International Business Strategy
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Course Introduction
International Business Strategy explores the frameworks and analytical tools necessary for formulating and implementing strategies in a global business environment. The course examines how firms expand and compete internationally, including the evaluation of foreign markets, global supply chain management, and the influence of cross-cultural, political, and economic factors on strategic decision-making. Students will learn to identify risks and opportunities associated with global operations, adapt to rapidly changing international trends, and create sustainable competitive advantages for multinational organizations. The course combines case studies, theoretical models, and practical applications to prepare students for strategic roles in today's interconnected world economy.
Recommended Textbook
International Business 16th Edition by John Daniels
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Chapter 1: Globalization and International Business
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Q1) Gaining some understanding of international business is important for any business student because global events and competition affect almost all companies.
A)True
B)False
Answer: True
Q2) 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
Q3) Globalization refers to all economic transactions among countries.
A)True
B)False
Answer: False
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Chapter 2: The Cultural Environments Facing Business
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Q1) The term "cultural distance" refers to the ________.
A)physical space between people during communication
B)time it takes people to adjust to the language, traditions, and norms of a foreign culture
C)degree to which countries differ on cultural dimensions
D)preferred relationship between superiors and subordinates in a given culture
Answer: C
Q2) Which of the following statements about the English language is most likely NOT true?
A)The largest portion of global output is in English-speaking countries.
B)A large portion of MNEs are headquartered in English-speaking countries.
C)English is the official national language in most countries where FDI is encouraged.
D)Many MNEs from non-English speaking countries use English as their operating language.
Answer: C
Q3) Cultures do not transcend national (state)boundaries.
A)True
B)False
Answer: False
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) How does a nation's legal environment affect an MNE's marketplace behavior, especially when the rule of man prevails?
Answer: National laws stipulate permissible practices in all forms of business activities, including sourcing, distributing, advertising, and pricing products.MNEs adjust their manufacturing configuration, supply chain coordination, and marketing strategy accordingly.In countries where the rule of man is the basis of law, acceptable marketplace behavior is unpredictable.MNEs often complain of trumped-up charges, solicitation of bribes, and favoritism for local rivals.Especially controversial in legal systems where the rule of man prevails is the issue of the protection-or lack thereof-of intellectual property.
Q2) Which of the following is most likely a true statement regarding the rule of law? The rule of law is a hallmark of ________.
A)a totalitarian government
B)a democratic government
C)societies that place ultimate power in the hands of one person
D)countries that are considered "partly free"
Answer: B
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Chapter 4: The Economic Environments Facing Businesses
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Q1) Tatum Manufacturing recently opened a new facility in Hong Kong.The firm can most likely expect the Hong Kong government to ________.
A)monitor market prices
B)control natural resources
C)ensure fair competition
D)provide innovation incentives
Q2) Which of the following calls for economic activity that meets present needs without hindering the future needs of society?
A)privatization
B)state capitalism
C)economic freedom
D)sustainable development
Q3) There is a positive correlation between economic freedom and economic growth. A)True
B)False
Q4) What is state capitalism? Why do you think state capitalism is becoming increasingly popular around the world?
Q5) What is the difference between a command economy and state capitalism?
Q6) What is inflation?
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Chapter 5: Globalization and Society
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Q1) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________.
A)strategic accomplishment
B)consumer commitment
C)industry resolutions
D)financial success
Q2) Explain why the argument that "anything that is legal is ethical" is insufficient.
Q3) Stockholders are typically more interested in corporate social responsibility than in earning profits.
A)True
B)False
Q4) A 1977 U.S.law that outlaws bribery payments by U.S.firms to foreign government officials is known as the ________.
A)Anti-Bribery Act of 2004
B)Foreign Corrupt Practices Act
C)Zero Tolerance Initiative
D)Sarbanes-Oxley Act
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Chapter 6: International Trade and Factor-Mobility Theory
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Q1) The theory of absolute advantage holds that there are advantages to trade because different countries can produce different goods more efficiently than others.
A)True
B)False
Q2) The comparative advantage theory holds that a country will gain from trade even though it can produce all goods more efficiently than other countries.
A)True
B)False
Q3) Which of the following is most likely a basis for a Jamaican natural advantage in international trade?
A)product technology developed by a Jamaican company
B)high literacy rates among Jamaican citizens
C)the use of English as the primary language
D)beautiful beaches and climate
Q4) An objective of neomercantilism is to build up gold reserves.
A)True
B)False
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Chapter 7: Governmental Influence on Trade
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Q1) Most countries have agreed on how to assess values when their customs agents levy tariffs.Which of the following best expresses this agreement?
A)They should use the value of similar goods arriving at about the same time.
B)They should use the declared invoice price unless they doubt its authenticity.
C)They should assess a value based on local costs to produce a similar product.
D)They should assess a value based on the expected final consumer sales price.
Q2) Successful trade retaliation is most likely achieved ________.
A)on agricultural products
B)on manufactured products
C)by a large trading country
D)by a small trading country
Q3) Describe and compare the different types of tariffs (duties).
Q4) On average, workers displaced by imports earn higher wages in the new jobs they accept.
A)True
B)False
Q5) In a short essay, list and discuss the nontariff barriers that relate to direct price influences: subsidies, aid and loans, customs valuations, and other direct price influences.
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) Hudson Manufacturing is an MNE based in the United States with operations in Asia.The firm is considering expansion into the European Union.Which of the following questions is most relevant to the decision?
A)What is the primary language of most workers?
B)Which country has the best production location?
C)Which currency has the most favorable value of the euro?
D)Which country has the lowest tariffs for manufactured products?
Q2) Most MNEs generate a majority of their revenues in their home regions.
A)True
B)False
Q3) Since production has shifted to more efficient producers due to comparative advantage, consumers in Country X have had access to more goods at lower prices.Which of the following most likely exists?
A)trade specialization
B)trade diversion
C)trade creation
D)trade internalization
Q4) What are the functions of the European Commission, the European Parliament, the Council, and the European Court of Justice?
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate, known as the ________.
A)spot rate
B)forward rate
C)option rate
D)reverse transaction rate
Q2) Why is London most likely the top market for trading foreign exchange?
A)The British pound is the world's top trading currency.
B)Most multinational firms are headquartered in London.
C)London is uniquely positioned geographically in terms of time zones.
D)British traders have always been the most sophisticated in the world.
Q3) The U.S.dollar is important as a vehicle for foreign-exchange transactions between two countries other than the United States.
A)True
B)False
Q4) What is currency speculation? Why is it risky?
Q5) An irrevocable letter of credit is the basis for multilateral netting.
A)True
B)False
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Chapter 10: The Determination of Exchange Rates
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Q1) Sarah, a manager at Farley Enterprises, an MNE with operations in Asia, Europe, and North America, is using past trends in exchange rate movements to spot future trends.Which type of forecasting approach is Sarah most likely using?
A)fundamental
B)technical
C)application
D)economic
Q2) Thomas is planning a vacation to Country X.On a tourism Web site, he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency.Country X most likely uses which of the following?
A)import deposit requirements
B)multiple exchange rates
C)import licensing
D)quantity controls
Q3) A technical forecaster is also known as a ________.
A)CFO
B)de facto economist
C)chartist
D)monetary administrator
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Chapter 11: Global Capital Markets
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Q1) Which of the following is a characteristic of most offshore financial centers?
A)strict domestic regulation
B)minimal banking activities
C)large foreign currency markets
D)nominal or non-existent tax rates
Q2) You are the chief financial officer at an MNE.What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?
Q3) The Eurocurrency market is limited to exchanges that include the euro.
A)True
B)False
Q4) Which of the following is a characteristic of most offshore financial centers?
A)political stability
B)services for residents
C)accounting scandals
D)a lack of legal expertise
Q5) What are the major sources of internal funds for MNEs? Why do many MNEs acquire external funds through the Eurodollar market?
Q6) Why do many MNEs acquire external funds through the Eurodollar market?
Q7) What is a transfer price? Why are transfer prices used?
Page 13
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Chapter 12: The Strategy of International Business
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Q1) Which of the following refers to the means by which management applies the systems that link a company's value activities, whether those activities are performed in one or in many countries?
A)configuration
B)logistics
C)coordination
D)core competency
Q2) 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)localization
C)transnational
D)international
Q3) 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
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Chapter 13: Country Evaluation and Selection
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Q1) Companies are more likely to gain advantages by locating near competitors for all the following reasons EXCEPT to ________.
A)take advantage of competitors' research to pick an ideal location
B)attract multiple suppliers and personnel with specialized skills
C)agree with competitors on production limitations
D)attract buyers who want to compare suppliers
Q2) An advantage of locating operations where there are many competitors is that the cluster of competing firms attracts multiple suppliers and specialized personnel.
A)True
B)False
Q3) Comparability of economic information among countries is hampered by countries' use of different definitions for similar terms.
A)True
B)False
Q4) When income inequality is high in a specific country, the per capita GDP figures are more meaningful.
A)True
B)False
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Chapter 14: Export and Import
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Q1) Which of the following is NOT one of the three common ways that private trade intermediaries are paid by exporters?
A)commission rate
B)buy-sell basis
C)fixed salary
D)special event contribution
Q2) The U.S.government has more than 10,000 tariff classifications and more than half of them are subject to interpretation.
A)True
B)False
Q3) What is the difference between exporting and importing? What are the unique characteristics of service exports and service imports?
Q4) A(n)________ operates on a contractual basis and provides exclusive representation for an exporter's goods and services in a foreign market.
A)export management company
B)import broker
C)invoice agent
D)countertrader
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) There are two ways companies can invest in a foreign country.They can either acquire an interest in an existing operation or construct new facilities.In a short essay, describe the advantages and disadvantages of each alternative.
Q2) 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
Q3) Appropriability theory refers to ________.
A)denying rivals access to competitive resources such as management know-how
B)categorizing the appropriateness of a firm's foreign investments in terms of host country objectives
C)explaining an investing firm's choice of partner in a joint venture
D)predicting the general pattern of direct investment locations
Q4) Few turnkey projects to date have been in remote areas of the world.
A)True
B)False
Q5) Explain how franchising agreements differ from licensing agreements.
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Chapter 16: The Organization of International Business
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Q1) Johnson & Johnson embodies its organizational culture in "The Credo," which is the firm's ________.
A)code of conduct
B)vision statement
C)strategic plan
D)mission statement
Q2) In a matrix structure, product, functional, or geographic groups compete for resources.
A)True
B)False
Q3) Falcon Enterprises is an MNE that uses price competition and relative market share to establish internal performance benchmarks and standards.The firm is most likely applying a system of ________.
A)bureaucratic control
B)market control
C)standardization control
D)clan control
Q4) How might centralization of decision making adversely affect local managers in an MNE?
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Chapter 17: Marketing Globally
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Q1) Why are MNEs criticized for exporting to developing countries the same products they sell in developed countries?
A)The prices of the products are too low in developing countries.
B)Many of the products are deemed to be unnecessary for low income consumers.
C)The sales enhance local company failures in developing countries.
D)Developing countries need local production rather than imports.
Q2) Increasingly, media reach audiences in more than one country, such as through satellite TV that reaches multiple countries simultaneously.What is NOT a problem of advertising on these media?
A)Because of reaching so many households, the cost is prohibitive.
B)The product may not be available everywhere it is advertised.
C)A company may not be able to advertise prices because they may differ among countries.
D)The advertisement may reach countries using different languages.
Q3) In a short essay, discuss the international application of five common marketing orientations.
Q4) In a short essay, describe the various reasons for product alteration.
Q5) How do foreign government regulations affect pricing and promotion for international businesses?
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) Alta Designs is considering the idea of global sourcing.What would be the most likely result for Alta Designs?
A)gain access to more domestic markets
B)gain access to more domestic products
C)lower costs and improve quality
D)shorten lengthy supply lines
Q2) Independent suppliers can connect to a company's intranet to help automate and organize delivery of components to that company.
A)True
B)False
Q3) ________ manufacturing is any manufacturing that takes place in a country different from the home country.
A)Offshore
B)Multidomestic
C)Cost-minimization
D)Outsourcing
Q4) Keiretsus is one of the two major configurations of sourcing.
A)True
B)False
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Chapter 19: International Accounting and Finance Issues
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Q1) When recording the value of a purchase denominated in a foreign currency, the company is required to use the spot rate when payment is made, as long as it is made 30 days or more in the future.
A)True
B)False
Q2) What is the role of the controller in an MNE? What are some of the challenges that a controller faces in an international environment?
Q3) U.S.-based MNEs do not like to use the balanced scorecard for evaluation performance because it does not take into consideration international differences.
A)True
B)False
Q4) The process of combining financial statements of different subsidiaries into one statement is known as ________.
A)conversion
B)translation
C)consolidation
D)recognition
Q5) How do exchange rates affect budgets used to evaluate performance in MNEs?
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Chapter 20: International Human Resource Management
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Q1) The various activities of HRM perform best when managers link them to the strategy of the firm.
A)True
B)False
Q2) Generally, HRM is more difficult for international companies for all of the following reasons EXCEPT which one?
A)Dual career and family obligations make it tough to convince executives to leave the home office to join a foreign subsidiary.
B)Leadership styles and management practices are so similar from country to country that it is difficult to create a culture of innovation.
C)Complications arise due to enduring political, cultural, legal, and economic differences between countries.
D)Labor markets are dramatically different in the mix of workers, costs, and productivity.
Q3) Why are third-country nationals increasingly being used to fill expatriate assignments? How do third-country nationals fit into the concept of geocentrism?
Q4) List and discuss the main components of an expatriate's compensation package.
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