International Management Practice Exam
Course Introduction
International Management explores the strategies, structures, and processes that organizations employ to operate effectively across national borders. This course examines the unique challenges of managing in a global context, including navigating cultural differences, adapting to diverse regulatory environments, and developing competitive strategies for international markets. Students will develop an understanding of cross-cultural leadership, global team dynamics, international human resource management, and ethical considerations in a globalized economy. Through case studies and practical examples, participants will gain the skills necessary to address complex issues faced by international managers in todays interconnected business world.
Recommended Textbook
International Business Competing in the Global Marketplace 10th Edition by
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Page 2
Charles W. L. Hill
Chapter 1: Globalization
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Q1) Since the 1960s, which of the following has been a notable trend in the demographics of the multinational enterprise?
A) The decline of multinational companies in the manufacturing sector
B) The growth of government-owned multinational enterprises
C) The decline of non-U.S. multinationals
D) The growth of mini-multinationals
Answer: D
Q2) The General Agreement on Tariffs and Trade (GATT) was responsible for ____.
A) protecting government owned enterprises
B) policing the global marketplace
C) limiting nuclear testing
D) promoting environment friendly technology
Answer: B
Q3) In late 2001, the WTO launched a new round of talks in Doha aimed at:
A) helping member states to cope with financial crisis.
B) further liberalization of the global trade and investment framework.
C) protecting national economies from global competition.
D) promoting higher standards of living in all member states.
Answer: B
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Chapter 2: National Differences in Political Economy
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Q1) What are the factors that contribute to the attractiveness of a country as a market or investment site?
Answer: The political, economic, and legal environments of a country clearly influence the attractiveness of that country as a market or investment site. The benefits, costs, and risks associated with doing business in a country are a function of that country's political, economic, and legal systems. The overall attractiveness of a country as a market or investment site depends on balancing the likely long-term benefits of doing business in that country against the likely costs and risks.
Q2) In an individualist society, the welfare of society is best served by letting people pursue their own economic self-interest.
A)True
B)False
Answer: True
Q3) In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more.
A)True
B)False
Answer: True
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Chapter 3: Political Economy and Economic Development
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Q1) Gross national income per-capita data take into account differences in the cost of living.
A)True
B)False
Answer: False
Q2) Political scientist Samuel Huntington predicts that there will be a more harmonious world dominated by a universal civilization characterized by democratic regimes and free market capitalism.
A)True
B)False
Answer: False
Q3) It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.
A)True
B)False
Answer: True
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Chapter 4: Differences in Culture
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Q1) Why is the role of education in a culture important to international companies?
Q2) What is Buddhism? Compare Buddhism with Hinduism.
Q3) Guanxi is an important mechanism for building long-term business relationships and getting business done in China.
A)True
B)False
Q4) The value systems and norms of a country are unrelated to the costs of doing business in that country.
A)True
B)False
Q5) Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than involvement in this world.
A)True
B)False
Q6) Since English is often thought of as the global language of business, it is not important for an American business executive to learn foreign languages.
A)True
B)False
Q7) Discuss why the stratification of a society is important to business.
Page 6
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Chapter 5: Ethics in International Business
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Q1) The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating.
A)True
B)False
Q2) Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?
Q3) Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase "When in Rome do as the Romans"? How well does this approach hold up ethically?
Q4) What is a code of ethics?
Q5) The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as: A) moral relativism.
B) noblesse oblige.
C) ethical dilemma.
D) social responsibility.
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Chapter 6: International Trade Theory
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Q1) A country has an absolute advantage in the production of a product when it ____.
A) has the capability to produce the product within its boundaries
B) is more efficient than any other country in producing it
C) has the largest domestic demand for the product
D) has access to the raw materials needed to produce the product
Q2) The product life-cycle theory argues that a large proportion of the world's new products had been developed by U.S. firms.
A)True
B)False
Q3) According to Ricardo's theory of comparative advantage, a country should produce goods ____.
A) for which it has access to raw materials
B) that it produces most efficiently
C) that have the highest domestic demand
D) for which it has an absolute advantage
Q4) Mercantilism supports the idea that countries should export more than what they import.
A)True
B)False
Q5) What are the four attributes that are discussed in Porter's diamond?
Page 8
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Chapter 7: The Political Economy of International Trade
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Q1) According to the Buy America Act, if a company wishes to win a contract from a U.S. government agency to provide some equipment, it must ensure that at least 51 percent of the product by value is manufactured in the United States. This is an example of:
A) antidumping duties.
B) voluntary export restraints.
C) import quotas.
D) local content requirements.
Q2) The U.S. government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws. This is an example of government intervention based on:
A) human rights protection.
B) national security.
C) consumer protection.
D) retaliation.
Q3) Human rights activists see WTO rules as outlawing the ability of nations to stop imports from countries where child labor is used or working conditions are hazardous.
A)True
B)False
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Chapter 8: Foreign Direct Investment
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Q1) Discuss the pragmatic nationalist view toward FDI.
Q2) Which of the following is an example of a greenfield investment?
A) A Chinese sugar maker setting up a sugar crushing facility in Cuba.
B) A Serbian automobile company purchasing a Croatian component manufacturer.
C) A Finnish mobile phone manufacturer expanding its production facility in Finland.
D) An Indian oil exploration company acquiring an oil refining company.
Q3) FDI undertaken to serve the home market is known as:
A) outsourcing.
B) FDI substitution.
C) offshore production.
D) home market FDI.
Q4) FDI has been declining in the last few decades because protectionist pressures have become less intense.
A)True
B)False
Q5) A country's balance of payments accounts keep track of both its payments to and its receipts from other countries.
A)True
B)False
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Chapter 9: Regional Economic Integration
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Q1) How does the NAFTA seem to increase the international competitiveness of U.S. and Canadian firms?
A) It gives them access to scarce natural resource hitherto unavailable.
B) It increases tariff barriers making the North American market less attractive to Asian companies.
C) It allows them to take advantage of lower labor costs in Mexico.
D) It gives them production bases in South American markets like Brazil and Argentina.
Q2) Which of the following is seen as a disadvantage of the euro?
A) Higher foreign exchange and hedging costs
B) National authorities losing control over monetary policy
C) It becomes difficult to compare prices across Europe
D) It undermines the development of a pan-European capital market
Q3) Why doesn't Great Britain use the euro as its national currency?
A) Would have to convert its economic structure to the euro
B) Would have to relinquish control of its monetary policy to the EU
C) Would have to change its financial markets operations
D) Would have to obtain approval from the U.S. Federal Reserve
Q4) Discuss the trend toward increased regional economic integration.
Q5) Discuss the Maastricht Treaty. What did it accomplish?
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Chapter 10: The Foreign Exchange Market
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Q1) The risk that arises from volatile changes in exchange rates is known as foreign exchange risk.
A)True
B)False
Q2) The International Fisher Effect has proven to have substantial power at predicting short-run changes in spot exchange rates.
A)True
B)False
Q3) _____ refers to a range of barter-like agreements by which goods and services can be traded for other goods and services.
A) Countertrade
B) Carry trade
C) Dumping
D) Capital flight
Q4) Consider the role of investor psychology and bandwagon effects on how well PPP and the International Fisher Effect explain short-term movements in exchange rates.
Q5) Discuss the nature of the foreign exchange market. How fast has it been growing? Where are the most important trading centers?
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Chapter 11: The International Monetary System
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Q1) Compare currency crisis, banking crisis, and foreign debt crisis.
Q2) Which of the following is a common criticism against IMF?
A) IMF lacks any real mechanism for accountability.
B) It is hesitant to help banks when they are in crisis.
C) IMF has not intervened to resolve the Asian crisis.
D) It did not try to resolve the Mexican currency crisis.
Q3) Explain the events that led to the failure of the Bretton Woods system.
Q4) What is gold standard? What was the major advantage of the system?
Q5) The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the U.S. dollar.
A)True
B)False
Q6) Which of the following is a function of World Bank?
A) Implementing a rigid fixed exchange rate regime
B) Promoting gold standard across the world
C) Lending money to governments for development
D) Implementing a flexible fixed exchange rate regime
Q7) Discuss the pegged exchange rate regime.
Page 13
Q8) Present the common arguments that favor fixed exchange rates.
Q9) How does a fixed exchange rate system work?
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Chapter 12: The Global Capital Market
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Q1) A capital market brings together those who want to invest money and those who want to borrow money.
A)True
B)False
Q2) Describe the factors that make the Eurobond market attractive.
Q3) When using the Euromarkets, companies ____.
A) have funds that lack liquidity
B) pay less for the loans
C) attract low interest rates
D) are secured from foreign exchange risks
Q4) Which of the following statements is true of the use of information technology in financial services?
A) Information technology prevents the spread of financial crises.
B) Financial services is an information-intensive industry.
C) Financial services do not use decisions making systems.
D) It does not require to process large volumes of information.
Q5) Eurocurrency market is characterized by lack of government regulation. A)True
B)False
Q6) What is a Eurocurrency?
Page 15
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Chapter 13: The Strategy of International Business
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Q1) Learning effects tend to be more significant when a technologically simple task is repeated.
A)True
B)False
Q2) Core competencies 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)True
B)False
Q3) What are learning effects? When are learning effects most significant?
Q4) Profit growth is measured by the percentage increase in net profits over time.
A)True
B)False
Q5) Diminishing returns 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)True
B)False
Q6) Discuss Michael Porter's interpretation of value creation and competitive advantage.
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Chapter 14: The Organization of International Business
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Q1) Firms pursuing a(n) _____ attempt to create value by transferring core competencies from home to foreign subsidiaries.
A) localization strategy
B) international strategy
C) transnational strategy
D) global strategy
Q2) Which of the following is NOT true regarding a worldwide area structure?
A) It tends to be favored by firms with a low degree of diversification.
B) It facilitates local responsiveness.
C) It tends to be favored by firms with a domestic structure based on functions.
D) Decision-making responsibilities are centralized.
Q3) Discuss the location of decision-making in a firm that is following a transnational strategy.
Q4) Firms pursuing a transnational strategy:
A) have a low need for coordination.
B) require very few integrating mechanisms.
C) have a very high need for cultural controls.
D) operate with a worldwide product division structure.
Q5) Discuss the sources of inertia in organizations. Is it easy to make organizational changes?
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) Which of the following is true of wholly owned subsidiaries?
A) It is the least expensive method of serving a foreign market from a capital investment standpoint.
B) It the most feasible entry mode due to the political considerations.
C) It is required if a firm is trying to realize location and experience curve economies.
D) It is particularly useful where FDI is limited by host-government regulations.
Q2) Educating customers is a part of pioneering costs.
A)True
B)False
Q3) Most service firms have found that _____ with local partners work best for controlling subsidiaries.
A) joint ventures
B) licensing agreements
C) greenfield investments
D) turnkey projects
Q4) The most typical joint venture is a 25/75 venture.
A)True
B)False
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Chapter 16: Exporting, Importing, and Countertrade
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Q1) The Export-Import Bank ____.
A) is an international financial institution that provides loans for capital programs
B) provides finance to facilitate trade between United States and other countries
C) is an independent agency of the United Nations
D) focuses on policies that have an impact on the exchange rate and the balance of payments
Q2) A _____ is issued to the exporter by the common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title.
A) bill of lading
B) sight draft
C) time draft
D) letter of credit
Q3) Ex-Im Bank has a direct lending operation under which it lends dollars to foreign borrowers.
A)True
B)False
Q4) Discuss the disadvantages of countertrade.
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Chapter 17: Global Production, Outsourcing, and Logistics
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Q1) The Six Sigma methodology _____.
A) is used to compare and benchmark the performances of competing firms
B) gives more importance to productivity than product quality
C) is a direct descendant of the total quality management philosophy
D) recommends that only one product should be defective in thousand products
Q2) Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of those activities.
A)True
B)False
Q3) Which of the following is a hidden cost associated with basing production in a foreign location?
A) Cost of labor within the location
B) High employee turnover
C) Transportation costs
D) Differences in the value of currency
Q4) The benefits of making all or part of a product in-house is minimal when highly specialized assets are involved.
A)True
B)False
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Chapter 18: Global Marketing and RD
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Q1) A push strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market.
A)True
B)False
Q2) The rate of new-product development seems to be lesser in countries where more money is spent on basic and applied research and development.
A)True
B)False
Q3) The probability of effective communications is reduced by:
A) noise.
B) location effects.
C) country of origin effects.
D) source effects.
Q4) A measure of the responsiveness of demand for a product to change in price is referred to as:
A) arbitrage demand.
B) predatory pricing.
C) price elasticity of demand.
D) experience curve pricing.
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Chapter 19: Global Human Resource Management
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Q1) Unions' bargaining power is largely derived from their ability to threaten to disrupt production.
A)True
B)False
Q2) An ethnocentric staffing policy is one in which:
A) all key management positions are filled by host-country nationals.
B) host-country nationals are recruited to manage subsidiaries.
C) all key management positions are filled by parent-country nationals.
D) the best people are recruited for key jobs throughout the organization, regardless of nationality.
Q3) Consider the allowance component of a typical expatriate compensation package. What types of allowance are included in this component?
Q4) A manager might be sent on several foreign postings over a number of years to build his/her cross-cultural sensitivity and experience as part of a management development program.
A)True
B)False
Q5) What are the four strategies pursued by international companies, and what is the role of HRM in these?
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Chapter 20: Accounting and Finance in the International Business
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Q1) A _____ is compensation for professional services or expertise supplied to a foreign subsidiary by the parent company or another subsidiary.
A) fronting loan
B) fee
C) royalty
D) transfer price
Q2) The connection between cash flows to the parent and the source of financing must be recognized when performing capital budgeting for an international business.
A)True
B)False
Q3) When using the projected spot exchange rate to translate both the budget and performance figures into the corporate currency, the projected rate in such cases will typically be the _____.
A) forward exchange rate as determined by the foreign exchange market
B) exchange rate that exists at the start of a project
C) exchange rate when the budget was prepared
D) transfer price that a firm will offer to one or more of its subsidiaries
Q4) Briefly differentiate accounting standards and auditing standards.
Page 23
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