Question 1

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

Accepted Answer

With advancements in technology and the globalization of economies, the business world has indeed become a more unified, global field. Trade barriers are being reduced, communication is faster and cheaper, and the tastes and preferences of consumers are becoming more similar across different regions and countries.

Question 2

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

Accepted Answer

The statement is false. Greenfield ventures involve starting a new business from scratch, which can be costly and risky. A better option for a least costly and least risky direct investment would be to acquire an existing business or invest in an established franchise.

Question 3

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

Accepted Answer

Per capita income has been the traditional criteria used to classify countries as developed or developing. However, there have been criticisms of this approach and alternative methods have been proposed.

Question 4

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

Accepted Answer

The global stage of corporate international development is referred to as the stateless stage because companies operate globally without belonging to any specific country.

Question 5

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

Accepted Answer

A greenfield venture refers to the establishment of a new company or subsidiary from the ground up in a foreign country. It involves building everything from scratch rather than acquiring an existing company or merging with an established one.

Question 6

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

Accepted Answer

This is true. The three 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.

Accepted Answer

This is a correct example of global outsourcing, where a company uses low-cost labour in another country to produce goods that are later sold in their home country.

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.

Accepted Answer

Direct investing involves direct management of productive assets, giving the company more control over its investment compared to other entry strategies with 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.

Accepted Answer

The European Union's goal is to create a single market system that enables free trade among its member states and allows the free movement of goods, services, capital, and people. This single market system is designed to benefit the millions of consumers within Europe.

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.

Accepted Answer

Licensing refers to granting permission to a company or individual to use intellectual property, such as trademarks or technology, under defined conditions, not specifically about labor division.

Question 11

Large international firms typically are called multinational corporations.

Accepted Answer

This is true. Multinational corporations are companies that operate in multiple countries, often with significant operations and headquarters in different locations around the world. Examples of multinational corporations include Apple, Coca-Cola, and Toyota.

Question 12

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

Accepted Answer

Offshoring refers to the practice of seeking cheaper sources of materials or labour from abroad, typically from countries with lower wages and production costs. This can involve outsourcing the production of goods or services, or relocating business operations to another country.

Question 13

A form of direct investment is franchising.

Accepted Answer

The answer of 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.

Accepted Answer

The term top of the pyramid refers to the wealthiest individuals or companies in the world, and not to those who earn the least.

Question 15

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

Accepted Answer

With exporting, the corporation only transfers its products for sale to foreign countries, it does not transfer its production facilities.

Question 16

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

Accepted Answer

The answer of A tendency to regard their own culture...

Question 17

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

Accepted Answer

The basic management functions remain the same regardless of the company operating domestically or internationally. However, the methods and strategies employed within each function may differ depending on the cultural, legal, and economic factors of the international environment.

Question 18

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

Accepted Answer

Acquiring a wholly owned foreign affiliate means that the acquiring company would own 100% of the affiliate and have full control over its operations and decision-making. This is a significant advantage compared to acquiring a partial ownership stake in a foreign company or entering into a joint venture where decision-making may be shared with another company.

Question 19

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

Accepted Answer

The rupee is not the single European currency. The euro is currently the single European currency adopted by 19 member states of the EU.

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.

Accepted Answer

Countertrade involves the exchange of goods or services between countries without using cash, whereas the scenario described is more akin to a licensing agreement where intellectual property and resources are shared.

Quiz 5: Managing in a Global Environment