Question 1

Which of the following is an advantage of direct investment?
A) New infrastructure
B) Simplicity
C) Enhanced control
D) Greater political support
E) Greater certainty

Accepted Answer

Direct investment occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country.

Question 2

Making a product in the firm's domestic marketplace and selling it in another country is known as _____.
A) direct investment
B) exporting
C) joint venture
D) competing
E) franchising

Accepted Answer

Exporting is making a product in the firm's domestic marketplace and selling it in another country, and can involve both merchandise and services.

Question 3

As an internationalization strategy, the typical use of maquiladoras by U.S. firms is a form of _____.
A) strategic alliance
B) licensing agreement
C) direct investment
D) joint venture
E) franchising

Accepted Answer

Many U.S. firms use maquiladoras for the same purpose as direct investment. Maquiladoras are light assembly plants built in Northern Mexico close to the U.S. border.

Question 4

Which of the following actions represents an attempt to manage social responsibility through ethical compliance?
A) Requiring top financial managers to ensure compliance with securities and banking regulations
B) Donating money to fund the performing arts
C) Creating a committee to review proposals concerning selection and promotion
D) Consulting the legal department regarding the requirements of a particular law
E) Making human resource managers responsible for complying with the Equal Employment Opportunity Commission (EEOC) standards

Accepted Answer

Many organizations also establish formal ethics committees, which may be asked to review proposals for new projects, to help evaluate new hiring strategies, or to assess a new environmental protection plan.

Question 5

Once a licensing agreement is agreed to, the licensee pays a(n) _____ in return.
A) interest
B) royalty
C) remuneration
D) tariff
E) reward

Accepted Answer

Licensing is an arrangement whereby a firm allows another company to use its brand name, trademark, technology, patent, copyright, or other assets. In return, the licensee pays a royalty, usually based on sales.

Question 6

Which of the following is true of quotas in trade?
A) It is used most commonly to restrict trade.
B) It is used to encourage strategic alliance.
C) It is used to increase domestic competition.
D) It is the tax breaks given by the host government.
E) It is a form of tax collected on imported goods.

Accepted Answer

Quotas are the most common form of trade restriction. A quota is a limit on the number or value of goods that can be traded.

Question 7

Which of the following about the ethical compliance of an organization is true?
A) It is a formal dimension of managing social responsibility.
B) It cannot be enhanced by providing training.
C) It includes awarding of funds or gifts to charities or other worthy causes.
D) It is used to circumvent their legal obligations.
E) It cannot be imposed by developing guidelines and codes of conduct.

Accepted Answer

The formal organizational dimensions through which businesses can manage social responsibility include legal compliance, ethical compliance, and philanthropic giving.

Question 8

Which of the following approaches to internationalization of business has the disadvantage of shared ownership?
A) Importing
B) Licensing
C) Exporting
D) Joint ventures
E) Direct investment

Accepted Answer

A joint venture is special type of strategic alliance in which the partners actually share ownership of a new enterprise.

Question 9

A potential disadvantage of licensing agreements is:
A) decreased profits.
B) limited profitability.
C) inflexibility.
D) home production costs.
E) excessive transportation costs.

Accepted Answer

A company may prefer to arrange for a foreign company to manufacture or market its products under a licensing agreement. Factors leading to this decision may include excessive transportation costs, government regulations, and home production costs.

Question 10

Development of guidelines and codes of conduct is one of the most common ways through which an organization ensures _____.
A) risk management
B) technological specification
C) philanthropic giving
D) ethical compliance
E) export restraint agreements

Accepted Answer

Organizations have increased their efforts in ethical compliance by providing training in ethics and developing guidelines and codes of conduct.

Question 11

An advantage of importing and exporting is:
A) shared ownership.
B) the lack of government restrictions.
C) low transportation costs.
D) the lack of tariffs and taxes.
E) small cash outlay.

Accepted Answer

Importing or exporting (or both) is usually the first type of international business in which a firm gets involved. Its advantages include small cash outlay, little risk, and that it does not require adaptation to the local market.

Question 12

A(n) _____ strategy requires little small cash outlay, is heavily regulated by government, and does not require modification to products for local conditions and is the easiest approach to internationalization.
A) importing
B) licensing
C) joint venture
D) direct investment
E) offshoring

Accepted Answer

Importing is bringing a good, service, or capital into the home country from abroad. It requires small cash outlay, does not require adaptation, and has government restrictions imposed on it.

Question 13

Soft Bites, a factory that makes breads, has asked all its retailers to return the loaves that have not been sold till the last date of expiry. It then donates all these loaves to shelters for the poor and the homeless. This act of Soft Bites can be termed as _____.
A) corporate gifting
B) legal compliance
C) ethical compliance
D) philanthropic giving
E) apprentice sponsoring

Accepted Answer

Philanthropic giving is the awarding of funds or gifts to charities or other worthy causes.

Question 14

Atlantia is a company that manufactures dishwashers in Germany. Its products are sold in the United States. Which of the following statements is most accurate?
A) Atlantia is exporting its products to the United States.
B) Atlantia has a license agreement with the United States.
C) Atlantia is importing its products from the United States.
D) Atlantia wholly owns subsidiaries of the firm in the United States.
E) Atlantia is outsourcing to the United States.

Accepted Answer

Exporting is making a product in the firm's domestic marketplace and selling it in another country and can involve both merchandise and services.

Question 15

Sam's Big Bites, an American chain of burger stands, operates on all military bases in the United States. The agreement between Sam's Big Bites and the Department of Defense is a(n) _____.
A) maquiladora.
B) licensing agreement
C) exporting agreement
D) importing agreement
E) strategic alliance

Accepted Answer

In a strategic alliance, two or more firms jointly cooperate for mutual gain.

Question 16

Basco Electric Inc., an American company, has two factories in Mexico near the U.S. border. Basco gets special concessions from the Mexican government as it provides employment to the local population. The factories are an example of:
A) licensing agreements.
B) franchisees.
C) leases.
D) imports
E) maquiladoras.

Accepted Answer

Maquiladoras are light assembly plants built in Northern Mexico close to the U.S. border. The plants are given special tax breaks by the Mexican government, and the area is populated with workers willing to work for low wages.

Question 17

Which of the following is an advantage of licensing as an approach to internationalization?
A) Lack of competition
B) Extended profitability
C) Lesser uncertainty
D) Flexibility
E) Shared ownership

Accepted Answer

A company may prefer to arrange for a foreign company to manufacture or market its products under a licensing agreement. Factors leading to this decision may include excessive transportation costs, government regulations, and home production costs.

Question 18

_____ is an employee's disclosure of illegal or unethical conduct by others within the organization.
A) Lobbying
B) Influence peddling
C) Whistle-blowing
D) Source criticizing
E) Reconnaissance

Accepted Answer

Whistle-blowing is an employee's disclosure of illegal or unethical conduct by others within the organization.

Question 19

Which of the following is an informal organizational dimension of managing social responsibility?
A) Licensing
B) Philanthropic giving
C) Legal compliance
D) Ethical compliance
E) Organizational culture

Accepted Answer

In addition to the formal dimensions of managing social responsibility, there are also informal ones. Organizational culture helps shape and define people's perceptions of the organization's stance on social responsibility.

Question 20

_____ is the extent to which the organization conforms to local, state, federal, and international laws.
A) Technological compliance
B) Philanthropic giving
C) Ethical compliance
D) Legal compliance
E) Risk management

Accepted Answer

Legal compliance is the extent to which the organization conforms to local, state, federal, and international laws.

Quiz 2: The Environment of Organizations and Managers

Which of the following is an advantage of direct investment?

Making a product in the firm's domestic marketplace and selling it in another country is known as _____.

As an internationalization strategy, the typical use of maquiladoras by U.S. firms is a form of _____.

Which of the following actions represents an attempt to manage social responsibility through ethical compliance?

Once a licensing agreement is agreed to, the licensee pays a(n) _____ in return.

Which of the following is true of quotas in trade?

Which of the following about the ethical compliance of an organization is true?

Which of the following approaches to internationalization of business has the disadvantage of shared ownership?

A potential disadvantage of licensing agreements is:

Development of guidelines and codes of conduct is one of the most common ways through which an organization ensures _____.

An advantage of importing and exporting is:

A(n) _____ strategy requires little small cash outlay, is heavily regulated by government, and does not require modification to products for local conditions and is the easiest approach to internationalization.

Soft Bites, a factory that makes breads, has asked all its retailers to return the loaves that have not been sold till the last date of expiry. It then donates all these loaves to shelters for the poor and the homeless. This act of Soft Bites can be termed as _____.

Atlantia is a company that manufactures dishwashers in Germany. Its products are sold in the United States. Which of the following statements is most accurate?

Sam's Big Bites, an American chain of burger stands, operates on all military bases in the United States. The agreement between Sam's Big Bites and the Department of Defense is a(n) _____.

Basco Electric Inc., an American company, has two factories in Mexico near the U.S. border. Basco gets special concessions from the Mexican government as it provides employment to the local population. The factories are an example of:

Which of the following is an advantage of licensing as an approach to internationalization?

_____ is an employee's disclosure of illegal or unethical conduct by others within the organization.

Which of the following is an informal organizational dimension of managing social responsibility?

_____ is the extent to which the organization conforms to local, state, federal, and international laws.