UNIT 1: An Overview of International Business Environment

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

a) Globalization

b) Offshoring

c) Franchising

d) Outsourcing

2. 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.

3. 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

4. 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

5. 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.

6. 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.

7. 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

8. 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

9. Which of the following best explains why the international business has grown rapidly in the
past few decades?

a) the end of the political division 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

10. 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 and logistics

d) cross-national cooperation

11. 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

12. Gaining some understanding of international business is important for any business student
because global events and competition affect almost all companies.

True

False

13. It is difficult to compare the globalization of business over time because shifting national
borders have changed the nature of transactions from domestic to international and vice versa.

True

False

14. Globalization refers to all economic transactions among countries.

True

False

15. International business includes all commercial transactions between two or more countries.

True

False
 Unit 02: Components of International Business Environment

1) consists of specific learned norms based on attitudes, values, and beliefs of a group of people.

a) Ethnology

b) Civilization

c) Culture

d) Doctrine

2) Which of the following is NOT true about cultural diversity?

a) Companies may gain competitive advantages by bringing together people of diverse backgrounds.

b) Cultural diversity is most successful when domestic and foreign firms establish joint ventures.

c) Cultural diversity may help a company gain deeper knowledge about products and services.

d) The process of bringing people of different national cultures together is often difficult.

3) 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

4) Most people's basic value system is.

a) modified significantly between childhood and adulthood

b) altered during adulthood through the imposition

c) affected primarily by teenage peer pressure

d) acquired mainly during early childhood

5) People generally prefer little consultation between superiors and subordinate’s in cultures
where is high.

a) power distance

b) fatalism

c) individualism

d) self-actualization

6) All of the following countries have a totalitarian political system EXCEPT.

a) China

b) Russia

c) South Korea

d) Saudi Arabia
7) The principle that an individual has the freedom to pursue his or her interests is called.

a) socialism

b) totalitarianism

c) individualism

d) collectivism

8) Proponents of argue that individual interests are not as important as the welfare of the group.

a) pluralism

b) capitalism

c) collectivism

d) individualism

9) In a country that emphasizes collectivism,

a) the interests of the individual are more important than the interests of the state

b) one person or political party exercises absolute control over the political and economic systems

c) the needs of society and the needs of individuals are treated as equally important

d) the needs of society take precedence over individual freedoms

10) refers to a political system in which government is organized by and accountable to the
people.

a) Totalitarianism

b) Fascism

c) Socialism

d) Democracy

11. Kyle, an international manager for Apex Industries, has been given the task of analyzing the
economies of three different emerging countries for the firm's potential expansion. Which of the
following questions is LEAST relevant to Kyle's assignment?

a) How much freedom will Apex have to run its foreign operations?

b) What are the current economic policies related to development?

c) What is the likelihood that Apex can fill manufacturing positions with locals?

d) What factors in the country drive or hinder economic change?

12. Since the late 1980s, the growing emergence of freer markets has been powered by the
realization that.

a) economic growth is directly related to economic freedom

b) economic growth has a limited effect on the standard of living

c) adoption of free market principles contributes to social injustices

d) centrally planned economies are best designed to deliver progress

13. In a command economy,

a) businesses and consumers are assumed to be the best judges of how resources should be allocated

b) the government sets goals and determines the price and quantity of what is produced

c) different economic sectors coordinate the activities of the federal government

d) each enterprise sets its goals before making reports to the central government

14. Williams Enterprises wants to expand its operations into Asia. Managers are focusing on
countries with high degrees of economic freedom most likely because the firm is interested in a
country with.

a) minimal government intervention

b) standardized minimum wages

c) laws favoring sustainability

d) state-run corporations

15. Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely
expect the Hong Kong government to.

a) monitor market prices

b) control natural resources

c) ensure fair competition

d) provide innovation incentives

16) Which of the following is not a technological factor influencing international business
operation?

a) Change in technology

b) Research and development

c) Automation

d) Inflation

17) Technology has drastically reduced time between conceiving an idea and that idea.

a) Processing

b) Implementing

c) Generating

d) None of these

18) Which of the following countries has a collectivist orientation?

a) Canada

b) Australia

c) Japan

d) Netherlands
19) Which of the following is most likely a characteristic of a "partly free" country, such as
Guatemala, Pakistan, or Tanzania?

a) strict religious constraints

b) fair election procedures

c) respect for civil liberties

d) weak rule of law

20) In which of the following countries would business activity, given its status as a "not free
“marketplace, be under the greatest government control?

a) Vietnam

b) Pakistan

c) India

d) Brazil

UNIT 03: The External Environment and Challenges

1) Meeting the needs of the present without compromising the ability of future generations to
meet their own needs is known as.

a. competitive advantage

b. the Kyoto Protocol

c. sustainability

d. externality

2) Firms that operate in countries that have adopted the Kyoto Protocol are required to either
reduce emissions or.

a. purchase carbon credits from other firms

b. file petitions to appeal the requirement

c. cease manufacturing operations

d. pays fines to the UN

3) Which of the following best supports the idea that MNEs should remain in countries that allow
child labor?

a. MNEs have a positive influence on government employment policies in most foreign countries.

b. Many MNEs have substantially improved the working conditions of their foreign plants.

c. MNEs are required to pay child workers more than local companies.

d. Most MNEs employ local managers to handle cultural differences.

4) is driving the planet to future warming because it remains in the atmosphere for many decades.

a) Carbon monoxide

b) Carbon dioxide

c) Ethanol

d) None of these

5) is one that eliminates waste and pollution while restoring natural systems.

a) Circular business

b) Rectangular business

c) Triangular business

d) None of these

6) The principal greenhouse gases that enter the atmosphere because of human activities are
called

a) Philanthropic

b) Carbon monoxide

c) Methanol

d) Anthropogenic

7) Farming, and fisheries are changing the anatomy of the biosphere.

a) Deforestation

b) Water

c) Forestry

d) None of these

8) Which of the following is not an environmental factor that influences international business
operations of the organizations?

a) Demographics

b) Geographic locations

c) Global climate change

d) None of these

9)Which of the following is not risk while operating internationally?

a) Increasing competition

b) Damage to reputation

c) Political situation

d) None of these
10) Regulatory risk is beyond the control of the multinational enterprise.

True

False

11) Meeting the needs of the present without compromising the ability of future generations to
meet their own needs is known as sustainability.

True

False

12) Legal and ethical values in a country may cause its companies to operate abroad according to
home country laws rather than host country laws.

True

False

13) Consolidation in the telecom sector helped Vodafone India to perform better in the Indian
market.

True

False

14) External environment factors are under organizational control.

True

False

15) In the long run, MNEs must adequately meet the needs of all stakeholders to prosper and
survive.

True

False
 UNIT 4: International Trade Theories

1. If the cost of production of items X and Y in China and Russia are as given below, which
statement will be more appropriate?

ChinaC Russia
China Russia

X 14f
X 19
14 19

Y 11
Y 22
11 22

a) Russia will import X and Y from China

b) Russia will export X to China and import Y from China

c) China will import Y from Russia and export X to Russia

d) Russia will import X from China

2. The trade theory that says a country should export more than it imports is known as.

a) mercantilism

b) absolute advantage

c) comparative advantage

d) import substitution

3. Under mercantilism, governments sought to influence trade by.

a) establishing bilateral trading agreements with other countries

b) limiting exports

c) limiting imports and subsidizing exports

d) encouraging the development of manufacturing in their colonies

4. Which of the following undesirable results will most likely occur for a country running a
favorable balance of trade?

a) higher unemployment

b) higher domestic interest rates

c) fewer funds to invest abroad

d) granting credit that may be risky

5. Understanding trade theories helps companies know if they will need to compete against goods
and services produced abroad.

True

False
6. Countries enact trade policies based on trade theories, which, in turn, affect companies'
optimum production locations.

True

False

7. Factor mobility refers to the movement of which of the following combinations?

a) capital, technology, and people

b) currency, profits, and raw materials

c) labor, capital, and management

d) trade, profits, and materials

8. The free-trade theories of specialization primarily assume that.

a) specialization leads to unemployment, but production gains compensate for job losses

b) resources can move internationally from the production of one good to another

c) resources can move domestically from the production of one good to another

d) countries have objectives other than economic efficiency

9. Countries with varied climates and varied natural resources generally, then countries with less
varied climates and natural resources.

a) have lower per capita incomes

b) depend less heavily on trade

c) have more ethnic subgroups

d) have higher endowments of capital relative to labor

10. The trade theory that says countries should concentrate production on those products using
their most abundant production factors is the.

a. factor proportions theory

b. theory of comparative advantage

c. theory of absolute advantage

d. none of these

11. All countries face the questions of what, how much, and with whom they should import and
export. How they answer these questions primarily affects whether.

a. non-tradable goods become tradable

b. products go through a long life cycle

c. companies adhere to laissez-faire export policies

d. a company's present production location will be competitive

12. The diamond of national advantage would be best used to answer which of the following
questions?

a. How do developed countries prevent the trade of blood diamonds?

b. How can be developing countries create a significant trade surplus?

c. Why do specialize competitive advantages differ among countries?

d. Why do most innovative products originate in developed countries?

13. All of the following are features of the diamond of national advantage theory EXCEPT

a. firm strategy, structure, and rivalry

b. strategic trade policy regulations

c. Related and supporting industries

d. demand conditions

14. According to the diamond of national advantage theory, the domestic existence of all four
conditions best explains.

a. the essence of an industry's development

b. the position of a product in its life cycle

c. Where globally competitive firms develop and sustain themselves

d. why countries rely on abundant factor endowments

15. The existence of the four favorable conditions of the diamond of national advantage does not
guarantee that industry will develop in a given locale

True

False
 UNIT5: Protectionism and Trading Environment

1. Which of the following is not going to act as a challenge for firms operating internationally?

a) Culture difference

b) Language barriers

c) Promotors

d) Foreign politics

2. What was the initial translation of Mercedes Benz in Chinese when they entered China?

a) Ben Chi

b) Bensi

c) MeiShi

d) Benzi

3. X is looking to enter a country where currency fluctuation is very high in comparison to other
countries. Which of the following statement will work for an export-oriented organization X that
deals in consumer durables products?

a) X should avoid entering such a nation

b) X should enter without worrying much as fluctuation can be profitable for the organization.

c) X should evaluate the buyers operating in that market before entering

d) X should analyze the current fluctuation and its impact on its margin before entering

4. Which of the following is not an economic rationale for government trade intervention?

a) Fighting unemployment

b) Protecting established industry

c) Promoting industrialization

d) Improving comparative position

5. On which of the following basic parameters improving comparative position does not depend?

a) Balance-of-Trade Adjustments

b) Gaining comparable access to foreign markets

c) Using liberalization as a bargaining tool

d) Controlling prices.
6. Countries seek protection to promote industrialization because that type of production

a) Can use surplus agricultural workers more easily

b) Brings in investment funds

c) Diversifies the economy

d) All of the above.

7. Import restrictions to create domestic employment may:

a) Lead to retaliation by other countries

b) Affect large economies only

c) Increase import handling jobs

d) Not decrease jobs in another industry

8. Which of the following is not a noneconomic rationale for government trade intervention?

a) Maintaining non-essential industries

b) Promoting acceptable practices abroad

c) Maintaining or extending spheres of influence

d) Preserving national culture

9. In protecting essential industries, countries must consider_____ and ______ consequences.

a) Social and economic

b) Economic and political

c) Political and Social

d) None of these

10. In addition to protection, tariffs serve to ________.

a) generate revenue

b) subsidize exports

c) subsidize imports

d) increase consumption

11. In international trade, what is a quota?

a) a guarantee by one country to buy some minimum amount from another

b) a quantitative limit on the amount of a product that can be imported or exported

c) a countertrade arrangement that establishes the value of imports and exports

d) a bilateral agreement calling for mutual access to markets

12. The U.S. catfish industry successfully petitioned the U.S. government to require that catfish

variety imported from Vietnam be labeled as "tar," "base," or "phantasies." This is an example of

which of the following?

a) A tariff

b) A nontariff barrier

c) A direct price influence

d) None of these

13. The most common type of tariff is the export tariff.

True

False

14. The international regulatory situation for trade is becoming more, rather than less, complex.

True

False

15. A quota is a quantitative limit on the amount of a product that can be traded.

True

False
 Unit 06: Economic Integration and Co-operation

1. integration is the political and economic agreements among countries that give preference to
member countries to the agreement.

A. Global

B. Economic

C. Bilateral

D. Regional

2. Country A and Country B make an agreement to cooperate more closely and implement tariff
reductions. Which of the following best describes this agreement?

A. Double commodity integration

B. Multilateral integration

C. Regional integration

D. Bilateral integration

3. The European Union is an example of integration.

A. Regional

B. Relative

C. Global

D. Bilateral

4. Global integration occurs as countries from all over the world decide to cooperate through the.

A. EU

B. NAFTA agreement

C. WTO

D. CARICOM

5. Which of the following statements most accurately describes the relationship between trading
groups and MNEs?

A. Trading groups have no influence on the size of the regional market.

B. Regional trading groups can define the rules under which companies must operate within that region.

C. Companies never need to change their organizational structure to take advantage of regional trading groups.

D. Regional trading groups do not influence an MNE's strategy since they operate worldwide.
6.Anderson Enterprises is a U.S. firm that manufactures light fixtures for commercial and
residential consumers. Anderson is looking to expand internationally, so the firm should most

likely.

A. Focus on developing new recruitment strategies and selection tests

B. Change their organizational structure to fit the norms of the foreign country

C. Disregard changes in trading groups because they have little effect on a company

D. Look to expand beyond the triad regions currently controlled by the top 500 MNEs

7. Baldani Manufacturing, an Italian firm, plans to expand into Asia. However, in order to take
advantage of regional trading groups, Baldani will most likely need to change its .

A. Operating strategies

B. Selection test methods

C. Bilateral trade agreements

D. Economic integration methods

8. Regional integration is better known as global integration through the World Trade
Organization.

True

False

9. Most MNEs generate a large portion of their revenues in their home regions.

True

False

10. The clause embodied the fundamental principle of GATT—trade without discrimination.

A. Most-favored-nation

B. Non-tariff barriers

C. Free rider

D. Normal trade relations

11. Which of the following accurately identifies a difference between GATT and the WTO?

A. GATT could enforce member compliance with agreements, but the WTO cannot.

B. At its inception, GATT had more member nations than the WTO currently has.

C. GATT withdrew the most-favored-nation clause, but the WTO reinstated it.

D. GATT rules did not cover trade in services, but the rules of the WTO do.
12. Under the WTO agreement,

A. A dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate

trade discrimination measures.

B. There is no dispute resolution mechanism except for trade involving environmental products.

C. Countries are allowed to place trade barriers on member countries with no particular justification because, like GATT, the

WTO has no enforcement mechanism

D. Tariffs are permitted to be levied by developed countries against developing countries but not against each other.

13. Most trade agreements contain countries in the same area of the world. Why is this so?

A. The distances that goods need to travel between such countries are short.

B. Distribution channels are not quickly established in adjacent countries.

C. Adjacent countries are reluctant to coordinate policies.

D. Neighboring countries usually lack a shared history and interests.

14. The goal of a is to abolish all tariffs among member countries.

A. Customs union

B. Common market

C. Free trade agreement

D. Common internal tariff

15. Trade shifting to countries within a regional trade agreement at the expense of trade with
countries not in the agreement is called.

A. A dynamic effect

B. Trade creation

C. Trade diversion

D. Economy of scale
 Unit 07: International Financial Markets

1. The primary objective of the International Monetary Fund is to.

A. encourage euro adoption

B. promote exchange rate stability

C. establish a unilateral system of payments

D. foster the power of the foreign-exchange market

2. The Bretton Woods Agreement established a system of fixed exchange rates under which each
IMF member country set a.

A. quota

B. par value

C. gold standard

D. nominal interest rate

3. To join the IMF, a country must contribute a certain sum of money, called a.

A. special drawing right

B. trade balance

C. monetary reserve

D. quota

4. Which of the following BEST describes the special drawing right?

A. an international reserve asset created to supplement members' existing reserve assets

B. the official currency for international trade established by the World Bank

C. a substitute for the fixed value of gold as determined by currency rates

D. a contribution made by countries to join the IMF

5. The IMF's primary role is to identify exchange rate regimes.

A. True
B. False

6. The IMF uses the quota system to determine how much a country may borrow from the Fund.
A. True

B. False

7. Which type of exchange rate arrangement is based on supply and demand?

A. soft peg

B. hard peg

C. crawling

D. floating
8. All of the following are ways to control currency convertibility EXCEPT.

A. import licenses

B. multiple exchange rates

C. import deposits

D. purchasing power parity

9. If inflation in the United States is relatively higher than inflation in Japan, and the Japanese
government wants to keep the exchange rate fixed between the yen and the dollar, it should most
likely.

A. allow its currency to rise against the dollar

B. allow its currency to fall against the dollar

C. increase the supply of yen in the market

D. decrease the supply of yen in the market

10. The is the currency most widely used as a reserve asset.

A. euro

B. Japanese yen

C. U.S. dollar

D. British pound

11. The Fed wants to counter downward pressure on the dollar, so it will most likely.

A. sell dollars for foreign currency

B. sell dollars and buy foreign stocks

C. buy Treasury bills with dollars

D. buy dollars with foreign currency

12. Hard currencies are usually.

A. not fully convertible

B. undesirable assets

C. highly liquid

D. unstable

13. The purchasing power parity theory claims that a change in relative between two countries
must cause a change in to keep the prices of goods in two countries fairly similar.

A. exchange rates; inflation

B. inflation; exchange rates

C. interest rates; inflation

D. interest rates; exchange rates

14. Which of the following statements BEST describes a limitation of the Big Mac Index?

A. Profit margins vary by the strength of competition, which affects relative prices.

B. The theory of PPP incorrectly assumes that there are trade barriers.

C. The Big Mac represents all possible commodities and services.

D. Taxes do not affect Big Mac prices.

15. If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in
Argentine pesos converted into dollars at the spot exchange rate), which of the following is most
likely true?

A. The peso is overvalued against the dollar.

B. The dollar is overvalued against the peso.

C. It should be more challenging for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far.

D. It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak.

UNIT 8: Global Debt and Equity Market

1.The long-term financing dimension of financial management.

A. deals with the selection, issuance, and management of long-term debt and equity

B. is unaffected by currency changes because everyone borrows in U.S. dollars

C. focuses on the analysis of investment opportunities =

D. is independent of the capital structure of an MNE

2.Acquiring and allocating financial resources among the company's activities and projects is the
responsibility of the.

A. the accounting function of the firm

B. external auditors

C. CFO

D. financial marketing manager

3.The financial management activity that determines the proper mix of debtand equity is.

A. capital structure

B. long-term financing

C. capital budgeting

D. working capital management

4.In a country like Russia, where there is a great deal of corruption, an MNE would most likely use
to fund corporate activities.

A. equities

B. debt

C. cash

D. countertrade

5.The degree to which a firm funds the growth of a business by debt is known as.

A. leveraging

B. equity financing

C. hedging

D. the after-tax cost of debt

6.MNEs most likely use offshore debt markets.

A. to hide their cash from tax authorities

B. to take advantage of their ability to access capital in different countries

C. since debt in foreign countries is always cheaper than in the home-country market

D. because investors don't like to invest in companies that only raise capital in their home

7.What term refers to a currency on deposit outside its country of issue?

A. Eurocurrency

B. Eurodollar

C. Euro yen

D. Euro pound

8.Which of the following is NOT an advantage associated with Eurocurrencies?

A. more convenience for users

B. better yield for lenders

C. tighter U.S. regulation

D. cheaper lending rates

9.The global capital market offers all of the following advantages to firms EXCEPT.

A. short-term financing options

B. numerous investment opportunities

C. a wide array of financing sources

D. financing at a reduced cost

10. A bond that is issued by Nestle, a Swiss company, which is denominated in yen and sold to
residents of Japan is most likely a.

A. Eurobond

B. global bond

C. foreign bond

D. country fund

11. Brooke buys shares of stock in a small bakery in a foreign country in return for an ownership
position and promised capital gains. This is an example of.

A. equity securities

B. debt financing

C. playing the stock market

D. investing in Euro equities

12. The stock market is also known as the.

A. capital market

B. foreign-exchange market

C. bond market

D. equity capital market

13. A firm would decide to delist its stock from a foreign stock exchange for all of the following
reasons EXCEPT.

A. the best price for the stock is in the home market

B. there is an increased regulation in that particular foreign market

C. there are weak market returns on the stock

D. there are high trading volumes on the stock

14. focus on offering banking and other financial services to non-resident customers.

A. Subsidiary banks

B. Branch banks

C. Affiliated banks

D. Offshore financial centers

15. Which of the following is an example of crypto currency?

A. U.S. dollar

B. Japanese yen

C. Bitcoin

D. Euro
 UNIT 09: Global Competitiveness

1.Which of the following transactions refers to the sale of goods or services produced by a
company based in one country to customers that reside in a different country?

a. importing

b. counter trading

c. exporting

d. freight forwarding

2. Are among the fastest-growing economic activities in the world.

a. Global manufacturing and supply chain management

b. Accounting and taxation

c. Finance and human resources

d. Exporting and importing

3.Iverson Products is a U.S. firm that is considering expanding internationally by exporting. Which
of the following is the LEAST likely benefit for Iverson?

a. boosting marketplace flexibility

b. improving economies of scale

c. facing lower business risk compared to other foreign market entry options

d. requiring fairly few resources

4.This spring break, you plan to leave the United States and visit London, where you will stay in a
hotel for ten days. The London hotel will be performing a(n).

a. indirect merchandise export

b. merchandise export

c. service export

d. service import

5.The benefits of retaining a core competency within a company and purposefully threading that
core competency through the value chain are referred to as advantages.

a. internalization

b. domestic

c. location

d. ownership
6.Companies are likely to export products abroad in all of the following situations EXCEPT.

a. when their average cost per unit of home country production declines substantially by increasing output

b. when they want to use the riskiest but most profitable method to engage international trade

c. When they aim to increase the degree of market diversification

d. when they are new to international business

7.Boyce Dynamics, a U.S. maker of LED flashlights, fills unsolicited orders from foreign buyers. It
has not proactively investigated international trade options. Boyce Dynamics is best categorized
as a.

a. regular exporter

b. non-exporter

c. sporadic exporter

d. domestic exporter

8.Barton Accessories has two retail stores and one production facility where the firm's line of
leather belts and purses is assembled. Barton employs 430 people and generates nearly $1 million
in revenue each year through domestic and international sales. Which term best describes the
status of Barton?

a. SME

b. MNE

c. MNC

d. FDI

9. is the services or products provided by competing companies that serve international

customers.

a. Global competition

b. Domestic competition

c. Third country competition

d. None of these

10. country refers to the country where the headquarters is located.

a. Host

b. Home

c. Third

d. None of these
11. Which of the following is among the factors that would increase a firm'sprobability of
exporting?

a. low domestic productivity

b. high domestic labor costs

c. high level of efficiency

d. high R & D demands

12. Who will take care of the structural reforms in an economy?

a. Government

b. Multinational companies

c. Domestic company

d. None of these

13. The probability that a business is engaged in exporting tends to.

a. decrease with the size of the firm

b. increase with the product life cycle

c. decrease with the product life cycle

d. increase with the size of the firm

14. Which of the following is not a challenge in front of the policymakers of different economies in
general?

a. Debt management

b. Public health

c. Structural reform

d. None of these

15. An Australian company makes athletic wear for women, men, and children. After several years
of successfully exporting its products to the U.K. and the U.S., the company began exporting to
Japan. This is an example of.

a. a born-global company

b. a location advantage

c. incremental internationalization

d. third-party exporting
 UNIT 10: Internationalization Strategies Summary

1. can refer to a company that takes steps to increase its footprint or capture greater market
shares outside of its country of domicile by branching out into international markets.

A. Import

B. Internationalization

C. Localization

D. None of these

2.Which of the following is not the factor behind the decision to internationalize?

A. Organizational factor

B. Firm-specific factors

C. Bandwagon effect

D. Solicited proposals

3.Which of the following is not a firm specific factor?

A. Firm size

B. Foreign language proficiency

C. International appeal

D. None of these

4. is the framework that managers apply to determine the competitive moves and business
approaches that run the company.

A. Competition

B. Growth

C. Strategy

D. Vision

5.A strategy that focuses on lowering operating costs is referred to as a strategy.

A. differentiation
B. cost leadership

C. niche market

D. diversification
6. are the two basic strategies for creating value and attaining a competitive advantage in a
industry.

A. Diversification and niche marketing

B. Industry leadership and market dominance

C. Customer satisfaction and product innovation

D. Cost leadership and differentiation

7.Firms that compete in the global marketplace typically face the asymmetric forces of pressures
for and.

A. global integration; local responsiveness

B. price reductions; cost reductions

C. political sensitivity; market leadership

D. cost reductions; customer satisfaction

8.Which of the following is NOT a factor driving local responsiveness among global firms?

A. cross-national differences in distribution channels

B. diverging consumer tastes and preferences

C. cross-national differences in product standards

D. host government support of freer international trade

9.In the global environment, firms use an international strategy, a localization strategy, a global
strategy, or a strategy.

A. regional

B. standardization

C. transnational

D. locational

10. When the pressure for global integration is high, and the pressure for local responsiveness is
low, a company is most likely to pursue a(n) strategy.

A. global

B. transnational

C. localization

D. international

11. Which of the following is NOT a disadvantage of the international strategy?

A. Headquarters can misread foreign-market opportunities and threats.

B. The transfer of core competencies to foreign markets is complicated by the necessity to adapt to local needs.

C. Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.

D. The company can be blindsided by an unexpectedly innovative rival in a foreign market.

12. A driving factor for the growth in imports is the impact of.

A. government programs

B. labor specialization

C. consumer preferences

D. social trends
13. Federal, state, and local governments that recognize the benefits of international trade,
actively aid the efforts of potential and active exporters and.

A. ensure the quality of exported products

B. establish barriers to punish foreign rivals

C. collect a fee for each successful export sale

D. protect the interests of struggling importers

14. The company sells its products to an independent intermediary in the domestic market, which
then exports the product to its foreign agents, who then sell it to the end consumer is known as .

A. Direct exporting

B. Direct importing

C. Indirect exporting

D. Indirect importing

15. Which of the following is not a type of importer?

A. Input optimizers

B. Counter trade

C. Opportunistic

D. Arbitrageurs
 Unit 11: Forms &Ownership of Foreign Production

1. Which of the following is the LEAST likely reason consumers would prefer domestically made
products over imports?

A. a belief that imports are subsidized

B. feelings of national pride and sentiment

C. negative associations with products from certain countries

D. concerns that parts will be difficult to obtain for foreign products

2. A U.S. firm plans to shift from exporting to production in China to serve the Chinese market.
Which of the following statements would best explain this decision?

A. China's currency is appreciating relative to the U.S. dollar.

B. The firm is nearing capacity utilization in its U.S. plant.

C. The company need not alter its products for the Chinese market.

D. Transportation costs have become low relative to production costs.

3. Coca-Cola collaborates extensively abroad, but it refuses collaboration that might imperil
control of its core competency. As a result, which of the following is NOT one of its international
collaborative forms?

A. sharing ownership in the production of its secret formula concentrate

B. using franchisers to bottle, sell, and deliver Coke beverages

C. licensing Coke's trademark for use on products in which it lacks skills

D. forming joint ventures with companies that provide supplies for Coke products

4. Small economies are sometimes less successful than large countries in attracting FDI by
raising import restrictions. What is the most likely reason for this?

A. Large economies impose higher trade restrictions.

B. Transportation costs are generally higher in small economies.

C. People in small economies are more nationalistic in their purchases.

D. Small economies frequently lack sufficient markets for large-scale production.

5. A U.S. firm owns 100% of its production facility in Brazil; thus, it is most likely using a(n)
strategy.

A. comprehensive ownership

B. vertical integration

C. appropriability

D. internalization
6. Appropriability theory refers to.

A. denying rivals access to competitive resources such as management know-how

B. categorizing the appropriateness of a firm's foreign investments in terms of host country objectives

C. explaining an investing firm's choice of partner in a joint venture

D. predicting the general pattern of direct investment locations

7. A greenfield investment is another name for a company's decision to.

A. acquire an interest in an existing foreign operation

B. implement sustainable marketing practices

C. construct a new facility in a foreign market

D. build a facility for a local company

8. A company that makes a foreign investment largely to acquire knowledge is most likely to use

as a means of expansion.

A. a greenfield investment

B. internalization

C. an acquisition

D. a licensing agreement

9. In which of the following situations would Company X most likely seek a collaborative
arrangement with Company Z in which Company Z would handle work for Company X?

A. Company X has excess capacity.

B. Fixed costs for the work are high, and Company X has large volumes of work.

C. Company X is inexperienced in outsourcing work.

D. Fixed costs for the work are high, and Company X has small volumes of work.

10. Which of the following is an argument for using a collaborative agreement?

A. to prevent problems caused by minority shareholders

B. to preserve a concentration strategy

C. to secure vertical and horizontal links

D. to maintain better control

11. The more a company engages in international collaborative arrangements as opposed to

wholly- owned foreign operations, the more it is likely to.

A. decrease its exposure to political risk

B. increase its control over foreign operations

C. learn rapidly about foreign environments

D. protect its core assets

12. Coca-Cola has collaborative arrangements whereby it produces a concentrate that it sells to
other companies to bottle its drinks. Which of the following terms best describes this type of
arrangement?

A. vertical alliance

B. horizontal alliance

C. link alliance

D. scale alliance

13. Chrysler granted South East Motor (a company in China) rights to produce its Grand Voyager
minivan for sale in China in exchange for a fee. This is an example of a.

A. licensing agreement

B. bargaining school arrangement

C. technology appropriation

D. turnkey operation

14. Collaborative agreements allow companies to specialize more in those activities that best fit
their competencies.

A. True

B. False

15.An advantage of collaborative agreements is the ability to spread faster geographically.

A. True

B. False

16.Which of the following is not a reason for the failure of collaborative arrangements?

A. Divergent Objectives

B. Difference in Culture

C. Greenfield investment

D. Comparative contributions and appropriations

17) Sharing assets with another company may generate confusion over between the management
of the organizations.

A. Objectives

B. Control

C. turnkey operations

D. None of these
 Unit 12: International Business Diplomacy

1. is defined as the deliberate interaction of two or more social units (at least one of them a
business entity), originating from different nations, that are attempting to define or redefine their
interdependence in a business matter.

A. Culture

B. International business negotiation

C. Risk propensity

D. Assertive communication

2.Which of the following is not included in the negotiation phase?

A. Price issue

B. Timing

C. Culture

D. Dispute settlement

3.Which of the following is not a phase in process of negotiation?

A. Pre-negotiation phase

B. Negotiation phase

C. Post-negotiation phase

D. Support-negotiation phase

4. consists of patterns, explicit and implicit, of behavior, acquired and transmitted by symbols
including their embodiment in artifacts.

A. Risk propensity

B. Timing

C. Culture

D. D) Cognitive

5.Which of the following is not a cultural value on the international business negotiation process?

A. Protocol

B. Risk propensity

C. Communication

D. None of these
6. is the concept of and strategies for guarding one's wealth against taxation, seizure, or other
losses.

A. Risk propensity

B. Asset protection

C. Fraudulent practices

D. None of these

7.The goal of a comprehensive asset-protection plan is to prevent or significantly risk by

insulating business and personal assets from the claims of creditors.

A. Increase

B. Elevated

C. Reduce

D. D) Subtle

8.Which of the following is not an asset protection strategy?

A. Corporations

B. Trusts

C. Specific partnership

D. General partnership

9. is a process of organizing relations between groups of three or more states.

A. Culture

B. Multilateralism

C. Trusts

D. None of these

10. ISEAS stands for.

A. Institute of Southeast Asian Studies

B. Institute of Southwest African Studies

C. Institute of Southern Asian Seminars

D. Institute of South American Studies

11. 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.
12. 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

13. 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 comply 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

14. 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

15. 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

 Unit 13: Country Evaluation & Selection

1.Comparing countries in international business is LEAST useful for determining the.

A. best location for sales and production

B. sequence of entering different countries

C. amount of resources to allocate in each country

D. selection of which managers to send to which countries

2.Executives at Wilson Enterprises need to determine how to leverage and improve the firm's
existing competencies on a global basis. What are the two most basic questions that they must
answer?

A. Which markets should we serve and where should production be located to serve those markets?

B. What are the short-term competitive advantages of the project and what is the return on investment?

C. What is the total investment required and what are the managerial resources needed to supervise the investment?

D. What is the availability of land and what is the cost of labor?

3.A company's location should be flexible enough to.

A. implement concentration strategies instead of diversification strategies

B. respond to new opportunities and withdraw from less profitable ones

C. import from anywhere in the world to a single production location

D. export anywhere in the world from a single production location

4.Elison Enterprises is planning international geographic expansion. A manager at Ellison has

been given the task of scanning for locations primarily to.

A. reduce the number of options available to a manageable number for further detailed analysis

B. assure the compatibility between the mode of corporate operation and the country

C. assure that all countries within a region have similar investment climates

D. decide whether to use a concentration or a diversification strategy

5.Which of the following most accurately compares the techniques of scanning versus detailed
analysis of countries?

A. Scanning is used for planning and detailed analysis is used for control.

B. Detailed analysis is used to consider countries overlooked in the scanning process.

C. Scanning considers a large number of countries so that only the most promising ones undergo a detailed analysis.

D. Scanning compares one country to another, whereas detailed analysis compares regions within a single country.
6.Opal Computers is considering international production expansion. After scanning to decide on
a few countries to consider more closely, Opal managers will most likely need to.

A. identify firms with which to form joint ventures

B. add some more countries for closer consideration

C. travel to the locations to analyze and collect specific data

D. make final decisions by expanding in locations near their rivals

7.Sales expansion is probably the most important variable in determining international location
decisions. This statement is most likely based on the assumption that.

A. consumer demand exceeds supply

B. increased sales will lead to more profits

C. the company will have a first-mover advantage

D. raw materials are available in the country targeted for sales

8.In terms of political risk, it is most accurate to state that high-risk.

A. affects all geographic regions of a country equally

B. affects all foreign companies in the same manner

C. if avoided, may lead to higher competitive risk

D. triggers government turnovers

9. indicator is any measurable or observable variable of interest that predicts a change or

movement in another data series, process, trend, or another phenomenon of interest before it
occurs.

A. Lagging

B. Leading

C. Microeconomic

D. None of these

10. Which of the following is not a type of leading indicator?

A. GDP

B. Consumer spending

C. Corporate profits

D. Inflation

11. Which of the following BEST describes the purpose of using an opportunity-risk matrix for
comparing countries?

A. narrow alternatives so decision-makers can make a detailed analysis of the strongest candidates

B. eliminate countries that have specific unacceptable conditions

C. determine whether to use a concentration versus diversification strategy for international expansion

D. estimate where competitors are most likely to globalize

12. The major use of the matrix as a tool in international location strategy is to.

A. pinpoint acceptable and unacceptable characteristics of countries

B. indicate the relative placement of countries in terms of attributes

C. rank countries based on expected investment return

D. show the degree of certainty for projected returns

13. Which of the following is the LEAST likely reason for inaccuracies in published governmental
data?

A. translation errors from the host country language

B. limitations of government resources and finances

C. purposeful publication of misleading information

D. false information provided to data collectors

14. Unlike grids, matrices do not require managers to determine weights for factors that indicate
risk.

A. True

B. False

15. When choosing international operating locations, companies should outsource the preparation
of grids or matrices to experts rather than preparing them with their personnel.

A. True

B. False
 UNIT 14: Globalization and Society

1.The triple bottom line aims to measure the financial and environmental performance of a
company over time.

A. Profit

B. Economic

C. Social

D. Planet

2.Which of the following is NOT a key stakeholder group that a company must work to satisfy to
survive in a global environment?

A. employees

B. competitors

C. shareholders

D. customers

3.An important business objective for pursuing ethical behavior is to create a better relationship
with corrupt politicians and customers.

A. True

B. False

4.Under the practice of extraterritoriality, legal and ethical values in a country may cause its
companies to operate abroad according to home country laws rather than host country laws.

A. True

B. False

5.Which of the following is not a source of work-related pressures in the global supply chain?

A. Consumers

B. Trade Unions

C. Media

D. Leading indicators

6.Which of the following statements is most likely true about the post conventional level of moral
development?

A. Individuals learn what is moral but not why such behavior is moral.

B. Individuals behave morally because they fear negative repercussions.

C. Individuals learn how to conform to society's values through observation.

D. Individuals behave morally because they believe such actions are right.
7.Encouraging ethical behavior to develop competitive advantages will most likely result in all of
the following for a firm EXCEPT.

A. strategic accomplishment

B. consumer commitment

C. industry resolutions

D. financial success

8.Which of the following most likely complicates ethical behavior for firms that expand overseas?

A. local laws and values

B. expatriate management

C. unstable financial settings

D. international codes of conduct

9.Ethical dilemmas tend to be_______ for MNE managers than for domestic managers.

A. more complicated

B. less controversial

C. easier to decide

D. less common

10. Which of the following is a reason for an MNE to base its standards for ethical behavior on a
country's laws?

A. The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct.

B. The law contains unenforceable rules that are impossible for society to follow.

C. The law represents a consensus derived from significant deliberation.

D. The law is based on precisely defined moral concepts.

11. Which of the following is NOT one of the issues surrounding high levels of bribery and
corruption?

A. high poverty rates

B. regional conflict

C. political unrest

D. high per capita income

12. Which level of moral development involves an individual learning roleconformity from peers,
parents, and laws?

A. conventional

B. principled

C. autonomous

D. preconvention
13. Which of the following best supports the idea that MNEs should remain in countries that allow
child labor?

A. MNEs have a positive influence on government employment policies in most foreign countries.

B. Many MNEs have substantially improved the working conditions of their foreign plants.

C. MNEs are required to pay child workers more than local companies.

D. Most MNEs employ local managers to handle cultural differences.

14. Which of the following best explains Nike's quick response to criticism of unfair employment
practices in developing countries?

A. retaining employees

B. improving public relations

C. addressing product safety concerns

D. cutting costs in order to improve profits

15. Governmental agencies and nongovernmental organizations monitor the behavior of

companies and their employees to ensure that laws are being followed.

A. True

B. False

----------------------------------------- All the very best ----------------------------------------------

Thanks and Regards

Ankit Gairola