Test Bank for International Business, 15th Edition

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1International Business: Environments and Operations, 16e(Daniels et al.)Chapter 1Globalization and International Business1) The widening set of interdependent relationships among people from different parts of theworld is known as ________.A) globalizationB) offshoringC) franchisingD) outsourcingAnswer: ADiff: 1Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking2) Which of the following best defines international business?A) It includes all economic flows between two or more countries.B) It includes all private economic flows between two or more countries.C) It includes all business transactions involving two or more countries.D) It includes all business transactions in countries other than your home country.Answer: CDiff: 2Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking3) In terms of international business, it is most accurate to say that ________.A) there is a universal "best way" to conduct businessB) global competition affects large companies but not small onesC) most firms depend either on foreign markets and supplies or compete against companies thatdoD) government regulation of international business has little effect on a company's profitsAnswer: CDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking

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24) Devon, an accounts manager at a large electronics firm, does not have any direct internationalresponsibilities; however, Devon would most likely benefit from studying international businessissues so that he can ________.A) conduct better job interviewsB) better understand how foreign operations affect the company's competitive positionC) supervise and evaluate subordinates who have global assignmentsD) understand the legalities of importing and exporting products overseasAnswer: BDiff: 2Skill: ApplicationObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Application of knowledge5) Which of the following is an indication of the increased globalization of business since theend of World War II?A) Foreign trade has largely replaced foreign ownership as a means of conducting internationalbusiness.B) World trade has grown more rapidly than world production.C) Globally, consumers now depend on foreign output for more than half their consumption.D) Countries have increased their import restrictions to counter the rising tide of imports.Answer: BDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking6) According to the A.T. Kearny/Foreign Policy Globalization Index, countries ________.A) tend to be ranked similarly on all four dimensionsB) are more globalized on the political dimension than on personal contactC) that are large in land mass and population are less globalized than small countriesD) sometimes rank high on one dimension and low on anotherAnswer: DDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Diverse and multicultural work environments

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37) Globalization refers to all economic transactions among countries.Answer: FALSEDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking8) International business includes all commercial transactions between two or more countries.Answer: TRUEDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Reflective thinking9) It is difficult to compare globalization of business over time because shifting national bordershave changed the nature of transactions from domestic to international and vice versa.Answer: TRUEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Application of knowledge10) Most countries' imports account for more than half of their citizens' consumption.Answer: FALSEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Application of knowledge11) Gaining some understanding of international business is important for any business studentbecause global events and competition affect almost all companies.Answer: TRUEDiff: 1Skill: ConceptObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Application of knowledge

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412) What is international business? What are the primary reasons that companies engage ininternational business?Answer: International business is all commercial transactions—private and governmental—between two or more countries. Private businesses undertake such transactions for profit;governments may or may not do the same in their transactions. These transactions include sales,investments, and transportation.Firms engage in international business for three main reasons.1.To expand sales—The number of people and the amount of their purchasing power arehigher for the world as a whole than for a single country, so companies may increase their salesby reaching international markets.2.To acquire resources—Manufacturers and distributors seek out products, services, andcomponents produced in foreign countries.3.To minimize competitive risk—Many companies enter into international business fordefensive reasons. They want to counter advantages competitors might gain in foreign marketsthat, in turn, could hurt them domestically.Diff: 3Learning Outcome: Define the fundamental concepts of international businessSkill: SynthesisObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Analytical thinking

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513) What is globalization? What modes of international business are used by firms that want toglobalize? Briefly describe each method.Answer: Globalization refers to the widening set of interdependent relationships among peoplefrom different parts of a world that happens to be divided into nations. The term can also refer tothe integration of world economies through the elimination of barriers to movements of goods,services, capital, technology, and people. Firms have many options available when they want toglobalize their operations including licensing, franchising, turnkey operations, managementcontracts, and direct/portfolio investment.a.Licensing and franchising—Licensing agreements are used when companies allow others touse their assets, such as trademarks, patents, copyrights, or expertise under contract. Franchisingis a mode of business in which one party allows another party the use of a trademark that is anessential asset for the franchisee's business.b.Turnkey operations—Refers to business operations, performed under contract, that aretransferred to the owner when they are ready to begin operating.c.Management contract—Refers to arrangements in which one company provides personnel toperform general or specialized management functions for another company.d.Direct and portfolio investment—A direct investment is one that gives the investor acontrolling interest in a foreign company. A portfolio investment is a noncontrolling interest in acompany or ownership of a loan to another party.Diff: 3Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: SynthesisObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Analytical thinking

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614) Why should domestic managers have an understanding of globalization and internationalbusiness? What are the current views regarding the future of globalization?Answer: International business comprises a large and growing portion of the world's totalbusiness. Global events affect almost all companies. A company operating internationally willengage in modes of business, such as exporting and importing, that differ from those it isaccustomed to domestically. To operate effectively, managers must understand these differentmodes.The three main views of the future of globalization are as follows: further globalization isinevitable, or international business will grow regionally rather than globally, or forces workingagainst globalization will slow both trends. The view that increased growth in internationalbusiness is inevitable is supported by the power of MNEs who have multiple production anddistribution networks and are able to pressure governments to place fewer restrictions oninternational business. The view that growth will occur regionally rather than globally is basedon studies that show that most "global" transactions actually occur between neighboringcountries. Finally, the view that globalization will be slowed by pressure from theantiglobalization movement to raise barriers and reject international treaties and organizationsstems from the success of such groups in the past.Diff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: SynthesisObjective: 1-1 Relate globalization and international business (IB) to each other and explainwhy their study is importantAACSB: Application of knowledge15) The shifting of national borders has most likely created which of the following situations forinternational business?A) It has left rural residents more isolated from technology.B) It has complicated the understanding of behavioral factors affecting business.C) It has increased physical barriers to exporting.D) It has slowed communications between a company's headquarters and foreign operations.Answer: CDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking

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716) Most of the world's goods and services are sold ________.A) in international marketsB) in the countries where they are producedC) through exports to small countriesD) through exports to large countriesAnswer: BDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking17) Which of the following has NOT been a major force increasing globalization in recentdecades?A) liberalization of cross-border tradeB) increase in and expansion of technologyC) growing pressure from consumersD) decreasing prices of natural resourcesAnswer: DDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking18) Which of the following has MOST influenced consumers to demand access to foreign-madeproducts?A) Declining global affluence has caused consumers to seek out lower-priced products fromabroad.B) Consumers have become more efficient in using media and technologies to compare pricesworldwide.C) Fearing that their governments will enact restrictive policies on imports, consumers arestocking up on foreign products before restrictions are put in place.D) Expectations of rising prices of foreign products have caused consumers to seek foreignproducts before their prices become prohibitive.Answer: BDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Information technology

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819) Which of the following best explains why international business has grown rapidly in thepast few decades?A) the end of the political division between the Communist and non-Communist blocsB) greater income equality in most countriesC) growing concern about climate changeD) increased concerns about terrorismAnswer: ADiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking20) Advanced communication systems have contributed to growth in international business by________.A) enabling better oversight of global operationsB) reducing the effects of global competitionC) decreasing the cost of cargo transportationD) reducing export regulationsAnswer: ADiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Information technology21) Imported flowers are now a stronger competitor to U.S. grown flowers in the U.S. market.Which of the following is likely the MOST important factor for this increase in imports?A) more effective production techniquesB) advances in communication systemsC) advances in transportation and logisticsD) cross-national cooperationAnswer: CDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ApplicationObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking

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922) Because consumers want a greater variety of goods and services at lower prices, manygovernments have ________.A) reduced their restrictions on the international movement of goods and servicesB) acted to tax most imports at a lower rate than domestic productsC) sought to eliminate reciprocal advantages negotiated through international organizations andtreatiesD) increased their participation in multinational problem-solving effortsAnswer: ADiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Application of knowledge23) Which of the following best explains recent governmental relaxation of restrictions on cross-border trade and resource movements?A) Most countries face shortages of workers, so they seek immigrants who can help themproduce more.B) Governments believe that this will decrease the need to make their own companies moreinnovative.C) Consumers increasingly want to buy goods and services produced in their own countries,making restrictions less necessary.D) Governments believe that domestic producers will become more efficient as a result offoreign competition.Answer: DDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking24) A company starting out with a global focus, usually because of the international experienceof its founders, is called a ________.A) multinational enterpriseB) transnational companyC) strategically allied companyD) born-global companyAnswer: DDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking

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1025) Assume an enterprise is considering establishment of a foreign production facility. Which ofthe following best supports this decision?A) Its foreign competitors have higher production costs than it has.B) Its main competitor successfully opened a foreign plant.C) Its suppliers follow an agglomeration strategy.D) None of its competitors have foreign production facilities.Answer: BDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: Critical ThinkingObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking26) When a company successfully responds to foreign production and market opportunities,________.A) other companies will likely emulate its successful practicesB) it likely has a long-term advantage over competitorsC) it will downsize its domestic operationsD) its home government likely raises taxes on the companyAnswer: ADiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Application of knowledge27) Which of the following is NOT one of the three main reasons affecting international businessfor governments to cooperate with each other?A) to attack problems jointly that one country acting alone cannot solveB) to deal with issues that lie outside the territory of any nationC) to gain reciprocal advantagesD) to establish a common languageAnswer: DDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking

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1128) Governments have signed treaties to protect foreign-owned property rights, such asinvestments and patents. A primary reason for doing so is to ________.A) gain reciprocal advantagesB) reduce the domestic effects of other countries' economic policiesC) deal with areas of concern outside the territory of any one countryD) reduce national conflicts leading to violent political demonstrationsAnswer: ADiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking29) What is the most likely reason that governments cooperate with each other through treaties,agreements, and consultations?A) to gain an advantageous division of laborB) to be in compliance with United Nations' requirementsC) to attack problems jointly that one country acting alone cannot solveD) to assure that all countries get an equitable share of taxes from multinational enterprisesAnswer: CDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking30) All of the following are areas in which commercial activities take place outside the territoryof any nation EXCEPT ________.A) noncoastal areas of the oceansB) the Panama and Suez CanalsC) outer spaceD) AntarcticaAnswer: BDiff: 2Skill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Application of knowledge31) Globalization of business has been stimulated by institutional developments that aid foreigntrade and investment.Answer: TRUEDiff: 1Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Application of knowledge

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1232) The recent expansion of technology has contributed to the growth in international businessby creating new products that are important in world trade.Answer: TRUEDiff: 1Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Information technology33) Import restrictions are becoming less important because consumers increasingly want to buygoods and services produced in their own countries.Answer: FALSEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking34) Many companies merge with or acquire other companies to gain operating efficiencies thathelp them compete with or become global leaders.Answer: TRUEDiff: 2Skill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Analytical thinking35) Governments primarily cooperate through treaties to create a global division of labor.Answer: FALSEDiff: 1Skill: ConceptObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking

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1336) What are three factors that have led to the increased growth in international business inrecent decades? Which do you think has been most important and why?Answer:a.Rapid increase in an expansion of technology—By increasing the demand for new productsand services, technology has tremendous impact on international business. As the demandincreases, so do the number of international business transactions. Improved communicationsand transportation speed up interactions and improve managers' ability to control foreignoperations.b.Liberalization of cross-border movements—Although the past decrease in restrictions hasbeen erratic, governments have lowered barriers because their citizens have expressed the desirefor better access to a greater variety of goods and services at lower prices. Governments alsoreason that their domestic producers will become more efficient as a result of foreigncompetition, and they hope to induce other countries to reduce their barriers to internationalmovements.c.Increase in global competition—The pressures of increased foreign competition can persuadea company to expand its business into international markets. Today companies can respondrapidly to many foreign sales opportunities. If they're experienced in foreign markets, they canshift production quickly among countries because they can transport goods efficiently from mostplaces.d.Growing consumer pressures—Consumers are savvier and have more income. They want tobe able to buy the variety and low-cost products available from anywhere in the world.e.Development of supporting services—Companies and governments have developed servicesthat ease international business. Today, producers can be paid relatively easily for goods andservices sold abroad because of bank credit agreements, clearing arrangements that convert onecountry's currency into another's, and insurance that covers damage en route and nonpayment bythe buyer.f.Changing political situations—The schism between communist and noncommunist countriesis basically over, as communist countries have moved toward transitioning their economies;therefore, trade between these countries has increased.g.Expanded cross-national cooperation—Countries realize they can't go it alone. Theycooperate to gain reciprocal advantages, to attack problems jointly, and to deal with areas outsidethe confines of any country.Diff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: Critical ThinkingObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Reflective thinking

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1437) In a short essay, discuss why governments have been liberalizing cross-border movements ofgoods, services, and resources.Answer: Generally, governments today impose fewer restrictions on cross-border movementsthan they did a decade or two ago. They have lowered them for the following reasons:a.Their citizens have expressed the desire for easier access to a greater variety of goods andservices at lower prices.b.They reason that their domestic producers will become more efficient as a result of foreigncompetition.c.They hope to induce other countries to reduce their barriers to international movements.Diff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: Critical ThinkingObjective: 1-2 Grasp the forces driving globalization and IBAACSB: Application of knowledge38) Which of the following is the LEAST likely reason that small countries worry aboutoverdependence caused by globalization?A) A large country on which they depend may pressure them on political matters.B) A large international firm may dictate its terms of operations in a small country.C) A large company may exploit legal loopholes to avoid tax payments.D) A large country may substantially increase its demand for the small country's production.Answer: DDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Analytical thinking39) Which of the following statements would most likely be made by a SUPPORTER ofglobalization?A) Globalization encourages the adoption of uniform and superior standards for combatingenvironmental problems.B) Economic growth created by globalization is largely in services, which involves the use offew nonrenewable resources.C) Global competition discourages resource-saving technologies, which are costly.D) Air pollution and toxic runoff problems increase with global economic growth.Answer: ADiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Analytical thinking

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1540) Limitation of logging in the Amazon region is generally viewed as environmentallybeneficial for the planet as a whole; however, unemployed Brazilian workers have felt that jobcreation inside Brazil is more important than climate protection outside Brazil. This example bestillustrates which of the following?A) why smaller countries are concerned that large international companies are powerful enoughto dictate operating termsB) why globalization is needed to foster uniform standards for combating environmentalproblemsC) how cultural homogeneity threatens the cultural foundation of smaller nationsD) how global interests can conflict with a country's local interestsAnswer: DDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ApplicationObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Application of knowledge41) Although globalization may bring economic growth, critics nevertheless contend that________.A) the growth is too fastB) the inequality of gains puts some people in a relatively worse economic situationC) this growth is mainly for the future, thus ignoring present economic growth needsD) the cultural foundations of sovereignty are supported by globalizationAnswer: BDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Reflective thinking42) Which of the following statements would most likely NOT be supported by an advocate ofoffshoring?A) Offshoring increases the number of high-value jobs in the home countries of offshoringcompanies.B) Offshoring is fundamentally better for workers than the introduction of labor-savingtechnologies.C) Workers displaced due to offshoring are able to find new jobs as easily as those displaced bytechnology.D) There are upper limits to offshoring because of the lack of skilled workers willing to workpermanently for low wages.Answer: BDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Application of knowledge

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1643) A major criticism of offshoring is that it ________.A) increases production costsB) exchanges good jobs for bad jobsC) threatens the sovereignty of larger countriesD) allows companies to avoid payment of any taxesAnswer: BDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Application of knowledge44) Critics of offshoring claim all EXCEPT which of the following?A) Cost savings are seldom passed on to final consumers.B) Offshoring reduces the incomes of people in low-wage countries.C) Incomes of workers in countries whose companies offshored production have gone down as apercentage of national income.D) Many workers who have been displaced by offshoring do not have the skills needed forhigher-value jobs.Answer: BDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Analytical thinking45) Supporters of globalization assert that the process helps countries strengthen theirsovereignty.Answer: FALSEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Analytical thinking46) A criticism of globalization is that as economic growth increases, too many nonrenewableresources are used.Answer: TRUEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Ethical understanding and reasoning

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1747) The process of shifting production to a foreign country is known as outsourcing.Answer: FALSEDiff: 1Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Reflective thinking48) Critics of offshoring assert that the short-term cost savings derived from offshoring hinderfirms from developing more efficient production methods.Answer: TRUEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-3 Discuss the major criticisms of globalizationAACSB: Analytical thinking49) The process of shifting production from a domestic to a foreign location is best known as________.A) offshoringB) outsourcingC) licensingD) joint venturingAnswer: ADiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge50) Assume that company executives at the firm would like to increase sales by expanding intoan international market. Which of the following factors, if true, best supports a decision toexpand sales globally?A) It can offshore most of its production.B) It can obtain all of its resources for the same price overseas.C) Its costs of making additional sales would not increase disproportionately.D) The foreign market has higher real interest rates.Answer: CDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: Critical ThinkingObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Reflective thinking

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1851) Kevin, marketing manager of the North American Bowling League, has decided to televisemajor bowling competitions to viewers in multiple countries rather than only in Canada and theU.S. Which of the following goals would this most likely help Kevin accomplish?A) acquiring new resourcesB) minimizing corporate risksC) increasing sales and profitsD) obtaining competitive advantagesAnswer: CDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ApplicationObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Reflective thinking52) Which of the following BEST explains how a firm reduces risk by operating internationally?A) taking advantage of business-cycle differences among countriesB) buying competitive risk insurance unavailable domesticallyC) preventing competitors from operating in the countries it has enteredD) operating in less competitive environments than those at homeAnswer: ADiff: 2Skill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Analytical thinking53) Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________.A) hiring host-country nationals who pay no taxesB) taking advantage of taxation laws in foreign countriesC) sailing in international waters outside countries' tax jurisdictionD) paying substantial port fees instead of taxes during stopoversAnswer: ADiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge

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1954) A flag of convenience is ________.A) the declaration that a product is made in a country that has easier legal access to a givenforeign marketB) a designation for products originating within a particular trading groupC) the registration of a ship by a shipping company in a country that charges low taxesD) the indication that a shipping organization can sail in international watersAnswer: CDiff: 2Skill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge55) By operating internationally, a company may take advantage of business-cycle differencesamong countries and thereby reduce its financial risks.Answer: TRUEDiff: 2Skill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Analytical thinking56) The terms multinational corporation and multinational company are frequently usedsynonyms for strategic alliances.Answer: FALSEDiff: 2Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge57) What are the differences between merchandise and service imports and exports? Provideexamples to illustrate your answer.Answer:a.Merchandise exports are tangible products—goods—sent out of a country. Merchandiseimports are goods brought into a country. When a Chinese contractor sends toy action figuresfrom China to Hasbro in the United States, the contractor exports and Hasbro imports.b.Service exports and imports generate nonproduct international earnings. The company orindividual receiving payment is making a service export. The company or individual paying ismaking a service import. When an American tourist stays at a hotel in London, the hotel stay isthe service export.Diff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge

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2058) What is foreign direct investment? What social factors in the external environment mightaffect FDI?Answer: In foreign direct investment (FDI), sometimes referred to simply as direct investment,the investor takes a controlling interest in a foreign company. Control need not be a 100 percentor even a 50 percent interest; if a foreign investor holds a minority stake and the remainingownership is widely dispersed, no other owner may effectively counter the investor's decisions.A nation's political policies of course affect how international business is conducted within itsborders. In particular, political disputes can disrupt the flow of international business. Domesticlaw, which includes both home- and host-country regulations on issues such as taxation andemployment, affects how a company can operate internationally. International law—the legalagreements between countries—also obviously affects FDI.Diff: 3Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: SynthesisObjective: 1-4 Assess the major reasons companies seek to create value by engaging in IBAACSB: Application of knowledge59) An example of a U.S. merchandise import is an automobile made in ________ and sold________.A) the United States by a Japanese company; in the United StatesB) the United States by a Japanese company; outside the United StatesC) Japan by a Japanese company; in the United StatesD) Japan by a U.S. company; outside the United StatesAnswer: CDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge60) Visible exports and imports are ________.A) merchandise imports and exportsB) the sum total of goods and services tradedC) international transactions paid for in money rather than barterD) typically a country's least common international economic transactionsAnswer: ADiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge

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2161) An example of a Japanese service export is a visit by a ________.A) Japanese citizen to Disneyland in the United StatesB) Japanese citizen to the Japan Pavilion at Epcot Center in the United StatesC) U.S. citizen to the Japan Pavilion at Epcot Center in the United StatesD) U.S. citizen to Tokyo Disneyland in JapanAnswer: DDiff: 2Learning Outcome: Define the fundamental concepts of international businessSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge62) Reebok pays a royalty to the German Soccer League to use the team's logo on t-shirts that itsells. Reebok and the German Soccer League most likely have a ________.A) turnkey operation contractB) licensing agreementC) portfolio investmentD) joint ventureAnswer: BDiff: 2Learning Outcome: Define the fundamental concepts of international businessSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge63) A foreign direct investment occurs when ________.A) a company owns at least 25% of a foreign firmB) a company has a controlling interest in a foreign companyC) foreign ownership is in private rather than government securitiesD) a foreign firm agrees to a licensing agreement with a large conglomerateAnswer: BDiff: 2Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge

Test Bank for International Business, 15th Edition - Page 23 preview image

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2264) Which term refers to two or more companies that share ownership of an FDI?A) turnkey operationB) transnational firmC) joint ventureD) franchiseAnswer: CDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Analytical thinking65) A multinational enterprise (MNE) is best defined as a firm ________.A) that is a member of the Fortune 500B) with foreign business partnersC) involved in global franchisingD) with foreign direct investmentsAnswer: DDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Analytical thinking66) The term used by the United Nations as a synonym for multinational enterprise is ________.A) multinational corporationB) transnational companyC) international firmD) born-globalAnswer: BDiff: 1Learning Outcome: Define the fundamental concepts of international businessSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge

Test Bank for International Business, 15th Edition - Page 24 preview image

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2367) The owner of a U.S. football team and the owner of a Canadian hockey team purchase aBritish soccer team. This is an example of a ________.A) royaltyB) portfolio investmentC) turnkey operationD) joint ventureAnswer: DDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Analytical thinking68) The production of goods by a French company in Italy for sale in Italy is an example of anItalian merchandise import.Answer: FALSEDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge69) When a U.S. citizen flies Japan Airlines, the airline acts as a service exporter for Japan.Answer: TRUEDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge70) A joint venture is an example of a portfolio investment.Answer: FALSEDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge

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2471) The ownership of foreign bonds is an example of a portfolio investment.Answer: TRUEDiff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge72) The fact that a company is the market leader in one country is no guarantee that it will be theleader in another country.Answer: TRUEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Analytical thinking73) What is a multinational enterprise (MNE)? How do physical and social factors affect how anMNE functions in a foreign country?Answer: The multinational enterprise (MNE) is a company that takes a global approach toforeign markets and production. It is willing to consider market and production locationsanywhere in the world. However, most writers use the term to mean any company withoperations in more than one country. Physical factors, such as a country's geography ordemography, and social factors, such as its politics, law, culture, and economy, influence thefunctioning of an MNE. Physical and social factors can affect how companies produce andmarket products, staff operations, and even maintain accounts. Geographic barriers—mountains,deserts, jungles, and so forth—often affect communications and distribution channels. And thechance of natural disasters and adverse climatic conditions (hurricanes, floods, droughts,earthquakes, volcanic eruptions, tsunamis) can make business riskier in some areas than inothers, while affecting supplies, prices, and operating conditions in far-off countries.Diff: 3Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: SynthesisObjective: 1-5 Define and illustrate the different operating modes for companies to accomplishtheir international objectivesAACSB: Application of knowledge

Test Bank for International Business, 15th Edition - Page 26 preview image

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2574) Managers who are knowledgeable about ________ are better able to identify the location,quantity, quality, and availability of the world's natural resources.A) political factorsB) geographic factorsC) competitive factorsD) cultural factorsAnswer: BDiff: 1Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking75) Although the U.S. film industry depends heavily on revenue in foreign countries, revenuefrom international markets is usually low for a sports-themed film. This is most likely due to________ factors.A) politicalB) geographicC) behavioral (cultural)D) legalAnswer: CDiff: 2Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Application of knowledge76) In addition to understanding the laws affecting business in countries where their companiesoperate, it is most important for managers to understand the ________.A) methods for appointing local judgesB) ethical rationale behind the lawsC) history of the local legal systemD) degree of law enforcementAnswer: DDiff: 2Learning Outcome: Discuss the role of ethics and social responsibility in international businessSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking

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2677) Some key ________ factors in a company's international business external environment areits product strategy and access to resources.A) geographicB) politicalC) competitiveD) behavioralAnswer: CDiff: 1Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking78) The same automobile company produces Fiats and Ferraris. The company builds an engineplant in China with low production costs for Fiats but not Ferraris. The probable reason is that________.A) Fiat competes mainly on a focus strategy, whereas Ferrari competes mainly on a mass-marketstrategyB) Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focusstrategyC) Ferrari faces global competitors in China, whereas Fiat competes in China mainly againstChinese competitorsD) although Ferrari did not build an engine plant, it will use the same Fiat engines in its modelsAnswer: BDiff: 3Skill: ApplicationObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Application of knowledge79) Elway, a computer firm, has high foreign sales in Asia and wants to expand sales intoEurope. Which of the following statements provides the most appropriate advice for Elwayexecutives?A) Although countries' market sizes differ, companies usually face about the same number ofcompetitors in each national market.B) In most industries, companies face the same competitors in each country where they operate.C) It takes about the same amount of resources to gain national distribution in one country versusanother.D) Being a leader in one country does not guarantee market leadership in another country.Answer: DDiff: 3Learning Outcome: Define the fundamental concepts of international businessSkill: Critical ThinkingObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking

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2780) When companies face the same competitors in almost all countries where they operate,________.A) what they learn about one another in one country is useful in predicting the others' strategiesand actions elsewhereB) the market leader is the same everywhereC) there is less need to understand the physical and societal factors of each countryD) they are less likely to enter joint ventures with other companiesAnswer: ADiff: 2Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking81) The view that globalization is inevitable is most likely based on the belief that ________.A) international organizations will replace nation-statesB) protesters against globalization will be persuaded to change their viewsC) people want more global homogeneity of culturesD) technical advances in transportation and communications are highly persistentAnswer: DDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking82) Critics of the view that regionalization will prevail over globalization most likely base theirargument on the belief that ________.A) regionalization is a transition stage toward globalizationB) neighboring countries are more apt to disagree politically than distant countriesC) neighboring countries are too geographically similar to benefit from tradeD) business in non-territorial areas is not regionalAnswer: ADiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking

Test Bank for International Business, 15th Edition - Page 29 preview image

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2883) Which of the following is NOT a common argument for the slowing of future globalization?A) Antiglobalization interests have been successful in electing parties that oppose freermovement of trade or people.B) Technological, transportation, and communication advances will decline in the near future.C) Major countries have either ignored certain international treaties or have refused to sign them.D) The growing split between those who succeed in a global environment and those who do notwill foster greater antiglobalization sentiments.Answer: BDiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking84) Some observers feel that international institutions and the people working in them cannotadequately handle the complexities of an interconnected world. Based on this, these observersbelieve that ________.A) globalization will slow in the futureB) globalization is nevertheless inevitableC) international business will grow primarily on a regional basisD) private companies will replace international organizations in running the world's economyAnswer: ADiff: 3Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking85) Geographical barriers typically affect distribution channels within countries, but they rarelyaffect distribution channels between countries.Answer: FALSEDiff: 2Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking

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2986) Managers need to understand not only the laws of countries where they operate, but also howthose laws are enforced.Answer: TRUEDiff: 2Learning Outcome: Discuss the role of ethics and social responsibility in international businessSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking87) A company with limited resources is more likely to achieve national distribution within asmall country than within a large country.Answer: TRUEDiff: 2Skill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Analytical thinking88) The view that regionalization, rather than globalization, will prevail in the future is largelybased on the use of common languages among countries in a region.Answer: FALSEDiff: 2Learning Outcome: Discuss trends in and the debate over globalizationSkill: ConceptObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Reflective thinking89) In a short essay, identify and explain three competitive factors that influence internationalbusinesses.Answer:a.Product strategy—A company's choice of strategy, either cost or differentiation, plays a partin determining how and where the company will operate.b.Company resources and experience—A company's size, resources, and experience incomparison to competitors' affects how it will operate in international markets. In addition, acompany's national market share and brand recognition will affect the operating tactics itemploys.c.Competitors faced in each market—Success for a company in any market will always beinfluenced by the strategies and operations of competitors within the market.Diff: 2Learning Outcome: Summarize the main entry strategies and modes that businesses use to enterinto foreign marketsSkill: ApplicationObjective: 1-6 Recognize why national differences in companies' external environments affecthow they may best improve their IB performanceAACSB: Application of knowledge

Test Bank for International Business, 15th Edition - Page 31 preview image

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1International Business: Environments and Operations, 16e(Daniels et al.)Chapter 2The Cultural Environments Facing Business1) ________ consists of specific learned norms based on attitudes, values, and beliefs of a groupof people.A) EthnologyB) CivilizationC) CultureD) DoctrineAnswer: CDiff: 1Skill: ConceptObjective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky toassessAACSB: Diverse and multicultural work environments2) Which of the following is NOT true about cultural diversity?A) Companies may gain competitive advantages by bringing together people of diversebackgrounds.B) Cultural diversity is most successful when domestic and foreign firms establish joint ventures.C) Cultural diversity may help a company gain deeper knowledge about products and services.D) The process of bringing people of different national cultures together is often difficult.Answer: BDiff: 3Learning Outcome: Explain how differences in culture affect the international businessenvironmentSkill: ConceptObjective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky toassessAACSB: Diverse and multicultural work environments3) When divergent cultures come in contact, ________ occurs.A) power distanceB) culture shockC) cultural collisionD) group membershipAnswer: CDiff: 1Skill: ConceptObjective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky toassessAACSB: Diverse and multicultural work environments

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