International Business Environment
Final Exam
Course Introduction
The International Business Environment course explores the complex and dynamic global context in which modern businesses operate. Students will examine the economic, political, legal, technological, and cultural factors that influence international markets and cross-border activities. The course covers topics such as globalization, international trade and investment, regulatory frameworks, and the challenges of operating in diverse environments. Through case studies and real-world examples, students will develop a critical understanding of how businesses formulate strategies to manage risks, leverage opportunities, and gain competitive advantages in the global marketplace.
Recommended Textbook
International Business 16th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Sample Questions
Q1) 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
Q2) 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
Q3) International business includes all commercial transactions between two or more countries.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) There is a strong correlation between the intensity of religious belief and attributes that lead to economic growth, such as obeying laws and thriftiness.
A)True
B)False
Answer: True
Q2) 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
Q3) When a company does business in another country whose official language is the same as the company's home country, employees can assume that although some spellings are different, words will mean the same thing.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Political and Legal Environments Facing Business
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Q1) A ________ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible, detailed, and written law that applies to all citizens.
A)customary
B)common
C)civil
D)theocratic
Answer: C
Q2) Which of the following is most likely a true statement regarding the rule of law? The rule of law is a hallmark of ________.
A)a totalitarian government
B)a democratic government
C)societies that place ultimate power in the hands of one person
D)countries that are considered "partly free"
Answer: B
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Page 5
Chapter 4: The Economic Environments Facing Businesses
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Q1) Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom.Presently, which of the following locations would most likely offer Morrison the highest economic freedom?
A)Bolivia
B)Hong Kong
C)Venezuela
D)North Korea
Q2) The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day.
A)Base of the Pyramid
B)Hierarchy of Needs
C)Happy Planet Index
D)Gini coefficient
Q3) Why is economic freedom an important factor to consider when analyzing a country's economic development, performance, and potential?
Q4) What is inflation?
Q5) What is the difference between a command economy and state capitalism?
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Chapter 5: Globalization and Society
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Q1) In the long run, MNEs must adequately meet the needs of all stakeholders in order to prosper and survive.
A)True
B)False
Q2) Which of the following is NOT a likely reason for companies to act more ethically?
A)Consumer boycotts may result from unethical corporate behavior.
B)Irresponsible and unethical actions may lead to legal problems for MNEs.
C)Unethical or irresponsible behavior can negatively impact employee morale.
D)The company would like to raise its ranking on the Transparency International scale.
Q3) An effective code of conduct reports results to external stakeholders.
A)True
B)False
Q4) GE's Ecomagination program has enabled the firm to develop a competitive advantage over its competitors.
A)True
B)False
Q5) Explain why the argument that "anything that is legal is ethical" is insufficient.
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Chapter 6: International Trade and Factor-Mobility Theory
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Q1) In a short essay, discuss the theory of mercantilism, and discuss favorable and unfavorable balances of trade as they apply to international business.
Q2) The free trade theories of specialization assume that countries will be better off even though some people are unemployed.
A)True
B)False
Q3) Countries with varied climates and varied natural resources generally ________ than countries with less varied climates and natural resources.
A)have lower per capita incomes
B)depend less heavily on trade
C)have more ethnic subgroups
D)have higher endowments of capital relative to labor
Q4) The finite nature of natural resources should work as a disadvantage for the export prices of developing countries.
A)True
B)False
Q5) What is the country similarity theory? According to this theory, what factors affect trade patterns?
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Chapter 7: Governmental Influence on Trade
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Q1) It is sometimes contended that by imposing import controls a country might be able to increase its exports.This contention is premised on ________.
A)the country's simultaneous currency depreciation, which decreases the price of its exports
B)using the import taxes to institute efficiency measures in potential export industries
C)raising domestic prices in one industry so that the excess domestic profits in that industry can compensate for the cost of dumping products from another industry into foreign markets
D)getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade war
Q2) Defense arguments are sometimes used to prevent exports to unfriendly countries.This runs the risk of the targeted country ________.
A)becoming politically destabilized
B)removing import restrictions
C)finding alternative sources of supply
D)banding with other countries to form a cartel
Q3) Describe and compare the different types of tariffs (duties).
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) What has been the impact of NAFTA on trade and employment in NAFTA nations?
Q2) The three major responsibilities of the ________ are legislative power, control over the budget, and supervision of executive decisions.
A)European Commission
B)European Council
C)European Parliament
D)European Court of Justice
Q3) Which of the following groups of countries is most likely to form a regional trading group?
A)India, Argentina, France
B)Canada, United States, Mexico
C)Brazil, Ukraine, Japan
D)Spain, South Africa, Mongolia
Q4) GATT's contribution to trade liberalization made possible the expansion of world trade in the second half of the twentieth century.
A)True
B)False
Q5) Describe the different types of regional economic integration and give an example of each type.
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Chapter 9: Global Foreign-Exchange Markets
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Sample Questions
Q1) The interbank market in foreign exchange is where ________.
A)electronic brokerage systems are required
B)banks trade currency with each other
C)reporting dealers set exchange terms
D)remittance payments are made
Q2) Stella, who works and lives in San Diego, wants to send money to her mother who lives in a small village south of Puerto Vallarta, Mexico.Stella typically uses Western Union to handle the transaction.Which of the following is the most likely reason that Stella uses Western Union?
A)no fees
B)convenience
C)low exchange rates
D)cross rate capability
Q3) The U.S.dollar is most likely traded widely because it is ________.
A)a reserve currency held by many central banks
B)one of the oldest and most stable currencies in the world
C)monitored by the Bank of International Settlements and the U.S. Federal Reserve
D)based on prices of the NYSE, which is the world's largest foreign-exchange center
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Chapter 10: The Determination of Exchange Rates
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Sample Questions
Q1) A country's central bank is responsible for ________.
A)distributing money to foreign countries that are in a debt crisis
B)encouraging disorderly conditions in foreign-exchange markets
C)the policies affecting the value of its country's currency
D)establishing foreign-exchange markets
Q2) The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.
A)True
B)False
Q3) How do exchange rate changes affect a company's marketing, production, and financial decisions? What predictors should a manager monitor to forecast exchange rate changes?
Q4) The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.
A)quota
B)par value
C)gold standard
D)nominal interest rate
Q5) What is a Special Drawing Right (SDR)? How is it used?
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Chapter 11: Global Capital Markets
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Q1) Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the ________.
A)accounting function of the firm
B)external auditors
C)CFO
D)financial marketing manager
Q2) The primary objective of multinational tax planning is to minimize the firm's worldwide tax burden.
A)True
B)False
Q3) The international bond market is much larger and more lucrative than the domestic bond market.
A)True
B)False
Q4) The ________ approach to corporate taxation is considered double taxation.
A)separate entity
B)integrated system
C)capital gains
D)value-added
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Chapter 12: The Strategy of International Business
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Q1) Which of the following is NOT a disadvantage of the international strategy?
A)Headquarters can misread foreign-market opportunities and threats.
B)The transfer of core competencies to foreign markets is complicated by the necessity to adapt to local needs.
C)Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.
D)The company can be blindsided by an unexpectedly innovative rival in a foreign market.
Q2) A strategy that focuses on lowering operating costs is referred to as a ________ strategy.
A)differentiation
B)cost leadership
C)niche market
D)diversification
Q3) Micro-multinationals are firms that globalize immediately and enter countries with numerous customers, productive workers, and attractive industries.
A)True
B)False
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14
Chapter 13: Country Evaluation and Selection
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Q1) In a short essay, compare the strategies of diversification versus concentration and provide examples of situations in which each would be used.
Q2) Escalation of commitment is best described as the ________.
A)strategy of first entering a country on a small scale
B)process of entering a country because "everyone else is going there"
C)expectation of a higher return in more politically risky environments
D)increased likelihood of investing in a country because of having spent considerable time and money in examining it
Q3) Which of the following is the LEAST likely reason that inaccuracies appear in published information about countries?
A)inclusion of both legal and illegal economic activities
B)inclusion of both market and non-market economic activities
C)poor methodology used in data collection
D)use of different translation software
Q4) What are the major types of published data that managers can use to compare countries? Describe the tools available to managers for making country comparisons.
Q5) What is scanning? What opportunities and risks are most relevant to scanning?
Q6) Why do companies engage in international harvesting or divestment?
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Chapter 14: Export and Import
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Q1) What is a born global? How has technology triggered the growth of born globals?
Q2) Which of the following best explains why SpinCent decided to export?
A)growth opportunities in Asia
B)labor demands in the U.S.
C)declining tariffs in the EU
D)promising market locations in South America
Q3) Countertrade is an alternative means of structuring an international sale when
A)natural resources are highly desirable
B)an importer is able to obtain a bank loan
C)an importer does not belong to the World Bank
D)conventional forms of payment are difficult, costly, or nonexistent
Q4) The primary duty of the customs agency of a government is the assessment and collection of all duties, taxes, and fees on imported merchandise.
A)True
B)False
Q5) What is the difference between exporting and importing? What are the unique characteristics of service exports and service imports?
Q6) What are export management companies, and how do they help potential exporters?
Page 16
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) What is a consortium?
A)the ownership of a company by a government and a foreign company
B)an agreement signed by most governments to protect intellectual property rights
C)an international joint venture owned by at least three organizations
D)an agreement between two or more governments to provide for reciprocal foreign investment protection
Q2) It is important when setting up a collaborative arrangement to agree on mutual goals and expectations.
A)True
B)False
Q3) A licensing agreement is a contract for the granting of rights on tangible property.
A)True
B)False
Q4) Licenses are often given to companies owned in whole or in part by the licensor.
A)True
B)False
Q5) Explain how franchising agreements differ from licensing agreements.
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Chapter 16: The Organization of International Business
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Q1) Which of the following is promoted by a neoclassical structure?
A)innovation of ideas
B)information control
C)project competition
D)minimal relationships
Q2) Chapman Enterprises is an MNE that markets a diverse portfolio of products including jewelry, luggage, and furniture.Which structure would most likely be used by Chapman?
A)international division
B)functional division
C)geographic division
D)product division
Q3) Which of the following factors increasingly encourages MNEs to install a geographic division structure?
A)growth of emerging markets
B)diversification of products
C)rise of social networking
D)global recession
Q4) What is the difference between a classical structure and a neoclassical structure? Provide examples of each type.
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Chapter 17: Marketing Globally
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Q1) Which of the following would LEAST likely be caused by a high inflation rate?
A)rules against increasing export prices
B)inability to quote prices in letters or catalogs
C)difficulty making changes to vending machines
D)necessity to set an equivalent value in a stable currency
Q2) Market diversity, government intervention, and currency fluctuations complicate international pricing decisions.
A)True
B)False
Q3) Assume the per capita consumption of shoes is three pairs in Country A and two pairs in Country B.The difference probably means that there is a ________ gap in Country B.
A)product line
B)usage
C)distribution
D)competitive
Q4) In a production orientation, a company focuses on efficiency and product quality when selling abroad.
A)True
B)False
Page 19
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) Which term refers to the network that links together the different aspects of the value chain and coordinates materials, information, and funds from the initial raw-material supplier to the ultimate customer?
A)logistics strategy information system
B)materials management device
C)customer service
D)supply chain
Q2) Which of the following BEST describes a major difference between supply chain management and logistics?
A)Supply chain management involves handling suppliers and customers.
B)Logistics involves longer distances and international distribution networks.
C)Supply chain management focuses on transportation and the storage of goods.
D)Logistics only encompasses the outbound flow of products and materials.
Q3) Quality is defined as ________.
A)meeting or exceeding the expectations of the customer
B)meeting the everyday low price expected by the customer
C)meeting international quality standards, such as ISO 9000
D)meeting internal quality standards
Q4) How has technology altered supply chain management? Discuss some of the available tools.
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Chapter 19: International Accounting and Finance Issues
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Q1) The standard-setting organization tasked with the challenge of determining one set of accounting standards that can be used worldwide is the ________.
A)Global Financial Accounting Standards Board
B)International Organization of Securities Commissions
C)International Financial Reporting Committee
D)International Accounting Standards Board
Q2) Both the form and content of financial statements are currently the same in most countries due to the convergence of accounting implemented by the International Accounting Standards Board.
A)True
B)False
Q3) In 2002, the ________ required adoption of International Financial Reporting Standards (IFRS)by 2005.
A)EU
B)SEC
C)ASB
D)GAAP
Q4) In regards to accounting, what is the impact of the SEC and Sarbanes-Oxley Act on international business?
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Chapter 20: International Human Resource Management
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Q1) An example of a third-country national is a ________.
A)dual citizen (Canadian and U.S. citizenship)working for a Mexican company in Mexico
B)Canadian citizen working for a U.S. company in Canada
C)U.S. citizen working for a U.S. company in Canada
D)Canadian citizen working for a U.S. company in Mexico
Q2) Which of the following best explains why MNEs often employ more locals than expatriate managers in foreign facilities?
A)lower compensation expense
B)better support from unions
C)improved economies of scale
D)better grasp of core competencies
Q3) Fundamentally, the task of HRM is putting the right person into the right job in the right place at the right time for the right salary.
A)True
B)False
Q4) Why is global HRM more difficult than domestic HRM? How can staffing a foreign facility with locals alleviate some of these HRM difficulties?
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Page 22