Test Bank for International Business: The Challenges of Globalization, 9th Edition

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International Business: TheChallenges of GlobalizationNinth EditionJohn J. WildKenneth L. WildTest Bank for InternationalBusiness: TheChallengesof GlobalizationByJohnJ.Capela

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1International Business: The Challenges of Globalization, 9e(Wild)Chapter 1Globalization1) 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: CAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.2) Goods and services purchased abroad and brought into a country are called ________.A) gross domestic productsB) exportsC) gross national productsD) importsAnswer: DAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.3) ________ are all goods and services sold abroad and sent out of a country.A) Net national productsB) ExportsC) Gross domestic productsD) ImportsAnswer: BAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.4) Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in theUnited States is an example of a ________.A) net national productB) U.S. exportC) U.S. importD) gross domestic productAnswer: CAACSB: Application of knowledgeSkill: ApplicationDifficulty: HardLO: 1.1: Identify the types of companies active in international business.

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25) Christopher, an accounts manager at a mid-sized health care firm, does not have any directinternational responsibilities; however, Christopher would most likely benefit from studyinginternational business issues 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: BAACSB: Analytical thinkingSkill: ApplicationDifficulty: ModerateLO: 1.1: Identify the types of companies active in international business.6) A business that has direct investments (in the form of marketing or manufacturingsubsidiaries) abroad in several countries is called a ________.A) dummy corporationB) shell corporationC) multinational corporationD) domestic corporationAnswer: CAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.7) The rise of a new international entity called the ________ suggests that any company,regardless of age, experience, and resources, can engage in international business.A) transnational corporationB) multinational corporationC) born global firmD) global firmAnswer: CAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.

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38) Which of the following is NOT a likely reason to study international business?A) Global events affect almost all companies.B) Differences among countries in physical, social, and competitive conditions may causecompanies to alter their operating methods from country to country.C) Business conducted outside the limits of any one country is inexplicably on the decline.D) Firms may be better able to obtain better or less expensive resources by operatinginternationally.Answer: CAACSB: Application of knowledgeSkill: ConceptDifficulty: ModerateLO: 1.1: Identify the types of companies active in international business.9) ________ is an effective alternative to traditional distribution channels for firms that selldigitized products.A) Dual licensingB) Electronic distributionC) Visual merchandisingD) Digital switchoverAnswer: BAACSB: Information technologySkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.10) The widening set of interdependent relationships among people from different parts of theworld is known as ________.A) globalizationB) offshoringC) franchisingD) outsourcingAnswer: AAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.11) Globalization is characterized by ________.A) the demise of democracy within a nationB) national boundaries becoming less relevantC) the fortification of trade barriersD) rigid foreign relations policiesAnswer: BAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.

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412) As a result of globalization, Argonia finds that its national borders are becoming lessrelevant. This indicates that Argonia is undergoing ________.A) denationalizationB) standardizationC) reorganizationD) internationalizationAnswer: AAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.13) The term ________ refers to entities cooperating across national boundaries.A) internationalizationB) supranationalismC) denationalizationD) multiculturalismAnswer: AAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.14) Most companies today operate in an environment of increased transparency and scrutinyregarding their business activities. This is due to ________.A) the rise of the social mediaB) the prosperity of developing nationsC) the heterogeneity in marketsD) labor market flexibility in developing nationsAnswer: AAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.15) The value of all goods and services produced by a country's domestic and internationalactivities over a one-year period is the country's ________.A) gross domestic product (GDP)B) gross world product (GWP)C) gross national product (GNP)D) gross state product (GSP)Answer: CAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.

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5Scenario: Topsy Turvey Toys and Ureshi ToysTopsy Turvey Toys is a U.S.-based toy retailer that buys all its merchandise from Ureshi Toys, aJapan-based toy manufacturer with production facilities in twelve nations. Ureshi Toys marketsits toys globally without modification.16) Topsy Turvey Toys buying its merchandise from Ureshi Toys is an example of ________.A) importingB) exportingC) outsourcingD) insourcingAnswer: AAACSB: Analytical thinkingSkill: ApplicationDifficulty: HardLO: 1.1: Identify the types of companies active in international business.17) Ureshi Toys selling its products to Topsy Turvey Toys is an example of ________.A) outsourcingB) insourcingC) exportingD) importingAnswer: CAACSB: Analytical thinkingSkill: ApplicationDifficulty: HardLO: 1.1: Identify the types of companies active in international business.18) The products that Ureshi Toys manufactures are examples of ________.A) global productsB) niche productsC) intangible productsD) customized productsAnswer: AAACSB: Analytical thinkingSkill: ApplicationDifficulty: HardLO: 1.1: Identify the types of companies active in international business.

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619) Ureshi Toys is an example of a(n) ________.A) domestic companyB) multinational companyC) direct importerD) shell corporationAnswer: BAACSB: Analytical thinkingSkill: ApplicationDifficulty: HardLO: 1.1: Identify the types of companies active in international business.Scenario: Donna Bader, Globalization OpponentDonna Bader spent her final year at college studying the effect of various economic factors onthe economy of developing nations. Based on the results of her study, she concluded thatglobalization does these countries more harm than good.20) Upon what assumption does Donna's conclusion rest? Donne assumes that ________.A) there are no factors other than globalization which influence the economic conditions of acountryB) the welfare of individuals matters less than the economic prosperity of a nationC) globalization does not affect the employment rate of developed and developing countriesD) the wages paid to all individuals within developed countries are equalAnswer: AAACSB: Reflective thinkingSkill: Critical ThinkingDifficulty: HardLO: 1.1: Identify the types of companies active in international business.21) International business includes all commercial transactions between two or more countries.Answer: TRUEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.22) Imports are goods and services purchased abroad and brought into a country.Answer: TRUEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.

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723) Multinational corporations (MNCs) have direct investments abroad in multiple countries.Answer: TRUEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.24) Gaining some understanding of international business is important for any business studentbecause global events and competition affect almost all companies.Answer: TRUEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.1: Identify the types of companies active in international business.25) Extranets give distributors and suppliers access to a company's database to place orders orrestock inventories electronically.Answer: TRUEAACSB: Information technologySkill: ConceptDifficulty: ModerateLO: 1.1: Identify the types of companies active in international business.

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826) Summarize each benefit a company might obtain from the globalization of markets.Answer: The globalization of markets refers to convergence in buyer preferences in marketsaround the world.The benefits of the globalization of markets for companies include:1. Reduces marketing costs-Companies that sell global products can reduce costs bystandardizing certain marketing activities. A company selling a global consumer good can makean identical product for the global market and then simply design different packaging to accountfor the language spoken in each market. Companies can achieve further cost savings by keepingan ad's visual component the same for all markets but dubbing TV ads and translating print adsinto local languages.2. Creates new market opportunities-A company that sells a global product can exploreopportunities abroad if its home market is small or becomes saturated. Seeking sales growthabroad can be absolutely essential for an entrepreneur or small company that sells a globalproduct but has a limited home market.3. Levels uneven income streams-A company that sells a product with universal, but seasonal,appeal can use international sales to level its income stream. By supplementing domestic saleswith international sales, the company can reduce or eliminate wide variations in sales betweenseasons and steady its cash flow.4. Local buyers' needs-The benefit of serving customers with an adapted product may outweighthe benefit of a standardized one.5. Global sustainability-It ensures that development meets the needs of the present withoutcompromising the ability of the future generations to meet their own needs. Most companiestoday operate in an environment of increased transparency and scrutiny regarding their businessactivities. The rise of social media is partly responsible for this trend.AACSB: Application of knowledgeSkill: ConceptDifficulty: ModerateLO: 1.1: Identify the types of companies active in international business.

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927) Describe key characteristics of a born global firm, and explain why a born global firm wouldbe attuned to international firm management.Answer: International business competition has given rise to a new international entity, the bornglobal firm—a company that adopts a global perspective and engages in international businessfrom or near its inception. Key characteristics of born global firms are an innovative culture andknowledge-based organizational capabilities. Although these firms first appeared in nationshaving small domestic markets, today they arise from all major trading nations. Remarkably,many of these companies rise to the status of international competitor in less than three years.Perhaps the extreme example of a born global firm is one that reaches out to customers aroundthe world solely through the Internet.A born global firm would be attuned to international firm management because managing aglobal company is vastly different from managing a purely domestic business. Companies mustabide by the rules in every market in which they choose to operate. Therefore, the context ofinternational business management is defined by the characteristics of national businessenvironments. Because of widely dispersed production and marketing activities today, firmscommonly interact with people in distant locations within the international businessenvironment. Finally, managers and their firms are compelled to be knowledgeable about thenations in which they operate because of the integrating power of globalization. Businessesshould try to anticipate events and forces that can affect their operations by closely monitoringglobalization, national business environments, and the international business environment.AACSB: Reflective thinkingSkill: SynthesisDifficulty: HardLO: 1.1: Identify the types of companies active in international business.28) The widening set of interdependent relationships among people from different parts of theworld is known as ________.A) globalizationB) offshoringC) franchisingD) outsourcingAnswer: AAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.

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1029) Which of the following refers to the use of computer networks to purchase, sell, or exchangeproducts; service customers; and collaborate with partners?A) e-commerceB) telecommutingC) data virtualizationD) virtual hostingAnswer: AAACSB: Information technologySkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.30) Gentian Violet is a dye manufacturing company that uses computer networks to sell itsproducts, service customers, and collaborate with partners. Which of the following technologiesis the company engaging in this scenario?A) rapid prototypingB) e-businessC) simulationD) console automationAnswer: BAACSB: Information technologySkill: ApplicationDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.31) Development that meets the needs of the present without compromising the ability of futuregenerations to meet their own needs indicates ________.A) egalitarianismB) denationalizationC) generalizabilityD) sustainabilityAnswer: DAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.

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1132) An established consumer market that primarily comprises the middle class and possessesefficient infrastructure is characteristic of ________ markets.A) emergingB) frontierC) traditionalD) developedAnswer: DAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.33) ________ markets are characterized by the rural population migrating to cities for better payand thus, overloading cities' infrastructures.A) TraditionalB) EmergingC) VirtualD) DevelopedAnswer: BAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.34) Konesia is a country in which rising incomes are increasing the global demand for basicproducts and services. Which of the following is the type of market featured in this country?A) traditional marketB) emerging marketC) feudal marketD) virtual marketAnswer: BAACSB: Application of knowledgeSkill: ApplicationDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.35) The population of a(n) ________ market is mostly rural and is characterized by poorinfrastructure with little credit or collateral.A) emergingB) traditionalC) developedD) virtualAnswer: BAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.

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1236) Kireki is a small country with a corrupt government. Its population is rural for most part andcitizens have few or no legal rights. Which of the following is the type of market featured inKireki?A) developed marketB) traditional marketC) emerging marketD) virtual marketAnswer: BAACSB: Application of knowledgeSkill: ApplicationDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.37) ________ is defined as the dispersal of production activities to locations that help a companyachieve its cost-minimization or quality-maximization objectives for a good or service.A) Global offeringB) Globalization of productionC) Global governanceD) Globalization of marketsAnswer: BAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.38) 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: DAACSB: Application of knowledgeSkill: ApplicationDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.

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1339) Whereas relocating production to low-cost locales traditionally meant production of goodsalmost exclusively, it increasingly applies to the production of ________.A) domestic productsB) perishablesC) servicesD) global brandsAnswer: CAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.40) Crystal Inc. is a multifaceted company that deals with the mining, cutting, and selling ofdiamonds. It gives distributors and suppliers access to its database to place orders or restockinventories electronically and automatically. Which of the following is the network implementedin the company?A) intranetB) chaosnetC) extranetD) ethernetAnswer: CAACSB: Information technologySkill: ApplicationDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.Scenario: Jeans UnlimitedJeans Unlimited produces clothing for young adults. It designs its clothes at its New Yorkheadquarters and produces them at facilities located in two Southeast Asian countries. Thecompany recently received negative press after one of its facilities was found using questionablelabor practices, such as, employing children and operating in a manner that damages theenvironment.41) Jeans Unlimited manufactures its clothing at facilities located in two Southeast Asiancountries. The dispersal of manufacturing activities by the company indicates ________.A) customization of productsB) niche marketingC) globalization of marketsD) globalization of productionAnswer: DAACSB: Application of knowledgeSkill: ApplicationDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.

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1442) 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: AAACSB: Application of knowledge; Reflective thinkingSkill: Critical ThinkingDifficulty: HardLO: 1.2: Explain globalization and how it affects markets and production.43) The term "globalization of production" refers to convergence in buyer preferences in marketsaround the world.Answer: FALSEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.44) The recent expansion of technology has contributed to the growth in international businessby creating new products that are important in world trade.Answer: TRUEAACSB: Application of knowledgeSkill: ConceptDifficulty: EasyLO: 1.2: Explain globalization and how it affects markets and production.

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