Deck 5: Global Management and Cultural Diversity

Question 1

A franchise is a type of business in which a local firm pays a foreign firm a fee for the rights to make and/or sell the foreign firm's products.

Answer 1

True

Question 2

Businesses expand their operations to the international marketplace in order to increase profits and gain access to customers, suppliers, capital, and labour.

Answer 2

True

Question 3

Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.

Answer 3

True

Question 4

Sigma Inc. conducts for-profit transactions of goods and services across national boundaries. Sigma Inc. is an example of an international business.

Question 5

In World 3.0, local needs and priorities are largely ignored compared to the economic gains from global integration.

Question 6

Importing enables a company to enter the international market by selling locally-made products in foreign markets.

Question 7

Because the growth of export industries creates jobs, governments willingly give advice and assistance to businesses trying to grow their export capabilities.

Question 8

In a joint venture, a foreign firm buys the rights to use another's name and operating methods in its home country.

Question 9

In exporting, local products are sold to foreign customers.

Question 10

Global managers keep informed about international developments and can understand and relate to people with diverse cultural backgrounds.

Question 11

Insourcing is the process of creating jobs through foreign direct investment.

Question 12

Global sourcing, exporting/importing, and licensing/franchising are market-entry strategies for conducting international business.

Question 13

Cultural awareness is an important characteristic of a truly global manager.

Question 14

Businesses go international to gain new markets to sell products and to enhance profit potential but not to increase access to raw materials, lower-cost labour, or financial resources.

Question 15

Joint ventures and franchising are direct investment strategies for conducting international business.

Question 16

A common first step into international business is global sourcing.

Question 17

The growing interdependence among elements of the global economy is known as diversification.

Question 18

China's foreign direct investment in the U.S. has led to the creation of many jobs in China. This is an example of insourcing.

Question 19

Most manufacturers today shy away from using global sourcing owing to the growing concerns over issues related to quality.

Question 20

A licensing agreement is a form of international business through which a foreign company pays a fee for the rights to manufacture or sell another firm's products in a specified region.

Question 21

The World Trade Organization (WTO) is a global institution that was established to promote free trade and open markets around the world.

Question 22

The World Trade Organization uses tariffs and quotas to protect favoured nations from foreign competition.

Question 23

The goal of most tariffs is to protect local firms from foreign competition.

Question 24

NAFTA was formed by the United Kingdom, France, and Germany.

Question 25

The most favoured nation status allows a nation to choose one other nation to get special treatment regarding quotas and tariffs.

Question 26

Most global firms use a planning technique called a political risk analysis to forecast political disruptions that can threaten foreign investments.

Question 27

The nations that make up NAFTA facilitate cross-border trade and business development by sharing a common currency.

Question 28

The North American Free Trade Agreement (NAFTA) largely frees the flow of goods and services, workers, and investments between the U.S. and Canada, but limits them between the United States and Mexico.

Question 29

Political risk is the potential loss in value of a foreign investment due to instability and political changes in the host country.

Question 30

The expected benefits of a common European currency include higher productivity, lower inflation rates, and steady growth in the member countries.

Question 31

A foreign subsidiary is a foreign operation completely owned and controlled by a local firm.

Question 32

APEC was established to promote free trade and investment in European countries.

Question 33

The European Union is a group of European countries that have common trade and customs laws that facilitate the free flow of workers, good and services, and investments across national boundaries.

Question 34

Protectionism is used by the members of the European Union to restrict business and government procurement of goods and services from foreign competition.

Question 35

The European Union is an alliance of European countries that agree to promote mutual economic growth by removing barriers that previously limited cross-border trade and business development.

Question 36

Tariffs are basically taxes that governments impose on imports.

Question 37

A foreign direct investment is building, buying, or buying part ownership of a business in another country.

Question 38

A foreign subsidiary represents the lowest level of involvement in international operations.

Question 39

The Asia Pacific Economic Forum consists of 27 countries that agree to support economic growth and development by removing trade barriers.

Question 40

Any company doing business abroad is not necessarily required to abide by local laws, but by their home country laws.

Question 41

Long hours of work and poor working conditions are prevalent in sweatshops.

Question 42

Executives of transnationals view the entire world as their domain for acquiring resources.

Question 43

Culture shock is the tendency to view one's culture as superior to other cultures.

Question 44

The use of child labour has been effectively eliminated as an ethical issue that faces managers of MNCs.

Question 45

Culture is the shared set of beliefs, values, and patterns of behaviour common to a group of people.

Question 46

Host-country complaints about multinational corporations (MNCs) include foreign exchange restrictions, pressure to buy raw materials at inflated prices, failure to protect intellectual property, and failure to uphold contracts.

Question 47

Extraction of excessive profits by global corporations is a potential host-country cost.

Question 48

Knowledge about foreign cultures is known as cultural intelligence.

Question 49

Sustainable development places greater importance on the needs of the present generation than on the needs of future generations.

Question 50

Technology transfer, capital development, increased employment opportunities, and the development of local resources are benefits that host countries can obtain from relationships with multinational corporations.

Question 51

In the United States, the Foreign Corrupt Practices Act makes it illegal for U.S. firms to engage in U.S. corrupt practices overseas.

Question 52

Transnational corporations seek integration of their operations, operating across borders without home-based prejudices, and making major decisions from a global perspective.

Question 53

SADC links 14 countries of Southeast Asia in trade and economic development efforts.

Question 54

Citizens of many nations are putting increased pressure on global corporations to protect the natural environment, pursue safe industrial practices, and pursue sustainable development.

Question 55

Multinational corporations are often criticized at home for diverting labour-intensive jobs from the domestic labour force to foreign labour markets, diverting capital investments away from the domestic market, and encouraging corrupt practices in their foreign subsidiaries.

Question 56

Ethnocentrism is the confusion or discomfort that someone may experience when in an unfamiliar culture.

Question 57

When large multinationals gain disproportionately from the forces of globalization, while smaller firms and countries do not, there occurs what is referred to as a "globalization gap."

Question 58

In Canada, the Corruption of Foreign Public Officials Act makes it illegal for Canadian firms and their representatives to engage in corrupt practices overseas.

Question 59

Transnational corporations have a domestic perspective yet operate across borders and make multinational decisions.

Question 60

Nigel is very proud of his British culture and tends to view other cultures as potentially inferior to his own. This is an example of ethnocentrism.

Question 61

Proxemics is the study of how people use space to communicate.

Question 62

In monochronic cultures time is used to accomplish many different things at once.

Question 63

In low-context cultures, what is actually said or written may convey only part, and sometimes a very small part, of the real message.

Question 64

The silent language of culture refers to the common practices and beliefs that are similar across different cultures.

Question 65

In high-context cultures, contracts tend to be viewed as binding agreements; in low-context cultures, written contracts continue to emerge and are modified as the parties work together.

Question 66

The ecological fallacy refers to the belief that a generalized cultural value, such as individualism, does not apply equally to all members of that culture.

Question 67

In a tight culture, deviations from norms tend to be tolerated.

Question 68

The importance of Hofstede's research lies in drawing attention to the impact that differences in national culture have on international management.

Question 69

Members of polychronic cultures do not approve of coming late or bringing an uninvited guest.

Question 70

Tight cultures are characterized by clear and rigid social norms.

Question 71

In low-context cultures, contracts tend to be viewed as binding agreements; in high-context cultures, written contracts continue to emerge and are modified as the parties work together.

Question 72

Most communication in low-context cultures takes place via the written or spoken word.

Question 73

In terms of proxemics, Japanese culture places little emphasis on how space is used or managed.

Question 74

The five cultural dimensions identified by Hofstede are power distance, uncertainty avoidance, individualism-collectivism, masculinity-femininity, and time orientation.

Question 75

People in high-power-distance cultures tend to be tolerant of power and are prone to follow orders.

Question 76

Members of monochronic cultures are more flexible in their views of time than those of polychronic cultures.

Question 77

Self-awareness and reasonable sensitivity are the basic building blocks of cultural intelligence.

Question 78

The power dimension in Hofstede's framework is defined as the degree to which a society encourages individual autonomy to make decisions versus depending on others for direction.

Question 79

High-context cultures are those in which most communication takes place via the spoken or written word. Low-context cultures are those in much communication takes place through nonverbal and situational cues in addition to the written or spoken word.

Question 80

In polychronic cultures people tend to do one thing at a time.