International Management
Chapter Exam Questions
Course Introduction
International Management explores the challenges and opportunities faced by organizations operating across national boundaries. The course examines the impact of cultural, legal, economic, and political environments on managerial practices, decision-making, and strategy in a global context. Students will learn about international organizational structures, cross-cultural communication, global human resource management, and ethical considerations. Through case studies and practical examples, the course equips students with the knowledge and skills necessary to effectively manage and lead in diverse, dynamic international settings.
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International Business 15th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) The term used by the United Nations as a synonym for multinational enterprise is
A) multinational corporation
B) transnational company
C) international firm
D) born-global
Answer: B
Q2) Although the U.S.film industry depends heavily on revenue in foreign countries,revenue from international markets is usually low for a sports-themed film.This is most likely due to ________ factors.
A) political
B) geographic
C) behavioral
D) legal
Answer: C
Q3) When a U.S.citizen flies Japan Airlines,the airline acts as a service exporter for Japan.
A)True
B)False
Answer: True
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Chapter 2: The Cultural Environments Facing Business
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Q1) A firm that begins operating in a culturally similar foreign country will most likely face few necessary cultural adjustments.
A)True
B)False
Answer: True
Q2) According to the theory of success and reward expectation,the greatest enthusiasm for work generally occurs when there is a ________ certainty of success combined with a ________ reward for success compared to the reward for failure.
A) high; high
B) high; low
C) low; high
D) low; low
Answer: C
Q3) Many firms gain a global competitive advantage by fostering cultural diversity.
A)True
B)False
Answer: True
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) Harmon Clothing has a production facility located in Venezuela.Recently,Harmon has been unable to arrange for overseas loans due to the burdensome regulatory policies of the Venezuelan government.Which type of political risk is Harmon most likely experiencing?
A) catastrophic
B) distributive
C) procedural
D) systemic
Answer: D
Q2) The International Anti-Counterfeiting Coalition estimates that international trade in counterfeit products runs less than 5 percent of the value of total world trade.
A)True
B)False
Answer: False
Q3) Research indicates that democracy is declining around the world and that totalitarian regimes are increasing.
A)True
B)False
Answer: True
Page 5
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Chapter 4: The Economic Environments Facing Businesses
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Q1) Inflation occurs because aggregate demand is growing as fast as aggregate supply.
A)True
B)False
Q2) Inflation affects interest rates,exchange rates,the cost of living,general economic confidence,and the stability of the current political system.
A)True
B)False
Q3) Why is economic freedom an important factor to consider when analyzing a country's economic development,performance,and potential?
Q4) A worrisome outcome of chronic inflation is that it tends to ________.
A) erode confidence in a country's currency
B) give central banking officials excessive flexibility to manage monetary policy
C) increase the real income of people, thereby inflating their spending and borrowing levels
D) lower consumer demand for foreign goods, which triggers lower prices and eventually lower employment
Q5) What is the difference between a command economy and state capitalism?
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) The factor proportions theory holds that countries should concentrate production on those products that use their most abundant production factors.
A)True
B)False
Q2) An exception to the PLC theory in terms of production location is often a product with very rapid change in innovation.
A)True
B)False
Q3) Understanding trade theories helps companies know if they will need to compete against goods and services produced abroad.
A)True
B)False
Q4) What is the country similarity theory? According to this theory,what factors affect trade patterns?
Q5) Countries enact trade policies based on trade theories,which,in turn,affect companies' optimum production locations.
A)True B)False
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Chapter 6: Governmental Influence on Trade
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Q1) In most cases,which type of government protection assistance is most controversial?
A) business development services
B) foreign business contacts
C) trade expositions
D) tariffs
Q2) The most common type of tariff is the ________ tariff.
A) export
B) import
C) transit
D) ad valorem
Q3) The term protectionism,when applied to international trade,refers to governmental restrictions and incentives to affect trade flows.
A)True
B)False
Q4) Import trade controls,but not export trade controls,can be used as a weapon of foreign policy.
A)True
B)False
Q5) Describe and compare the different types of tariffs (duties).
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Chapter 7: Cross-National Cooperation and Agreements
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Questions
Q1) What is the difference between a free trade agreement and a customs union? Provide examples of each in your answer.
Q2) Under the WTO agreement,________.
A) a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures
B) there is no dispute resolution mechanism except for trade involving environmental products
C) countries are allowed to place trade barriers on member countries with no particular justification, because like GATT the WTO has no enforcement mechanism
D) tariffs are permitted to be levied by developed countries against developing countries but not against each other
Q3) What are the rules of origin and regional content provisions of NAFTA?
Q4) Which of the following is Walmart's competitive advantage in Mexico?
A) Walmart purchased all Mexican retail chains and eliminated competitors.
B) Walmart is able to transfer its "everyday low prices" concept to Mexico.
C) Walmart offers affordable, unique products for niche markets in Mexico.
D) Customers prefer to buy from American companies instead of Mexican companies.
Q5) Are commodity agreements effective? Why or why not?
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Chapter 8: Global Foreign-Exchange Markets
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Q1) The top location for trading foreign exchange is ________.
A) London
B) New York
C) Zurich
D) Tokyo
Q2) How does arbitrage differ from speculation?
A) Speculation, unlike arbitrage, is never used to protect against risk.
B) A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit.
C) Speculation is the purchase of foreign currency on one market for the immediate resale on another market.
D) Arbitrage is another way to speculate for profit or protect against risk.
Q3) Most foreign exchange is handled through voice brokers.
A)True
B)False
Q4) What is a futures contract? What institutions handle futures contracts?
Q5) An irrevocable letter of credit is the basis for multilateral netting.
A)True
B)False
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Chapter 9: The Determination of Exchange Rates
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Q1) Inflation in the United States would cause China's massive dollar reserves to lose value.
A)True
B)False
Q2) Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.
Q3) A country's central bank is responsible for ________.
A) distributing money to foreign countries that are in a debt crisis
B) encouraging disorderly conditions in foreign-exchange markets
C) the policies affecting the value of its country's currency
D) establishing foreign-exchange markets
Q4) An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates are most favorable so it can maximize its return.
A)True B)False
Q5) El Salvador's hard peg exchange rate arrangement involves the use of both the U.S.dollar and its own separate legal tender.
A)True
B)False
11
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Chapter 10: Global Capital Markets
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Q1) What is the difference between translation exposure,transaction exposure,and economic exposure?
Q2) Foreign source income that is derived from the active conduct of a trade or business and therefore subject to U.S.taxation is known as ________.
A) passive income
B) active income
C) uncontrollable foreign corporation income
D) tax haven income
Q3) The principle by which the tax authorities allow firms to reduce their tax liability by the amount of income taxes paid to a foreign government is known as a tax credit.
A)True
B)False
Q4) The concept of leveraging in finance refers to ________.
A) the degree to which companies rely on foreign exchange to fund operations
B) how a company hedges its foreign currency obligations
C) the degree to which a firm funds the growth of a business by debt
D) how much cash the CFO has in the bank
Q5) What is a transfer price? Why are transfer prices used?
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Chapter 11: Globalization and Society
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Q1) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs.
A)True
B)False
Q2) The creation of a code of conduct includes steps such as establishing a global policy,communicating the code to employees,ensuring that the policies are followed,and reporting results to external stakeholders.
A)True
B)False
Q3) Which of the following is NOT affected by the Foreign Corrupt Practices Act?
A) companies registered in the U.S.
B) foreign firms operating in U.S. territory
C) foreign firms quoted on a U.S. stock exchange
D) foreign companies managed by U.S. expatriates
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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Chapter 12: The Strategy of International Business
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Q1) Tel-Comm Tek is a company that believes it has core competencies that its competitors in foreign markets lack and that it faces relatively weak pressures for local responsiveness and cost reductions.Tel-Comm Tek is likely to adopt an international strategy.
A)True
B)False
Q2) Citibank decides to open a call center in Mumbai,India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls.Citibank is exploiting ________ by running a call center in India.
A) value configuration synergies
B) location economies
C) geographic arbitrage
D) value offshoring
Q3) ________ are the two basic strategies for creating value and attaining a competitive advantage in an industry.
A) Diversification and niche marketing
B) Industry leadership and market dominance
C) Customer satisfaction and product innovation
D) Cost leadership and differentiation
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Chapter 13: Country Evaluation and Selection
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Q1) A company can best benefit from a first-mover advantage by moving into a small country,before entering a much larger country.
A)True
B)False
Q2) Dawson Manufacturing produces and sells DVD players and is planning to expand sales internationally.Dawson has narrowed down the list of potential countries to India and Guatemala.A Dawson manager has the task of obtaining data regarding the number of DVD players sold annually in India and Guatemala.If unable to locate this information,she might most likely estimate the sales potential of these two countries by
A) determining average wages
B) calculating future inflation rates
C) reviewing the countries' dependence on steel imports
D) examining the sales history of flat-screen televisions
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) 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) 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
Q2) Which of the following is typically true of an export management company?
A) It is usually a division of a manufacturing company.
B) Most EMCs in the United States are large, representing a wide range of products and large number of companies.
C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients' products.
D) It usually takes title to products rather than act as an agent.
Q3) Which of the following best describes the concept of serendipity in exporting?
A) modifying products to meet cultural preferences
B) initiating global sales through e-commerce methods
C) relying too much on exports when domestic sales suddenly increase
D) opportunistically responding to unsolicited orders from foreign customers
Q4) What are export management companies,and how do they help potential exporters?
Q5) What difficulties of exporting can be minimized by customs brokers?
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Q6) What is a born global? How has technology triggered the growth of born globals?
Chapter 15: Direct Investment and Collaborative Strategies
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Q1) Which of the following would most likely trigger internal tensions as a firm's modes of foreign operations change?
A) losing or gaining responsibilities
B) reluctance to learn about a culture
C) traveling for business purposes
D) geographic diversity
Q2) 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.
Q3) Licenses are often given to companies owned in whole or in part by the licensor.
A)True
B)False
Q4) 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.
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Chapter 16: The Organization of International Business
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Q1) In which of the following situations would a company most likely benefit from using the international division structure?
A) when the company's different foreign markets pose significantly different opportunities and threats
B) when the company relies on local managers in foreign operations to make strategic decisions
C) when the company's domestic market activity is much more important than its international business activity
D) when the company's domestic business activity has reached its full market potential
Q2) Andrews Enterprises,which uses an international division structure,should be able to respond quickly to foreign activities but will most likely experience costly country-to-country duplication.
A)True
B)False
Q3) Describe how an MNE might use reports as a control mechanism.
Q4) What role does a firm's strategy play in determining organizational structure? Why are boundaries problematic for firms with international strategies?
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18
Chapter 17: Marketing Globally
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Q1) Different country standards,such as safety regulations,add complexity to whether companies decide to use a globally standardized product.
A)True
B)False
Q2) A push strategy is most likely preferable to a pull strategy when the price of the product is high relative to incomes.
A)True
B)False
Q3) Companies using a sales orientation find their greatest ability to sell the same product in more than one country when ________.
A) promotional programs are identical in each country
B) consumer characteristics are similar
C) the product is a household item
D) the product has a low price relative to incomes
Q4) Antidumping regulations of the WTO allow countries to establish restrictions against any exports that fail to meet quality standards.
A)True
B)False
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) A ________ takes into account the complete costs of ownership,such as storing and transporting inventory,and of disposal.
A) total cost analysis
B) cost-benefit analysis
C) make-or-buy decision
D) flexibility strategy
Q2) 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
Q3) In order to assure the quality of its products,Samsonite ________.
A) performs only internal quality tests
B) relies only on independent quality-assurance tests
C) conforms its products to industry-set standards
D) uses both internal quality tests and independent quality-assurance tests
Page 20
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Chapter 19: International Accounting and Finance Issues
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Q1) The financial reports and information provided by businesses is primarily used by all of the following EXCEPT ________.
A) educators
B) investors
C) creditors
D) lenders
Q2) The price on the sale of goods from one member of a corporate family to another is known as a ________.
A) transfer price
B) sale/resale price
C) global price
D) multidomestic price
Q3) The challenge with setting an optimal transfer price is that there could be conflicting conditions in the local country.
A)True
B)False
Q4) In regards to accounting,what is the impact of the SEC and Sarbanes-Oxley Act on international business?
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) According to research,expatriates posted to ________ encounter the greatest difficulty in finding accommodations,locating health care,and setting up finances.
A) Australia
B) Saudi Arabia
C) Thailand
D) South Africa
Q2) Jeanette Thompson,a native Texan,is being sent by her company,Samsung of South Korea,to head up a new facility in Hong Kong.Jeanette would be considered a(n)________.
A) inpatriate
B) host-country citizen
C) third-country national
D) local executive
Q3) There is a strong yet inconsistent relationship between the strategic performance of an MNE and the decisions it has made in managing its human resources.
A)True
B)False
Q4) List and discuss the main components of an expatriate's compensation package.
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Page 22