International Management Question
Bank
Course Introduction
International Management explores the strategies, structures, and processes that organizations use to operate effectively across national borders. The course covers topics such as cross-cultural communication, international market entry strategies, global leadership, human resource management in multinational environments, and the impact of political, economic, and legal systems on business operations worldwide. Students will analyze real-world case studies to understand the challenges and opportunities that global managers face, including adapting to cultural differences, managing international teams, and navigating complex global supply chains. The course aims to equip students with the knowledge and skills necessary to succeed in the dynamic and interconnected world of international business.
Recommended Textbook
International Business Competing in the Global Marketplace 12th Edition by
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Charles W. L. Hill
Chapter 1: Globalization
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Q1) 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
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) Issy's Ice Cream is an international business. As such, it
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) invests in international trade or investment.
Answer: D
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Chapter 2: National Differences in Political, Economic, and Legal Systems
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Q1) A theocratic law system is one in which the law is based on
A) religious teachings.
B) tradition, precedent, and custom.
C) a detailed set of laws organized into codes.
D) cultural and social norms.
Answer: A
Q2) Patents discourage companies from committing themselves to extensive basic research.
A)True
B)False
Answer: False
Q3) Who was the author of The Wealth of Nations in which he stated that "an individual who intends his own gain is led by an invisible hand to promote an end that was no part of his intention..."?
A) David Hume
B) Adam Smith
C) Karl Marx
D) John Stuart Mill
Answer: B
Page 4
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Chapter 3: National Differences in Economic Development
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Sample Questions
Q1) According to Amartya Sen, development should be
A) seen as a process of expanding the real freedoms that people experience.
B) seen as a nonpolitical concept that focuses on the net income of a country.
C) viewed as a purely economic process.
D) assessed by material output measures such as GNI per capita.
Answer: A
Q2) Which of the following statements is true about Samuel Huntington?
A) Samuel Huntington argues that there is a universal civilization based on widespread acceptance of Western democratic ideals.
B) Samuel Huntington argues that the rise of Islamic fundamentalism is a response to the alienation produced by modernization.
C) Samuel Huntington argues that global terrorism is a product of the static nature of traditional values and religious systems.
D) Samuel Huntington argues that many societies, by adopting the material paraphernalia of the modern world, are becoming more Western.
Answer: B
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Chapter 4: Differences in Culture
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Q1) ________ are the routine conventions of everyday life.
A) Folkways
B) Mores
C) Rites
D) Beliefs
Q2) Martin worried a lot about his job, which he chose specifically because it was very structured with clear rules and regulations. He carefully planned his career to maximize job security and retirement benefits. Martin would rate high on which of Hofstede's four dimensions?
A) power distance
B) individualism versus collectivism
C) uncertainty avoidance
D) masculinity versus femininity
Q3) There are three values central to the Confucian system of ethics that have very important economic implications. Which of the following is one of these values?
A) filial piety
B) rule-based law
C) humaneness
D) honesty in dealings with others
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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Q1) What is considered normal business practice in one country may be considered unethical in other countries.
A)True
B)False
Q2) Justice theories of business ethics focus on
A) the moral worth of actions or practices.
B) minimum levels of morally acceptable behavior.
C) fundamental rights and privileges that transcend national boundaries.
D) the attainment of an equitable distribution of goods and services.
Q3) Explain the concept of moral imagination as it relates to a company's stakeholders.
Q4) The ________ occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.
A) tragedy of the commons
B) moral ignorance
C) noblesse oblige
D) veil of ignorance
Q5) Describe the five-step process that businesses can use to think through ethical problems.
7
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Chapter 6: International Trade Theory
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Q1) 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.
Q2) Which of the following observations is consistent with Michael Porter's theory of national competitive advantage?
A) Factors such as domestic demand and domestic rivalry explain nations' dominance in production.
B) Countries should produce only those goods for which they have a comparative advantage.
C) Interplay between the factors of production cause international marketing decisions.
D) International differences in labor productivity determine nations' supremacy in production.
Q3) Explain Paul Samuelson's critique.
Q4) Identify a major disadvantage of the product life-cycle theory.
Q5) Explain Ricardo's theory of comparative advantage.
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Chapter 7: Government Policy and International Trade
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Q1) ________ a requirement that some specific fraction of a good be produced domestically.
A) Administrative trade policies are
B) The Buy American Act is
C) A local content requirement is
D) Bureaucratic rules are
Q2) After the Uruguay Round of GATT negotiations extended global trading rules to cover trade in services, the first two industries targeted for reform by the WTO were
A) textiles and technology.
B) telecommunications and financial services.
C) automotive and aerospace.
D) agriculture and consulting services.
Q3) The extra profit that producers make when supply is artificially limited by an import quota is referred to as a
A) quota rent.
B) specific tariff.
C) tariff rate quota.
D) subsidy.
Q4) Define dumping. How do governments respond to charges of dumping?
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Chapter 8: Foreign Direct Investment
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Sample Questions
Q1) Only a few countries have adopted the free market view in its pure form.
A)True
B)False
Q2) 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.
Q3) Why do many economists favor internalization theory as an explanation for FDI compared to Knickerbocker's theory?
Q4) What are the possible adverse effects of FDI on a host country's balance-of-payments position?
Q5) Mergers and acquisitions are quicker to execute than greenfield investments.
A)True
B)False
Q6) Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.
Q7) Discuss an example that substantiates Dunning's argument about location-specific advantages.
Page 10
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) In 1990, Bolivia, Peru, Ecuador, Colombia, and Venezuela relaunched
A) Mercosur.
B) NAFTA.
C) APEC.
D) the Andean Pact.
Q2) Concerns about national sovereignty in the EU have been a major impediment to economic integration.
A)True
B)False
Q3) In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade policies.
A)True
B)False
Q4) Which of the following observations is true of the euro?
A) It is used by all member states of the European Union.
B) While recommended, it is not required that participating countries give up their own currencies.
C) It required participating countries to give up control over monetary policy.
D) By adopting it, the EU created the most widely traded currency in the world.
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Chapter 10: The Foreign Exchange Market
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Q1) ________ is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates.
A) An arbitrage
B) A carry trade
C) A spot exchange
D) A currency swap
Q2) Capital flight is most likely to occur when
A) the value of the domestic currency is depreciating rapidly because of hyperinflation.
B) a country's economic prospects are solid and promising.
C) the value of the domestic currency is appreciating rapidly.
D) the value of the foreign currency is depreciating rapidly.
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) How can a firm minimize its foreign exchange exposure?
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Chapter 11: The International Monetary System
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Q1) A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.
A)True
B)False
Q2) Under a ________ exchange rate regime, a country will attach the value of its currency to that of a major currency.
A) managed-float
B) pegged
C) free-float
D) currency board
Q3) Which of the following is a common underlying cause of financial crises?
A) a narrowing current account deficit
B) excessive expansion of domestic borrowing
C) low relative price inflation rates
D) asset price deflation
Q4) Discuss the significance of the Jamaica Agreement.
Q5) Recent policies of the International Monetary Fund have drawn a lot of criticism. Discuss these criticisms.
Q6) Describe the different exchange rate policies that are in practice today.
Page 13
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Chapter 12: The Global Capital Market
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Q1) ________ deposits are regulated in all industrialized countries.
A) U.S. currency
B) Domestic currency
C) Foreign currency
D) Eurocurrency
Q2) Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include A) governments.
B) corporations with surplus cash.
C) pension funds.
D) insurance companies.
Q3) An Italian corporation issues a bond denominated in dollars that has no regulatory interference. This is an example of a
A) foreign bond.
B) Eurobond.
C) micro bond.
D) regulatory bond.
Q4) There is a low correlation between the movement of stock markets in two different countries. What are the two factors that influence this?
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Chapter 13: The Strategy of International Business
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Q1) Firms usually respond to pressures for cost reduction by trying to
A) lower the costs of value creation.
B) be locally responsive.
C) undertaking product differentiation.
D) diversifying product lines.
Q2) What is strategy? How does strategy relate to a firm's profitability?
Q3) Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on
A) value creation.
B) economies of scale.
C) location economies.
D) the domestic market.
Q4) As competition intensifies, global standardization strategies and transnational strategies tend to become less viable, and managers need to direct their companies toward either an international strategy or a localization strategy.
A)True
B)False
Q5) How can a firm increase its profitability?
Q6) Discuss the creation of a global web of value creation activities.
Page 15
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Chapter 14: The Organization of International Business
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Q1) In a worldwide area structure, each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities.
A)True
B)False
Q2) Firms pursuing ________ attempt to create value by transferring core competencies from home to foreign subsidiaries.
A) a localization strategy
B) an international strategy
C) a transnational strategy
D) a global strategy
Q3) Regardless of a firm's domestic structure, its international division tends to be A) organized on economy.
B) decentralized.
C) organized on geography.
D) centralized.
Q4) Explain organizational structure.
Q5) Discuss the issues involved in refreezing an organization.
Q6) Why should a firm centralize its decision making?
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Chapter 15: Entry Strategy and Strategic Alliances
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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) The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country.
A)True
B)False
Q3) Discuss the advantages of establishing a greenfield venture in a foreign country.
Q4) Cross-licensing agreements are increasingly common in the ________ industries.
A) transportation
B) high-technology
C) construction
D) consumer durables
Q5) What is a joint venture? What type of joint venture is most common? Provide an example of a joint venture.
Q6) Discuss the three primary characteristics of a good ally.
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Chapter 16: Exporting, Importing, and Countertrade
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Q1) Discuss the idea of compensation or buybacks as they relate to countertrade. Provide an example of a buyback arrangement.
Q2) The ________ is issued to the exporter by the common carrier transporting the merchandise.
A) bill of lading
B) sight draft
C) letter of credit
D) time draft
Q3) Which of the following statements is true of countertrade?
A) Countertrade reduces the profitability of competing firms and is considered an unethical practice.
B) Countertrade is a conventional means to pay exporters.
C) Smaller organizations commonly use countertrade in international transactions.
D) Countertrade occurs when goods and services are traded for other goods and services.
Q4) U.S. organizations can get financing aid from the Export-Import Bank.
A)True
B)False
Q5) Compare and contrast time drafts and sight drafts.
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Chapter 17: Global Production and Supply Chain Management
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Q1) In global purchasing, Level I involves domestic purchasing activities only.
A)True
B)False
Q2) ________ can be viewed as the decision-making process regarding the raw materials, work-in-process (component parts), and finished goods inventory for a multinational corporation.
A) Global supply chain management
B) Global inventory management
C) Global corporate management
D) Global sourcing arrangements
Q3) Which of the following products will have low value-to-weight ratios?
A) pharmaceuticals
B) refined sugar
C) microprocessor
D) electronic items
Q4) Briefly describe the Six Sigma methodology.
Q5) Discuss the effect of country factors on the decision of where to locate production.
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Q6) Discuss the strategic objectives of the production and logistics functions of an international firm.
Chapter 18: Global Marketing and R&D
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Q1) A channel is considered to be very short if the producer sells
A) through an import agent.
B) through a wholesaler.
C) through a retailer.
D) directly to the consumer.
Q2) If market segments transcend national borders
A) the company should develop unique products for each national market.
B) the company can view the global market as a single entity and pursue a global strategy.
C) a localization strategy would be appropriate.
D) consumers will have differing purchasing behavior in different nations.
Q3) The continuing persistence of ________ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences.
A) technological and industrial
B) institutional and political
C) cultural and economic
D) GNP level and growth rate
Q4) Explain briefly the regulatory influences on pricing.
Q5) What factors can jeopardize the success of a firm's international communications?
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Chapter 19: Global Human Resource Management
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Q1) Bringing managers together in one location for extended periods and rotating them through different jobs in several countries helps the firm build
A) an expatriate community.
B) a formal management network.
C) an inpatriate community.
D) an informal management network.
Q2) Cultural myopia refers to a firm's failure to understand host-country cultural differences that require different approaches to marketing and management.
A)True
B)False
Q3) 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.
Q4) What are the three actions taken by organized labor to respond to the increased bargaining power of multinationals? How successful have these efforts been?
Q5) How can firms reduce the bias in performance appraisals of expatriate managers?
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Chapter 20: Accounting and Finance in the International Business
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Q1) The problem of blocked earnings is not as serious now as it once was because A) fixed exchange rates have become more common.
B) governmental intervention in earnings is more frequent.
C) there is greater acceptance of free market economics.
D) political risk within the economy is very low in modern times.
Q2) A ________ allows an entity to reduce the taxes paid to the home government by the amount of taxes paid to the foreign government.
A) tax amnesty
B) tax credit
C) waiver
D) tax treaty
Q3) Every time a firm changes cash from one currency into another currency it must bear
A) a transaction cost.
B) a tax.
C) a transfer fee.
D) an audit.
Q4) What are the advantages of using royalties and fees to move money across borders?
Q5) What are the shortcomings of IASB?
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