International Business Strategy
Exam Bank
Course Introduction
International Business Strategy examines how organizations develop and implement strategies to compete effectively in the global marketplace. The course explores core topics such as the analysis of international markets, entry strategies, competitive advantage, global value chains, and the impact of cultural, political, and economic environments on decision-making. Students will learn to assess multinational business opportunities and risks, adapt strategic models to diverse markets, and navigate complexities such as cross-border mergers, global alliances, and sustainability challenges. Through case studies and practical applications, this course equips students with the analytical tools and frameworks necessary to craft and execute successful strategies in an interconnected world.
Recommended Textbook
Global Business 4th Edition by Mike W. Peng
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Page 2
Chapter 1: Globalizing Business
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Sample Questions
Q1) Expats often receive significant _____.
A) international premiums
B) government assistance
C) economic penalties
D) decreases in income
Answer: A
Q2) Which of the following countries would be characterized as an emerging economy?
A) Brazil
B) USA
C) Germany
D) Japan
Answer: A
Q3) Overall,the focus on firm performance around the globe defines the field of global business more than anything else.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Understanding Formal Institutions: Politics, laws, and Economics
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Sample Questions
Q1) State ownership differs from private ownership in that in state ownership _____.
A) maximizing profits is the sole objective of a firm
B) management appointments are made by owners and investors based on merit
C) protecting jobs and minimizing social unrest is the objective of a firm
D) managers' compensation is determined by competitive market forces
Answer: C
Q2) _____ is a long-standing legal doctrine that excuses firms from living up to the terms of a deal in the event of natural disasters or other calamities.
A) De minimis
B) Nolo contendere
C) Force majeure
D) Travaux préparatoires
Answer: C
Q3) Intellectual property specifically refers to _____ property.
A) tangible
B) intangible
C) real
D) moveable
Answer: B
Page 4
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Chapter 3: Emphasizing Informal Institutions: Cultures, ethics, and Norms
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Sample Questions
Q1) _____ refers to the extent to which members in a culture tolerate ambiguous situations.
A) Uncertainty avoidance
B) Lingua franca
C) Ethnocentrism
D) Long-term orientation
Answer: A
Q2) Which of the following is one of the three "middle-of-the-road" guiding principles proposed by business ethicist Thomas Donaldson?
A) Firms should try to export its home-country ethics to the global market.
B) Firms should not base their ethics on local institutions.
C) Firms should be culturally sensitive when conducting business abroad.
D) Firms should follow a universal ethical business code regardless of geography.
Answer: C
Q3) According to Max Weber,Protestant work ethics led to the rise of capitalism in Europe.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Leveraging Resources and Capabilities
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Q1) Activities with high levels of commoditization should be performed in-house to increase competitiveness.
A)True
B)False
Q2) According to the VRIO framework,valuable,but common resources and capabilities,will lead to a temporary competitive advantage.
A)True
B)False
Q3) Valuable and rare,but imitable,resources and capabilities give firms a permanently sustainable competitive advantage.
A)True
B)False
Q4) Illustrate with examples the difference between OEMs,ODMs,and OBMs.
Q5) Onshoring is the process of turning over an organizational activity to a foreign supplier that will perform it on behalf of the focal firm.
A)True
B)False
Q6) Identify the four categories of tangible resources that a firm can possess.
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Chapter 5: Trading Internationally
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Sample Questions
Q1) Which of the following is a classical theory of international trade?
A) Comparative advantage theory
B) Product life cycle theory
C) Strategic trade theory
D) National competitive advantage of industries theory
Q2) Antidumping duties are a type of tariff barrier.
A)True
B)False
Q3) The absolute advantage theory is considered as the forerunner of the free trade movement.
A)True
B)False
Q4) Classical theories are based on the assumption of perfect resource mobility.
A)True
B)False
Q5) The basic concept of protectionism and mercantilism is the same.
A)True
B)False
Q6) Elaborate on Michael Porter's "diamond" theory.
Q7) Discuss the economic arguments against free trade.
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Chapter 6: Investing Abroad Directly
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Sample Questions
Q1) Intrafirm trade enables MNEs to better coordinate cross-border activities.
A)True
B)False
Q2) The benefit of ownership lies in the combination of equity ownership rights and management control rights.
A)True
B)False
Q3) _____ refers to the reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation.
A) Bandwagon effect
B) Domino effect
C) Dissemination risk
D) Contagion effect
Q4) Repatriated earnings from profits of MNEs benefit the host country financially.
A)True
B)False
Q5) Differentiate between the radical,the free market and pragmatic nationalism view on FDI.
Q6) Why do firms prefer FDI to licensing?
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Q7) Describe the process of obsolescing bargain between MNEs and governments.
Chapter 7: Dealing With Foreign Exchange
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Sample Questions
Q1) The primary participants of the foreign exchange market are IMF and World Bank.
A)True
B)False
Q2) The _____ suggests the price for identical products in different countries would be the same,if trade barriers are absent.
A) theory of purchasing power parity
B) fixed exchange rate policy
C) Penn effect
D) Bretton Woods system
Q3) Explain,with the help of examples,the three primary types of foreign exchange transactions.
Q4) List the five underlying building blocks that determine the supply and demand of foreign exchange.
Q5) Floating exchange rates are less volatile than fixed rates.
A)True
B)False
Q6) Compare and contrast the advantages and disadvantages of a strong and a weak dollar.
Q7) Briefly explain the cause for the fall of the Bretton Woods System.
Page 9
Q8) What determines the success and failure of currency management around the globe?
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Page 10
Chapter 8: Capitalizing on Global and Regional Integration
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Q1) Which of the following was part of the agenda of the Doha Round?
A) Reducing agricultural subsidies in developing countries
B) Increasing tariffs in the industries that developed countries might benefit from
C) Freeing up trade in services
D) Loosening intellectual property protection
Q2) _____ refers to the official title for regional economic integration involving 21 member economies around the Pacific.
A) UNASUR
B) APEC
C) NAFTA
D) CAFTA
Q3) The former Soviet Union is an example of a political union.
A)True
B)False
Q4) The Doha Round primarily aimed at strengthening economic development in developed economies.
A)True
B)False
Q5) Describe the European Union as an economic union.
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Chapter 9: Growing and Internationalizing the Entrepreneurial Firm
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Sample Questions
Q1) SMEs are the exclusive domain of entrepreneurship.
A)True
B)False
Q2) In general,governments in developed economies impose more procedures to start a company than those in poorer countries.
A)True
B)False
Q3) Among developed countries,_____ has the lowest rate of start-ups.
A) United Kingdom
B) United States
C) Russia
D) Japan
Q4) International entrepreneurship is defined as "a combination of innovative,proactive,and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations."
A)True
B)False
Q5) Explain the institution-based views in light of their effect on entrepreneurial success.
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Q6) What is the stage model? How does the stage model apply to internationalization?
Chapter 10: Entering Foreign Markets
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Sample Questions
Q1) The distinction between _____ is what defines an MNE from a firm that merely exports or imports.
A) direct and indirect exports
B) licensing and franchising
C) small- and large-scale of entry
D) equity and non-equity modes of entry
Q2) With regard to foreign market entry,the resource-based view argues that foreign firms need to
A) take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries.
B) be aware of the numerous regulatory risks and trade and investment barriers.
C) deploy overwhelming resources and capabilities to offset their liability of foreignness.
D) understand the numerous differences in cultures, norms, and values.
Q3) Which of the following is a non-equity mode of entry?
A) Acquisitions
B) Joint ventures
C) Turnkey projects
D) Green-fields
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Chapter 11: Managing Global Competitive Dynamics
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Q1) Which of the following industrial characteristics makes a collusion difficult but leads to competition?
A) Existence of few firms in the industry
B) Existence of an industry price leader
C) Lack of market commonality
D) High barriers of entry
Q2) _____ determines the institutional mix of competition and cooperation that gives rise to the market system and also seeks to balance efficiency and fairness.
A) Competition policy
B) Antitrust policy
C) Mutual forbearance
D) Fairness policy
Q3) Mutual forbearance refers to retaliatory attacks on a competitor's other markets if this competitor attacks a firm's original market.
A)True
B)False
Q4) Cartels are often labeled as anticompetitive and outlawed by antitrust laws.
A)True
B)False
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Chapter 12: Making Alliances and Acquisitions Work
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Q1) In the context of alliance formation,shared capabilities is one of the driving forces in deciding whether to take a contract or an equity approach.
A)True
B)False
Q2) Mergers and acquisitions represent the largest proportion of foreign direct investment (FDI) flows.
A)True
B)False
Q3) How does the VRIO framework affect acquisitions?
Q4) Elaborate on the factors that may influence alliance performance.
Q5) The combination of operations and management of two firms to establish a new legal entity is called a(n) _____.
A) joint venture
B) merger
C) contractual alliance
D) acquisition
Q6) Contractual alliances involve sharing of ownership.
A)True
B)False
Page 15
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Chapter 13: Strategizing,structuring,and Learning Around the World
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Sample Questions
Q1) Which of the following is a disadvantage of the home replication strategy?
A) It lacks local responsiveness.
B) It is organizationally complex and difficult to implement.
C) It focuses too much on the foreign country.
D) It has higher costs due to duplication of efforts in multiple countries.
Q2) In a transnational strategy,the flow of knowledge is unidirectional.
A)True
B)False
Q3) Briefly explain which of the four organizational structures is appropriate for each of the MNE strategic choices.
Q4) One of the disadvantages of the geographic area structure is that the country and regional managers are not given sufficient voice relative to the heads of the domestic divisions.
A)True
B)False
Q5) Subsidiary initiatives are new opportunities pursued by a subsidiary based on headquarters' demands.
A)True
B)False
Q6) Summarize the advantages and disadvantages of the home replication strategy. Page 16
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Page 17
Chapter 14: Competing on Marketing and Supply Chain Management
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Sample Questions
Q1) Elaborate on the major concerns faced by MNEs doing business around the world.
Q2) In the context of achieving alignment,if a recognized leader in a supply chain exercises power,it facilitates legitimacy and efficiency of the whole supply chain.
A)True
B)False
Q3) List the globally useful ways of segmenting according to customer categorization.
Q4) ____ refers to the expenditures a customer is willing to pay for a product.
A) Total cost
B) Price
C) Total cost of ownership
D) Price elasticity
Q5) Firms dealing with global agnostics can leverage global brands and their relatively more standardized products and services.
A)True
B)False
Q6) Elaborate on the triple As in supply chain management.
Q7) List a few do's and don'ts to avoid blunders in international marketing.
Q8) Explain the four Ps of marketing.
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Chapter 15: Managing Human Resources Globally
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Q1) Performance appraisals are given only when an employee is not performing well.
A)True
B)False
Q2) Describe the different roles of expatriates.
Q3) A psychological contract is a written contract signed by the employer and the expatriation candidate.
A)True
B)False
Q4) Compensation with a _____ makes locations,where pay is higher than in their home country,a more attractive place to work for PCNs and TCNs.
A) going rate approach
B) balance sheet approach
C) pay-per-impression
D) merit rate
Q5) Middle-aged expatriates are the most expensive,because the employer often has to provide a heavy allowance for children's education.
A)True
B)False
Q6) Analyze managing labor relations at home and abroad.
Page 19
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Chapter 16: Financing and Governing the Corporation
Globally
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Sample Questions
Q1) Elaborate on the external governance mechanisms.
Q2) Information asymmetries exist between principals and agents.
A)True
B)False
Q3) Private equity is primarily invested through _____.
A) leveraged buyouts
B) acquisitions
C) alliances
D) stock swaps
Q4) The board of directors oversees and ratifies strategic decisions and evaluates,rewards,and,if necessary,penalizes top managers.
A)True
B)False
Q5) The main external governance mechanism is the _____.
A) market for corporate control
B) market for product competition
C) market for private equity
D) market for stock options
Q6) Differentiate between concentrated and diffused ownership.
Q7) Outline the principal-agent problems in an agency relationship. Page 20
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Page 21
Chapter 17: Managing Corporate Social Responsibility
Globally
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Q1) The ability to meet the needs of the present without compromising the ability of future generations to meet their needs around the world is called global sustainability.
A)True
B)False
Q2) List some corporate social responsibilities with regard to employment practices,recommended for multinational enterprises by some international organizations.
Q3) Reactive firms actively participate in regional,national,and international policy and standards discussions.
A)True
B)False
Q4) A key insight of the institution-based view of CSR is that individuals and organizations make rational choices given the right kind of incentives.
A)True
B)False
Q5) Failing to heed certain CSR imperatives may be self-defeating in the long run.
A)True
B)False
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