Deck 1: What Is International Business

Question 1

A firm's decision to internationalize is generally made as a reaction to the phenomenon of market globalization.

Answer 1

False

Question 2

The collapse of the Soviet Union in 1989 hindered the forces of market liberalization in Eastern Europe.

Answer 2

False

Question 3

The rate of speed at which nations integrate into the global economy is relatively consistent, regardless of income level.

Answer 3

False

Question 4

National economic integration refers to the economic interdependence experienced by closely associated countries that have formed an alliance.

Question 5

The European Union, formerly the European Economic Community, is the world's oldest, largest, and most advanced economic bloc.

Question 6

The introduction of the euro in 2002 meant that the monetary power of national governments within the EU was taken over by the European Central Bank.

Question 7

Rationalization after regional integration reduces redundancy in a firm by lowering costs and improving the efficiency of company operations.

Question 8

Which of the following best explains why export growth has outpaced the growth of domestic production during the last few decades?

A) Both world exports and domestic production have grown significantly over the past 30 years.
B) The cost to import products is generally higher than the cost to produce domestic products.
C) Growth in gross domestic product in most countries has steadily increased since 1970.
D) Advanced economies now source many of their consumable products from low-cost manufacturing nations.

Question 9

Which of the following is not a driver of market globalization?

A) market liberalization
B) technological advances
C) increased import tariffs
D) economic development

Question 10

Reduction in trade barriers is associated with the emergence of which of the following?

A) Japan's transition to a command economy
B) regional economic integration blocs
C) member defection from the WTO
D) violation of GATT provisions

Question 11

Which of the following drivers of market globalization enables firms to engage in foreign currency transactions?

A) economic development
B) integration of world financial markets
C) market liberalization
D) reduction of barriers to investment

Question 12

Which of the following is the way in which common markets differ from customs unions?

A) Products, services, and factors of production are allowed to move freely between member countries.
B) Tariffs and non-tariff trade barriers are eliminated when trade and business investments occur between member nations.
C) Member nations share a regulated system of tariff rates and equally distribute tax revenue received from non-member countries.
D) The monetary, tax, and fiscal policies of member nations are overseen by a central authority.

Question 13

Switzerland is a member of which of the following economic blocs?

A) EU
B) EFTA
C) CAN
D) APEC

Question 14

Firms often internationalize within an economic bloc for all of the following reasons except ________.

A) gain international experience
B) generate new sales and profits
C) reduce exposure to competition
D) increase source of supplies

Question 15

Overseas Expansion
Whittaker Semiconductors has recently decided to expand its operations overseas. Amanda Quan, Vice President of International Business, assigned a team of investigators to analyze the risks faced by the company in making this move. Of particular interest were the risks that might affect the success of a new production plant to be located in one of three potential countries.

-Philip Baxter reported on the risks associated with establishing the plant in Country A. The most significant risk, in his view, was posed by the government's complex bureaucratic structure. Philip reported the likelihood of significant administrative delays in opening the plant. The risk identified by Philip is an example of which of the following?

A) country risk
B) commercial risk
C) currency risk
D) cross-cultural risk

Question 16

Global Operations Report
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia.

-In describing the main driver behind Pax's expansion to China, Rashid most likely emphasizes ________.

A) economic development
B) advances in technology
C) reduction of barriers to trade
D) integration of world financial markets

Question 17

Global Operations Report
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia.

-Lavonne's research most likely recognizes which of the following drivers of market globalization as responsible for the company's expansion to Japan?

A) integration of world financial markets
B) modernization
C) adoption of free markets
D) reduction of barriers to investment

Question 18

Globalization Debate
In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps shift cultures to a universal norm. Rina Taylor is assigned to counter Juan's position.

-Which of the following most likely supports Rina's argument over Juan's concerning wages and working conditions in developing countries?

A) Most African countries today still suffer from low or negative GDP growth.
B) Vietnam has experienced a five-fold increase in wages as a result of the growth of the footwear industry there.
C) The move of Electrolux to Mexico cost Michigan 2,700 jobs.
D) Minimum wages should be established at set levels, regardless of the impact on the number of jobs.

Question 19

Globalization Debate
In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps shift cultures to a universal norm. Rina Taylor is assigned to counter Juan's position.

-Rina most likely counters Juan's claim regarding environmental effects by pointing out which of the following?

A) Land preservation is more important than pollution reduction for preserving the environment.
B) China's landscape was permanently altered by the construction of the Three Gorges Dam.
C) Environmental destruction tends to diminish in the long run, as economies develop.
D) Attempts at foreign cultural imperialism are often blocked by national governments.

Question 20

Globalization Debate
In his international business class, Professor Jang organizes a debate on the societal effects of market globalization. Juan Prince takes a position that highlights the negative effects of market globalization. He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty. He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad. Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps shift cultures to a universal norm. Rina Taylor is assigned to counter Juan's position.

-Which of the following most likely supports Rina's argument over Juan's concerning the homogenization of national cultures?

A) The standardizing forces of globalization are often resisted through increasing nationalism.
B) Foreign values tend to shift not just superficial aspects of culture, but deeply held beliefs as well.
C) Material goods such as cell phones and computers are found in most homes throughout the world.
D) In most industries, domestic operation alone cannot sustain competitive business growth.