International Entrepreneurship
Pre-Test Questions
Course Introduction
International Entrepreneurship explores the processes and strategies involved in identifying, evaluating, and exploiting business opportunities across national borders. The course examines the unique challenges and opportunities faced by entrepreneurs in global markets, including cultural, legal, financial, and logistical considerations. Students will analyze case studies of successful international ventures, develop skills in market entry strategies, and learn how to adapt business models to diverse environments. Emphasis is placed on innovation, networking, and resource management in an international context, preparing students to launch and manage entrepreneurial ventures in the global economy.
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) What is the most likely reason that governments cooperate with each other through treaties,agreements,and consultations?
A) to gain an advantageous division of labor
B) to be in compliance with United Nations' requirements
C) to attack problems jointly that one country acting alone cannot solve
D) to assure that all countries get an equitable share of taxes from multinational enterprises
Answer: C
Q2) Many professional basketball teams recruit tall youngsters in foreign countries into basketball camps where they can develop basketball skills and perhaps become candidates for professional play.This is an example of engaging in international business to acquire resources.
A)True
B)False
Answer: True
Q3) A joint venture is an example of a portfolio investment.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) In societies where trust is high,there tends to be a lower cost of doing business.
A)True
B)False Answer: True
Q2) A culture in which people prefer to handle tasks sequentially is a polychronic culture.
A)True
B)False Answer: False
Q3) Which of the following is NOT true about cultural diversity?
A) Companies may gain competitive advantages by bringing together people of diverse backgrounds.
B) Cultural diversity is most successful when domestic and foreign firms establish joint ventures.
C) Cultural diversity may help a company gain deeper knowledge about products and services.
D) The process of bringing people of different national cultures together is often difficult. Answer: B
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) According to EIU research,37% of the world's populations live in full democracies.
A)True
B)False
Answer: False
Q2) Although there are different views about the purpose of a political system,most analysts agree that an essential task of a political system is to ________.
A) integrate the different elements of a society into a functioning unit
B) allocate scarce resources among competing users
C) develop reasonable attitudes and outlooks within the population
D) protect individuals within the country from foreign threats
Answer: A
Q3) A U.S.firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.
A) civil
B) common
C) customary
D) mixed
Answer: D
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Chapter 4: The Economic Environments Facing Businesses
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Q1) In computing GNI,the value of a Ford car that is manufactured in Mexico using capital from the United States would ________.
A) be added to the GNI of the United States as well as to the GNI and GDP of Mexico
B) not be added to the GNI of the United States but would be added to the GNI of Mexico
C) only affect the computation of GDP and have no bearing on GNI
D) be added to the GNI of the United States but not the GNI of Mexico
Q2) The range of economic systems in the world today,when represented on a spectrum,has one end anchored by the idea of capitalism,the other with that of socialism.
A)True
B)False
Q3) Communism primarily relies on a system of ________.
A) private business ownership
B) competitive pricing and marketing
C) market-generated supply and demand
D) government controlled economic activity
Q4) What is the difference between a command economy and state capitalism?
Q5) What issues complicate international economic analysis?
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) All of the following are reasons that foreign investment may stimulate exports from the home (donor)country EXCEPT which of the following?
A) The investor often sends home-country components to its facilities abroad.
B) The investor often sends home-country equipment to its facilities abroad.
C) Home-country aid usually goes where the investments are made.
D) The foreign facility is adept at selling the investors' home country products.
Q2) The international mobility of labor includes workers,students,tourists,and retirees who travel to another country.
A)True
B)False
Q3) From an economic standpoint,why do production factors move from one country to another? How does factor movement affect international trade?
Q4) The finite nature of natural resources should work as a disadvantage for the export prices of developing countries.
A)True
B)False
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Chapter 6: Governmental Influence on Trade
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Q1) Terms of trade refers to ________.
A) the quantity of imports that a given quantity of a country's exports can buy
B) specific requirements placed on imports and exports at the port of entry or exit
C) requirements agreed upon by two countries to regulate bilateral trade
D) an account statement showing a country's annual imports and exports
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) Unemployed workers are most apt to form a pressure group to support ________.
A) export restrictions
B) import restrictions
C) price limitations
D) import subsidies
Q4) Export prices of primary products fluctuate less than export prices of manufactured products.
A)True
B)False
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Chapter 7: Cross-National Cooperation and Agreements
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Q1) Which of the following is NOT one of the regions included in the triad regions of the world?
A) South America
B) Europe
C) North America
D) Asia
Q2) The ________ is a preferential trade agreement that was organized in 1967 and comprises Brunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,the Philippines,Singapore,Thailand,and Vietnam.
A) APEC
B) OAU
C) ASEAN
D) CAFTA
Q3) Toyota has been successful in Europe by exporting cars to Europe as well as designing and manufacturing cars in Europe for the European market.
A)True
B)False
Q4) In a brief essay,explain the roles of the World Trade Organization and the United Nations in international trade.
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Chapter 8: Global Foreign-Exchange Markets
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Q1) Which of the following is NOT one of the top exchanges that trade in foreign currency futures and options?
A) CME
B) UBS
C) NYSE Liffe
D) NASDAQ OMX
Q2) A speculator is someone who ________.
A) trades foreign exchange illegally
B) deals in the black market in currency
C) takes positions in foreign-exchange markets to earn a profit
D) works for OTC financial institutions rather than nonfinancial corporations
Q3) In which of the following transactions is one currency swapped for another on one date and then swapped back on a future date?
A) reverse transaction
B) spot transaction
C) FX swap
D) outright forward transaction
Q4) The largest market in foreign exchange is in London.
A)True
B)False
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Chapter 9: The Determination of Exchange Rates
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Q1) Which of the following problems with the euro most likely worsened the financial crisis in Greece?
A) excessive flexibility with interest rates
B) cultural disagreements on labor reform
C) lack of uniform fiscal regulation standards
D) unclear policies of the European Central Bank
Q2) What is a Special Drawing Right (SDR)? How is it used?
Q3) What methods are used by managers to forecast exchange rates? What are the main factors that influence exchange rates?
Q4) Which of the following statements best describes a limitation of the Big Mac Index?
A) Profit margins vary by the strength of competition, which affect relative prices.
B) The theory of PPP incorrectly assumes that there are barriers to trade.
C) The Big Mac represents all possible commodities and services.
D) Taxes have no effect on Big Mac prices.
Q5) Technical forecasting relies on trends in economic variables to predict future exchange rates.
A)True
B)False
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Chapter 10: Global Capital Markets
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Q1) Which of the following is a true statement about the Euroloan market?
A) It is extremely competitive and lenders operate on razor-thin margins.
B) It is extremely competitive but lenders still receive substantial margins.
C) It is monopolistic, yet lenders operate on razor-thin margins.
D) It is monopolistic and lenders receive substantial margins.
Q2) An ADR is a negotiable certificate issued by a U.S.bank in the United States to represent the underlying shares of a foreign corporation's stock held at a custodian bank in the foreign country.
A)True
B)False
Q3) Depositary receipts traded outside the United States are called ________ depositary receipts.
A) Euro
B) Global
C) American
D) None of the above
Q4) The Eurocurrency market is limited to exchanges that include the euro.
A)True
B)False
Q5) What is a transfer price? Why are transfer prices used?
Page 12
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Chapter 11: Globalization and Society
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Q1) A guideline for responsible action by a firm in its operations worldwide is a(n)________.
A) code of conduct
B) corporate monitoring policy
C) education program
D) honor code
Q2) HIV/AIDS is affecting the operations of Anglo American PLC by forcing the company to invest outside of South Africa to avoid having to deal with workforce health issues.
A)True
B)False
Q3) Stockholders are typically more interested in corporate social responsibility than in earning profits.
A)True
B)False
Q4) According to utilitarianism,actions are moral if they produce the greatest amount of good for the greatest number of people.
A)True
B)False
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Page 13
Chapter 12: The Strategy of International Business
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Q1) The potential of new entrants in an industry is one of the forces in the Five-Forces Model of Industry Structure.
A)True
B)False
Q2) Preston Electronics is an MNE with facilities located in Taiwan,Singapore,and Germany.Preston gives its local operations the authority to adapt value activities to prevailing local economic,political,legal,and cultural conditions.Preston is most likely using a(n)________ strategy.
A) global
B) multidomestic
C) international
D) continental
Q3) The industry organization (IO)paradigm reports that,on average,the best predictor of firm strategy is the ________.
A) company's stockpile of assets, skills, and capabilities
B) aggressiveness of a company's marketing objectives
C) link between a company's products and processes
D) structure of the industry in which it competes
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14
Chapter 13: Country Evaluation and Selection
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Q1) Companies have tended to wait too long to divest poorly performing foreign facilities,trying instead to improve performance through expensive means.
A)True
B)False
Q2) Why do companies often treat foreign reinvestment decisions differently than new foreign investment decisions?
Q3) The origin of investment proposals differs from the origin of divestment proposals in that the divestment proposals are more likely to come from ________.
A) subsidiary management
B) outside the organization
C) higher up in the organization
D) line personnel as opposed to staff personnel
Q4) Good scanning helps managers avoid the need to make a detailed analysis of countries when deciding where to operate.
A)True
B)False
Q5) In a short essay,discuss liquidity preference as it relates to monetary risk.
Q6) What is scanning? What opportunities and risks are most relevant to scanning?
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Chapter 14: Export and Import
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Q1) Which of the following types of agents moves international cargo,facilitates shipment tracking,and handles product returns for exporters and importers?
A) trade intermediaries
B) third party logistics
C) customs brokers
D) freight forwarders
Q2) All of the following are benefits of countertrade EXCEPT ________.
A) decreasing trade protectionism
B) increasing access to innovative technology
C) developing new trade relationships with foreign companies
D) preserving foreign-exchange reserves
Q3) 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
Q4) The stages of development in a company's export expansion are tied to company size.
A)True
B)False
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) A company that makes a foreign investment largely to acquire knowledge is most likely to use ________ as a means of expansion.
A) a greenfield investment
B) internalization
C) an acquisition
D) a licensing agreement
Q2) Why do turnkey operators often require a feasibility study as part of the contract?
A) By adding to the cost, they earn more money.
B) This lessens the risk of contract cancellation when political leadership changes.
C) This lowers their risk of foreign-exchange losses.
D) This helps to define what constitutes "satisfactory completion" of the project.
Q3) What motives do businesses have for entering into collaborative arrangements? What are some of the problems associated with collaborative arrangements?
Q4) What are the various types of collaborative arrangement options available to international businesses? How can firms most effectively manage international collaborative arrangements?
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Chapter 16: The Organization of International Business
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Q1) Which of the following is NOT one of the three prevalent approaches to coordination?
A) standardization
B) mutual adjustment
C) adaptation
D) planning
Q2) Profile the idea and features of horizontal differentiation,paying particular attention to its implications to how managers design their company's structure.
Q3) The open source model is a hyperarchy that involves giving source code to volunteers who fix software bugs.
A)True
B)False
Q4) A divisional structure tends to be adopted by firms that are diversified by products or markets.
A)True
B)False
Q5) In a brief essay,discuss how decentralized management and organizational culture affect Johnson & Johnson.
Q6) Describe how an MNE might use reports as a control mechanism.
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Chapter 17: Marketing Globally
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Q1) High inflation might cause a company to gain advantages by selling more on credit.
A)True
B)False
Q2) Gap analysis refers to an estimation of sales potential caused by the disparity in incomes between developed and developing countries.
A)True
B)False
Q3) Why might companies sometimes narrow the product line that they sell in a foreign country as compared to the product line they sell at home?
A) Government restrictions typically limit how many products a company can sell locally.
B) Selling cost per unit increases substantially when a company offers a broad product line.
C) Not all products have sufficient demand in every market.
D) Firms cannot sell products with product line gaps.
Q4) In a short essay,discuss the standardization of two marketing components: advertising and distribution.
Q5) What is the gray market? Why are companies concerned about it?
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) Which of the following is NOT one of the three basic configurations that MNEs consider when establishing a global manufacturing strategy?
A) regional manufacturing
B) centralized manufacturing
C) multidomestic manufacturing
D) multicultural manufacturing
Q2) Electronic data interchange (EDI)is an online collaboration model that brings manufacturers,distributors,value-added retailers,and customers together to execute trading transactions.
A)True
B)False
Q3) 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
Q4) Foreign trade zones (FTZs)can be either general-purpose zones or subzones.
A)True
B)False
20
Q5) What are foreign trade zones? How are they used?
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Chapter 19: International Accounting and Finance Issues
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Q1) Larson Shoes is a British company.Which balance sheet format is most likely used by Larson?
A) assets + liabilities = shareholders' equity
B) liabilities + shareholders' equity = assets
C) noncurrent assets + current assets - current liabilities - noncurrent liabilities = shareholders' equity
D) noncurrent assets - net current assets = liabilities + capital and reserves
Q2) An exchange rate variance results from ________.
A) setting the budget at the actual exchange rate at that time and final performance at the rate used when the budget was set
B) translating the budget and actual performance at the forecasted exchange rate
C) translating the budget at the projected exchange rate and final results at the actual exchange rate
D) translating the budget using the current-rate method and actual results at the new current-rate method
Q3) How do cultural values such as optimism,conservatism,transparency,and secrecy affect country differences in accounting systems?
Q4) How do exchange rates affect budgets used to evaluate performance in MNEs?
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Page 21
Chapter 20: International Human Resource Management
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Q1) Which of the following best explains why MNEs often employ more locals than expatriate managers in foreign facilities?
A) lower compensation expense
B) better support from unions
C) improved economies of scale
D) better grasp of core competencies
Q2) List and compare the three common methods of implementing a balanced compensation plan.
Q3) HRM refers to the range of activities that a company,whether solely domestic or thoroughly global,undertakes to ________.
A) direct its strategy
B) staff its operations
C) improve its responsiveness
D) integrate business functions
Q4) A growing number of MNEs are increasing expatriate allowances to entice employees to move overseas.
A)True
B)False
Q5) List and discuss the main components of an expatriate's compensation package.
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