International Entrepreneurship
Final Test Solutions
Course Introduction
International Entrepreneurship explores the dynamic process of identifying, evaluating, and exploiting entrepreneurial opportunities in global markets. This course examines how entrepreneurs create and manage new ventures that operate across national borders, considering the challenges and strategies associated with different legal, cultural, economic, and political environments. Students will analyze international business models, learn about market entry strategies, and understand how to navigate cross-cultural negotiations and build global networks. Practical cases and real-world examples will be used to develop the skills and mindset needed to launch and grow successful ventures in the international arena.
Recommended Textbook
International Business 15th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) An example of a Japanese service export is a visit by a ________.
A) Japanese citizen to Disneyland in the United States
B) Japanese citizen to the Japan Pavilion at Epcot Center in the United States
C) U.S. citizen to the Japan Pavilion at Epcot Center in the United States
D) U.S. citizen to Tokyo Disneyland in Japan
Answer: D
Q2) The shifting of national borders has most likely created which of the following situations for international business?
A) It has left rural residents more isolated from technology.
B) It has complicated the understanding of behavioral factors affecting business.
C) It has increased physical barriers to exporting.
D) It has slowed communications between a company's headquarters and foreign operations.
Answer: C
Q3) Governments primarily cooperate through treaties to create a global division of labor.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) There is a strong correlation between the intensity of religious belief and attributes that lead to economic growth,such as obeying laws and thriftiness.
A)True
B)False
Answer: True
Q2) Raj,an engineer,works long hours and takes full responsibility for both his good and bad work performance.Raj most likely believes in ________.
A) self-determination
B) low power distance
C) collectivism
D) fatalism
Answer: A
Q3) The identity of a nation is typically promoted through symbols,monuments,and museums.
A)True
B)False
Answer: True
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) Elite Manufacturing seeks a foreign location with a highly favorable business environment and a comprehensive legal code.Which of the following countries would be most suitable for Elite?
A) Japan
B) Canada
C) Singapore
D) United Kingdom
Answer: C
Q2) Multilateral development banks encourage development in risky environments through financial incentives.
A)True
B)False
Answer: True
Q3) The principle that an individual has the freedom to pursue his or her interests is called ________.
A) socialism
B) totalitarianism
C) individualism
D) collectivism
Answer: C
Page 5
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Chapter 4: The Economic Environments Facing Businesses
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Q1) A government increases its internal debt for all of the following reasons EXCEPT
A) the tax system is so poorly run that the government cannot collect all the revenues it expects
B) government costs such as security and social programs exceed total tax revenues
C) the government borrows money from international financial institutions
D) state-owned enterprises run large deficits
Q2) In most cases,if the misery index of a country is high,then consumers and businesses are less likely to spend and invest.
A)True
B)False
Q3) The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its ________.
A) net national product (NNP)
B) gross national product (GNP)
C) gross domestic product (GDP)
D) gross national income (GNI)
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) Countries with large land areas are generally less dependent on trade than countries with small land areas.
A)True
B)False
Q2) Contrary to the product life cycle theory,there has been an increased tendency for companies to ________.
A) sell products only in their home markets throughout the cycle
B) produce and sell products in countries where counterfeiting is low
C) introduce new products simultaneously in domestic and foreign markets
D) sell new products in developing countries before expanding into developed countries
Q3) Factor mobility refers to the movement of which of the following combinations?
A) capital, technology and people
B) currency, profits and raw materials
C) labor, capital and management
D) trade, profits and materials
Q4) In a short essay,discuss the theory of mercantilism,and discuss favorable and unfavorable balances of trade as they apply to international business.
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7
Chapter 6: Governmental Influence on Trade
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Q1) The purpose of "Made in" labels on imported products is to enable countries to keep records of the origin of imports.
A)True
B)False
Q2) The argument for using import controls to promote exports is partially premised on the assumption that other countries will remove their import restrictions as a result.
A)True
B)False
Q3) Which of the following hypothetical examples would be a restriction on the import of services?
A) The U.S. restricts foreign companies from carrying cargo between two U.S. cities.
B) Japan restricts North Koreans from visiting Tokyo Disneyland.
C) China does not allow the importation of rice from Thailand.
D) Canada does not allow Air Canada to buy Brazilian aircraft.
Q4) The international regulatory situation for trade is becoming more,rather than less,complex.
A)True
B)False
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8
Chapter 7: Cross-National Cooperation and Agreements
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Q1) Many NGOs,including Africa Now,Quaker Peace and Social Witness,and Save the Children,are members of the ________.
A) Ethical Trading Initiative
B) International Red Cross Council
C) United Nations Global Compact
D) United Nations Economic and Social Council
Q2) Although the European Union is a common market,member countries have different economic growth rates.
A)True
B)False
Q3) What are the functions of the European Commission,the European Parliament,the Council,and the European Court of Justice?
Q4) NAFTA was primarily formed because the member nations have ________.
A) static and dynamic liberalization policies
B) similarly sized economies and resources
C) geographic proximity to each other
D) competing interests with the EU
Q5) What is the difference between a free trade agreement and a customs union? Provide examples of each in your answer.
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Chapter 8: Global Foreign-Exchange Markets
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Q1) Which of the following best explains why migrant workers in Dubai send money back home?
A) Non-citizens cannot purchase property.
B) Non-citizens have temporary visas.
C) Western Union offers low rates.
D) Labor demand is flexible.
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 the spot market,the spread is the difference between the bid and offer rates and is the trader's profit margin.
A)True
B)False
Q4) The largest market in foreign exchange is in London.
A)True
B)False
Q5) What is a futures contract? What institutions handle futures contracts?
Page 10
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Chapter 9: The Determination of Exchange Rates
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Q1) According to the text,which currency is expected to experience the most change in the upcoming years?
A) yen
B) yuan
C) euro
D) U.S. dollar
Q2) The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers costing the same in the U.S.as abroad.
A)True
B)False
Q3) The SDR is equal in value to the U.S.dollar.
A)True
B)False
Q4) Which of the following is used as an illustration of the PPP theory for estimating exchange rates?
A) the Composition of Official Foreign Exchange Reserves (COFER)
B) the black market rate
C) the import licensing ratio
D) the Big Mac Index
Q5) What is a Special Drawing Right (SDR)? How is it used?
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Chapter 10: Global Capital Markets
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Q1) According to U.S.tax law,if a foreign subsidiary earns income,________.
A) its income is immediately taxable to the parent, irrespective of the type of income earned
B) that income is not taxable to the parent company as long as the subsidiary pays income taxes in the country where it is earned
C) passive income is taxable to the parent unless the parent company is a controlled foreign corporation
D) active income is taxable to the parent when it is remitted as a dividend
Q2) The OECD is concerned about transfer pricing practices because ________.
A) transfer pricing can help maximize a company's worldwide tax liability
B) transfer prices tend to be higher in industrial than developing countries
C) governments use transfer prices to manipulate companies' investment strategies
D) companies use transfer prices to manipulate prices and therefore taxes
Q3) What term refers to a currency on deposit outside its country of issue?
A) Eurocurrency
B) Eurodollar
C) Euroyen
D) Europound
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Chapter 11: Globalization and Society
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Q1) Which of the following best supports the idea that MNEs should remain in countries that allow child labor?
A) MNEs have a positive influence on government employment policies in most foreign countries.
B) Many MNEs have substantially improved the working conditions of their foreign plants.
C) MNEs are required to pay child workers more than local companies.
D) Most MNEs employ local managers to handle cultural differences.
Q2) Governmental agencies and nongovernmental organizations monitor the behavior of companies and their employees to ensure that laws are being followed.
A)True
B)False
Q3) Which of the following statements describes an inconsistency of the FCPA?
A) Facilitation payments are classified as bribery.
B) Facilitation payments are excluded from the FCPA's definition of bribery.
C) Payments to officials who are not directly responsible for carrying out the law are legal.
D) Payments to foreign officials who carry out the law are considered illegal by provisions of the FCPA.
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Chapter 12: The Strategy of International Business
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Q1) Change in the long-term industry growth rate has the potential to transform an industry's structure.
A)True
B)False
Q2) 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
Q3) A company that develops different capabilities and contributions from different countries and shares them in integrated worldwide operations is using a transnational strategy.
A)True
B)False
Q4) Using a concentrated configuration,an MNE performs value activities in different countries.
A)True
B)False
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Chapter 13: Country Evaluation and Selection
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Q1) Although capital intensity is growing in most industries,labor compensation remains a significant cost for most companies.
A)True
B)False
Q2) Losses to companies from natural disasters are much less risky than losses from operating in violent areas.
A)True
B)False
Q3) 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
Q4) When choosing international operating locations,companies should outsource the preparation of grids or matrices to experts rather than preparing them with their own personnel.
A)True
B)False
Q5) In a short essay,discuss liquidity preference as it relates to monetary risk.
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Chapter 14: Export and Import
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Q1) Small and medium-size enterprises,such as SpinCent as seen in the opening case for chapter 14,account for ________ of all U.S.exporters.
A) 38%
B) 54%
C) 79%
D) 98%
Q2) Major types of indirect intermediaries include export trading companies,distributors,and freight forwarding companies.
A)True
B)False
Q3) What are some reasons that firms decide to export their products or services? What does a firm need to consider when developing an export plan?
Q4) According to the text,technological advances such as e-mail and VoIP have increased the appeal of international trade because it is now easy and inexpensive to manage customer needs and communicate with customers frequently.
A)True
B)False
Q5) Why are financial risks a key concern of SMEs considering international trade?
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) Why can a company more easily pursue a global strategy when it owns 100 percent of foreign operations?
A) The company is not likely to face overcapacity issues.
B) The company limits foreign-exchange rate fluctuations.
C) The company avoids communication misunderstandings.
D) The company can sub-optimize results in one country in order to optimize results globally.
Q2) Which of the following is NOT a factor affecting the payment amount of international licensing contracts?
A) geographic scope of the sales territory
B) tax treaties between the parties' home countries
C) length of time the asset will have market value
D) market experience of using the asset elsewhere
Q3) In a short essay,discuss how transportation,trade restrictions,domestic capacity,and country-of-origin affect companies' decisions about modes of operating internationally.
Q4) What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?
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) Profile the causes and likely benefits that prompt companies to consider adopting a neoclassical structure.
Q2) Historically,managers built organizations by focusing on the boxes and lines of a(n)________ structure.
A) formal
B) innovative
C) collaborative
D) flexible
Q3) Functional structures for international operations are most likely found among those companies that ________.
A) have a narrow range of products that rely on economies of scale
B) have multiple products that share few common technologies
C) rely on differentiated marketing methods
D) compete in unstable industries
Q4) A firm's vertical differentiation determines where in its organization structure managers have decided to concentrate decision-making authority.
A)True
B)False
Q5) Describe how an MNE might use reports as a control mechanism.
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Chapter 17: Marketing Globally
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Q1) In a short essay,discuss the standardization of two marketing components: advertising and distribution.
Q2) A company that exports products at a price lower than its domestic market price is using a skimming policy abroad.
A)True
B)False
Q3) Passive exports involve the filling of unsolicited orders from abroad.
A)True
B)False
Q4) All of the following are possible advantages of globally standardized advertising programs EXCEPT ________.
A) cost savings
B) improvement of local-level quality
C) avoidance of legal impediments
D) faster entry into different markets
Q5) A company that adapts its marketing to foreign differences without deviating very much from its experience is following a customer orientation.
A)True
B)False
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) Which of the following is a current trend with regards to transportation networks?
A) increased simplicity of transporting goods internationally
B) decreased use of third-party intermediaries to store and transport goods
C) increased use of third-party intermediaries to store and transport goods
D) decreased risks of managing longer global supply chains
Q2) Which of the following would most likely be reduced by vertical integration?
A) export tariffs
B) component prices
C) product returns
D) transaction costs
Q3) The make-or-buy decision applies only to domestic firms.
A)True
B)False
Q4) ________ is the process of a firm having inputs supplied to it for the production process.
A) Sourcing
B) Subcontracting
C) External production
D) Offshoring
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Chapter 19: International Accounting and Finance Issues
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Q1) Translation of foreign currency financial statements is the process of restating foreign currency financial statements from one currency into another.
A)True
B)False
Q2) The most common approach to translate budgets and compare a budget with actual performance uses the ________.
A) spot rate
B) forecast rate
C) historical exchange rate
D) temporal exchange rate
Q3) Vanessa,a manager at an MNE,has been given the task of measuring the firm's performance by using the balanced scorecard approach.Which of the following would be best for Vanessa?
A) review financial and nonfinancial factors broadly
B) create a multidomestic strategy for the future
C) closely compare industry and firm standards
D) calculate the firm's return on investment
Q4) How do exchange rates affect budgets used to evaluate performance in MNEs?
Q5) In a brief essay,discuss the concepts of transfer pricing and hedging.
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Chapter 20: International Human Resource Management
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Q1) Shelly,a sales manager at Best Computers,has recently moved from Dallas to Hong Kong for an expatriate assignment.Shelly is feeling disoriented,irritable,and stressed about her new job and living arrangements in Hong Kong,which means that she is most likely experiencing ________.
A) uncertainty dislocation
B) melancholy
C) culture shock
D) cultural transition
Q2) Which of the following is a characteristic of India that discourages MNE investment?
A) slow market growth
B) restrictive labor laws
C) poor communication infrastructure
D) government controlled market
Q3) According to the text,what is the most common concern that expatriates have before they move overseas?
A) reestablishing a social life
B) missing friends and family
C) learning a foreign language
D) adapting to the culture
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Page 22