Global Business Strategy
Final Exam
Course Introduction
Global Business Strategy explores how organizations formulate and implement strategies to compete effectively in international markets. The course examines the complexities of operating across borders, including cultural, economic, and regulatory differences, and considers how firms can leverage resources and capabilities to achieve a sustainable competitive advantage globally. Students analyze case studies of multinational companies, assess entry strategies, and evaluate the challenges and opportunities presented by globalization, forming a strategic perspective necessary for managing businesses in an interconnected world.
Recommended Textbook
International Business Competing in the Global Marketplace 12th Edition by Charles W. L. Hill
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20 Chapters
2122 Verified Questions
2122 Flashcards
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Chapter 1: Globalization
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Since Wally's Whistles is a medium-size business, it wouldn't benefit from globalization.
A)True
B)False
Answer: False
Q2) Since the 1960s, which of the following has been a notable trend in the demographics of the multinational enterprise?
A) the decline of multinational companies in the manufacturing sector
B) the growth of government-owned multinational enterprises
C) the decline of non-U.S. multinationals
D) the growth of mini-multinationals
Answer: D
Q3) Which of the following is true regarding international businesses?
A) All MNEs are international businesses.
B) Only firms that export products are international businesses.
C) Only firms that invest abroad are international businesses.
D) All international businesses are MNEs.
Answer: A
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3
Chapter 2: National Differences in Political, Economic, and Legal Systems
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) What are state-owned companies? Why do they usually perform poorly?
Answer: A state-owned company is a company that is owned by a nation's government. After World War II, many social democratic governments nationalized private companies that were to be run for the public good rather than private profit. Great Britain, for example, nationalized so many companies that by the end of the 1970s, state-owned monopolies existed in telecommunications, electricity, gas, coal, and several other industries. However, because state-run companies such as the ones that existed in Great Britain are protected from competition by their monopoly position and guaranteed financial support, they become inefficient.
Q2) Which of the following is a reason that command economies tend to stagnate?
A) Costs are tightly controlled and business are forced to be efficient rather than dynamic and innovative.
B) The abolition of private ownership means there is no incentive for individuals to look for better ways to serve consumer needs.
C) All economic resources are mobilized for the public good.
D) Individuals in command economy countries lack the skills to be innovative.
Answer: B
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Page 4
Chapter 3: National Differences in Economic Development
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) A country's economic system and property rights regime are reasonably good predictors of economic prospects.
A)True
B)False
Answer: True
Q2) The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers.
A)True
B)False
Answer: True
Q3) Which of the following factors is likely to make a country a more attractive location for international business?
A) totalitarian regimes
B) planned economies
C) government ownership of production methods
D) market-based economic policies
Answer: D
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Chapter 4: Differences in Culture
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105 Flashcards
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Sample Questions
Q1) Which of the following statements is true about the murabaha contract?
A) Under the murabaha contract, when an Islamic bank lends money to a business it takes a share in the profits that are derived from the investment.
B) Under the murabaha contract, money deposited in a savings account is treated as an equity investment in whatever activity the bank uses the capital for.
C) The murabaha contract is widely used among the world's Islamic banks because it is the easiest to implement.
D) The murabaha contract is a more efficient system than the Western banking system since it encourages both long-term savings and long-term investment.
Q2) Consider the importance of unspoken language. Why is it important to be familiar with the unspoken language of another culture?
Q3) Max Weber believed that devout Hindus would be less likely to engage in entrepreneurial activity than devout Protestants.
A)True
B)False
Q4) What are the determinants of culture?
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Discuss the notion of social responsibility. What does it mean for corporations?
Q2) Which of the following observations about the Foreign Corrupt Practices Act is true?
A) The act outlawed the paying of bribes to foreign government officials to gain business.
B) There is enough evidence that it put U.S. firms at a competitive disadvantage.
C) The act originally allowed for "facilitating payments."
D) The Nike case was the impetus for the 1977 passage of this act.
Q3) The ________ outlawed the paying of bribes to foreign government officials to gain business.
A) Convention on Combating Bribery of Foreign Public Officials
B) Foreign Corrupt Practices Act
C) Convention on International Business Transactions
D) Universal Declaration of Human Rights
Q4) Utilitarian philosophy takes into consideration the principle of justice.
A)True
B)False
Q5) Describe the five-step process that businesses can use to think through ethical problems.
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Chapter 6: International Trade Theory
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Sample Questions
Q1) Resources always move easily from one economic activity to another.
A)True
B)False
Q2) The ________ argues that a large proportion of the world's new products had been developed by U.S. firms.
A) product life-cycle theory
B) Porter's diamond
C) new trade theory
D) Leontief paradox
Q3) Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.
A)True
B)False
Q4) What are the four attributes that are discussed in Porter's diamond?
Q5) A country's balance-of-payments accounts keep track of the A) basic factor endowments and advanced factor endowments that the nation possesses.
B) payments to and receipts from other countries for a particular time period.
C) income taxes paid by domestic firms and the spending on the firms.
D) total value of taxes paid by domestic firms and the spending on the firms.
Page 8
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Chapter 7: Government Policy and International Trade
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) What was the purpose of the establishment of the Common Agricultural Policy (CAP) by the European Union?
A) to increase imports and raise prices
B) to protect the jobs of Europe's farmers
C) to increase the import of grapes for the wine industry
D) to make farmers in Europe more productive
Q2) A common hybrid of a quota and a tariff is known as
A) an import tariff quota.
B) a voluntary export restraint.
C) an ad valorem tariff.
D) a tariff rate quota.
Q3) Tariff rates on agricultural products are generally
A) much lower than tariff rates on manufactured products or services.
B) much lower than import fees on electronics.
C) much higher than tariff rates on manufactured products or services.
D) much higher than import fees on electronics.
Q4) Describe the Buy America Act. What is its connection with local content requirements?
Q5) Explain the disadvantages of government protectionism as it relates to competitive advantage.
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Chapter 8: Foreign Direct Investment
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) An oligopoly is an industry composed of a limited number of large firms.
A)True
B)False
Q2) ________ seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.
A) Knickerbocker's theory
B) Internalization theory
C) The noninterventionist theory
D) The eclectic paradigm
Q3) Which of the following is a home-country policy aimed at restricting outward FDI flow?
A) taxing domestic companies' foreign earnings at a higher rate than their domestic earnings
B) implementation of government-backed insurance programs to cover major types of foreign investment risk
C) eliminating double taxation of foreign income
D) persuading host countries to relax their restrictions on inbound FDI
Q4) When a firm is considering FDI, what are some of the negotiating points it must weigh before making its decision?
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Chapter 9: Regional Economic Integration
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) ________ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.
A) Trade deficit
B) Trade diversion
C) Trade creation
D) Trade distortion
Q2) Political turmoil in several African nations has persistently impeded any meaningful progress in economic integration.
A)True
B)False
Q3) Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?
A) the European Parliament
B) the European Commission
C) the Council of the European Union
D) the Court of Justice
Q4) What is the Single European Act? What was the effect of the Single European Act on the EU economy? Did the Single European Act achieve its goals?
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Chapter 10: The Foreign Exchange Market
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Sample Questions
Q1) Assuming the 30-day forward exchange rate was $1 = 130 and the spot exchange rate was $1 = ×120, the dollar is selling at a ________ on the 30-day forward market.
A) premium
B) margin
C) discount
D) subsidy
Q2) What are the main uses of foreign exchange markets for international business?
Q3) The International Fisher Effect has
A) proven to have substantial power at predicting long-run changes in forward exchange rates.
B) proven to have substantial power at predicting short-run changes in spot exchange rates.
C) not proven to be a good predictor of long-run changes in forward exchange rates.
D) not proven to be a good predictor of short-run changes in spot exchange rates.
Q4) Where is the foreign exchange market located? What is the nature of the market? Is the market growing or shrinking on a global basis?
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Page 12
Chapter 11: The International Monetary System
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) The international monetary system refers to the institutional arrangements that govern
A) microeconomic parameters.
B) exchange rates.
C) gross domestic produce.
D) foreign direct investment.
Q2) When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a ________ regime.
A) currency board exchange
B) pegged exchange rate
C) fixed exchange rate
D) floating exchange rate
Q3) With the help of an example, explain how balance-of-trade equilibrium is maintained under the gold standard.
Q4) Describe the different exchange rate policies that are in practice today.
Q5) An effective business strategy to reduce economic exposure is to contract out high-value-added manufacturing.
A)True
B)False
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Chapter 12: The Global Capital Market
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104 Flashcards
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Sample Questions
Q1) Financial services has historically been the most tightly regulated of all industries.
A)True
B)False
Q2) A purely domestic capital market faces the problem of
A) foreign exchange risk.
B) limited liquidity.
C) lack of regulation.
D) deregulated markets.
Q3) Eurobonds are
A) denominated in the currency of the country in which they are issued.
B) normally underwritten by an international syndicate of banks.
C) denominated in a currency that is accepted by the European Union.
D) sold outside the borrower's county with reference to the originating currency.
Q4) When using the Euromarkets, companies
A) have funds that lack liquidity.
B) pay less for loans.
C) attract low interest rates.
D) are secured from foreign exchange risks.
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Page 14
Chapter 13: The Strategy of International Business
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Firms usually respond to pressures for cost reduction by trying to
A) lower the costs of value creation.
B) be locally responsive.
C) undertaking product differentiation.
D) diversifying product lines.
Q2) The basic strategy paradigm suggests that to maximize its profitability, a firm should do which of the following?
A) Choose, according to strategy, any position on the efficiency frontier as all positions are viable.
B) Pick a position on the efficiency frontier that is viable in the sense that there is a low product demand anticipated.
C) Configure its external operations so that they support the position of diminishing returns.
D) Make sure that the right organization structure is in place to execute its strategy.
Q3) Support activities are always less important than the primary activities in achieving a competitive advantage.
A)True
B)False
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15
Chapter 14: The Organization of International Business
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) To unfreeze the established culture of an organization, the company
A) must take bold steps such as shaking up the management structure in order to implement change.
B) is best served by taking incremental steps.
C) should employ the existing structural organization to integrate changes.
D) implement a rewards or incentive program.
Q2) Because of inertia forces, ________ is often no change.
A) big bang change
B) cultural change
C) shock therapy change
D) incremental change
Q3) What are the basic principles for successful organizational change?
Q4) The need for coordination between subunits is lowest in firms pursuing
A) a localization strategy.
B) an international strategy.
C) a global strategy.
D) a transnational strategy.
Q5) Discuss the issues involved in refreezing an organization.
Q6) Consider the use of personal controls in international firms. In which type of firm is this control most common?
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Chapter 15: Entry Strategy and Strategic Alliances
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) What are the two methods of entering foreign marketing using a wholly owned subsidiary?
Q2) ________ allow a firm to rapidly build its presence in the target foreign market.
A) Joint ventures
B) Acquisitions
C) Subsidiaries
D) Turnkey contracts
Q3) The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as ________ costs.
A) switching
B) market development
C) pioneering
D) promotional development
Q4) By producing its product in a centralized location, licensing limits a firm's ability to realize experience curve and location economies.
A)True
B)False
Q5) What are first-mover advantages? Discuss these advantages.
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Chapter 16: Exporting, Importing, and Countertrade
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Sample Questions
Q1) A counterpurchase gives exporters more flexibility than an offset.
A)True
B)False
Q2) Barter is a reciprocal buying agreement that occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.
A)True
B)False
Q3) As a document of title, a ________ can be used to obtain payment or a written promise of payment before the merchandise is released to the importer.
A) bill of lading
B) letter of credit
C) bill of exchange
D) draft
Q4) A ________ is payable on presentation to the drawee.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
Q5) Explain why barter is viewed as the most restrictive countertrade arrangement.
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Chapter 17: Global Production and Supply Chain Management
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Sample Questions
Q1) The major cost saving associated with JIT systems comes from
A) early delivery of raw materials to production.
B) decentralization of manufacturing.
C) speeding up inventory turnover.
D) reduced spending on CRM activities.
Q2) Describe the major arguments put forth by Edward Deming.
Q3) Which of the following statements is true of the country factors that govern international business?
A) Relative factor costs should be considered when selecting a country for production.
B) Centralized production is the most suitable method of doing international business.
C) Exchange rates are not a significant factor that determines the selection of a country.
D) Decentralized manufacturing is the most suitable method of doing international business.
Q4) Explain how the strategic role of foreign factories evolves over time.
Q5) Explain how the concept of production efficiency has changed with the rise of flexible manufacturing technologies.
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Chapter 18: Global Marketing and R&D
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121 Verified Questions
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Sample Questions
Q1) The set of choices the firm offers to its targeted market is known as the
A) marketing mix.
B) marketing concept.
C) marketing strategy.
D) market promotion.
Q2) A ________ strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market.
A) push
B) globalization
C) pull
D) localization
Q3) Dumping occurs whenever a firm sells a product
A) for a price that is less than the cost of producing it.
B) without paying the necessary regulatory charges.
C) for a price that is higher than the market rate.
D) by including a premium for the R&D activities of the firm.
Q4) Tight cross-functional integration among R&D, production, and marketing maximizes the time to market.
A)True
B)False
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Chapter 19: Global Human Resource Management
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Sample Questions
Q1) Broadly speaking, a geocentric approach is compatible with A) an international strategy.
B) both global standardization and transnational strategies.
C) a localization strategy.
D) both an international and a localization strategy.
Q2) Which of the following is a concern of organized labor regarding multinational firms?
A) A company can counter a union's bargaining power with the power to move production to another country.
B) An international business will keep low-skilled tasks in its home country and farm out only highly skilled tasks to foreign plants.
C) An international business can attempt to import employment practices and contractual agreements from its host country.
D) A multinational company is more likely to receive government support in the case of hostile labor relations.
Q3) Discuss why the repatriation process is so difficult for so many expatriates.
Q4) Selection is the first step in matching a manager with a job.
A)True
B)False
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Chapter 20: Accounting and Finance in the International Business
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Sample Questions
Q1) Financial management in an international business includes three sets of related decisions. Which of these involves making decisions about how to manage the firm's financial resources most efficiently?
A) multilateral decisions
B) financing decisions
C) investment decisions
D) money management decisions
Q2) The principles of multilateral netting and bilateral netting are different.
A)True
B)False
Q3) A fronting loan is a loan between a parent and its subsidiary channeled through a financial intermediary.
A)True
B)False
Q4) Transfer price refers to the
A) price at which goods and services are transferred to a subsidiary.
B) price at which the title of products is transferred to a customer.
C) price at which a supplier provides raw materials to a firm.
D) cost incurred when goods or services are transferred from one place to another.
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