Question 1

Multinational companies typically have no difficulty determining the correct balance between global consistency and local adaptation.

Accepted Answer

Multinational companies often struggle to strike a balance between global consistency and local adaptation, as they need to account for cultural differences, legal requirements, customer preferences, and market conditions in each country they operate in. Finding the right level of standardization versus localization requires ongoing evaluation and adjustment.

Question 2

The purpose of the Maastricht Treaty of Europe was to create the European Union with one common currency, the euro, for its members.

Accepted Answer

The Maastricht Treaty, also known as the Treaty on European Union, was signed in 1992 with the purpose of creating the European Union as a political and economic union of European countries. One of the key provisions of the treaty was the creation of a single currency, the euro, which was eventually adopted by 19 member states.

Question 3

If companies focus too much on local adaptation, they run the risk of losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.

Accepted Answer

Local adaptation can lead to customization of rules and procedures in different regions, which can result in increased costs and reduced efficiency. Standardization allows for economies of scale and streamlined processes. However, some level of local adaptation may be necessary to meet cultural, legal, or consumer preferences in different markets. Balancing standardization and adaptation is key for multinational companies.

Question 4

Regional trading is defined as a method of investment in which a company builds a new business or buys an existing business in a foreign country. .

Accepted Answer

Regional trading involves the exchange of goods and services between countries within a specific geographic region, such as NAFTA or the EU. Investment in a foreign country through building or buying a business is known as foreign direct investment (FDI).

Question 5

The two kinds of cooperative contracts are licensing and franchising.

Accepted Answer

This statement is true, as licensing and franchising are both types of cooperative contracts where one company allows another company to use its intellectual property or business model in exchange for royalties or other fees.

Question 6

A joint venture is an example of a strategic alliance.

Accepted Answer

A joint venture is a type of strategic alliance in which two or more independent companies form a new entity to pursue a specific business objective together. They share the risks and rewards of the venture and have joint ownership and control over the new entity.

Question 7

It appears that all companies follow the phase model of globalization when entering foreign markets.

Accepted Answer

While many companies may utilize the phase model of globalization, it is not a universal approach and some companies may use different strategies depending on the specific market and circumstances.

Question 8

The biggest disadvantage associated with licensing is that the licensor gives up control over the quality of the good or service sold by the foreign licensee.

Accepted Answer

When a company decides to license its brand or technology to a foreign partner, the licensor gives up some level of control over how the licensed product or service is produced, marketed, and distributed. The foreign licensee has the freedom to operate their business in the way they see fit, which can result in differences in quality, pricing, and other factors that may negatively impact the brand's reputation.

Question 9

Approximately one-third of multinational companies enter foreign markets through wholly owned affiliates.

Accepted Answer

According to research, approximately one-third of multinational companies enter foreign markets through wholly owned affiliates.

Question 10

Global joint ventures can be difficult to manage because they represent a merging of four cultures.

Accepted Answer

Global joint ventures involve the integration of the cultures of the two companies involved, as well as the cultures of the two countries in which they operate. This can create unique challenges in managing the joint venture.

Question 11

Global business is defined as the buying and selling of goods and services by people from different countries.

Accepted Answer

This is the commonly accepted definition of global business. It involves international trade and commerce between individuals, companies, and governments from different countries.

Question 12

The North American Free Trade Agreement (NAFTA) is a regional trade agreement between Canada and the United States. No other nations have signed this trade agreement.

Accepted Answer

NAFTA was a trade agreement between Canada, the United States, and Mexico, not just between Canada and the United States.

Question 13

In a multinational company, managers at company headquarters value global consistency as it simplifies decision making.

Accepted Answer

Global consistency is valued by managers at company headquarters as it allows for standardized decision-making processes across different regions and countries. This can lead to greater efficiency and streamlined operations within the company.

Question 14

Global new ventures bring a product or service to market in one foreign market at a time.

Accepted Answer

Global new ventures usually launch their product or service simultaneously in multiple foreign markets to maximize their outreach and impact.

Question 15

The phase model of globalization is one in which a company makes the transition from a domestic company to a global company in three sequential phases. The three phases are exporting, wholly owned subsidiaries, and strategic alliances.

Accepted Answer

The phase model of globalization typically involves stages such as exporting, licensing/franchising, joint ventures, and wholly owned subsidiaries, but not specifically in the order mentioned, and strategic alliances can occur at various stages, not as a distinct phase following wholly owned subsidiaries.

Question 16

Historically, companies have generally followed the phase model of globalization.

Accepted Answer

The phase model of globalization is a widely accepted framework that describes the four stages of globalization: domestic, international, multinational, and global. Many companies have followed this model in the past and continue to do so today.

Question 17

One of the disadvantages of global joint ventures is that, like licensing and franchising, they help companies avoid tariff and nontariff barriers to entry.

Accepted Answer

Global joint ventures often involve establishing a presence in a foreign country, which can expose companies to tariff and nontariff barriers rather than avoiding them. Licensing and franchising can sometimes help in avoiding these barriers by leveraging local partners, but joint ventures typically involve more direct investment and operations in the foreign market.

Question 18

Direct foreign investment is an increasingly important and common method of conducting global business.

Accepted Answer

Direct foreign investment has become a popular way for businesses to expand globally and gain access to new markets, resources, and labor.

Question 19

Multinational corporations are corporations that own businesses in two or more countries.

Accepted Answer

Multinational corporations are indeed corporations that own businesses in two or more countries.

Question 20

A European car manufacturer collaborating with a Chinese car manufacturer for building a new car manufacturing company in China is an example of direct foreign investment.

Accepted Answer

The answer of A European car manufacturer collaborating with a...

Quiz 8: Global Management