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International Business, 17e (Daniels) Chapter 1

Globalization and International Business

1) In terms of international business, it is most accurate to say that ________. A) there is a universal "best way" to conduct business B) global competition affects large companies but not small ones C) most firms depend either on foreign markets and supplies or compete against companies that do D) government regulation of international business has little effect on a company's profits Answer: C Diff: 2 Skill: Concept Objective: 1-1 Explain why and how the study of international business (IB) is important AACSB: Reflective thinking 2) 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 experience Answer: C Diff: 1 Skill: Application Objective: 1-1 Explain why and how the study of international business (IB) is important AACSB: Application of knowledge 3) Devon, an accounts manager at a large electronics firm, does not have any direct international responsibilities; however, Devon 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 Diff: 2 Skill: Application Objective: 1-1 Explain why and how the study of international business (IB) is important AACSB: Application of knowledge

4) Why is it relevant for today's business students 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 understanding 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 country. 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 economy can help a business person earn respect, confidence, and a competitive edge. Diff: 2 Skill: Concept Objective: 1-1 Explain why and how the study of international business (IB) is important AACSB: Reflective thinking 5) 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: 2 Skill: Concept Objective: 1-1 Explain why and how the study of international business (IB) is important AACSB: Reflective thinking 6) 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 Diff: 1 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Reflective thinking

7) 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 Diff: 2 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Reflective thinking 8) International business is more complex than domestic business. Answer: TRUE Diff: 1 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Application of knowledge 9) Globalization refers to all economic transactions among countries. Answer: FALSE Diff: 1 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Reflective thinking 10) Globalization has allowed firms to expand into markets that, until recently, were separated from the international marketplace. Answer: TRUE Diff: 1 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Application of knowledge 11) It is difficult to compare globalization of business over time because shifting national borders have changed the nature of transactions from domestic to international and vice versa. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Application of knowledge

12) Globalization enables companies to get a greater variety of products with better quality and with lower prices. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-2 Understand the relationship between globalization and IB AACSB: Application of knowledge 13) What is globalization? What modes of international business are used by firms that want to globalize? Briefly describe each method. Answer: Globalization refers to the widening set of interdependent relationships among people from different parts of a world that happens to be divided into nations. The term can also refer to the 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 to globalize their operations including licensing, franchising, turnkey operations, management contracts, and direct/portfolio investment. a. Licensing and franchising–Licensing agreements are used when companies allow others to use their assets, such as trademarks, patents, copyrights, or expertise under contract. Franchising is a mode of business in which one party allows another party the use of a trademark that is an essential asset for the franchisee's business. b. Turnkey operations–Refers to business operations, performed under contract, that are transferred to the owner when they are ready to begin operating. c. Management contract–Refers to arrangements in which one company provides personnel to perform general or specialized management functions for another company. d. Direct and portfolio investment–A direct investment is one that gives the investor a controlling interest in a foreign company. A portfolio investment is a noncontrolling interest in a company or ownership of a loan to another party. Diff: 3 Skill: Synthesis Objective: 1-2 Understand the relationship between globalization and IB AACSB: Analytical thinking 14) The shifting of national borders has most likely created which of the following situations for international 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: C Diff: 3 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking

15) Which of the following is an indication of the increased globalization of business since the end of World War II? A) Foreign trade has largely replaced foreign ownership as a means of conducting international business. 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: B Diff: 3 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 16) The integration of markets, nation-states, and technologies in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before is referred to as ________. A) international business organization B) market internationalization C) economic integration D) globalization Answer: D Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge 17) Most of the world's goods and services are sold ________. A) in international markets B) in the countries where they are produced C) through exports to small countries D) through exports to large countries Answer: B Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking

18) 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 Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 19) Which of the following has MOST influenced consumers to demand access to foreign-made products? A) Declining global affluence has caused consumers to seek out lower-priced products from abroad. B) Consumers have become more efficient in using media and technologies to compare prices worldwide. C) Fearing that their governments will enact restrictive policies on imports, consumers are stocking up on foreign products before restrictions are put in place. D) Expectations of rising prices of foreign products have caused consumers to seek foreign products before their prices become prohibitive. Answer: B Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Information technology 20) Which of the following best explains why international business has grown rapidly in the past few decades? A) the end of the political division between the Communist and non-Communist blocs B) greater income equality in most countries C) growing concern about climate change D) increased concerns about terrorism Answer: A Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking

21) Advanced communication systems have contributed to growth in international business by ________. A) enabling better oversight of global operations B) reducing the effects of global competition C) decreasing the cost of cargo transportation D) reducing export regulations Answer: A Diff: 3 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Information technology 22) 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 techniques B) advances in communication systems C) advances in transportation and logistics D) cross-national cooperation Answer: C Diff: 2 Skill: Application Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 23) Because consumers want a greater variety of goods and services at lower prices, many governments have ________. A) reduced their restrictions on the international movement of goods and services B) acted to tax most imports at a lower rate than domestic products C) sought to eliminate reciprocal advantages negotiated through international organizations and treaties D) increased their participation in multinational problem-solving efforts Answer: A Diff: 3 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge

24) Which of the following best explains recent governmental relaxation of restrictions on crossborder trade and resource movements? A) Most countries face shortages of workers, so they seek immigrants who can help them produce more. B) Governments believe that this will decrease the need to make their own companies more innovative. 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 of foreign competition. Answer: D Diff: 3 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 25) A company starting out with a global focus, usually because of the international experience of its founders, is called a ________. A) multinational enterprise B) transnational company C) strategically allied company D) born-global company Answer: D Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 26) Assume an enterprise is considering establishment of a foreign production facility. Which of the 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: B Diff: 3 Skill: Critical Thinking Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking

27) When a company successfully responds to foreign production and market opportunities, ________. A) other companies will likely emulate its successful practices B) it likely has a long-term advantage over competitors C) it will downsize its domestic operations D) its home government likely raises taxes on the company Answer: A Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge 28) Which of the following is NOT one of the three main reasons affecting international business for governments to cooperate with each other? A) to attack problems jointly that one country acting alone cannot solve B) to deal with issues that lie outside the territory of any nation C) to gain reciprocal advantages D) to establish a common language Answer: D Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 29) Governments have signed treaties to protect foreign-owned property rights, such as investments and patents. A primary reason for doing so is to ________. A) gain reciprocal advantages B) reduce the domestic effects of other countries' economic policies C) deal with areas of concern outside the territory of any one country D) reduce national conflicts leading to violent political demonstrations Answer: A Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 30) What is the most likely reason that governments cooperate with each other through treaties, agreements, and consultations? A) to gain an advantageous division of labor B) to be in compliance with United Nations' requirements C) to attack problems jointly that one country acting alone cannot solve D) to assure that all countries get an equitable share of taxes from multinational enterprises Answer: C Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 9 Copyright © 2022 Pearson Education, Inc.

31) All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT ________. A) noncoastal areas of the oceans B) the Panama and Suez Canals C) outer space D) Antarctica Answer: B Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge 32) In a short essay, discuss why governments have been liberalizing cross-border movements of goods, services, and resources. Answer: Generally, governments today impose fewer restrictions on cross-border movements than 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 and services at lower prices. b. They reason that their domestic producers will become more efficient as a result of foreign competition. c. They hope to induce other countries to reduce their barriers to international movements. Diff: 3 Skill: Critical Thinking Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge 33) International business includes all commercial transactions between two or more countries. Answer: TRUE Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 34) Globalization of business has been stimulated by institutional developments that aid foreign trade and investment. Answer: TRUE Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge

35) 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 Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Information technology 36) Import restrictions are becoming less important because consumers increasingly want to buy goods and services produced in their own countries. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 37) Many companies merge with or acquire other companies to gain operating efficiencies that help them compete with or become global leaders. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Analytical thinking 38) Governments primarily cooperate through treaties to create a global division of labor. Answer: FALSE Diff: 1 Skill: Concept Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking

39) Why should domestic managers have an understanding of globalization and international business? What are the current views regarding the future of globalization? Answer: International business comprises a large and growing portion of the world's total business. Global events affect almost all companies. A company operating internationally will engage in modes of business, such as exporting and importing, that differ from those it is accustomed to domestically. To operate effectively, managers must understand these different modes. The three main views of the future of globalization are as follows: further globalization is inevitable, or international business will grow regionally rather than globally, or forces working against globalization will slow both trends. The view that increased growth in international business is inevitable is supported by the power of MNEs who have multiple production and distribution networks and are able to pressure governments to place fewer restrictions on international business. The view that growth will occur regionally rather than globally is based on studies that show that most "global" transactions actually occur between neighboring countries. Finally, the view that globalization will be slowed by pressure from the antiglobalization movement to raise barriers and reject international treaties and organizations stems from the success of such groups in the past. Diff: 3 Skill: Synthesis Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Application of knowledge

40) What are three factors that have led to the increased growth in international business in recent 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 products and services, technology has tremendous impact on international business. As the demand increases, so do the number of international business transactions. Improved communications and transportation speed up interactions and improve managers' ability to control foreign operations. b. Liberalization of cross-border movements–Although the past decrease in restrictions has been erratic, governments have lowered barriers because their citizens have expressed the desire for better access to a greater variety of goods and services at lower prices. Governments also reason that their domestic producers will become more efficient as a result of foreign competition, and they hope to induce other countries to reduce their barriers to international movements. c. Increase in global competition–The pressures of increased foreign competition can persuade a company to expand its business into international markets. Today companies can respond rapidly to many foreign sales opportunities. If they're experienced in foreign markets, they can shift production quickly among countries because they can transport goods efficiently from most places. d. Growing consumer pressures–Consumers are savvier and have more income. They want to be 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 services that ease international business. Today, producers can be paid relatively easily for goods and services sold abroad because of bank credit agreements, clearing arrangements that convert one country's currency into another's, and insurance that covers damage en route and nonpayment by the buyer. f. Changing political situations–The schism between communist and noncommunist countries is 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. They cooperate to gain reciprocal advantages, to attack problems jointly, and to deal with areas outside the confines of any country. Diff: 3 Skill: Critical Thinking, Synthesis Objective: 1-3 Grasp the forces driving globalization and IB AACSB: Reflective thinking 41) Which of the following is the LEAST likely reason that small countries worry about overdependence 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: D Diff: 3 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Analytical thinking 13 Copyright © 2022 Pearson Education, Inc.

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 Diff: 3 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Analytical thinking 43) Limitation of logging in the Amazon region is generally viewed as environmentally beneficial for the planet as a whole; however, unemployed Brazilian workers have felt that job creation inside Brazil is more important than climate protection outside Brazil. This example best illustrates which of the following? A) why smaller countries are concerned that large international companies are powerful enough to dictate operating terms B) why globalization is needed to foster uniform standards for combating environmental problems C) how cultural homogeneity threatens the cultural foundation of smaller nations D) how global interests can conflict with a country's local interests Answer: D Diff: 3 Skill: Application Objective: 1-4 Discuss the major criticisms of globalization AACSB: Application of knowledge 44) Although globalization may bring economic growth, critics nevertheless contend that ________. A) the growth is too fast B) the inequality of gains puts some people in a relatively worse economic situation C) this growth is mainly for the future, thus ignoring present economic growth needs D) the cultural foundations of sovereignty are supported by globalization Answer: B Diff: 3 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Reflective thinking

45) Which of the following statements would most likely NOT be supported by an advocate of offshoring? A) Offshoring increases the number of high-value jobs in the home countries of offshoring companies. B) Offshoring is fundamentally better for workers than the introduction of labor-saving technologies. C) Workers displaced due to offshoring are able to find new jobs as easily as those displaced by technology. D) There are upper limits to offshoring because of the lack of skilled workers willing to work permanently for low wages. Answer: B Diff: 3 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Application of knowledge 46) A major criticism of offshoring is that it ________. A) increases production costs B) exchanges good jobs for bad jobs C) threatens the sovereignty of larger countries D) allows companies to avoid payment of any taxes Answer: B Diff: 2 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Application of knowledge 47) 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 a percentage of national income. D) Many workers who have been displaced by offshoring do not have the skills needed for higher-value jobs. Answer: B Diff: 2 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Analytical thinking 48) Supporters of globalization assert that the process helps countries strengthen their sovereignty. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Analytical thinking 15 Copyright © 2022 Pearson Education, Inc.

49) A criticism of globalization is that as economic growth increases, too many nonrenewable resources are used. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Ethical understanding and reasoning 50) The process of shifting production to a foreign country is known as outsourcing. Answer: FALSE Diff: 1 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Reflective thinking 51) Critics of offshoring assert that the short-term cost savings derived from offshoring hinder firms from developing more efficient production methods. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-4 Discuss the major criticisms of globalization AACSB: Analytical thinking 52) The process of shifting production from a domestic to a foreign location is best known as ________. A) offshoring B) outsourcing C) licensing D) joint venturing Answer: A Diff: 1 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Application of knowledge

53) Assume that company executives at the firm would like to increase sales by expanding into an international market. Which of the following factors, if true, best supports a decision to expand 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: C Diff: 3 Skill: Critical Thinking Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Reflective thinking 54) Kevin, marketing manager of the North American Bowling League, has decided to televise major bowling competitions to viewers in multiple countries rather than only in Canada and the U.S. Which of the following goals would this most likely help Kevin accomplish? A) acquiring new resources B) minimizing corporate risks C) increasing sales and profits D) obtaining competitive advantages Answer: C Diff: 2 Skill: Application Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Reflective thinking 55) Which of the following BEST explains how a firm reduces risk by operating internationally? A) taking advantage of business-cycle differences among countries B) buying competitive risk insurance unavailable domestically C) preventing competitors from operating in the countries it has entered D) operating in less competitive environments than those at home Answer: A Diff: 2 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Analytical thinking 56) Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________. A) hiring host-country nationals who pay no taxes B) taking advantage of taxation laws in foreign countries C) sailing in international waters outside countries' tax jurisdiction D) paying substantial port fees instead of taxes during stopovers Answer: A Diff: 2 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Application of knowledge 17 Copyright © 2022 Pearson Education, Inc.

57) A flag of convenience is ________. A) the declaration that a product is made in a country that has easier legal access to a given foreign market B) a designation for products originating within a particular trading group C) the registration of a ship by a shipping company in a country that charges low taxes D) the indication that a shipping organization can sail in international waters Answer: C Diff: 2 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Application of knowledge 58) By operating internationally, a company may take advantage of business-cycle differences among countries and thereby reduce its financial risks. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Analytical thinking 59) The terms multinational corporation and multinational company are frequently used synonyms for strategic alliances. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Application of knowledge 60) What is foreign direct investment? What social factors in the external environment might affect 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 percent or even a 50 percent interest; if a foreign investor holds a minority stake and the remaining ownership 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 its borders. In particular, political disputes can disrupt the flow of international business. Domestic law, which includes both home- and host-country regulations on issues such as taxation and employment, affects how a company can operate internationally. International law–the legal agreements between countries–also obviously affects FDI. Diff: 3 Skill: Synthesis Objective: 1-5 Assess the major reasons companies seek to create value by engaging in IB AACSB: Application of knowledge

61) ________ 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 Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 62) Black and Decker produces tools at a plant in North Carolina and ships the tools 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: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 63) 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 States B) the United States by a Japanese company; outside the United States C) Japan by a Japanese company; in the United States D) Japan by a U.S. company; outside the United States Answer: C Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge

64) Visible exports and imports are ________. A) merchandise imports and exports B) the sum total of goods and services traded C) international transactions paid for in money rather than barter D) typically, a country's least common international economic transactions Answer: A Diff: 1 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 65) An example of a Japanese service export is a visit by a ________. A) Japanese citizen to Disneyland in the United States B) Japanese citizen to the Japan Pavilion at Epcot Center in the United States C) U.S. citizen to the Japan Pavilion at Epcot Center in the United States D) U.S. citizen to Tokyo Disneyland in Japan Answer: D Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 66) ________ 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: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge

67) Reebok pays a royalty to the German Soccer League to use the team's logo on t-shirts that it sells. Reebok and the German Soccer League most likely have a ________. A) turnkey operation contract B) licensing agreement C) portfolio investment D) joint venture Answer: B Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 68) A(n) ________ involves a firm in one country agreeing to operate facilities for 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: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 69) A foreign direct investment occurs when ________. A) a company owns at least 25% of a foreign firm B) a company has a controlling interest in a foreign company C) foreign ownership is in private rather than government securities D) a foreign firm agrees to a licensing agreement with a large conglomerate Answer: B Diff: 2 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge

70) Which term refers to two or more companies that share ownership of an FDI? A) turnkey operation B) transnational firm C) joint venture D) franchise Answer: C Diff: 1 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Analytical thinking 71) A multinational enterprise (MNE) is best defined as a firm ________. A) that is a member of the Fortune 500 B) with foreign business partners C) involved in global franchising D) with foreign direct investments Answer: D Diff: 1 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Analytical thinking 72) The term used by the United Nations as a synonym for multinational enterprise is ________. A) multinational corporation B) transnational company C) international firm D) born-global Answer: B Diff: 1 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge

73) The owner of a U.S. football team and the owner of a Canadian hockey team purchase a British soccer team. This is an example of a ________. A) royalty B) portfolio investment C) turnkey operation D) joint venture Answer: D Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Analytical thinking 74) International licensing occurs when a firm in one country authorizes a firm in another country to use its operating systems, brand name, trademark, and logo in return for a royalty payment. Answer: FALSE Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 75) Services constitute the fastest growth sector in international trade. Answer: TRUE Diff: 1 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 76) Merchandise exports and imports are tangible products—goods—that are respectively sent out of and brought into a country. Answer: TRUE Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge

77) The production of goods by a French company in Italy for sale in Italy is an example of an Italian merchandise import. Answer: FALSE Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 78) When a U.S. citizen flies Japan Airlines, the airline acts as a service exporter for Japan. Answer: TRUE Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 79) A joint venture is an example of a portfolio investment. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 80) The ownership of foreign bonds is an example of a portfolio investment. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 81) The fact that a company is the market leader in one country is no guarantee that it will be the leader in another country. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Analytical thinking

82) What are the differences between merchandise and service imports and exports? Provide examples to illustrate your answer. Answer: a. Merchandise exports are tangible products–goods–sent out of a country. Merchandise imports are goods brought into a country. When a Chinese contractor sends toy action figures from China to Hasbro in the United States, the contractor exports and Hasbro imports. b. Service exports and imports generate nonproduct international earnings. The company or individual receiving payment is making a service export. The company or individual paying is making a service import. When an American tourist stays at a hotel in London, the hotel stay is the service export. Diff: 2 Skill: Application Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 83) What is a multinational enterprise (MNE)? How do physical and social factors affect how an MNE functions in a foreign country? Answer: The multinational enterprise (MNE) is a company that takes a global approach to foreign markets and production. It is willing to consider market and production locations anywhere in the world. However, most writers use the term to mean any company with operations in more than one country. Physical factors, such as a country's geography or demography, and social factors, such as its politics, law, culture, and economy, influence the functioning of an MNE. Physical and social factors can affect how companies produce and market products, staff operations, and even maintain accounts. Geographic barriers–mountains, deserts, jungles, and so forth–often affect communications and distribution channels. And the chance of natural disasters and adverse climatic conditions (hurricanes, floods, droughts, earthquakes, volcanic eruptions, tsunamis) can make business riskier in some areas than in others, while affecting supplies, prices, and operating conditions in far-off countries. Diff: 3 Skill: Synthesis Objective: 1-6 Define and illustrate the different operating modes for companies to accomplish their international objectives AACSB: Application of knowledge 84) Managers who are knowledgeable about ________ are better able to identify the location, quantity, quality, and availability of the world's natural resources. A) political factors B) geographic factors C) competitive factors D) cultural factors Answer: B Diff: 1 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking 25 Copyright © 2022 Pearson Education, Inc.

85) Although the U.S. film industry depends heavily on revenue in foreign countries, revenue from international markets is usually low for a sports-themed film. This is most likely due to ________ factors. A) political B) geographic C) behavioral (cultural) D) legal Answer: C Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Application of knowledge 86) In addition to understanding the laws affecting business in countries where their companies operate, it is most important for managers to understand the ________. A) methods for appointing local judges B) ethical rationale behind the laws C) history of the local legal system D) degree of law enforcement Answer: D Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking 87) Some key ________ factors in a company's international business external environment are its product strategy and access to resources. A) geographic B) political C) competitive D) behavioral Answer: C Diff: 1 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking

88) The same automobile company produces Fiats and Ferraris. The company builds an engine plant 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-market strategy B) Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focus strategy C) Ferrari faces global competitors in China, whereas Fiat competes in China mainly against Chinese competitors D) although Ferrari did not build an engine plant, it will use the same Fiat engines in its models Answer: B Diff: 3 Skill: Application Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Application of knowledge 89) Elway, a computer firm, has high foreign sales in Asia and wants to expand sales into Europe. Which of the following statements provides the most appropriate advice for Elway executives? A) Although countries' market sizes differ, companies usually face about the same number of competitors 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 versus another. D) Being a leader in one country does not guarantee market leadership in another country. Answer: D Diff: 3 Skill: Critical Thinking Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking 90) 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' strategies and actions elsewhere B) the market leader is the same everywhere C) there is less need to understand the physical and societal factors of each country D) they are less likely to enter joint ventures with other companies Answer: A Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking 27 Copyright © 2022 Pearson Education, Inc.

91) The view that globalization is inevitable is most likely based on the belief that ________. A) international organizations will replace nation-states B) protesters against globalization will be persuaded to change their views C) people want more global homogeneity of cultures D) technical advances in transportation and communications are highly persistent Answer: D Diff: 3 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking 92) Critics of the view that regionalization will prevail over globalization most likely base their argument on the belief that ________. A) regionalization is a transition stage toward globalization B) neighboring countries are more apt to disagree politically than distant countries C) neighboring countries are too geographically similar to benefit from trade D) business in non-territorial areas is not regional Answer: A Diff: 3 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking 93) 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 freer movement 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 not will foster greater antiglobalization sentiments. Answer: B Diff: 3 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking

94) Some observers feel that international institutions and the people working in them cannot adequately handle the complexities of an interconnected world. Based on this, these observers believe that ________. A) globalization will slow in the future B) globalization is nevertheless inevitable C) international business will grow primarily on a regional basis D) private companies will replace international organizations in running the world's economy Answer: A Diff: 3 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking 95) Geographical barriers typically affect distribution channels within countries, but they rarely affect distribution channels between countries. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking 96) Managers need to understand not only the laws of countries where they operate, but also how those laws are enforced. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking 97) A company with limited resources is more likely to achieve national distribution within a small country than within a large country. Answer: TRUE Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Analytical thinking

98) The view that regionalization, rather than globalization, will prevail in the future is largely based on the use of common languages among countries in a region. Answer: FALSE Diff: 2 Skill: Concept Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Reflective thinking 99) In a short essay, identify and explain three competitive factors that influence international businesses. Answer: a. Product strategy–A company's choice of strategy, either cost or differentiation, plays a part in determining how and where the company will operate. b. Company resources and experience–A company's size, resources, and experience in comparison to competitors' affects how it will operate in international markets. In addition, a company's national market share and brand recognition will affect the operating tactics it employs. c. Competitors faced in each market–Success for a company in any market will always be influenced by the strategies and operations of competitors within the market. Diff: 2 Skill: Application of Knowledge Objective: 1-7 Recognize why national differences in companies' external environments affect how they may best improve their IB performance AACSB: Application of knowledge

International Business, 17e (Daniels) Chapter 2 The Cultural Environments Facing Business 1) ________ consists of specific learned norms based on attitudes, values, and beliefs of a group of people. A) Ethnology B) Civilization C) Culture D) Doctrine Answer: C Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 2) Which of the following is NOT true about cultural diversity? A) Companies may gain competitive advantages by bringing together people of diverse backgrounds. 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: B Diff: 3 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 3) Culture is not ________. A) about beliefs and values of society B) relative C) a collective phenomenon D) inherited Answer: D Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Application of knowledge

4) When divergent cultures come in contact, ________ occurs. A) power distance B) culture shock C) cultural collision D) group membership Answer: C Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 5) Which of the following is defined as a group of people who share a unique way of life within a larger, dominant culture? A) macroculture B) subculture C) cultural universal D) monoculture Answer: B Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 6) Which of the following BEST describes a result of cultural collision in international business? A) A company implements practices that are less effective than intended. B) Local employees are overlooked for promotions by home country managers. C) Expatriate managers rely too heavily on local employees for negotiating business deals. D) Foreign and domestic companies make adjustments for the local culture and legal environment. Answer: A Diff: 3 Skill: Application Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments

7) Which of the following is the MOST accurate statement about culture? A) Cultural variables can easily be isolated from other factors such as economic and political conditions. B) Although most cultural variables are universal, the forms these variables take differ from culture to culture. C) Most cultural variables are superficial and can easily be influenced by environmental factors. D) Within a culture, everyone responds to particular cultural variables the same way. Answer: B Diff: 3 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 8) Businesspeople seeking to understand more about another culture in order to successfully conduct business within that culture would be best advised to do which of the following? A) Observe the behavior of people who have gained respect within that cultural environment. B) Rely on stereotypes, which are based on averages, to gain an understanding of the culture. C) Avoid cultural research studies because they perpetuate unjustified stereotypes and behaviors. D) Memorize the cultural variations that are typically encountered in a specific cultural environment. Answer: A Diff: 2 Skill: Application Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 9) Which of the following is a common shortcoming of studies examining culture in different countries and regions? A) Cultures are static, which leads researchers to draw false conclusions from old data. B) It is impossible to compare countries because of differences in data. C) Responses are reported in averages, which can lead to a belief in unrealistic stereotypes. D) People are reluctant to complain about their own cultures, so they present only positive opinions to researchers. Answer: C Diff: 3 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments

10) Certain attitudes can link groups, such as managers, from different nations more closely than managers within a given nation. As a result, international businesspeople should most likely ________. A) assume that there are few significant cultural differences among nations B) examine relevant groups when comparing nations C) adopt universal operating methods D) avoid cultural imperialism Answer: B Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 11) When contact among divergent cultures creates problems, the situation is known as cultural diversity. Answer: FALSE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 12) Many firms gain a global competitive advantage by fostering cultural diversity. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 13) Most cultural variables are universal. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 14) The lack of cultural guidebooks and research specifically for international managers poses a significant problem for global firms. Answer: FALSE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 4 Copyright © 2022 Pearson Education, Inc.

15) The identity of a nation is typically promoted through symbols, monuments, and museums. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 16) Most people's basic values are acquired during childhood and are not readily changed later in life. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 17) Acquired group memberships include those based on gender, family, age, caste, and ethnic, racial, or national origin. Answer: FALSE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 18) Ascribed group memberships are usually determined by birth and include gender, family, age, caste, and ethnic, racial, or national origin. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 19) Values determine how individuals will probably respond in any given circumstance. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments

20) A nation's cultural boundaries do not always correspond with its political boundaries. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 21) The specific learned norms based on attitudes, values, and beliefs of a group of people are known as ethnology. Answer: FALSE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 22) Similarity among people is both a cause and effect of national boundaries. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 23) Cultures do not transcend national (state) boundaries. Answer: FALSE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 24) European policies that require large companies to include a minimum percentage of women on their boards are aimed at overcoming male dominance therein. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments

25) Only some countries enforce age-related laws such as on employment, driving privileges, rights to obtain products and services, and civic duty. Answer: FALSE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 26) An individuals' desire for material wealth motivates them to work hard, which in turn leads to community-wide economic development. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 27) People have a great deal of enthusiasm for effort when the likelihood of success seems overly easy. Answer: FALSE Diff: 2 Skill: Concept Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments 28) What are the advantages and disadvantages of using a nation as a point of reference for a culture? Answer: The nation, as opposed to the State, provides a workable definition of a culture for international business because basic similarity among people is both a cause and an effect of national boundaries. The laws governing business operations also apply primarily along national lines. Within the bounds of a nation are people who largely share essential attributes, such as values, language, and race. However, these shared attributes do not mean that everyone in a country is alike, nor do they suggest that each country is unique in all respects. Diff: 3 Skill: Critical Thinking Objective: 2-1 Explain why culture, especially national culture, is important in IB, but tricky to assess AACSB: Diverse and multicultural work environments

29) Managing and cultivating diverse teams is facilitated by first encouraging team members to ________. A) understand each other's culture before dealing with the tasks at hand B) jump into the task allowing the team members to react and adapt to each other C) deal with fellow team members as they would in their own culture D) establish strict rules on how the task will be performed Answer: A Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 30) The nation offers a workable reference for studying cultural differences because ________. A) a nation contains only one distinct culture B) similarity among people is both a cause and effect of national boundaries C) the commonality of language within a nation eases the process of conducting surveys D) different groups within the same country always have more in common with each other than with groups in other countries Answer: B Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 31) A problem of using the nation as a reference point for culture is that ________. A) nations fail to mediate the different interests within their boundaries B) self-stereotypes tend to fall along national lines C) such an approach tends to be polycentric D) variations tend to be great within a country (state) Answer: D Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 32) Which of the following statements is true of attitudes? A) Over the years, they become more rigid than values. B) They are learned from role models. C) Because they're formed within a cultural context, they mirror the attitudes of surrounding countries. D) They are developed only for the most important aspects of life. Answer: B Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 8 Copyright © 2022 Pearson Education, Inc.

33) ________ is increasing the pace of both cultural diffusion and cultural change. A) Collectivism B) Enculturation C) Fundamentalism D) Globalization Answer: D Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 34) It is most accurate to say that within most nations' borders, people largely share such essential attributes as ________ and ________. A) work attitudes; occupations B) lifestyles; education level C) education level; ethnicity D) values; language Answer: D Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 35) Most people's basic value system is ________. A) modified significantly between childhood and adulthood B) altered during adulthood through imposition C) affected primarily by teenage peer pressure D) acquired mainly during early childhood Answer: D Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 36) Religion ________. A) is the exclusive means by which a society's members communicate with each other B) shapes the attitudes its adherents have toward work, consumption, individual responsibility, and planning for the future C) is the overall framework that determines the roles of individuals within a society, the stratification of the society, and the individuals' mobility within the society D) remains one of the least important elements of culture Answer: B Diff: 3 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 9 Copyright © 2022 Pearson Education, Inc.

37) Which of the following is a reason for global companies to NOT take religious beliefs into account? A) Religion has an impact on almost every business function. B) A company could get in trouble with local religious authorities. C) A manager's religious training should be implemented in the company he/she manages. D) Religion may influence consumer behavior. Answer: C Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 38) Contact among countries brings about cultural change, which is a process called ________. A) cultural collision B) cultural imperialism C) cultural diffusion D) polycentrism Answer: C Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 39) Creolization refers to ________. A) government efforts to maintain a distinct cultural identity through legislation and language B) the process of mixing elements of an outside culture with those of a national culture C) the use of stereotypes to describe a culture D) changes as cultures evolve over time Answer: B Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 40) The practice of exchanging rings at weddings, which was initially a pagan ritual, is now followed by most people across the world. Which of the following does this illustrate? A) cultural literacy B) cultural encoding C) cultural diffusion D) cultural lag Answer: C Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments

41) Cultural change occurs when people integrate into their culture the gestures, material objects, traditions, or concepts of another culture through ________. A) ethnocentrism B) cultural diffusion C) social stratification D) polycentrism Answer: B Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 42) Cultural change imposed by an alien culture is called ________. A) multicultural ethnocentrism B) cultural imperialism C) collectivism D) high-context Answer: B Diff: 1 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 43) Which of the following languages has the most NATIVE speakers? A) English B) Mandarin C) Spanish D) Hindi Answer: B Diff: 1 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 44) ________ people account for the largest percentage of global production. A) English-speaking B) Mandarin-speaking C) French-speaking D) Spanish-speaking Answer: A Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments

45) Which of the following statements about the English language is most likely NOT true? A) The largest portion of global output is in English-speaking countries. B) A large portion of MNEs are headquartered in English-speaking countries. C) English is the official national language in most countries where FDI is encouraged. D) Many MNEs from non-English speaking countries use English as their operating language. Answer: C Diff: 3 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 46) Although English is referred to as the "international language of business,"________. A) it is less frequently used than French in international business B) there is a growing disagreement over which version of English to use, e.g. British, American, or Australian C) companies headquartered outside English-speaking countries all use their official language as their operating language D) monolingual English speakers may experience more difficulty in the future in communicating on a worldwide basis Answer: D Diff: 3 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 47) The fact that an English word such as blue jeans has entered the Spanish language, while a Spanish word such as macho has come into American English illustrates that ________. A) cultural diffusion is a two-way process B) cultural trends come from emerging nations C) existing national borders are shifting D) material cultures are becoming universal Answer: A Diff: 2 Skill: Application Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments

48) American hamburgers, Japanese sushi, Italian pizza, Mexican tacos, and Middle Eastern pita bread are now commonly found in most countries. This best supports the argument that ________. A) although visible expressions of culture are becoming homogenized, basic differences in societal values remain strong B) globalization fulfills lower order needs in Maslow's hierarchy C) cultural imperialism is increasingly widespread D) cultural hybridization is occurring Answer: D Diff: 2 Skill: Application Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 49) People in the port city of Jeddah were less culturally conservative than people in the interior of the country. The most likely reason for this is that ________. A) people in the port cities have more contact with foreigners B) the coastal area has to trade with countries using different religious holidays C) the coastal area has a culture with a higher uncertainty avoidance D) the coastal area is secular, whereas the interior of Saudi Arabia has a state religion Answer: A Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 50) Cultural change may come by choice or imposition. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 51) Creolization refers to the mixing of cultural elements that occurs during cultural diffusion. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 52) English-speaking people account for a larger portion of global output than people who speak any other language. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 13 Copyright © 2022 Pearson Education, Inc.

53) Change agents intentionally cause or accelerate social and cultural change. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 54) Language is a noticeable aspect of culture because it limits contact among people who can't communicate with each other. Answer: TRUE Diff: 2 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 55) The role of religion in shaping behavior is even stronger among people and countries with strong religious convictions. Answer: TRUE Diff: 1 Skill: Concept Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments 56) What is the difference between a monochronic and polychronic culture? How do such cultural differences affect business practices for international firms? Answer: Cultures such as those in Northern Europe are called monochronic. People prefer to work sequentially, such as finishing with one customer before dealing with another. Conversely, polychronic Southern Europeans are more comfortable working simultaneously with all the tasks they face. Such cultural differences affect the degree of multitasking with which people are comfortable. International companies and individuals must evaluate their business and personal practices to ensure that their behavior may fit with the culture. Diff: 3 Skill: Synthesis Objective: 2-2 Grasp the major causes of national cultural formation and change AACSB: Diverse and multicultural work environments

57) International businesspeople need to understand social stratification systems where they do business because ________. A) such systems reflect a culture's willingness to accept new products B) such systems indicate who people in a given culture will likely respect more C) the high similarity among countries lets firms effectively use global hiring practices D) what is an ascribed group membership in one country is an acquired one in another Answer: B Diff: 3 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments 58) The more closed a society is, the more important ________ group membership is. A) acquired B) age-based C) education D) ascribed Answer: D Diff: 2 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments 59) John is employed in an American manufacturer or health care products and is currently working with some Japanese clients on a new project. He uses a lot of hand gestures during meetings which his clients find very distracting and rude. This has also led to many misunderstandings between John and his Japanese clients in the recent past. Which of the following best describes such a situation? A) risk aversion B) organizational anarchy C) cross-cultural risk D) acculturation Answer: C Diff: 2 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments

60) Social structure is best defined as the ________. A) means by which a society's members communicate with each other B) attitudes of MNEs towards corporate social responsibility on a global scale C) overall framework that determines the roles of individuals within a society D) behavior of and opportunities available to MNCs operating in a given society Answer: C Diff: 2 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments 61) Studies indicate a strong correlation between the intensity of religious belief and ________. A) a desire to convert productivity gains into more leisure time B) an adherence to some attributes that lead to economic growth C) the belief that material success is related to salvation D) the degree of ethnocentrism exhibited in a culture Answer: B Diff: 2 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments 62) Which of the following is an example of an acquired group membership? A) national origin B) religion C) gender D) race Answer: B Diff: 1 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments 63) According to the theory of success and reward expectation, the greatest enthusiasm for work generally occurs when there is a ________ certainty of success combined with a ________ reward for success compared to the reward for failure. A) high; high B) high; low C) low; high D) low; low Answer: C Diff: 2 Skill: Concept Objective: 2-3 Discuss major behavioral factors influencing countries' business practices AACSB: Diverse and multicultural work environments