International Business Exam Review
Course Introduction
International Business explores the complexities of conducting commerce across national borders, focusing on how cultural, economic, political, and legal environments influence business operations globally. The course examines key concepts such as globalization, international trade theories, market entry strategies, cross-cultural management, and the impact of economic integration. Students will learn about multinational corporations, international financial markets, and the ethical challenges faced by businesses operating in diverse regions. Practical case studies and real-world examples equip learners with the skills and knowledge necessary to navigate and succeed in the global business landscape.
Recommended Textbook
Global Business Today 10th Edition by
Charles W. L. Hill Dr
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17 Chapters
2024 Verified Questions
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Page 2
Chapter 1: Globalization
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Sample Questions
Q1) As a result of globalization,international businesses can avoid the haggle of currency exchanges during cross-border transactions.
A)True
B)False
Answer: False
Q2) Foreign direct investment (FDI)occurs when a firm invests resources in business activities outside its home country.
A)True
B)False
Answer: True
Q3) Royal Teas,a U.K.-based company employing just 30 people worldwide,generates $1.5 million in revenues of which 60 percent comes from exports to Asian countries.In this context,Royal Teas is most likely classified as a
A)large domestic firm.
B)mini-multinational firm.
C)greenfield firm.
D)foreign firm.
E)multinational giant.
Answer: B
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Page 3
Chapter 2: National Differences in Political, Economic, and Legal Systems
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Sample Questions
Q1) Liability laws are typically the least extensive in highly-developed nations.
A)True
B)False
Answer: False
Q2) Discuss the philosophy that underlies intellectual property laws.
Answer: The philosophy behind intellectual property laws is to reward the originator of a new invention,book,musical record,clothes design,restaurant chain,and the like,for his or her idea and effort.Such laws stimulate innovation and creative work.They provide an incentive for people to search for novel ways of doing things,and they reward creativity.For example,in the pharmaceutical industry,a patent will grant the inventor of a new drug a 20-year monopoly in production of that drug.This gives pharmaceutical firms an incentive to undertake the expensive,difficult,and time-consuming basic research required to generate new drugs that can cost $1 billion in R&D and take 12 years to get on the market.Without the guarantees provided by patents,companies would be unlikely to commit themselves to extensive basic research.
Q3) Plato did not equate collectivism with equality.
A)True
B)False
Answer: True
Page 4
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Chapter 3: National Differences in 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 risks of doing business are most likely to be the highest in a country that
A)has low inflation rates.
B)supports high living standards.
C)has only one ethnic nationality.
D)protects intellectual property.
E)faces frequent changes in government and government policy.
Answer: E
Q3) The purchasing power parity for different countries is adjusted (up or down)depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.
A)True
B)False
Answer: True
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Chapter 4: Differences in Culture
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Q1) Which of the following is true about the Islamic banking method the mudarabah?
A)A mudarabah contract is similar to a profit-sharing scheme.
B)Under mudarabah,when an Islamic bank lends money to a business,it charges interest on the loan.
C)It is the most widely used banking method among the world's Islamic banks,primarily because it is the easiest to implement.
D)It has been proven that a mudarabah contract discourages both long-term savings and long-term investment.
E)A mudarabah contract uses a price markup method to make profits.
Q2) Which of the following is the most widely spoken language in the world,and is increasingly becoming the language of international business?
A)Chinese
B)French
C)English
D)Spanish
E)German
Q3) Elaborate on the caste system supported by Hinduism.
Q4) Elaborate on the connection made between Protestant ethics and "the spirit of capitalism."
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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125 Verified Questions
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Sample Questions
Q1) Lugnow Inc.paid a sum of $76,000 to an official in the government of Nepotismia to ensure that the company obtained exclusive preferential treatment.The $76,000 can be classified as
A)customs duties.
B)excise taxes.
C)speed money.
D)bribe.
E)repatriation fees.
Q2) Who asserted that the only social responsibility of business is to increase profits,so long as the company stays within the rules of law?
A)Milton Friedman
B)Leon Sullivan
C)Karl Marx
D)Immanuel Kant
E)David Hume
Q3) "Facilitating payments" are payments to secure contracts that would not otherwise be secured.
A)True
B)False
Page 7
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Chapter 6: International Trade Theory
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Sample Questions
Q1) The country of Dalima has long been a substantial exporter of agricultural goods,reflecting its unusual abundance of arable land; in contrast,its continental neighbor,Bundeeza,has excelled in the export of goods produced in labor-intensive manufacturing industries.The export policies of the two countries is best explained by A)mercantilism.
B)theory of absolute advantage.
C)Heckscher-Ohlin theory.
D)theory of comparative advantage.
E)Samuelson's critique.
Q2) Mercantilism,propagated in the sixteenth and seventeenth centuries,advocated that countries should simultaneously encourage both imports and exports.
A)True
B)False
Q3) Discuss Paul Samuelson's critique of free trade.
Q4) Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.
A)True
B)False
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Page 8
Chapter 7: Government Policy and International Trade
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Q1) Maroji is a major exporter of dairy products.Mipon is a major exporter of heavy machinery but also has a sizeable domestic dairy industry.Since it imports a sizeable amount of heavy machinery from Mipon,Maroji,at the request of Mipon,limited the amount of dairy products it exports to Mipon each year.This is an example of
A)tariff rate quota
B)quota rent
C)voluntary export restraint (VER)
D)quota share
E)export embargo
Q2) Which of the following specifies that U.S.government agencies must give preference to U.S.products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage?
A)Export Administration Act
B)Helms-Burton Act
C)Hawley-Burton Act
D)Buy America Act
E)Volcker Rule
Q3) Define local content requirements.Explain how this helps domestic firms.
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) Services such as telecommunications,retailing,and many financial services,where the service has to be produced where it is delivered,lend themselves well to exporting.
A)True
B)False
Q2) The interdependence between firms in an oligopoly leads to A)trade wars.
B)a decrease in the supply.
C)imitative behavior.
D)higher demand.
E)increased domestic consumption.
Q3) Under what circumstances will a firm favor foreign direct investment over exporting as an entry strategy?
Q4) A firm's bargaining power is low when the host government places a low value on what the firm has to offer.
A)True
B)False
Q5) What is meant by the term foreign direct investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) The European Parliament,which meets in Strasbourg,France,is primarily a legislative rather than consultative body.
A)True
B)False
Q2) The fourteen member countries of BERPHO have a level of economic integration that involves the use of a common currency,harmonization of members' tax rates,and a common monetary and fiscal policy.BERPHO is an example of a(n)
A)free trade area.
B)customs union.
C)common market.
D)economic union.
E)command economy.
Q3) As with free trade in general,regional economic integration creates gain for consumers,but it can be challenging for some producers.
A)True
B)False
Q4) Briefly describe how the creation of a single market through regional economic integration offers significant opportunities.Provide an example.
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11
Chapter 10: The Foreign Exchange Market
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Sample Questions
Q1) When dominant enterprises in an industry exercise a degree of pricing power,setting different prices in different markets to reflect varying demand conditions,it is referred to as
A)price discrimination.
B)premium pricing.
C)psychological pricing.
D)price skimming.
E)price leadership.
Q2) In the context of The Economist's "Big Mac Index," assume that the average price of a Big Mac in South Korea is $3.98 at the prevailing won/dollar exchange rate.The average price of a Big Mac in the United States is $4.93.This suggests that the Korean won is overvalued against the U.S.dollar.
A)True
B)False
Q3) When residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency,the phenomenon is generally referred to as capital flight.
A)True
B)False
Q4) Differentiate between a lead strategy and a lag strategy.
Page 12
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Chapter 11: The International Monetary System
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Sample Questions
Q1) Moora and Trun,two countries that are part of the BURPHA common market have an exchange rate system where the values of their currencies are set against each other at a mutually agreed on exchange rate.Moora and Trun's exchange rate system is called
A)clean float.
B)floating.
C)fixed.
D)dirty-float.
E)pegged.
Q2) In a floating exchange rate,the relative value of a currency
A)is more predictable and less volatile.
B)is determined by market forces.
C)changes infrequently only under a specific set of circumstances.
D)is set against other currencies at some mutually agreed on exchange rate.
E)does not depend on the free play of market forces.
Q3) How has the volatility of the current global exchange rate regime affected international businesses? How can the problem be tackled?
Q4) Describe the Jamaica agreement of 1976.What were the main elements of this agreement?
Q5) What changes have occurred in the International Monetary Fund in recent years?
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Chapter 12: The Strategy of International Business
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Sample Questions
Q1) For an international business,which of the following is most likely to be an outcome of protectionism and nationalism in a host-country?
A)increase in the attractiveness of location economies
B)pressure for localization of production
C)requirement of standardization of products or services
D)pressure for cost reduction
E)decrease in the significance of local responsiveness
Q2) Which of the following statements is true about economies of scale?
A)Economies of scale lead to an increase in the average unit cost of a product.
B)Attaining economies of scale increases a firm's profitability.
C)The ability to spread variable costs over a large volume is a source of economies of scale.
D)Economies of scale result due to the increase in the perceived value of a product.
E)Economies of scale refer to cost savings that come from learning by doing.
Q3) Discuss the significance of value creation.According to Michael Porter,what are the two primary strategies for creating value?
Q4) What are the disadvantages of strategic alliances?
Q5) Describe the localization strategy.
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Chapter 13: Entering Foreign Markets
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Sample Questions
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,which enables 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) In terms of the various modes of entry into a foreign market,franchising is employed primarily by service firms,whereas licensing is pursued primarily by manufacturing firms.
A)True B)False
Q3) What are first-mover advantages? Describe three first-mover advantages for international businesses.
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Chapter 14: Exporting, Importing, and Countertrade
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Sample Questions
Q1) When a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer,it serves as a
A)document of title.
B)contract.
C)receipt.
D)time draft.
E)collateral.
Q2) What is the difference between a sight draft and a time draft?
Q3) Delios Trading is exporting for the first time to Japan and has contracted with Abe Imports in Tokyo for an initial order valued at $110,000.Delios Trading wants Abe Imports to secure a document from a Tokyo bank that would indicate that the bank would pay Delios Trading $110,000 upon presentation of specified documents by the exporter.What is the name of the document that Delios Trading is asking for?
A)bill of lading
B)time draft
C)letter of credit
D)sight draft
E)bill of exchange
Q4) Describe the pros and cons of countertrade.
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Chapter 15: Global Production and Supply Chain Management
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Sample
Questions
Q1) Discuss the two basic strategies for locating production facilities.When is it most appropriate to centralize production?
Q2) Describe the Six Sigma methodology.
Q3) How do country-specific factors affect a country's attractiveness as a manufacturing base?
Q4) When should a firm concentrate its production facilities in a centralized location?
A)when the production technology has a low minimum efficient scale
B)when the production technology has low fixed costs
C)when important exchange rates are expected to remain relatively stable
D)when flexible manufacturing technologies are unavailable
E)when the product's value-to-weight ratio is low
Q5) Which of the following products is best manufactured in multiple locations close to major markets to reduce transportation costs?
A)pharmaceuticals
B)petroleum products
C)books
D)magazines
E)electronics
Chapter 16: Global Marketing and Research and Development
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Sample Questions
Q1) The members of a cross-functional team should have
A)low standing within their respective functions.
B)the ability to put functional and national advocacy first.
C)the ability to contribute functional expertise.
D)the ability to solely focus on the ongoing work of their respective functions.
E)the ability to work on several projects simultaneously.
Q2) Many international businesses try to counter negative source effects by deemphasizing their foreign origins.
A)True
B)False
Q3) Predatory pricing and experience curve pricing do not violate antidumping regulations.
A)True
B)False
Q4) Which of the following is the most important determinant of channel length?
A)degree to which the retail system is fragmented
B)increase in car ownership and two-income households
C)level of consolidation in the global retail industry
D)amount of difference between product or technical standards
E)level of economic development of a country
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Chapter 17: Global Human Resource Management
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Sample Questions
Q1) According to Mendenhall and Oddou,perceptual ability refers to
A)an expatriate's willingness to use the host-country language.
B)an expatriate's ability to strengthen his or her self-esteem.
C)an expatriate's ability to empathize.
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) 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.
Q3) Briefly describe how national differences in compensation can affect an international business.
Q4) What is repatriation? What is its importance?
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Page 19