Question 1

Globalisation describes the shift towards:
A) a world economy dominated by national policies and standards
B) a more integrated and interdependent world economy
C) a world economy where uncertainty can be more effectively managed through multilateral agreements
D) a fairer world that offers greater economic security for all

Accepted Answer

Globalisation increases economic interdependencies, so the correct answer is b. It brings no assurance of greater economic security for all nor of the role of national policy. Interdependency is also associated with an increase in uncertainty.

Question 2

Outsourcing is only possible for intermediate manufactured products.

Accepted Answer

The statement is false because many activities including supporting services such as marketing or logistics can also be outsourced.

Question 3

The current globalisation wave has been driven by technological change and declining barriers to trade in goods, ideas and services.

Accepted Answer

It is true that technological changes in communication and transport technologies and declining barriers to international exchange have driven the most recent wave of globalisation.

Question 4

The globalisation is bringing about homogenization of national cultures and values.

Accepted Answer

The statement is false, it is generally believed that diversity can coexist with growing interdependence.

Question 5

Traditional trade, where a country produces a product or service that is exported to overseas consumers as a final good, now represents only around 30 per cent of all trade.

Accepted Answer

True: About 70 per cent of trade is today linked to GVCs as intermediate products, services and components cross national borders, often multiple times, and further value is added, before they are exported as final goods.

Question 6

A global value chain shows how an international business organises the transformation of goods and services from raw materials to finished goods.

Accepted Answer

True, this is a valid description of what a value chain shows.

Question 7

The growth of non-equity modes of internationalization indicates that:
A) Globalisation is slowing down
B) Companies prefer internalising activities
C) Internalisation is preferred to externalisation
D) Companies increase 'fine-slicing' and externalization

Accepted Answer

These changing patterns of trade and production are entirely consistent with the increased 'fine-slicing' of tasks within global value chains and a concomitant externalization of activities.

Question 8

Technology could be considered as the application of knowledge which redefines the boundaries of global business.

Accepted Answer

This would be true for technologies that focus on processes or organisational innovations that can be utilised by international organisations. When adopted they can change the form, scope and reach of MNEs.

Question 9

The international business environment is mostly characterised by:
A) Constant change that impacts the strategies and the structures of international firms
B) Risks and global opportunities that are generally equal
C) Risks that exceed global opportunities
D) Constant cross-border integration

Accepted Answer

The correct response is a) Shifts in the nature of the international operating environment, including communications technologies, economic liberalization, regional integration, the explosion of e-commerce, and the growing participation of emerging economies in the world economy, have expanded the locational and governance choices facing international businesses.

Question 10

The growth of GVCs has brought changes to both the structure of trade and the governance of cross-border transactions.

Accepted Answer

True: The fragmentation of production has increased the focus on the costs and efficiency of intermediate production, widening locational choices for multinational enterprises and favouring emerging economies.

Quiz 1: Introduction to International Business

Globalisation describes the shift towards: