International Business
Final Exam
Course Introduction
International Business explores the dynamic and complex world of global commerce, focusing on how companies operate across national borders. The course examines the strategies, structures, and management practices necessary for success in international markets, including topics such as cultural differences, legal and economic environments, international trade theories, foreign direct investment, global supply chains, and ethical considerations in a multicultural context. Students will gain insights into the challenges and opportunities presented by globalization and develop the skills needed to analyze and implement international business operations effectively.
Recommended Textbook
International Business 16th Edition by John Daniels
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Chapter 1: Globalization and International Business
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Sample Questions
Q1) Critics of offshoring assert that the short-term cost savings derived from offshoring hinder firms from developing more efficient production methods.
A)True
B)False
Answer: True
Q2) In a short essay, identify and explain three competitive factors that influence international businesses.
Answer: a.Product strategy-A company's choice of strategy, either cost or differentiation, plays a part in determining how and where the company will operate.
b.Company resources and experience-A company's size, resources, and experience in comparison to competitors' affects how it will operate in international markets.In addition, a company's national market share and brand recognition will affect the operating tactics it employs.
c.Competitors faced in each market-Success for a company in any market will always be influenced by the strategies and operations of competitors within the market.
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3
Chapter 2: The Cultural Environments Facing Business
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Q1) What is the difference between a polycentric, ethnocentric, and geocentric approach to international management? What key factors should a firm consider before adopting one of these approaches?
Answer: In polycentric organizations, control is decentralized.In other words, business units in different countries have a significant degree of autonomy from the home office and act like local companies.Polycentrism may be, however, an overly cautious response to cultural variety.Ethnocentrism is the belief that one's own culture is superior to others.In international business, it describes a company or individual so taken with the belief that what worked at home should work abroad that environmental differences are ignored.Geocentrism refers to a situation in which a company bases its operations on an informed knowledge of home and host country needs, capabilities, and constraints.This is the preferred approach to business dealing with another culture because it increases introduction of innovations and decreases the likelihood of their failures.In deciding whether to make changes in either home- or host-country operations, a company should consider several factors: the importance of the proposed changes to every party involved, the cost and benefit to the company of each proposed change, the value of opinion leaders in implementing the changes, and timing.
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) What is the difference between individualism and collectivism? What is the relationship between government and business under each orientation?
Answer: The doctrine of individualism emphasizes the primacy of individual freedom, self-expression, and personal independence.Individualism values the individual's ambitions and opposes external interference by the government that constrains individual choice.Under individualism, the role of the government is to protect the liberty of individuals to act as they wish, so long as they do not infringe upon the liberties of others.Countries with an individualist orientation typically have an economy shaped by the idea of laissez-faire, meaning that the government should, for the most part, not interfere with business.
In contrast, the doctrine of collectivism emphasizes the primacy of the group-class, society, or the nation-over the interests of the individual.The group as a whole is greater than the sum of its individual parts.Individuals define themselves in connection with the group.Under collectivism, activities in the marketplace must improve the welfare of society.Systems that feature a collectivist orientation, then, hold that government should intervene in business situations to ensure that business practices benefit the group.
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Page 5
Chapter 4: The Economic Environments Facing Businesses
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Q1) During a time of reflation, the government is most likely to ________.
A)lower taxes
B)print money
C)reduce interest rates
D)support infrastructure
Q2) The so-called "misery index" is the sum of a country's inflation and unemployment rates.
A)True
B)False
Q3) ________ is a general, sustained rise in prices measured against a standard level of purchasing power.
A)Deflation
B)Inflation
C)Expansion
D)Reflation
Q4) Why is economic freedom an important factor to consider when analyzing a country's economic development, performance, and potential?
Q5) What is gross national income? How is it calculated? Illustrate your answer with a specific example.
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Chapter 5: Globalization and Society
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Q1) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________.
A)strategic accomplishment
B)consumer commitment
C)industry resolutions
D)financial success
Q2) Why is the argument that "anything legal is ethical" most likely insufficient?
A)Everything that is unethical is also illegal.
B)The law is an extremely efficient way to solve ethical dilemmas.
C)Laws are frequently based on imprecisely defined moral concepts.
D)Laws can never be changed; thus, rules for all possible ethical dilemmas are found in the law.
Q3) According to the teleological approach, individuals base moral decisions on
A)personal and social responsibilities
B)consequences of an action
C)cultural value systems
D)opinions of peers
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7
Chapter 6: International Trade and Factor-Mobility Theory
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Q1) The factor proportions theory holds that countries should improve their competitiveness by importing capital and skilled employees from abroad.
A)True
B)False
Q2) The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________.
A)depend more on production of nontradable goods and services
B)encourage urbanization in emerging countries that lack infrastructure
C)establish facilities in dispersed locations to hinder domestic competition
D)take advantage of wage and skill differences among countries
Q3) Most world trade takes place ________.
A)between developed countries and developing countries
B)among developed countries
C)among developing countries
D)between raw material exporters and manufacturing exporters
Q4) What is the difference between the free trade theories of absolute advantage and comparative advantage? How can free trade improve global efficiency?
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Chapter 7: Governmental Influence on Trade
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Q1) A voluntary export restriction (VER)refers to ________.
A)an agreement between two countries to reciprocally restrict exports to one another
B)requests by governments for companies to limit exports of militarily useful technology
C)limiting companies' exports to increase domestic supplies
D)limits placed on exports by a government of an exporting country at the request of the government of an importing country
Q2) Which of the following is typically NOT an argument used for keeping the U.S.trade embargo with Cuba intact?
A)There is not much economic potential from trade given Cuba's small population and low per capita income.
B)Removal of the embargo will cause much more Cuban immigration to the United States.
C)If the Cuban economy is weakened just a bit more, the Cuban political-economic system cannot be sustained.
D)There will be a backlash among countries supplying such commodities as sugar to the United States if the U.S. buys them from Cuba instead.
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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) ________ is a preferential trade agreement that was organized in 1967 and comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
A)APEC
B)OAU
C)ASEAN
D)CAFTA
Q3) The most important rationales for NAFTA are geographic proximity and trading importance.
A)True
B)False
Q4) The Single European Act set steps to accomplish monetary union in the European Union, including the creation of the euro.
A)True
B)False
Q5) Most MNEs generate a majority of their revenues in their home regions.
A)True
B)False
Q6) Are commodity agreements effective? Why or why not?
Page 10
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Commercial banks look at foreign-exchange trading as a service extended primarily to important customers, not as a major business activity of its own.
A)True
B)False
Q2) Which term refers to money denominated in the currency of another nation or group of nations?
A)foreign exchange
B)foreign subsidy
C)export tariff
D)quota
Q3) In foreign-exchange markets, reporting dealers trade more foreign exchange with other reporting dealers than with any other category of users.
A)True
B)False
Q4) A(n)________ is the price of a currency.
A)tariff
B)quota
C)exchange rate
D)subsidy
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Chapter 10: The Determination of Exchange Rates
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Q1) If inflation in the United States is relatively higher than inflation in Japan, and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar, it should most likely ________.
A)allow its currency to rise against the dollar
B)allow its currency to fall against the dollar
C)increase the supply of yen in the market
D)decrease the supply of yen in the market
Q2) Craig, a manager at a global firm, is studying the cyclical nature of growth and employment as a part of the process to forecast exchange rates.Which factor is Craig most likely monitoring?
A)the institutional setting
B)fundamental analyses
C)cultural analyses
D)circumstances
Q3) The value of the SDR is currently based on the ________.
A)euro
B)U.S. dollar
C)weighted average of four currencies
D)weighted average of six currencies
Q4) What is a black market? Under what conditions might one exist?
Page 12
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Chapter 11: Global Capital Markets
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Q1) The OECD is concerned about transfer pricing practices because ________.
A)transfer pricing can help maximize a company's worldwide tax liability
B)transfer prices tend to be higher in industrial than developing countries
C)governments use transfer prices to manipulate companies' investment strategies
D)companies use transfer prices to manipulate prices and, therefore, taxes
Q2) The Japanese yen makes up the largest portion of the international bond market.
A)True
B)False
Q3) The Eurocurrency market is a retail, rather than wholesale, market.
A)True
B)False
Q4) The Eurocurrency market is limited to exchanges that include the euro.
A)True
B)False
Q5) A negotiable certificate issued by a U.S.bank to represent the underlying shares of a foreign corporation's stock is called a(n)________.
A)Euroequity
B)American Depositary Receipt
C)Global Depositary Receipt
D)European Depositary Receipt
Page 13
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Chapter 12: The Strategy of International Business
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Q1) Which of the following has the greatest potential to transform an industry's structure?
A)a change in a competitor's management
B)a change in a competitor's pricing structure
C)the expansion of a distribution channel
D)the exit of a competitor from the industry
Q2) Which of the following refers to the means by which management applies the systems that link a company's value activities, whether those activities are performed in one or in many countries?
A)configuration
B)logistics
C)coordination
D)core competency
Q3) Phillip is an international business manager with Corbin Manufacturing.Which of the following serves as an external influence on the business decisions that Phillip makes?
A)production plant locations
B)host country monetary policy
C)supply chain linkages
D)product design standards
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Chapter 13: Country Evaluation and Selection
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Q1) Carrefour has been more successful than Walmart in Europe, whereas Walmart has been more successful than Carrefour in the United States.What is the most likely reason for these results?
A)first-mover advantages
B)nationalistic preferences of consumers
C)lack of knowing how to adapt products
D)increased exporting fees and transportation costs
Q2) Headquarters management often feels that people within an established operation are the best judge of the operation's investment needs.
A)True
B)False
Q3) Which of the following BEST explains why foreign subsidiary managers are often reluctant to propose divestments in the countries where they are working?
A)They are afraid of proposing the elimination of their jobs.
B)They are usually poorly trained in how to sell units or how to close them down.
C)They are too nationalistic to examine political risk objectively.
D)Many are in countries where the cultural attribute of power-distance is very high.
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Page 15
Chapter 14: Export and Import
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Q1) What are some reasons that firms decide to export their products or services? What does a firm need to consider when developing an export plan?
Q2) Ultimately, countertrade is an inefficient way of doing business because it
A)encourages buyers and sellers to use customs brokers to handle exchanges
B)requires buyers and sellers to negotiate a fair value on the exchange
C)reduces the risk that the goods sent as payment are of poor quality
D)eliminates the potential for price and financial distortion
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) Major types of indirect intermediaries include export trading companies, distributors, and freight forwarding companies.
A)True
B)False
Q5) What is a born global? How has technology triggered the growth of born globals?
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) What is an equity alliance? What motives would a firm have for forming an equity alliance?
Q2) What is a key industry?
A)an industry that is locked up competitively by domestic producers
B)a turnkey operator specializing in the construction of infrastructure components
C)an industry that receives government subsidies
D)an industry that significantly affects the economy by virtue of its size or influence on other sectors
Q3) Large companies that have resources to go it alone may have advantages in product development over small companies that do not because ________.
A)evidence suggests that collaborative arrangements slow the speed of innovation
B)large companies can dictate their terms of operations abroad
C)small companies are disadvantaged in legal settlements
D)large companies need not adapt to national differences
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) Falcon Enterprises is an MNE that uses price competition and relative market share to establish internal performance benchmarks and standards.The firm is most likely applying a system of ________.
A)bureaucratic control
B)market control
C)standardization control
D)clan control
Q2) Andrews Enterprises, which uses an international division structure, should be able to respond quickly to foreign activities but will most likely experience costly country-to-country duplication.
A)True
B)False
Q3) The fundamental limitation of a matrix structure is that it ________.
A)creates a poor organizational culture
B)isolates upper management from operational levels
C)institutes a dual hierarchy that violates the unity-of-command principle
D)introduces more errors in the decision-making process due to the speed of the process
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18
Chapter 17: Marketing Globally
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Q1) Which of the following BEST describes globally standardized advertising?
A)a campaign that is identical in all markets
B)a campaign that meets the legal and ethical standards of all countries
C)a campaign that is similar but not identical from market to market
D)a campaign that depends primarily on push rather than pull promotion
Q2) Different country standards, such as safety regulations, add complexity to whether companies decide to use a globally standardized product.
A)True
B)False
Q3) Passive exports involve the filling of unsolicited orders from abroad.
A)True
B)False
Q4) Higher disposable income and technological advances help overcome many geographic constraints on product demand and distribution.
A)True
B)False
Q5) How do foreign government regulations affect pricing and promotion for international businesses?
Q6) In a short essay, describe the various reasons for product alteration.
Page 19
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) Offshore manufacturing is attractive because it offers high labor costs, cheap materials and components, and proximity to markets.
A)True
B)False
Q2) ________ is the measuring of performance so that companies can respond appropriately to changing conditions.
A)Coordination
B)Configuration
C)Control
D)Compatibility
Q3) Most U.S.companies have moved from a total quality management (TQM)approach to an acceptable quality level (AQL)approach.
A)True
B)False
Q4) What is a just-in-time (JIT)inventory system? What are the implications of JIT for firms that use foreign sourcing?
Q5) Onshoring is also knows as reshoring.
A)True
B)False
Page 20
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Chapter 19: International Accounting and Finance Issues
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Q1) According to the accounting concept of mutual recognition, companies are required to reconcile financial statements to local GAAP.
A)True
B)False
Q2) Which of the following countries would be most likely to be classified as high secrecy and conservatism?
A)Vietnam
B)Chile
C)Turkey
D)Honduras
Q3) Assume that a U.S.-based MNE has operations in Germany and that the revenues and expenses are mostly incurred in euros.Which translation method is the MNE most likely to use?
A)current-rate method
B)temporal method
C)translate-restate method
D)consolidation method
Q4) What is the role of the controller in an MNE? What are some of the challenges that a controller faces in an international environment?
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Chapter 20: International Human Resource Management
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Q1) What problems do managers commonly encounter when repatriated from foreign assignments? How can HRM improve the repatriation process?
Q2) Terrell, a manager with Qualsys Technologies, has been on an expatriate assignment in Russia for the last three years.Terrell's foreign assignment has ended, and he is working with HR to return to the United States and begin a new job at the firm's headquarters in Philadelphia.In which activity is Terrell most likely involved?
A)expatriation
B)repatriation
C)demotion
D)promotion
Q3) All of the following would most likely improve the successful repatriation of expatriates EXCEPT ________.
A)encouraging repatriated workers to take sabbaticals upon return
B)developing mentoring programs to smooth transitions
C)integrating foreign assignments into career plans
D)providing repatriated workers with desirable jobs
Q4) List and compare the three common methods of implementing a balanced compensation plan.
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