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    International Business: The Challenges of Globalization Ninth Edition John J. Wild Kenneth L. Wild T est Bank for International Business: The Challenges of Globalization By John J. Capela

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    1 International Business: The Challenges of Globalization, 9e (Wild) Chapter 1 Globalization 1) 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: C AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 products B) exports C) gross national products D) imports Answer: D AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 products B) Exports C) Gross domestic products D) Imports Answer: B AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 the United States is an example of a ________. A) net national product B) U.S. export C) U.S. import D) gross domestic product Answer: C AACSB: Application of knowledge Skill: Application Difficulty: Hard LO: 1.1: Identify the types of companies active in international business.

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    2 5) Christopher, an accounts manager at a mid-sized health care firm, does not have any direct international responsibilities; however, Christopher would most likely benefit from studying international business issues so that he can ________. A) conduct better job interviews B) better understand how foreign operations affect the company's competitive position C) supervise and evaluate subordinates who have global assignments D) understand the legalities of importing and exporting products overseas Answer: B AACSB: Analytical thinking Skill: Application Difficulty: Moderate LO: 1.1: Identify the types of companies active in international business. 6) A business that has direct investments (in the form of marketing or manufacturing subsidiaries) abroad in several countries is called a ________. A) dummy corporation B) shell corporation C) multinational corporation D) domestic corporation Answer: C AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 corporation B) multinational corporation C) born global firm D) global firm Answer: C AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business.

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    3 8) 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 cause companies 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 operating internationally. Answer: C AACSB: Application of knowledge Skill: Concept Difficulty: Moderate LO: 1.1: Identify the types of companies active in international business. 9) ________ is an effective alternative to traditional distribution channels for firms that sell digitized products. A) Dual licensing B) Electronic distribution C) Visual merchandising D) Digital switchover Answer: B AACSB: Information technology Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business. 10) The widening set of interdependent relationships among people from different parts of the world is known as ________. A) globalization B) offshoring C) franchising D) outsourcing Answer: A AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business. 11) Globalization is characterized by ________. A) the demise of democracy within a nation B) national boundaries becoming less relevant C) the fortification of trade barriers D) rigid foreign relations policies Answer: B AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business.

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    4 12) As a result of globalization, Argonia finds that its national borders are becoming less relevant. This indicates that Argonia is undergoing ________. A) denationalization B) standardization C) reorganization D) internationalization Answer: A AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business. 13) The term ________ refers to entities cooperating across national boundaries. A) internationalization B) supranationalism C) denationalization D) multiculturalism Answer: A AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business. 14) Most companies today operate in an environment of increased transparency and scrutiny regarding their business activities. This is due to ________. A) the rise of the social media B) the prosperity of developing nations C) the heterogeneity in markets D) labor market flexibility in developing nations Answer: A AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 international activities 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: C AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business.

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    5 Scenario: Topsy Turvey Toys and Ureshi Toys Topsy Turvey Toys is a U.S.-based toy retailer that buys all its merchandise from Ureshi Toys, a Japan-based toy manufacturer with production facilities in twelve nations. Ureshi Toys markets its toys globally without modification. 16) Topsy Turvey Toys buying its merchandise from Ureshi Toys is an example of ________. A) importing B) exporting C) outsourcing D) insourcing Answer: A AACSB: Analytical thinking Skill: Application Difficulty: Hard LO: 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) outsourcing B) insourcing C) exporting D) importing Answer: C AACSB: Analytical thinking Skill: Application Difficulty: Hard LO: 1.1: Identify the types of companies active in international business. 18) The products that Ureshi Toys manufactures are examples of ________. A) global products B) niche products C) intangible products D) customized products Answer: A AACSB: Analytical thinking Skill: Application Difficulty: Hard LO: 1.1: Identify the types of companies active in international business.

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    6 19) Ureshi Toys is an example of a(n) ________. A) domestic company B) multinational company C) direct importer D) shell corporation Answer: B AACSB: Analytical thinking Skill: Application Difficulty: Hard LO: 1.1: Identify the types of companies active in international business. Scenario: Donna Bader, Globalization Opponent Donna Bader spent her final year at college studying the effect of various economic factors on the economy of developing nations. Based on the results of her study, she concluded that globalization 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 a country B) the welfare of individuals matters less than the economic prosperity of a nation C) globalization does not affect the employment rate of developed and developing countries D) the wages paid to all individuals within developed countries are equal Answer: A AACSB: Reflective thinking Skill: Critical Thinking Difficulty: Hard LO: 1.1: Identify the types of companies active in international business. 21) International business includes all commercial transactions between two or more countries. Answer: TRUE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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: TRUE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business.

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    7 23) Multinational corporations (MNCs) have direct investments abroad in multiple countries. Answer: TRUE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.1: Identify the types of companies active in international business. 24) Gaining some understanding of international business is important for any business student because global events and competition affect almost all companies. Answer: TRUE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 or restock inventories electronically. Answer: TRUE AACSB: Information technology Skill: Concept Difficulty: Moderate LO: 1.1: Identify the types of companies active in international business.

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    8 26) Summarize each benefit a company might obtain from the globalization of markets. Answer: The globalization of markets refers to convergence in buyer preferences in markets around the world. The benefits of the globalization of markets for companies include: 1. Reduces marketing costs-Companies that sell global products can reduce costs by standardizing certain marketing activities. A company selling a global consumer good can make an identical product for the global market and then simply design different packaging to account for the language spoken in each market. Companies can achieve further cost savings by keeping an ad's visual component the same for all markets but dubbing TV ads and translating print ads into local languages. 2. Creates new market opportunities-A company that sells a global product can explore opportunities abroad if its home market is small or becomes saturated. Seeking sales growth abroad can be absolutely essential for an entrepreneur or small company that sells a global product 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 sales with international sales, the company can reduce or eliminate wide variations in sales between seasons and steady its cash flow. 4. Local buyers' needs-The benefit of serving customers with an adapted product may outweigh the benefit of a standardized one. 5. Global sustainability-It ensures that development meets the needs of the present without compromising the ability of the future generations to meet their own needs. Most companies today operate in an environment of increased transparency and scrutiny regarding their business activities. The rise of social media is partly responsible for this trend. AACSB: Application of knowledge Skill: Concept Difficulty: Moderate LO: 1.1: Identify the types of companies active in international business.

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    9 27) Describe key characteristics of a born global firm, and explain why a born global firm would be attuned to international firm management. Answer: International business competition has given rise to a new international entity, the born global firm—a company that adopts a global perspective and engages in international business from or near its inception. Key characteristics of born global firms are an innovative culture and knowledge-based organizational capabilities. Although these firms first appeared in nations having 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 around the world solely through the Internet. A born global firm would be attuned to international firm management because managing a global company is vastly different from managing a purely domestic business. Companies must abide by the rules in every market in which they choose to operate. Therefore, the context of international business management is defined by the characteristics of national business environments. Because of widely dispersed production and marketing activities today, firms commonly interact with people in distant locations within the international business environment. Finally, managers and their firms are compelled to be knowledgeable about the nations in which they operate because of the integrating power of globalization. Businesses should try to anticipate events and forces that can affect their operations by closely monitoring globalization, national business environments, and the international business environment. AACSB: Reflective thinking Skill: Synthesis Difficulty: Hard LO: 1.1: Identify the types of companies active in international business. 28) The widening set of interdependent relationships among people from different parts of the world is known as ________. A) globalization B) offshoring C) franchising D) outsourcing Answer: A AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production.

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    10 29) Which of the following refers to the use of computer networks to purchase, sell, or exchange products; service customers; and collaborate with partners? A) e-commerce B) telecommuting C) data virtualization D) virtual hosting Answer: A AACSB: Information technology Skill: Concept Difficulty: Easy LO: 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 its products, service customers, and collaborate with partners. Which of the following technologies is the company engaging in this scenario? A) rapid prototyping B) e-business C) simulation D) console automation Answer: B AACSB: Information technology Skill: Application Difficulty: Hard LO: 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 future generations to meet their own needs indicates ________. A) egalitarianism B) denationalization C) generalizability D) sustainability Answer: D AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production.

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    11 32) An established consumer market that primarily comprises the middle class and possesses efficient infrastructure is characteristic of ________ markets. A) emerging B) frontier C) traditional D) developed Answer: D AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production. 33) ________ markets are characterized by the rural population migrating to cities for better pay and thus, overloading cities' infrastructures. A) Traditional B) Emerging C) Virtual D) Developed Answer: B AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 basic products and services. Which of the following is the type of market featured in this country? A) traditional market B) emerging market C) feudal market D) virtual market Answer: B AACSB: Application of knowledge Skill: Application Difficulty: Easy LO: 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 poor infrastructure with little credit or collateral. A) emerging B) traditional C) developed D) virtual Answer: B AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production.

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    12 36) Kireki is a small country with a corrupt government. Its population is rural for most part and citizens have few or no legal rights. Which of the following is the type of market featured in Kireki? A) developed market B) traditional market C) emerging market D) virtual market Answer: B AACSB: Application of knowledge Skill: Application Difficulty: Hard LO: 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 company achieve its cost-minimization or quality-maximization objectives for a good or service. A) Global offering B) Globalization of production C) Global governance D) Globalization of markets Answer: B AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 recent decades? A) liberalization of cross-border trade B) increase in and expansion of technology C) growing pressure from consumers D) decreasing prices of natural resources Answer: D AACSB: Application of knowledge Skill: Application Difficulty: Hard LO: 1.2: Explain globalization and how it affects markets and production.

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    13 39) Whereas relocating production to low-cost locales traditionally meant production of goods almost exclusively, it increasingly applies to the production of ________. A) domestic products B) perishables C) services D) global brands Answer: C AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 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 of diamonds. It gives distributors and suppliers access to its database to place orders or restock inventories electronically and automatically. Which of the following is the network implemented in the company? A) intranet B) chaosnet C) extranet D) ethernet Answer: C AACSB: Information technology Skill: Application Difficulty: Hard LO: 1.2: Explain globalization and how it affects markets and production. Scenario: Jeans Unlimited Jeans Unlimited produces clothing for young adults. It designs its clothes at its New York headquarters and produces them at facilities located in two Southeast Asian countries. The company recently received negative press after one of its facilities was found using questionable labor practices, such as, employing children and operating in a manner that damages the environment. 41) Jeans Unlimited manufactures its clothing at facilities located in two Southeast Asian countries. The dispersal of manufacturing activities by the company indicates ________. A) customization of products B) niche marketing C) globalization of markets D) globalization of production Answer: D AACSB: Application of knowledge Skill: Application Difficulty: Hard LO: 1.2: Explain globalization and how it affects markets and production.

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    14 42) Which of the following statements would most likely be made by a SUPPORTER of globalization? A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems. B) Economic growth created by globalization is largely in services, which involves the use of few 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: A AACSB: Application of knowledge; Reflective thinking Skill: Critical Thinking Difficulty: Hard LO: 1.2: Explain globalization and how it affects markets and production. 43) The term "globalization of production" refers to convergence in buyer preferences in markets around the world. Answer: FALSE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production. 44) The recent expansion of technology has contributed to the growth in international business by creating new products that are important in world trade. Answer: TRUE AACSB: Application of knowledge Skill: Concept Difficulty: Easy LO: 1.2: Explain globalization and how it affects markets and production.

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