Deck 6: International Management

Question 1

Germany is a member of the Group of Five.

Answer 1

True
Explanation: The Group of Five are the top five industrial nations in the view of the World Bank and IMF: the United States, Britain, France, Germany, and Japan.

Question 2

New York Times columnist Thomas Friedman wrote a best-selling book called "The Global Economy Is Flat."

Answer 2

False
Explanation: The global economy matters because your customers, employees, and suppliers could be located anywhere in the world. New York Times columnist Thomas Friedman wrote a best-seller about this phenomenon. His book, The World Is Flat, described how such trends as the Internet and trade agreements between more nations have made international business the norm today.

Question 3

Members of APEC include South Korea, Taiwan, the United States, Australia, and Russia.

Answer 3

True
Explanation: South Korea, Taiwan, and Singapore and other Asian countries have joined with the United States, Australia, and Russia to form the 21-member Asia-Pacific Economic Cooperation (APEC) trade group.

Question 4

The value of U.S. imports from China is more than five times the value of U.S. exports to China.

Question 5

The Maastricht Treaty formally established the trade area in North America.

Question 6

North America, South America, and Asia are the three regions that are most dominant in the global economy.

Question 7

Major disadvantages of the multinational model are higher manufacturing costs and duplication of efforts.

Question 8

When pressures for local responsiveness are high and pressures for global integration are low, the global model is appropriate.

Question 9

Pressure to lower costs is one reason a firm may prefer a common global strategy to one tailored to individual markets.

Question 10

Japan is the most important trading partner of the United States based on the value of imports and exports between the two countries.

Question 11

The Middle East is the largest supplier of oil to the United States.

Question 12

NAFTA had an immediate and negative effect on the U.S. automobile industry.

Question 13

Offshoring occurs when an organization contracts with an outside provider to produce one or more of an organization's products or services.

Question 14

One consequence of an increasingly integrated global economy is that imports are penetrating deeper into the world's largest economies, such as that of the United States.

Question 15

When there are differences among countries in traditional practices such as driving, pressures for local responsiveness emerge.

Question 16

Universal needs exist when the tastes and preferences of consumers in different countries with regard to a product are similar.

Question 17

In the international model, managers use their organization's existing core capabilities to expand into foreign markets.

Question 18

Foreign direct investment flows to less developed countries by firms in developed countries is declining substantially.

Question 19

Mexico has quickly emerged as the third-largest trading partner of the United States as a result of NAFTA.

Question 20

The creation of a unified Europe has resulted in an economic superpower with a larger GDP than the United States.

Question 21

One way to prevent failed global assignments is to use effective, validated screening and selection criteria.

Question 22

On Hofstede's power distance and individualism scales, the United States is very similar to France.

Question 23

Transnational companies are companies that produce products in one country and export these products to many overseas countries.

Question 24

Companies that adopt the global model tend to be those pursuing a cost focus as a competitive strategy.

Question 25

High transportation costs associated with exporting can make it uneconomical, particularly in the case of bulk products.

Question 26

Using host-country nationals at an overseas subsidiary is generally more expensive than using expatriates.

Question 27

When a company's competitive advantage is based on technology and it wishes to enter the global marketplace, the least preferred strategy is the wholly owned subsidiary.

Question 28

Franchising is utilized primarily by manufacturing industries, whereas licensing is used more often in service industries.

Question 29

Inpatriates are valuable because they bring with them extensive knowledge about how to operate effectively in their home countries.

Question 30

Culture shock is the disorientation and stress associated with being in a foreign environment.

Question 31

Ethical behavior and decision making are surprisingly harder in a purely domestic situation than in the international arena.

Question 32

Cultural shock is an example of an executive coping strategy for international assignments.

Question 33

One advantage of exporting is that it provides scale economies.

Question 34

Individuals from the parent country who are sent to work at a foreign subsidiary are known as expatriates.

Question 35

The failure rate among expatriates is less than five percent.

Question 36

Which of the following is a consequence of an increasingly integrated global economy?

A) World output and trade have decreased to a dramatically low level.
B) Many companies find their home markets under attack from foreign competition.
C) Companies are making foreign direct investments at home.
D) Imports are failing to penetrate deeper into the world's largest economies.
E) There are reduced opportunities for global trade.

Question 37

Quality control is a significant disadvantage of franchising.

Question 38

Inpatriates are foreign nationals that are sent abroad for a short period.

Question 39

Family issues are the biggest reason for expatriates to return home early.

Question 40

Ethnocentrism is the tendency to judge others by the standards of one's own culture or group, which are seen as superior.

Question 41

Answering yes to which of the following questions should be considered by managers as a reason to offshore?

A) Is cost the competitive advantage of the organization's products?
B) Is the business in its early stages?
C) Can production savings be achieved locally?
D) Can the efficiency of the supply chain be improved?
E) Answering yes to any or all of these would be considered by managers as reason to offshore.

Question 42

Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

A) Japan.
B) Canada.
C) Mexico.
D) China.
E) Vietnam.

Question 43

Pressure for local responsiveness includes

A) Varying consumer preferences.
B) Varying sales and distribution patterns.
C) Varying traditions.
D) Varying political demands.
E) All of these.

Question 44

Labor costs in China are about ________ those in Mexico.

A) one-third of
B) three times
C) the same as
D) seven times
E) 10 times

Question 45

________ occurs when the organization contracts with an outside provider to produce one or more of an organization's products or services.

A) International development
B) Outsourcing
C) Offshoring
D) Expatriation
E) Franchising

Question 46

Which of the following has resulted from the formation of the European Union?

A) The elimination of all trade barriers within Europe.
B) The protection of local industry within Europe.
C) The strengthening of Europe's position as an economic superpower.
D) The reunification of Germany.
E) The adoption of one European language.

Question 47

Which of the following existing agreements includes Costa Rica, Nicaragua, and the United States?

A) NAFTA.
B) CAFTA-DR.
C) FTAA.
D) APEC.
E) ASEAN.

Question 48

Pressure for global integration includes

A) Universal needs.
B) Differences in traditional practices.
C) Political demands imposed by host countries.
D) Varied consumer preferences.
E) Legal demands imposed by host countries.

Question 49

The passage of NAFTA has provided short-term benefits to which of the following industries?

A) The auto industry.
B) Grain producers.
C) The financial industry.
D) Capital goods suppliers.
E) All of these have benefited from NAFTA.

Question 50

Which country does the text describe as having become an important provider of online computer and software support for the United States?

A) Egypt.
B) Great Britain.
C) India.
D) Mexico.
E) Taiwan.

Question 51

Operating in a global marketplace is considered more complex because

A) Managers must compete with cost-efficient overseas competitors.
B) The lessening of trade barriers has decreased opportunities in previously attractive markets.
C) Many overseas competitors operate with greater economies of scale.
D) Of varying cultures and coordination of globally dispersed operations.
E) International management is relatively risk-free as compared to domestic management.

Question 52

Which areas are considered the most dominant in the global economy?

A) North America, western Europe, and Asia.
B) North America, South America, and Asia.
C) Western Europe, Asia, and Africa.
D) North America, South America, and western Europe.
E) North America, Asia, and Africa.

Question 53

When identifying the best strategy for competing in a global marketplace, it is helpful to plot a company's position on a(n)

A) Leadership grid.
B) Force field analysis grid.
C) Integration-responsiveness grid.
D) Cost-benefit grid.
E) Strategy map.

Question 54

Which of the following pressures for local responsiveness includes threats of protectionism, economic nationalism, and local rules?

A) Differences in distribution channels.
B) Differences in traditional practices.
C) Economic and political demands.
D) Differences in consumer tastes.
E) Global market integration.

Question 55

The flat world has required managers to operate in an environment that is ________ complex and competitive and offers more _________.

A) more; profit
B) less; profit
C) more; opportunities
D) less; opportunities
E) less; ROI

Question 56

To be competitive in a global economy, Europeans must increase their level of

A) Population density.
B) Productivity.
C) Espionage activity.
D) Philanthropic contributions.
E) Wealth.

Question 57

Under (the) ________, member countries agreed to adopt a common European currency called the euro.

A) NAFTA
B) Maastricht Treaty
C) GATT Agreement
D) APEC Treaty
E) European Unification Act

Question 58

________ occurs when companies move jobs to another country, typically where wages are lower.

A) International development
B) Outsourcing
C) Offshoring
D) Expatriation
E) Franchising

Question 59

NAFTA combined the economies of

A) The United States, Canada, and Mexico.
B) Canada, Mexico, and South America.
C) South America, the United States, and Central America.
D) Latin America, the Pacific Rim, and the European Union.
E) The United States, the European Union, and Canada.

Question 60

The grid used for identifying the best strategy for competing in a global marketplace measures what two dimensions?

A) Pressures for global integration and pressures for local responsiveness.
B) Pressure for local interaction and pressures for global responsiveness.
C) Financial viability and employee satisfaction.
D) Employee satisfaction and management credibility.
E) Pressures for global systems capacity and pressures for local financial success.

Question 61

Where global efficiency is not required but adapting to local conditions offers advantages, the __________ model of organizational structure is appropriate.

A) international
B) multinational
C) global
D) transnational
E) multimedia

Question 62

An organizational model that consists of a company's overseas subsidiaries and is characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations is called the

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) Intranational model.

Question 63

Competing globally under the assumption that no tangible differences exist among consumer tastes and preferences in varying countries is referred to as a __________ model.

A) multinational
B) consumer-focused
C) transnational
D) global
E) domestic

Question 64

The global strategy model that uses subsidiaries in each country and provides each a great deal of discretion to respond to local conditions is the __________ model.

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

Question 65

The international model of organizational structure consists of

A) Large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries.
B) Subsidiaries located in countries where the company does business with much of the control exercised by the parent company.
C) Subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries.
D) Manufacturing various components at appropriate sites and assembling the components at national subsidiaries.
E) Global services.

Question 66

Calabria Steel has subsidiaries in each country in which it does business. As the parent company, Calabria has located its core skills in technology and R&D overseas so that each subsidiary remains dependent on it for new products, processes, and ideas. This illustrates the __________ model for global strategy.

A) international
B) multinational
C) global
D) transnational
E) intranational

Question 67

Though the product is based on a formula pioneered in California and Florida, Euro Disney operates the amusement park in France, and markets it somewhat differently than the United States facilities in order to appeal to the European consumer. This type of strategy is known as a(n) __________ model.

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

Question 68

Which global strategy model realizes the advantage of local responsiveness but the disadvantage of high manufacturing costs and duplication of effort?

A) Transnational.
B) Global.
C) Worldwide.
D) International.
E) Multinational.

Question 69

Heineken, a Netherlands-based brewing company, produces more than 170 different brands around the world, some of them international but many of them specialty brews for regional and local tastes. This illustrates the

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) Intranational model.

Question 70

When a company such as Procter & Gamble approaches the European market as a unified whole, thus reducing costs and improving efficiency, it is using the __________ model of organizational structure.

A) international
B) multinational
C) transnational
D) global
E) intranational

Question 71

Which of the following is a global strategy used as an approach to international competition?

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) All of these are global strategies.
According to Figure 6.6, the four types of organization models used in global trade are global, transnational, international, and multinational.

Question 72

From which model of organizational structure did IBM and Xerox profit by transferring skills and know-how to subsidiaries around the globe?

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) Intranational model.

Question 73

In which two models of global strategy do manufacturing costs remain relatively high?

A) Global and transnational.
B) International and transnational.
C) Multinational and international.
D) Global and international.
E) Multinational and transnational.

Question 74

Companies that decentralize their operations throughout the globe in order to appeal to the varying tastes and preferences of global consumers are utilizing a ___________ model.

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

Question 75

The __________ model of organizational structure has a disadvantage in that it may result in a product that fails to satisfy anyone.

A) international
B) multinational
C) transnational
D) global
E) intranational

Question 76

The __________ organizational model is designed to enable a company to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

A) international
B) multinational
C) global
D) transnational
E) multimedia

Question 77

A disadvantage of a multinational model is that

A) Problems in transferring core skills are created.
B) Each subsidiary must respond to specific consumer needs.
C) Transfer pricing presents difficulties.
D) It is difficult to launch a coordinated global attack against competitors.
E) Coordination of efforts within countries is more difficult.

Question 78

The overseas success of Kellogg, Coca-Cola, Heinz, and Procter & Gamble is based on marketing know-how. These companies are using which model of organizational structure?

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) Intranational model.

Question 79

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the

A) International model.
B) Multinational model.
C) Global model.
D) Transnational model.
E) Multimedia model.

Question 80

The multinational model of organization structure consists of

A) Large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries.
B) Subsidiaries located in countries where the company does business with much of the control exercised by the parent company.
C) Subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries.
D) Manufacturing various components at appropriate sites and assembling the components at national subsidiaries.
E) Extensive use of offshoring.