Global Business Environment
Exam Answer Key
Course Introduction
Global Business Environment explores the complex and dynamic context in which international firms operate, focusing on economic, political, legal, technological, and cultural factors that shape global markets. The course examines how organizations adapt their strategies to respond to differences in regulatory frameworks, international trade policies, financial systems, and emerging market trends. Students will develop analytical skills to assess risks and opportunities in global business, understand the impact of globalization, and evaluate the roles of multinational enterprises in driving economic development and competition worldwide.
Recommended Textbook
M International Business 1st Edition by Michael Geringer
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17 Chapters
1505 Verified Questions
1505 Flashcards
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Page 2
Chapter 1: The Challenging World of International Business
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Sample Questions
Q1) According to the definitions in the text,a multidomestic firm is an organization that attempts to standardize operations worldwide in all functional areas.
A)True
B)False
Answer: False
Q2) A business whose activities are carried out across national borders is known as an international business.
A)True
B)False
Answer: True
Q3) The major globalization drivers include all of the following except:
A)Political
B)Social
C)Technological
D)Market
E)Cost
Answer: B
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Page 3
Chapter 2: International Trade and Investment
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Sample Questions
Q1) Adam Smith claimed:
A)that governments,not market forces,should determine the directions,volume,and composition of international trade.
B)a nation could trade advantageously if it had a comparative advantage.
C)that market forces,not government controls,should determine direction,volume,and the composition of international trade.
D)that customers' tastes are affected by income levels.
E)that a nation should always specialize in producing what the government espouses without considering any absolute advantage it may have.
Answer: C
Q2) According to the text,differences in taste,a demand variable,can reverse the direction of trade predicted by the theory.
A)True
B)False
Answer: True
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Chapter 3: International Institutions From an International Business Perspective
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Sample Questions
Q1) The United Nations is probably the best-known among
A)non-profit organizations.
B)social service organizations.
C)international organizations.
D)military organizations.
Answer: C
Q2) The UN International Court of Justice hears cases that involve disputes between national governments.
A)True
B)False
Answer: True
Q3) The Council of European Union,the primary policy-setting institution of the EU,is composed of
A)the member states' prime ministers or presidents.
B)the member states' ministers who represents the specific area being discussed.
C)elected members from across Europe,elected by country.
D)appointed representatives from each member state.
Answer: B
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Chapter 4: Sociocultural Forces
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Sample Questions
Q1) Culture is a group of shared worldviews,social rules and interpersonal dynamics that is
A)chosen consciously by each group to set themselves apart from other groups.
B)learned,interrelated and shared.
C)used as a way to separate economic classes.
D)a collection of noble pursuits including opera,art,ballet and classical music.
Q2) "When in Rome,do as the Romans do" is a solid,moral guideline.
A)True
B)False
Q3) Gift giving in many cultures is marked by
A)specific etiquette and meaning that may be markedly different from what the international manager knows in the home culture.
B)graft and corruption; for example,a way to launder money.
C)humility not fitting an international manager.
D)drinking and late parties.
Q4) Another term Hofstede uses to describe long-term orientation is
A)Herculian commitment.
B)Confucian dynamism.
C)Big-picture focus.
D)Strategic commitment.
Page 6
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Chapter 5: Natural Resources and Environmental Sustainability
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Sample Questions
Q1) World Bank studies have shown that underdevelopment is often due to A)factors such as parasites and viruses that are a part of tropical climates and expand unchecked because of the lack of winter temperatures.
B)mental slowness in people of the climates around the equator.
C)socialist political regimes.
D)lack of government investment in education.
Q2) Petroleum,a relatively cheap nonrenewable energy source,is
A)in abundant supply but is not environmentally clean.
B)being increasingly depleted and is expected to run out in another 50 years,but in the meantime,improved retrieval techniques are being developed.
C)clean,cheap and available,but most of the reserves are located in countries whose leadership is critical of the industrialized world.
D)expected to run out in another 10 years and needs to be replaced with renewable energy sources quickly.
Q3) Why do nations care about having outlets to the ocean? Are landlocked nations at a disadvantage?
Q4) Why do international managers need to know anything about a nation's topographic features?
Page 7
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Chapter 6: Political and Trade Forces
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Sample Questions
Q1) The owners of private companies sometimes complain government owned companies have unfair advantages.Discuss some of these complaints.
Q2) One example of nationalization of private companies is with the nationalization of French-owned firms in Europe after WWII.
A)True
B)False
Q3) Social dumping occurs when an exporting country
A)imposes an export tax on domestic businesses that export,to compensate for the opportunity cost to the domestic market.
B)creates unfair competition based on lower costs because they provide little social support system to the worker.
C)target markets to specific vulnerable groups in the importing country.
D)exports good that are not sellable in the domestic environment due to hazards and safety issues.
Q4) Tariff barriers may be used to protect domestic industry from foreign,lower-cost producers.
A)True
B)False
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Chapter 7: Intellectual Property and Other Legal Forces
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Sample Questions
Q1) Global trademark protection follows the Office of Harmonization in the Internal Market approach.
A)True
B)False
Q2) Usually,assuming that foreign law
A)will be similar to U.S.law is reasonable.
B)will differ from U.S.law and must be understood is a reasonable approach.
C)won't matter because you and your trading partner will agree to arbitrate is reasonable.
D)will be biased against the foreigner is reasonable.
Q3) By UN regulation,contracts can not contain choice of law and choice of forum clauses.
A)True
B)False
Q4) The U.S.enforcement of EEOC law in U.S.companies operating abroad is an example of extraterritoriality.
A)True
B)False
Q5) What is international law?
Q6) How might U.S.law affect international managers?
Page 9
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Chapter 8: The International Monetary System and Financial Forces
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Sample Questions
Q1) When a government requires a permit to purchase foreign currency,the exchange rates
A)are market-driven.
B)can be negotiated by the firm.
C)are unpredictable.
D)are set by the government,often above the free market rate.
Q2) The random walk hypothesis suggests that the best predictor of tomorrow's currency prices are today's prices.
A)True
B)False
Q3) What is appealing about the gold standard is A)everyone loves gold.
B)its simplicity.
C)its transportability.
D)its carrying costs.
Q4) The international Fisher effect states that the interest rate differentials for any two currencies reflect the expected change in their exchange rates.
A)True
B)False
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Chapter 9: Labor Forces
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Sample Questions
Q1) In traditional societies,sometimes minorities,well-educated and knowledgeable about the local culture,are easy for foreign firms to become overly dependent on; a problem if these minorities are unpopular with the majority local population.
A)True
B)False
Q2) Family-related employment benefits such as paid maternity leave and parental leave are guaranteed in all developed countries.
A)True
B)False
Q3) Immigration can be a net positive for inflation and international cost-competitiveness,but it often is seen to reduce wage levels,a factor which makes immigration unpopular with labor unions.
A)True
B)False
Q4) (p.152.)How do brain drain and reverse brain drain affect the home country?
Q5) Labor quality refers to the caste or upbringing of the employee.
A)True
B)False
Q6) Discuss the reasons some workers leave their countries to work abroad.
Page 11
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Chapter 10: International Competitive Strategy
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Sample Questions
Q1) Managers of international companies that are attempting to develop a competitive advantage face a formidable challenge because:
A)resources are always scarce.
B) there are not many equally attractive alternative ways to use the company's scarce resources.C. managers are forced to make choices regarding what to do and what not to do.
C) resources are always scarce, there are not many equally alternative ways to use the company's scarce resources and are forced to make choices.
D)Two of A, B and C.
Q2) There is a growing tendency for firms to use strategic planners to devise the corporate plan,which is then handed to operations people for execution.
A)True
B)False
Q3) Value chain analysis focuses primarily on the question,"What value does the company want to deliver to these customers?"
A)True
B)False
Q4) What international strategy is and why it is important?
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Page 12
Chapter 11: Organizational Design and Control
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Sample Questions
Q1) Explain why and where decisions are made among ICs and their subsidiary units.
Q2) Companies that adopted the global organizational form felt that this organization would:
A)permit them to obtain cheaper labor.
B)be more capable of developing strategies to confront new global competition.
C)enable them to get lower interest rates to finance expansion.
D)permit them to obtain specialized labor.
E)enable them to get lower debit rates when marching towards finance expansion.
Q3) What is organizational design and why is it an important topic for managers of international companies to understand?
Q4) A structure organized by more than one dimension at the top level is a matrix organization.
A)True
B)False
Q5) Changes in an international company's strategy may require changes in the organization's design,but not the reverse.
A)True
B)False
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Chapter 12: Assessing International Markets
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Sample Questions
Q1) The e-commerce potential index developed in the text includes three indexes: market size,market growth rate,and e-commerce readiness.
A)True
B)False
Q2) Market screening is a modified version of environmental scanning in which the firm studies the stock market to eliminate the less desirable markets.
A)True
B)False
Q3) Entry barriers,profit remittance barriers,and policy stability are all part of the ___________ stage of market screening.
A)economic and financial
B)political and legal
C)sociocultural
D)market entry
E)economical and social
Q4) Country and segment are units of analysis for market screening.
A)True
B)False
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Page 14
Chapter 13: Entry Modes
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Sample Questions
Q1) Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position.
A)True
B)False
Q2) Alliances can allow a partner to acquire a firm's technological or other competencies,thereby raising important competitive concerns.
A)True
B)False
Q3) A company can engage in indirect exporting by using which of the following in its own country?
A)import merchants
B)sales companies
C)export commission agents
D)overseas merchants
E)franchisee vendors
Q4) What are the disadvantages of joint ventures?
Q5) Turnkey projects export technology,management expertise,and capital equipment. A)True
B)False
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Chapter 14: Marketing Internationally
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Sample Questions
Q1) Promotion is the paid,nonpersonal presentation of ideas,goods,or services by an identified sponsor.
A)True
B)False
Q2) Generally,management prefers global product standardization because:
A)There can be longer production runs,which lowers costs.
B)A standardized corporate visual identity can help project a consistent image.
C)The creative work needed for promotion doesn't need to be done for each market.
D)The creative work needed for promotion doesn't need be done separately for each market.
E)there can be longer production runs,which lowers costs,a standardized corporate visual identity can help project a consistent image,and the creative work needed for promotion doesn't need to be done for each market.
Q3) Laws on pollution,consumer protection,and operator safety are critical as legal forces.
A)True
B)False
Q4) Discuss the programmed-management approach to advertising strategy.
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Chapter 15: Global Operations and Supply Chain Management
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Sample Questions
Q1) Backward vertical integration refers to:
A)the purchase of competitive firms.
B)the installation of production facilities to produce inputs for the production of final products.
C)the placing of minorities in charge of production processes.
D)the installation of production facilities to consume the outputs of the production system.
Q2) A reason that outsourcing has become an increasingly common option for companies is:
A)it helps companies to focus scarce resources on their core competencies.
B)it avoids problems of different languages or cultures.
C)it enhances flexibility.
D)it helps companies to focus scarce resources on their core competencies and it enhances flexibility.
E)it enhances customer interaction.
Q3) In many companies,the purchasing function has been viewed as prime candidate for outsourcing to other firms,a trend encouraged by rapid developments in E-procurement.
A)True
B)False
Page 17
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Chapter 16: Managing Human Resources in an International Context
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Sample Questions
Q1) According to the text,the failure rate for expatriate assignments,including failing to achieve performance targets for an international assignment or prematurely returning from the assignment,range from _______ percent.
A)6 to 10
B)15 to 25
C)25 to 45
D)30 to 55
E)41 to 65
Q2) The use of third country nationals as IC executives in LDCs is a growing practice because:
A)they tend to prefer working in LDCs.
B)there is frequently a shortage of skilled host country nationals.
C)they can become arbitrators when conflicts arise.
D)they often already have host country work permits and knowledge of its language and culture.
E)there is frequently a shortage of skilled host country nationals,and they often already have host country work permits and knowledge of its language and culture.
Q3) Discuss the advantages and disadvantages of employing third country managers.
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Chapter 17: International Accounting and Financial Management
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Sample Questions
Q1) FASB 52 requires that companies record foreign currency based transactions at the spot rate at the time of the transaction.
A)True
B)False
Q2) In debt markets,the corporate trend is to
A)raise debt-based capital in their home country first.
B)raise debt capital in the local markets first.
C)raise equity capital first.
D)rely first on retained earnings before debt is incurred.
Q3) In a currency option hedge,the firm covers its downside risk,but,because the contract is an option,can also benefit from any upside.
A)True
B)False
Q4) Accounting is an objective,fact-based discipline and not influenced by culture.
A)True
B)False
Q5) Unanticipated shifts in exchange rates present risk to the international firm.
A)True
B)False
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