Final T/F Flashcards
Since Mercury Machine is a medium-size business, it would not benefit from
globalization.
false
Globalization of production can help companies lower their overall cost structure or
improve the quality or functionality of their product offering.
true
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.
true
Nations faced with a financial crisis can turn to the World Bank, known as the lender of
last resort, to bail it out.
false
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.
false
Managing an international business is quite similar to managing a domestic business.
false
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.
true
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
false
Democracy is a form of government that prohibits opposing political parties.
false
In mixed economies, governments tend to take into state ownership troubled firms whose
continued operation is thought to be vital to national interests.
true
Contracts under a civil law system tend to be very detailed with all contingencies spelled
out
false
A theocratic law system is one in which the law is based on religious teachings.
true
Johan wanted to protect his screenplay from piracy, so he copyrighted it. Patents,
copyrights, and trademarks establish ownership rights over intellectual property.
true
GDP allows a more direct comparison of living standards in different countries than other
measures.
false
If a country’s economy is to sustain long-term economic growth, the business
environment must be conducive to innovations and entrepreneurial activity
true
Totalitarian states promote human freedom and human development, which facilitates
economic progress.
false
A country’s economic system, property rights regime, and education systems are
reasonably good predictors of economic prospects.
true
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.
false
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.
true
Economist Amartya Sen argues that development is an economic process that should be
assessed primarily by material output measures such as GNI per capita.
false
Virtually all scholars agree on a simple definition of culture—that is, the collective
system of values of a people.
false
Norms are abstract ideas about what a group believes to be good, right, and desirable.
false
Education plays an important role, from an international business perspective, as a
determinant of national competitive advantage.
true
Hofstede’s research has been criticized because it appears to be based on gender
stereotypes about masculinity and femininity, which seem inappropriate.
true
Because of its individualistic mind-set, Japanese culture is more supportive of
entrepreneurial activities than American culture
false
Islam is a polytheistic religion
false
Being born into a class system does ultimately determine your social standing.
false
Guanxi is an important mechanism for building long-term business relationships and
getting business done in China.
true
International business executives find that making payments to corrupt government
officials never results in economic advantages.
false
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.
false
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.
true
Ethical dilemmas are situations in which none of the available alternatives seems
ethically acceptable.
true
Personal ethics are unique to the individual and have no effect on societal business ethics.
false
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.
false
Fostering ethical behavior in a company is easily achieved by simply providing a
company-specific code of ethics.
false
Utilitarian philosophy, based on the principle of justice, is considered fair and equitable.
false
Porter’s theory of national competitive advantage recommends unrestricted free trade
between countries.
false
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.
true
A country has an absolute advantage in the production of a product when it is more
efficient than any other country in producing it.
false
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.
true
The past two decades have shown a marked decrease in the number of regional trade
agreements.
false
In a customs union, trade barriers are eliminated among member countries, and each
country maintains its own external trade policies.
false
A regional free trade agreement will benefit the world only when the amount of trade it
diverts exceeds the amount of trade it creates.
false
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.
false
A key benefit resulting from the adoption of the euro is the ability to compare prices
across member markets.
true
A benefit to companies of economic integration is the opportunity to centralize their
production and reduce costs.
true
A currency swap deal enables companies to insure themselves against foreign exchange
risk.
true
To minimize the risk of an unanticipated change in exchange rates, a company can
protect itself by entering into a spot exchange contract.
false
The efficient market school argues that investing in exchange rate forecasting services
would be a waste of money.
true
There are many impediments to the free flow of goods and services in an efficient
market.
false
There is no evidence that psychological factors play an important role in determining the
expectations of market traders as to likely future exchange rates.
false
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.
false
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
false
Implementing a fixed exchange rate regime increases price inflation in countries.
false
The IMF does not expect governments to meet any obligations except to pay back the
money it borrows
false
The agreement reached at Bretton Woods established the International Monetary Fund
(IMF) and the World Bank.
true
The International Monetary Fund’s original function was to provide a pool of money
from which members could borrow in the short term
true
An effective business strategy to reduce economic exposure is to contract out high-value-
added manufacturing.
false
Fixed exchange rates lead to speculation and uncertainty in the value of currencies.
false
Adopting a floating exchange rate regime increases the inflationary pressures in a
country.
true
The preeminent strategic goal for most firms is to maximize the firm’s presence in the
global marketplace.
true
Support activities are always less important than the primary activities in achieving a
competitive advantage.
false
The skills within the firm that a competitor cannot easily match or imitate are known as
the core knowledge base.
false
When consumer tastes and preferences differ significantly between countries, there is
high pressure for local responsiveness.
true
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.
false
Pursuing a global standardization strategy is appropriate when a firm is facing high
pressures for cost reduction but low pressure for local responsiveness.
true
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
true
Franchising does not enable a firm to quickly build a global presence.
false
If a firm’s core competence is proprietary technological knowledge, a joint venture is not
preferable.
true
A joint venture is often politically more acceptable than a wholly owned subsidiary and
brings a degree of local knowledge to the subsidiary.
true
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.
true
Acquisitions generally take a short time to execute and, for this reason, are not favored by
most firms.
true
Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of
foreign expansion.
false
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.
true
Products such as electronic components and pharmaceuticals have high value-to-weight
ratios.
true
Poor product quality and low productivity are hidden costs associated with basing
production in a foreign location.
true
Concentration of production should be avoided when important exchange rates are
expected to remain relatively stable.
false
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.
false
A “buy” decision is favored when there is any chance that supply cannot be guaranteed if
the firm moves production overseas.
false
Make-or-buy decisions are decisions that concern the components to be used in a
production process.
false
Most managers believe that knowledge of a foreign language is not necessary to succeed
in an international posting
true
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.
true
Expatriate success refers to the premature return of an expatriate manager to the home
country.
false
A geocentric approach tends to strengthen local responsiveness.
true
Cultural toughness refers to the relationship between the country of assignment and how
well an expatriate adjusts to a particular posting.
true
By pooling its cash reserves, the firm can increase the total size of the cash pool it must
hold in highly liquid accounts.
false
Accounting information is the means by which firms communicate their financial
position to the providers of capital.
true
Accounting standards are rules for preparing financial statements.
true
The standards of U.S. Financial Accounting Standards Board and IASB are similar.
true
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.
false
A tax haven is a country that gives income tax exemptions to firms that export all or part
of its products.
false
The set of choices the firm offers to its targeted markets is known as the marketing mix.
true
Differences in product and technical standards from country to country would be a reason
a business might vary aspects of its marketing mix.
true
The structure of market segments may not differ significantly from country to country.
false
A multipoint pricing strategy is a competitive weapon used to drive weaker competitors
out of a national market.
false
The longer the distribution channel, the fewer intermediaries there are that must be
persuaded to carry the product for it to reach the consumer.
false
A push strategy makes sense when distribution channels are long.
false
The more fragmented the retail system, the cheaper it is for a firm to make contact with
each individual retailer.
false
In highly developed countries, in the context of communication, noise tends to be high.
true
The most popular staffing policy is the ethnocentric approach.
false
