International Business Exam Preparation Guide
Course Introduction
International Business explores the complexities and opportunities of conducting business across national borders. Students will examine the global marketplace, focusing on international trade theories, foreign direct investment, and the strategies multinational enterprises use to compete and operate in diverse environments. The course covers key topics such as cross-cultural management, international marketing, global supply chains, entry modes, legal and ethical considerations, and the impact of economic, political, and technological forces on international business decisions. Through case studies and practical examples, students will develop an understanding of how organizations navigate the challenges of globalization and create value in a rapidly changing world economy.
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International Business 16th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) When a company successfully responds to foreign production and market opportunities, ________.
A)other companies will likely emulate its successful practices
B)it likely has a long-term advantage over competitors
C)it will downsize its domestic operations
D)its home government likely raises taxes on the company
Answer: A
Q2) A company starting out with a global focus, usually because of the international experience of its founders, is called a ________.
A)multinational enterprise
B)transnational company
C)strategically allied company
D)born-global company
Answer: D
Q3) The terms multinational corporation and multinational company are frequently used synonyms for strategic alliances.
A)True
B)False
Answer: False
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Chapter 2: The Cultural Environments Facing Business
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Q1) Which of the following is characterized by low dependence on an organization and a desire for personal time, freedom, and challenges?
A)collectivism
B)democracy
C)individualism
D)anarchy
Answer: C
Q2) International businesspeople need to understand social stratification systems where they do business because ________.
A)such systems reflect a culture's willingness to accept new products
B)such systems indicate who people in a given culture will likely respect more
C)the high similarity among countries lets firms effectively use global hiring practices
D)what is an ascribed group membership in one country is an acquired one in another Answer: B
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) In a brief essay, describe the political and legal systems in China and their effect on MNEs doing business in China.
Answer: China applies state capitalism whereby the government manipulates market activities to achieve political goals.Consequently, MNEs doing business in China often find themselves at a disadvantage.Incorporating in China requires telling the government-in excruciating detail-who you are, what you want to do, how you plan to do it, how much you intend to invest, and how many jobs you will create.China's political and legal systems impose many time-consuming tasks on MNEs.Moreover, China tends to stack the odds against foreigners who are bold enough to forge ahead in the face of an elaborate government bureaucracy and a fledgling legal system.
Q2) Which of the following would most likely be used in a totalitarian system to promote unconditional support for the official ideology?
A)privately owned media outlets
B)a parliamentary system
C)state control of the education system
D)a representative legislative body
Answer: C
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Chapter 4: The Economic Environments Facing Businesses
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Q1) The recent global financial crisis has interrupted the trend of national economies
A)rapidly adopting the command market model
B)steadily adopting the free market model
C)moving from the mixed to the command model
D)turning away from the mixed model
Q2) The balance of trade is a record of a country's international transactions that take place among companies, governments, or individuals.
A)True
B)False
Q3) Inflation affects interest rates, exchange rates, the cost of living, general economic confidence, and the stability of the current political system.
A)True
B)False
Q4) What general characteristics of a country should managers consider when analyzing an economic environment? What specific indicators help managers measure the economic development, performance, and potential of a country?
Q5) What is inflation?
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Chapter 5: Globalization and Society
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Q1) Ethical dilemmas tend to be ________ for MNE managers than for domestic managers.
A)more complicated
B)less controversial
C)easier to decide
D)less common
Q2) GE's Ecomagination program has enabled the firm to develop a competitive advantage over its competitors.
A)True
B)False
Q3) The saying "When in Rome, do as the Romans do" applies to the ________ approach.
A)teleological
B)relativism
C)normativism
D)deontological
Q4) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as sustainability.
A)True
B)False
Page 7
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Chapter 6: International Trade and Factor-Mobility Theory
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Q1) Analysts conclude that the finite supply of natural resources will most likely
A)cause a higher proportion of world trade to occur among developed countries
B)cause a higher proportion of world trade to occur among developing countries
C)serve as an advantage for developing countries in their sales to developed countries
D)create a greater portion of world trade in the form of services
Q2) What is the country similarity theory? According to this theory, what factors affect trade patterns?
Q3) According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.
A)the country will forgo producing its less efficient output in order to produce its more efficient output
B)workers become more efficient through specialization
C)economies of scale will reduce cost
D)there will be more incentive to develop cost-saving technologies
Q4) In a short essay, discuss the theory of mercantilism, and discuss favorable and unfavorable balances of trade as they apply to international business.
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Chapter 7: Governmental Influence on Trade
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Q1) Advocates of the comparable access argument for trade protection primarily assert that domestic industries ________.
A)will deteriorate in countries that have lower import restrictions than their trading partners
B)should be required to implement export-led development policies on foreign competitors
C)are entitled to the same access to foreign markets as foreign industries have to their markets
D)are forced to lower prices for domestic consumers because of foreign import restrictions
Q2) In a short essay, list and discuss the nontariff barriers that relate to direct price influences: subsidies, aid and loans, customs valuations, and other direct price influences.
Q3) In most cases, trade protectionism makes it easier for a company to buy what it needs and to sell products in global markets.
A)True
B)False
Q4) What is dumping? What are the possible effects of dumping on a country's economy?
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) The goal of a free trade agreement is to abolish all tariffs among member countries.
A)True
B)False
Q2) ________ effects of economic integration are the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale.
A)Dynamic
B)Static
C)Economic
D)Barrier
Q3) As companies expand internationally, they must change their organizational structure and operating strategies to take advantage of regional trading groups.
A)True
B)False
Q4) What are the rules of origin and regional content provisions of NAFTA?
Q5) Each country in NAFTA sets its own tariffs to the rest of the world.
A)True
B)False
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Which of the following is an example of interest arbitrage?
A)investing in debt instruments in different currencies or different countries
B)selling U.S. dollars for Swiss francs, then selling Swiss francs for British pounds, then selling British pounds for U.S. dollars
C)investigating different commercial banks to find the best exchange rate
D)an American investing in a London-based company
Q2) In a short essay, discuss how companies use foreign exchange.
Q3) In which of the following transactions is a currency switched with another on one date and then switched back on a future date?
A)reverse transaction
B)spot transaction
C)FX swap
D)outright forward transaction
Q4) Western Union's role in foreign-exchange trading is best described as ________.
A)setting a fair exchange rate in multiple currencies
B)transferring currency from one country to another
C)transferring Mexican pesos from the United States to Mexico
D)handling all money transfers that occur between North and South America
Q5) How is foreign exchange traded? What methods are available?
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Chapter 10: The Determination of Exchange Rates
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Q1) The central bank in the United States is the ________.
A)Federal Reserve System
B)U.S. Exchange Reserve
C)Board of Governors
D)U.S. Treasury
Q2) According to purchasing power parity, if the domestic inflation rate is ________ than that in the foreign country, the domestic currency should be ________ than that of the foreign country.
A)lower; weaker
B)higher; higher
C)lower; stronger
D)higher; stronger
Q3) Tanya is a manager at a global firm that has operations located in Brazil, India, and Japan.Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country.Which of the following questions is most relevant to Tanya?
A)What is the cyclical situation in terms of employment and inflation?
B)Are the government's intervention practices sustainable?
C)What level of credibility does the government have?
D)What is the possibility of a national crisis?
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Chapter 11: Global Capital Markets
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Q1) Which of the following is a characteristic of most offshore financial centers?
A)strict domestic regulation
B)minimal banking activities
C)large foreign currency markets
D)nominal or non-existent tax rates
Q2) You are the chief financial officer at an MNE.What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?
Q3) Which of the following countries has the largest market for domestic bonds?
A)United Kingdom
B)United States
C)Japan
D)China
Q4) A city or country that provides large amounts of funds in currencies other than its own is a(n)________.
A)offshore financial center
B)ADR facilitator
C)interbank market
D)currency regulator
Q5) What is a transfer price? Why are transfer prices used?
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Chapter 12: The Strategy of International Business
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Q1) A ________ is a special outlook, skill, capability, or technology that runs through the firm's operations, weaving together all value activities into an integrated value chain.
A)core competency
B)value proposition
C)mission statement
D)learning curve
Q2) Pressures for global integration include economic integration, convergent consumer preferences, and political demands imposed by host countries.
A)True
B)False
Q3) Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls.Citibank is exploiting ________ by running a call center in India.
A)value configuration synergies
B)location economies
C)geographic arbitrage
D)value offshoring
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Chapter 13: Country Evaluation and Selection
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Q1) Which of the following is the LEAST likely reason for inaccuracies in published governmental data?
A)translation errors from the host country language
B)limitations of government resources and finances
C)purposeful publication of misleading information
D)false information provided to data collectors
Q2) A go/no-go decision means ________.
A)an individual project decision is based on whether the project meets threshold criteria
B)projects are ranked and approved from the top of the list down until available resources are exhausted
C)management reviews existing information and decides whether additional individualized feasibility studies are warranted
D)projects are approved or disapproved based on the potential ease of divestment
Q3) What is the relationship between a company's international market and its production location decisions? How do firms benefit from the use of scanning techniques when making location decisions?
Q4) What problems are common with the published data available about different countries?
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15
Chapter 14: Export and Import
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Q1) Companies are likely to export products abroad in all of the following situations EXCEPT ________.
A)when their average cost per unit of home country production declines substantially by increasing output
B)when they want to use the riskiest but most profitable method to engage international trade
C)when they aim to increase degree of market diversification
D)when they are new to international business
Q2) All of the following are benefits of countertrade EXCEPT ________.
A)decreasing trade protectionism
B)increasing access to innovative technology
C)developing new trade relationships with foreign companies
D)preserving foreign-exchange reserves
Q3) What is the most likely reason that firms avoid aggressively seeking export opportunities?
A)Exporting is an activity best left to large, resource-rich firms.
B)Firms are unaware of opportunities in foreign markets.
C)Foreign customers cannot easily communicate their needs.
D)Firms are reluctant to adjust their established business practices.
Q4) Why are financial risks a key concern of SMEs considering international trade?
Page 16
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) What motives do businesses have for entering into collaborative arrangements? What are some of the problems associated with collaborative arrangements?
Q2) Which of the following is an argument for using a collaborative agreement?
A)to prevent problems caused by minority shareholders
B)to preserve a concentration strategy
C)to secure vertical and horizontal links
D)to maintain better control
Q3) An international joint venture is an agreement between two or more companies for the use of a trademark.
A)True
B)False
Q4) What is an equity alliance?
A)a collaborative arrangement in which at least one collaborating company takes an ownership position in the other
B)a collaboration in which each contributor receives an equitable return based on relative contribution
C)a collaboration in which partners agree to share technology with each other
D)a wholly owned acquisition to prevent appropriation of intellectual property
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) Neoclassical structures attempt to minimize boundaries between all of the following EXCEPT ________.
A)vertical ranks and functions
B)horizontal units in different areas
C)the firm and its suppliers
D)the firm and its competitors
Q2) Explain the major types of classical organization structures and the advantages and disadvantages of each for international operations.
Q3) Historically, the geographic division structure is associated with companies pursuing ________ strategies.
A)multidomestic
B)transnational
C)global
D)international
Q4) The functional structure is ideal when the company faces complex and changing environments.
A)True
B)False
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Chapter 17: Marketing Globally
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Q1) A company that exports products at a price lower than its domestic market price is using a skimming policy abroad.
A)True
B)False
Q2) A pull rather than a push strategy is most likely preferable when ________.
A)self-service is not predominant
B)the price of a product is high relative to incomes
C)there are few governmental restrictions on advertising
D)there are a large number of languages and a low literacy rate
Q3) Different country standards, such as safety regulations, add complexity to whether companies decide to use a globally standardized product.
A)True
B)False
Q4) Why are MNEs criticized for exporting to developing countries the same products they sell in developed countries?
A)The prices of the products are too low in developing countries.
B)Many of the products are deemed to be unnecessary for low income consumers.
C)The sales enhance local company failures in developing countries.
D)Developing countries need local production rather than imports.
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) A kanban system is best described as a system that ________.
A)uses special locations for storing imported inventory to avoid paying duties
B)seeks to improve quality by setting a rigorous goal of zero defects
C)electronically links together suppliers, customers, and intermediaries
D)facilitates JIT by using cards to control the flow of production through a factory
Q2) A company may use outsourcing as an implied threat to underperforming employees.
A)True
B)False
Q3) The success of a global manufacturing strategy depends on compatibility, configuration, coordination, and control.
A)True
B)False
Q4) 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
Page 20
Q5) What is a just-in-time (JIT)inventory system? What are the implications of JIT for firms that use foreign sourcing?
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Chapter 19: International Accounting and Finance Issues
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Q1) According to the translation process in the United States, ________.
A)companies first translate their statements into dollars, and then recast their financial statements consistent with U.S. GAAP
B)companies recast their financial statements consistent with U.S. GAAP, and then translate them into U.S. dollars
C)companies only need to worry about the translation process because local operations take place in a local GAAP environment
D)companies translate foreign currency financial statements only if the dollar is weakening against the local currency
Q2) What are the four main ways that financial statements differ from country to country? What role has the IASB played in establishing global accounting standards?
Q3) According to U.S.GAAP, companies recognize transaction gains and losses in the income statement.
A)True
B)False
Q4) What factors influence international accounting practices? What forces are leading to the global convergence of accounting practices?
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Chapter 20: International Human Resource Management
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Q1) Watson Electronics, an MNE based in Canada, tends to follow an ethnocentric staffing model.From which group will it most likely hire for upper-level management positions in its new facility in Germany?
A)home-country nationals
B)third-country nationals
C)host-country nationals
D)local citizens
Q2) Culture shock is the anxiety and disorientation experienced when one moves into an unfamiliar culture.
A)True
B)False
Q3) Advantages of adopting a polycentric approach include which of the following?
A)capitalizing on the availability of qualified local managers
B)helping transfer core competencies from the home nation to local subsidiaries
C)increasing the international career mobility for local managers
D)offsetting tendencies for the company to adapt excessively to the local market
Q4) What types of employees are increasingly being chosen for expatriate assignments? What characteristics are firms seeking when selecting expatriates?
Q5) List and discuss the main components of an expatriate's compensation package.
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