Deck 5: The Global Environment

Question 1

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

Answer 1

True

Question 2

Importing involves merchandise but not services.

Answer 2

False

Question 3

Only two of the worlds ten largest banks are headquartered in the United States.

Answer 3

True

Question 4

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

Question 5

Most countries have pure systems of private ownership or pure systems of public ownership.

Question 6

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

Question 7

Licensing is the easiest way of entering a new market.

Question 8

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

Question 9

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

Question 10

Export restraint agreements are accords signed by two parties that voluntarily limit the volume or value of goods exported to a particular country.

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

MNC stands for multiple nations and continents.

Question 16

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

Question 17

Stability can be viewed in two ways¾as 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 18

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

Question 19

Maquiladoras face competition in China.

Question 20

Dumping is selling items for more than fair market value.

Question 21

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

Question 22

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 23

____ 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 24

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 25

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 26

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

Question 27

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 28

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 29

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 30

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 31

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 32

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 33

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 34

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

Question 35

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 36

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 37

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

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

Question 38

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

Question 39

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 40

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

Question 41

A disadvantage of importing/exporting is

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

Question 42

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 43

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 44

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 45

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 46

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 47

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 48

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 49

The major reason so many companies from all over the world are embracing the maquiladoras concept is 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 50

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 51

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 52

____ 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 53

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 54

China requires foreign companies to form ____ with Chinese companies so that the Chinese get access to the latest technology.China forces a(n)____ strategy.

A)importing/exporting
B)licensing
C)outsourcing
D)direct investment
E)a joint venture/strategic alliance

Question 55

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 56

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 57

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 58

Which of the following is NOT a potential disadvantage associated with an import/export operation?

A)Some products are restricted and cannot be imported or exported.
B)Products may miss the needs of a large segment of the market because they are not adapted to local conditions.
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 59

McDonalds operates restaurants around the world in airports.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 60

____ 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 61

Which of the following statements is NOT true about the WTO?

A)It replaced GATT.
B)It promotes trade between nations.
C)It reduces trade barriers through negotiations.
D)It actively supports human rights and the environment.
E)It resolves trade disputes between its members.

Question 62

Which of the following is NOT an example of a mature market system?

A)India
B)Japan
C)Sweden
D)The United Kingdom
E)The United States

Question 63

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

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

Question 64

____ is an example of a high-potential/high-growth economy.

A)Syria
B)The Philippines
C)South Korea
D)China
E)Kuwait

Question 65

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 66

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 67

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 68

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 69

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

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

Question 70

The U.S.government became the majority shareholder in GM in 2009.The Obama administration was moving the U.S.away from a ____ economy.

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

Question 71

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

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

Question 72

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 73

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 74

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

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

Question 75

____ 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 76

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

A)Eliminate trade barriers between member countries
B)Decrease tariffs on products from nonmember countries
C)Enhance movement of capital and labor between nonmember nations
D)Increase the usage of member labor pools by nonmembers
E)Gradually eliminate imports from nonmember nations

Question 77

Which of the following is the type of economy most countries in the world are striving to attain?

A)Mature market economy
B)Industrializing economy
C)Communist economy
D)Developing market economy
E)Command economy

Question 78

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

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

Question 79

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

A)Belgium
B)Luxembourg
C)Italy
D)Ireland
E)Ukraine

Question 80

Trees are a part of a country's

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