Question 1

Many companies are moving production outside the United States because of the effects of geopolitics, a trend known as deglobalization.

Accepted Answer

While some companies are locating their manufacturing outside the United States,a countertrend,called "deglobalization," is that some companies are moving production back home because long supply chains can be easily affected by the whims of geopolitics and energy prices.

Question 2

Countertrading is a decision by an organization to never accept the market price from its suppliers, but to save money by negotiating a lower price.

Accepted Answer

Countertrading refers to a process where goods or services are exchanged for other goods or services instead of using money as a means of payment. It does not necessarily involve negotiating a lower price with suppliers.

Question 3

To complete the Johnson family's new home in Ohio, Top Builders, an American construction company specializing in new homes, utilized a Swiss company that specializes in fine-quality doors, using the wood of trees from the Alps region. Top's use of a foreign company's products and labor is known as offshoring.

Accepted Answer

Global outsourcing,or offshoring,is defined as using suppliers outside the United States to provide labor,goods,or services.

Question 4

Farm Supply has decided to allow a retailer in Canada to utilize the Farm Supply name and a number of valuable business services in return for paying the company a fee and part of its profits. This business arrangement is known as franchising.

Accepted Answer

This description fits the definition of franchising, where a company (the franchisor) allows another party (the franchisee) to use its brand name and business model in exchange for fees and a portion of profits.

Question 5

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.

Accepted Answer

This is the correct definition of franchising.

Question 6

Jose, the owner of a citrus farm in Mexico, discovers the United States is offering a new larger tariff on the import of Mexican-grown oranges A tariff is a bonus paid to foreign companies by the American government on imported products.

Accepted Answer

A tariff is actually a tax imposed by the American government on imported products, not a bonus paid to foreign companies.

Question 7

Two managers from an Electronics Mart were talking to Ty, their district manager, about Harriet, the unpopular store manager. Susan, the assistant manager, said, "I believe I speak for other managers and employees when I say that Harriet acts like she knows it all. We all feel that Harriet does not listen to any of us because she always thinks her way is right and does not want to consider any other opinion." Harriet is an example of a geocentric manager; geocentricism is also called parochialism.

Accepted Answer

Ethnocentrism might also be called parochialism,which is a narrow view in which people see things solely through their own perspective.Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.

Question 8

In 1999, the top exporting nation was the United States, but in 2013 the world's top exporting nation was Japan.

Accepted Answer

In 2013, the top exporting nation was China, not Japan.

Question 9

A company that produces boats, which is headquartered in Japan, formed a new company in the United States to avoid paying a tariff on its boats manufactured for the U.S. market. This new company is an example of a subsidiary.

Accepted Answer

A subsidiary is a company that is owned or controlled by another company, known as the parent company. In this case, the new company formed in the United States is owned by the Japanese company and is therefore considered a subsidiary. Its formation is a strategy to avoid paying a tariff on its boats manufactured for the U.S. market.

Question 10

Adriana, a CEO, is interested in expanding her clothing business globally. She loves the excitement and challenge of forming something new that is totally owned and controlled by her organization, knowing that the risky investment will possibly yield a large return. Adriana's desire to form a firm that is totally owned and controlled by her company is an example of a wholly owned subsidiary.

Accepted Answer

Adriana's desire to form a firm that is totally owned and controlled by her company is an example of a wholly owned subsidiary.

Question 11

To help American companies, the U.S. government utilizes import quotas, which encourage foreign countries to increase the number of goods exported to the United States.

Accepted Answer

Import quotas limit the amount of foreign goods that can be imported to the United States, rather than encouraging more exports. Restricted import quotas can have the effect of protecting domestic industries by limiting foreign competition.

Question 12

The study of international management is not important for some people because most individuals and companies are not affected by global companies.

Accepted Answer

International management is becoming increasingly important for individuals and companies due to the global interconnectedness of economies and businesses. Even small businesses may be impacted by global companies and need to understand international management concepts to compete effectively. Additionally, individuals may work for multinational companies or in global markets, requiring knowledge of international management practices.

Question 13

Phillip, the global sales manager for a cosmetic company, believes that employees and managers in each of his foreign stores understand best how to handle the personnel and practices in their locations. So when a corporate executive approached Phillip about reprimanding Aki, the Tokyo store manager, for not doing things as corporate dictates, Phillip backed Aki. Phillip feels the home office should leave her alone. Phillip is an example of an ethnocentric manager.

Accepted Answer

Polycentric managers take the view that native managers in the foreign offices best understand native personnel and practices,and so the home office should leave them alone.Ethnocentric managers believe that their native country,culture,language,and behavior are superior to all others.

Question 14

Multinational organizations expand to take advantage of availability of supplies, new markets, and lower labor costs or to avoid tariffs and import quotas.

Accepted Answer

Multinational organizations often look for opportunities outside their home country to expand their operations and take advantage of factors such as availability of supplies, new markets, lower labor costs, and avoidance of tariffs and import quotas. This allows them to gain a competitive edge and increase their profits.

Question 15

A manufacturing facility in a Mexico was unable to afford the products it needs from an American supplier because Mexico's currency dropped dramatically. To acquire the parts needed to produce its products, the Mexican facility bartered with several companies in Texas, offering completed goods for parts. This direct exchange of goods for goods is known as countertrading.

Accepted Answer

Sometimes other countries may wish to import American goods but lack the currency to pay for them.In that case,the exporting U.S.company may resort to countertrading,which is bartering goods for goods.When the Russian ruble plunged in value in 1998,some goods became a better medium of exchange than currency.

Question 16

The Johnson family in Ohio approached Top Builders, an American construction company specializing in new homes, to build their new home. To complete its jobs, Top Builders likes to support small, locally owned American companies that specialize in high-quality products. The use by Top Builders of suppliers outside its company to provide goods and services is known as global outsourcing.

Accepted Answer

The use of suppliers outside the company is known as outsourcing, not global outsourcing.

Question 17

A likely reason for modern outsourcing is the lower cost of labor in another country.

Accepted Answer

One of the main reasons for outsourcing is to take advantage of lower labor costs in another country, which allows companies to save money on production and increase profits. Other reasons for outsourcing include gaining access to specialized skills, reducing operating costs, and increasing efficiency.

Question 18

Amy, the CEO of a large manufacturing organization, knows that many of her competitors have closed their American factories to utilize production facilities in Mexico because labor is cheaper there and they receive special privileges in return for employing Mexican citizens. However, Amy refuses to shift her operations down south, believing that it is important to keep jobs in the U.S., despite the cost savings. These manufacturing plants that are allowed to operate in Mexico, with special privileges in return for employing Mexican citizens, are known as internationldoras.

Accepted Answer

Maquiladoras are manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens.

Question 19

Greg, a manager at the Rome, Italy, store for an American-owned cell phone company, understands the differences and similarities between American and the Italian customers, customs, culture, and practices. As a result, Greg is very skilled at utilizing either the American or Italian technique that helps him market his products and services to customers in Rome. Greg is an example of a geocentric manager.

Accepted Answer

A geocentric manager understands and values both the similarities and differences between cultures and is capable of adapting to local practices and customs, as Greg does in the given scenario.

Question 20

Aiden, the purchasing manager for a company that produces high-end, quality medical equipment, is interested in meeting with the management of Diamond Cut, a production facility in the state that specializes in intensive research, precision assembly, and complex technology. Aiden's organization is less likely to offshore the manufacture of its products, and want to meet face-to-face with Diamond Cut because Diamond produces high-end products.

Accepted Answer

Aiden's organization is interested in meeting with Diamond Cut because they produce high-end products, which suggests that Aiden's organization is also interested in maintaining high-quality production and is less likely to offshore manufacturing.

Quiz 4: Global Management: Managing Across Borders