International Business Strategy
Practice Questions
Course Introduction
International Business Strategy explores the frameworks, concepts, and tools necessary for firms to compete effectively in the global marketplace. Students will examine how multinational corporations formulate and implement strategies across national boundaries, taking into account cultural, economic, political, and legal differences. The course covers topics such as market entry strategies, global competitive dynamics, risk management, international alliances, and the impact of globalization on business models. Through case studies and real-world examples, students will develop analytical and decision-making skills essential for addressing the strategic challenges faced by organizations operating in diverse international environments.
Recommended Textbook
International Business Competing in the Global Marketplace 12th Edition by Charles W. L. Hill
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20 Chapters
2122 Verified Questions
2122 Flashcards
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Chapter 1: Globalization
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Sample Questions
Q1) An international business, unlike a multinational enterprise,
A) needs to have manufacturing units in at least two foreign nations.
B) needs to manufacture products or provide services that target a global market.
C) need not customize its products to the requirements of national markets.
D) need not invest directly in operations in other countries.
Answer: D
Q2) Why did many Japanese firms invest in North America and Europe in the 1970s?
A) to avoid a highly competitive domestic market
B) to exploit high domestic tariff barriers
C) to provide a hedge against unfavorable currency movements
D) to take advantage of low labor costs
Answer: C
Q3) World Bank gives aid of $100 million to Kenya for creating rural health care facilities. This is an example of foreign direct investment.
A)True
B)False
Answer: False
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Chapter 2: National Differences in Political, Economic, and Legal Systems
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Sample Questions
Q1) Although many countries have stringent intellectual property regulations on their books, the enforcement of these regulations has often been lax. This has been the case even among many of the 185 countries that are now members of the ________, all of which have signed international treaties designed to protect intellectual property.
A) World Intellectual Property Organization
B) General Agreement on Tariffs and Trade
C) Business Software Alliance
D) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Answer: A
Q2) The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.
A)True
B)False
Answer: False
Q3) Democracy is a form of government that prohibits opposing political parties.
A)True
B)False
Answer: False
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Chapter 3: National Differences in Economic Development
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Sample Questions
Q1) In a ________, the state owns all means of production.
A) mixed economy
B) planned economy
C) market economy
D) totalitarian state
Answer: B
Q2) According to Hernando de Soto, which of the following factors is essential for the developing world to be able to reap the benefits of innovation and entrepreneurship?
A) detailed state planning
B) restricting direct investment by foreign enterprises
C) strong property rights
D) market regulation
Answer: C
Q3) To improve airport security following a major terrorist attack, the government of a country takes over the airport security industries 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) Discuss the limitations of Hofstede's research.
Q2) Discuss the relationship between society and the nation-state.
Q3) Cross-cultural literacy refers to
A) an individual's self-concept derived from perceived membership in a relevant social group.
B) the phenomenon of merging and converging cultures.
C) abstract ideas about what a group believes to be good, right, and desirable.
D) an understanding of how cultural differences can affect business.
Q4) Folkways include rituals and symbolic behavior.
A)True
B)False
Q5) Describe the four dimensions of culture as identified by Geert Hofstede.
Q6) Mores are
A) the norms that are seen as central to the functioning of a society and its social life.
B) the routine conventions of everyday life.
C) abstract ideas about what a group believes to be right, good, and desirable.
D) the social rules and guidelines that prescribe appropriate behavior in particular situations.
Q7) Compare and contrast folkways and mores.
Page 6
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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Sample Questions
Q1) To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows.
A)True
B)False
Q2) External stakeholders
A) are individuals or groups who own the business.
B) include all employees, the board of directors, and stockholders.
C) are typically customers, suppliers, lenders, etc.
D) are individuals or groups who work for the business.
Q3) Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization.
A)True
B)False
Q4) What is considered normal business practice in one country may be considered unethical in other countries.
A)True
B)False
Q5) How can companies strengthen the moral courage of employees?
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Chapter 6: International Trade Theory
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Sample Questions
Q1) Which of the following balance-of-payment accounts records onetime changes in the stock of assets?
A) capital account
B) current account
C) financial account
D) monetary account
Q2) According to Adam Smith, a country should specialize in the production of a good when it has
A) an absolute advantage in the production of the good.
B) a strong domestic demand for the good.
C) the ability to help country increase its national output.
D) the necessary raw materials for production.
Q3) Which of the following theories stress the role of luck, entrepreneurship, and innovation in the production and export of a good or service by the firms in a country?
A) product life-cycle theory
B) Ricardo's theory
C) theory of comparative advantage
D) new trade theory
Q4) Explain how the principle of diminishing returns weakens the Ricardian model.
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Chapter 7: Government Policy and International Trade
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Sample Questions
Q1) Foreign producers typically agree to voluntary export restrictions because
A) their manufacturing capacity is limited.
B) they can divert their exports to other countries and charge more for their products.
C) they fear far more damaging punitive tariffs or import quotas might follow if they do not.
D) they are required to by the World Trade Organization.
Q2) Antidumping policies vary drastically from country to country.
A)True
B)False
Q3) ________ is a quota on trade imposed by the exporting country, typically at the request of the importing country's government.
A) Voluntary export restraint
B) Specific tariff quota
C) Trade reconciliation
D) Ad valorem tariff
Q4) What is the TRIPS agreement? Why was it established?
Q5) Discuss the Doha Round of trade talks.
Q6) Discuss the economic reasons for government intervention in markets.
Q7) Explain the notion of predatory behavior with regard to dumping.
Page 9
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Chapter 8: Foreign Direct Investment
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Sample Questions
Q1) Which of the following is an example of a greenfield investment?
A) A Chinese sugar maker sets up a sugar crushing facility in Cuba.
B) A Serbian automobile company purchases a Croatian component manufacturer.
C) A Finnish mobile phone manufacturer expands its production facility in Finland.
D) An Indian oil exploration company acquires an oil refining company.
Q2) Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.
A) internalization theory
B) product life-cycle theory
C) perfect markets theory
D) random walk theory
Q3) According to the ________ view of FDI, multinational enterprises (MNE) extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.
A) imperialist
B) conservative
C) free market
D) radical
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) Which of the following is true of ASEAN?
A) China, India, South Korea, and Singapore are among its members.
B) Collectively, the member states account for about 55 percent of world trade.
C) It is slowly progressing toward establishing a free trade zone.
D) It has been successful in fulfilling its basic objective of fostering freer trade between member countries.
Q2) Which level of economic integration eliminates trade barriers between member countries and adopts a common external trade policy?
A) political union
B) customs union
C) common market
D) economic union
Q3) Which of the following, adopted by the member nations of the European Community in 1987, committed member countries to work toward the establishment of a single market by December 31, 1992?
A) Treaty of Rome
B) Single European Act
C) Treaty of Lisbon
D) Maastricht Treaty
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Page 11
Chapter 10: The Foreign Exchange Market
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Sample Questions
Q1) Which of the following occurs when the quantity of money in circulation in a country rises faster than the country's stock of goods and services?
A) inflation
B) credit squeeze
C) deflation
D) production surplus
Q2) What are the two main functions of the foreign exchange market?
A) trading foreign company equities and converting currency
B) reducing currency volatility and setting interest rates
C) insuring companies against interest rate risk and enabling imports and exports
D) converting currency and providing some insurance against foreign exchange risk
Q3) The rate at which one currency is converted into another is known as the
A) exchange rate.
B) currency swap rate.
C) fluctuation rate.
D) carry over rate.
Q4) Explain the difference between fundamental analysis and technical analysis.
Q5) Describe translation exposure. How can translation exposure be minimized?
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Chapter 11: The International Monetary System
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Sample Questions
Q1) The monetary autonomy argument is supported by the advocates of A) a dirty-float system.
B) fixed exchange rates.
C) pegged exchange rates.
D) floating exchange rates.
Q2) International Monetary Fund members were ________ in the Jamaica agreement.
A) not permitted to sell their own gold reserves
B) permitted to sell their own gold reserves, but only at the price set by IMF
C) required to hold their gold reserves in escrow
D) permitted to sell their own gold reserves at the market price
Q3) Prior to the introduction of the euro, many EU countries participated in a ________ system, in which the values of a set of currencies are fixed against each other at some mutually agreed upon exchange rate.
A) floating exchange rate
B) currency board
C) fixed exchange rate
D) pegged exchange rate
Q4) How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?
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Chapter 12: The Global Capital Market
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Sample Questions
Q1) What are the drawbacks of the Eurocurrency market?
Q2) One drawback of the Eurocurrency market is
A) increased governmental controls.
B) high reserve ratio requirements.
C) low interest rates on deposits.
D) exposure to foreign exchange risk.
Q3) The cost of recording, transmitting, and processing information has doubled with advancements in technology since 1964.
A)True
B)False
Q4) Economist Martin Feldstein has coined the term "hot money" to pertain to long-term capital flows.
A)True
B)False
Q5) The Eurocurrency market has been one cause of a decrease in global financial regulations.
A)True
B)False
Q6) Describe a fixed-rate bond.
Q7) What is a capital market? Define market makers.
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Chapter 13: The Strategy of International Business
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Sample Questions
Q1) ________ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.
A) Efficiency matrixes
B) Diminishing returns
C) Cost plus curves
D) Strategy convex curves
Q2) For a firm, all positions on the efficiency frontier are viable.
A)True
B)False
Q3) ________ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible.
A) Core competencies
B) Global standardization strategies
C) Operations
D) Location economies
Q4) Discuss how a firm's marketing strategies may have to address differences in distribution channels in other countries.
Q5) Describe the benefits of global expansion for firms.
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Chapter 14: The Organization of International Business
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Sample Questions
Q1) ________ refers to giving a person in each subunit responsibility for coordinating with another subunit on a regular basis.
A) Global learning
B) Liaison roles
C) Knowledge network
D) Matrix structures
Q2) Because of inertia forces, ________ is often no change.
A) big bang change
B) cultural change
C) shock therapy change
D) incremental change
Q3) In practice, the dual hierarchy in a global matrix structure
A) lessens all forms of conflict.
B) makes it easy to ascertain accountability.
C) results in extremely quick decision making.
D) can lead to perpetual power struggles.
Q4) What are the main strengths and weaknesses of the worldwide product division structure?
Q5) Explain organizational structure.
Q6) What is a knowledge network? What is the advantage of such a system?
Page 16
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Chapter 15: Entry Strategy and Strategic Alliances
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Sample Questions
Q1) By producing its product in a centralized location, licensing limits a firm's ability to realize experience curve and location economies.
A)True
B)False
Q2) ________ agreements enable firms to hold each other "hostage," thereby reducing the risk they will behave in an opportunistic manner toward each other.
A) Turnkey
B) Franchising
C) Cross-license
D) Integrated license
Q3) Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.
A)True
B)False
Q4) Exporting from a firm's home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad.
A)True
B)False
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Chapter 16: Exporting, Importing, and Countertrade
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Sample Questions
Q1) ________ occurs when a firm supplies technology, equipment, training, or other services in a country and agrees to take a certain percentage of the resultant output as partial payment for the contract.
A) A counterpurchase
B) An offset
C) A barter
D) A buyback
Q2) What problems do novice exporters typically face when trying to export?
Q3) The term switch trading refers to the use of a specialized third-party trading house in a countertrade arrangement.
A)True
B)False
Q4) ________ are export specialists that offer a full menu of services to handle all aspects of exporting, similar to having an internal exporting department within your own firm.
A) Small business development centers (SBDCs)
B) Centers for international business education and research (CIBERs)
C) Export legal assistance networks (ELANs)
D) Export management companies (EMCs)
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Chapter 17: Global Production and Supply Chain Management
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Sample Questions
Q1) The typical ________ is dedicated to the production of a family of parts or products through the use of four to six machines capable of performing various operations.
A) minimum efficient scale
B) flexible machine cell
C) just-in-time machine
D) assembly line
Q2) Poor product quality and low productivity are hidden costs associated with basing production in a foreign location.
A)True
B)False
Q3) ________ covers a range of manufacturing technologies designed to reduce setup times for complex equipment.
A) ISO 9000
B) TQM
C) Lean production
D) JIT
Q4) Describe the concept of minimum efficient scale of output. What are the implications of minimum efficient scale?
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Chapter 18: Global Marketing and R&D
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Sample Questions
Q1) Countries with ________ retail systems tend to have long channels of distribution.
A) fragmented
B) intermarket
C) concentrated
D) exclusive
Q2) The probability of effective communications is reduced by A) noise.
B) location effects.
C) country of origin effects.
D) source effects.
Q3) Marriott owns many brands of hotels, such as W Hotels, which is a luxury brand; Westin hotels, which is an upscale brand; and Fairfield Inns, which are midscale. Marriott is marketing its hotels based on A) market segmentation.
B) market penetration.
C) diversification strategy.
D) differentiation.
Q4) What is Theodore Levitt's contribution to international business?
Q5) Explain briefly the regulatory influences on pricing.
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Chapter 19: Global Human Resource Management
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Sample Questions
Q1) Unions' bargaining power is
A) largely derived from their ability to threaten to disrupt production.
B) rooted in their government backing.
C) largely derived from their ability to control corporate managers.
D) rooted in their financial resources.
Q2) Firms pursuing ________ strategy increasingly are using management development as a strategic tool.
A) a localization
B) a global standardization
C) a transnational
D) an international
Q3) What is the most common approach to expatriate pay?
A) balance sheet approach
B) net-to-net approach
C) host-country approach
D) cost-based approach
Q4) Union influence in the auto industry is increasing in part due to Japanese carmakers building autos in the United States.
A)True
B)False
Page 21
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Chapter 20: Accounting and Finance in the International Business
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Sample Questions
Q1) Which of the following is a country in which banks emerged as the main providers of capital to enterprises?
A) the United States
B) Britain
C) the Philippines
D) Switzerland
Q2) Lessard and Lorange refer to the company-generated forecast of future spot rates as the ________ rate.
A) forward exchange
B) internal forward
C) initial exchange
D) ending exchange
Q3) Historically, financial reports prepared by firms in Germany
A) reveal less information than reports of British or U.S. firms.
B) contain detailed information required by individual investors.
C) overvalued assets and undervalued liabilities.
D) made more public disclosures compared to firms in other countries.
Q4) Identify a key accounting problem that international businesses are confronted with but that does not confront purely domestic businesses. Substantiate with a suitable example.
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