International Business Strategy
Exam Preparation Guide
Course Introduction
International Business Strategy explores the frameworks, tools, and decision-making processes that guide organizations as they compete in global markets. The course examines how multinational firms analyze foreign market environments, formulate competitive strategies, adapt to cultural differences, manage international operations, and address issues such as risk assessment, entry mode selection, global value chain management, and cross-border alliances. Emphasis is placed on understanding the dynamic nature of the global business landscape and equipping students with practical strategies to foster sustainable competitive advantage in diverse international contexts.
Recommended Textbook
International Business Environments Operations 14th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) Which of the following statements would most likely be made by a supporter of globalization?
A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems.
B) Economic growth created by globalization is largely in services, which involves the use of few nonrenewable resources.
C) Global competition discourages resource-saving technologies, which are costly.
D) Air pollution and toxic runoff problems increase with global economic growth.
Answer: A
Q2) What is the most likely reason that governments cooperate with each other through treaties,agreements,and consultations?
A) to gain an advantageous division of labor
B) to be in compliance with United Nations' requirements
C) to attack problems jointly that one country acting alone cannot solve
D) to assure that all countries get an equitable share of taxes from multinational enterprises
Answer: C
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Chapter 2: The Cultural Environments Facing Business
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Q1) The attempt to resolve small issues before principles is a characteristic of which of the following?
A) relativism
B) monochronic behavior
C) pragmatism
D) uncertainty avoidance
Answer: C
Q2) U.S. companies monopolize much of the international entertainment media,which largely portrays U.S. products and lifestyles as glamorous and appealing. This situation would most likely be used as an example of ________.
A) the stronger work ethic typical of developed countries
B) the spread of high-context cultures
C) cultural fragmentation
D) cultural imperialism
Answer: D
Q3) Similarity among people is both a cause and effect of national boundaries.
A)True
B)False
Answer: True
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Page 4
Chapter 3: The Political and Legal Environments Facing Business
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Q1) A common law system is based on tradition,judge-made precedent,and usage in which the courts assign a preeminent position to existing case law to guide dispute resolution.
A)True
B)False
Answer: True
Q2) Multilateral development banks encourage development in risky environments through financial incentives.
A)True
B)False
Answer: True
Q3) Which of the following ideas holds that a government should NOT interfere in business affairs?
A) collectivism
B) laissez-faire
C) the rule of man
D) pluralism
Answer: B
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Chapter 4: The Economic Environments Facing Businesses
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Q1) 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
Q2) Kyle,an international manager for Apex Industries,has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment?
A) How much freedom will Apex have to run its foreign operations?
B) What are the current economic policies related to development?
C) What is the likelihood that Apex can fill manufacturing positions with locals?
D) What factors in the country drive or hinder economic change?
Q3) What is meant by the idea of economic freedom? What factors are used in the Economic Freedom Index? For managers,what role does the Economic Freedom Index play in analyzing the potential of a country?
Q4) Uneven income distribution is largely a problem confined to poorer nations.
A)True
B)False
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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) The OECD Convention against bribery is an example of a(n)________.
A) bilateral agreement developed for the EU
B) agreement that targets the demand side of bribery
C) agreement that targets the supply side of bribery
D) UN Convention dominated by developing countries
Q3) How have sustainability demands and the Kyoto Protocol affected international business? Discuss the controversies surrounding each.
Q4) According to the Ethical Trading Initiative (ETI),________.
A) child labor cannot be used unless there are no suitable alternatives
B) employment need not be freely chosen in order to be acceptable
C) no harsh or inhumane treatment of workers should be allowed
D) MNEs are not responsible for establishing codes of conduct
Q5) Explain why the argument that "anything that is legal is ethical" is insufficient.
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Chapter 6: International Trade and Factor Mobility Theory
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Q1) The term brain drain describes the export of high-technology products in exchange for low-technology products.
A)True
B)False
Q2) Why should managers in international business understand international trade theories?
A) Countries' trade policies, based on trade theories, influence which products companies might export to given countries.
B) The understanding helps managers decide whether their companies should follow laissez-faire management practices.
C) The theories help managers decide whether to use large-scale versus small-scale technologies for serving their export markets.
D) The comprehension is useful when deciding whether to transfer managers abroad to manage foreign operations.
Q3) The international mobility of labor includes workers,students,tourists,and retirees who travel to another country.
A)True
B)False
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8
Chapter 7: Governmental Influence on Trade
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Q1) A possible drawback to the essential industry argument for import protectionism is
A) that such protection hurts the protecting country's balance of payments
B) in times of military emergency, almost any product could be considered essential
C) other countries find supplies elsewhere
D) unemployment increases in the protecting country
Q2) Assume a government places restrictions on a specific product from a specific foreign country. What would be the government's most likely concern about the foreign country's response?
A) the foreign producers raising the prices of their exports
B) the foreign country restricting its own imports
C) the foreign country restricting its exports in that industry
D) the foreign producers seeking other markets
Q3) Tied aid requires a recipient to ________.
A) donate a portion of the funds to the donor country's infrastructure needs
B) use the capital in any way as long as donor country approval is granted
C) employ local workers in management positions
D) spend the funds in the donor country
Q4) Describe and compare the different types of tariffs (duties).
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) Explain the static effects and dynamic effects of economic integration. What is the difference between trade creation and trade diversion resulting from economic integration?
Q2) Which of the following statements about the euro is true?
A) It was adopted by all existing EU members when it was first initiated.
B) It must be adopted by countries as a precondition to joining the EU.
C) It cannot be used by countries that are not members of the EU.
D) It was designed to eliminate currency as a barrier to trade in the EU.
Q3) Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result?
A) Governance processes are streamlined because local governments have been eliminated.
B) Market size is larger because of the elimination of internal tariff barriers.
C) Differential external tariff barriers exist for product shipments.
D) The EU uses English as its official language.
Q4) What are the functions of the European Commission,the European Parliament,the Council,and the European Court of Justice?
Q5) Describe the different types of regional economic integration and give an example of each type.
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Chapter 9: Global Foreign-Exchange Markets
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Q1) An offer is the right but not the obligation to buy or sell foreign currency.
A)True
B)False
Q2) Which of the following best describes arbitrage?
A) using foreign exchange to fund new foreign direct investments
B) purchasing foreign currency in anticipation of long term trends
C) using foreign exchange instruments to speculate for profit
D) purchasing foreign currency on one market for immediate resale on another market
Q3) A major challenge faced by Western Union in transferring money between the United States and Mexico is that Mexican citizens trust the banks but do not trust Western Union due to its reliance on global banks.
A)True
B)False
Q4) If the forward rate for a foreign currency is less than the spot rate,the foreign currency is selling at a forward premium.
A)True
B)False
Q5) How is foreign exchange traded? What methods are available?
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Chapter 10: The Determination of Exchange Rates
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Q1) The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.
A)True
B)False
Q2) Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan. Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country. Which of the following questions is most relevant to Tanya?
A) What is the cyclical situation in terms of employment and inflation?
B) Are the government's intervention practices sustainable?
C) What level of credibility does the government have?
D) What is the possibility of a national crisis?
Q3) Ted,a manager at Global Manufacturing,is analyzing trends in economic variables to predict future exchange rates that might affect the MNEs international operations. Which of the following is Ted most likely doing?
A) fundamental forecasting
B) technical forecasting
C) resource forecasting
D) economic forecasting
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Page 12
Chapter 11: The Strategy of International Business
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Q1) A distinct advantage of an international strategy is ________.
A) transferring core competencies to foreign markets
B) reaping benefits of global learning
C) customizing product offerings to local conditions
D) leveraging local managers' knowledge of their markets
Q2) Which of the following is NOT a disadvantage of the international strategy?
A) Headquarters can misread foreign-market opportunities and threats.
B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.
C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.
D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.
Q3) A company that employs a ________ strategy creates value by generating customer insights and translating those insights into innovations.
A) differentiation
B) diversification
C) cost leadership
D) innovation
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Page 13
Chapter 12: Country Evaluation and Selection
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Q1) We now have technology to allow people to communicate globally without traveling as much. Leading researchers on urbanization and planning suggest that the most likely consequence of this is ________.
A) a decrease in international airline travel
B) a decreased need for immigration restrictions
C) a smaller number of retirees living in urban areas
D) a greater number of self-motivated workers e-mailing and teleconferencing with colleagues
Q2) Opal Computers is considering international production expansion. After scanning to decide on a few countries to consider more closely,Opal managers will most likely need to ________.
A) identify firms with which to form joint ventures
B) add some more countries for closer consideration
C) travel to the locations to analyze and collect specific data
D) make final decisions by expanding in locations near their rivals
Q3) Why do companies engage in international harvesting or divestment?
Q4) In a short essay,discuss why simply examining a country's per capita GDP and its population doesn't necessarily lead to a good estimate for potential demand.
Q5) What is scanning? What opportunities and risks are most relevant to scanning?
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Chapter 13: Export and Import
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Q1) Exporting helps firms improve productivity by utilizing unused capacity and spreading research costs over more customers.
A)True
B)False
Q2) Small and medium-size enterprises,such as SpinCent as seen in the opening case for chapter 13,account for ________ of all U.S. exporters.
A) 38%
B) 54%
C) 79%
D) 97%
Q3) 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
Q4) Why is countertrade considered inefficient?
Q5) What role does the customs agency of a government play?
Q6) What is a born global? How has technology triggered the growth of born globals?
Page 15
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Chapter 14: Direct Investment and Collaborative Strategies
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Q1) In a short essay,discuss how transportation,trade restrictions,domestic capacity,and country-of-origin affect companies' decisions about modes of operating internationally.
Q2) When no single company has control over a collaborative arrangement,________.
A) the operation may lack direction
B) none of the partners is responsible for legal violations
C) differences in corporate culture are likely to grow
D) one partner's interests are likely to be put ahead of the other partner's interests
Q3) Appropriability theory describes a firm's desire to deny rivals access to its competitive resources.
A)True
B)False
Q4) What is a management contract? What are the potential advantages to both parties in the contract?
Q5) According to the appropriability theory and the internalization theory,why would companies want to control their foreign operations?
Q6) What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?
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Page 16
Chapter 15: The Organization of International Business
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Q1) Which of the following factors increasingly encourages MNEs to install a geographic division structure?
A) growth of emerging markets
B) diversification of products
C) rise of social networking
D) global recession
Q2) The common values shared by a company's employees are known as its organization culture.
A)True
B)False
Q3) Concord Foods,an international firm based in the U.S.,is in the process of transitioning from a classical organizational structure to a neoclassical structure. Which of the following tools would most likely enable Concord to make this change?
A) annual performance appraisals
B) cross-functional task forces
C) flexible benefits plans
D) merit awards
Q4) What is the difference between a classical structure and a neoclassical structure? Provide examples of each type.
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Chapter 16: Marketing Globally
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Q1) A problem of advertising through media that reach multiple countries is that the product may not be available everywhere it is advertised.
A)True
B)False
Q2) Which of the following statements is most likely true?
A) Consumers in most countries believe that imported products are better than locally made products.
B) Brand names have little impact on perceptions about a product's country-of-origin.
C) Consumers in most countries favor locally made products over imported products.
D) A positive brand image helps overcome negative perceptions about a product's country-of-origin.
Q3) High inflation might cause a company to gain advantages by selling more on credit.
A)True
B)False
Q4) What factors makes international pricing and distribution more complex than domestic pricing and distribution?
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Chapter 17: Global Manufacturing and Supply Chain Management
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Q1) Fewer and fewer companies are using third-party intermediaries to store and transport goods.
A)True
B)False
Q2) Warehouse configuration is a particularly important consideration in the establishment of a transportation network.
A)True
B)False
Q3) What has been the influence of Japan on supply chain management? In your answer,discuss the concepts of industrial clustering and quality.
Q4) Duty-free zones are special locations for storing domestic and imported inventory in order to avoid paying duties until the inventory is sold.
A)True
B)False
Q5) Most U.S. companies have moved from a total quality management (TQM)approach to an acceptable quality level (AQL)approach.
A)True
B)False
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Chapter 18: International Accounting Issues
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Q1) Which of the following is true concerning the International Accounting Standards Board?
A) The IASB is an EU institution designed to harmonize accounting standards among EU member countries.
B) The EU has voted to not adopt IFRS issued by the IASB so that it will not hurt its own convergence efforts.
C) The IASB and the FASB of the United States are working closely to harmonize accounting standards.
D) FASB has been ordered by the SEC to not work with the IASB in setting accounting standards.
Q2) The most preferred exchange rate used by British MNEs to translate the budget is the ________.
A) current-rate method
B) temporal method
C) budgeted rate
D) forecast rate
Q3) Explain the difference between macro-uniform-based and micro-based accounting systems. What are some examples of countries that fit in each system?
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Chapter 19: The Multinational Finance Function
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Q1) When using a lag strategy,a company collects foreign-currency receivables before they are due when the foreign currency is expected to weaken.
A)True
B)False
Q2) A price on goods and services sold by one member of a corporate family to another is known as a(n)________.
A) transfer price
B) tax credit price
C) passive price
D) active price
Q3) What is an offshore financial center? What are the main characteristics of OFCs?
Q4) Brooke buys shares of stock in a small bakery in a foreign country in return for an ownership position and promised capital gains. This is an example of ________.
A) equity securities
B) debt financing
C) playing the stock market
D) investing in Euroequities
Q5) What is a transfer price? Why are transfer prices used?
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Chapter 20: International Human Resources
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Q1) A growing number of MNEs are increasing expatriate allowances to entice employees to move overseas.
A)True
B)False
Q2) The various activities of HRM perform best when managers link them to the strategy of the firm.
A)True B)False
Q3) A key disadvantage of a polycentric staffing policy is that it limits the career mobility of subsidiary executives.
A)True
B)False
Q4) Home-country nationals are ________.
A) used a great deal abroad by polycentric companies
B) citizens of the countries in which they are working
C) citizens of the country where the company is headquartered
D) noncitizens of the countries in which they are working
Q5) What are the differences between ethnocentric,polycentric,and geocentric frameworks?
Q6) List and discuss the main components of an expatriate's compensation package.
Page 22
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