Course Introduction
International Business Exam Practice Tests
International Business explores the complexities of conducting business across national borders in todays globalized economy. The course examines the economic, cultural, legal, and political factors that impact international trade, investment, and operations. Students will learn about global market entry strategies, international finance, cross-cultural management, and the challenges of adapting products and business practices to diverse international environments. Emphasis is placed on analyzing case studies, understanding the role of multinational corporations, and developing strategies for competitive advantage in the international marketplace.
Recommended Textbook
International Business The New Realities 3rd Edition by S. Tamer Cavusgil
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20 Chapters
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Page 2
Chapter 1: Introduction: What Is International Business
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Sample Questions
Q1) ________ refers to the transfer of assets to another country or the acquisition of assets in that country.
A) International investment
B) International trade
C) Importing
D) Exporting
Answer: A
Q2) ________ is the total value of products and services produced in a country over the course of a year.
A) GDP
B) CAD
C) FDI
D) PPP
Answer: A
Q3) The two primary types of international investment are portfolio investment and foreign direct investment.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Globalization of Markets and the
Internationalization of the Firm
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Sample Questions
Q1) In international economics, codetermination refers to the tendency for a financial or monetary crisis in one country to spread rapidly to other countries, due to integrated national economies.
A)True
B)False
Answer: False
Q2) The ________ phase of globalization began around 1900 and was associated with the rise of electricity and steel production.
A) first
B) second
C) third
D) fourth
Answer: B
Q3) Firms often internationalize proactively, in order to pursue new markets, find lower-cost inputs, or obtain other advantages.
A)True
B)False
Answer: True
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Chapter 3: Organizational Participants That Make International Business Happen
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Sample Questions
Q1) Within the international value chain, which of the following would operate as a facilitator?
A) importer
B) lawyer
C) retailer
D) distributor
Answer: B
Q2) Which of the following questions is most relevant for evaluating whether Nanocell should partner with an agent or a foreign distributor to expand its overseas sales?
A) Has FDI been successfully used by solar technology companies expanding abroad?
B) What would be the cost of capital required to finance additional expansion?
C) Who do Nanocell's competitors typically collaborate with when expanding operations?
D) Does Nanocell have an appropriate legal team in place to handle the requirements of expansion?
Answer: C
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Chapter 4: The Cultural Environment of International Business
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Sample Questions
Q1) Cultural values and attitudes can be transmitted through a variety of sources including parents, teachers, friends, government leaders, movies, television, and the Internet.
A)True B)False
Q2) Which of the following is true about globalization's effect on culture?
A) It segregates people on the basis of race and ethnicity.
B) It decreases diversity within a society by blocking the free flow of cultural ideas. C) It liberates people culturally by undermining the ideological conformity of nationalism.
D) It decreases the choices available to local people by making their countries culturally poor.
Q3) In a short essay, explain why international business managers should engage in critical incident analysis to avoid the self-reference criterion. Describe why an examination of values and attitudes toward culture is important in this analysis.
Q4) Cross-cultural risk is often intensified by managers with geocentric tendencies. A)True B)False
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Chapter 5: Ethics and International Business
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Sample Questions
Q1) Which of the following countries have the LEAST corruption?
A) Mexico
B) Philippines
C) Russia
D) Denmark
Q2) The five approaches to analyzing ethical dilemmas often lead to similar solutions.
A)True
B)False
Q3) Sean, a senior manager in Freedom, adheres to the relativist view regarding ethical standards. He goes by the rule, "When in Rome, do as the Romans do." Sean is most likely to agree strongly with which of the following views?
A) Freedom should not partner with foreign business entities.
B) Freedom should passively accept the practices that prevail in countries where it does business.
C) Freedom should not hire foreign managers.
D) Freedom should institute a single global code of conduct for all its employees and suppliers.
Q4) In a short essay, explain the value of CSR for businesses.
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Chapter 6: Theories of International Trade and Investment
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Sample Questions
Q1) Which of the following is true about the first stage of evolution in the international product life cycle theory?
A) The product enjoys a temporary monopoly at this stage.
B) The product's inventors mass-produce it and seek to export it.
C) The knowledge about how to produce the product is widespread.
D) The competition intensifies at this stage and export orders begin to come from lower-income countries.
Q2) ________ describes the total value of assets that MNEs own abroad via their investment activities.
A) Monopolistic advantage
B) FDI stock
C) Absolute advantage
D) Variable capital
Q3) In a short essay, explain the factor proportions theory. How does the theory differ from other theories?
Q4) Developing new product designs and new ways of organizing or training are some of the ways in which companies innovate.
A)True
B)False
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Chapter 7: Political and Legal Systems in National Environments
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Sample Questions
Q1) A market economy is also called a centrally planned economy.
A)True
B)False
Q2) Representative B is most likely from ________.
A) New Zealand
B) North Korea
C) Russia
D) Canada
Q3) Which of the following would most likely oppose the opening of a Super Sports store in Norway?
A) labor unions
B) local sports retailers
C) international banks
D) local sports enthusiasts
Q4) A(n) ________ is a voluntary refusal to engage in commercial dealings with a nation or a company.
A) expropriation
B) sanction
C) boycott
D) confiscation
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Chapter 8: Government Intervention in International Business
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Sample Questions
Q1) Economic freedom of a nation is based on the military capability, environmental wellness, and income of citizens.
A)True
B)False
Q2) Tariffs rarely vary with the form of an imported product.
A)True
B)False
Q3) A ________ is an area within a country that receives imported goods for assembly or other processing and subsequent re-export.
A) single market
B) trade bloc
C) foreign trade zone
D) common market
Q4) A quantitative restriction on specific imports for a set period of time is referred to as ________.
A) tariff
B) quota
C) investment barrier
D) country risk
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) Which of the following statements is true about the success factors for regional integration?
A) The more distinct the economies of the member countries, the more likely the economic bloc will succeed.
B) Countries should strictly hold onto their national autonomy in order to form a successful bloc.
C) Economic dynamism, a factor for successful regional integration, is often deficient in developed economies.
D) Similarity in political systems enhances prospects for a successful bloc.
Q2) The summated output of the individual states is greater than the total output of the integrated bloc.
A)True
B)False
Q3) The Common Agricultural Policy (CAP) has long been a fixture of the North American bloc.
A)True
B)False
Q4) Describe four advantages of regional integration. Provide an example to illustrate each point.
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Chapter 10: Understanding Emerging Markets
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Sample Questions
Q1) Emerging markets act as manufacturing bases for global MNEs because of ________.
A) high regulations
B) high availability of low-wage ,highly skilled labor
C) well-developed infrastructure
D) strong intellectual property laws
Q2) Which of the following emerging market economies has the lowest middle-class population?
A) Indonesia
B) Thailand
C) China
D) India
Q3) Transferring technology and know-how ________.
A) promotes local innovation and enterprise
B) depresses derived demand for business commodities
C) encourages the development of market monopolies
D) lowers the competitive advantages of firms
Q4) Emerging markets are home to low-wage, high-quality labor for manufacturing and assembly operations.
A)True
B)False
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Chapter 11: The International Monetary and Financial Environment
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Sample Questions
Q1) Currency risk can best be defined as the risk that occurs when ________.
A) currency values remain constant for prolonged periods
B) one currency changes in relation to another currency
C) buyers and sellers disagree over which currency to use
D) fluctuations in the stock market affect all exchange rates
Q2) Which of the following terms refers to the type of currency used only for domestic business transactions?
A) hard currency
B) convertible currency
C) nonconvertible currency
D) alternative currency
Q3) Capital flight from a country enhances its ability to service debt and pay for imports.
A)True
B)False
Q4) The official price of gold is used to determine the value of all major currencies in the exchange rate system used for international trade today.
A)True
B)False
Page 13
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Chapter 12: Strategy and Organization in the International Firm
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Sample Questions
Q1) Organizational culture is ________.
A) the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt
B) an approach in which a firm views international business as separate from, and secondary to, its domestic business
C) a reporting structure inside the firm that specifies the links between people, functions, and processes
D) an organizational design in which all international activities are centralized within one division in the firm, separate from domestic units
Q2) An export department structure requires considerable resource commitment. A)True B)False
Q3) Describe four traits that characterize visionary leaders, and explain why these traits are especially necessary for a firm that operates within a global matrix structure.
Q4) Describe local responsiveness and explain how a multidomestic strategy allows an international firm to pursue local responsiveness.
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Page 14
Chapter 13: Global Market Opportunity Assessment
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Sample Questions
Q1) With a high percentage of college-educated citizens, countries such as China and India have become a source for international firms seeking knowledge workers.
A)True
B)False
Q2) Private consumption as a percentage of GDP is used to measure ________.
A) market intensity
B) market size
C) market receptivity
D) market growth rate
Q3) The size and growth rate of a country's middle class is termed as ________.
A) market consumption capacity
B) market intensity
C) market receptivity
D) market size
Q4) Screening countries to identify attractive target markets is the first step toward internationalization.
A)True
B)False
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Page 15
Chapter 14: Exporting and Countertrade
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Sample Questions
Q1) Which of the following activities is applicable to the final stage of exporting?
A) The firm engages appropriate bankers and international trade attorneys.
B) The firm screens the most attractive export markets.
C) The firm modifies advertising and public relations to suit individual markets.
D) The firm acquires product development and foreign language skills.
Q2) The exporter usually first issues a quotation or pro forma invoice upon request by potential customers.
A)True
B)False
Q3) In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.
Q4) Which of the following industries-large, publicly traded U.S.-based manufacturing firms-will be more dependent on international sales?
A) publishing
B) medical equipment
C) electrical equipment
D) automobile
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Chapter 15: Foreign Direct Investment and Collaborative Ventures
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Sample Questions
Q1) Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?
Q2) Vertical integration is an arrangement in which the firm owns, or seeks to own, the activities performed in a single stage of its value chain.
A)True
B)False
Q3) New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.
A)True
B)False
Q4) Which of the following represents an infrastructural factor that firms must consider when selecting an FDI location?
A) size and growth of national market
B) political stability
C) availability and quality of local manufacturing
D) stability of currency
Q5) Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?
17
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Chapter 16: Licensing, Franchising, and Other Contractual Strategies
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Sample Questions
Q1) Franchising is an advanced form of licensing in which the the franchisor allows the franchisee, the right to use an entire business system in exchange for compensation.
A)True
B)False
Q2) Which of the following is an example of licensing?
A) An American electronics firm has given the right to a new process for manufacturing e-book readers to an electronics manufacturer in Canada.
B) An Indian automobile manufacturing company, buys engines from a Japanese manufacturer for its environment friendly cars.
C) A South-Korean consumer electronics manufacturer produces the screens for its brand of television and sends orders to a factory in China to manufacture the casing for the television.
D) A U.K-based motorcycle manufacturer, produces limited-edition customizations of the company's stock models and sells it to customers around the world.
Q3) How are trademarks established in the United States and abroad? What are some of the difficulties faced by firms regarding the protection of trademarks? Explain with an example.
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Page 18
Chapter 17: Global Sourcing
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Sample Questions
Q1) Most companies cite cost cutting as the main reason for global sourcing.
A)True
B)False
Q2) The relocation of a business process or entire manufacturing facility to a foreign country is known as ________.
A) offshoring
B) captive sourcing
C) outsourcing
D) subsidizing
Q3) Which of the following is most likely to be the consultants' utmost concern while deciding if clothing for Fun Play dolls needs to be outsourced?
A) Is doll clothing part of Fun Play's core competencies?
B) What kind of fabric is used for clothing Fun Play dolls?
C) Do the competitors of Fun Play outsource accounting activities abroad?
D) Does Fun Play intend to follow a strategy of product diversification in the near future?
Q4) Front-office activities cannot be classified under BPO.
A)True
B)False
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Chapter 18: Marketing in the Global Firm
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Sample Questions
Q1) In which of the following industries is standardization more likely to be pursued?
A) local industries
B) software
C) publishing
D) credit cards
Q2) Channel length can best be defined as ________.
A) the number of products sold under a single brand name
B) the number of transactions a business buyer makes in the market at a given point of time
C) the number of intermediaries between the manufacturer and the retailer
D) the length of time it takes for goods to be manufactured for sale
Q3) Gray market activity is also called ________.
A) market diversification
B) target costing
C) puffery
D) parallel importation
Q4) In a short essay, discuss the three common pricing strategies. How do firms employ each strategy? What are the main advantages and disadvantages of using such strategies?
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Chapter 19: Human Resource Management in the Global Firm
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Q1) The human resources department of Global Choppers designs trainings for employees in a way that helps them avoid the self-reference criterion. This implies that the training designed by the human resources department of Global Choppers
A) helps counter the tendency of viewing foreign assignments with suspicion and distrust
B) does not emphasize cultural awareness
C) is inadequately equipped to enhance the cultural intelligence of employees
D) helps counter the tendency of viewing other cultures through the lens of one's own culture
Q2) Which of the following would be the most important for human resources managers to determine before deciding who should manage the New Delhi facility?
A) Which candidate possesses the ability to be a flexible and sensitive leader with superior cross-cultural knowledge?
B) Which candidate best understands CCC corporate culture in Texas?
C) Which candidate is the most knowledgeable about CCC's products?
D) Which candidate has mentored the most CCC interns and new employees over the past three years?
Q3) Discuss the reasons why labor union membership has declined in recent years.
Page 21
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Chapter 20: Financial Management and Accounting in the Global Firm
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Q1) Which of the following is applied when an American tourist exchanges dollars for Japanese yen at a Tokyo bank?
A) the forward rate
B) the spot rate
C) the discount rate
D) the prime rate
Q2) Countries such as Germany, Italy, and Japan view a high debt ratio as undesirable, and the leaders of these nations encourage firms to balance their capital structure with more equity financing, which is readily available.
A)True
B)False
Q3) Net present value is defined as the ________.
A) combined value of the capital assets of a project and the sales projections
B) difference between the present value of a firm's assets and the future project liabilities
C) difference between the present value of a project's incremental cash flow and the initial investment
D) combined value of a project's initial investment and its incremental cash flow
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