IB Chapter 1 study questions - Flashcards

question

International business is primarily carried out by individual companies T/F

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TRUE

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The globalization of markets refers to the growing independence and self-sufficiency of countries worldwide T/F

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FALSE

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International business today is predominantly the domain of large, multinational companies T/F

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FALSE

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Exporting is an entry strategy involving the sale of products or services to customers located abroad T/F

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TRUE

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A country's economic assets are also known as factors of production T/F

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TRUE

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The two primary types of international investment are portfolio investment and foreign direct investment T/F

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TRUE

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Over the last few decades, export activity by nations has grown more quickly than has domestic production T/F

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TRUE

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In the past, international trade and investment activities were mainly conducted by companies that sold services T/F

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FALSE

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Services are the fastest growing sector in international trade T/F

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TRUE

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The level of government intervention in commercial activities is similar across most countries T/F

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FALSE

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Currency risk refers to the risk posed by adverse fluctuations in exchange rates T/F

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TRUE

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For internationalizing firms, the consequences of poor business management decisions are usually more costly when mistakes occur abroad than when they occur at home T/F

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TRUE

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MNEs with extensive international operations tend to focus mainly on downstream activities such as marketing in foreign countries T/F

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FALSE

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International business is primarily the domain of large, resourceful firms T/F

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FALSE

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Exporting is the most common foreign market entry strategy of the SME T/F

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TRUE

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For manufacturing companies, on a per-unit-of-output basis, high volumes of production are correlated with lower per-unit cost T/F

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TRUE

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Since the 1980s, emerging market countries have experienced substantial market liberalization and privatization T/F

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TRUE

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Firms that do not export tend to create jobs more quickly than do exporting firms T/F

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FALSE

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International business is defined as the performance of ________ activities by firms across national borders

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trade and investment

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International business is also known as which of the following

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cross border business

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Which of the following best characterizes the development of international business?

answer

It has existed in some form for centuries.

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Globalization has helped increase all of the following except ________. A) the variety of capital flows across national borders B) the economic isolation of developing countries C) the rate at which products are diffused worldwide D) the volume of cross-border transactions

answer

B) the economic isolation of developing countries

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Which of the following is another term for importing? A) capital investment B) supply side development C) global sourcing D) unilateral procurement

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C) global sourcing

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Which of the following is subject to importing and exporting? A) both finished products and intermediate goods B) finished products but not intermediate goods C) intermediate goods but not raw materials D) raw materials and components, but not finished products

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A) both finished products and intermediate goods

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________ refers to the transfer of assets to another country or the acquisition of assets in that country. A) International investment B) International trade C) Importing D) Exporting

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A) International investment

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Each of the following represents a factor of production except ________. A) manufacturing infrastructure B) technology C) government regulations D) managerial talent

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C) government regulations

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Which of the following would not be considered an example of foreign direct investment (FDI)? A) cross-border purchase of a textile plant B) cross-border purchase of stocks C) purchase of capital assets of a foreign company D) purchase of foreign land for business operations

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B) cross-border purchase of stocks

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________ is the total value of products and services produced in a country over the course of a year. A) GDP B) CAD C) FDI D) PPP

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A) GDP

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Which of the following best explains why export growth has outpaced the growth of domestic production during the last few decades? A) Both world exports and domestic production have grown significantly over the past 30 years. B) The cost to import products is generally higher than the cost to produce domestic products. C) Growth in gross domestic product in most countries has steadily increased since 1970. D) Advanced economies now source many of their consumable products from low-cost manufacturing nations.

answer

D) Advanced economies now source many of their consumable products from low-cost manufacturing nations.

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Each of the following has contributed to the rapid integration of world economies except ________. A) the growth of emerging market countries B) the increase in trade barriers C) advances in information technology D) the liberalization of markets

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B) the increase in trade barriers

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Which of the following types of risk is also known as political risk? A) currency risk B) cross-cultural risk C) commercial risk D) country risk

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D) country risk

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Which of the following is not an example of a cross-cultural risk factor? A) negotiation patterns B) decision-making styles C) costs of production D) ethical practices

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C) costs of production

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Fluctuating exchange rates are an example of which of the following? A) country risk B) political risk C) currency risk D) cross-cultural risk

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C) currency risk

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Businesses that directly initiate and implement international business activity are known as ________. A) focal firms B) fiscal enterprises C) fiduciary trusts D) business affiliates

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A) focal firms

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The largest multinational firms are found in each of the following industries except ________. A) retailing B) health care C) automobiles D) oil and gas

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B) health care

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Which of the following countries hosts the greatest number of MNEs? A) Germany B) Japan C) Netherlands D) United States

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D) United States

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Each of the following types of organizations is active in international business except ________. A) MNE B) SME C) RND D) NGO

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C) RND

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Which of the following is an example of a new global challenger? A) a firm from Russia that is rapidly growing in the communications industry B) a U.S. non-profit that focuses on fundraising for children's health care C) an MNE from France with large-scale operations across the globe D) an SME from Canada that began international operations early in its development

answer

A) a firm from Russia that is rapidly growing in the communications industry

question

Calexor is a telecommunications SME that has been highly successful despite its limited resources. Stakeholders attribute Calexor's success to its ability to serve niche markets. Which of the following, if true, would most strongly support the claim that Calexor's growth can be attributed to niche market sales? A) Calexor developed an interest in serving niche markets through an R & D experiment. B) Most of Calexor's sales are in specialty markets that larger competitors do not serve. C) Calexor's sales in mainstream telecommunications markets have always been strong. D) Calexor's growth soared after it entered its first overseas market and has continued to climb.

answer

B) Most of Calexor's sales are in specialty markets that larger competitors do not serve.

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The process of targeting and serving markets outside the home country is known as ________. A) market diversification B) competition intensity C) reactive internationalization D) trade protectionism

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A) market diversification

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A U.S. shoe manufacturer is considering internationalizing to promote growth by diversifying its markets. Which of the following, if true, would most strongly support the claim that moving to France would help the company grow through market diversification? A) Doing business in France would likely expose the company to new ideas for product innovation. B) French women tend to purchase shoes more frequently than do French men. C) French consumers represent a sizeable market that could significantly boost the company's sales. D) Many of the company's U.S. customers have moved overseas to Europe.

answer

C) French consumers represent a sizeable market that could significantly boost the company's sales.

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Which of the following contributes least to increasing a company's profit margins? A) increasing demand B) increasing global competition C) high-growth markets D) underserved economies

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B) increasing global competition

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Which of the following best explains why the Japanese firm Canon relocated much of its production to China? A) low-cost financial capital B) low-cost labor C) access to raw materials D) lack of skilled managerial talent in home country

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B) low-cost labor

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A restaurant chain based in Hong Kong plans to open a series of restaurants in the United States to gain access to low-cost capital for its expansion efforts. Which of the following, if true, would most strongly strongly support the claim that establishing U.S. operations would not be the best choice for providing the chain access to the low-cost capital it seeks? A) Relocation to the U.S. would involve substantial cross-cultural risk. B) U.S. funding sources are more expensive than capital sources in many other promising locations. C) The company has attracted significant interest from American venture capitalists. D) U.S. funding offered in the hospitality sector tends to be more expensive than funding for health care firms.

answer

B) U.S. funding sources are more expensive than capital sources in many other promising locations.

question

Increases in international trade and investment are accompanied by increases in all of the following except ________. A) literacy rates B) individual affluence C) cross-border conflict D) national prosperity

answer

C) cross-border conflict

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Which of the following, if true, would most strongly support the claim that national prosperity is increased by participation in international business? A) Countries that participate in international trade have higher GDPs than non-participating countries. B) Individuals in advanced economies tend to set purchasing trends for consumers worldwide. C) For most countries, levels of international trade have increased significantly in recent decades. D) National literacy levels are strongly correlated with a country's degree of political freedom.

answer

A) Countries that participate in international trade have higher GDPs than non-participating countries.

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At the meeting, Dan explains to the attendees that Freehold direct investment projects differ from international trade in that ________. A) the firm itself is crossing international borders to purchase foreign assets B) the firm is restricting its investments to stocks and does not purchase mutual funds C) the firm has chosen to focus strictly on the technology sector D) the firm is engaging in the transfer of products across national borders

answer

A) the firm itself is crossing international borders to purchase foreign assets

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Dan discusses an investment opportunity that involves the purchase of selected securities from the Chinese stock market. This opportunity represents which type of international investment? A) indirect production B) international portfolio C) foreign direct D) domestic securities

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B) international portfolio

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Bethany presents another opportunity that involves the purchase of a manufacturing plant in South Korea. She explains that this type of strategy will involve ________ ownership on the part of the firm. A) indirect B) passive C) short-term D) active

answer

D) active

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Phillip Hardy, one of the potential investors, expresses the desire to purchase only those types of assets in which he can maintain a relatively short-term interest. Which of the following investment opportunities would be most suited for Mr. Hardy? A) a venture that gives investors ownership of the equipment used by multiple South African mining companies B) an initiative to purchase the technology assets of an Indian consulting firm C) the Freehold Eastern Growth Fund, which purchases Eastern European growth stocks D) the Freehold World Climb Project, which maintains partial ownership of an Australian hiking equipment production plant

answer

C) the Freehold Eastern Growth Fund, which purchases Eastern European growth stocks

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One of the attendees represents a leading nation in the international merchandise trade. This attendee is most likely from which of the following countries? A) New Zealand B) Germany C) Kenya D) Saudi Arabia

answer

B) Germany

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One of the attendees represents a leading nation in the international services trade. This attendee is most likely from which of the following countries? A) Brazil B) Greece C) Spain D) South Africa

answer

C) Spain

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One summit attendee pointed out that the total value of her country's products trade typically accounted for more than 100 percent of her nation's GDP. This attendee most likely represents ________. A) Japan B) United Kingdom C) France D) Netherlands

answer

D) Netherlands

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Philip Baxter reported on the risks associated with establishing the plant in Country A. The most significant risk, in his view, was posed by the government's complex bureaucratic structure. Philip reported the likelihood of significant administrative delays in opening the plant. The risk identified by Philip is an example of which of the following? A) country risk B) commercial risk C) currency risk D) cross-cultural risk

answer

A) country risk

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LeShaun Golding researched the risks linked to establishing the plant in Country B. He cited government intervention, lack of local managerial talent, and unethical business practices as the most prominent risks for this location. LeShaun noted all of the following types of risks except ________. A) currency risk B) political risk C) country risk D) cross-cultural risk

answer

A) currency risk

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Rosa Suarez reported on her analysis of cross-cultural risks involved with establishing the plant in Country C. Each of the following was most likely discussed in her report except ________. A) language barriers B) lifestyle differences C) religious beliefs D) the level of national debt

answer

D) the level of national debt

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One shareholder questioned the CEO's rationale for beginning an exploratory effort to establish a new manufacturing plant in India. The CEO responded by explaining that India was an untapped market with a high demand for products such as those produced by Sterling. His rationale represented an example of which of the following reasons for international expansion? A) investing in a potentially rewarding relationship with a foreign partner B) gaining access to lower-cost or better-value factors of production C) seeking opportunities for growth through market diversification D) better serving key customers that have relocated abroad

answer

C) seeking opportunities for growth through market diversification

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The CEO introduced another overseas effort by noting that it represented an attempt to confront an international competitor. The CEO was most likely referring to which of the following efforts? A) a new plant established in Vietnam to benefit from low-cost labor B) a sales outlet established in Indonesia, where Sterling could charge more for its products C) a marketing and advertising partnership established with a successful French car retailer D) a distribution center established in London to preempt the growth of a British car manufacturer

answer

D) a distribution center established in London to preempt the growth of a British car manufacturer

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One shareholder wanted clarification about a research effort that investigated the possibility of setting up a plant in China. The CEO explained that serving China's rapidly growing middle class population would enable Sterling to increase the size of its customer base dramatically. In China, the CEO was most likely interested in ________. A) avoiding government intervention B) challenging Chinese competitors C) gaining access to innovative ideas D) developing economies of scale

answer

D) developing economies of scale

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The CEO justified one of the company's moves by pointing out that it not only enabled Sterling to benefit from global sourcing advantages, but it also provided access to new ideas about business methods. The shareholders viewed this justification positively most likely because they understood which of the following? A) Sourcing advantages are usually more important to growth than obtaining new business ideas. B) International firms may have more than one motive for international expansion. C) The most compelling motive for international expansion is to gain new ideas from other markets. D) This expansion strategy would enable the company to better manage cross-cultural risk.

answer

B) International firms may have more than one motive for international expansion.

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In discussing the expansion effort to India, the CEO reminded shareholders of Black and Decker's move to partner with the Indian auto retailer Bajaj. The CEO was most likely attempting to justify which of the following? A) a joint venture that would position Sterling for long-term sales in India B) a marketing effort targeted to American citizens living in India C) a price drop to ward off competition from an emerging Indian auto retailer D) a new manufacturing protocol based on an efficient Indian production method

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A) a joint venture that would position Sterling for long-term sales in India

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Nationalization refers to the gradual integration and growing interdependence of national economies. T/F

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False

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The initial phase of globalization was triggered by the introduction of the railroads and ocean transport T/F

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True

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The Great Depression marked the beginning of the second phase of globalization. T/F

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False

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The third phase of globalization was triggered by the development of personal computers, the Internet, and Web browsers. T/F

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False

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Firms expand abroad solely as a reaction to market globalization. T/F

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False

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Firms often internationalize proactively, in order to pursue new markets, find lower-cost inputs, or obtain other advantages. T/F

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True

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Firms that pursue internationalization as a strategic move tend to approach global competition more aggressively than do firms that internationalize on a purely reactive basis. T/F

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True

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Offshoring and the flight of jobs are prime drivers of market globalization. T/F

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False

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Globalization of production activities and services is a dimension of market globalization. T/F

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True

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Governments have facilitated economic integration by lowering barriers to international trade and investment, harmonizing their monetary and fiscal policies within regional economic integration blocs. T/F

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True

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In a "common market," barriers to the cross-border flow of factors of production are removed. T/F

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True

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The globalization of capital refers to the aggregate activities of firms that gives rise to economic integration T/F

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False

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Converging tastes of consumers worldwide promote traditional lifestyles and values in individual countries T/F

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False

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Companies strive to drive down prices through economies of scale, by standardizing what they sell. T/F

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True

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Falling trade barriers are facilitated by the WTO. T/F

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True

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The end of the Cold War in 1989 hindered the forces of market liberalization in Eastern Europe T/F

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False

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Industrialization implies that emerging markets are increasing their dependence on low-cost labor. T/F

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False

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Technological advances have helped make internationalization affordable for all sizes of firms T/F

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True

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The Internet has increased the cost of transmitting voices, data, and images. T/F

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False

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Mobile phones are the most transformative technology in developing economies. T/F

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True

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Today, the cost of transportation, as a proportion of the value of products shipped internationally, has increased dramatically. T/F

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False

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In international economics, codetermination refers to the tendency for a financial or monetary crisis in one country to spread rapidly to other countries, due to integrated national economies. T/F

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False

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Large multinationals are not constrained by market forces because they can exert considerable influence on governments through lobbying. T/F

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False

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To minimize globalization's harm and reap its benefits, governments should strive for nationalized economic regimes. T/F

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False

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The first wave of offshoring began in the 1990s with the exodus of service-sector jobs in credit card processing, software code writing, accounting, health care, and banking services. T/F

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False

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Countries that liberalize international trade and investment enjoy faster per-capita economic growth. T/F

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True

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Environmental destruction diminishes as economies develop, at least in the long run. T/F

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True

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"McDonaldization" or "Coca-Colonization" of the world refers to the idea that globalization can alter people's norms, values, and behaviors, which may tend to homogenize over time. T/F

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True

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Globalization results in more demanding buyers who shop for the best deals worldwide. T/F

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True

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Market globalization compels firms to organize their sourcing, manufacturing, marketing, and other value-adding activities on a strictly local scale. T/F

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False

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Which of the following is characteristic of globalization of markets? A) lack of skilled labor B) conservatism C) declining trade barriers D) diminishing gap between the rich and the poor

answer

C) declining trade barriers

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The first phase of globalization was characterized by the ________. A) rise of steel production B) rise of SMEs C) dominance of MNEs in the agricultural industry D) growth of railroads

answer

D) growth of railroads

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The ________ phase of globalization began around 1900 and was associated with the rise of electricity and steel production. A) first B) second C) third D) fourth

answer

B) second

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The third phase of globalization was triggered by ________. A) the end of World War II B) the invention of electricity C) the end of World War I D) the Great Depression

answer

A) the end of World War II

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Which of the following reflects the major contribution of GATT to globalization? A) It instituted strict controls on international currencies. B) It simplified patent and copyright laws. C) It reduced barriers to international trade and investment. D) It eliminated the divide between the rich and the poor.

answer

C) It reduced barriers to international trade and investment.

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The fourth phase of globalization is characterized by ________. A) rise of railroads and ocean transport B) reduction of barriers to trade by Western industrialized countries C) the initiation of the Marshall Plan to reconstruct Europe D) enormous growth of cross-border trade and investment

answer

D) enormous growth of cross-border trade and investment

question

At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. The representative from Business A is most likely from ________. A) China B) United Kingdom C) Mexico D) Brazil

answer

B) United Kingdom

question

At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. The representative from Business B is most likely from ________. A) Panama B) Hungary C) Uganda D) Japan

answer

D) Japan

question

At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country. The representative from Business C is most likely from ________. A) Italy B) Brazil C) the United States D) France

answer

B) Brazil

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Over time, the GATT evolved into the ________. A) World Bank B) International Monetary Fund C) World Trade Organization D) World Intellectual Property Organization

answer

C) World Trade Organization

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Early multinationals from the third phase of globalization originated in ________. A) Japan B) China C) India D) Brazil

answer

A) Japan

question

The fourth phase of globalization ________. A) is characterized by the rise of electricity and steel production B) is characterized by the rise of MNEs from Japan C) witnessed the Bretton Woods Conference of twenty-three nations in 1947 that led to the General Agreement on Tariffs and Trade D) facilitated the globalization of the service sector in such areas as banking and retailing

answer

D) facilitated the globalization of the service sector in such areas as banking and retailing

question

As market globalization intensifies, ________. A) the gap between the rich and the poor shrinks rapidly B) the distance between consumers worldwide expands C) individual firms respond to the challenges and new advantages that it brings D) firms internationalize solely as a reaction to it

answer

C) individual firms respond to the challenges and new advantages that it brings

question

Which of the following is a driver of globalization? A) greater emphasis on proactive internationalization B) internationalization of firm's value chain C) integration of world financial markets D) globalization of services

answer

C) integration of world financial markets

question

) Which of the following is a societal consequence of market globalization? A) greater emphasis on proactive internationalization B) internationalization of firm's value chain C) new risks and instant rivalry from foreign competitors D) offshoring and the flight of jobs

answer

D) offshoring and the flight of jobs

question

Firms that are more successful at global competition display each of the following qualities EXCEPT ________. A) identifying foreign market opportunities aggressively B) approaching internationalization from a reactive standpoint C) actively pursuing partnerships with foreign firms D) focusing intensively on building organizational capacities

answer

B) approaching internationalization from a reactive standpoint

question

As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. 47) To which of the following drivers of market globalization is Markus most likely to attribute his company's expansion to Eastern Europe? A) advances in technology B) integration of world financial markets C) market liberalization D) industrialization

answer

C) market liberalization

question

In terms of international business, market globalization can be viewed as a ________. A) consequence of a strong emphasis on traditional values worldwide B) consequence of the loss of national sovereignty C) driver and consequence of firm-level internationalization D) prime cause of rising diseconomies of scale in emerging economies

answer

C) driver and consequence of firm-level internationalization

question

A value chain is ________. A) the sequence of administrative policies implemented to promote economic integration by a government B) the process of relocating manufacturing and production to valuable and cost-effective locations abroad C) the process of integrating national economies during a financial crisis D) the sequence of value-adding activities performed by a firm in the course of developing, producing, marketing, and servicing a product

answer

D) the sequence of value-adding activities performed by a firm in the course of developing, producing, marketing, and servicing a product

question

Regional economic integration blocs ________. A) reduce trade and investment barriers B) reduce private investments C) adopt a hostile stance toward the private sector D) hinder the cross-border flow of factors of production

answer

A) reduce trade and investment barriers

question

Which of the following is an example of a supranational institution? A) the World Intellectual Property Organization B) the UNICEF C) the Red Cross D) the World Trade Organization

answer

D) the World Trade Organization

question

Governments have facilitated economic integration by ________. A) increasing barriers to international trade and investment B) developing supranational institutions to further reduce trade barriers C) adopting different monetary and fiscal policies within the same regional economic integration blocs D) standardizing consumer lifestyles and preferences

answer

B) developing supranational institutions to further reduce trade barriers

question

The free movement of capital around the world is also known as ________. A) bond-based debt financing B) contagion C) the globalization of capital D) common market arrangement

answer

C) the globalization of capital

question

________ refers to the sequence of value-adding activities performed by the firm in the course of developing, producing, marketing, and servicing a product. A) A value chain B) A supply chain C) Value gap D) Value migration

answer

A) A value chain

question

Companies strive to drive down prices ________. A) by centralizing manufacturing and procurement to a single source B) by standardizing what they sell C) by thwarting the growth of supranational institutions D) by discouraging competition

answer

B) by standardizing what they sell

question

Convergence of consumer preferences has led to an enhanced emphasis on standardization which implies that ________. A) the consistently rising prices of consumer goods have led to a demand vacuum in the market B) the distance between consumers worldwide has increased with the advent of technology C) the raw materials, parts, and components sourced by professional buyers are very similar in design and structure D) the globalization of services has adversely affected the quality of service worldwide

answer

C) the raw materials, parts, and components sourced by professional buyers are very similar in design and structure

question

Reduction in trade barriers is associated with the emergence of ________. A) fragmentary monetary and fiscal policies across the borders B) regional economic integration blocs C) widespread violation of intellectual property rights law D) violation of GATT provisions

answer

B) regional economic integration blocs

question

As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. 58) In describing the main driver behind Pax's expansion to China, Rashid is most likely to emphasize ________. A) high rate of employee attrition in China B) advances in technology C) reduction of barriers to trade D) integration of world financial markets

answer

C) reduction of barriers to trade

question

As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia. Which of the following drivers of market globalization is Lavonne's research most likely to recognize as the factor responsible for the company's expansion to Japan? A) integration of world financial markets B) the highly conservative nature of the Japanese economy C) the rise of monopoly markets in Japan D) reduction of barriers to investment

answer

A) integration of world financial markets

question

________ marked the end of the 50-year Cold War and smoothed the integration of former command economies into the global economy. A) The end of the World War II B) The Bolshevik Revolution in Russia C) China's free-market reforms D) China's move to join the WTO

answer

C) China's free-market reforms

question

Financial market integration makes it possible for internationally active firms to ________. A) nationalize manufacturing industries B) minimize offshoring C) increase tariffs on the import of automobiles and industrial machinery D) engage in foreign currency transactions

answer

D) engage in foreign currency transactions

question

The globalization of finance ________. A) enables companies to minimize offshoring B) contributes to firms' abilities to develop and operate world-scale production and marketing C) discourages innovation D) discourages free international exchange of goods and services

answer

B) contributes to firms' abilities to develop and operate world-scale production and marketing

question

Which of the following statements is true of technological advances? A) It provides a means for globalization to happen. B) It discourages internationalization. C) It inhibits the growth of new products and services. D) It helps consolidate traditional values among consumers worldwide.

answer

A) It provides a means for globalization to happen.

question

Technological leapfrogging is defined as ________. A) adopting new technology late in the hype cycle B) adopting new technology as soon as it is released C) bypassing certain stages of technology to come up with a radical innovation when upgrading to new products D) boosting demand artificially by postponing the sale of new technology in the market

answer

C) bypassing certain stages of technology to come up with a radical innovation when upgrading to new products

question

The science and process of creating and using information resources is known as ________. A) information design B) information technology C) psychographics D) demographics

answer

B) information technology

question

Which of the following benefits of IT is specific to smaller firms? A) It mitigates organizational anarchy. B) It creates competitive advantages by encouraging organizational learning. C) It aids in the consolidation of market monopolies. D) It allows firms to design and produce customized products they can target to narrow, cross-national market niches.

answer

D) It allows firms to design and produce customized products they can target to narrow, cross-national market niches.

question

________ are the most transformative technology in developing economies. A) Mobile phones B) Televisions C) Intranets D) E-mails

answer

A) Mobile phones

question

Technological advances have contributed to manufacturing by ________. A) promoting traditional lifestyles and values B) reducing cross-border flow of factors of production C) promoting nationalization D) reducing production costs

answer

D) reducing production costs

question

Stella manages the production team at Camden Inc., a manufacturer of heavy industry machinery in the United States. She needs to decide if her firm should export finished products or manufacture abroad. Which of the following would most likely help her evaluate the best alternative in this instance? A) What is the gross national income of the United States? B) What are the costs of transporting raw materials, components, and finished products? C) Is employee empowerment culturally favored in the United States? D) What is the average annual rate of employee turnover in the manufacturing industry?

answer

B) What are the costs of transporting raw materials, components, and finished products?

question

________ refers to the tendency of a financial or monetary crisis in one country to spread rapidly to other countries, due to the ongoing integration of national economies. A) Contagion B) Nationalization C) Internationalization D) Codetermination

answer

A) Contagion

question

The ability of a nation to govern its own affairs is known as ________. A) sovereignty B) liberalization C) interdependence D) homogenization

answer

A) sovereignty

question

The relocation of manufacturing and other value-chain activities to cost-effective locations abroad is known as ________. A) insourcing B) cultural imperialism C) contagion D) offshoring

answer

D) offshoring

question

Which of the following is an example of offshoring? A) Fahad, a resident of the UAE can share his views—data and information—about the country's construction industry with his friends in the U.S. B) The IT support services for customers of Mayfair Inc., a U.S. based consumer electronics manufacturer, are based in India. C) Treat Corp. is a food and beverage manufacturer based in Texas. It decided to move from Houston to Fort Worth in Texas to cut production costs. D) Lin, a Chinese citizen, decides to move to the U.K. after her application for scholarship is accepted by a leading university in London.

answer

B) The IT support services for customers of Mayfair Inc., a U.S. based consumer electronics manufacturer, are based in India.

question

An underground economy ________. A) refers to the informal economic sector B) refers to the formal economic sector C) is characterized by dominantly legal transactions D) is regulated and monitored by public authorities

answer

A) refers to the informal economic sector

question

While a degree of cultural imperialism may be at work, it is offset by the countertrend of ________. A) offshoring B) McDonaldization C) privatization D) local nationalism

answer

D) local nationalism

question

In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures. Rina Taylor is assigned to counter Juan's position. 76) Which of the following is Rina most likely to cite as a counter example to Juan's argument regarding the influence of MNEs on national sovereignty? A) the dominating influence of market forces on the global economy B) technological advances in computer-aided design of products C) the political influence of large firms such as Walmart D) the actual GDPs of underdeveloped economies

answer

A) the dominating influence of market forces on the global economy

question

Which of the following most likely supports Rina's argument over Juan's concerning wages and working conditions in developing countries? A) Most African countries today still suffer from low or negative GDP growth. B) Vietnam has experienced a five-fold increase in wages as a result of the growth of the footwear industry there. C) The move of Electrolux to Mexico cost Michigan 2,700 jobs. D) Minimum wages should be established at set levels, regardless of the impact on the number of jobs.

answer

B) Vietnam has experienced a five-fold increase in wages as a result of the growth of the footwear industry there.

question

Rina is most likely to counter Juan's claim regarding environmental effects by pointing out which of the following? A) The intensity of environmental pollution is far greater in emerging economies than in undeveloped ones. B) China's landscape was permanently altered by the construction of the Three Gorges Dam. C) Environmental destruction tends to diminish in the long run, as economies develop. D) Attempts at foreign cultural imperialism are often blocked by national governments.

answer

C) Environmental destruction tends to diminish in the long run, as economies develop.

question

Which of the following statements most likely to counters Juan's argument concerning the homogenization of national cultures? A) As globalization standardizes superficial aspects of life across national cultures, people resist these forces by insisting on their national identity and taking steps to protect it. B) Foreign values tend to shift not just superficial aspects of culture, but deeply held beliefs as well. C) Material goods such as cell phones and computers are found in most homes throughout the world. D) In most industries, domestic operation alone cannot sustain competitive business growth.

answer

A) As globalization standardizes superficial aspects of life across national cultures, people resist these forces by insisting on their national identity and taking steps to protect it.

question

The most direct implication of market globalization is on the firm's ________. A) value chain B) supply chain C) internal stakeholders D) top management

answer

A) value chain

question

Which of the following statements is true about value chain and international business? A) Exporting firms perform most of the downstream value chain activities in the home market. B) Exporting firms perform most of the upstream value chain activities in the home market. C) Exporting firms perform most of the upstream value chain activities abroad. D) Exporting firms perform most of the research and product development and production abroad.

answer

B) Exporting firms perform most of the upstream value chain activities in the home market.

question

In a typical value chain, the firm ________. A) rarely conducts research and development B) performs most upstream value-chain activities abroad, when exporting C) performs marketing activities such as pricing, promotion, and selling D) performs most downstream activities in the home market, when exporting

answer

C) performs marketing activities such as pricing, promotion, and selling

question

Which of the following statements is true about the firm-level consequences of market globalization? A) The globalization of markets has narrowed down new business opportunities for internationalizing firms. B) Globalization drives firms to relocate key value-adding activities to the most advantageous locations around the world. C) A firm's value chain is not subject to internationalization. D) Through offshoring, a firm relocates a major value-chain activity by establishing a factory or subsidiary in the home market.

answer

B) Globalization drives firms to relocate key value-adding activities to the most advantageous locations around the world.

question

Which of the following stages comes before procurement in a firm's value chain? A) research & development B) marketing C) manufacturing D) distribution

answer

A) research & development

question

Which of the following represents the final stage in a firm's value chain? A) marketing B) procurement C) research & development D) sales and service

answer

D) sales and service

question

Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research which shows that German health care companies have a strong demand for the type of software that Acme offers. 86) Which of the following activities in Acme's value chain would be internationalized if Acme decides to establish a development contract with one of the Indian software firms? A) sales B) distribution C) marketing D) procurement

answer

D) procurement

question

Which of the following would be most important for the consulting group to consider when deciding whether to recommend that Acme internationalize its sales efforts to Germany? A) Will Acme save money on advertising by targeting small rather than large companies? B) How intense is the competition from German companies offering similar products? C) What type of training is received by programmers in software firms abroad? D) Is employee empowerment culturally favored in Germany?

answer

B) How intense is the competition from German companies offering similar products?

question

Which of the following would be most important for Acme to determine before outsourcing its programming services to India? A) What benefits have Indian companies gained historically from internationalizing their value-chain activities? B) Do Indian businesses outsource value-chain activities to Europe? C) Would the lower cost of outsourcing allow Acme to sustain a competitive advantage in its business operations? D) Is either of the Indian health care companies interested in moving their operations abroad?

answer

C) Would the lower cost of outsourcing allow Acme to sustain a competitive advantage in its business operations?

question

1) The broadening set of interdependent relationships among people from different parts of the world is known as ________. A) globalization B) offshoring C) franchising D) outsourcing

answer

A) globalization

question

Which of the following best defines international business? A) It includes all economic flows between two or more countries. B) It includes all private economic flows between two or more countries. C) It includes all business transactions involving two or more countries. D) It includes all business transactions in countries other than your home country.

answer

C) It includes all business transactions involving two or more countries.

question

Which of the following is NOT a likely reason to study international business? A) Global events affect almost all companies. B) Differences among countries in physical, social, and competitive conditions may cause companies to alter their operating methods from country to country. C) Business conducted outside the confines of any one country is inexplicably on the decline. D) Firms may be better able to obtain better or less expensive resources by operating internationally.

answer

C) Business conducted outside the confines of any one country is inexplicably on the decline.

question

) In terms of international business, it is most accurate to say that ________. A) there is a universal "best way" to conduct business B) global competition affects large companies but not small ones C) most firms depend either on foreign markets and supplies or compete against companies that do D) government regulation of international business has little effect on a company's profits

answer

C) most firms depend either on foreign markets and supplies or compete against companies that do

question

) Devon, an accounts manager at a large electronics firm, does not have any direct international responsibilities. However, Devon would most likely benefit from studying international business issues so that he can ________. A) conduct better job interviews B) better understand how foreign operations affect the company's competitive position C) supervise and evaluate subordinates who have global assignments D) understand the legalities of importing and exporting products overseas

answer

B) better understand how foreign operations affect the company's competitive position

question

) The shifting of national borders has most likely created which of the following situations for international business? A) It has left rural residents more isolated from technology. B) It has complicated the understanding of behavioral factors affecting business. C) It has increased physical barriers to exporting. D) It has slowed communications between a company's headquarters and foreign operations.

answer

C) It has increased physical barriers to exporting.

question

Which of the following is an indication of the increased globalization of business since the end of World War II? A) Foreign trade has largely replaced foreign ownership as a means of conducting international business. B) World trade has grown more rapidly than world production. C) Globally, consumers now depend on foreign output for more than half their consumption. D) Countries have increased their import restrictions to counter the rising tide of imports

answer

B) World trade has grown more rapidly than world production.

question

Most of the world's goods and services are sold ________. A) in international markets B) in the countries where they are produced C) through exports to small countries D) through exports to large countries

answer

B) in the countries where they are produced

question

According to the A.T. Kearny/Foreign Policy Globalization Index, countries ________. A) tend to be ranked similarly on all four dimensions B) are more globalized on the political dimension than on personal contact C) that are large in land mass and population are less globalized than small countries D) sometimes rank high on one dimension and low on another

answer

D) sometimes rank high on one dimension and low on another

question

Which of the following has NOT been a major force increasing globalization in recent decades? A) liberalization of cross-border trade B) increase in and expansion of technology C) growing pressure from consumers D) decreasing prices of natural resources.

answer

D) decreasing prices of natural resources.

question

Institutional development of services by business and government has aided the expansion of international business by ________. A) providing a universally agreed upon language for conducting international transactions B) removing immigration restrictions so that global firms can move personnel easily C) developing means to ease the flow of goods among countries D) spurring competition among domestic producers

answer

C) developing means to ease the flow of goods among countries

question

12) Which of the following has MOST influenced consumers to demand access to foreign-made products? A) Declining global affluence has caused consumers to seek out lower-priced products from abroad. B) Consumers have become more efficient in using media and technologies to compare prices worldwide. C) Fearing that their governments will enact restrictive policies on imports, consumers are stocking up on foreign products before restrictions are put in place. D) Expectations of rising prices of foreign products have caused consumers to seek foreign products before their prices become prohibitive.

answer

B) Consumers have become more efficient in using media and technologies to compare prices worldwide.

question

13) Which of the following best explains why international business has grown rapidly in the past few decades? A) the end of the political schism between the Communist and non-Communist blocs B) greater income equality in most countries C) growing concern about climate change D) increased concerns about terrorism

answer

A) the end of the political schism between the Communist and non-Communist blocs

question

Advanced communication systems have contributed to growth in international business by ________. A) enabling better oversight of global operations B) reducing the effects of global competition C) decreasing the cost of cargo transportation D) reducing export regulations

answer

A) enabling better oversight of global operations

question

Imported flowers are now a stronger competitor to U.S. grown flowers in the U.S. market. Which of the following is likely the MOST important factor for this increase in imports? A) more effective production techniques B) advances in communication systems C) advances in transportation D) cross-national cooperation

answer

C) advances in transportation

question

Because consumers want a greater variety of goods and services at lower prices, many governments have ________. A) reduced their restrictions on the international movement of goods and services B) acted to tax most imports at a lower rate than domestic products C) sought to eliminate reciprocal advantages negotiated through international organizations and treaties D) increased their participation in multinational problem-solving efforts

answer

A) reduced their restrictions on the international movement of goods and services

question

17) Which of the following best explains recent governmental relaxation of restrictions on cross-border trade or resource movements? A) Most countries face shortages of workers, so they seek immigrants who can help them produce more. B) Governments believe that this will decrease the need to make their own companies more innovative. C) Consumers increasingly want to buy goods and services produced in their own countries, making restrictions less necessary. D) Governments believe that domestic producers will become more efficient as a result of foreign competition.

answer

D) Governments believe that domestic producers will become more efficient as a result of foreign competition.

question

18) A company starting out with a global focus, usually because of the international experience of its founders, is called a ________. A) multinational enterprise B) transnational company C) strategically allied company D) born-global company

answer

D) born-global company

question

In a strategy known as ________, many new companies locate themselves near competitors and suppliers. A) offshoring B) franchising C) clustering D) exporting

answer

C) clustering

question

Assume an enterprise is considering establishment of a foreign production facility. Which of the following best supports this decision? A) Its foreign competitors have higher production costs than it has. B) Its main competitor successfully opened a foreign plant. C) Its suppliers follow an agglomeration strategy. D) None of its competitors have foreign production facilities.

answer

B) Its main competitor successfully opened a foreign plant.

question

When a company successfully responds to foreign production and market opportunities, ________. A) other companies will likely emulate its successful practices B) it likely has a long-term advantage over competitors C) it will downsize its domestic operations D) its home government likely raises taxes on the company

answer

A) other companies will likely emulate its successful practices

question

Which of the following is NOT one of the three main reasons affecting international business for governments to cooperate with each other? A) to attack problems jointly that one country acting alone cannot solve B) to deal with issues that lie outside the territory of any nation C) to gain reciprocal advantages D) to establish a common language

answer

D) to establish a common language

question

Governments have signed treaties to protect foreign-owned property rights, such as investments and patents. A primary reason for doing so is to ________. A) gain reciprocal advantages B) reduce the domestic effects of other countries' economic policies C) deal with areas of concern outside the territory of any one country D) reduce national conflicts leading to violent political demonstrations

answer

A) gain reciprocal advantages

question

All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT ________. A) noncoastal areas of the oceans B) the Panama and Suez Canals C) outer space D) Antarctica

answer

B) the Panama and Suez Canals

question

What is the most likely reason that governments cooperate with each other through treaties, agreements, and consultations? A) to gain an advantageous division of labor B) to be in compliance with United Nations' requirements C) to attack problems jointly that one country acting alone cannot solve D) to assure that all countries get an equitable share of taxes from multinational enterprises

answer

C) to attack problems jointly that one country acting alone cannot solve

question

Which of the following is the LEAST likely reason that small countries worry about overdependence caused by globalization? A) A large country on whom they depend may pressure them on political matters. B) A large international firm may dictate its terms of operations in a small country. C) A large company may exploit legal loopholes to avoid tax payments. D) A large country may substantially increase its demand for the small country's production.

answer

D) A large country may substantially increase its demand for the small country's production.

question

Which of the following statements would most likely be made by a supporter of globalization? A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems. B) Economic growth created by globalization is largely in services, which involves the use of few nonrenewable resources. C) Global competition discourages resource-saving technologies, which are costly. D) Air pollution and toxic runoff problems increase with global economic growth.

answer

A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems.

question

Curtailment of logging in the Amazon region is generally viewed as environmentally beneficial for the planet as a whole. However, unemployed Brazilian workers have felt that job creation inside Brazil is more important than climate protection outside Brazil. This example best illustrates which of the following? A) why smaller countries are concerned that large international companies are powerful enough to dictate operating terms B) why globalization is needed to foster uniform standards for combating environmental problems C) how cultural homogeneity threatens the cultural foundation of smaller nations D) how global interests can conflict with a country's local interests

answer

D) how global interests can conflict with a country's local interests

question

29) Although globalization may bring economic growth, critics nevertheless contend that ________. A) the growth is too fast B) the inequality of gains puts some people in a relatively worse economic situation C) this growth is mainly for the future, thus ignoring present economic growth needs D) the cultural foundations of sovereignty are supported by globalization

answer

B) the inequality of gains puts some people in a relatively worse economic situation

question

The process of shifting production from a domestic to a foreign location is best known as ________. A) offshoring B) outsourcing C) licensing D) joint venturing

answer

A) offshoring

question

Which of the following statements would most likely NOT be supported by an advocate of offshoring? A) Offshoring increases the number of high-value jobs in the home countries of offshoring companies. B) Offshoring is fundamentally better for workers than the introduction of labor-saving technologies. C) Workers displaced due to offshoring are able to find new jobs as easily as those displaced by technology. D) There are upper limits to offshoring because of the lack of skilled workers willing to work permanently for low wages.

answer

B) Offshoring is fundamentally better for workers than the introduction of labor-saving technologies.

question

) A major criticism of offshoring is that it ________. A) increases production costs B) exchanges good jobs for bad jobs C) threatens the sovereignty of larger countries D) allows companies to avoid payment of any taxes

answer

B) exchanges good jobs for bad jobs

question

) Critics of offshoring claim all EXCEPT which of the following? A) Cost savings are seldom passed on to final consumers. B) Offshoring reduces the incomes of people in low-wage countries. C) Incomes of workers in countries whose companies offshored production have gone down as a percentage of national income. D) Many workers who have been displaced by offshoring do not have the skills needed for higher-value jobs.

answer

B) Offshoring reduces the incomes of people in low-wage countries.

question

Assume that company executives at the firm would like to increase sales by expanding into an international market. Which of the following factors, if true, best supports a decision to expand sales globally? A) It can offshore most of its production. B) It can obtain all of its resources for the same price overseas. C) Its costs of making additional sales would not increase disproportionately. D) The foreign market has higher real interest rates.

answer

C) Its costs of making additional sales would not increase disproportionately.

question

Kevin, marketing manager of the North American Bowling League, has decided to televise major bowling competitions to viewers in multiple countries rather than only in Canada and the U.S. Which of the following goals would this most likely help Kevin accomplish? A) acquiring new resources B) minimizing corporate risks C) increasing sales and profits D) obtaining competitive advantages

answer

C) increasing sales and profits

question

A firm is currently seeking resources from foreign countries. Which of the following is the LEAST likely reason for doing so? A) manufacturing products at a lower cost B) gaining knowledge about a specific market C) following a customer into the global market D) differentiating its products from the competition

answer

C) following a customer into the global market

question

Which of the following BEST explains how a firm reduces risk by operating internationally? A) taking advantage of business-cycle differences among countries B) buying competitive risk insurance unavailable domestically C) preventing competitors from operating in the countries it has entered D) operating in less competitive environments than those at home

answer

A) taking advantage of business-cycle differences among countries

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