Deck 8: Global Management

Question 1

Local adaptation is typically preferred by managers who are charged with making the international business successful in their countries, whereas managers at the headquarters of multinational companies value global consistency because it simplifies decisions.

Answer 1

True

Question 2

Which of the following is an advantage of joint ventures?

A) They provide companies an exclusive right to conduct business in a particular location.
B) They give companies training and assistance with marketing and advertising.
C) They help companies avoid tariff and nontariff barriers to entry.
D) They allow companies to earn additional profits without investing more money.

Answer 2

C

Question 3

FitForLife Gym, a large U.S. based fitness center, receives royalty payments from WeWelness, a small Canadian company, for using its name and gym equipment. The FitForLife Gym brand is well known across the world and many fitness centers use its brand to attract customers. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Answer 3

C

Question 4

Leodan, a glass manufacturing firm based in the U.S., has sole control over several glass manufacturing facilities located all over the world. The company assumes the entire risk if any of the facilities undergoes losses, and it enjoys all the profits if the facilities do well. Which of the following methods has Leodan used to conduct business globally in this scenario?

A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question 5

Global new ventures are foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company.

Question 6

According to the World Trade Organization (WTO), voluntary export restraints are legal and cannot be questioned.

Question 7

Toasty Inc., a chain of fast food restaurants, uses the same recipes, menu, and policies in all its branches throughout the world. This is an example of global consistency.

Question 8

_____ are foreign offices, facilities, and manufacturing plants that are 100 percent possessed by the parent company.

A) Joint ventures
B) Wholly owned affiliates
C) Strategic alliances
D) Business acquisitions

Question 9

PriemCrest, an oral care company in the country of Holtmont, bought an oral care company called SerenCrest in the country of Hofstadden. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 10

Purchasing power is an agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country.

Question 11

Two factors that help companies determine the growth potential of foreign markets are purchasing power and foreign competitors.

Question 12

Which of the following is an example of the process of exporting?

A) Allied Pharmacy receiving royalty payment from Wings Pharmacy for allowing it to produce and sell its trademark cough syrup
B) TechnoDorm, a manufacturer of mobile devices, licensing its entire business to DreamyTech
C) FootSoul, a U.S.-based shoe manufacturing company, selling its shoes in the U.S., Germany, and France
D) BiteSweet Inc. and NutriPack Inc. collaborating to form a new company, BitePack Inc., which manufactures energy bars

Question 13

When conducting global business, companies should attempt to identify the two types of political risk that are workforce quality and economic uncertainty.

Question 14

The criteria for choosing an office location are very similar to the criteria for entering a foreign market.

Question 15

Which of the following is an advantage of licensing?

A) It allows companies to earn additional profits without investing more money.
B) It provides licensors an exclusive right to conduct business in a particular location.
C) It allows companies to bear only part of the costs and the risks of that business.
D) It gives the parent company complete control over the foreign facilities.

Question 16

Zinocorp Inc., a multinational retail corporation with its headquarters in Australia, wants to open shopping malls in China and Japan. The company wants the new malls to follow the same set of rules and regulations that the parent company follows. It is evident from the scenario that Zinocorp Inc. wants to:

A) incorporate local adaptation.
B) establish global consistency.
C) create franchises.
D) form strategic alliances.

Question 17

Jepmem Inc. is expanding its global operations into North Pidlin, even though the country has a high global terrorism index. As Jepmem Inc. expands into North Pidlin, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 18

Which of the following is a disadvantage of franchising?

A) Franchisors face tariff and nontariff barriers when trying to enter a market.
B) Franchisors face a loss of control when they sell businesses to franchisees who are thousands of miles away.
C) Franchisors face power struggles and a lack of leadership when trying to adapt the franchisee's management practices.
D) Franchisors can eventually become competitors, especially when a licensing agreement includes access to important technology or proprietary business knowledge.

Question 19

Adaptability screening is used to assess how well managers and their families are likely to adjust to foreign cultures.

Question 20

The North American Free Trade Agreement (NAFTA) is a regional trade agreement between the United States, Canada, and Mexico.

Question 21

A(n)__________is someone who lives and works outside his or her native country.

A) source
B) patriot
C) pariah
D) expatriate

Question 22

In the context of firm strategies,__________is an active strategy to prevent or reduce political risks.

A) control
B) negotiation
C) coercion
D) portfolio

Question 23

Cad Cream Inc., an ice cream company, has collaborated with Bite Snack Inc., a food manufacturing company, to come up with a third company, Cream Bite Inc. This new company manufactures energy bars with a variety of flavors. In this context, Cream Bite Inc. is a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 24

For initial fee plus royalties, Inding Inc., a U.S.-based firm, will provide Caliste Works, a firm based in Singapore, with an exclusive right to conduct Inding's business in its country. This form of global business is an example of a _____.

A) wholly owned affiliate
B) conglomerate
C) franchise
D) joint venture

Question 25

Worthen, an information technology firm based in the U.S., was created with the goal of standardizing its services in all the developing nations of the world. Rather than strategizing for one country at a time, Worthen's plan is to focus on all the nations at the same time. Worthen is an example of a _____.

A) licensee
B) strategic alliance
C) global new venture
D) franchise

Question 26

The government of Mentlands levies large taxes and has set up a limit on the amount of goods FarTrek, a foreign sports goods manufacturer, can sell in Mentlands. In this scenario, FarTrek is most likely involved in _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 27

_____ is a government's use of trade barriers to shield domestic companies and their workers from foreign competition.

A) Protectionism
B) Developmentalism
C) Economic nationalism
D) Centralism

Question 28

Ingente Corp. and Ventruni Corp. will be combining their resources to build the largest railway system in the world. Both companies will equally share costs and profits from this venture. This form of global business is an example of a _____.

A) strategic alliance
B) wholly owned affiliate
C) conglomerate
D) franchise

Question 29

Orsten Corp. sent all its trainees to go and talk to the residents of a Swedish neighborhood because these trainees will be sent to Sweden on a business assignment. In the context of preparing for an international assignment, when would this type of training be given to employees?

A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Question 30

Which of the following trends has allowed companies to skip the phase model of globalization when going global?

A) Countries with growing levels of purchasing power are good choices for attractive global markets.
B) Low-cost communication technologies make it easier to communicate with global customers.
C) Companies do not have to establish a manufacturing location in each country they enter.
D) Masculinity and femininity capture the difference between highly assertive and nurturing cultures.

Question 31

DepDevs, an investment company in the country of Onimount, has purchased several small companies in Primelom, a third world country. DepDevs plans to revive these companies by investing their funds in them and improving their performances in the market. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 32

Aldhurst Corp., a software manufacturing firm in the country of Lochmount, bought Fairden Corp., a software manufacturing firm in the country of Vertholt. This scenario is an example of__________.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 33

Crimson Corp., an electronics manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that Crimson Corp. should consider while choosing the new office location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Question 34

Which of the following statements is true of the World Trade Organization (WTO)?

A) It ensures that trade between nations flows as predictably and freely as possible.
B) It transforms different economies and currencies into one common economic market.
C) It aims to create a unified South America by permitting free movement between nations.
D) It aims to establish regions in Europe as a single market by eliminating all tariffs by 2019.

Question 35

Bardron, an information technology company in the country of Conimount, wanted to start its business in the country of Bertholt. Hence, it bought Lecden Corp, a severely underperforming information technology company in the country of Bertholt. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 36

Which of the following is a disadvantage of wholly owned affiliates?

A) The high risk of losing intellectual property
B) The slow execution of strategic priorities
C) The cost of selling existing business
D) The expense of building new operations

Question 37

The government of Bicana recently passed a law requiring every foreign country operating in Bicana to pay 50% of its earnings in taxes. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of _____ faced by companies that want to conduct business in Bicana.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 38

WindWing Inc., an airline company with great success in the domestic market, started WingDream Ventures with the goal of bringing its airline services to all the major countries in the world. WingDream is an example of a _____.

A) licensee
B) strategic alliance
C) global new venture
D) franchise

Question 39

Upstart Corp. was formed when Bencanc Corp. and Torperd Corp. pooled their resources to work on a construction project for the government. The project had a short turnaround time along with intensive requirements that could not be fulfilled by one company alone. In this context, Upstart Corp. is a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 40

Pancken Corp. has never operated outside the country it is based in and wants to open a branch in a different country. It plans on sending some of its employees to the new country. Before doing so, it trains all its employees by showing them videos about the new country. It also guides them in taking part in roleplays where they are presented with real-world situations related to the new country. In the context of preparing for an international assignment, when would this type of training be given to employees?

A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Question 41

MiIgno Inc. is a U.S.-based pharmaceutical company. It wants to open a branch in Japan. In the process of learning the cultural differences between the countries, the managers of the company discovered that, unlike Americans, Japanese employees prefer a more structured management and prefer following a routine work schedule. In the context of cross-cultural training, when would the managers of Milgno have discovered this cultural difference?

A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Question 42

Flywater Inc. is refusing to expand its global operations into North Marland due to the civil wars that frequently occur in the country. This threat of civil wars in the country is an example of _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 43

Limkwee, a Chinese company, is training its employees to work in Japan on a company project. It was learned that Japanese people cover their abdomen during rainstorms, which is not the case in China. In the context of cross-cultural training, when would the employees of the company have discovered this cultural difference?

A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Question 44

Which of the following best defines a tariff?

A) It is a specific limit on the volume of imported goods.
B) It is a direct tax on imported goods.
C) It is a complete ban on trade of a certain item.
D) It is a limit on the number of products exported to a particular country.

Question 45

The two kinds of cooperative contracts in global business are:

A) exporting and importing.
B) joint ventures and consortia.
C) strategic alliances and wholly owned affiliates.
D) licensing and franchising.

Question 46

The cultural difference of__________is the degree to which people in a country are uncomfortable with unstructured, ambiguous, unpredictable situations.

A) long-term orientation
B) individualism
C) power distance
D) uncertainty avoidance

Question 47

Benkemel Corp., an industrial chemicals manufacturer in Noemern, has entered a foreign market. It now plans to establish a chemical manufacturing plant in that country. Which of the following is a qualitative factor that Benkemel should consider while choosing the new manufacturing plant location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Question 48

A _____ is an agreement in which companies combine key resources, costs, risks, technology, and people.

A) strategic alliance
B) business acquisition
C) merger
D) divestiture

Question 49

BlazeTrack Cars is a U.S.-based automaker. It is planning to introduce a new premium car in Ireland, Norway, Sweden, and Switzerland. The company is not sure if its car will be successful in these diverse markets, and it is concerned about its growth. It can afford to launch the product in only three countries. To choose these three countries, which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?

A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Question 50

The government of Gimzia recently passed a law making it mandatory for any foreign company that wants to do business in Gimzia to reinvest 70% of the revenue it is earning back into the country. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of _____ faced by companies that want to conduct business in Gimzia.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 51

LyTV, a large U.S. based broadcast network, receives royalty payments from TipTV, a small Ukrainian broadcast network, for using its channels and television programs. TipTV hopes to improve the viewership of its network by making use of LyTV's popularity. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 52

MekTech is a U.S.-based electronics company. It is planning to introduce a new home theatre system in a foreign country. It has identified Mexico and Canada to be the easiest foreign markets to enter; however, it only wants to launch the system in one country. Which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?

A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Question 53

Petnro, a bike manufacturing firm based in the U.S., operates bike manufacturing plants in China, Japan, Taiwan, and Singapore under the name of BikMe. The parent company receives all the profits made by these facilities, and it has complete control over all the different segments of the plants. Which of the following methods for conducting global business has Petnro used in this scenario?

A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question 54

The employees of Kilki Corp. learned that unlike the people living in the U.S., people living in Norway eat burgers with a knife and fork. In the context of cross-cultural training, when would the employees of the company have discovered this cultural difference?

A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Question 55

Who among the following can be considered expatriates?

A) The European employees of a company based in Europe who are transferred to a different city in the country for a particular project
B) The American employees of a company based in Japan who are transferred to the U.S. for a particular assignment
C) The Chinese employees of a company based in Shanghai, China who are transferred to the U.S. for a special assignment
D) The Indian employees of a company based in India who are transferred to a different city in the country

Question 56

The__________is a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property.

A) Asia-Pacific Economic Cooperation
B) General Agreement on Tariffs and Trade
C) Free Trade Agreement
D) Maastricht Treaty

Question 57

Oldhust Corp., an electronics company in the country of Bigmount, bought Specden Corp., an electronics company in the country of Vertholt. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 58

Which of the following statements is true of global consistency?

A) It modifies a company's standard operating procedures.
B) It occurs when two existing companies collaborate to form a third company.
C) It allows managers to adapt to differences in foreign customers.
D) It simplifies decisions for managers at the headquarters of a multinational company.

Question 59

Rinsen Corp., a U.S.-based firm, is allowing Blink Traders, a firm based in Ireland, to conduct Rinsen's business in its country. Rinsen Corp. is going to provide training, equipment, and advertising assistance to Blink Traders for initial fee plus royalties. This form of global business is an example of a _____.

A) wholly owned affiliate
B) conglomerate
C) franchise
D) joint venture

Question 60

Dustind Inc. is expanding its global operations into Arcland in spite of the constant threat of war between Arcland and its neighboring countries over petroleum reserves. As Dustind Inc. expands its operations into Arcland, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 61

Hutlot Corp., a clothing company in the country of Pretnola, bought a small clothing company named Midlews in the country of Limlouth. Hutlot is going to sell its own designs through Midlews, and it believes that this venture will be extremely successful. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 62

Which of the following trade barriers is established to protect the health and safety of citizens?

A) Tariffs
B) Quotas
C) Government import standards
D) Voluntary export restraints

Question 63

HungryFrank, a small eatery based in the U.S. was reporting losses and wanted to turn its business around. It decided to start using the same name and menu as JoeClub, a popular Italian restaurant, instead if its own. HungryFrank agreed to pay royalty fees to JoeClub to be able to use its menu and name. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 64

_____ are specific limits on the number or volume of imported products.

A) Tariffs
B) Quotas
C) Subsidies
D) Embargoes

Question 65

The government of Diarmina recently passed a law that requires foreign companies to partner with Diarminian companies if they want to conduct their business in the country. Many investors and companies started to pull their funds and business out of the country because of this. This scenario exemplifies _____.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 66

Lochmonden already has a company registered under the name of CreateOne. The Aldemeren company with the same brand name was not able to enter Lochmonden market. Hence, the Aldemeren CreateOne had to start a new company in the name of OneCreate to enter the market in Lochmonden. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 67

__________are nontax methods of increasing the cost or reducing the volume of imported goods.

A) Nontariff barriers
B) Grants
C) Tariffs
D) Subsidies

Question 68

The most common__________is a joint venture, which occurs when two existing companies collaborate to form a third company.

A) business acquisition
B) merger
C) divestiture
D) strategic alliance

Question 69

_____ is selling domestically produced products to customers in foreign countries.

A) Domestic trade
B) Entrepot trade
C) Importing
D) Exporting

Question 70

If companies focus too much on local adaptation, they run the risk of:

A) using management procedures poorly suited to particular countries' markets, cultures, and employees.
B) losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.
C) losing control over the quality of the product or service sold by the foreign licensee.
D) failing to benefit from an active global strategy.

Question 71

Multinat is a large corporate with its headquarters in Asia. It wants to open new divisions in Africa and Australia. The company wants to ensure that the new divisions follow the same policies and guidelines as the parent company. It is evident from the scenario above that Multinat wants to:

A) incorporate local adaptation.
B) establish global consistency.
C) create franchises.
D) form strategic alliances.

Question 72

The government of Diamza recently passed a law making it mandatory for any foreign company that wants to do business in its country to only use raw materials made in Diamza and only hire citizens. This is a type of _____ faced by companies that want to conduct business in Diamza.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 73

Opep Corp. received a new building project that had very short turnover and very high resource cost. The company decided to ask Imog Corp., another builder, to aid them in this project, and the two companies together formed a third company by combining their resources. This third company was formed for the duration of the project and received equal credit after completion. In this scenario, Opep Corp. and Imog Corp. are forming a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 74

_____ is the degree to which societies believe that a person should be self-sufficient.

A) Egoism
B) Dynamism
C) Moralism
D) Individualism

Question 75

Riytiz Corp. and Tenkriz Corp. are two industrial developers. They plan to combine their funds, finances, risks, and expertise to build the Opobip Bridge. This bridge is said to connect two states that are not connected by a highway. In this scenario, the venture between Riytiz Corp. and Tenkriz Corp. would be called a _____.

A) strategic alliance
B) wholly owned affiliate
C) conglomerate
D) franchise

Question 76

In the context of cross-cultural training, _____ is a technique in which trainees are placed in an ethnic neighborhood for three to four hours to talk to residents about cultural differences.

A) field simulation training
B) documentary training
C) cultural simulation
D) adaptability screening

Question 77

In the context of nontariff barriers,__________include government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition.

A) export restraints
B) import standards
C) quotas
D) subsidies

Question 78

John was born in America and moved to China when his company opened a branch there. In this scenario, John is a(n)__________.

A) source
B) patriot
C) pariah
D) expatriate

Question 79

In the context of cross-cultural training, the practice of adapting to cultural differences is called:

A) intercultural competence.
B) cultural conservatism.
C) cultural simulation.
D) multiculturalism.

Question 80

Emeremen Corp., an automobile manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that should be considered by Emeremen Corp. while choosing a new office location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates