International Business Strategy
Final Exam Questions
Course Introduction
International Business Strategy explores the frameworks, tools, and decision-making processes essential for firms operating in the global marketplace. The course examines how organizations analyze international business environments, assess cross-border risks and opportunities, and formulate strategies to achieve competitive advantage abroad. Topics include market entry modes, global value chains, international alliances and partnerships, adaptation versus standardization, and the impact of cultural, legal, and economic differences on strategic choices. Real-world case studies and contemporary challenges, such as sustainability and digital globalization, are integrated to provide practical insights for developing and executing successful international strategies.
Recommended Textbook
International Business Competing in the Global Market Place 9th
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Page 2
editon by Charles W. L. Hill
Chapter 1: Globalization
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Sample Questions
Q1) The _____ was established on October 24,1945,by 51 countries committed to preserving peace through international cooperation and collective security.
A) World Trade Organization
B) United Nations
C) G20tx
D) World Bank
Answer: B
Q2) Explain the trends in world trade and foreign direct investment over the last half century.
Answer: Since 1950,the volume of world merchandise trade has grown faster than the world economy.In particular,there has been acceleration in world trade since 1980.This trade and investment pattern implies that firms are dispersing parts of their production to different locations around the world to drive down production costs and increase product quality,that the economies of the world's nation states are becoming more intertwined,that foreign direct investment is playing an increasing role in the global economy as firms increase their cross-border investments,and that the world has become significantly wealthier over the last 50 years.
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Chapter 2: National Differences in Political Economy
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Sample Questions
Q1) Patents,copyrights,and trademarks establish ownership rights over intellectual property.
A)True
B)False
Answer: True
Q2) Aristotle argued that individual diversity and private ownership are undesirable.
A)True
B)False
Answer: False
Q3) What is a country's legal system? Why is it important to international businesses?
Answer: The legal system of a country refers to the rules,or laws,that regulate behavior along with the processes by which laws are enforced through which redress for grievances are obtained.It is critical that international companies understand a country's legal system because the legal system regulates business practice,defines the manner in which business transactions are to be executed,and sets down the rights and obligations of those involved in business transactions.
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Chapter 3: Political Economy and Economic Development
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Q1) Many totalitarian regimes were able to deliver economic progress to the vast bulk of their populations,which curbed the spread of democracy during the late 1980s.
A)True
B)False
Answer: False
Q2) For privatization to work,it must also be accompanied by a more general deregulation and opening of the economy.
A)True
B)False
Answer: True
Q3) The government of a country takes over the airport security industries following a major terrorist attack,to improve airport security.This is an example of privatization.
A)True
B)False
Answer: False
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Chapter 4: Differences in Culture
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Sample Questions
Q1) Which of the following sociologists made a connection between Protestant ethics and "the spirit of capitalism"?
A) Karl Marx
B) Max Weber
C) Amartya Sen
D) Adam Smith
Q2) The emphasis on individualism in the United States results in all of the following disadvantages EXCEPT:
A) managers tend to develop good general skills but lack the company-specific experience.
B) difficulty in building teams within an organization to perform collective tasks.
C) executives are not exposed to different ways of doing business.
D) difficulty to achieve cooperation both within a company and between companies.
Q3) _____ is/are best defined as shared assumptions about how things ought to be.
A) Norms
B) Values
C) Society
D) Culture
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Chapter 5: Ethics in International Business
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Q1) Explain the Friedman doctrine.Who developed the philosophy? How well does this approach hold up ethically?
Q2) Cultural relativism suggests that even if slavery is culturally acceptable in a country,a foreign firm operating in that country should avoid using slave labor.
A)True
B)False
Q3) In your opinion,are bribes ever acceptable? Why or why not?
Q4) Identify the INCORRECT statement about environmental regulations.
A) Environmental regulations are often lacking in developing nations.
B) Environmental regulations are similar across developed and developing nations.
C) Developed nations have substantial regulations governing the emission of pollutants,the dumping of toxic chemicals,etc.
D) Inferior environmental regulations in host nations,as compared to home nation,can lead to ethical issues.
Q5) Discuss the utilitarian approach to business ethics.When was this approach developed? What are its drawbacks?
Q6) What are ethical dilemmas? Why do they exist?
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Chapter 6: International Trade Theory
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Sample Questions
Q1) Identify a major disadvantage of the product life-cycle theory.
Q2) Explain Smith's theory of absolute advantage.
Q3) The product life-cycle theory argues that a large proportion of the world's new products had been developed by U.S.firms.
A)True
B)False
Q4) Which of the following arguments supports the Paul Samuelson's critique?
A) A rich country cannot produce net gains by engaging in free trade with a poor country.
B) Governmental intervention will reduce the likeliness of countries' economic success.
C) Countries should attempt to specialize in the production of goods and services.
D) Trade is a positive-sum game in which all countries that participate realize economic gains.
Q5) The theory of comparative advantage suggests that trade is a positive-sum game in which all countries that participate realize economic gains.
A)True
B)False
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Chapter 7: The Political Economy of International Trade
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Q1) Antidumping actions are concentrated in certain sectors of the economy such as basic metal industries,chemicals,plastics,and machinery and electrical equipment.
A)True
B)False
Q2) Discuss the infant industry argument for intervention in markets.What is GATT's position on the argument?
Q3) A company that sells its product in a foreign market below the cost of production may be accused of dumping.
A)True
B)False
Q4) Tariffs are unambiguously pro-consumer and anti-producer.
A)True
B)False
Q5) The Smoot-Hawley Act aimed at:
A) diverting consumer demand toward foreign products.
B) promoting unrestricted free trade.
C) limiting global warming.
D) avoiding rising unemployment.
Q6) What are the drawbacks of government intervention?
Page 9
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Chapter 8: Foreign Direct Investment
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Q1) The amount of FDI undertaken over a given time period is known as the flow of FDI.
A)True
B)False
Q2) The free market view argues that FDI is a benefit to both the source country and to the host country.
A)True
B)False
Q3) Licensing gives a firm tight control over manufacturing,marketing,and strategy in a foreign country that may be required to maximize its profitability.
A)True
B)False
Q4) The WTO supports the promotion of international trade in services.
A)True
B)False
Q5) John Dunning pioneered the eclectic paradigm.
A)True
B)False
Q6) How does the free market view support FDI?
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) Compare and contrast a free trade area and a common market.Provide examples.
Q2) The implied loss of national sovereignty to the ECB underlies the decision by Great Britain,Denmark,and Sweden to stay out of the euro zone for now.
A)True
B)False
Q3) The _____ is responsible for proposing EU legislation,implementing it,and monitoring compliance with EU laws by member states.
A) European Parliament
B) European Commission
C) Council of the European Union
D) Court of Justice
Q4) Which feature of a common market differentiates it from a customs union?
A) Harmonization of members' tax rates
B) A common currency
C) A common external trade policy toward nonmembers
D) Ability of factors of production to move freely between members
Q5) What is the political case for integration? How did political arguments influence the establishment of the European Union?
Q6) What is ASEAN? What is its basic goal? How successful is ASEAN?
Page 11
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Chapter 10: The Foreign Exchange Market
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Q1) Transaction exposure includes obligations for the purchase or sale of goods and services at previously agreed prices and the borrowing or lending of funds in foreign currencies.
A)True
B)False
Q2) Explain PPP.Use an example to show how PPP can help explain exchange rates.
Q3) Which of the following involves borrowing in one currency where interest rates are low,and then using the proceeds to invest in another currency where interest rates are high?
A) Carry trade
B) Swing trade
C) Channel trade
D) Price action trade
Q4) What is countertrade? Why would a firm engage in countertrade?
Q5) Discuss the failure of PPP theory to predict exchange rates accurately.What is the purchasing power puzzle?
Q6) Discuss the two schools of thought on exchange rate forecasting.
Q7) Where is the foreign exchange market located? What is the nature of the market? Is the market growing or shrinking on a global basis?
Page 12
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Chapter 11: The International Monetary System
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Q1) Recent policies of the IMF have drawn a lot of criticism.Discuss these criticisms.
Q2) Implementing a fixed exchange rate regime increases the price inflation in countries. A)True
B)False
Q3) Fixed exchange rates lead to speculation and uncertainty in the value of currencies.
A)True
B)False
Q4) Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?
A) It is likely to create high unemployment in some cases.
B) It will lead to inflationary economies across the world.
C) It is likely to bring about trade wars between nations.
D) It will instigate competitive devaluations and intense competition.
Q5) What is gold standard? What was the major advantage of the system?
Q6) Interest rates adjust automatically under a strict currency board system.
A)True
B)False
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Chapter 12: The Global Capital Market
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Sample Questions
Q1) Eurobonds are normally underwritten by an international syndicate of banks.
A)True
B)False
Q2) Which of the following statements is true of the use of information technology in financial services?
A) Information technology prevents the spread of financial crises.
B) Financial services is an information-intensive industry.
C) Financial services do not use decisions making systems.
D) It does not require to process large volumes of information.
Q3) Companies receive a higher interest rate on deposits and pay less for loans when using the Eurocurrency market.
A)True
B)False
Q4) Which of the following statements is true of Eurocurrency?
A) Eurocurrency market is a relatively high-cost source of funds.
B) It is produced and banked within European countries.
C) Eurocurrency can be created anywhere in the world.
D) It is used only for internal transactions within European Union.
Q5) Explain various types of capital market loans.
Q6) How does the growth in the global capital markets affect investing firms?
Page 14
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Chapter 13: The Strategy of International Business
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Sample Questions
Q1) Discuss the factors that lead to pressure for local responsiveness.
Q2) It has been observed that a product's production costs decline by some quantity about each time,cumulative output:
A) increases by twenty five percent.
B) quadruples.
C) doubles.
D) triples.
Q3) The preeminent strategic goal for most firms is to maximize the value of the firm for its owners.
A)True
B)False
Q4) _____ can be defined as the rate of return that the firm makes on its invested capital,which is calculated by dividing the net profits of the firm by total invested capital.
A) Profitability
B) Performance
C) Cash flow
D) Efficiency
Q5) Describe localization strategy.
Q6) Discuss the creation of a global web of value creation activities.
Page 15
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Chapter 14: The Organization of International Business
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Sample Questions
Q1) The worldwide product division structure:
A) is weak in local responsiveness.
B) inhibits the realization of location economies.
C) inhibits the realization of experience curve economies.
D) limits the transfer of core competencies between areas.
Q2) Discuss the issues involved in refreezing an organization.
Q3) What are output controls?
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) Which control system is most widely used by small firms?
A) Personal
B) Output
C) Bureaucratic
D) Cultural
Q6) Explain the five reasons why a firm should decentralize its decision-making.
Q7) What are the three dimensions of organizational structure?
Q8) Explain organizational structure.
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Chapter 15: Entry Strategy and Strategic Alliances
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Sample Questions
Q1) A joint venture is often politically more acceptable than a wholly owned subsidiary and brings a degree of local knowledge to the subsidiary.
A)True
B)False
Q2) Managing an alliance successfully requires building interpersonal relationships between the firms' managers.This is sometimes referred to as _____.
A) relational capital
B) relational assets
C) operational assets
D) venture capital
Q3) In a turnkey project,the contractor agrees to handle every detail of the project for a foreign client.
A)True
B)False
Q4) Switching costs:
A) drive early entrants out of the market.
B) make it easy for later entrants to win business.
C) make it difficult for later entrants to win business.
D) give later entrants a cost advantage over early entrants.
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Chapter 16: Exporting, Importing, and Countertrade
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Q1) Barter is viewed as the least restrictive countertrade arrangement.
A)True
B)False
Q2) Time drafts cannot be sold to investors at a discount from its face value.
A)True
B)False
Q3) _____ is the direct exchange of goods and/or services between two parties without a cash transaction and is the simplest arrangement.
A) Counterpurchase
B) Barter
C) Offset
D) Switch trading
Q4) _____ denotes a whole range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money.
A) Countertrade
B) Cross-selling
C) Matchmaking
D) Letter of credit
Q5) Discuss the disadvantages of countertrade.
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Chapter 17: Global Production, Outsourcing, and Logistics
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Q1) Just-in-time inventory systems _____.
A) are used when procurement is not organized
B) require large warehouses for storage
C) economize on inventory holding costs
D) maintain large buffer for inventory
Q2) A _____ is an asset whose value is contingent upon a particular relationship persisting.
A) specialized asset
B) balanced asset
C) universal asset
D) supplementary asset
Q3) How has the adoption of just-in-time inventory systems,computer-aided design,and computer-aided manufacturing impact firms' associations with suppliers?
A) The bargaining power of the firms over their suppliers has increased enormously.
B) It has reduced the level of data sharing between firms and their suppliers.
C) Firms are capable of switching suppliers often due to such technologies.
D) It has increased pressures to establish long-term relationships with suppliers.
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Chapter 18: Global Marketing and RD
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Sample Questions
Q1) Which of the following statements about retail systems is true?
A) One factor contributing to greater retail concentration is an increase in car ownership.
B) The number of households with refrigerators leads to lesser retail concentration in developed countries.
C) There is a tendency for greater retail concentration in many developing countries.
D) Retail systems are very fragmented in developed countries.
Q2) An increase in car ownership,the number of two-income households,and the number of households with a refrigerator have all contributed to the more fragmented retail system found in developed countries.
A)True
B)False
Q3) Explain the difference between a concentrated retail system and a fragmented one.Why is this distinction important to international businesses?
Q4) What is predatory pricing? Describe how a firm might use predatory pricing.
Q5) What is channel length? What is the most important determinant of channel length? Mention two factors that shorten channel length.
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Chapter 19: Global Human Resource Management
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Q1) A manager might be sent on several foreign postings over a number of years to build his/her cross-cultural sensitivity and experience as part of a management development program.
A)True
B)False
Q2) English is considered the language of world business.
A)True
B)False
Q3) What are the four strategies pursued by international companies,and what is the role of HRM in these?
Q4) What are the advantages of the geocentric staffing policy?
Q5) What is cultural toughness?
Q6) Bringing managers together in one location for extended periods and rotating them through different jobs in several countries helps the firm build a formal management network.
A)True
B)False
Q7) How can polycentric approach to staffing result in the creation of a "federation" within the firm? Why is this a disadvantage for the firm?
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Chapter 20: Accounting and Finance in the International Business
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Q1) What are the criticisms against adjusting discount rates to reflect a location's riskiness?
Q2) The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.
A)True
B)False
Q3) Capital budgeting is the technique financial managers use to try to quantify the benefits,costs,and risks of an investment.
A)True
B)False
Q4) Most international businesses require all budgets and performance data within the firm to be expressed in the "corporate currency," which is normally _____.
A) a common currency such as the U.S.dollar
B) the home currency
C) a foreign currency
D) the currency of the country where products are sold
Q5) What are the advantages of using royalties and fees to move money across borders?
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