International Business Exam Preparation Guide
Course Introduction
International Business explores the complexities of operating in the global marketplace, focusing on the strategies and challenges faced by firms as they expand beyond domestic borders. The course examines cross-cultural management, the impact of political and economic environments, international trade theories, currency exchange, and global supply chain management. Students will analyze real-world case studies to understand market entry modes, international marketing, ethical considerations, and the role of multinational corporations. Emphasis is placed on developing skills to adapt to diverse business climates and to create strategies responsive to the dynamic nature of global business operations.
Recommended Textbook
Global Business Today 8th Edition by
Charles W. L. Hill
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17 Chapters
2491 Verified Questions
2491 Flashcards
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Page 2
Chapter 1: Globalization
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Sample Questions
Q1) Which of the following has been detrimental to the globalization of markets and production?
A) The advent of containerization
B) The use of the Internet and services such as Skype
C) National differences in culture, consumer preferences, and business practices
D) Privatizing state-owned enterprises
E) The collapse of communism
Answer: C
Q2) Differences among countries require that an international business vary its practices country by country.
A)True
B)False
Answer: True
Q3) _____ has experienced a decline in the share of FDI stock between 1980 and 2010.
A) India
B) The United States
C) France
D) China
E) South Korea
Answer: B
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Chapter 2: National Differences in Political Economy
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Q1) How does a common law system differ from a civil law system?
Answer: A common law system has a degree of flexibility that other systems lack.Judges in a common law system have the power to interpret the law so that it applies to the unique circumstances of an individual case.In turn,each new interpretation sets a precedent that may be followed in future cases.As new precedents arise,laws may be altered,clarified,or amended to deal with new situations.A civil law system tends to be less adversarial than a common law system,because the judges rely upon detailed legal codes rather than interpreting tradition,precedent,and custom.Judges under a civil law system have less flexibility than those under a common law system.Judges in a common law system have the power to interpret the law,whereas judges in a civil law system have the power only to apply the law.
Q2) When firms do not wish to accept the rules of the CIGS,they often opt for _____ to settle contract disputes.
A) UN involvement
B) arbitration
C) collective bargaining
D) the common law system of the U.S.
E) Islamic law
Answer: B
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Page 4
Chapter 3: Political Economy and Economic Development
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Q1) Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth,define innovation broadly to include not just new products but also new processes,new organizations,new management practices,and new strategies.
A)True
B)False
Answer: True
Q2) The _____ of the Cold War era has vanished.
A) multipolar world
B) democratic system
C) free market system
D) bipolar world
E) widespread belief in the Western ideology
Answer: D
Q3) Although countries such as China and India are currently relatively poor,their economies are already large in absolute terms and growing more rapidly than those of many advanced nations.
A)True
B)False
Answer: True
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Chapter 4: National Differences in Culture
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Q1) Janet believes that the cultural group she belongs to is superior and is hence highly intolerant toward employees from the cultures of other countries.This behavior of Janet is known as:
A) cultural convergence.
B) Confucian dynamism.
C) ethnocentrism.
D) ethnic gloss.
E) class consciousness.
Q2) According to the World Values Survey,as countries get richer,a shift occurs away from "traditional values" linked to religion,family,and country,and toward "secular rational" values.
A)True
B)False
Q3) "Mudarabah" and the "murabaha" are:
A) Islamic banking methods.
B) Arabic words for interest and profit, respectively.
C) banking practices that are prohibited by Islam.
D) laws governing international trade and commerce in Islamic countries.
E) laws limiting the right to private property.
Q4) Compare and contrast the principles of Hinduism and Buddhism.
Page 6
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Chapter 5: Ethics in International Business
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Q1) Which of the following is most likely to be considered as unethical?
A) Galaxy Inc. ceased its operations in some developing nations on the account that those countries had low employment standards.
B) Unicorn Inc. sells its medicines at a lower price in less developed nations.
C) Capricorn Inc., a multinational company operating in developing nations, pays its labor 30 percent more than what the local competitors pay.
D) Centaur Inc. had to close down a production plant as the local management there had employed child labor.
E) Orion Inc. sends its products for recycling to a developing nation because the pollution control laws in its home country are much more strict than that in the developing nation.
Q2) The primary purpose for which managers use a moral compass is to:
A) help them navigate through difficult ethical dilemmas.
B) maximize stockholders' wealth.
C) legally justify their unethical behavior.
D) identify new markets that have the best growth potential.
E) establish political imperialism in host countries.
Q3) Discuss the global tragedy of the commons.
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Chapter 6: International Trade Theory
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Q1) What reasons does Raymond Vernon cite for U.S.firms basing initial production at home and not at low-cost foreign locations?
Q2) According to the theory of comparative advantage,potential world production is greater with unrestricted free trade than it is with restricted trade.
A)True
B)False
Q3) Porter argues that a nation's firms gain competitive advantage if their domestic consumers are:
A) sophisticated and demanding.
B) price insensitive and trusting.
C) accommodating and flexible.
D) nationalistic and protective of their domestic industries.
E) biased towards foreign products.
Q4) According to Michael Porter,the government can influence each of the four components of Porter's diamond-either positively or negatively.
A)True
B)False
Q5) Briefly describe the new trade theory.
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Chapter 7: The Political Economy of International Trade
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Sample Questions
Q1) A country Cadmia,which is a leading producer of bauxite,had to impose trade sanctions on Cerian soda cans in order to get the government of Ceria to enforce export restrains.This imposition by Cadmian government was undertaken to protect domestic producers of soda cans.Which of the following government intervention is being used by Cadmia?
A) Diversification
B) Deregulation
C) Retaliation
D) Liberalization
E) Monopolization
Q2) The strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade and this justification challenges the rationale for unrestricted free trade.
A)True
B)False
Q3) Export tariffs are far more common than import tariffs.
A)True
B)False
Q4) What constitutes the revised case for free trade?
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Chapter 8: Foreign Direct Investment
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Sample Questions
Q1) Countries such as the U.S.,the U.K.,France,Germany,the Netherlands,and Japan dominate in the share of total global stock of FDI and FDI outflows and in rankings of the world's largest multinationals because:
A) they were the most developed countries postwar and home to the largest and best capitalized enterprises.
B) they pursued a policy of blocking or restricting FDI inflow into their own economies.
C) they provided subsidies for their domestic firms to protect them from foreign competition.
D) they control much of the operating structure of the WTO which governs international trade.
E) they were the governing body of the International Monetary Fund.
Q2) Firms for which licensing is not a good option include:
A) low-technology industries.
B) global oligopolies.
C) industries characterized by low cost pressures.
D) industries where transportation costs are high.
E) industries which need to have low control over foreign operations.
Q3) What are the benefits of FDI to the home (source)country?
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Chapter 9: Regional Economic Integration
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Q1) A common market has no barriers to trade among member-countries,includes a common external trade policy,and allows factors of production to move freely among members.
A)True
B)False
Q2) How is a common market different from an economic union?
Q3) Which of the following is an issue confronting the North American Free Trade Agreement?
A) Economic stability
B) Reduction in purchasing power
C) Political stability
D) Expanding the membership of the agreement
E) Lack of resources
Q4) The _____ refers to a 1969 agreement among Bolivia,Chile,Ecuador,Colombia,and Peru to establish a customs union.
A) Andean Pact
B) ASEAN
C) Mercosur
D) CARICOM
E) Caribbean Single Market and Economy
Page 11
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Chapter 10: The Foreign Exchange Market
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Q1) The euro/dollar exchange rate is 1 = $1.20.According to the law of one price,a camera that retails for $300 in New York should sell for _____ in Germany.
A) 320
B) 300
C) 250
D) 360
E) 150
Q2) What is meant by translation exposure?
A) The long-run effect of changes in exchange rates on future prices, sales, and costs
B) The impact of currency exchange rate changes on the reported financial statements of a company
C) The extent to which a firm's future international earning power is affected by changes in exchange rates
D) The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values
E) The obligations for the purchase or sale of goods and services at previously agreed prices
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Page 12
Chapter 11: The International Monetary System
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Q1) Which of the following is a feature of the current monetary system?
A) It is free from government intervention.
B) It is free from volatile movements in exchange rates.
C) It has increased foreign exchange risk for businesses.
D) It has made it easier to get insurance coverage against exchange rate changes.
E) Instruments like forward market and swaps have lost their importance in the present system.
Q2) Since March 1973,currency exchange rates have become less volatile and more predictable than they were between 1945 and 1973.
A)True
B)False
Q3) The International Monetary Fund can force countries to adopt the policies required to correct economic mismanagement.
A)True
B)False
Q4) In terms of speculation,describe the arguments for a fixed exchange rate system.
Q5) Briefly describe the pegged exchange rate regime.
Q6) Explain the concept of a currency board.
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Chapter 12: The Strategy of International Business
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Sample Questions
Q1) Typically,the price a firm charges for a good or service is:
A) less than the value placed on that good or service by the customer.
B) more than what customers assume it would be.
C) more than the market price for similar goods or services.
D) the same as the value placed on that good or service by the customer.
E) less than the lowest priced similar good or service in the market.
Q2) Describe the localization strategy.
Q3) A strategy that focuses primarily on increasing the attractiveness of a product is referred to as a low-cost strategy.
A)True
B)False
Q4) How do firms respond to low cost pressures and low pressures for local responsiveness?
Q5) What are operations of a firm? How can operations be categorized?
Q6) Strategies that increase profitability can also expand a firm's business and thus enable it to attain a higher rate of profit growth.
A)True
B)False
Q7) What are the sources of economies of scales?
Page 14
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Chapter 13: Entering Foreign Markets
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Q1) Which of the following is an advantage of joint ventures as a mode of entry into foreign markets?
A) The foreign firm benefits from a local partner's knowledge of the host country.
B) The foreign firm can protect its technology from being appropriated by its local partner.
C) There is less cause for friction and conflict between the foreign and local partners.
D) It gives a firm tight control over subsidiaries that which enable it to realize experience curve or location economies.
E) The foreign firm does not have to bear any development costs and risks associated with opening a foreign market.
Q2) The most typical joint venture is a 50/50 venture,in which there are two parties,each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control.
A)True
B)False
Q3) In terms of international business,briefly describe pioneering costs.
Q4) Describe the pros and cons of greenfield ventures.
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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) A letter of credit may reduce an importer's ability to borrow funds for other purposes. A)True B)False
Q3) Briefly describe the strategic steps that novice exporters can take to increase the probability of exporting successfully.
Q4) What are export management companies? What are their advantages and and disadvantages?
Q5) What is an Ex-Im Bank? What is its mission and how does it pursue it?
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Page 16
Chapter 15: Global Production, Outsourcing, and Logistics
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Sample Questions
Q1) Which of the following statements is true about specialized assets?
A) The value of a specialized asset significantly increases in its next-best use.
B) When one firm must invest in specialized assets to supply another, mutual dependency is created.
C) When substantial investments in specialized assets are required, firms prefer to contract it out to a supplier.
D) A specialized asset is a flexible manufacturing technology that can be put to multiple uses.
E) Using a specialized asset allows firms to switch their orders easily between suppliers.
Q2) With the advent of flexible manufacturing technologies and mass customization,manufacturing in each major market in which the firm is active is becoming less attractive.
A)True
B)False
Q3) Describe the Six Sigma methodology.
Q4) How does a firm's decision regarding the location of its production facilities vary based on the availability of flexible manufacturing technologies?
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Chapter 16: Global Marketing and R-D
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Sample Questions
Q1) Describe how economic development influences product attributes.
Q2) Firms based in _____ countries tend to build a lot of extra performance attributes into their products.
A) highly developed
B) least developed
C) highly-indebted
D) developing countries
E) agriculture-based
Q3) In terms of the differences between countries with respect to distribution systems,there is a tendency for lesser retail concentration in developed countries.
A)True
B)False
Q4) Which of the following is a basis for the differences in retail concentration in various countries?
A) Tradition
B) Idiosyncracies
C) Prejudices
D) Demographics
E) Geography
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Chapter 17: Global Human Resource Management
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Sample Questions
Q1) According to Mendenhall and Oddou's dimensions that predict success in a foreign posting,relationship development refers to:
A) an expatriate's willingness to use the host-country language.
B) the ability to understand why people of other countries behave the way they do.
C) the ability to empathize with foreign nationals.
D) the relationship between the country of assignment and how well an expatriate adjusts to a particular posting.
E) the ability to develop long-lasting friendships with host-country nationals.
Q2) Which of the following is an additional and difficult dimension to the long-standing problem of expatriate failure due to the inability of the spouse to adjust?
A) Formal training
B) Dual-career families
C) Cultural diversity
D) Single parenting
E) Cultural toughness
Q3) What is expatriate failure? According to Tung's survey,what are the different reasons for expatriate failure in U.S.multinationals?
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