Deck 3: Managing in a Global Environment

Question 1

Business has become a unified, global field as trade barriers fall, communication becomes faster and cheaper, and consumer tastes converge.

Answer 1

True

Question 2

An example of global outsourcing is seen when Gap, Inc uses low-cost Caribbean labor to cheaply produce its clothing, and then finishes off and sells its clothing in the United States.

Answer 2

True

Question 3

The criterion traditionally used to classify countries as developed or developing is per capita income.

Answer 3

True

Question 4

Fifteen member states of the EU have adopted the rupee, as a single European currency.

Question 5

Large international firms typically are called multinational corporations.

Question 6

Licensing means engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies.

Question 7

One advantage to acquiring a wholly owned foreign affiliate is that the company that acquires it would then have complete control.

Question 8

A tendency to regard their own culture as superior and to downgrade other cultures reflects an attitude called geocentric.

Question 9

With exporting, the corporation transfers its products for sale and its production facilities in foreign countries.

Question 10

The sub-divisions of the international environment are the economic, the sociocultural, and the legal-political environments.

Question 11

The goal of the European Union is to create a powerful single market system for Europe's millions of consumers.

Question 12

A form of direct investment is franchising.

Question 13

Seeking cheaper sources of materials or labor offshore is called offshoring.

Question 14

The basic management functions of planning, organizing, leading, and controlling are the same whether a company operates domestically or internationally.

Question 15

Because of cheap labor, most international business firms are headquartered in the less developed countries of Asia and South America.

Question 16

The least costly and least risky direct investment is called a greenfield venture.

Question 17

Direct investing means that the company is involved in managing the productive assets, which distinguishes it from other entry strategies that permit less managerial control.

Question 18

When Harbor Trades, a Korean-based company, makes resources including technology, managerial skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby allowing Nano to make products similar to Harbor, it is engaging in exporting.

Question 19

The term top of the pyramid refers to the more than four billion people who earn the least, as defined by per capita income.

Question 20

When a company builds a subsidiary from scratch in a foreign country it is called a greenfield venture.

Question 21

According to the GLOBE Project, gender differentiation refers to the extent to which a society maximizes gender role differences.

Question 22

The countries experiencing political stability face the greatest threat of violence.

Question 23

Many U.S. managers fail to realize that the values and behaviors that typically govern how business is done in the United States do not translate to the rest of the world.

Question 24

Ethnocentrism refers to a natural tendency of people to regard their own culture as superior and to downgrade or dismiss other cultural values.

Question 25

A country's physical facilities that support economic activities make up its infrastructure.

Question 26

Social values greatly influence organizational functioning and management styles.

Question 27

Collectivism means a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members' interests.

Question 28

The primary emphasis of polycentric companies is on their home countries.

Question 29

According to the GLOBE Value Dimensions, Japan and Russia both have very high performance orientation.

Question 30

A multinational corporation typically receives more than 25 percent of its total sales revenues from operations inside the parent's home country.

Question 31

Geocentric companies are truly world-oriented and favor no specific country.

Question 32

The estimated 2010 misery index figures suggest significantly less misery for almost every country as compared to figures at the beginning of the century.

Question 33

A high humane orientation means that a society encourages toughness, assertiveness, and competitiveness.

Question 34

A low-context culture is a culture in which communication is used to enhance personal relationships.

Question 35

Market risk is defined as the risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments.

Question 36

An MNC is managed as an integrated worldwide business system.

Question 37

People who value high power distances normally expect equality in power.

Question 38

The social value of uncertainty avoidance is evident in countries like Greece, which supports beliefs that provide stability and conformity among its citizenry.

Question 39

A high-context interaction requires more time because a relationship has to be developed, and trust and friendship must be established.

Question 40

According to the GLOBE Project, a society with a high performance orientation places high emphasis on performance and rewards people for performance improvements and excellence.

Question 41

CRL, a European plastics manufacturer, is considering forming an alliance with a U.S. military goods manufacturer to develop a new type of polymer that can be used for international industrial and military applications. Such a partnership represents what type of direct investment?

A) Franchising
B) Joint Venture
C) Wholly owned affiliate
D) Greenfield venture
E) Outsourcing

Question 42

German, Swiss, and North American cultures are among the high-context cultures.

Question 43

As a first step into international business, which two countries are most companies going to today?

A) Russia and Japan
B) Sweden and Germany
C) China and India
D) Brazil and Philippines
E) Indonesia and Brazil

Question 44

Which of the following pairs of alternatives closely resemble each other in the amount of ownership, control and risk obtained in operating international businesses?

A) Direct investment/franchising
B) Wholly owned foreign affiliate/countertrade
C) Exporting/licensing
D) Franchising/licensing
E) All of these

Question 45

The Maquiladora industry along the Texas-Mexico border on the Mexico side uses cheap labor for assembling products. This lowers the price for U.S. consumers and is an example of:

A) licensing.
B) joint venture.
C) outsourcing.
D) franchising.
E) none of these.

Question 46

Go RVing, a U.S. company, built a subsidiary from scratch in England. This is an example of:

A) franchising.
B) greenfield venture.
C) joint venture.
D) exporting.
E) licensing.

Question 47

Which of the following is an entry strategy in which the organization maintains its production facilities within its home country and transfers its products for sale in foreign markets?

A) Franchising
B) Licensing
C) Exporting
D) Greenfield venture
E) Joint venture

Question 48

Today's companies compete in a .

A) growingly domestic
B) low-context culture
C) high-context culture
D) Greenfield economy
E) borderless world

Question 49

The extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries is called .

A) standardization
B) industrialization
C) globalization
D) internationalism
E) linguistic pluralism

Question 50

Companies that have a have a competitive edge.

A) globally
B) regionally
C) nationally
D) strategically
E) "customers first"

Question 51

A foreign subsidiary over which an organization has complete control is called a:

A) joint venture.
B) licensing agreement.
C) franchise.
D) wholly owned foreign affiliate.
E) foreign venture.

Question 52

Exporting, licensing, and direct investing are called strategies because they represent alternative ways to sell products and services in foreign markets.

A) globalized
B) expansion
C) retrenchment
D) market entry
E) concentrated business

Question 53

Ethnocentrism refers to a natural tendency of people to regard their own culture as inferior to other cultures.

Question 54

The Digitec company has recently decided to design and manufacture a laptop that retails for under $50, in an effort to make information technology available to people in places like rural Africa and rural India. This is known as what type of strategy?

A) Bottom of the pyramid strategy
B) Skimming the barrel strategy
C) Cream of the crop strategy
D) Top of the peak strategy
E) Base price strategy

Question 55

is a concept that proposes that corporations can alleviate poverty and other social ills by selling to the world's poorest people.

A) Cream of the crop
B) Skimming the barrel
C) Bottom of the pyramid
D) Top of the peak
E) Base hierarchy

Question 56

places an emphasis on a worldwide perspective.

A) Polycentric companies
B) Geocentric companies
C) Ethnocentric companies
D) Regiocentric companies
E) Domestic companies

Question 57

is the most widespread approach to international involvement in China and India.

A) Importing
B) Exporting
C) Manufacturing
D) Outsourcing
E) Greenfield venture

Question 58

Your company is interested in producing and marketing a line of coffee that will penetrate the Chinese market. Your firm is willing to supply the equipment, products, product ingredients, trademark, and standardized operating system to entrepreneurs. What type of strategy are you going to use?

A) Wholly owned foreign affiliate
B) A greenfield venture agreement
C) A franchise
D) An export agreement
E) Barter trade

Question 59

Franchising is a form of which of these?

A) Direct investing
B) Licensing
C) Exporting
D) Countertrade
E) Barter trade

Question 60

Which of the following refers to engaging in the international division of labor so as to obtain the cheapest sources of labor and supplies regardless of country?

A) Franchising
B) Licensing
C) Market entry strategy
D) Outsourcing
E) Activity

Question 61

is normally used to classify countries as developed or developing.

A) Exchange rates
B) Interest rates
C) Gross national product
D) Per capita income
E) Inflation rates

Question 62

Political risk is defined as an organization's risk of due to politically based events or actions by host governments.

A) loss of assets
B) managerial control
C) earning power
D) all of these
E) managerial control and earning power only

Question 63

Rooftop International, Inc. buys insurance against host government takeover when investing in foreign countries. This is an example of which sector of the international environment?

A) Legal-political
B) Sociocultural
C) Technological
D) Economic
E) Infrastructure

Question 64

Which of the following is NOT a legal-political factor in the international environment?

A) Laws and regulations
B) Language
C) Tariffs, quotas, taxes
D) Political risk
E) Government takeovers

Question 65

In international operations, the economic environment represents all of the following factors except:

A) infrastructure.
B) resource and product markets.
C) laws and regulations.
D) inflation.
E) exchange rates.

Question 66

A.R.C. is a large non-profit humanitarian aid organization that has been forced to pull out of several African markets in recent years due to civil wars and large-scale violence. This demonstrates which frequently cited problem for international companies?

A) Political instability
B) Communist governments
C) Economic instability
D) Political risk
E) Financial risk

Question 67

Exchange rates are included in which of the following international environments?

A) The legal-political sector
B) The economic environment
C) The sociocultural environment
D) The barter system environment
E) The government sector

Question 68

Resource development, infrastructure, and exchange rates all describe which dimension in the international environment?

A) Economic
B) Legal
C) Political
D) Sociocultural
E) Technological

Question 69

Language, values, religion, and education all describe which dimension in the international environment?

A) Economic
B) Legal
C) Political
D) Sociocultural
E) Technological

Question 70

Your grocery store in India is having trouble getting the local farmers to supply you with the proper produce. This is a problem with India's:

A) product market.
B) resource market.
C) infrastructure.
D) economy.
E) power distance.

Question 71

The management of business operations conducted in more than one country is called:

A) global management.
B) international management.
C) outsourcing management.
D) planning management.
E) domestic management.

Question 72

A country's physical facilities that support economic activities make up its .

A) resource markets
B) infrastructure
C) physical markets
D) product markets
E) plants and equipment

Question 73

The legal-political environment, in international operations, includes which of the following?

A) Shared knowledge, beliefs and values
B) Political risks
C) Social organizations
D) Infrastructure
E) None of these

Question 74

A company's risk of loss of assets, earning power, or managerial control due to politically based events or action by host government is referred to as:

A) MFN.
B) political risk.
C) tariffs.
D) political instability.
E) terrorism.

Question 75

If you built a computer company in Africa and then found that your product was having difficulty being distributed to customers because of the road system, your problem would be related to:

A) an inadequate infrastructure.
B) an economy incapable of supporting growth.
C) a poor resource market.
D) a poor product market.
E) none of these.

Question 76

The Write Pens, Inc. wants to reduce transferring costs by producing closer to the consumer in a foreign country. This will also help in reducing transportation and storage costs. Which strategy would be the best to use given the circumstances?

A) Franchising
B) Exporting
C) Direct investing
D) Barter agreement
E) Licensing

Question 77

A foreign terrorist kidnaps your firm's marketing VP while the VP is in the host country. This is a harsh example of:

A) economic development.
B) infrastructure.
C) political risk.
D) international law.
E) social risk.

Question 78

In international operations, the economic environment includes:

A) shared knowledge, beliefs and values.
B) political risks.
C) social organizations.
D) infrastructure.
E) tariffs, quotas, and taxes.

Question 79

generally are located in Asia, Africa and South America.

A) MNCs
B) EUs
C) LDCs
D) WTOs
E) MFNs

Question 80

aspects of management do not change when doing business internationally.

A) Planning
B) Organizing
C) Controlling
D) Leading
E) All of these