International Business Operations Practice Exam
Course Introduction
International Business Operations explores the strategies, structures, and processes that organizations use to conduct business across national borders. This course examines the complexities of operating in diverse cultural, economic, and regulatory environments, addressing topics such as global market entry strategies, cross-cultural management, international supply chain logistics, and foreign exchange risk. Through case studies and real-world examples, students learn to analyze the challenges and opportunities faced by multinational firms and develop an understanding of how businesses adapt their operations to succeed in the global marketplace.
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International Business 16th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) The view that globalization is inevitable is most likely based on the belief that
A)international organizations will replace nation-states
B)protesters against globalization will be persuaded to change their views
C)people want more global homogeneity of cultures
D)technical advances in transportation and communications are highly persistent
Answer: D
Q2) The recent expansion of technology has contributed to the growth in international business by creating new products that are important in world trade.
A)True
B)False
Answer: True
Q3) All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT ________.
A)noncoastal areas of the oceans
B)the Panama and Suez Canals
C)outer space
D)Antarctica
Answer: B
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) Which of the following statements about the English language is most likely NOT true?
A)The largest portion of global output is in English-speaking countries.
B)A large portion of MNEs are headquartered in English-speaking countries.
C)English is the official national language in most countries where FDI is encouraged.
D)Many MNEs from non-English speaking countries use English as their operating language.
Answer: C
Q2) What are the characteristics of individualist and collectivist cultures?
Answer: Attributes of individualism are low dependence on the organization and a desire for personal time, freedom, and challenge.Attributes of collectivism are dependence on the organization and a desire for training, good physical conditions, and benefits.In those countries with high individualism, self-actualization will be a prime motivator because employees want challenges.However, in countries with high collectivism, the provision of a safe physical and emotional environment will be a prime motivator.
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) All of the following countries have a totalitarian political system EXCEPT ________.
A)China
B)Russia
C)South Korea
D)Saudi Arabia
Answer: C
Q2) Countries with a ________ legal system tend to encourage precise, detailed contracts, whereas countries with a ________ legal system tend to encourage shorter and less specific contracts.
A)theocratic; mixed
B)common; civil
C)civil; customary
D)customary; common
Answer: B
Q3) The term collectivism refers to a system that stresses the primacy of societal goals over individual goals.
A)True
B)False
Answer: True
Page 5
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Chapter 4: The Economic Environments Facing Businesses
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Q1) In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________.
A)leveraging control of the financial system
B)developing national corporations
C)supporting the local activities of foreign competitors
D)systematically managing trade relations
Q2) A market economy gives individuals the freedom to decide where to work doing what, how to spend or save money, and whether to consume now or later.
A)True
B)False
Q3) In the United States, the unemployment rate indicates the ________.
A)percentage of the labor force that wants to work full-time but can only find part-time employment
B)number of people who have stopped looking for work because full-time jobs are unavailable
C)percentage of unemployed workers seeking paid work relative to the total labor force
D)number of workers eligible for government services and unemployment benefits
Q4) Describe the three ways economies can be categorized.
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Page 6
Chapter 5: Globalization and Society
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Q1) Which stakeholder group primarily wants additional sales and increased productivity?
A)customers
B)shareholders
C)society at large
D)government
Q2) A payment to a customs official to clear legitimate merchandise is permitted by the Foreign Corrupt Practices Act.
A)True
B)False
Q3) GE's Ecomagination program has enabled the firm to develop a competitive advantage over its competitors.
A)True
B)False
Q4) What is the primary reason that Anglo American PLC developed its ART program?
A)comply with government standards
B)maintain a healthy workforce
C)abide by union demands
D)reduce employee benefits
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Chapter 6: International Trade and Factor-Mobility Theory
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Q1) According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle?
A)Doing so allows use of long production runs using capital-intensive methods.
B)Many consumers are willing to pay high costs for the newest products.
C)Transportation costs are reduced by focusing on markets in developed countries.
D)Import restrictions prevent production in countries other than the ones making product innovations.
Q2) Nontradable goods are BEST defined as ________.
A)products and services for which exporting costs are excessive
B)factors of production that exceed safety regulations
C)goods used for national defense
D)products that comprise a portion of the inputs for finished products
Q3) A strategic trade policy is one that develops industries to lessen dependence on foreign military goods.
A)True
B)False
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Chapter 7: Governmental Influence on Trade
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Q1) The most common type of tariff is the ________ tariff.
A)export
B)import
C)transit
D)ad valorem
Q2) 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
Q3) Export prices of primary products fluctuate less than export prices of manufactured products.
A)True
B)False
Q4) An effective tariff is the sum of the ad valorem tariff plus the specific duty.
A)True
B)False
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) The ________ clause embodied the fundamental principle of GATT-trade without discrimination.
A)most-favored-nation
B)nontariff barriers
C)free rider
D)normal trade relations
Q2) An example of an effective commodity agreement is ________.
A)the Organization of Petroleum Exporting Countries
B)the Organization of Petroleum Importing Countries
C)the International Tin Alliance
D)the International Cotton Alliance
Q3) Most MNEs generate a majority of their revenues in their home regions.
A)True
B)False
Q4) The European Union is an example of regional integration.
A)True
B)False
Q5) Are commodity agreements effective? Why or why not?
Q6) What are the rules of origin and regional content provisions of NAFTA?
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Q7) What has been the impact of NAFTA on trade and employment in NAFTA nations?
Chapter 9: Global Foreign-Exchange Markets
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Q1) A tariff is the price of a currency.
A)True
B)False
Q2) Stella, who works and lives in San Diego, wants to send money to her mother who lives in a small village south of Puerto Vallarta, Mexico.Stella typically uses Western Union to handle the transaction.Which of the following is the most likely reason that Stella uses Western Union?
A)no fees
B)convenience
C)low exchange rates
D)cross rate capability
Q3) The pound-dollar forward rate for pounds is $1.9068, and the spot rate is $1.9100.Pounds are selling at a ________.
A)discounted premium
B)backward discount
C)forward discount
D)forward premium
Q4) What is a futures contract? What institutions handle futures contracts?
Q5) What is currency speculation? Why is it risky?
Q6) How is foreign exchange traded? What methods are available?
Page 11
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Chapter 10: The Determination of Exchange Rates
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Q1) The International Fisher Effect ________.
A)links interest rates and inflation
B)implies that the currency of the country with the lower interest rate will weaken in the future
C)implies that the country with the higher interest rate should have lower inflation
D)links interest rates and exchange rates
Q2) Fundamental forecasting uses trends in economic variables to predict future rates.
A)True
B)False
Q3) Research has shown that past exchange rates are an accurate predictor of future exchange rates ________.
A)only in the long run
B)only in the very short run
C)only during times of economic crisis
D)only during times of economic calm
Q4) The International Fisher Effect links interest rates and exchange rates.
A)True
B)False
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Page 12
Chapter 11: Global Capital Markets
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Q1) The international bond market is much larger and more lucrative than the domestic bond market.
A)True
B)False
Q2) A firm would decide to delist its stock from a foreign stock exchange for all of the following reasons EXCEPT ________.
A)the best price for the stock is in the home market
B)there is increased regulation in that particular foreign market
C)there are weak market returns on the stock
D)there are high trading volumes on the stock
Q3) The global capital market offers all of the following advantages to firms EXCEPT ________.
A)short-term financing options
B)numerous investment opportunities
C)wide array of financing sources
D)financing at reduced cost
Q4) The dominant currencies in the international bond market are the euro and the U.S.dollar.
A)True
B)False
Page 13
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Chapter 12: The Strategy of International Business
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Q1) Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls.Citibank is exploiting ________ by running a call center in India.
A)value configuration synergies
B)location economies
C)geographic arbitrage
D)value offshoring
Q2) Which of the following is the most important constraint on the explanatory power of the IO paradigm?
A)Many industries are imperfectly competitive.
B)Many companies are locally but not internationally competitive.
C)Most customers have perfect knowledge of the products they select.
D)Most industries have many firms that each have small market shares.
Q3) Describe the two basic ways that companies can create value.What role does the value chain play in these methods?
Q4) What is the difference between primary and secondary activities in the value chain?
Describe the functions of configuration and coordination in these value activities.
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Page 14
Chapter 13: Country Evaluation and Selection
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Q1) Comparing countries in international business is LEAST useful for determining the
A)best location for sales and production
B)sequence of entering different countries
C)amount of resources to allocate in each country
D)selection of which managers to send to which countries
Q2) 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.
Q3) When planning international geographic expansion, decision makers use scanning to reduce the number of options available to a manageable number for further detailed analysis.
A)True
B)False
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Chapter 14: Export and Import
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Q1) All of the following are benefits of countertrade EXCEPT ________.
A)decreasing trade protectionism
B)increasing access to innovative technology
C)developing new trade relationships with foreign companies
D)preserving foreign-exchange reserves
Q2) This spring break you are planning to leave the United States and visit London, where you will stay in a hotel for 10 days.The London hotel will be performing a(n)________.
A)indirect merchandise export
B)merchandise export
C)service export
D)service import
Q3) "Born global" firms are those that step straight onto the world stage, making exporting the primary goal of the firm from day one of operations.
A)True
B)False
Q4) 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?
Q5) Why is countertrade considered inefficient?
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) Which of the following is LEAST likely to trigger the breakup of a joint venture?
A)The partners place a different degree of importance on the joint venture.
B)The partners develop different capabilities to contribute to the joint venture.
C)The partners come from different industries.
D)Objectives evolve differently over time.
Q2) What is a consortium?
A)the ownership of a company by a government and a foreign company
B)an agreement signed by most governments to protect intellectual property rights
C)an international joint venture owned by at least three organizations
D)an agreement between two or more governments to provide for reciprocal foreign investment protection
Q3) In a licensing arrangement, it is rare for companies to agree to a front-end payment to cover technology transfer costs.
A)True
B)False
Q4) What is an equity alliance? What motives would a firm have for forming an equity alliance?
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Chapter 16: The Organization of International Business
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Q1) Abel Enterprises has implemented a system based on coordination by mutual adjustment.Which of the following would most likely be used by Abel Enterprises?
A)strict scheduling
B)social networking
C)synchronized training
D)centralized decision making
Q2) A matrix organization is a hybrid of the functional and geographic organizations.
A)True
B)False
Q3) MNEs typically design their control systems in terms of either market control, bureaucratic control, or adaptation control.
A)True
B)False
Q4) A common feature of neoclassical structures is greater cross-functional collaboration.
A)True
B)False
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Chapter 17: Marketing Globally
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Q1) Dixon Electronics recently introduced a new computer with features unavailable from other products on the market.Dixon is charging a very high price for the computer and has plans to progressively lower the price over the next year.Dixon is most likely using a ________ strategy.
A)cost-plus
B)skimming
C)penetration
D)diversification
Q2) A positive brand image cannot overcome negative perceptions of the country where the product is made.
A)True
B)False
Q3) Diversity of international markets and currency instability have the greatest effect on ________.
A)promotion
B)R&D
C)branding
D)pricing
Q4) What is the gray market? Why are companies concerned about it?
Q5) 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) Gates Manufacturing is striving to improve its performance reliability, speed of delivery, and product reliability.Gates is most likely focusing on a(n)________ strategy.
A)flexibility
B)innovation
C)dependability
D)quality
Q2) ________ is the process of a firm having inputs supplied to it for the production process.
A)Sourcing
B)Subcontracting
C)External production
D)Offshoring
Q3) What has been the influence of Japan on supply chain management? In your answer, discuss the concepts of industrial clustering and quality.
Q4) Logistics is also known as materials management.
A)True
B)False
Q5) Describe total quality management.
Page 20
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Chapter 19: International Accounting and Finance Issues
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Q1) A major force leading to the convergence of accounting standards is ________.
A)a shareholder orientation towards FDI
B)the global separation of capital markets
C)MNEs' needs for foreign capital
D)pressures from the EU
Q2) What factors influence international accounting practices? What forces are leading to the global convergence of accounting practices?
Q3) Translation of foreign currency financial statements is best described as ________.
A)the process of restating foreign currency financial statements from one currency into another
B)the process of combining financial statements of different subsidiaries into one statement
C)the conversion of foreign currencies into the U.S. dollar D)easier when the foreign currency is the euro
Q4) Ericsson, the Swedish MNE, was required as of 2005 to adopt both Swedish and U.S.GAAP since it lists it securities in both the United States and Sweden.
A)True
B)False
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Chapter 20: International Human Resource Management
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Q1) An executive with a polycentric staffing policy presumes that successful business practices at home need not change when transferred to foreign markets.
A)True
B)False
Q2) Upon selection of an executive for an expatriate posting, the most common predeparture training involves a range of instructive profiles of major aspects of the host country.
A)True
B)False
Q3) Generally, HRM does NOT emphasize which of the following characteristics when evaluating the adaptability of an expatriate candidate?
A)self maintenance
B)technology skills
C)cultural empathy
D)sensitivity to host environments
Q4) Expatriates are locals from the country of the foreign subsidiary.
A)True
B)False
Q5) List and discuss the main components of an expatriate's compensation package.
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