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Test Bank for International Business: A Managerial Perspective, 9th Edition

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    1 International Business, 9e (Griffin/Pustay) Chapter 1 An Overview of International Business 1) Which of the following would be considered an international business transaction? A) purchasing products in one country and assembling them in the same countr y B) recruiting employees internationally C) borrowing money from a major bank to finance capital improvements D) shipping finished products from one country to another for retail sale Answer: D Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of int ernational business. AACSB: Analytical Thinking 2) Trade between nations can be traced back as far as ________. A) 2000 BC B) 500 BC C) 1200 D) 1600 Answer: A Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Appli cation of Knowledge 3) Which country was a significant focal point for international business during the Middle Ages? A) China B) England C) Italy D) Russia Answer: C Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 4) Which of the following is a primary source of revenue for the IOC during the Olympics? A) television coverage B) public donations C) real estate sales D) international loans Answer: A Diff: 1 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge

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    2 5) A boundary less economy is one in which ________. A) exported goods are predominant B) regional borders are significant C) trade laws are strictly enforced D) national bord ers are irrelevant Answer: D Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 6) Business transactions between parties from more than one country are known as international business. Answer : TRUE Diff: 1 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 7) International business is more complex than domestic business. Answer: TRUE Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 8) Small businesses are usually not involved in international business given the cost restrictions. Answer: FALSE Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business . AACSB: Application of Knowledge 9) The growth of FDI and MNCs first started during the American colonial period. Answer: TRUE Diff: 2 Skill: Concept LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge

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    3 10) How a re the Olympic Games symbolic of international business? Answer: The Olympics reflect an intense version of international business. Cities compete with each other to host the games because hosting the Olympics brings recognition and publicity to the city just as it does to a company brand name. In addition, the city benefits from increased travel, tourism, and investment by businesses supporting the Olympic games. Diff: 3 Skill: Critical Thinking LO: 1.1: Discuss the meaning of international business. AA CSB: Application of Knowledge 11) How does international business differ from domestic business? Why is it important for business students to learn about international business? Answer: Domestic business involves transactions that occur within a single country, while international business involves transactions that cross national borders. Students should learn about IB because most large firms have global operations and many small firms are expanding into the international arena. Diff: 3 Skill: Synthes is LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 12) International business differs from domestic business in several ways. Identify at least three of these differences and describe their implications for compan ies. Answer: The countries involved may use different currencies, requiring currency conversion and introducing exchange rate risk. Because the legal systems are different, one or more parties must adjust their practices to comply with local laws. Cultura l differences and the availability of resources affects production of various items and production methods. Diff: 3 Skill: Synthesis LO: 1.1: Discuss the meaning of international business. AACSB: Application of Knowledge 13) The Internet has helped sma ll businesses compete in global markets because it ________. A) allows them to establish a physical presence in each country B) avoids transactions involving foreign exchange C) eliminates price controls D) reduces entry costs Answer: D Diff: 2 Skill: Co ncept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge

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    4 14) According to the CAGE Model, which of the following refers to the physical, communications, and transportation links between countries? A ) cultural distance B) administrative distance C) geographic distance D) economic distance Answer: C Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 15) Individuals should most likely study international business to ________. A) comply with graduate school certification requirements B) ensure that an employer has a global online presence C) remain current on the latest business methods D) obtain bilingual business experienc e Answer: C Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 16) Which of the following has most likely triggered the increase of small businesses involved in international business? A) e - commerce B) economic recession C) foreign - made materials D) increased cultural literacy Answer: A Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 17) Just - in - time systems were created in ________. A) the United States B) Japan C) Germany D) China Answer: B Diff: 1 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge

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    5 18) Just - in - time sys tems are used by firms to ________. A) store important data B) manage inventory C) monitor production D) screen job applicants Answer: B Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 19) Sony's suppliers deliver necessary inputs as they are needed by Sony. Sony is most likely using a(n) ________ system. A) cross - functional B) just - in - time C) inventory management D) on - demand delivery Answer: B Diff: 1 Skill: Application LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 20) Capital supplied by residents of one country to residents of another is known as ________. A) international investments B) host - country financi ng C) international franchising D) domestic inversion financing Answer: A Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 21) International business originally consisted o f ________. A) FDI B) international trade C) licensing D) contract manufacturing Answer: B Diff: 1 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge

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    6 22) It is important to study in ternational business because you may work for a firm that is owned by a corporation that is headquartered in another country. Answer: TRUE Diff: 2 Skill: Concept LO: 1.2: Explain the importance of understanding international business. AACSB: Applicatio n of Knowledge 23) Why are small businesses becoming more involved in international business? What is the simplest way for a small business to globalize? Answer: Technology allows small businesses to have access to customers without the previous expense and investment. Exporting is the simplest form of international business. Diff: 3 Skill: Synthesis LO: 1.2: Explain the importance of understanding international business. AACSB: Information Technology 24) Why is it relevant for today's business studen ts to study international business and to become culturally literate? Answer: There are several reasons to study international business. Most large organizations will have international operations or be affected by the global economy. In addition, an unde rstanding of international business will allow students to better assess career opportunities, interact more effectively with other managers, and keep pace with competitors. Furthermore, students may eventually work for a company headquartered in another c ountry. Finally, small businesses are becoming more involved in international business. Being culturally literate means having an understanding of different countries and cultures. Having some knowledge of how a country or company fits into the global econ omy can help a business person earn respect, confidence, and a competitive edge. Diff: 3 Skill: Critical Thinking LO: 1.2: Explain the importance of understanding international business. AACSB: Application of Knowledge 25) You are a manager at a small business, and the firm's CEO wants the firm to globalize. What suggestions would you offer to accomplish this task? Should the firm globalize? Why or why not? Answer: Many small businesses today can take advantage of opportunities in foreign markets that were previously closed to them. The Internet has in a sense leveled the playing field to some degree for small businesses. A good Website allows companies to sell to consumers all over the world without the cost of developing a physical presence in each ma rket. In addition, the Internet can allow companies to become more efficient in areas such as communication. Diff: 3 Skill: Critical Thinking LO: 1.2: Explain the importance of understanding international business. AACSB: Analytical Thinking

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    7 26) Which of the following could be considered a major reason that a city would want to host the Olympic Games? A) to prevent the economic growth of competing nations B) the long - term benefits of tourism C) to test the capacity of national infrastructure D) to prom ote international harmony Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Analytical Thinking 27) Black and Decker produces tools at a plant in North Carolina and ships the t ools to retailers in England. This is an example of which type of international business activity? A) merchandising B) importing C) exporting D) trading Answer: C Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 28) ________ is the buying of products made in other countries for use or resale in one's own country. A) Exporting B) Importing C) Merchandising D) Transporting Answer: B Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 29) Sam's Club purchases kalamata olives from Greece for sale in its stores. Which international business activity does this represent? A) exporting B) importing C) merchandising D) franchising Answer: B Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge

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    8 30) The British term for the trading of ta ngible goods is ________. A) visible trade B) invisible trade C) merchandising D) service franchising Answer: A Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 31) The British term for the trading of intangible goods is ________. A) visible trade B) invisible trade C) merchandise exports and imports D) service exports and imports Answer: B Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 32) Boeing, an American firm, sells commercial aircraft to Lufthansa in Germany. This is an example of ________. A) exporting B) importing C) licensing D) franchising Answer: A Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 33) Exports account for about ________ of Germany's gross domestic product? A) 31.2 percent B) 27.0 percent C) 50. 3 percent D) 15.2 percent Answer: D Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge

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    9 34) The international business activity called ________ occurs when capita l is supplied by residents of one country to residents of another country. A) international investment B) global direct investment C) portfolio financing D) state capitalism Answer: A Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 35) ________ are investments made for the purpose of actively controlling property, assets, or companies located in host countries. A) Licensing investments B) Portfolio investments C ) Foreign direct investments D) Indirect global investments Answer: C Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 36) Which term refers to the location of a parent company's headquarters? A) host country B) home country C) third country D) local country Answer: B Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 37 ) If a company is headquartered in Taiwan, then Taiwan is the company's ________. A) host country B) home country C) dominant country D) competitive country Answer: B Diff: 1 Skill: Application LO: 1.3: Identify and describe the basic forms of internati onal business activities. AACSB: Application of Knowledge

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    10 38) Ford Motor Company is based in Detroit, Michigan. It also has offices in Germany, England, and China. Which of the following is Ford's home country? A) Germany B) England C) China D) United S tates Answer: D Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 39) The ________ is where a company operates but is not headquartered. A) host country B) h ome country C) parental country D) third party country Answer: A Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 40) Siemens is headquartered in Germany but ma intains operations in the United States. The United States is the ________ country. A) home B) host C) parent D) subsidiary Answer: B Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 41) ________ are purchases of foreign financial assets for a purpose other than control. A) Foreign direct investments B) Global business investments C) Foreign portfolio investments D) Indirect investments Answer: C Diff: 1 Ski ll: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge

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    11 42) If a Dutch pension fund purchases 1,000 shares of Sony's stock, the Dutch company has most likely ________. A) made a foreign direct investment B) made a foreign portfolio investment C) earned a higher return on assets D) earned a lower rate of return Answer: B Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activitie s. AACSB: Application of Knowledge 43) Compared to Thailand, the United Kingdom has a ________ level of exports of goods and services as a percentage of GDP. A) slightly lower B) slightly higher C) significantly lower D) significantly higher Answer: C D iff: 3 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 44) Kraft purchased all of the common stock of Cadbury PLC. This is an example of ________. A) foreign portfolio investment B) foreign direct investment C) international expansion D) global licensing Answer: B Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 45) McDona ld's has licensed its brand name, operational systems, and trademarks to individual restaurant owners in Europe. This is called international ________. A) leasing B) marketing C) franchising D) diversifying Answer: C Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge

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    12 46) ________ is a contractual arrangement in which a firm in one country allows the use of its intellectual property by a firm in a second country in return for a royalty payment. A) Leasing B) Franchising C) Licensing D) Merchandising Answer: C Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 47) Licensi ng usually involves permission to use which of the following? A) real estate B) trademarks C) labor leasing D) production facilities Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AA CSB: Application of Knowledge 48) Walt Disney permits a German clothing manufacturer to market children's pajamas embroidered with Mickey Mouse in return for a percentage of company sales. This is an example of ________. A) franchising B) licensing C) le asing D) piracy Answer: B Diff: 2 Skill: Application LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 49) A(n) ________ involves a firm in one country agreeing to operate facilities f or a firm in another country for an agreed fee. A) franchising agreement B) licensing agreement C) management contract D) indirect investment Answer: C Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activ ities. AACSB: Application of Knowledge

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    13 50) Any organization that engages in cross - border commercial transactions with individuals, private firms, and/or public sector organizations is a(n) ________. A) multinational corporation B) multinational enterpris e C) international business D) international franchise Answer: C Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 51) The term ________ is used to identify firm s that have extensive involvement in international business. A) global operation B) multinational corporation C) international conglomerate D) multidomestic organization Answer: B Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 52) The International Red Cross is an example of a(n) ________. A) international business B) multinational enterprise C) multinational organization D) multinational corporation Answer: C Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 53) Which of the following is a common activity of MNCs? A) training of international managers B) buying resour ces in various countries C) inventing goods in a variety of countries D) establishing foreign exchange rates Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Kno wledge

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    14 54) Toyota, ExxonMobil, General Electric, and Volkswagen are all examples of ________. A) multinational corporations B) management contracts C) portfolio investments D) franchised firms Answer: A Diff: 2 Skill: Concept LO: 1.3: Identify and des cribe the basic forms of international business activities. AACSB: Application of Knowledge 55) International nonprofit organizations are called ________. A) multinational corporations B) multinational organizations C) multinational enterprises D) multin ational nonprofits Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 56) Which of the following is considered a BRIC nation? A) Britain B) Russia C) In donesia D) Chile Answer: B Diff: 1 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 57) By 500 B.C.E., ________ merchants were exporting silk and jade to India and part s of Europe. A) American B) Chinese C) Japanese D) Greek Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge

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    15 58) Which of the following is not considere d a dominant institution in the Era of Globalization? A) World Trade Organization B) International Olympic Committee C) World Bank D) International Monetary Fund Answer: B Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of internat ional business activities. AACSB: Application of Knowledge 59) The highest profile level in corporate sponsorship of the Olympics is that of worldwide partner. Answer: TRUE Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of inter national business activities. AACSB: Application of Knowledge 60) The primary benefit of worldwide partnership is the right to use the Olympic logo on all advertising by the sponsor. Answer: FALSE Diff: 3 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 61) A well - developed web - site can draw the business of consumers throughout the world without the need to establish a physical presence in each country. Answer: TRUE D iff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Application of Knowledge 62) The Internet has facilitated the entry of small businesses into international markets. Answer: TRUE Diff: 2 Skill: Concept LO: 1.3: Identify and describe the basic forms of international business activities. AACSB: Information Technology

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