the business and/or differentiate the product in some way so that consumers value it more.

Answer 65

false

Question 66

Pursuing a global standardization strategy is appropriate when a firm is facing high pressures for cost reduction but low pressure for local responsiveness.

Answer 66

true

Question 67

As competition intensifies, global standardization strategies and transnational strategies tend to become more viable, and managers need to direct their companies toward either an international strategy or a localization strategy

Answer 67

true

Question 68

Franchising does not enable a firm to quickly build a global presence.

Answer 68

false

Question 69

If a firm’s core competence is proprietary technological knowledge, a joint venture is not preferable.

Answer 69

true

Question 70

A joint venture is often politically more acceptable than a wholly owned subsidiary and brings a degree of local knowledge to the subsidiary.

Answer 70

true

Question 71

When a firm’s competitive advantage is based on technological competence, a wholly owned subsidiary will often be the preferred entry mode because it reduces the risk of losing control over that competence.

Answer 71

true

Question 72

Acquisitions generally take a short time to execute and, for this reason, are not favored by most firms.

Answer 72

true

Question 73

Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.

Answer 73

false

Question 74

Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of those activities.

Answer 74

true

Question 75

Products such as electronic components and pharmaceuticals have high value-to-weight ratios.

Answer 75

true

Question 76

Poor product quality and low productivity are hidden costs associated with basing production in a foreign location.

Answer 76

true

Question 77

Concentration of production should be avoided when important exchange rates are expected to remain relatively stable.

Answer 77

false

Question 78

Managers of a source factory operate in essentially the same way that managers in an offshore factory operate. They have very little say in purchasing or logistics decisions.

Answer 78

false

Question 79

A “buy” decision is favored when there is any chance that supply cannot be guaranteed if the firm moves production overseas.

Answer 79

false

Question 80

Make-or-buy decisions are decisions that concern the components to be used in a production process.

Answer 80

false

Question 81

Most managers believe that knowledge of a foreign language is not necessary to succeed in an international posting

Answer 81

true

Question 82

If an executive performs well in a domestic setting, then the executive will not be able to easily adapt to managing in a different cultural setting.

Answer 82

true

Question 83

Expatriate success refers to the premature return of an expatriate manager to the home country.

Answer 83

false

Question 84

A geocentric approach tends to strengthen local responsiveness.

Answer 84

true

Question 85

Cultural toughness refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular posting.

Answer 85

true

Question 86

By pooling its cash reserves, the firm can increase the total size of the cash pool it must hold in highly liquid accounts.

Answer 86

false

Question 87

Accounting information is the means by which firms communicate their financial position to the providers of capital.

Answer 87

true

Question 88

Accounting standards are rules for preparing financial statements.

Answer 88

true

Question 89

The standards of U.S. Financial Accounting Standards Board and IASB are similar.

Answer 89

true

Question 90

Most international businesses require all budgets and performance data within the firm to be expressed in the currencies of the countries where its subunits are located.

Answer 90

false

Question 91

A tax haven is a country that gives income tax exemptions to firms that export all or part of its products.

Answer 91

false

Question 92

The set of choices the firm offers to its targeted markets is known as the marketing mix.

Answer 92

true

Question 93

Differences in product and technical standards from country to country would be a reason a business might vary aspects of its marketing mix.

Answer 93

true

Question 94

The structure of market segments may not differ significantly from country to country.

Answer 94

false

Question 95

A multipoint pricing strategy is a competitive weapon used to drive weaker competitors out of a national market.

Answer 95

false

Question 96

The longer the distribution channel, the fewer intermediaries there are that must be persuaded to carry the product for it to reach the consumer.

Answer 96

false

Question 97

A push strategy makes sense when distribution channels are long.

Answer 97

false

Question 98

The more fragmented the retail system, the cheaper it is for a firm to make contact with each individual retailer.

Answer 98

false

Question 99

In highly developed countries, in the context of communication, noise tends to be high.

Answer 99

true

Question 100

The most popular staffing policy is the ethnocentric approach.

Answer 100

false