Deck 5: Navigating the Global Environment

Question 1

France has a relatively low level of government ownership among the market economies.

Answer 1

False

Question 2

No organization is insulated from the effects of foreign markets and competition.

Answer 2

True

Question 3

Dumping is selling items for more than fair market value.

Answer 3

False

Question 4

There is currently a strong movement around the world to reduce many trade barriers.

Question 5

Most MNCs use direct investment exclusively because they are so big they can afford to buy companies.

Question 6

Stability can be viewed in two ways ⎯ as the ability of a given government to stay in power in the country and as the permanence of government policies toward business. A country that is stable in both respects is preferable because managers have a higher probability of successfully predicting how government will affect their businesses.

Question 7

High-potential/high-growth economies have been relatively underdeveloped and immature and, until recently, were characterized by weak industry, weak currency, and relatively wealthy consumers.

Question 8

A strategic alliance and a joint venture are the same thing.

Question 9

Importing involves merchandise but not services.

Question 10

Licensing is the easiest way of entering a new market.

Question 11

We can identify four distinct levels of international activity that differentiate organizations.

Question 12

Every country and indeed many regions within any given country are unique.

Question 13

Market systems are clusters of countries that engage in high levels of trade with one another.

Question 14

Magna International Inc., a Canadian company, offered to buy Opel, a German company, from GM. This is an example of direct investment.

Question 15

Maquiladoras face competition in China.

Question 16

The education system is not part of the infrastructure of a country.

Question 17

A country's culture includes all the values, symbols, beliefs, and language that guide behavior.

Question 18

Political stability in the Middle East makes it a less risky place to conduct business.

Question 19

International licensing agreements involve regulations for truckers transporting products between countries.

Question 20

MNC stands for multiple nations and continents.

Question 21

Boeing sells planes to commercial airlines around the world. It has suppliers around the world too. The defense side of Boeing sells primarily to the federal government. It is a(n) ____ business.

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

Question 22

People who exhibit short-term outlook behaviors tend to place a high premium on material possessions, money, and assertiveness.

Question 23

Which of the following describes what has occurred in international business from 1960-2000?

A) Although still increasing, international trade has grown at a slower rate since 1980.
B) The volume of international trade increased more than 3000 percent.
C) U.S. investment overseas has been on the decline for the past two decades.
D) The majority of the world's largest firms are firms with headquarters inside the United States.
E) All U.S. firms still earn the majority of their sales and profits in the United States.

Question 24

In contrast to MNCs, medium-size organizations doing business abroad are much more selective about the markets they enter.

Question 25

Fewer and fewer small organizations are also finding that they can benefit from the global economy.

Question 26

To effectively plan and make decisions in a global economy, managers need to understand local market conditions and technological factors that will affect their operations.

Question 27

Packaging for rice should be green because all countries think green is healthy.

Question 28

United States farmers are the biggest producers of corn. China's demand for corn has increased. The U.S. is a corn ____.

A) importer
B) direct investor
C) global sourcer
D) exporter
E) joint venturer

Question 29

A(n) ____ business transcends national boundaries and is not committed to a single home country.

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

Question 30

Which of the following is the least intense level of international business strategy?

A) Importing/exporting strategy
B) Joint venture
C) Licensing strategy
D) Direct investment
E) Global sourcing

Question 31

Japanese firms give managers of their foreign operations relatively great responsibility. As a result, top executives frequently travel to the foreign operations.

Question 32

____ is the least risky type of international business in which firms usually become involved.

A) Importing/exporting
B) Licensing
C) Joint venture
D) Global sourcing
E) Direct investment

Question 33

Coca-Cola is based out of Atlanta but reaches into hundreds of countries. The product is locally packaged, but the cola inside is essentially the same throughout the world. Coca-Cola is edging closer to being a(n) ____ business.

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

Question 34

Renata is a tax attorney in Germany. Her service is a(n) ____ business.

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

Question 35

A(n) ____ business is one that is primarily based in a single country but that acquires some meaningful share of its resources and/or revenues from other countries.

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

Question 36

eBay is based in San Jose. Buyers and sellers on the site are located around the world. eBay is a(n) ____ business.

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

Question 37

American Eagle is a regional airline that flies in the United States and Canada. It is an example of a(n) ____ business.

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

Question 38

Two U.S. companies Cargill and Archer Daniels Midland purchase 25% of the world cocoa supply from farmers in West Africa. These companies use

A) importing.
B) direct investment.
C) global sourcing.
D) exporting.
E) joint venture.

Question 39

Which of the following statements can be used to explain the growth of international business?

A) Many countries in Europe and Asia were devastated after World War II and had to be rebuilt.
B) The postwar population boom decreased demand for products.
C) Changes in cultural traditions made the rest of the world open to all of the products made in the United States.
D) Infrastructures in Europe and Asia remained sound in spite of World War II.
E) All of these choices

Question 40

Geert Hofstede identified five fundamental differences that can be used to characterize people in different cultures. They are time, power, age, race, and gender.

Question 41

Which of the following is a potential disadvantage associated with an import/export operation?

A) P roducts are unrestricted; anything can be imported or exported.
B) Importing and exporting requires a large cash outlay from organizations.
C) There is a great deal of risk involved compared to other strategic alternatives.
D) Imports/exports are subject to taxes, tariffs, and higher transportation expenses.
E) All of these choices

Question 42

In the U.S. Starbucks does not franchise. It has a(n) ____ agreement with Barnes and Noble.

A) importing
B) exporting
C) strategic
D) global sourcing
E) direct investment

Question 43

Which of the following is NOT a reason for using a licensing agreement as a means of entering international business?

A) Low levels of risk
B) High domestic production costs
C) Government regulation
D) Increased/extended profitability of technology
E) Excessive transportation costs

Question 44

Which of the following statements about maquiladoras is FALSE?

A) Maquiladoras are light-assembly plants built in northern Mexico.
B) There are more than 1000 maquiladoras employing workers.
C) Maquiladoras are a form of licensing.
D) Maquiladoras are owned by major corporations from the United States, Japan, and South Korea.
E) Maquiladoras are a form of direct investment.

Question 45

McDonalds operates restaurants in airports around the world. The agreement between McDonalds and the airports is a(n)

A) global sourcing agreement.
B) strategic alliance.
C) global business.
D) exporting agreement.
E) direct investment.

Question 46

Compassion International is a children's charity that provides basic necessities, schooling, and job training for poverty-stricken children around the world. This not-for-profit organization would require which type of investment when it enters a new country?

A) Direct investment
B) Joint venture
C) Licensing
D) Importing/exporting
E) Franchising

Question 47

A(n) ____ strategy involves a partnership with a long-term commitment that can be used to acquire new technology and information.

A) direct investment
B) joint venture
C) licensing
D) importing/exporting
E) pure domestic

Question 48

____ strategy is considered the highest level of involvement in international business.

A) Importing/exporting
B) Licensing
C) Joint venture/strategic alliance
D) Franchising
E) Direct investment

Question 49

____ is the form of international business involvement in which two or more firms have an equity position in an operation.

A) A joint venture
B) Direct investment
C) A maquiladoras arrangement
D) A strategic alliance
E) International brokering

Question 50

The National Football League and team owners allow shirts, hats, blankets, and many other products to be sold with team logos on them. The teams and league get a percentage of the sale. The teams have chosen to use a(n) ____ strategy to generate more income.

A) joint venture
B) licensing
C) direct investment
D) exporting
E) global involvement

Question 51

The advantage of direct investing is

A) access to materials and technology.
B) quick market entry.
C) enhanced control.
D) little risk.
E) small cash outlay.

Question 52

Opponents to the maquiladoras concept are most critical of its

A) high production cost.
B) exploitation of human resources.
C) legality.
D) waste of raw materials.
E) high transportation costs.

Question 53

Which of the following is a disadvantage of joint ventures/strategic alliances?

A) More rapid market entry
B) Access to technology
C) Access to raw materials
D) Reduced risk
E) Shared control over operations

Question 54

Companies from all over the world are embracing the maquiladoras concept mainly because of

A) lower transportation costs.
B) its efficient use of raw materials.
C) its ability to avoid regulatory problems.
D) improved technology.
E) cheap labor.

Question 55

China requires foreign companies to form ____ with Chinese companies so that the Chinese get access to the latest technology.

A) an importing/exporting coalition
B) a licensing agreement
C) an outsourcing strategy
D) a direct investment pact
E) a joint venture/strategic alliance

Question 56

A disadvantage of importing/exporting is

A) inflexibility.
B) competition.
C) shared ownership.
D) complexity.
E) government restriction.

Question 57

Rest stops in New Jersey have Burger King restaurants. The NJ Transit Authority and Burger King use a(n) ____ strategy.

A) importing/exporting.
B) licensing.
C) outsourcing.
D) direct investment.
E) strategic alliance.

Question 58

Starbucks owns one third of its stores outside the U.S. Those stores are

A) a direct investment.
B) a joint venture.
C) licensing.
D) a strategic alliance.
E) franchising.

Question 59

A(n) ____ strategy requires little initial investment, is heavily regulated, and provides little opportunity to modify products for local conditions.

A) importing/exporting
B) licensing
C) joint venture
D) global sourcing
E) direct investment

Question 60

Which of the following statements does NOT describe a characteristic of importing/exporting?

A) Importing/exporting is an easy way to enter a market.
B) There is very little risk involved with importing and exporting.
C) The cost of importing/exporting may be high due to transportation costs.
D) Due to government restrictions, not all products can be imported or exported.
E) The costs of initiating an import/export strategy are high.

Question 61

Which of the following is NOT a characteristic of a mature market economy?

A) They employ market forces in the allocation of resources
B) Their GDP comes largely from oil revenue
C) They have mostly private ownership of property
D) U.S. managers have relatively few problems operating there
E) Markets in these economies are typically quite mature

Question 62

One of the primary challenges facing those who would like to enter a high-potential/high-growth economy is

A) more infrastructure than can be used.
B) a large upper class.
C) a communist government.
D) potential consumers are poor.
E) None of these choices

Question 63

Which of the following describes one of the reasons for the establishment of the European Union?

A) It eliminates trade barriers between member countries.
B) It decreases tariffs on products from nonmember countries.
C) It enhances movement of capital and labor between nonmember nations.
D) It increases the usage of member labor pools by nonmembers.
E) It gradually eliminates imports from nonmember nations.

Question 64

____ economies are recognizable by their tendency to allow market forces to determine business strategies and to have private ownership of property.

A) Communist
B) Market
C) Industrializing
D) Pure competition
E) Socialist

Question 65

Which of the following countries is NOT a member of the European Union (EU)?

A) Russia
B) Romania
C) Hungary
D) Poland
E) Sweden

Question 66

With whom is the United States involved in a mature market system?

A) The European Union
B) The Latin American Integration Association
C) The Caribbean Common Market
D) Canada and Mexico
E) Pacific Asia

Question 67

Which of the following is NOT an example of an economic challenge faced by international managers?

A) Government ownership of all property
B) Unstable government
C) Absence of power plants
D) Lack of educational facilities
E) Few natural resources

Question 68

Which of the following is an example of an economic challenge faced by international managers?

A) Government ownership of all property
B) Absence of natural resources
C) Lack of communication capabilities
D) Poor transportation system
E) All of these choices

Question 69

U.S. managers have the least difficulty operating in ____ economies.

A) market
B) communist
C) industrializing
D) developing
E) pure competition

Question 70

The oil-exporting countries present mixed models of all of the following EXCEPT

A) resource allocation.
B) property ownership.
C) infrastructure development.
D) political stability.
E) energy revenue.

Question 71

Which of the following is NOT one of the environmental challenges that complicates international management?

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

Question 72

In 2002, ______ of the EU members eliminated their home currencies.

A) all
B) 28
C) 3
D) 11
E) 6

Question 73

The first mall in Mumbai, India was successful.  Builders proceeded to construct three more right away.  However, they have more than 50% vacancies because they lack customers. The builders failed to properly account for which challenge of operating in developing countries?

A) Underdeveloped infrastructure
B) Stagnant political policies
C) Firms have to invest heavily in distribution systems
D) Firms have to train consumers how to use their products
E) Potential consumers' lack of wealth

Question 74

Which of the following is a problem associated with the implementation of a direct investment strategy?

A) Complexity of decision making
B) Sharing of profits
C) Loss of managerial control
D) Inability to purchase the brand identification of a product
E) Having to develop an organizational infrastructure

Question 75

Trees are a part of a country's

A) economic environment.
B) sociocultural environment.
C) infrastructure.
D) technological environment.
E) political-legal environment.

Question 76

The United States, Canada, and Mexico are major trading partners with one another.  They are an example of a(n)

A) mature market.
B) market system.
C) market economy.
D) high potential/high growth economy.
E) other economy.

Question 77

Germany is a mature market economy. One major problem GE expected to face when it began operating in Germany was

A) cultural barriers.
B) fluctuations in political relations.
C) taking market share from established firms.
D) government regulation of trade.
E) an underdeveloped infrastructure.

Question 78

Which of the following countries does NOT have a mature market economy?

A) Germany
B) Korea
C) Sweden
D) Iran
E) Spain

Question 79

Which of the following countries is NOT part of Pacific Asia?

A) China
B) The Philippines
C) India
D) South Korea
E) Australia

Question 80

The U.S. government became the majority shareholder in GM. The U.S. was moving away from a ____ economy.

A) command
B) developing
C) mixed
D) communist
E) market