INTERNATIONAL BUSINESS- CHAPTER REVIEW

CHAPTER 1 INTERNATIONAL BUSINESS AND GLOBALIZATION

1. All of the following are benefits of international business except
A. expanded business opportunities
B. increased sources of raw materials
C. decreased competition
D. improved political relationships
2. All business activities needed to create, ship, and sell goods and services across
national borders are considered to be
A. domestic business
B. international business
C. global dependency
D. none of these
3. Making, buying, and selling goods and services within a country is called
A. international business
B. global dependency
C. domestic business
D. none of these
4. Historically, international business
A. is a relatively new concept made possibly by communications technolgy
B. probably occurred as long as 15,000 years ago
C. declined when European countries created colonies on other continents
D. none of these
5. A global dependency exists when
A. massive crop failures require buying food from another country
B. a country buys tools from another country because it does not have the technology to make the
tools
C. doctors travel to another country to provide healthcare because there is a shortage of
medically-trained professionals in that country
D. all of these
6. What does Comparative Management explore?
A. The impact of globalization on management practices

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B. The dynamics of cross-cultural communication

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C. The landscape, contours, and national patterns of development
D. The convergence towards a global system
7. What is the definition of globalization?
A. Being tied together into a single globalized marketplace driven by free market capitalism
B. Being detached from international trade driven by autarky
C. Being isolated from the global market driven by protectionist policies
D. Being interconnected with regional markets driven by socialist policies
8. What is one of the reasons a company might consider going international?
A. Because it has a unique product
B. To saturate the domestic market
C. To reduce its profit margin
D. To reduce its dependency on a single market
9. Which of the following is a motivator for a firm to go international?
A. To increase competition
B. To reduce sales
C. To reduce costs
D. To seek profit
10. What might a company do to amortize the high costs of developing new products or
processes?
A. Sell its products at a higher price
B. Expand to a single new market
C. Reduce production costs
D. Enter new markets to amortize the costs
11. What is one of the benefits of going
international? A. Reducing the customer base
B. Increasing production costs
C. Increasing competition
D. Achieving economies of scale or scope in production and/or marketing
12. A three-country trade agreement negotiated by the governments of Canada, Mexico,
and the United States that took effect in 1989.
A. The UN
B. NAFTA
C. NATO

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D. IMF

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13. is the trend toward greater economic, cultural, political, and
technological interdependence among national institutions and economies.
A. Globalization
B. Privatization
C. Decentralization
D. Heterogenization
14. What is international business?
A. International business refers to the trade of goods, services, technology, capital and/or
knowledge across national borders and at a global or transnational scale.
B. International business refers to a company has economic transactions that are done within
the country's geographical limits.
C. International business refers to privately owned corporations, partnerships, or sole
proprietorships that have fewer employees and/or less annual revenue than a regular-sized
business or corporation.
D. International business refers to businesses that maintain revenues, assets or a number of
employees below a certain threshold.
15. Globalization defined as
A. is the widening set of interdependent relationships among people from different parts
of a world divided into nations.
B. service industries are very common to find on the most profitable small business list.
C. segmentation in market research to understand consumer behavior.
D. the sum total of all external and internal factors that influence a business.
16. The following are the forces driving globalization EXCEPT...
A. increase in and application of technology
B. growth of consumer pressures
C. increased global competition
D. people behavior
17. What are the costs of globalization?
A. Threats to national sovereignty
B. Economic growth and environmental stress
C. Growing income inequality and personal stress
D. All of these
18. Benefits of international business is

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A. more job employment
B. increase FDI

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C. variety of goods & services available
D. all of these
19. Globalization has the opportunities for a firm to expand its revenues by selling
around the world and its costs by producing in nations where key inputs are cheap.
A. reduced, reduced
B. increased, increased
C. increased, reduced
D. reduced, increased
20. Identify the incorrect statement concerning globalization.
A. It has been blamed for unemployment in developed nations, environmental
degradation and the Americanization of popular culture.
B. It has created new threats for businesses accustomed to dominating their domestic markets.
C. It is transforming industries and is highly welcomed by those who believed their jobs
were protected from foreign competition.
D. It is a very beneficial process where gains outweigh the losses by a wide margin.
21. Which of the following is not an impediment that makes it difficult for firms
to achieve the optimal dispersion of their productive activities to locations
around the globe?
A. Reduced transportation costs.
B. Government regulations.
C. Issues associated with economic and political risk.
D. Barriers to foreign direct investment.
22. The is primarily responsible for policing the world trading system and
making sure nation-states adhere to the rules laid down in trade treaties signed by
member states.
A. UN
B. WORLD BANK
C. IMF
D. WTO
23. The was created in 1944 by 44 nations that met in Breton Woods, New
Hampshire to promote economic development.
A. UN
B. WORLD BANK
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C. IMF
D. WTO

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24. The institution, created in 1944 at Bretton Woods, responsible for maintaining
order in the international monetary system is the
A. IMF
B. WTO
C. UN
D. UNESCO
25. The was established to remove barriers to the free flow of goods, services,
and capital between nations.
A. IMF
B. GATT
C. WTO
D. UNESCO
26. The reduction in the average tariff rates on manufactured products since 1950
implies all of the following except that
A. firms are dispersing parts of their production process to global locations to drive down
production costs and increase product quality.
B. the economies of the world's nation states are becoming more intertwined.
C. nations are becoming increasingly independent of each other for important goods and
services.
D. the world has become significantly wealthier since 1950.
27. The growing integration of the world economy is
A. increasing the intensity of competition in a wide range of manufacturing and service
industries.
B. decreasing the intensity of competition in manufacturing industries, and increasing the
intensity of competition in services.
C. increasing the intensity of competition in manufacturing industries, and decreasing the
intensity of competition in services.
D. narrowing the scope of competition in a wide range of service, commodity and industries
28. Which of the following statements regarding cross-border trade and investment is not
true?
A. "Protection" from foreign competitors has been, at times, demanded by the United States.
B. Forecasts show a return to the restrictive trade policies of the 1920s and 30s.
C. If trade barriers decline no further they will put a brake upon both markets and production
globalization

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D. It is not clear whether the political majority in the industrialized world favors further
reductions in trade barriers.
29. Identify the incorrect statement pertaining to the World Wide Web.
A. It makes it much easier for buyers and sellers to find each other.

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B. Viewed globally, it is emerging as an equalizer.
C. It rolls back all of the constraints of location, scale, and time zones.
D. It allows businesses to expand their global presence at a lower cost than ever before.
30. Technological innovations have facilitated all of the following except:
A. globalization of production.
B. globalization of markets.
C. creation of electronic global marketplaces.
D. creation of absolutely homogeneous consumer markets.
31. Which of the following does not help create an economic system that is favorable to
international business?
A. Decreased privatization
B. Widespread deregulation
C. Open markets
D. Falling trade and investment barriers
32. When a company "exports jobs" overseas, the company is
A. helping domestic workers by pushing up wage rates.
B. increasing the demand of qualified domestic workers.
C. taking advantage of lower wages in foreign markets.
D. deceiving the supporters of globalization.
33. Critics of globalization maintain that the apparent decline in real wage rates of unskilled
workers
A. owes far more to a technology-induced shift within advanced economies toward jobs
that require significant education and skills.
B. is due to the migration of low-wage manufacturing jobs and a reduction in
demand for unskilled workers.
C. has been impacted most by technological change.
D. can be checked by increasing society's investment in education to reduce the supply of unskilled
workers
34. What does PEST analysis evaluate for
business? A. Public, economic, social, and trade
factors
B. Political, economic, social, and technological
factors

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C. Physical, environmental, social, and technological
factors
D. Political, environmental, social, and trade factors

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CHAPTER 2 THE POLITICAL AND ECONOMIC ENVIRONMENTS
1. Political systems based on the paradigm, such as those of Japan and China,
accept the principle that government may intervene to ensure that business practices
benefit society.
A) individualistic
B) collectivistic
C) pluralistic
D) laissez-faire
2. In a democracy, .
A) citizens have the right to participate in the decision-making process
B) the opportunity to truly participate in the political process is restricted to a select few
C) the court system is directly supervised by the political system
D) the rights of the individual are merged with the state
3. Which of the following countries has an individualistic orientation?
A) Venezuela
B) Japan
C) Egypt
D) Canada
4. The principle that an individual has the freedom to pursue his or her interests is called .
A) socialism
B) totalitarianism
C) individualism
D) collectivism
5. Proponents of argue that individual interests are not as important as the
welfare of the group.
A) pluralism
B) capitalism
C) collectivism
D) individualism
6. Although there are different views about the purpose of a political system, most analysts
agree that an essential task of a political system is to .
A) integrate the different elements of a society into a functioning unit
B) allocate scarce resources among competing users

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C) develop reasonable attitudes and outlooks within the population
D) protect individuals within the country from foreign threats

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7. In a practical sense, the term political system is meant to signify the .
A) organization of military power in a country
B) working government in a country
C) philosophical orientations in a country
D) cultural values in a country
8. The distinguishing feature of political ideologies along the political spectrum is ,
with some emphasizing its primacy and others opposing it.
A) capitalism
B) socialism
C) freedom
D) liberalism
9. Under the form of totalitarianism, the regime confines itself to political
control of the state. It does not regulate the economic and social structure of society.
A) fascist
B) communist
C) theocratic
D) authoritarian
10. Which of the following ideas holds that a government should NOT interfere in business
affairs?
A) collectivism
B) laissez-faire
C) the rule of man
D) pluralism
11. A(n) ideology is the system of ideas that expresses the goals, theories, and
aims of how society should work.
A) technological
B) economic
C) legal
D) political
12. The pushback against democracy has powered a rise in totalitarianism, a situation that
is likely to include which of the following?
A) increasing adoption of the principles of the rule of law
B) growing demands worldwide for greater fairness and justice in legal proceedings

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C) increasing adoption of the principles of the rule of man
D) suppression of state-control in the direction of legal activities

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13. All of the following countries have a totalitarian political system EXCEPT .
A) China
B) Russia
C) South Korea
D) Saudi Arabia
14. In a totalitarian political system, .
A) political power resides with the citizens of the country
B) governments direct most economic activity but few social ones
C) an individualistic outlook shapes political debate and policy formation
D) one agent monopolizes political power
15. Which of the following would most likely be used in a totalitarian system to
promote unconditional support for the official ideology?
A) privately owned media outlets
B) a parliamentary system
C) state control of the education system
D) a representative legislative body
16. 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
17. Which of the following is a true statement about China?
A) The Chinese government's shift from communism to capitalism has led to an increase in
FDI.
B) China attracts FDI because the government has eliminated elaborate bureaucracies.
C) The Chinese government manipulates market activities for political purposes.
D) China lacks an educated pool of employees due to slowly developing industrialization.
18. Which of the following countries has a collectivist orientation?
A) Canada
B) Australia
C) Japan
D) Netherlands

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

A) Fascism
B) Socialism
C) Democracy
D) Totalitarianism

20. What does Authoritarianism refer to?

A. A political structure with direct citizen participation
B. A form of governance with checks and balances
C. A system of government based on democratic principles
D. Rule by one or more individuals who have absolute power and no substantive accountability for citizens
21. Which legal system is characterized by laws based on religious beliefs and teachings?
A. Religious law
B. Civil law
C. Theocratic law
D. Common law
22. What are the risks associated with government changes, tax system changes, and
impediments to factor of production transfer collectively known as?

A. Legal risks
B. Political risks
C.Operational risks
D.Economic risks
23. What is the right to patent known as in the first to file
system?
A. Patent privilege
B. First claim
C. Inventor's
right D. Priority
right
24. What type of entry mode involves international licensing, franchising, and
wholly owned subsidiary?
A. Transfer-related entry modes
B. Direct exporting

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C. Indirect exporting
D. Trade-related entry modes

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CHAPTER 3 CULTURAL ENVIRONMENT
1. What is the degree of unfamiliarity with a foreign business location's culture known as?
A. Cultural integration
B. Cultural awareness
C. Cultural distance
D. Cultural adaptation
2. What is the Culture Psychic Distance Paradox?
A. Expatriates overestimating cultural differences and experiencing greater culture shock
B. Expatriates accurately estimating cultural differences and experiencing less culture shock
C. Expatriates ignoring cultural differences and experiencing no culture shock
D. Expatriates underestimating cultural differences and experiencing greater culture shock
3. What do Hofstede's cultural dimensions impact in the context of international business?
A. Financial reporting standards
B. Supply chain management strategies
C. Technology adoption and innovation
D. International business decisions
4. 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.
5. Businesspeople seeking to understand more about another culture in order to
successfully conduct business within that culture would be best advised to do which of the
following?
A) observe the behavior of people who have gained respect within that cultural
environment
B) rely on stereotypes, which are based on averages, to gain an understanding of the culture
C) avoid cultural research studies because they perpetuate unjustified stereotypes and behaviors
D) memorize the cultural variations that are typically encountered in a specific cultural
environment
6. Certain attitudes can link groups, such as managers, from different nations more
closely than managers within a given nation. As a result, international businesspeople

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should most likely
.
A) assume that there are few significant cultural differences among nations
B) examine relevant groups when comparing nations
C) adopt universal operating methods
D) avoid cultural imperialism

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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
8. Which of the following is the MOST accurate statement about culture?
A) Cultural variables can easily be isolated from other factors such as economic and political
conditions.
B) Although most cultural variables are universal, the forms these variables take differ
from culture to culture.
C) Most cultural variables are superficial and can easily be influenced by environmental factors.
D) Within a culture, everyone responds to particular cultural variables the same way.
9. Which of the following is a common shortcoming of studies examining culture in
different countries and regions?
A) Cultures are static, which leads researchers to draw false conclusions from old data.
B) It is impossible to compare countries because of differences in data.
C) Responses are reported in averages, which can lead to a belief in unrealistic stereotypes.
D) People are reluctant to complain about their own cultures, so they present only positive
opinions to researchers.
10. Which of the following BEST describes a result of cultural collision in international
business?
A) A company implements practices that are less effective than intended.
B) Local employees are overlooked for promotions by home country managers.
C) Expatriate managers rely too heavily on local employees for negotiating business deals.
D) Foreign and domestic companies make adjustments for the local culture and legal environment.
11. When divergent cultures come in contact, occurs.
A) power distance
B) culture shock
C) cultural collision
D) group membership
12. 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
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C) such an approach tends to be polycentric
D) variations tend to be great within a country (state)

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13. A nation offers a workable reference for studying cultural differences because .
A) the 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
14. Managing and cultivating diverse teams is facilitated by first encouraging team members
to
.
A) understand each other's culture before dealing with the tasks at hand
B) jump into the task allowing the team members to react and adapt to each other
C) deal with fellow team members as they would in their own culture
D) establish strict rules on how the task will be performed

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CHAPTER 4 FOREIGN DIRECT INVESTMENTS
1. 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
2. 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
3. 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
4. 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
5. Why can a company more easily pursue a global strategy when it owns 100 percent
of foreign operations?
A) The company is not likely to face overcapacity issues.
B) The company limits foreign-exchange rate fluctuations.
C) The company avoids communication misunderstandings.
D) The company can sub-optimize results in one country in order to optimize results
globally.
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6. A green field investment is another name for a company's decision to .
A) acquire an interest in an existing foreign operation
B) implement sustainable marketing practices

26
C) construct a new facility in a foreign market
D) build a facility for a local company
7. A U.S firm is acquiring an existing company in Germany rather than starting up a new
foreign operation. Which of the following statements best supports this decision?
A) Because the German firm is performing poorly, there is a good turn-around opportunity.
B) The U.S. firm's U.S. facility is working at capacity.
C) Stock market prices have been very high in Germany.
D) The German firm has skilled personnel that the U.S. firm cannot hire at a good price on its
own.
8. 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.
9. Executives at a U.S firm are debating whether to start a new operation in Russia or
acquire an existing one. Which of the following factors best supports a decision to start
up a new operation in Russia?
A) The Russian government places restrictions on the outward transfer of foreign capital.
B) Labor relations at existing Russian firms are poor and difficult to change.
C) Russia's currency is weak and stock market prices are significantly depressed.
D) Existing companies have goodwill and positive brand recognition in Russia.
10. A U.S firm with a production facility in Brazil uses its own personnel to handle almost
all activities because their outsourcing would be too costly and inefficient.Its
internalization will most likely lead to cost savings because the firm can avoid .
A) costly customs brokers
B) high, fixed start-up costs
C) the costs of enforcing an agreement
D) sharing profits
11. 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.

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C) People in small economies are more nationalistic in their purchases.
D) Small economies frequently lack sufficient markets for large-scale production.

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CHAPTER 5 INTERNAITONAL BUSINESS STRATEGIES
1. A is a special outlook, skill, capability, or technology that runs through
the firm's operations, weaving together all value activities into an integrated value
chain.
A) core competency
B) value proposition
C) mission statement
D) learning curve
2. 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
3. Political, legal, economic, monetary, and institutional forces comprise the of
international business and influence managers' actions.
A) environment
B) competition
C) culture
D) threat
4. Which of the following has the greatest potential to transform an industry's structure?
A) a change in a competitor's management
B) a change in a competitor's pricing structure
C) the expansion of a distribution channel
D) the exit of a competitor from the industry
5. Phillip is an international business manager with Corbin Manufacturing. Which of the
following serves as an external influence on the business decisions that Phillip makes?
A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards
6. Which of the following is the most important constraint on the explanatory power
of the IO paradigm?
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A) Many industries are imperfectly competitive.
B) Many companies are locally but not internationally competitive.

30
C) Most customers have perfect knowledge of the products they select.
D) Most industries have many firms that each have small market shares.
7. Rather than an inspirational statement, a(n) statement is meant to motivate people
to act and specify the objectives that the firm needs to attain.
A) mission
B) vision
C) expectation
D) strategy
8. A(n) outlines a firm's ultimate goal and its guiding values in broad terms.
A) mission
B) strategy
C) vision
D) imperative
9. Which of the following refers to the means by which management applies the systems
that link a company's value activities, whether those activities are performed in one or in
many countries?
A) configuration
B) logistics
C) coordination
D) core competency
10. The industry organization (IO) paradigm assumes which of the following?
A) stable political and cultural trends
B) shifting foreign-exchange rates
C) perfect competition
D) unequal value
11. Which force in Toyota's immediate environment would most likely have the greatest
impact on its strategy?
A) interest rate trends
B) technological developments
C) shifts in U.S. political attitudes
D) actions taken by Honda and Mercedes Benz
12. The industry organization (IO) paradigm reports that, on average, the BEST predictor
of firm strategy is the .
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A) company's stockpile of assets, skills, and capabilities
B) aggressiveness of a company's marketing objectives

32
C) link between a company's products and processes
D) structure of the industry in which it competes
13. Improving explanatory power of the IO paradigm can be done by considering the
potential for
to lead to a company's sustained competitive advantage.
A) bright, motivated managers
B) political trends and events
C) cultural institutions
D) new markets
14. The goal of most firms is to choose a strategy that
A. maximizes the value of the firm for its shareholders
B. that minimizes costs
C. that emphasizes high sales
D. that controls both costs and expenses
15 is a ratio or rate of return concept.
A. Profitability
B. Performance
C. Cash flow
D. Efficiency
16. Two basic conditions determine a firm's profits are
A) the firm's costs of production and the state of the economy
B) the amount of value customers place on the firm's good and services and the firm's costs
of production
C) the quality of a firm's products and the industry the firm participates in
D) the industry the firm participates in and the state of the economy
17. The percentage increase in net profits over time is
A) capital return
B) profitability
C) net profits
D) profit growth
18. A strategy that focuses on lowering production costs is referred to as a (n)
A. differentiation strategy.
B. cost minimization strategy.
C. low cost strategy.
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D. efficiency strategy.
19. A consumer surplus can be thought of as .

34
A. what the consumer has “left-over” after a purchase
B. how much extra a consumer has to pay for a product
C. value for the money
D. the higher price the consumer must pay for getting a quality product
20. In the context of value chain analysis, the primary activities of a firm include:
A) R&D, human resources, materials management, and production
B) service, human resources, production, and materials management
C) company infrastructure, information systems, human resources, and materials management
D) R&D, production, marketing & sales, and service
21. Global expansion allows firms to achieve all of the following except .
A) minimize returns by failing to capture skills developed in foreign countries
B) realize location economies by dispersing value creation activities on the optimal location
C) realize cost economies from experience effects generated by serving a larger market from
a central location
D) expand the market for their domestic product offerings by selling those products in
international markets
22. Companies that are successful at global expansion are successful at transferring their
A. competitive advantage
B. comparative advantage
C. core competencies
D. core advantage
23. Economies that arise from performing a value creation activity in the optimal
location for that activity are referred to as .
A) factor economies
B) production economies
C) location economies
D) value creation economies
24. When individuals learn the most efficient ways to perform particular
tasks, there are
A) location economies
B) value creation effects
C) experience curve effects
D) learning effects

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25. Economies of scale arise from all of the following sources EXCEPT .
A) locating production in the optimal location

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B) spreading fixed costs over a large volume
C) serving global markets
D) bargaining with suppliers to bring down the cost of key inputs
26. When a firm needs to minimize its unit costs, the firm is facing .
A. pressure for cost reduction
B. pressure to be locally responsive
C. pressure for location economies
D. pressure for experience effects
27. Responding to requires that a firm differentiate its product offering and
marketing strategy from country to country in an effort to respond to differences in
consumers tastes and preferences, business practices, distribution channels, competitive
conditions, and government policies.
A) pressure for cost reductions
B) pressure for experience effects
C) pressure for location economies
D) pressure to be locally responsive
28. A firm that is positioned in the upper left hand corner of the cost reductions/local
responsiveness grid is facing
A) high pressure for local responsiveness and high pressure for cost reductions
B) low pressure for local responsiveness and high pressure for cost reductions
C) high pressure for local responsiveness and low pressure for cost reductions
D) low pressure for local responsiveness and low pressure for cost reductions
29. All of the following add to the pressure to be locally responsive except .
A) national differences in infrastructure
B) differences in accepted business practices
C) consumers with low switching costs
D) host government demands
30. Firms such as Intel or Texas Instruments that produce products serving universal needs
follow a
strategy.
A) global standardization
B) localization
C) international

37
D) transnational
31. Apple Inc. suit with strategy

38
A) international
B) global standardization
C) localization
D) transnational
32. Which of the following best describes the concept of economies of scale?
A) Reducing production costs by increasing output
B) Increasing the price of goods to maximize profits
C) Enhancing product quality through local sourcing
D) Diversifying product lines to capture different markets
33. In a global market, firms often face the challenge of balancing cost reduction with
.
A) product differentiation
B) market saturation
C) technological advancement
D) regulatory compliance
34. What is the primary advantage of a transnational strategy for firms operating in
multiple countries?
A) It allows for complete standardization of products
B) It enables firms to be responsive to local markets while achieving cost efficiencies
C) It focuses solely on cost leadership
D) It eliminates the need for local partnerships
35. What is a potential reason for the failure of Joint Ventures (JVs) as a form of Global
Strategic Alliances (GSAs)?
A. Loss of autonomy and conflict between partners
B. Inability to adapt to local cultural norms
C. Lack of technological advancements in the industry
D. Strict government regulations in the host country
36. What is a key feature of Foreign Direct Investment (FDI) entry modes?
A. They involve minimal risk due to government support
B. They include market-related, production-related, resource-related, and control of
strategic assets
C. They exclude control of strategic assets in the new
market

39
D. They primarily focus on short-term profit generation
37. What is a characteristic of Global Strategic Alliances (GSAs) in the context of
international business?

40
A. They are cross-border partnerships between firms from different countries to
improve competitive advantage
B. They involve complete acquisition of a foreign company by the parent firm
C. They focus solely on independent operations without collaboration
D. They limit the sharing of risks and resources between partner firms

41
CHAPTER 6 INTERNATIONAL BUSINESS ORGANIZATION
1. Decision making in a functional structure tends to be .
A) decentralized
B) centralized
C) horizontal
D) collaborative
2. Functional structures for international operations are most likely found among those
companies that .
A) have a narrow range of products that rely on economies of scale
B) have multiple products that share few common technologies
C) rely on differentiated marketing methods
D) compete in unstable industries
3. A major benefit of the international division structure is .
A) outsourcing distribution and shipping tasks
B) responding quickly to foreign events
C) diversifying most product groups
D) hiring low-cost, local workers
4. The balance between centralization and decentralization of authority in a company is
known as
.
A) systemic differentiation
B) horizontal differentiation
C) schematic differentiation
D) vertical differentiation
5. At Tyson Manufacturing, departments and units are organized around discrete business
activities, such as finance, production, marketing, and human resources. Tyson most likely
has a
structure.
A) network
B) matrix
C) functional
D) divisional

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6. is the matter of how the company balances centralization versus
decentralization of decision making, whereas is the matter of how the company
opts to divide itself into specific units to do specific jobs.
A) Horizontal differentiation; vertical differentiation

43
B) Vertical differentiation; systemic differentiation
C) Schematic differentiation; schematic differentiation
D) Vertical differentiation; horizontal differentiation
7. In general terms, we see the principles of horizontal differentiation in the design logic of
.
A) vertical differentiation
B) decentralization
C) the value chain
D) the unity-of-command principle
8. Johnson & Johnson distributes decision-making power among departments and
divisions.This policy provides managers with a sense of ownership and control at the
company.Johnson & Johnson is best described as a organization.
A) vertical
B) centralized
C) horizontal
D) decentralized
9. Whereas executives specify roles and relationships in a functional structure in terms of
, they use the divisional structure format to specify them according to .
A) inputs; outputs
B) buyers; suppliers
C) markets; countries
D) politics; economics
10. Which of the following statements is most likely true regarding vertical differentiation?
A) MNEs with decentralized structures are more appealing to foreign workers.
B) Most MNEs balance authority between headquarters and subsidiaries because of
globality.
C) MNEs with many organizational levels are less likely to perform well in emerging markets.
D) Most MNEs implement centralized authority structures due to the complexity of globalization.
11. Organization refers to the formal arrangement of roles,
responsibilities, and relationships within an organization.
A) structure
B) systems
C) culture
D) strategy
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12. A structure is the ideal way to organize work when global integration
is more important than local responsiveness and the industry structure
encourages cost leadership.

45
A) decentralized
B) matrix
C) divisional
D) functional
13. The idea of involves how a company specifies organizational tasks; divides
those tasks into jobs, departments, subsidiaries, and divisions; and then assigns authority
and authority relationships.
A) systemic differentiation
B) horizontal differentiation
C) vertical differentiation
D) schematic differentiation
14. The the level of the company at which managers make decisions, the
more that organization is .
A) higher; decentralized
B) lower; centralized
C) higher; centralized
D) higher; unstructured
15. The concept of organization includes how a company does all of the following EXCEPT .
A) specifies the framework for work
B) develops systems that coordinate and control tasks
C) cultivates a common workplace culture among employees
D) plans leadership and training programs to develop the managerial staff
16. Which of the following is the LEAST likely reason that global firms are shifting
away from formal organizational structures?
A) advancements in communication systems
B) changes in managerial standards
C) opportunities in new markets
D) demands of stockholders
17. In which of the following situations would a company most likely benefit from
using the international division structure?
A) when the company's different foreign markets pose significantly different opportunities
and threats
B) when the company relies on local managers in foreign operations to make strategic decisions

46
C) when the company's domestic market activity is much more important than its
international business activity

47
D) when the company's domestic business activity has reached its full market potential
18. Tyrone is a production manager at Penderhall Electronics, an MNE with operations in
Asia, Europe, and the United States. Tyrone has very little decision-making authority at
Penderhall, since most decisions are made at headquarters and distributed downward.
Which structure is most likely used by Penderhall?
A) centralized
B) systematic
C) decentralized
D) multidomestic
19. Historically, managers built organizations by focusing on the boxes and lines of a(n)
structure.
A) formal
B) innovative
C) collaborative
D) flexible

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CHAPTER 7 MODES OF ENTRY
1. The alliance between two companies, both own a part of the company, share risks,
technology and rewards is
A. Foreign Direct Investment
B. Licensing
C. Joint Venture
D. Franchising
2. is the riskiest way of entering a new market, because it involves buying an
existing business or setting a new one.
A. Foreign Direct Investment
B. Licensing
C. Joint Venture
D. Franchising
3. is an easy way to enter markets with high trade restrictions as a company
gives the right to use the property to another company in a new market in exchange for a
fee
Foreign Direct Investment
A. Foreign Direct Investment
B. Licensing
C. Joint Venture
D. Exporting
4. What is it called when a domestic firm buys part of a foreign company or partners with
a foreign company to create a new business?
A. Direct Investment
B. Joint Venture
C. Contract Partnership
D. Exporting
5. What risks does a joint venture between a domestic and foreign company come with?
A. the foreign market's demands could change and lower production value
B. it's an ineffective and expensive way to gain experience in a foreign market.
C. the domestic market's demands could change and lower production value
D. one partner can be bought out by the other, or management can not agree on overall
strategies

49
6. What is a potential downside of licensing as an international collaborative entry mode?
A. Creation of a potential competitor in the licensee
B. Lack of control over the licensee

50
C. Higher risk of exposure to economic instability
D. Difficulty in accessing markets with low entry barriers
7. What is a characteristic of franchising as an international collaborative entry mode?
A. Lower level of business know-how sharing
B. Lower risk of market penetration
C. Higher level of marketing expertise required
D. Higher level of control over the franchisee
8. What is a characteristic of consortia as an international collaborative entry mode?
A. Creates a monopoly effect
B. Not allowed in markets where the government controls activity
C. Involves two or more companies
D. Typically used in markets with high entry barriers
9. What is the primary goal of international collaborative entry modes?
A. To minimize risks and maximize control
B. To create new competitors in the market
C. To reduce the level of business know-how sharing
D. To access markets that may be closed or have high entry barriers
10. What is the main difference between international strategic alliances and joint
venturing?
A. Level of control over the business operations
B. Type of business know-how shared
C. Level of equity ownership
D. Number of companies involved
11. What is the main characteristic of a Wholly Owned Subsidiary?
A. A branch office with limited marketing activity
B. A joint venture between two local companies
C. A foreign company with full control and high risk
D. A type of international collaborative entry mode
12. What is the primary difference between a Wholly Owned Subsidiary and a Branch Office?
A. Type of business activity engaged in
B. Number of employees
C. Level of investment required
D. Level of control and autonomy

51
13. Why might a company choose to engage in a joint venture?
A. Due to governmental pressure or mutually beneficial commercial considerations

52
B. To increase control and autonomy
C. To exit the international market
D. To reduce costs and minimize risk
14. What is a common characteristic of foreign direct investment entry modes?
A. Low levels of control and investment
B. High levels of risk and long-term commitment
C. Limited market access
D. High employee turnover
15. What is the primary advantage of a Wholly Owned Subsidiary over a Joint Venture?
A. Greater control and autonomy
B. Increased local knowledge
C. Faster market entry
D. Lower costs
16. What do Horizontal Mergers involve?
A. Companies in the same industry
B. Companies at different levels within an industry's supply chain
C. Companies with no relation to each other
D. Companies in different industries
17. What do Diversification alliances involve?
A. Partnerships between competitors
B. Partnerships between unrelated companies
C. Partnerships between companies in different lines of business
D. Partnerships between companies in the same line of business
18. What does Global Strategy refer to?
A. Maximum local responsiveness by customizing product and marketing strategy
B. Customizing product and marketing strategy to match different national conditions
C. Measuring levels of integration, personal contact, technology, and political engagement
D. A single strategy for the entire global network for subsidiaries and partners
19. What is a characteristic of Wholly Owned Subsidiary as an international business entry
mode?
A. It requires obtaining permission from the government to operate in the new country
B. It offers 100% ownership in a new country and increased flexibility and control
C. It limits the control and decision-making authority of the parent company

53
D. It involves sharing ownership with a local partner to reduce risk

54
CHAPTER 8 INTERNATIONAL HUMAN RESOURCE MANAGEMENT
1. Which of the following is a characteristic of India that discourages MNE investment?
A) slow market growth
B) restrictive labor laws
C) poor communication infrastructure
D) government controlled market
2. Generally, HRM is more difficult for international companies for all of the following
reasons EXCEPT which one?
A) Dual career and family obligations make it tough to convince executives to leave the home
office to join a foreign subsidiary.
B) Leadership styles and management practices are so similar from country to country
that it is difficult to create a culture of innovation.
C) Complications arise due to enduring political, cultural, legal, and economic differences
between countries.
D) Labor markets are dramatically different in the mix of workers, costs, and productivity.
3. Which of the following trends has LEAST likely led to the increased demand for expatriate
talent?
A) market developments
B) technology changes
C) globalization
D) nationalism
4. are expat lifers who work an ongoing series of international assignments and
often plan never to return to headquarters or even to their original home.
A) Home-country nationals
B) Transpatriates
C) Inpatriates
D) Flexpatriates
5. Growing demand for expatriates stems from which of the following trends?
A) the emergence of developing countries as high-growth markets
B) the resurgence of developed countries as high-growth markets
C) the reduced need for localized expatriate assignments
D) the longer-term assignments created in response to the global credit crisis
6. Home-country nationals are .

55
A) used a great deal abroad by polycentric companies
B) citizens of the countries in which they are working

56
C) citizens of the country where the company is headquartered
D) noncitizens of the countries in which they are working
7. Mona, a native of India, is employed by IBM in the firm's facility in New Delhi.Mona
is best described as a(n) .
A) expatriate
B) local
C) third-country national
D) home-country national
8. Jeanette Thompson, a native Texan, is being sent by her company, Samsung of South
Korea, to head up a new facility in Hong Kong. Jeanette would be considered a(n) .
A) inpatriate
B) host-country citizen
C) third-country national
D) local executive
9. Why is management of international human resources more difficult than
directing human resources at the domestic level?
A) the challenge of adjusting for political, cultural, legal, and economic differences between
countries
B) the challenge posed by managers in other countries that aim to achieve global
objectives for the company no matter the costs imposed on national objectives
C) the greater similarity among foreign subsidiaries than among domestic subsidiaries in
terms of dependence on headquarters for resources
D) the complications posed by dealing with competing agendas from different labor unions in
different countries
10. There is growing consensus that human resource managers must hire, develop,
reward, and retain people whose performance explicitly improves the .
A) productivity of the firm's core competencies
B) fit between the firm's practices and industry standards
C) firm's engagement of political authorities
D) firm's responsiveness to customer complaints
11. Traditionally, expatriates were ; today, HRM increasingly considers .
A) men; women
B) women; men

57
C) mid-level and mid-career executives; older employees and younger employees
D) older employees and younger employees; mid-level and mid-career executives

58
12. A company that decides to "localize" expatriate assignments will offer an expatriate the
option of
.
A) serving a shorter assignment in the host country
B) becoming a naturalized citizen of the host country
C) moving to an emerging market closer to the home country
D) retaining a foreign assignment provided he or she accepts the status of a local hire
13. Ongoing research confirms that MNEs with superior practices correlate to
high productivity, value creation, and a competitive advantage.
A) human resource
B) human capital
C) expatriate
D) parent-country
14. refers to the activities that an organization carries out to put the right person
into the right job in the right place at the right time for the right salary.
A) Work force analysis
B) Staff development
C) Human resource management
D) Leadership planning

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