1) The broadening set of interdependent relationships among people from different parts of the world is known as.

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1 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 Page Ref: 49 2) Although globalization may bring economic growth, critics nevertheless contend that A) the growth is not fast enough 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 Page Ref: 57 3) Some observers feel that international institutions and the people working in them cannot adequately handle the complexities of an interconnected world. Based on this, these observers believe that A) international business will grow primarily on a regional basis B) globalization is nevertheless inevitable C) globalization will slow in the future D) private companies will replace international organizations in running the world's economy Answer: C Page Ref: 68 4) Which of the following is a common shortcoming of studies examining culture in different countries and regions? A) Cultures are static, tending not to evolve much over periods of time. This tempts researchers to draw conclusions from old data. B) It is impossible to compare countries because of differences in the form of data collected. C) People are almost always reluctant to complain about their own cultures, so they present only positive opinions to researchers. D) Responses are reported in averages, which can lead to a belief in unrealistic stereotypes. Answer: D Page Ref: 95 5) The nation offers a workable reference for studying cultural differences because A) a nation contains only one distinct culture B) similarity among people is both a cause and effect of national boundaries C) the commonality of language within a nation eases the process of conducting surveys D) different groups within the same country always have more in common with each other than with groups in other countries Answer: B Page Ref: 95 6) A problem of using the nation as a reference point for culture is that A) nations fail to mediate the different interests within their boundaries B) self-stereotypes tend to fall along national lines C) such an approach tends to be polycentric D) variations tend to be great within a country Answer: D Page Ref: 96

2 7) consists of specific learned norms based on attitudes, values, and beliefs of a group of people. A) Ethnology B) Civilization C) Culture D) Doctrine Answer: C Page Ref: 93 8) Companies may be able to better motivate workers through delayed compensation, such as retirement programs, in a society characterized by A) low uncertainty avoidance B) high trust C) high future orientation D) high masculinity Answer: C Page Ref: 108 9) The fact that Spanish words and phrases such as macho and enchilada have come into American English illustrates that A) cultural diffusion is a two-way process B) most cultural diffusion moves from developed countries to developing countries C) existing national borders are shifting D) material cultures are becoming more universal Answer: A Page Ref: ) Why should managers in international business understand international trade theories? A) Countries' trade policies, based on trade theories, influence which products companies might export to given countries. B) The understanding helps managers decide whether their companies should follow laissez-faire management practices. C) The theories help managers decide whether to locate production in large versus small countries. D) The comprehension is useful when deciding whether to transfer managers abroad to manage foreign operations. Answer: A Page Ref: ) According to the PLC theory, companies produce products where labor rates are high during the introductory stage of the products' cycles. Which of the following is NOT a reason for this practice? A) These workers are efficient in non-standardized production. B) Producers can pass on higher costs to consumers who are unwilling to await possible price reductions. C) The practice reduces transportation costs because early consumers are near the highly paid workers. D) Import restrictions prevent production in countries other than the ones making product innovations. Answer: D Page Ref: ) All the following are reasons for the lower international mobility of people than capital EXCEPT which one? A) The differences in economic return between countries are lower for people than for capital. B) It is more expensive to move people than capital. C) People may have to learn another language and adapt to a different culture. D) International capital transfers have less cumbersome legal restrictions than international

3 movements of people. Answer: A Page Ref: ) Trade protectionism may affect companies' operations in all of the following ways EXCEPT which one? A) Foreign supplies may be more difficult to obtain. B) Certain products may be sold more easily abroad. C) The transfer of personnel internationally may be more difficult. D) Certain products may be more difficult to sell abroad. Answer: C Page Ref: ) Countries sometimes fear that foreign producers are pricing their exports artificially low. This fear would most likely be based on the assumption that A) foreign companies will earn inadequately to repay their foreign debt B) there will be insufficient earnings to improve product technology C) foreign producers will charge exorbitant prices after putting competition out of business D) they will be unable to maintain industries needed in times of war Answer: C Page Ref: ) Which of the following hypothetical examples would be a restriction on the import of services? A) The United States restricts foreign companies from carrying cargo between two U.S. cities. B) Japan restricts North Koreans from visiting Tokyo Disneyland. C) China does not allow the importation of rice from Thailand. D) Canada does not allow Air Canada to buy Brazilian aircraft, which it claims are subsidized. Answer: A Page Ref: ) The European Union is an example of integration. A) regional B) relative C) global D) bilateral Answer: A Page Ref: ) An advantage for foreign multinationals operating in the European Union is that A) there are no exchange rate risks B) market size is larger because of the elimination of internal tariff barriers C) they can use differential external tariff barriers to determine where to ship products D) the EU uses English as its official language Answer: B Page Ref: ) The is a preferential trade agreement that was organized in 1967 and comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. A) APEC B) OAU C) ASEAN D) CAFTA

4 Answer: C Page Ref: ) Which of the following is NOT among the five forces in the Five-Forces Model of Industry Structure? A) governments B) buyers C) potential new entrants D) suppliers of raw materials Answer: A Page Ref: ) In the international environment, firms use an international strategy, a multidomestic strategy, a global strategy, or a strategy. A) regional B) standardization C) transnational D) locational Answer: C Page Ref: ) A disadvantage of the strategy is that firms that adopt this strategy tend to decentralize too much autonomy to national subsidiaries. A) multidomestic B) continental C) international D) transnational Answer: A Page Ref: ) When planning international geographic expansion, managers use scanning to A) reduce the number of options available to a manageable number for further detailed analysis B) assure the compatibility between the mode of operation and the country for international expansion C) assure that all countries within a region have similar investment climates D) decide whether to use a concentration or a diversification strategy Answer: A Page Ref: ) Grids are a useful method of comparing countries for international business expansion because A) they generally show how countries will perform in the future B) they show risk on one axis and opportunity on another C) they can highlight unacceptable conditions and set minimum scores for proceeding further D) they highlight the interrelationship of operations in different countries Answer: C Page Ref: ) A go-no-go decision means A) an individual project decision is based on whether the project meets threshold criteria B) projects are ranked in comparison to each other, and projects are approved from the top of the list down until available resources are exhausted C) management reviews existing information and decides whether additional individualized feasibility studies are warranted D) projects are approved or disapproved based on the potential ease of divestment

5 Answer: A Page Ref: ) A(n) operates on a contractual basis and provides exclusive representation for an exporter's goods and services in a foreign market. A) export management company B) import broker C) invoice agent D) horizontal financial trader Answer: A Page Ref: ) Companies are likely to export products abroad in all of the following situations EXCEPT which one? A) when their average cost per unit of home country production declines substantially by increasing output B) when they want to use the riskiest method to engage in international trade C) when they aim to increase degree of market diversification D) when they are new to international business Answer: B Page Ref: ) The probability of being an exporter A) decreases with firm size B) is almost always related to firm size C) is rarely related to firm size D) increases with firm size Answer: D Page Ref: ) Products that have to be altered significantly for a country's market are more likely to be A) imported into that market B) licensed to a foreign firm C) produced within that country D) test-marketed in the home country Answer: C Page Ref: ) What is an international joint venture? A) an agreement between two or more companies to manage a foreign business for a fee B) the ownership of a company by two or more companies, of which at least one is a foreign company where the venture is located C) an international agreement between two or more firms for the use of a trademark D) an agreement between two or more organizations to share management expertise Answer: B Page Ref: ) When a large company and a small company enter a collaborative arrangement, A) the large company is expected to contribute more to the arrangement B) the large company is likely to be more active in the venture C) the small company is more likely to view the collaboration's expansion as competition to itself D) the small company is likely to be disadvantaged if legal action is necessary to solve a dispute Answer: D Page Ref: 581

4800/4810. INTERNATIONAL STRATEGY: Creating Value in Global Markets 4/3/2014. The Global Economy: A Brief Overview

4800/4810. INTERNATIONAL STRATEGY: Creating Value in Global Markets 4/3/2014. The Global Economy: A Brief Overview 4800/4810 INTERNATIONAL STRATEGY: Creating Value in Global Markets The Global Economy: A Brief Overview Opportunities and risks when firms diversify abroad Trade across nations will exceed trade within