International Business Strategy Exam
Review
Course Introduction
International Business Strategy explores the frameworks, concepts, and tools necessary for formulating and implementing successful strategies in the global marketplace. The course examines the challenges and opportunities that multinational corporations face, such as cross-cultural differences, global competition, international market entry modes, and strategic alliances. Students will analyze real-world case studies to understand how firms design and adapt strategies for global expansion, manage international operations, and leverage resources across borders while addressing ethical considerations and the impact of diverse regulatory environments. By the end of the course, students will be equipped to critically assess international business environments and develop effective strategies for sustained global competitiveness.
Recommended Textbook
International Business Competing in the Global Marketplace 8th Edition
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2033 Verified Questions
2033 Flashcards
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by Charles W. L. Hill
Chapter 1: Globalization
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100 Verified Questions
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Sample Questions
Q1) The managers of an international business must decide whether it is ethical to adhere to the lower labor and environmental standards found in many less developed nations.
A)True
B)False
Answer: True
Q2) The ______ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states.
A)International Development Association
B)World Bank
C)International Court of justice
D)World Trade Organization
Answer: D
Q3) An international business is any firm that engages in international trade or investment.
A)True
B)False
Answer: True
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Page 3
Chapter 2: National Differences in Political Economy
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Sample Questions
Q1) This refers to a political system in which government is by the people,exercised either directly or through elected representatives.
A)Totalitarianism
B)Authoritarianism
C)Democracy
D)Dictatorship
Answer: C
Q2) In a _____ economy,certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.
A)market
B)private
C)command
D)mixed
Answer: D
Q3) In a common law system,judges have the power to interpret the law.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Differences in Culture
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Sample Questions
Q1) The values and norms of a culture are evolutionary.
A)True
B)False Answer: True
Q2) Culture is static.
A)True
B)False Answer: False
Q3) Values are abstract ideas about what a group believes to be right,good,and desirable.
A)True
B)False Answer: True
Q4) The group is the primary unit of organization in Western societies.
A)True
B)False Answer: False
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Chapter 4: Ethics in International Business
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Sample Questions
Q1) The righteous moralist suggests that:
A)ethics are nothing more than the reflection of culture.
B)a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.
C)the social responsibility of business is to increase profits,so long as the company stays within the rules of law.
D)if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation,that manager should not either.
Q2) Facilitating payments are also known as speed money or grease payments.
A)True
B)False
Q3) An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.
A)True
B)False
Q4) Consider the Kantian approach to ethics.Who is responsible for the philosophy?
Q5) What is the Foreign Corrupt Practices Act? What is its purpose?
Q6) Discuss the notion of social responsibility.What does it mean for corporations?
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Chapter 5: International Trade Theory
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Sample Questions
Q1) According to the new trade theorists,because early entrants are able to gain _____,the early entrants into an industry may get a lock on the world market that discourages subsequent entry.
A)zero-sum advantages
B)highly skilled employees
C)process expertise
D)economies of scale
Q2) Contrary to what the Heckscher-Ohlin theory would predict,the United States has been a primary importer rather than an exporter of capital goods.This phenomenon is referred to as the _____ paradox.
A)zero-sum
B)Leontief
C)empirical
D)Ricardo
Q3) What is the Leontief paradox?
Q4) Discuss the implications of the new trade theory.
Q5) Limits on imports are often in the interests of domestic consumers,but not domestic producers.
A)True
B)False
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Chapter 6: The Political Economy of International Trade
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Sample Questions
Q1) Specific tariffs are levied as a proportion of the value of the imported good.
A)True
B)False
Q2) A key goal of the 1986 Uruguay Round was to extend GATT to cover trade in services.
A)True
B)False
Q3) The threat of antidumping action limits the ability of a firm to use aggressive pricing to gain market share in a country.
A)True
B)False
Q4) A common hybrid of a quota and a rent is known as a quota rent.
A)True
B)False
Q5) Explain the notion of predatory behavior with regard to dumping.
Q6) What is a quota rent? Provide an example of how an import quota affects price.
Q7) Explain how trade barriers affect a firm's strategy.
Q8) Discuss the different types of subsidies.How do subsidies help domestic producers?
Q9) Discuss the Doha Round of trade talks.
Page 8
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Chapter 7: Foreign Direct Investment
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Sample Questions
Q1) Discuss the market imperfections explanation of FDI.What is its relationship with internalization theory?
Q2) Africa is not a popular destination for FDI because of all of the following reasons except:
A)political unrest in the region.
B)armed conflict in the region.
C)liberalization of FDI regulations.
D)frequent policy changes in the region.
Q3) The largest source country for FDI has been China.
A)True
B)False
Q4) Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.
A)True
B)False
Q5) If a firm that makes bicycles in Germany acquires a French bicycle producer,Greenfield investment has taken place. A)True
B)False
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Chapter 8: Regional Economic Integration
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Sample Questions
Q1) The move toward regional economic integration has been most successful in Europe.
A)True
B)False
Q2) Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?
A)The European Parliament
B)The European Commission
C)The Council of the European Union
D)The Court of Justice
Q3) Consider the opportunities arising from the creation of the EU for international businesses.
Q4) Discuss the trend toward increased regional economic integration.
Q5) In December 1991,EC members signed this treaty that committed them to adopting a common currency by January 1,1999.
A)The Treaty of Rome
B)The Delores Commission
C)The Maastricht Treaty
D)The Single European Act
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Chapter 9: The Foreign Exchange Market
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Sample Questions
Q1) When traders move as a herd in the same direction at the same time such as what occurred when George Soros betted against the British pound in 1992,a(n)_____ occurs.
A)efficient market
B)inefficient market
C)bandwagon effect
D)Fisher Effect
Q2) The foreign exchange market is open for only 12 hours in a day.
A)True
B)False
Q3) Identify the incorrect statement about the PPP theory.
A)It predicts that exchange rates are determined by relative prices.
B)It yields accurate predictions in the short run.
C)It best predicts exchange rate changes for countries with high rates of inflation.
D)It assumes away transportation costs and barriers to trade.
Q4) Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.
A)True
B)False
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11
Chapter 10: The International Monetary System
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Sample Questions
Q1) Evidence shows that adopting a pegged exchange rate regime increases inflationary pressures in a country.
A)True
B)False
Q2) What was the gold standard? Who participated in the system? What was the major advantage of the system?
Q3) A fixed exchange rate regime:
A)modeled along the lines of the Bretton Woods system will not work.
B)allows each country to choose its own inflation rate.
C)is characterized by speculation that adds to the uncertainty surrounding future currency movements.
D)leads to a situation where governments under political pressures expand monetary supply too rapidly,causing unacceptably high price inflation.
Q4) The amount of currency needed to purchase one ounce of gold under the gold standard was referred to as the gold par value.
A)True
B)False
Q5) With the help of an example,discuss the notion of balance-of-trade equilibrium.
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Chapter 11: The Global Capital Market
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Sample Questions
Q1) Which of the following are among the best examples of market makers?
A)Individuals
B)Regulatory agencies
C)Governments
D)Commercial banks
Q2) According to data from the Bank for International Settlements,
A)by late 2008,the stocks of cross-border bank loans were significantly less as compared to those in 1990.
B)international equity issues were actually higher in 2007.
C)outstanding international bonds in late 2008 were down from those in 1997.
D)the international capital market was in recession from the 1980s to the early 2000s.
Q3) Adverse exchange rate movements can transform otherwise profitable investments into unprofitable investments.
A)True
B)False
Q4) What are the features of the eurobond market that make it an appealing alternative to most major domestic bond markets?
Q5) What are the various types of capital market loans?
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Chapter 12: The Strategy of International Business
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Sample Questions
Q1) Describe the benefits of global expansion for firms.
Q2) The _____ function creates value by ensuring the company has the right mix of people to perform activities effectively.
A)information systems
B)company infrastructure
C)human resources
D)logistics
Q3) Discuss the factors that lead to pressure for local responsiveness.
Q4) What is strategy? How does strategy relate to a firm's profitability?
Q5) Which of the following statements is not true?
A)The way to increase the profitability of a firm is to create more value.
B)The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
C)The more value customers place on a firm's products,the higher the price the firm is able to charge for those products.
D)The price a firm charges for a good or service is typically more than the value the customer places on that good or service.
Q6) How can the marketing and sales functions of a firm create value?
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Chapter 13: The Organization of International Business
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Sample Questions
Q1) Explain the five reasons why a firm should decentralize its decision-making.
Q2) The emphasis on local responsiveness in firms pursuing a local responsiveness strategy creates strong pressures for:
A)decentralizing all decisions to foreign subsidiaries.
B)decentralizing operating decisions to foreign subsidiaries.
C)centralizing all operating decisions.
D)centralizing all decisions.
Q3) The term people refers to not just the employees of the organization,but also the strategy used to recruit,compensate,and retain those individuals and the type of people that they are in terms of their skills,values,and orientation.
A)True
B)False
Q4) By centralizing decision making,a firm can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization.
A)True
B)False
Q5) What is a knowledge network? What is the advantage of such a system?
Q6) Explain organizational structure.
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Chapter 14: Entry Strategy and Strategic Alliances
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Sample Questions
Q1) Define licensing agreements.What are the advantages of this mode of international expansion?
Q2) Discuss Bartlett and Ghoshal's perspective on how firms from developing countries should approach international expansion.
Q3) Firms that lack the capital necessary to develop foreign operations may choose _____ as a means of expanding internationally.
A)turnkey projects
B)licensing
C)greenfield investments
D)acquisitions
Q4) Firms pursuing global standardization or transnational strategies tend to prefer joint-venture arrangements over wholly owned subsidiaries.
A)True
B)False
Q5) First-mover advantages are the advantages associated with entering a market early.
A)True
B)False
Q6) Compare and contrast licensing agreements and franchising agreements.
Page 16
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Chapter 15: Exporting,Importing,and Countertrade
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Sample Questions
Q1) Discuss the Exim Bank,its goals,and its operations.
Q2) International transactions are usually settled using drafts.
A)True
B)False
Q3) Consider the incidence of countertrade.Where is it most common?
Q4) Entering a foreign market on a large scale provides the opportunity to learn about the foreign country.
A)True
B)False
Q5) What type of firm is most likely to engage in countertrade? Why?
Q6) A draft:
A)is a document requesting payment.
B)is the same as a letter of credit.
C)is a reciprocal buying agreement.
D)gives title to shipped goods.
Q7) What is an export management company? What are the advantages and disadvantages associated with it?
Q8) Why do so many firms take a reactive approach to exporting rather than a proactive approach?
Q9) What is the Foreign Credit Insurance Association? Page 17
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Page 18
Chapter 16: Global Production, Outsourcing, and Logistics
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Sample Questions
Q1) A grouping of various types of machinery,a common materials handler,and a centralized cell controller is a flexible machine cell.
A)True
B)False
Q2) When political risk is high,sourcing products from independent suppliers can be advantageous.
A)True
B)False
Q3) European Union firms must comply with ISO 9000 standards in their manufacturing processes and products before they will be given access to the European Union market.
A)True
B)False
Q4) The Six Sigma methodology:
A)is a direct descendant of the total quality management philosophy.
B)is a direct descendant of benchmarking.
C)was adopted first by British companies and then Japanese companies during the 1980s.
D)was developed by Deming,Juran,and Feigenbaum.
Q5) What does Six Sigma refer to?
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Chapter 17: Global Marketing and RD
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Sample Questions
Q1) What is the most important factor in determining the elasticity of demand for a product in a given country?
A)Personal selling
B)Logistics
C)Operating revenue
D)Income level
Q2) With a concentrated retail sector:
A)a relatively large sales force is required.
B)the orders generated from each sales call can be large.
C)there are long channels of distribution.
D)it is expensive for the firm to make contact with each individual retailer.
Q3) When the receiver of a message evaluates a message based on the status or image of the sender,_____ are said to have occurred.
A)sender effects
B)noise effects
C)source effects
D)communication effects
Q4) The "customization versus standardization" debate is an all or nothing issue.
A)True
B)False
Page 20
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Chapter 18: Global Human Resource Management
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Sample Questions
Q1) If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquarters,the firm is following a(n):
A)ethnocentric staffing policy.
B)regiocentric staffing policy.
C)polycentric staffing policy.
D)geocentric staffing policy.
Q2) International trade secretariats (ITSs)have not enjoyed much success for all of the following reasons except:
A)national unions compete with each other to attract investment from international businesses.
B)the structure and ideology of unions tend to vary significantly from country to country.
C)organized labor has had only limited success in its efforts to get national and international bodies to regulate multinationals.
D)the codes of conduct developed by International Labor Organization and the Organization for Economic Cooperation and Development prevented the ITSs from exercising absolute power.
Q3) Discuss the concerns of organized labor.
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Chapter 19: Accounting in the International Business
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Sample Questions
Q1) Which of the following methods translates assets valued in a foreign currency into the home-country currency using the exchange rate that exists when the assets are purchased?
A)Temporal method
B)Current rate method
C)Operating cost accounting method
D)Historic cost principle
Q2) Managers of foreign subsidiaries should never be evaluated in local currency terms.
A)True
B)False
Q3) EU directives have the power of law and so it can be assumed that the EU has a better chance of harmonizing accounting standards than the IASB.
A)True
B)False
Q4) When one company acquires another in a takeover,the value of the goodwill is calculated as the amount paid for a firm above its book value.
A)True
B)False
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Page 22
Chapter 20: Financial Management in the International Business
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Sample Questions
Q1) Transaction costs arise when cash moves from one location to another.
A)True
B)False
Q2) What are tax havens? What is their importance in international business?
Q3) The commission fee a firm pays to foreign exchange dealers for changing cash from one currency into another currency is known as:
A)foreign exchange tax.
B)transfer fee.
C)transaction cost.
D)conversion tax.
Q4) What is capital budgeting?
Q5) Many nations follow the worldwide principle that they have the right to tax income earned outside their boundaries by entities based in their country.
A)True
B)False
Q6) In a fronting loan,the parent company lends cash directly to the foreign subsidiary,and the subsidiary repays it later.
A)True B)False
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