International Business Operations
Exam Answer Key
Course Introduction
International Business Operations explores the strategic, managerial, and operational aspects of conducting business across national borders. This course examines the complexities of the global marketplace, including international trade theories, cross-cultural communication, market entry strategies, global supply chain management, international finance, and regulatory environments. Students will analyze real-world case studies to understand how multinational organizations adapt to economic, socio-cultural, legal, and political differences in various regions. Emphasis is placed on developing skills required to assess global business opportunities, mitigate risks, and successfully manage international operations in a dynamic and interconnected world economy.
Recommended Textbook
International Business The New Realities 4th Edition by S. Tamer Cavusgil
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Page 2
Chapter 1: Introduction: What Is International Business
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Q1) For manufacturing companies, on a per-unit-of-output basis, high volumes of production are correlated with lower per-unit cost.
A)True
B)False
Answer: True
Q2) All of the following are reasons to study international business EXCEPT ________.
A)international business contributes to economic prosperity
B)international trade is a critical engine for job creation
C)international trade and investment have experienced unprecedented decline
D)international business provides an opportunity to support sustainability and corporate citizenship
Answer: C
Q3) Which of the following countries hosts the greatest number of MNEs?
A)Germany
B)Japan
C)Netherlands
D)United States
Answer: D
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3
Chapter 2: Globalization of Markets and the
Internationalization of the Firm
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Q1) Which of the following statements is true about the firm-level consequences of market globalization?
A)The globalization of markets has narrowed down new business opportunities for internationalizing firms.
B)Globalization drives firms to relocate key value-adding activities to the most advantageous locations around the world.
C)A firm's value chain is not subject to internationalization.
D)Through offshoring, a firm relocates a major value-chain activity by establishing a factory or subsidiary in the home market.
Answer: B
Q2) Which of the following represents the final stage in a firm's value chain?
A)marketing
B)procurement
C)research and development
D)sales and service
Answer: D
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Chapter 3: The Cultural Environment of International Business
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Q1) Which of the following is most important for Tag-Mart's top management to determine while making a choice between Sato and Aoki as the new store manager?
A)How many shoppers are expected at the Tokyo Tag-Mart grand opening sale?
B)How many locally owned stores will Tokyo Tag-Mart compete against?
C)Would customers at the Tokyo Tag-Mart prefer strong customer service or a U.S.-style shopping experience?
D)What is the average age and annual income of Tokyo Tag-Mart shoppers?
Answer: C
Q2) Business dealings in low-context cultures are characterized by ________.
A)a high degree of sensitivity to the context
B)a high degree of mutual respect
C)efficient negotiations
D)complex rituals
Answer: C
Q3) In companies with decentralized organizational structure, power is concentrated at the regional or corporate headquarters.
A)True
B)False
Answer: False
5
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Chapter 4: Ethics, Corporate Social Responsibility,
Sustainability and Corporate Governance
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Q1) In 2014,________ was the largest single source of counterfeit products imported into the U.S.
A)China
B)The United States
C)Iran
D)Russia
Q2) ________ refers to ideas or works created by individuals or firms and includes a variety of proprietary, intangible assets: discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs.
A)Global sourcing
B)Corporate governance
C)Constant capital
D)Intellectual property
Q3) Which of the following is true with regard to bribery?
A)Bribery promotes a culture of dishonesty and immorality.
B)Bribery poses no significant threat to market economies.
C)Bribery is considerably rare in developing economies.
D)Bribery is not acceptable in much of the world.
Q4) Define ethics. Provide examples of unethical behavior exhibited by firms.
Page 6
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Chapter 5: Theories of International Trade and Investment
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Q1) Which of the following is true about the determinants of national competitive advantage?
A)The presence of strong competitors in a nation adversely affects national competitive advantage.
B)The presence of demanding customers pressures firms to innovate faster and produce better products.
C)Demand conditions describe the nation's position in factors of production, such as labor, natural resources, capital, technology, entrepreneurship, and know-how.
D)Vigorous competitive rivalry among firms lowers national innovativeness.
Q2) Which of the following is true with regard to competitive advantage?
A)Competitive advantages are typically derived from deliberate national policies.
B)A competitive advantage is difficult for competitors to imitate.
C)A competitive advantage is also known as a country-specific advantage.
D)Competitive advantage includes inherited resources, such as arable land.
Q3) In a short essay, explain the factor proportions theory. How does the theory differ from other theories?
Q4) Explain the limitations of early trade theories. Discuss born global firms.
Q5) In a short essay, discuss the internalization theory. Provide examples.
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Chapter 6: Political and Legal Systems in National Environments
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Q1) Which of the following is a typical complaint of host-country competitors against foreign firms?
A)Foreign firms burden the host-country with infrastructure requirements.
B)Foreign firms do not have to obey host-country laws and regulations.
C)Foreign firms receive financial support from host-country governments.
D)Foreign firms lure host-country workers to the home-country businesses.
Q2) Unlike other legal systems, Islamic law evolves very little over time .
A)True
B)False
Q3) Which of the following is the most important issue to consider when determining the best entry strategy for Super Sports?
A)What are the regulations regarding income repatriation?
B)What type of promotion and advertising is prohibited?
C)What are the restrictions on inward foreign direct investment?
D)Is the recycling of product packaging mandatory?
Q4) Which of the following statements is true of country risk?
A)Its nature remains constant over time and across nations.
B)Its intensity seldom varies over time and across nations.
C)It is present only in poor nations.
D)It is always present.
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Chapter 7: Government Intervention and Regional Economic Integration
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Q1) Which of the following is a method used by some manufacturers to avoid paying high tariffs?
A)assemble products in the target market
B)produce a large number of less expensive items in the target market
C)employ highly skilled workers in the export location regardless of the cost
D)ship products to fewer international locations
Q2) In a short essay, explain how the GATT changed international trade.
Q3) The Chinese government's policy of requiring foreign firms to enter the Chinese market via joint ventures is intended to ________.
A)limit the amount of FDI
B)create jobs for Chinese workers
C)protect China's national security
D)stimulate foreign investment
Q4) Nations pursuing regional integration seek to ________.
A)increase the scale of the marketplace for firms inside the economic bloc
B)help firms increase the scale of operations and enhanced productivity
C)attract direct investment from outside the bloc
D)all of the above
Q6) What has NAFTA accomplished for its members? Page 9
Q5) Briefly describe the five levels of economic integration.
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Chapter 8: Understanding Emerging Markets
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Q1) Which of the following most likely supports the consulting firm's recommendation that Vytel proceed with plans to do business in Argentina?
A)The political conditions in Argentina are stable.
B)Government bureaucrats favor domestic firms to foreign firms.
C)Potential local partners have few government contacts.
D)The Argentine government lacks transparency.
Q2) Per-capita GDP converted at market exchange rates does NOT paint an accurate picture of the market potential of an emerging market because ________.
A)it tends to over-emphasize the role of pricing in driving growth in emerging markets
B)it overlooks the substantial price differences between advanced economies and emerging markets
C)prices are usually higher for most products and services in emerging markets
D)emerging markets do not support inward FDI
Q3) Certain emerging markets that have evolved from centrally planned economies to liberalized markets are called transition economies.
A)True
B)False
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11
Chapter 9: The International Monetary and Financial Environment
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Q1) The 2008 global financial crisis began in the United States and quickly spread around the world.
A)True
B)False
Q2) The monetary authority in each country that regulates the money supply, issues currency, and manages the exchange rate of the nation's currency relative to other currencies is called the World Bank.
A)True
B)False
Q3) Which of the following should be considered before the government takes any action to correct the high rate of inflation?
A)What have been the historical consequences of trade barriers in Country X?
B)What is the current price of coffee in the United States and Europe?
C)What will be the long-term effects of currency depreciation to Country X?
D)What other industries in Country X could replace agriculture?
Q4) Merchant banks provide capital to firms in the form of shares rather than loans.
A)True
B)False
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Chapter 10: Financial Management and Accounting in the Global Firm
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Q1) The volume and complexity of a firm's intracorporate transfers depends on
A)the amount of cash available from loans
B)the value of the shareholders' stock
C)the country from which the firm originates
D)the number of subsidiaries and alliances the firm maintains worldwide
Q2) Eurobond is a bond sold outside the issuer's country and denominated in the currency of the country where issued.
A)True
B)False
Q3) Which of the following is most likely a disadvantage of Intensity raising funds through equity financing?
A)Intensity management could lose a controlling interest in the firm.
B)Intensity would not be able to repay shareholders at any time.
C)Intensity management would end up in bankruptcy.
D)Intensity could lose money from currency fluctuations in emerging markets.
Q4) Describe three methods used to transfer funds within an MNE.
Q5) Explain the differences between a forward contract and a futures contract.
Q6) How has technology affected foreign exchange trading?
Q7) What goals does harmonization of world accounting practices aim to achieve? Page 13
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Chapter 11: Strategy and Organization in the International Firm
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Q1) How can a firm's strategy make the best use of the firm's resources? How does a firm's decision to have a centralized versus a decentralized organizational structure affect its strategy?
Q2) Which of the following would exert pressure on a U.S.-based clothing company,
ZSource Ltd. , to become locally responsive?
A)to seek cost reduction through scale economies
B)to conduct global sourcing of raw materials, components, energy, and labor
C)to monitor and respond to global competitors
D)to meet host government requirements and regulations
Q3) Which of the following best characterizes the concept of global integration?
A)Effective global competition requires that products be specialized based on the market.
B)Making adjustments for unique markets is an essential element of international business.
C)Creating variations of the same product for different markets is an unnecessary expense.
D)The differences in market-to-market distribution channels must be accommodated.
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Chapter 12: Global Market Opportunity Assessment
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Q1) The buying power of the country's residents is termed as ________.
A)market intensity
B)market size
C)market consumption capacity
D)market receptivity
Q2) Private consumption as a percentage of GDP is used to measure ________.
A)market intensity
B)market size
C)market receptivity
D)market growth rate
Q3) Which of the following tasks is the final stage of assessing the global market opportunities of a firm?
A)screen countries to identify target markets
B)assess product suitability for foreign markets
C)estimate company sales potential
D)assess industry market potential
Q4) By monitoring key industry-specific indicators, a manager can estimate industry market potential.
A)True
B)False
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Chapter 13: Exporting and Global Sourcing
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Q1) Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.
A)True
B)False
Q2) Discuss the major risks associated with global sourcing.
Q3) The relocation of a business process or entire manufacturing facility to a foreign country is known as ________.
A)offshoring
B)captive sourcing
C)outsourcing
D)subsidizing
Q4) Which of the following activities is highly important to firms as a strategic asset?
A)manufacturing of parts
B)customer service
C)sales and distribution
D)marketing and branding
Q5) Front-office activities cannot be classified under BPO.
A)True
B)False
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Chapter 14: Foreign Direct Investment and Collaborative Ventures
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Q1) A greenfield investment is a direct investment to purchase an existing company or facility.
A)True
B)False
Q2) Which of the following questions is most important for Ciao managers to evaluate in their decision regarding the location of the new manufacturing facility?
A)What would be the costs and availability of skilled labor in Canada and Russia?
B)What other industries manufacture products in Canada and Russia?
C)How much time will it take to train managers in Canada and Russia?
D)How should the current marketing strategies be modified to serve markets in Canada and Russia?
Q3) Which of the following is a characteristic of an equity joint venture?
A)simple management structure
B)facilitates knowledge transfer between partners
C)easy to terminate
D)lesser exposure to political risk
Q4) Discuss the four key differences between project-based, nonequity ventures and equity ventures.
18
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Chapter 15: Licensing, Franchising, and Other Contractual Strategies
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Q1) Which of the following is an advantage of licensing?
A)It is ideal for products, services, or knowledge that is highly complex.
B)It is easy to maintain control over how the licensed asset is used.
C)It requires very little capital investment in the foreign market.
D)It guarantees a basis for future expansion in the market.
Q2) Compare and contrast licensing and franchising as foreign market entry strategies. Why is franchising a more comprehensive strategy?
Q3) When compared to licensing agreements, the relationships established in franchising arrangements are typically volatile and short-term.
A)True
B)False
Q4) Explain franchising as an entry strategy into foreign markets. Describe three advantages and three disadvantages of franchising for the franchisee.
Q5) In a typical licensing agreement, after the relationship is established, the licensor is required to be directly involved in the market and provide ongoing managerial guidance.
A)True
B)False
Page 19
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Chapter 16: Marketing in the Global Firm
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Q1) Adaptation is often necessitated due to ________.
A)differences across countries in language, culture, economic conditions, and other factors
B)unstable demand
C)high import tariffs
D)similarities in customer preferences across various demographic groups worldwide and the increased emphasis on the homogenization of global markets
Q2) All of the following are true of global new-product planning teams EXCEPT
A)they assemble employees with special knowledge and expertise
B)they are responsible for global promotion of products and services
C)they include geographically-diverse employees in team activities
D)they determine which elements of the product will be standardized
Q3) All of the following refer to external factors that impact international pricing EXCEPT
A)cost of manufacturing
B)value-added taxes
C)shipping
D)anticipated fluctuations in currency exchange rates
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Chapter 17: Human Resource Management in the Global Firm
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Q1) ________ refers to the employee's ability to adopt verbal and nonverbal behaviors appropriate in different cultures.
A)Behavioral biases
B)Parochialism
C)Behavioral flexibility
D)Ethnocentrism
Q2) In a short essay, discuss the connection between expatriate assignment failure and culture shock. What are the different components of training designed to prepare expatriates for assignments abroad?
Q3) Women enjoy equal access to senior management positions in most Asian countries.
A)True
B)False
Q4) Through labor relations, management and workers identify and determine job relationships that will apply in the workplace.
A)True
B)False
Q5) Why are taxes a concern for expatriates? Discuss how firms and governments often handle tax issues for employees working abroad.
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