Deck 5: 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

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

The global stage of corporate international development is also referred to as the stateless stage.

Question 5

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

Question 6

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

Question 7

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

Question 8

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 9

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

Question 10

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

Question 11

Large international firms typically are called multinational corporations.

Question 12

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

Question 13

A form of direct investment is franchising.

Question 14

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 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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 24

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

Question 25

An MNC is managed as an integrated worldwide business system.

Question 26

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

Question 27

Social values greatly influence organizational functioning and management styles.

Question 28

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

Question 29

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

Question 30

Cultural intelligence refers to a person's ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioural responses.

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

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

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

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

Question 41

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

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

Question 42

An industry uses cheap overseas labour for assembling products. This lowers the price for consumers and is an example of:

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

Question 43

Which have been the two most attractive countries for global companies so far?

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 refers to engaging in the international division of labour so as to obtain the cheapest sources of labour regardless of country?

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

Question 45

_____ places an emphasis on a worldwide perspective.

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

Question 46

A company designs and manufactures £50 laptops in an effort to make information technology available to poor 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 47

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

Question 48

A company wants to produce and market a line of coffee to sell in the Chinese market. The company will supply the entire business system to entrepreneurs, including the equipment, products, product ingredients, trademarks and standardized operating systems. Which type of entry strategy is this?

A) Wholly owned foreign affiliate
B) Greenfield venture agreement
C) Franchise
D) Export agreement
E) Barter trade

Question 49

A company operates globally, making sales and acquiring resources in whichever state offers the best opportunities and lowest cost. The company can be called a:

A) Stateless
B) Multinational
C) International
D) Domestic
E) Multidomestic

Question 50

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

Question 51

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

Question 52

For most western companies, ____ of their manufacturing has led to massive job creation in China and India.

A) Importing
B) Exporting
C) Insourcing
D) Outsourcing
E) Transferring

Question 53

Which of the following is an entry strategy in which organizations maintain their production facilities within their home countries but ship their products to foreign markets for sale?

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

Question 54

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 55

_____ is a concept that proposes that corporations can take measures to alleviate the poverty and social ills of the world's poorest people.

A) Cream of the crop
B) Skimming the barrel
C) Helping those at the bottom of the pyramid
D) Top of the peak
E) Base hierarchy

Question 56

Today's companies compete in a _____.

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

Question 57

Stateless stage is also referred to as the _____ stage.

A) multinational
B) global
C) multidomestic
D) international
E) domestic

Question 58

A company wants to build a new factory from scratch overseas. This is an example of:

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

Question 59

A company is considering forming an alliance with a foreign manufacturer to develop a new type of polymer that can be used for industrial 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 60

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

A) Foreign direct investment / reselling
B) Wholly owned foreign affiliate / countertrade
C) Export / Import
D) Franchising / licensing
E) All of these

Question 61

If a company was having difficulty distributing products by truck to customers because of a poor road system, the 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 62

Which aspect of business management would not change when doing business internationally?

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

Question 63

A supermarket is having trouble getting the local farmers to supply it with fresh produce. This is a problem with the:

A) metal market.
B) natural resource market.
C) infrastructure.
D) economy.
E) power dimensions.

Question 64

When making foreign direct investments, companies that purchase insurance against the possible expropriation of their assets by host governments is an example of which sector of the international business environment?

A) Political and legal
B) Sociocultural
C) Technological
D) Economic
E) Infrastructure

Question 65

A company wants to reduce shipping costs by producing goods closer to their customers in foreign countries. This strategy would reduce transportation costs and storage costs. The company is engaging in which strategy?

A) Franchising
B) Exporting
C) Foreign direct investment
D) Barter agreement
E) Licensing

Question 66

In international business, 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 67

All of the following countries are considered emerging economies EXCEPT _____.

A) Brazil
B) Russia
C) India
D) China
E) Canada

Question 68

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 expropriations

Question 69

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 subsidiary.
E) foreign venture.

Question 70

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

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

Question 71

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

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

Question 72

A country's physical facilities that support its economic activities such as ports make up its _____.

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

Question 73

Which of the following is a sociocultural factor in the international business environment?

A) Language
B) Exchange rates
C) Tariffs, taxes, and quotas
D) Per capita income
E) Infrastructure

Question 74

A company's risk of loss of assets, of reduced earning power and of losing managerial control because of adverse events and actions taken by a host government is referred to as:

A) GDP
B) Political risk.
C) Tariffs.
D) Duties.
E) Quotas.

Question 75

Access to natural resource, infrastructure, exchange rates all describe which dimension in the international environment?

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

Question 76

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 77

Political risk is defined as an organization's risk of _____ because of adverse events and actions taken by host governments against it.

A) Loss of assets
B) Losing managerial control
C) Reduced earning power
D) All of the above three choices
E) Gaining managerial control and earning power

Question 78

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

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

Question 79

_____ is a social measure used to classify countries as developed countries or emerging countries.

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

Question 80

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