International Business
Mock Exam
Course Introduction
International Business examines the complexities and dynamic environment of conducting business across national borders. This course covers concepts such as globalization, international trade and investment, cross-cultural management, global marketing, and international financial management. Students will explore how economic, cultural, political, and legal differences among countries affect business strategies and operations. Through case studies and real-world examples, participants will develop the analytical skills necessary to understand international markets, manage global teams, and formulate strategies for entering and succeeding in diverse international markets.
Recommended Textbook
International Business 7th Edition by Ricky
W. Griffin
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19 Chapters
2470 Verified Questions
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Page 2
Chapter 1: An Overview of International Business
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Sample Questions
Q1) A(n) ________ involves a firm in one country agreeing to operate facilities for a firm in another country for an agreed-upon fee.
A) franchising agreement
B) licensing agreement
C) management contract
D) indirect investment
Answer: C
Q2) The ________ is where a company operates but is not headquartered.
A) host country
B) home country
C) parental country
D) third party country
Answer: A
Q3) Which of the following is the LEAST likely reason that firms globalize?
A) expanding into new markets
B) acquiring low-cost resources
C) leveraging core competencies
D) competing for critical workers
Answer: D
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Page 3
Chapter 2: Global Marketplaces and Business Centers
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Sample Questions
Q1) In Saudi Arabia, oil makes up 90 percent of its total export earnings.
A)True
B)False
Answer: True
Q2) Which country possesses the world's largest economy? Why do you think international trade is such a small component of the U.S. economy?
Answer: The United States has the world's largest economy, accounting for almost 30 percent of the world's GDP. Although international trade has become increasingly more important during the past decade, it is a relatively small component of the U.S. economy. U.S. exports of goods and services in 2010 totaled $1.8 trillion but were only 12.3 percent of its GDP. However, this figure is somewhat misleading. Because of the country's large size, trade that might be counted as international in smaller countries is considered domestic in the United States. For example, the money spent for a hotel room in neighboring Belgium by a Dutch motorist trapped in a thunderstorm 50 miles from home late at night is counted in the international trade statistics of both Belgium and the Netherlands. A similar expenditure by a Connecticut motorist stuck in New Jersey after watching a football game at the Meadowlands is a purely domestic transaction.
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Chapter 3: Legal, Technological, Accounting, and Political Environments
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Sample Questions
Q1) Saudi Arabia's nationalization of the oil industry in the 1970s is an example of
A) macropolitical risk
B) micropolitical risk
C) transfer risk
D) ownership risk
Answer: B
Q2) Macropolitical risks affect all firms in a country, while micropolitical risks affect only specific industries or specific firms.
A)True
B)False
Answer: True
Q3) Statutory laws are those enacted under the rule of a dictator.
A)True
B)False
Answer: False
Q4) What is the Overseas Private Investment Corporation (OPIC)?
Answer: OPIC insures American overseas investments against nationalization, insurrections or revolutions, and foreign exchange inconvertibility.
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Chapter 4: The Role of Culture
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Sample Questions
Q1) ________ is the unconscious use of one's own culture to help assess new surroundings.
A) Cultural conversion
B) Cultural illiteracy
C) Cross-cultural literacy
D) Self-reference criterion
E) Acculturation
Q2) Germany is a low-context culture.
A)True
B)False
Q3) Which form of family is most emphasized in Somalia?
A) nuclear
B) extended
C) blended
D) ancestral
Q4) What is the difference between a high-context and low-context culture? Provide examples of each to illustrate your answer.
Q5) What are the four characteristics of culture? How can an international manager adapt to a culture and develop cross-cultural literacy?
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Chapter 5: Ethics and Social Responsibility in International Business
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Sample Questions
Q1) Which of the following best explains why international factory owners would most likely want regular ILO inspections?
A) eliminate workplace corruption
B) encourage investments from MNEs
C) comply with World Trade Organization
D) earn reductions in exporting taxes and fees
Q2) Bribery is common in China and Russia but is considered unacceptable in Kenya and South Korea.
A)True
B)False
Q3) Why is it important for top management to demonstrate ethical behavior?
Q4) Research indicates that as much as 50% of the world's diamonds are smuggled "conflict diamonds."
A)True
B)False
Q5) Under the Foreign Corrupt Practices Act, American firms are permitted to pay bribes only in those countries where bribery is considered a normal part of business.
A)True
B)False
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Chapter 6: International Trade and Investment
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Sample Questions
Q1) Since World War II, world trade has ________.
A) grown slightly
B) shrunk slightly
C) shrunk significantly
D) grown dramatically
Q2) Demand factors affecting the decision to undertake FDI include all of the following except ________.
A) customer access
B) marketing advantages
C) customer mobility
D) resource availability
Q3) Saudi Arabia has large crude oil reserves, and India has a large pool of skilled workers. These are both examples of ________.
A) factor endowments
B) economies of scope
C) production factors
D) opportunity costs
Q4) Why was Adam Smith opposed to mercantilism? What was the premise of Smith's theory?
Q5) Explain the four elements of Porter's national competitive advantage theory.
Page 8
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Chapter 7: The International Monetary System and the Balance of Payments
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Sample Questions
Q1) The BOP is a useful tool for detecting signs of trouble that could lead to governmental trade restrictions.
A)True
B)False
Q2) Currencies that can be freely exchanged for other currencies without legal restrictions are called ________.
A) floating currencies
B) fixed currencies
C) convertible currencies
D) free currencies
Q3) Under the gold standard, when the United States and the United Kingdom exchanged their currencies at a rate of the $20.67/ 4.247, the exchange rate was a
A) floating rate
B) fixed exchange rate
C) par value
D) pegged rate
Q4) Why did many countries prefer to be paid in currency rather than in gold during the gold standard?
Q5) What is an SDR? How are SDRs used?
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Chapter 8: Foreign Exchange and International Financial Markets
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Sample Questions
Q1) The price of foreign exchange is set by ________.
A) the international monetary fund
B) the gold standard
C) demand and supply in the marketplace
D) administrators of the World Bank
Q2) ________ focus on offering banking and other financial services to nonresident customers.
A) Subsidiary banks
B) Branch banks
C) Affiliated banks
D) Offshore financial centers
Q3) When the direct quote and the cross quote for each possible pair of currencies are equal, there is no opportunity for three-point arbitrage.
A)True
B)False
Q4) What is the difference between a Eurobond, a global bond, and a foreign bond?
Q5) MNCs can cross-list their common stocks on multiple stock exchanges.
A)True
B)False
Page 10
Q6) Why are arbitrage activities important to the international monetary system?
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Chapter 9: Formulation of National Trade Policies
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Sample Questions
Q1) What is the difference between an ad valorem tariff, specific tariff, and compound tariff? What is a countervailing duty and its purpose?
Q2) What type of tariff includes both ad valorem components and specific components?
A) transit tariff
B) harmonized tariff
C) export tariff
D) compound tariff
Q3) Explain how a maquiladora operates.
Q4) Retail prices are irrelevant in determining whether dumping has occurred.
A)True
B)False
Q5) Managed trade is another term for free trade.
A)True
B)False
Q6) According to international trade law, countries can implement safeguard clauses to impose temporary tariffs and quotas.
A)True
B)False
Q7) Which type of trade policy did Adam Smith support?
Page 12
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Chapter 10: International Cooperation Among Nations
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Sample Questions
Q1) A coalition of two large countries or three smaller countries can block a decision by the Council of the Economic Union.
A)True
B)False
Q2) What is the best means of promoting economic development in Mexico?
A) trade
B) mercantilism
C) protectionism
D) export substitutions
Q3) The individuals appointed to the European Commission serve the European Union, not their individual country.
A)True
B)False
Q4) EU members are no longer sovereign nations.
A)True
B)False
Q5) Economic integration is typically beneficial to all sectors within an economy.
A)True
B)False
Q6) What was the most important aspect of the Maastricht Treaty?
Page 13
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Chapter 11: International Strategic Management
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Sample Questions
Q1) What is a distinctive competence?
Q2) Which approach is most appropriate when economies of scale for production, distribution, and marketing are low?
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Q3) Disney uses the related diversification strategy.
A)True
B)False
Q4) What are the similarities and differences between the home replication strategy and the global strategy?
Q5) The first step in the strategic planning process is to ________.
A) perform a SWOT analysis
B) develop a mission statement
C) establish strategic goals
D) develop a control framework
Q6) What is the purpose of conducting a SWOT analysis? As an international manager, how would you conduct a SWOT analysis? How would you use the gathered information?
Page 14
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Chapter 12: Strategies for Analyzing and Entering Foreign Markets
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Sample Questions
Q1) The ________ acts as a foreign sales department for domestic producers by selling those firms' goods in foreign markets.
A) manufacturers' agent
B) export and import broker
C) freight forwarder
D) manufacturers' export agent
Q2) ________ are those that make it desirable for a firm to produce a good or service itself rather than contracting with another firm to produce it.
A) Ownership advantages
B) National competitive advantages
C) Internalization advantages
D) Resource availabilities
Q3) Dunning's eclectic theory is useful in understanding which mode of entry to use.
A)True
B)False
Q4) Name five critical factors in assessing new market opportunities.
Q5) What is the difference between a brownfield strategy and a greenfield strategy? Do you think one strategy is better than the other? Explain.
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Chapter 13: International Strategic Alliances
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Sample Questions
Q1) What are the five primary pitfalls of strategic alliances? Describe each and explain which one you think is most difficult to avoid.
Q2) Joint ventures tend to have a longer duration than non-joint venture strategic alliances.
A)True
B)False
Q3) General Mills and Nestle formed a functional alliance that allowed the joint venture, Cereal Partners Worldwide, to achieve synergy through its size and resources.
A)True
B)False
Q4) A(n) ________ alliance occurs when partners share expertise or services related to distribution, pricing, and communications.
A) production
B) marketing
C) financial
D) R & D
Q5) In a brief essay, discuss the problems associated with forming a strategic alliance with a competitor.
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Chapter 14: International Organization Design and Control
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Sample Questions
Q1) A(n) ________ is a numerical index of performance that the firm wants to maintain.
A) control standard
B) performance ratio
C) accounting standard
D) benchmark
Q2) What are the typical levels a firm goes through with regard to its organizational design as it transitions from domestic to international to global? What are the three managerial philosophies that guide organization design? Briefly explain when each philosophy is appropriate.
Q3) Which of the following is an advantage of using a global area design?
A) eliminating duplication of functional areas
B) gaining cost efficiencies in manufacturing
C) tailoring the product mix in a region
D) encouraging global product planning
Q4) The higher the level of interdependence among divisions and functions in a firm, the more coordination is required.
A)True
B)False
Q5) What is the meaning of area knowledge?
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Chapter 15: Leadership and Employee Behavior in International Business
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Sample Questions
Q1) ________ is the process of choosing one alternative from among a set of alternatives in order to promote a specific objective.
A) Decision making
B) Perception
C) Motivation
D) Leadership
Q2) People who are high in ________ are willing to listen to new ideas and to change their own beliefs as a result of new information.
A) agreeableness
B) extroversion
C) openness
D) conscientiousness
Q3) What role did ineffective leadership play in Toyota's 2010 quality and safety problems?
Q4) What are the need levels in Maslow's hierarchy of needs? What role do these needs play in international management? How does an employee's location or culture affect the hierarchy of needs?
Q5) What are the Big Five personality traits? How are these traits relevant to organizations?
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Chapter 16: International Marketing
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Sample Questions
Q1) What is the function of pricing in the marketing mix?
A) assessing customer needs and values
B) developing policies that generate revenue
C) increasing the desirability of the product to buyers
D) transporting products to customers quickly and inexpensively
Q2) Why is it especially difficult for MNCs to develop pricing strategies? What factors contribute to these difficulties?
Q3) Organix Foods, a U.S. firm, is expanding its operations overseas. Executives at the firm plan to take a polycentric approach to international marketing. Which of the following actions will Organix most likely take?
A) using the same marketing mix in domestic and foreign markets
B) customizing the marketing mix for each foreign market
C) standardizing the marketing mix and product
D) developing a bilingual marketing mix
Q4) Which of the following is a tangible component of a product?
A) image
B) installation
C) warranty
D) packaging
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Chapter 17: International Operations Management
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Sample Questions
Q1) All else being equal, a firm will choose to make or buy simply on the basis of whether it can obtain the resource cheaper by making it internally or by buying it from an external supplier.
A)True
B)False
Q2) ________ refers to the situation when various units within the firm can be seen as suppliers to other units within the firm.
A) Supply chain management
B) Vertical integration
C) Operations management
D) Cross-ownership
Q3) Why do most personal computer manufacturers purchase components from outside suppliers?
A) protection of intellectual property rights
B) fast rate of technological change
C) close oversight of quality ratios
D) fluctuation in currency rates
Q4) The service sector is especially important in developing economies.
A)True
B)False
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Chapter 18: International Financial Management
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Sample Questions
Q1) What are the major forms of payment for international transactions?
Q2) Columbus Trading agrees to exchange coffee and rice to Romania in return for machinery. Which term best describes this transaction?
A) countertrade
B) in-kind payment
C) open account payment
D) documentary collection
Q3) What is the primary risk an exporter faces with documentary collection?
A) bank changing terms
B) importer defaulting
C) issuing bank defaulting
D) importer failing to pay account balance
Q4) Exporters usually prefer their payment in the host currency.
A)True
B)False
Q5) Economic exposure is the impact on the value of a firm's operations of unanticipated exchange rate changes.
A)True
B)False
Q6) Which type of country relies most on countertrade?
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Chapter 19: International Human Resource Management and Labor Relations
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Sample Questions
Q1) Which stage of acculturation do most people remain in?
A) honeymoon
B) disillusionment
C) adaptation
D) biculturalism
Q2) Codetermination encourages cooperation between management and labor in running a business.
A)True
B)False
Q3) The primary advantage of using a host country national is that the manager already understands the local laws, culture, and economic conditions.
A)True
B)False
Q4) What challenges face repatriated managers when they return from a foreign assignment? How do these problems affect employers?
Q5) What is culture shock?
Q6) What are headhunters?
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Q7) What are the basic elements of the international human resource management process?