Pre Assessment Flashcards
Which negative outcome on political systems comes from globalization?
Increase in the number of laws
Increase in the amount of taxes
Creation of isolationist policies
Creation of translation problems
Creation of isolationist policies
Which factor results in a higher rate of globalization?
Reduced trade barriers
Lower cross-border migration
Higher costs of doing business
Decreased direct foreign investment
Reduced trade barriers
What are the four factors in Ghemawat’s CAGE analysis?
Culture, administration, government, environment
Culture, agriculture, government, economy
Culture, agriculture, geography, environment
Culture, administration, geography, economy
Culture, administration, geography, economy
What is a major drawback to the home country when companies outsource manufacturing jobs to countries with lower worker wages?
Higher taxes
Loss of manufacturing jobs
Increased manufacturing costs
Decreased focus on research and development
Loss of manufacturing jobs
A country has a characteristic traditional economic system with poor infrastructure and limited economic opportunity.
What is the impact of this system on the process of globalization?
The globalization process is unaffected as the system does not hinder the process.
The globalization process has shortcomings as there are conflicts with other countries.
The globalization process is at a disadvantage as the country has a lower standard of living.
The globalization process is steady as the country is not vulnerable to the impact of globalization.
The globalization process is at a disadvantage as the country has a lower standard of living.
What is a characteristic of a market economy?
Government regulation is abundant.
Production is based on traditions.
Goods and services are publicly owned.
Firms seek to maximize profits.
Firms seek to maximize profits.
Which impact does Islamic law directly have on businesses?
It forbids charging interest.
It commercializes the legal system.
It prohibits sale-buyback of businesses.
It limits the globalization of business.
It forbids charging interest.
Which institution helps to maintain availability of global financing to solve trade deficit issues?
The World Bank
The Federal Reserve
International Monetary Fund
International Finance Corporation
International Monetary Fund
What is the current focus of the World Bank?
Maximizing profitability
Improving quality of life
Supporting structural development
Maintaining equity between developing economies
Improving quality of life
For which concern has the World Trade Organization been criticized?
Adoption of labor standards protecting labor rights
Impact of tariffs set by developing nations
Impact of high tariffs on agricultural products
Influence of free trade policies on human trafficking
Adoption of labor standards protecting labor rights
How is the Special Drawing Right of the International Monetary Fund (IMF) valued?
It is based on the value of gold.
It is based on the U.S. dollar.
It is based on all members’ currencies.
It is based on the value of the five most significant members’ currencies.
It is based on the value of the five most significant members’ currencies.
Two countries agree to open their borders to international business transactions with one another without tariffs.
How does this affect global business?
It imposes import restrictions on competing nations.
It leads to developing free trade policies with strategic partners.
It provides subsidies and protects a critical industry.
It creates a trade surplus for the national economy.
It leads to developing free trade policies with strategic partners.
A country uses its established technology infrastructure to produce a good.
What is the impact of this infrastructure on trade?
It will improve supply and demand.
It will create barriers to entry for other nations.
It will decrease economies of scale.
It will decrease natural resources.
It will create barriers to entry for other nations.
What was the economic impact of the North American Free Trade Agreement (NAFTA)?
the reduction of economic output as measured by gross domestic product (GDP)
The overall loss of jobs and higher unemployment
The shift of jobs away from low comparative advantage industries
The increase of low-skilled worker employment in the United States
The shift of jobs away from low comparative advantage industries
A company that is located in Country A would like to sell products in Country B. The government of Country B is pushing for a tariff-based international trade agreement on the product.
What is the reasoning behind Country B’s decision?
Country B wants Country A to divert trade to another country to help Country A’s economy.
Country B seeks to protect its economy and give it the opportunity for long-term expansion.
Country B prefers to divert trade to another country to enhance its product industry.
Country B wants to expand its export to Country A in the product industry.
Country B seeks to protect its economy and give it the opportunity for long-term expansion.
Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products.
What is the effect, if any, on the domestic prices of these products?
Increases
Decreases
Stays the same
Cannot be determined
Increases
Two countries decide to open up trade with each other.
What is likely to happen when trade opens up?
Economies of scale in comparative advantage industries will decrease.
Jobs will increase in non-comparative advantage industries.
Jobs will increase in comparative advantage industries.
Productivity in comparative and non-comparative advantage industries will decrease.
Jobs will increase in comparative advantage industries.
What is a purpose of a country implementing trade protectionism?
To increase dumping
To protect an infant industry
To increase competition
To protect against import subsidies
To protect an infant industry
Country A and Country B are trying to mend their relationship. A company from Country A would like to invest in a company in Country B.
Which action by Country B will help these two countries meet their goal?
Provide tax exemptions
Increase trade tariffs
Limit privatization policies
Create protectionist policies
Provide tax exemptions
Which level of regional economic integration is a key feature of a Customs Union?
Unified trading policies with non-members
Removal of all barriers to economic integration
Control of capital closed within each member country
Unified political policies within each member country
Unified trading policies with non-members
What is a drawback of creating regional trade agreements?
They discourage trade with less efficient producers.
They push cultural diversity between member countries.
They maintain tariff protection for small firms.
They shift employment opportunities.
They shift employment opportunities.
The United States-Mexico- Canada Agreement (USMCA), a modification of the North American FreeTrade Agreement (NAFTA), broadened the scope of free trade between member nations and tightened restrictions in the region.
Which regulation was established by this new agreement?
Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023.
100% of all automobile parts must be manufactured within the regions of Mexico, Canada, and the United States.
All dairy products produced in Canada, Mexico, or the United States must be traded with no tariffs.
Member countries may negotiate with foreign exporters to lower tariffs on their imports.
Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023.
A U.S. capital investment firm is researching new markets to enter to diversify its portfolio. The director of foreign investments presented a pitch to the board of directors encouraging entry into the Costa Rican telecommunications market by investing in local companies in the region through acquisition.
Which alliance supports this director’s suggestion?
Free Trade Area of the Americas
Central America Free Trade Agreement
Canada-Costa Rica Free Trade Agreement
International Monetary Fund
Central America Free Trade Agreement
A firm based in Country A manufactures its products in Country B and pays the manufacturing employees in the currency in which they are located.
Which currency situation will result in the maximum profit for the firm?
The currency in Country A is weak relative to the currency of Country B.
The currency in Country A is strong relative to the currency in Country B.
The value of the currency in both countries decrease.
The value of the currency in both countries stays the same.
The currency in Country A is strong relative to the currency in Country B.
Which drawback is associated with regional economic integration?
Lower prices for consumer products
Greater movement of labor
Increased exclusive internal trade
Specialization based on comparative advantage
Increased exclusive internal trade
Which factor contributes to the creation of a monopoly?
Control of natural resources
Strong prime interest rates
Highly educated employees
Vertically integrated organizations
Control of natural resources
Which convention provides gap fillers for terms that may not be expressly stated in agreements between two companies?
The Common Law
Uniform Commercial Code
Contracts for the International Sale of Goods
International treaties between the home countries of the companies
Contracts for the International Sale of Goods
Which laws are violated by practices such as price-fixing, price discrimination, restraints, and monopolization?
Production
Anti-trust
Contract
Intellectual property
Anti-trust
An international company’s consumers are demanding that the owners make socially ethical business decisions concerning their packaging, but the company is finding that the suggested green modifications are increasing the costs of producing the product.
Which concern is this company facing by meeting these ethical demands?
Decreased profitability
Diminished community reputation
Damaged local environment
Decreased shareholder satisfaction
Decreased profitability
A business is entering a global market at the same time it has been trying to improve its level of corporate social responsibility (CSR).
Which CSR goal should this company remember during this process?
Increase shareholder trust via high ethical standards
Improve public trust in regions experiencing low profits from global competition
Enhance shareholder value of global corporations through social marketing
Expand corporate charitable giving in underserved communities
Increase shareholder trust via high ethical standards
A company would like to expand its corporate social responsibility (CSR) initiatives to a global level.
Which strategy should the company use to meet this goal?
Improve manufacturing processes for local workers
Engage stakeholders on the issue of air quality
Provide city charities with the funds to continue community activities
Invite high school students to the company headquarters to explore careers
Engage stakeholders on the issue of air quality
An individual is encouraged to provide a small, quiet fee to local offi cials to get some critical work doneoverseas for a global offi ce. The individual was told that this would greatly expedite the work. Theindividual took that advice, and the work was completed, but the manager in the United States was upsetwith the action and called the individual to discuss the matter.
What is the most challenging aspect of this individual’s ethical dilemma?
The manager is being influenced by personal perceptions of ethics.
Ethical behaviors are not standardized across the world.
Unethical practices are common outside the United States.
The ethical actions observed in business are universal by human nature.
Ethical behaviors are not standardized across the world.
A CEO of a multinational corporation tells employees that they are expected to follow the organization’s values, remember the mission, and adapt behaviors to be in alignment with the vision and mission, regardless of the situation.
Which ethical standard is being stressed by this company?
Transparency
Code of ethics
Corporate social responsibility
Ethical resolutions
Code of ethics
An international company has employees divided into departments related to designated areas of the business, such as marketing, production, human resources, information technology, and customer service.
What is the organizational structure of this company?
Teams
Matrix
Divisional
Functional
Functional
Which organizational structure is common in international high-tech and engineering firms that have projects of limited lengths of time where employees can be put on different teams to maximize ingenuity?
Departmental
Matrix
Divisional
Functional
Matrix
Which organizational structure helps increase employee creativity, productivity, and mutual accountability?
Teams
Matrix
Divisional
Departmental
Teams
A global household appliance company competes in three areas: washers, dryers, and refrigerators.
Which type of departmentalization does this company use?
Product
Market
Geographic
Functional
Product
A multinational corporation (MNC) with headquarters in the United States is seeking to limit its supply chain to U.S. companies so that decision-making authority is localized at the highest level of the organization.
What is a result of using this decision-making structure?
Economies of scale are achieved.
Economies of scope are decreased.
There is increased consistency in operations.
There is increased perception of fairness with suppliers.
There is increased consistency in operations.
A company wants to hold a direct operating presence in a foreign country, so it buys a company in the target country and runs the operations.
Which type of business agreement is this company using?
Franchising
Licensing
Joint venture
Subsidiary
Subsidiary
A multinational beverage company decides to export products into a new market in order to grow its business. Exporting products was determined to be one of the cheapest methods of market entry for this company; however, the company realizes there are some disadvantages to exporting.
Which challenge is this company likely facing by exporting its products?
Costs of transporting goods is high.
Costs of advertising is too expensive.
The company loses control over product quality.
The company has to share intellectual property rights with the distributor.
Costs of transporting goods is high.
A multinational company hires a distributor to manage the distribution of products in a new international market that it recently entered.
Which entry strategy is the company using?
Exporting
Franchising
Joint venture
Direct investments
Exporting
A company located in the United States ships its products to a country overseas. Frequent bad weather causes significant delays, thus leading to reduced profits. As a result, the company wants to encourage leadership to consider adding a location in this overseas country.
Which strategy solves this problem?
Market growth
Flexible sourcing
Economies of scale
Decentralized manufacturing
Decentralized manufacturing
As a company enters a foreign market, it provides assets, takes on all of the responsibility, and assumes the significant risk.
What is this market entry strategy?
Exporting
Franchising
Greenfield venture
Joint venture
Greenfield venture
A company has entered several foreign markets and maintains the same branding in all of them.
What is the term for this marketing strategy?
Adaptation
Standardization
Expansion
Glocalization
Standardization
A company would like to have a direct operating presence in a foreign country. The company is concerned about being exposed to the highest levels of risk and a slow market entry.
Which entry strategy is the company concerned about?
Franchising
Joint venture
Acquisition
Subsidiary
Subsidiary
Which national cultural dimension refers to how agreeably a society accepts hierarchical differences between people in the global workplace?
Power distance
Masculinity
Uncertainty avoidance
Long-term orientation
Power distance
Which national cultural dimension in global business refers to the amount of ambiguity a society is willing to accept?
Uncertainty avoidance
Long-term orientation
Power distance
Masculinity
Uncertainty avoidance
Which national cultural dimension in global business refers to people’s inclination to take care of themselves and their close circle of family and friends, often at the cost of the whole society?
Individualistic
Uncertainty avoidance
Long-term orientation
Power distance
Individualistic
A senior manager from the head office of a company based in the United States is assigned to work in its overseas office in Indonesia where the significant emphasis is placed on workplace harmony. The manager ensures that the local culture and language are understood and is often perceived as an insider who follows the normal traditions.
How will the cultural dimensions of the local country influence the manager’s evaluation?
The senior manager would be given a very favorable performance evaluation.
The local employees would refuse to evaluate the performance of an expatriate manager.
The senior manager would be given a very harsh performance evaluation.
The local employees would have difficulty understanding the process and language of the evaluation.
The senior manager would be given a very favorable performance evaluation.
An employee for a global technology company was assigned to the overseas office in Asia. Once the assignment was completed, the employee experienced disorientation in repatriating to the head office in the United States.
What caused this disorientation?
Changes in work culture and customs
Loss of pay and benefits
Lack of consistency in work dynamics
Changes in time zones between countries
Changes in work culture and customs
Human resources policies are determined by how a particular global company decides to oversee its diverse workforce.
What is the disadvantage of using this polycentric approach?
Decisions are made by the home office in a top-down approach.
Staff members need an adjustment period to the new culture.
There is less flexibility in adjusting to changing local conditions.
It is possible there are dual demands for shared resources.
It is possible there are dual demands for shared resources.
A computer technology company has several factories in three countries. The headquarters introduces steps in the manufacturing process so that waste decreases dramatically.
Which supply chain practice is this company using to optimize production efficiency?
Lean manufacturing
Refined logistic network
Just-in-time
Channel-spanning performance measures
Lean manufacturing
A company is evaluating where it will locate its next facility to minimize its distribution shipping costs.
Which factor must the company consider as part of this decision?
Value-to-weight ratio
Minimum efficient scale
Fixed costs
Financial incentives
Value-to-weight ratio
A multinational company sources the components for its products from multiple countries around the globe and assembles the final finished product locally in the country of sale. However, the consumers in the local country do not prefer locally made goods.
Which phenomenon is the company experiencing?
Value chain effect
Country-of-origin effect
Mass customization effect
Quality-of-localization effect
Country-of-origin effect
What is an advantage of using intermediaries in an indirect distribution channel?
It displays a sense of ownership of the products.
It reduces up-front costs with the use of an existing channel.
It controls the marketing efforts.
It maintains the company’s interests at the forefront.
It reduces up-front costs with the use of an existing channel
A new start-up company wants to connect directly with its consumers.
How many layers of intermediaries should the company consider?
0
1
2
3
0
A company’s distribution channel consists of a producer, a distributor, a retailer, and a consumer.
What is a distribution channel with this structure called?
Direct
Indirect
Complex
Multi-level
Indirect
Which form of funding requires a low cost of capital and does not require time to mature?
Loans
Bonds
Equity shares
Angel investments
Loans
A manufacturing company in the United States acquired a small national supplier based in California.
Which accounting method should the company use to record the acquisition?
Generally accepted accounting principles
Financial accounting reporting standards
International financial reporting standards
General international accounting principles
Generally accepted accounting principles
How do banks and investors use financial statements?
To decide whether to grant access to money
To assess the marketing health of a company
To recommend strategic partnerships
To create plans for growth and expansion
To decide whether to grant access to money
A company wants to reduce the effects of currency fluctuations with its host country subsidiaries for the coming year.
Which action should the company take?
Use a forward contract
Establish the price of a derivative
Mitigate societal risks
Accept hard policy risks
Use a forward contract
A multinational company uses transfer pricing to reduce its tax burden in the subsidiaries’ countries.
Which effect does this action have on subsidiaries?
Lowered profit
Increased morale
Reduced compliance
Relaxed regulations
Lowered profit
What is an example of a micro risk for multinational companies?
Change in government leadership
Government nationalization of assets
Loss of intellectual property
Presence of nationalistic movements
Government nationalization of assets
A community has the skills and ability to access computers and the internet but does not value that form of technology. A company is trying to change the situation in order to facilitate increased online transactions.
Which stage of the digital divide is the company hoping to correct?
Economic
Usability
Empowerment
Accessibility
Empowerment
A global company wants to share and store business information online 24/7 for employees so they can access the items when they are not physically in the office.
Which tool should the company use for this purpose?
Cloud-based file share
Email attachments
Social media pages
Desktop publishing program
Cloud-based file share
A manufacturing facility would like to consider the use of artificial intelligence deep learning.
Which practice illustrates the use of this approach?
Employees use fingerprint readers to enter doors.
Machines become familiar with common defects in products.
Items are sorted by bar codes before being packaged.
Orders populate immediately as clients place them.
Machines become familiar with common defects in products
A company is interested in working with the technology that will allow consumers to privately and securely store personal information such as social security and credit card numbers, making it accessible around the world.
Which piece of technology is of interest to this company?
Blockchain
Antivirus software
Artificial intelligence
Virtual reality
Blockchain
An international business experienced significant changes due to advances in global technology such as autonomous cars, 3D printing, biometrics, nanotechnology, and quantum computing.
Which era caused this impact on the business?
Second Industrial Revolution
Technology Revolution
Fourth Industrial Revolution
Market Revolution
Fourth Industrial Revolution
An international company works with many economic sectors and notices that one sector, in particular, is slower to adopt artificial intelligence, which limits their opportunities on a global scale.
Which economic sector shows this slower pace?
Financial services
Healthcare
Transportation
Education
Education
Workers at a company are struggling to efficiently address daily problems because the company’s current information systems do not communicate across departments.
What type of system should the company implement to solve this problem?
Enterprise resource planning system
Deep learning system
Management information system
Integrated software system
Enterprise resource planning system
