Questions Flashcards
Which type of globalization refers to the international movement of goods, capital, and services?
Social
Economic
Anti
Cultural
Economic
Correct! The movement of goods and services internationally through trade and trade agreements is economic globalization. As the world becomes smaller, increased movement of goods across borders occurs along with trade agreements.
The CEO of an international company reminds the executive vice presidents that while the company may do good while performing corporate social responsibilities, the business has one ultimate goal since it is engaged in commercial activities with corporate shareholders.
Which ultimate goal is the CEO emphasizing to the executive vice presidents?
Profitability
Exporting
Cultural exchange
Stakeholder satisfaction
Profitability
Correct! Ultimately, a company is engaged in commerce to achieve a profit. Business profit is gauged in financial and economic terms. However, some level of sustained financial and economic profits is needed for a business to achieve other outcomes that are measured as social or environmental performance.
A CEO seeks to better use the economies of scale and scope of production to increase the international company’s profits.
Which type of globalization driver is the CEO seeking to use?
Cost
Government
Market
Competition
Cost
Correct! Companies seek to put production in low labor-cost countries to lower labor costs and increase the contribution margin. Economies of scale and scope and the exploitation of differences in costs for product development, manufacturing, and sourcing in different parts of the world will assume greater importance as determinants of global strategy.
Which argument is used by critics who wish to discourage movement towards globalization?
It increases consumer prices across the world.
It decreases awareness of the international community.
It increases the wealth of the rich rather than the poor.
It decreases the pace of new product development.
It increases the wealth of the rich rather than the poor.
Correct! Critics make the argument that globalization only serves to assist the rich in becoming richer at the expense of the poor.
Which type of economy is decentralized and allows firms and households to participate in global trade with minimum governmental interference?
Market
Command
Mixed
Traditional
Market
Correct! In a market economy, goods and services are owned by individuals or companies that can buy, sell, or lease them to make a profit with minimum interference by the government.
Which type of legal system is based on a code and focuses on how the law is applied to the facts?
Theocratic
Common
Civil
Religious
Civil
Correct! The civil law system is an inquisitorial system where the judge investigates the facts of the case.
Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases?
Common
Theocratic
Civil
Religious
Common
Correct! In common law systems, judges hear arguments from both parties and make a judgment. This judgment stands as precedent for future cases.
Which legal system can vary from community to community and is found in countries without strong formal justice systems?
Customary
Common
Civil
Canon
Customary
Correct! This is generally found at the tribal or local level, is based on longstanding local customs, and is often transmitted orally.
In which legal system does a judge decide the applicable law for the case as a jury determines the facts?
Common
Customary
Canon
Civil
Common
Correct! In common law systems, while a jury may determine the facts, a judge decides which law will be applied to the case.
Which activity of the International Monetary Fund (IMF) impacts policymaking?
Supporting loans to developing countries
Engaging over 10,000 staff in cultural affairs training and development
Offering investment services to countries
Being owned and directed by the governments of the member nations
Being owned and directed by the governments of the member nations
Correct! The IMF is owned and directed by the governments of the member nations.
What is a characteristic of the International Monetary Fund (IMF)?
The IMF loans to all nations and helps increase their resources.
The IMF is a developmental institution and supports developing countries.
The IMF is a cooperative institution and provides more effective currency exchange.
The IMF provides financial assistance to all nations and improves their investment capability.
The IMF is a cooperative institution and provides more effective currency exchange.
Correct! The IMF is cooperative institution and is similar to a credit union for all member nations.
What was the initial purpose of the International Monetary Fund (IMF) in phase one, prior to 1973?
Provided a means for nations to easily exchange currency
Supervised economic policies
Offered loans to member organizations
Regulated currency exchange between nations
Regulated currency exchange between nations
Correct! The initial purpose of the IMF was to regulate currency exchange between nations.
How does the International Monetary Fund (IMF) impact international organizations and governments?
It reduces funding for social programs.
It complicates the process for nations to borrow and loan.
It provides limited financial assistance to the wealthy populations.
It over-represents the global south.
It reduces funding for social programs.
Correct! The conditions put on the IMF loan require the recipient country to have a policy of austerity. This policy usually results in a cut in funding for social programs.
What is a common name for the International Bank for Reconstruction and Development?
Federal Reserve Bank
European Central Bank
World Bank
International Monetary Fund
World Bank
Correct! World Bank is the common name for the International Bank for Reconstruction and Development.
What was the first loan that the World Bank made after the end of World War II?
To Switzerland for being neutral in the war
To Germany to rebuild its military
To France to rebuild its infrastructure
To the U.S. to rebuild Europe’s infrastructure
To France to rebuild its infrastructure.
Correct! The first loan made by the World Bank after World War II was used to rebuild the infrastructure of France.
Which criticism is associated with the World Bank?
The developed countries such as the U.S. and Europe have too much control over its decisions.
It makes loans that are too large and cannot be repaid.
It does not offer large enough loans to developing countries.
The developing countries of Asia and Africa have too much control over its decisions.
The developed countries such as the U.S. and Europe have too much control over its decisions.
Correct! This is one of major criticisms of the World Bank.
Which criticism is made about the World Bank?
It funds too many projects in developed countries.
It does not consider how funding projects will affect the environment.
It makes too many loans to countries with strong governments.
It supports government ownership of property.
It does not consider how funding projects will affect the environment.
Correct! One of the criticisms of the World Bank is it does not consider how funding projects will affect the environment.
Country A exports more goods to Country B than it imports from Country B. Country A receives more monetary gain by using this practice.
Which relationship does Country A have with Country B?
Neo-mercantilism
Protectionism
Mercantilism
Trade surplus
Trade surplus
Correct! Trade surplus is when a country exports more than it imports from another country. For example, China normally exports more manufactured goods to the United States than it imports from the United States. China has a trade surplus.
Country A has been criticized by other countries for giving generous tax credits to its corn farmers, which enables the country’s farmers to sell corn on the international markets for cheaper than all other countries.
Which term is used by other countries to describe this practice?
Mercantilism
Trade surplus
Free trade
Government subsidies
Government subsidies
Correct! The farmers are getting payment in the form of tax credits. This creates an unfair advantage to the farmers of Country A.
Which type of tariff is put in place to specifically ensure that domestic industries are given an advantage?
Export
Revenue
Protective
Ad valorem
Protective
Correct! A protective tariff is put into place to reduce the number of imports of a product that is produced domestically and to increase the cost of the imports to make the domestic product’s price more appealing to consumers.
What is a benefit of implementing a system of free trade?
Reduced import quotas would result in more domestic sales due to scarcity.
Reduced tariffs would result in lower costs of imported raw materials.
Increased export quotas would result in more international sales of domestic goods.
Increased tariffs would result in more revenue generated for the government.
Reduced tariffs would result in lower costs of imported raw materials.
Correct! In a free trade system, tariffs are reduced or eliminated to increase the ease and efficiency with which trade can be accomplished.
How are free trade agreements handled differently than treaties in the United States?
Treaties must be approved by the Senate, whereas a free trade agreement must pass both houses of Congress.
Treaties must be approved by the House of Representatives, while a free trade agreement only needs to be approved by the Senate.
Treaties must be approved by both houses of Congress, whereas a free trade agreement only needs to be approved by the Senate.
Treaties must be approved by the Senate, whereas free trade agreements must be approved by the House of Representatives.
Treaties must be approved by the Senate, whereas a free trade agreement must pass both houses of Congress.
Correct! Since a free trade agreement involves revenue from trade, it must be approved by both houses of Congress, whereas a treaty only needs to be approved by the Senate.
How do antidumping laws protect a domestic market?
They prevent international companies from foreign direct investment.
They restrict domestic companies from selling goods at prices above the price of production.
They prevent foreign companies from selling goods and services at or below cost.
They restrict international companies from selling domestically.
They prevent foreign companies from selling goods and services at or below cost.
Correct! Antidumping laws prevent foreign companies from selling goods at or below production cost to ensure domestic companies can stay competitive.
A small clothing company based in California decided that it needed to have an application (app) and an updated website. Because this is a small company, it did not have the technological expertise to handle this improvement. The company hired a company based in Pakistan to handle its technology needs. Which common practice among companies is this an example of?
Merger
Acquisition
Outsourcing
Dumping
Outsourcing
Correct! Outsourcing is an option that can result in cheaper labor in other regions.
Company A is located outside the home country of Company B. Company B has acquired Company A with the intent of controlling and managing Company A’s assets.
Which practice is being used by Company B?
Partnership
Foreign direct investment
Merger
Portfolio investment
Foreign Direct Investment
Correct! Investments made by international companies with the intention of controlling those assets in a foreign market represents foreign direct investment.
Why does a company engage in foreign direct investment?
The company wants to find a foreign source of financing for its foreign operations.
The company wants to identify another company with which it can partner.
The company wants to find a domestic source of financing for its foreign operations.
The company wants to control organizational assets in another country.
The company wants to control organizational assets in another country.
Correct! Foreign direct investment is when a company acquires a foreign firm or asset with the intent to control and manage it to strengthen its economic and financial market position.
Which strategy is used by governments to limit the foreign direct investment in a country?
Creating foreign ownership restrictions in the country
Creating domestic ownership restrictions in the country
Increasing the value of the country’s currency
Decreasing the value of the country’s currency
Creating foreign ownership restrictions in the country
Correct! Many countries restrict the percentage of ownership by foreign investors.
Which activity is considered a foreign direct investment (FDI) by a multinational corporation?
Setting up manufacturing plants in the host country
Providing guidance for franchises in the home country
Setting up manufacturing plants in the home country
Providing guidance for franchises in the host country
Setting up manufacturing plants in the host country.
Correct! FDI is when a company invests in manufacturing or some other major asset in another (host) country.
What is a reason for companies to engage in foreign direct investments?
To take advantage of tax exemptions offered by the home country
To increase imports to the home country
To take advantage of tax exemptions offered by the host country
To decrease imports to the host country
To take advantage of tax exemptions offered by the host country
Correct! Often countries offer tax exemptions to companies that invest in their economies.
Which country characteristic is most important to foreign direct investors according to a study by the World Bank?
Macroeconomic stability and favorable exchange rate
Political stability and security
Access to land or real estate
Low tax rates
Political stability and security
Correct! A recent World Bank study showed political stability and security to be the most important country characteristic when choosing a country to invest in
What is a benefit of foreign direct investment?
The outflow of capital benefits the local but not global economies
The inflow of capital benefits the local but not global economies
The inflow of capital benefits global and local economies
The outflow of capital benefits global and local economies
The inflow of capital benefits global and local economies
Correct! The inflow of capital to a country helps both the global and the local economies.
What is the result of the existence of multinational businesses?
Political integration among countries
Economic separation of countries
Political separation of countries
Economic integration among countries
Economic integration among countries
Correct! One of the results of the existence of multinational businesses is economic integration among countries. This works to promote economic development and trade between home and host countries of multinational businesses.
What is a potential influence of the existence of multinational corporations (MNCs) on international relations?
Improves relations between countries where the MNC operates
Creates international trade barriers
Eliminates international trade barriers
Worsens relations between countries where the MNC operates
Improves relations between countries where the MNC operates.
Correct! An MNC improves relations between countries since they need to cooperate to trade.
What is an accurate characterization of the relationships between multinational corporations (MNCs) and the host country governments in which they operate?
The relationships are mixed because MNCs cause economic strife in the host country.
The relationships are positive because MNCs provide jobs and capital to the host country.
The relationships are mixed because MNCs can cause, but also solve, problems for the host country.
The relationships are negative because MNCs take resources from the host country.
The relationships are mixed because MNCs can cause, but also solve, problems for the host country.
Correct! The relationships between an MNC and the host country can be both good and bad depending on a number of factors including economic development, resource distribution, and employment.
Which level of economic integration presents an alliance of all policies by a common organization?
Free trade area
Customs union
Common market
Political union
Political union
Correct! A political union is defined as when a single nation is formed and a mutual organization confederates all policies.
Which level of economic integration is formed when trade barriers are removed between member countries but there is no mutual policy on trading with nonmember countries?
Free trade area
Political union
Common market
Customs union
Free trade area
Correct! The free trade area allows basic economic cooperation so member countries remove barriers to trade among themselves.
Which level of economic integration permits the free movement of capital, labor and technology from member countries?
Free trade area
Political union
Common market
Customs union
Common market
Correct! The common market permits the formation of economically integrated markets between member countries, removing trade barriers and any restrictions on the movement of labor, technology, and capital.
Which economic integration stage offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers?
Common market
Political union
Free trade area
Customs union
Customs union
Correct! A customs union offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers.
Which drawback is involved when regional agreements are created?
Regions with higher economic development increase their gap over lower developed regions.
Companies experience higher overall costs.
Member countries will trade less with nonmember countries.
Countries move production to more expensive labor markets in member countries.
Member countries will trade less with nonmember countries.
Correct! When a regional agreement is made between countries, those members will trade more with each other and trade less with nonmember countries.
What is a benefit of creating a regional economic integration agreement?
Less import potential
Decreased competition
Increased national cultural identity
Improved financial growth
Improved financial growth
Correct! Trade agreements create more growth opportunities for countries to trade among themselves as barriers to trade and investment are removed.
What is an advantage of regional economic integration?
Employment shifts preserve member countries’ resources.
Continued discussions help nations gain additional political rights.
Flexibility on labor movement develops job opportunities.
Mergers and acquisitions encourage start-ups of small businesses.
Flexibility on labor movement develops job opportunities
Correct! Economic integration often removes labor movement restrictions, which help increase job opportunities.
What is a disadvantage of regional economic integration?
Labor movement restrictions narrow job opportunities.
The exclusion of external countries reduces global free trade.
Integrated agreements among a small number of countries create conflicts.
A higher number of trades lowers growth rates in less-developed countries.
The exclusion of external countries reduces global free trade.
Correct! Regional agreements may create trade barriers with nonmember countries, which lowers global free trade.
Which economic actors are suppliers of U.S. dollars?
Foreign companies purchasing a U.S. firm
Foreign firms exporting to the U.S.
Foreign tourists visiting the U.S.
Foreign investors buying bonds issued by the U.S.
Foreign firms exporting to the U.S.
Correct! These firms will earn U.S. dollars but will need their own currency to pay the workers based in their country; thus they are suppliers of U.S. dollars and demanders of their home currency.
Which economic actor benefits as the U.S. dollar weakens?
A U.S. tourist abroad
A foreign firm exporting to the U.S.
A U.S. investor abroad
A foreign investor in the U.S.
A U.S. investor abroad
Correct! A U.S. investor abroad invests money in another country by first converting U.S. dollars to a foreign currency, making the investment, then later converting+ it back to U.S. dollars. As the U.S. dollar becomes weaker, the rate of return on the investment is larger as the investor gets more U.S. dollars from converting back from the foreign currency.
Which agreement was implemented in 1994 and helped form a free-trade zone between Canada, the United States, and Mexico by decreasing tariffs and trade barriers?
CAFTA-DR
USMCA
NAFTA
MERCOSUR
NAFTA
Correct! This trade agreement was implemented in 1994 and had the described trading goals.
Which economic actor benefits as the U.S. dollar strengthens?
A U.S. investor abroad
A foreign tourist in the U.S.
A U.S. exporting firm
A foreign firm exporting to the U.S.
A foreign firm exporting to the U.S.
Correct! The firm earns U.S. dollars through export sales, then converts it back into their home currency. A stronger U.S. dollar would mean they can buy more of the home currency.
Which exchange rate regime allows a currency’s value to fluctuate according to the foreign exchange market?
Crawling pegs
Floating
Pegged
Fixed
Floating
Correct! This regime automatically adjusts to economic circumstances.
A farmers market has many vendors and consumers who all sell and buy the same produce at the same price.
Which type of market is represented?
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
Perfect competition
Correct! Since vendors can enter and exit the market freely with no barriers and the products are homogenous, it is a pure competition.
A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies.
What caused the violation of the antitrust laws?
Reduced competition
Technological innovation
Service disruptions
Increased profits
Reduced competition
Correct! Antitrust laws are enacted to protect consumer’s rights to competition in the marketplace. The sole, national company was a monopoly, and no competition occurred.
Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices.
Which entity can the United States appeal to in order to correct this apparent market manipulation?
International Monetary Fund
World Bank
World Trade Organization
European Union
World Trade Organization
Correct! The World Trade Organization is designed to judge potential market manipulations of its members. The United States has accused several countries around the world of dumping steel.
Which of these agreements or treaties was to combat increased temperatures of global climate change?
Paris
Antarctic
Versailles
Maastricht
Paris
Correct! This agreement was completed in 2016 to stop or at least slow global warming. Not all countries agreed to these goals.
Which governmental entity was created to provide regulatory authority regarding pollution by industry?
Environmental Protection Agency
Department of Commerce
Department of Agriculture
Federal Bureau of Investigation
Environmental Protection Agency
Correct! The agency was created in 1970 to monitor industry and industry’s environmental practices. The agency is not under any cabinet-level department.
Which type of duty is required to take care of the collective environment across the nation?
Shared
Individual
Customs
Assigned
Shared
Correct! Nation states and industry have a shared responsibility to take care of the collective environment of the nation. Collectively, both can accomplish more.
What makes the enforcement of United Nations Environmental Program regulations difficult?
World Food Program distributions
Pure competitive markets
Sovereign rights of nations
Peacekeeping missions of nations
Sovereign rights of markets
Correct! The sovereign rights of nations preclude the United Nations from enforcing the regulations. United Nations compliance is normally voluntary and agreements tend to be nonbinding.
A major footwear brand company is contracting the manufacturing of its products to a contractor’s manufacturing plant overseas. The footwear company has been accused of turning a blind eye to sweatshop practices at other overseas contract locations before.
How should the footwear company ensure that the contractor will comply with the standards set forth in the code of conduct that explicitly prohibit this practice?
Require that the factories be available for inspections
Require the contractor to self-report compliance on a monthly basis
Prohibit the use of worker overtime
Restrict authorization to daytime shifts
Require that the factories be available for inspections
Correct! Making the factories available for inspections and audits, sometimes unannounced, is a best practice to ensure compliance with the code of conduct.
Which action is used by companies wishing to avoid working with vendors who use sweatshops?
Establishing national child labor laws and requiring vendors to comply with them
Sending a whistleblower to the job sites to ensure the vendor practices safe working conditions
Allowing vendor practices to be flagged by nongovernmental organizations such as the National Labor Committee
Developing and imposing a company internal code of conduct for vendor labor practices
Developing and imposing a company internal code of conduct for vendor labor practices
Correct! A code of conduct for vendors is contractually imposed, and often publicly posted, to ensure the reputation of the company is protected.
What did the Worst Forms of Child Labor Convention, 1999 define?
Rights for domestic workers
Hourly wage rates
Rules of workplace of safety
The age at which a person becomes an adult
The age at which a person becomes an adult
Correct! The Worst Forms of Child Labor Convention defines a child as an individual younger than 18 years old.
Which convention protects decent working hours for a cruise ship director who travels in international waters?
Equal Remuneration Convention
Forced Labor Convention
Domestic Workers Convention, 2011
Maritime Labor Convention, 2006
The Maritime Labour Convention
Correct! The Maritime Labour Convention, sometimes called the “Seafarer’s Bill of Rights,” protects the rights of seafaring workers and is law for multiple countries. This convention protects decent working hours for a cruise ship director that travels in international waters.
Which two primary sources of law govern contracts in the United States?
The common law and U.S. Supreme Court
The UN Convention on Contracts for the International Sale of Goods and a vertical structure
The common law and the Uniform Commercial Code
The UN Convention on Contracts for the International Sale of Goods and a horizontal structure
the common law and Uniform Commercial Code
Correct! Common law comes from custom and from precedents set by other court decisions. The Uniform Commercial Code provides some a standardized laws and regulations for commercial transactions such as sales. They are the two primary sources of law that govern contracts in the United States.
Which result occurs when a legally enforceable contract between two businesses from different countries is broken?
The party who has been affected can seek damages.
The party who broke the contract cannot sell goods.
The broken contract impacts political policy making.
Resolution of the contract must be secured in 90 days.
The party who has been affected can seek damages.
Correct! When a legally enforceable contract is broken, the party who has been affected can seek damages so the business can be made whole as if the breach of contract did not occur.
How is contract law structured as it applies to global business among nations?
Tribunal
Arbitral
Vertical
Horizontal
Horizontal
Correct! A horizontal business structure means that no nation is in a legally dominant position over another.
Which condition is part of a contract between international companies that are based in different nations?
A provision against arbitration clause
A choice of law clause
A clause against unfair contract terms
A structure that is vertical in nature
A choice of law clause
Correct! A choice of law clause specifies the laws and the jurisdiction under which international disputes will be settled. International businesses operating in different countries include such clauses in their contractual agreements to clarify ahead of time how disputes will be settled.
Which intellectual property right describes a chemical company’s filing on their innovative industrial process invention?
Copyright
Patent
Trademark
Service mark
Patent
Correct! A patent is filed to protect the right to an innovative invention, which must be a manufactured product, an apparatus, chemical composition, or a manufacturing process.
Which organization aims to develop a global intellectual property infrastructure?
WRC
TRIPS
WTO
WIPO
WIPO
Correct! This stands for World Intellectual Property Organization. Its goal is to develop a global IP infrastructure, build international respect for IP, and implement global policy related to IP.
What is the agreement that the World Trade Organization has between its member nations that governs all intellectual property laws?
Alternative Dispute Resolution (ADR)
United States Trade Representative (USTR)
World Intellectual Property Organization (WIPO)
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Correct! This agreement by the WTO governs all IP laws
What does business ethics implicitly regulate?
Consumer preference
Employee behavior
External stakeholders
Consumer action
Employee behavior
Correct! Employers want employees to self-regulate so that when a stimulus appears they will take proper action in the interest of everyone involved, either directly or indirectly.
A company sells products that many have reported on social media to be culturally insensitive, and sales have decreased significantly since the negative publicity began.
How are consumers responding to the publicity?
By notifying government agencies
By considering sustainability
By focusing on supply chain
By voting with their purchases
By voting with their purchases
Correct! Consumers who do not believe the product is made in alignment with their values may not buy the product. Not buying the product is considered voting with one’s wallet.
A global buyer reviews a company’s ethical profile and the social responsibility section of its annual report. Understanding that the company’s values match the buyer’s principles, the buyer purchases the company’s products.
Which action did the buyer perform regarding the purchase of the company’s products?
The buyer practiced shareholder activism.
The buyer used organizational ethics.
The buyer practiced ethical consumerism.
The buyer used personal ethics.
The buyer practiced ethical consumerism
Correct! When a person evaluates a company’s values and then makes purchases from the company based on the person and company’s matched values, this is ethical consumerism.
A business has experienced significant internal and external events, and the owner decides to respond effectively while maintaining the rules of behavior the company has always vocalized as being appropriate.
Which component has guided this owner’s response?
Ethical standardization
Personal ethics
Ethical conundrum
Organizational ethics
Organizational ethics
Correct! Organizational ethics is how a business responds to stimuli in an ethical manner.
A coffee company received international criticism for an employee negatively responding towards a customer. The response was said to be racially motivated. The company needs to take swift action to improve how all employees in the organization are viewed by ethical consumers.
Which course of action should the company take to meet this goal?
Show instances of employees helping that population
Give the person affected company gift cards
Have employees attend sensitivity training
Fire the worker’s supervising manager
Have employees attend sensitivity training
Correct! This is a solution that addresses the entire company and does not cause harm to any employees for any mistakes.
A company that released a new vehicle marketed as being environmentally friendly is found to have cheated when testing the vehicle’s total emissions. The company would like to repair damage from the negative publicity by changing its image and catering more to ethical consumers.
Which action should the company take to reach this goal?
Market the original product strongly so ethical consumers receive the information
Retest the vehicles using its own test environment and protocols
Hire a new leader to send the message that practices have changed
Ask political supporters to modify the environmental emission regulations
Hire a new leader to send the message that practices have changed
Correct! Establishing a new image and leader can help consumers trust the company again after practices have changed.
A company is reviewing how ethical consumerism is being addressed in the organization. It is hoping to improve its awareness of this factor and how it will influence future business decisions.
How does this factor affect business decisions?
Companies that make good financial decisions will be perceived well by the public.
Companies must consider the age of the intended audience for a product.
Companies that hide their production methods can avoid negative impacts of ethical consumerism.
Companies must remember that their consumers may care about more than just the final product.
Companies must remember that their consumers may care about more than just the final product.
Correct! Nearly half of North American consumers report punishing a company by not purchasing a product if they disagree with its manufacturing or other business practices.
Which term describes the normative beliefs and practices passed from generation to generation that help define a group of people?
Cultural norms
Legal norms
Office norms
Graft norms
Cultural norms
Correct! Shared and integrated systems of beliefs and practices that are passed down through generations and characterize a cultural group are cultural norms.
An American salesperson is attempting to do business in a Middle Eastern country.
What is one of the major cultural issues the salesperson needs to understand about this part of the world?
It is more relationship-based than the United States.
It is more rules-based than the United States.
Individualistic culture is stronger in the Middle East than in the United States.
Secular culture is stronger in the Middle East than in the United States.
It is more relationship-based than the United States
Correct! Compared to United States and other Western cultures, relationships, including those in business, are more important.
A global company has warned managers that the country involved in their current business venture typically expects small payments to be made to government officials to expedite decisions and transactions. The company has encouraged managers to avoid this type of unethical practice.
Which form of activity is the company concerned about?
Oil payments
Grease payments
Unfair competition
Trade policies
Grease payments
Correct! When a business engages in making small payments to government officials to expedite activities, it is a grease payment.
