International Business Strategy
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Course Introduction
International Business Strategy explores the frameworks and techniques organizations use to compete and operate effectively across global markets. The course examines the complexities of international environments, including cultural, economic, legal, and political dimensions, and their impacts on strategic decisions. Students learn how to analyze global opportunities, enter new markets, and manage cross-border operations while considering risks and sustainability. Emphasis is placed on the formulation and implementation of strategies that leverage competitive advantages, respond to global challenges, and align with organizational goals in an increasingly interconnected world.
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) Most of the world's goods and services are sold ________.
A) in international markets
B) in the countries where they are produced
C) through exports to small countries
D) through exports to large countries
Answer: B
Q2) What is foreign direct investment? What social factors in the external environment might affect FDI?
Answer: In foreign direct investment (FDI),sometimes referred to simply as direct investment,the investor takes a controlling interest in a foreign company.Control need not be a 100 percent or even a 50 percent interest; if a foreign investor holds a minority stake and the remaining ownership is widely dispersed,no other owner may effectively counter the investor's decisions.A nation's political policies of course affect how international business is conducted within its borders.In particular,political disputes can disrupt the flow of international business.Domestic law,which includes both home- and host-country regulations on issues such as taxation and employment,affects how a company can operate internationally.International law-the legal agreements between countries-also obviously affects FDI.
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Chapter 2: The Cultural Environments Facing Business
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Q1) Many firms gain a global competitive advantage by fostering cultural diversity.
A)True
B)False
Answer: True
Q2) Expatriate managers located in cultures characterized by ________ have noticed that local employees are highly motivated by retirement programs.
A) low uncertainty avoidance
B) high future orientation
C) low masculinity
D) high power distance
Answer: B
Q3) Based on the hierarchy-of-needs theory,in which of the following would fulfillment of lower-order needs be the best motivator?
A) wealthy countries
B) Protestant countries
C) high femininity countries
D) very poor countries
Answer: D
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) ________ refer(s)to the creative ideas,innovative expertise,or intangible insights that give an individual,company,or country a competitive advantage.
A) Proprietary goods
B) Exclusive ownership
C) Restrictive goods
D) Intellectual property
Answer: D
Q2) The protection of intellectual property rights is very similar from country to country.
A)True
B)False
Answer: False
Q3) Which of the following countries has an individualistic orientation?
A) Venezuela
B) Japan
C) Egypt
D) Canada
Answer: D
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Page 5
Chapter 4: The Economic Environments Facing Businesses
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Q1) The calculation of GNI per capita takes into account the differences in the cost of living from one country to another.
A)True
B)False
Q2) What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
B) a lack of reliable economic data from most developed economies
C) the isolation of most markets from each other
D) static nature of the marketplace
Q3) Which of the following governmental actions is LEAST likely to increase national debt?
A) macroeconomic stimulus plans
B) unemployment benefits
C) corporate bailouts
D) T-bond sales
Q4) What is the difference between a command economy and state capitalism?
Q5) What is inflation? How does inflation affect international business?
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Chapter 5: Globalization and Society
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Q1) Which of the following statements about GE and its "Green is Green" movement is true?
A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States.
B) GE has decided to develop new products that are environmentally friendly rather than adopt internal policies to reduce greenhouse gas emissions.
C) GE has moved aggressively to reduce greenhouse gas usage internally but has not been able to develop commercially viable "clean" technologies.
D) GE considered joining the U.S. Climate Action Partnership but decided the group was too radical in its approach to reducing greenhouse gas emissions.
Q2) Which stakeholder group primarily wants additional sales and increased productivity?
A) customers
B) shareholders
C) society at large
D) government
Q3) What is extraterritoriality? Why is the concept controversial?
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Chapter 6: International Trade and Factor Mobility Theory
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Q1) According to theories of specialization in international trade,gains occur because specialized workers move to countries that can use their skills more effectively.
A)True
B)False
Q2) Which of the following statements is most likely FALSE?
A) Developing countries trade mainly with developed countries.
B) Developed countries trade mainly with other developed countries.
C) Cultural similarity among countries enhances their trade with each other.
D) The greater the geographic distance between countries the greater the trade.
Q3) What assumptions underlie the theories of specialization in international trade? What are the limitations of these assumptions?
Q4) What is the theory of country size? How is country size determined? How does country size affect national trade patterns?
Q5) The factor proportions theory holds that countries should improve their competitiveness by importing capital and skilled employees from abroad.
A)True
B)False
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Chapter 7: Governmental Influence on Trade
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Q1) The countries most likely to be successful at using trade retaliation are large trading countries.
A)True
B)False
Q2) The U.S. automobile industry has attempted to counter import competition in all the following ways EXCEPT ________.
A) concentrating on market niches that initially had less import competition
B) lobbying for customs deposits so that importers' costs would be raised
C) moving some production to lower-cost countries and exporting to the United States
D) effecting internal adjustments, such as cost efficiencies and improved quality
Q3) The comparable access argument for import restrictions is a more valid economic argument for products using small-scale technology than for products requiring substantial economies of scale to be competitive.
A)True
B)False
Q4) Explain the rationale for and problems with making the infant-industry argument work as intended.
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) The most important rationales for NAFTA are geographic proximity and trading importance.
A)True
B)False
Q2) As companies expand internationally,they must change their organizational structure and operating strategies to take advantage of regional trading groups.
A)True
B)False
Q3) Which of the following members of the European Union has NOT adopted the euro?
A) United Kingdom
B) Estonia
C) Germany
D) Greece
Q4) Which of the following are members of NAFTA?
A) the United States, Canada, and Mexico
B) North America and Latin America
C) the United Kingdom, the United States, and Canada
D) the United States, Canada, and Brazil
Q5) What are the rules of origin and regional content provisions of NAFTA?
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Ryan,a foreign exchange dealer,sold U.S. dollars for Swiss francs in the U.S.,then sold Swiss francs for Japanese yen in Switzerland,and then sold the Japanese yen for U.S. dollars in the U.S. Ryan hopes that he will end up with more U.S. dollars than when he began. Which term best describes Ryan's actions?
A) arbitrage
B) speculation
C) spot transaction
D) outright forward
Q2) Which of the following would have the LEAST influence on price setting in the foreign exchange market?
A) Morgan Stanley
B) Deutsche Bank
C) Western Union
D) JP Morgan
Q3) In 2010,what was the top remittance-receiving country in the world?
A) Brazil
B) Mexico
C) India
D) China
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Page 11
Chapter 10: The Determination of Exchange Rates
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Q1) Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union?
A) The annual government budget must be no greater than 3% of GDP.
B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries.
C) The annual government budget deficit could be no greater than 60% of GDP.
D) The annual inflation rate must remain within 5.5% of the four best-performing EU countries.
Q2) What led to the Greek financial crisis of 2010? What have been the roles of the IMF and European Central Bank in the crisis? What challenges with the euro facilitated the crisis?
Q3) In a country with a currency that is not freely floating,the timing of an exchange rate change is often a ________ decision.
A) cultural
B) consensus
C) political
D) market
Q4) What is a Special Drawing Right (SDR)? How is it used?
Q5) What is a black market? Under what conditions might one exist?
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Chapter 11: The Strategy of International Business
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Q1) The MNE that applies a global strategy aims to ________.
A) compete essentially the same way wherever the company does business
B) empower local operations to make decisions about value activities
C) adapt activities to the industry standards in critical markets
D) customize its business practices to consumer expectations
Q2) What is coordination? Describe the factors that influence value chain coordination.
Q3) Marrin Associates is an MNE with operations in Hong Kong,India,and Canada. The firm strives to leverage its core competencies worldwide,reduce costs by exploiting location economics,and adapt when efficient to local conditions. Marrin is most likely following a(n)________ strategy.
A) global
B) multidomestic
C) transnational
D) international
Q4) The strategy of a firm using an international strategy is likely to entail producing and marketing mostly standardized products worldwide,with some customization where and when necessary.
A)True
B)False
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Chapter 12: Country Evaluation and Selection
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Q1) It is generally agreed that because of technical advancements,managers will not need face-to-face communication in the future.
A)True
B)False
Q2) Published government data is most often inaccurate because of translation errors from other countries' languages.
A)True
B)False
Q3) A company's overall geographic strategy should be flexible enough to ________.
A) implement concentration strategies instead of diversification strategies
B) respond to new opportunities and withdraw from less profitable ones
C) import from anywhere in the world to a single production location
D) export anywhere in the world from a single production location
Q4) In developed countries,the percentage of the working-age population (using today's standards)is expected to rise by 2050.
A)True
B)False
Q5) Why do companies often treat foreign reinvestment decisions differently than new foreign investment decisions?
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Chapter 13: Export and Import
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Q1) In designing an export plan,managers initially do all of the following EXCEPT
A) sequence tactics
B) specify objectives
C) identify useful resources
D) organize financial support
Q2) Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price
D) importers using foreign sourcing to optimize their supply chains
Q3) The probability that a business is engaged in exporting tends to ________.
A) decrease with the size of the firm
B) increase with the product life cycle
C) decrease with the product life cycle
D) increase with the size of the firm
Q4) What are export management companies,and how do they help potential exporters?
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Q5) What is a born global? How has technology triggered the growth of born globals?
Chapter 14: Direct Investment and Collaborative Strategies
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Q1) The advantage to host countries of international management contracts is that they
A) receive state-of-the-art facilities
B) get assistance without foreign control
C) can pay in local currency
D) save on making capital investments
Q2) A greenfield investment is another name for a company's decision to ________.
A) acquire an interest in an existing foreign operation
B) implement sustainable marketing practices
C) construct a new facility in a foreign market
D) build a facility for a local company
Q3) An advantage of collaborative agreements is the ability to spread faster geographically.
A)True
B)False
Q4) What is a management contract? What are the potential advantages to both parties in the contract?
Q5) What is an equity alliance? What motives would a firm have for forming an equity alliance?
Q6) Explain how franchising agreements differ from licensing agreements.
Page 16
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Chapter 15: The Organization of International Business
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Q1) IBM puts investments,people,and work anywhere in the world based on the best mix of costs,skills,and environment and uses sophisticated strategies and technologies to support and coordinate activities. IBM most likely uses a ________ structure.
A) classical
B) product
C) neoclassical
D) locational
Q2) What role does a firm's strategy play in determining organizational structure? Why are boundaries problematic for firms with international strategies?
Q3) Formal reports,management performance evaluations,and financial metrics are three examples of ________.
A) coordinating tools
B) coordinating systems
C) control systems
D) control mechanisms
Q4) What is the difference between a classical structure and a neoclassical structure? Provide examples of each type.
Q5) Describe how an MNE might use reports as a control mechanism.
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Chapter 16: Marketing Globally
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Q1) Internet sales complement traditional distributors,thus enhancing companies' ability to secure and hold traditional distributors.
A)True
B)False
Q2) International marketing is unlike domestic marketing because the basic principles are completely different.
A)True
B)False
Q3) 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.
Q4) How do language differences affect international branding and promotion?
Q5) In a short essay,discuss gap analysis.
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Page 18
Chapter 17: Global Manufacturing and Supply Chain Management
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Q1) The Japanese approach to quality is total quality management (TQM),which stresses which of the following principles?
A) employee involvement, commitment to international standards, and customer satisfaction
B) customer satisfaction, continuous improvements, and warranties
C) customer satisfaction, employee involvement, and continuous improvements
D) employee involvement, continuous improvements, and commitment to international quality standards
Q2) The use of JIT does not depend on the quality of incoming parts or the time of their arrival.
A)True
B)False
Q3) What are the roles of compatibility,configuration,coordination,and control in a global manufacturing strategy? Describe each of these four factors.
Q4) Which of the following is one of the main purposes of FTZs?
A) discouraging companies to locate in the host country
B) forcing countries to pay extra duties
C) discouraging companies from using JIT
D) allowing countries to defer duties
19
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Chapter 18: International Accounting Issues
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Q1) Matt manages the sales unit at Global Electronics but has no control over input costs. The primary purpose of the sales division is to sell goods produced by another division at Global Enterprises. What is the most appropriate performance evaluation measure for Matt's division?
A) market share
B) profitability
C) net income as a percentage of sales
D) inventory costs as a percentage of sales
Q2) Which of the following statements is most likely true about secrecy and transparency in accounting?
A) Japanese firms are usually as transparent as U.S. firms.
B) German companies tend to be less transparent than British companies.
C) Secrecy and transparency refer to the degree of caution companies display in valuing assets.
D) Companies that list on stock exchanges are highly transparent because of stockholder audits.
Q3) In regards to accounting,what is the impact of the SEC and Sarbanes-Oxley Act on international business?
Q4) How do exchange rates affect budgets used to evaluate performance in MNEs?
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Chapter 19: The Multinational Finance Function
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Q1) An economic exposure ________.
A) occurs when reporting systems are inadequate
B) generally takes place when foreign currencies weaken against the dollar
C) occurs when the sourcing and costs of components change as exchange rates change
D) is the same as a translation exposure
Q2) MNEs most likely use offshore debt markets ________.
A) to hide their cash from tax authorities
B) to take advantage of their ability to access capital in different countries
C) since debt in foreign countries is always cheaper than in the home country market
D) because investors don't like to invest in companies that only raise capital in their home markets
Q3) Tax law variations around the world affect an MNE's capital budgeting,financing,and method of setting transfer prices.
A)True
B)False
Q4) A transaction exposure results in a foreign exchange gain or loss.
A)True
B)False
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Chapter 20: International Human Resources
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Q1) Generally,HRM does not emphasize which of the following characteristics when evaluating the adaptiveness of an expatriate candidate?
A) self maintenance
B) technology skills
C) cultural empathy
D) sensitivity to host environments
Q2) A geocentric staffing policy seeks the best qualified people for key jobs throughout the organization,irrespective of their nationality.
A)True
B)False
Q3) Historically,companies searching their ranks for potential expatriates looked first for individuals with the necessary language proficiency and then evaluated their technical competence.
A)True
B)False
Q4) What are the differences between ethnocentric,polycentric,and geocentric frameworks?
Q5) List and compare the three common methods of implementing a balanced compensation plan.
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