Globalization and Business Midterm Exam
Course Introduction
This course explores the multifaceted relationship between globalization and contemporary business practices, examining how international economic integration influences markets, competition, and organizational strategies. Students will analyze the drivers and impacts of globalization, including technological advancements, trade liberalization, and cross-border investment flows. Key topics include the globalization of production and consumption, global value chains, the role of multinational enterprises, cultural and ethical challenges, and the regulatory environment. Through case studies and current events, students will gain insights into how businesses adapt to global opportunities and threats, and the implications of globalization for sustainable development and corporate responsibility.
Recommended Textbook
Global Business Today 9Th Edition by Charles
W. L. Hill
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Page 2
Chapter 1: Globalization
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Q1) In the past two decades, the majority of Latin American countries have:
A)experienced a decline in the health of their economies.
B)sold state-owned enterprises to private investors.
C)been characterized by low growth, high debt, and hyperinflation.
D)restricted investment by foreign firms.
E)discouraged both democracy and free market reforms.
Answer: B
Q2) What is the shift toward a more integrated and interdependent world economy called?
A)International trade
B)Foreign direct investment
C)Globalization
D)Moore's Law
E)Containerization
Answer: C
Q3) Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.
A)True
B)False
Answer: True
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Chapter 2: National Differences in Political, Economic, and Legal Systems
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Q1) Other things being equal, a nation with democratic political institutions is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions.
A)True
B)False
Answer: True
Q2) When firms do not wish to accept the Contracts for the International Sale of Goods, they often opt for arbitration by a recognized arbitration court to settle contract disputes. A)True
B)False
Answer: True
Q3) By the mid-1990s, communism was rising worldwide.
A)True
B)False
Answer: False
Q4) Liability laws are typically the least extensive in highly developed nations. A)True
B)False
Answer: False
Page 4
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Chapter 3: National Differences in Economic Development
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Q1) The government of Great Lanthania is planning to adopt a market-based economic system. To be able to do so, the government of this country should:
A)abolish the laws that deal with protection of property rights.
B)introduce stringent foreign investment regulations.
C)increase its intervention in the economy.
D)adopt privatization.
E)oppose democracy.
Answer: D
Q2) Many commentators have blamed the problems that led to global financial crisis of 2008-2009, and the recession that followed on:
A)a lack of free markets.
B)a lack of regulation.
C)the political ideologies followed in the Asian countries.
D)a strong presence of command economies.
E)a lack of privatization and liberalization.
Answer: B
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Chapter 4: Differences in Culture
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Q1) The use of a grading system in schools teaches children the value of personal achievement and competition.
A)True
B)False
Q2) The distinctive culture of Wengiston has been losing its predominance among the citizens of the country. This is due to the fact that the people of Wengiston are extensively adopting certain universally accepted values and norms. This behavior of the people in Wengiston demonstrates:
A)ethnocentrism.
B)the convergence hypothesis.
C)egocentrism.
D)Confucian dynamism.
E)social mobility.
Q3) The primacy of the value of group identification encourages managers and workers to move from company to company.
A)True
B)False
Q4) Elaborate on the caste system supported by Hinduism.
Q5) What are norms? Briefly describe the two categories of norms.
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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Q1) Many of the ethical issues in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation.
A)True
B)False
Q2) Which of the following explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business?
A)The Friedman doctrine
B)The Sullivan principles
C)Utilitarianism
D)Marxism
E)Kantian ethics
Q3) Which of the following is a drawback of the utilitarian approach to business ethics?
A)It omits the consideration of justice.
B)It fails to consider the benefits, costs, and risks of a course of action.
C)It advocates moral imperialism and ethnocentrism.
D)It overemphasizes the significance of maximization of stockholder wealth.
E)It recognizes that actions have multiple consequences.
Page 7
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Chapter 6: International Trade Theory
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Q1) A certain amount of friction is involved when resources are required to move from one economic activity to another.
A)True
B)False
Q2) According to Adam Smith, countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries.
A)True
B)False
Q3) When the impact of differences of technology on productivity is controlled for, Heckscher-Ohlin theory gains predictive power.
A)True
B)False
Q4) Michael Porter argues that advanced factors are the most significant for competitive advantage.
A)True
B)False
Q5) Briefly describe the new trade theory.
Q6) Describe the Leontief paradox.
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Chapter 7: Government Policy and International Trade
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Q1) What are the political arguments for government intervention into international trade? Give examples.
Q2) Free trade as a government policy was first officially embraced by Germany in 1846, when the Bundestag repealed the Corn Laws.
A)True
B)False
Q3) In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT rules.
A)True
B)False
Q4) Dumping is variously defined as selling goods in a foreign market at below their costs of production, or as selling goods in a foreign market at below their "fair" market value.
A)True
B)False
Q5) By lowering production costs, subsidies help foreign competitors gain export markets.
A)True
B)False
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Chapter 8: Foreign Direct Investment
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Q1) When a firm exports, it need not bear the costs associated with FDI, and it can reduce the risks associated with selling abroad by using a native sales agent. Exporting, however, is not without its limitations. Discuss the most common limitations of exporting as compared to FDI.
Q2) Which of the following is most likely to involve establishment of a new operation in a foreign country?
A)Consolidation
B)Greenfield investment
C)Acquisition
D)Licensing agreement
E)Mass customization
Q3) According to the pragmatic nationalist view, no country should ever permit foreign corporations to undertake FDI.
A)True
B)False
Q4) An acquisition does not result in a net increase in the number of players in a market.
A)True
B)False
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Page 10
Chapter 9: Regional Economic Integration
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Q1) Briefly describe the Association of Southeast Asian Nations.
Q2) Which of the following is true about the European Commission?
A)The European Union's competition commissioner has been gaining influence as the chief regulator of competition policy in the member nations of the European Union.
B)The European Commission has to be approved by the Council of the European Union before it can begin work.
C)The European Commission does not have a policing role with respect to European Union laws.
D)The legislation proposed by the European Commission goes directly to the European Parliament.
E)The European Commission is the ultimate controlling authority within the European Union.
Q3) The Andean Community now operates as a customs union.
A)True
B)False
Q4) Briefly describe the European Council.
Q5) Differentiate between a free trade area and a customs union. Provide an example of each form of economic integration.
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Chapter 10: The Foreign Exchange Market
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Q1) What is a firm engaging in when it insures itself against foreign exchange risk?
A)Currency speculation
B)Carry trade
C)Hedging
D)Currency swap
E)Arbitrage
Q2) Which of the following premises is technical analysis, an approach to exchange rate forecasting, based on?
A)Price and volume data cannot be used to determine past trends.
B)Econometric models drawn from economic theory are best suited to predict exchange rate movements.
C)The foreign exchange market is efficient and forward exchange rates are the best predictors of future spot exchange rates.
D)Previous market trends and waves can be used to predict future market trends and waves.
E)Since forward exchange rates are the best predictors of future spot rates, it makes no sense to invest in forecasting.
Q3) Explain how investor psychology and bandwagon effects impact the movement in exchange rates.
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Page 12
Chapter 11: The International Monetary System
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Q1) Which of the following is true of a banking crisis?
A)It leads to individuals and companies withdrawing their deposits from banks.
B)It results in a sharp appreciation in the value of the currency.
C)It happens due to a decline in domestic borrowing.
D)It occurs due to asset price deflation.
E)It results in low government deficits.
Q2) Which term was not defined in the International Monetary Fund's Articles of Agreement but was intended to apply to countries that had suffered permanent adverse shifts in the demand for their products?
A)Competitive disadvantage
B)Capital flight
C)Fundamental disequilibrium
D)Break-even point
E)Diseconomies of scale
Q3) The International Monetary Fund has been criticized for:
A)its lack of a "one-size-fits-all" approach to macroeconomic policy.
B)encouraging moral hazard among banks.
C)its lack of power and authority.
D)using external experts to gain knowledge about a country.
E)keeping its operations open to outside scrutiny.
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Chapter 12: The Strategy of International Business
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Q1) Cost reduction pressures tend to be particularly intense in industries that:
A)create products that serve universal needs.
B)create customized products.
C)are not involved in international business.
D)produce products that have inelastic demand.
E)serve different customers with different needs.
Q2) What are the sources of economies of scales?
Q3) A firm's ability to increase its profitability and profit growth by expanding globally is constrained:
A)by the imperative of localization.
B)by the economies of scale.
C)due to customer surplus.
D)due to the leveraging of skills developed in foreign operations.
E)due to the dispersion of individual value creation activities.
Q4) Diminishing returns imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires only minimal additional costs.
A)True
B)False
Q5) What is an experience curve? What is its strategic significance?
Page 14
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Chapter 13: Entering Foreign Markets
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Q1) The probability of survival decreases if an international business enters a national market after several other foreign firms have already done so.
A)True
B)False
Q2) First-mover disadvantages refer to:
A)disadvantages associated with entering a foreign market before other international businesses.
B)costs that a late entrant to a foreign market has to bear.
C)a direct restriction on the quantity of a good that can be imported into a country.
D)imperfections in the operation of the market mechanism.
E)disadvantages experienced by being a late entrant in a foreign market.
Q3) When an international firm makes an acquisition in a foreign market, it acquires valuable intangible as well as tangible assets.
A)True
B)False
Q4) Describe the advantages and disadvantages of acquisitions.
Q5) What are the advantages and disadvantages of exporting as a mode of entry into foreign markets?
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Chapter 14: Exporting, Importing, and Countertrade
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Q1) Which of the following is true of exporting?
A)It takes a very short time before all foreigners are comfortable enough to purchase in significant quantities.
B)Novice exporters tend to overestimate the time required to cultivate business in foreign countries.
C)Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors.
D)Large firms are usually unfamiliar with foreign market opportunities.
E)Large firms do not consider exporting until their domestic market is saturated.
Q2) The advantage of export management companies (EMCs) is that they are experienced specialists that can help the neophyte exporter identify opportunities and avoid common pitfalls.
A)True
B)False
Q3) Reactive firms do not consider exporting until their domestic market is saturated.
A)True
B)False
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Chapter 15: Global Production and Supply Chain Management
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Q1) A product's value-to-weight ratio affects location decision primarily because of its influence on:
A)transportation costs.
B)shelf life.
C)work-in-progress inventory.
D)inventory turnover.
E)capacity utilization.
Q2) Flexible manufacturing technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.
A)True
B)False
Q3) Which of the following is a consequence of using flexible machine cells?
A)It fails to adapt to the production of different products.
B)It generally results in stockpiles of partly finished products.
C)It improves capacity utilization and reduces wastes.
D)It increases setup time for complex equipment.
E)It adds to the cost structure of a firm.
Q4) How do country-specific factors affect a country's attractiveness as a manufacturing base?
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Chapter 16: Global Marketing and Rd
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Q1) Which of the following is true of market segmentation?
A)An important market segment in a foreign country always has a parallel in a firm's home country.
B)Markets can be segmented only on the basis of geography and demography.
C)The structure of market segments is quite similar across various countries.
D)Since market segments are similar across various countries, firms can pursue a global marketing strategy without varying the marketing mix.
E)For a segment to transcend national borders, consumers in that segment must have some compelling similarities along important dimensions.
Q2) Which of the following is an argument against standardized advertising?
A)One large effort to develop a campaign fails to produce better results than 40 or 50 smaller efforts.
B)It fails to make use of local talent available in other cultures.
C)Advertising regulations may block implementation of standardized advertising.
D)Royalties make it the most expensive form of advertising.
E)It increases the costs of value creation.
Q3) Describe the influence of integrating research and development, marketing, and production on new-product development.
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Chapter 17: Global Human Resource Management
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Q1) A concern of organized labor is that an international business keeps highly skilled tasks in its home country and farms out low-skilled tasks to foreign plants.
A)True
B)False
Q2) What is repatriation? What is its importance?
Q3) What is the advantage of a geocentric staffing policy?
A)It requires firms to provide little or no documentation to hire a foreign national.
B)It enables firms to build a cadre of international executives who feel at home working in a number of cultures.
C)It is inexpensive to implement the policy in a firm.
D)It allows all key management positions of the firms and their subsidiaries to be filled by parent-country nationals.
E)It helps firms to follow a localization strategy.
Q4) According to Mendenhall and Oddou, expatriates with perceptual ability tend to be judgmental and evaluative in interpreting the behavior of host-country nationals.
A)True B)False
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