International Management Review Questions
Course Introduction
International Management explores the challenges and strategies involved in managing organizations in a global context. The course examines cross-cultural differences, international business environments, global leadership, and multinational organizational structures. Students will learn about international market entry strategies, managing diverse teams, communication across cultures, and the impact of economic, legal, and political factors on global operations. By integrating theoretical concepts with real-world case studies, the course prepares students to effectively manage and lead in an increasingly interconnected and competitive international business landscape.
Recommended Textbook
International Business 16th Edition by John Daniels
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Chapter 1: Globalization and International Business
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Q1) What is foreign direct investment? What social factors in the external environment might affect FDI?
Answer: In foreign direct investment (FDI), sometimes referred to simply as direct investment, the investor takes a controlling interest in a foreign company.Control need not be a 100 percent or even a 50 percent interest; if a foreign investor holds a minority stake and the remaining ownership is widely dispersed, no other owner may effectively counter the investor's decisions.A nation's political policies of course affect how international business is conducted within its borders.In particular, political disputes can disrupt the flow of international business.Domestic law, which includes both home- and host-country regulations on issues such as taxation and employment, affects how a company can operate internationally.International law-the legal agreements between countries-also obviously affects FDI.
Q2) A multinational enterprise (MNE)is best defined as a firm ________.
A)that is a member of the Fortune 500
B)with foreign business partners
C)involved in global franchising
D)with foreign direct investments
Answer: D
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) Studies indicate a strong correlation between the intensity of religious belief and ________.
A)a desire to convert productivity gains into more leisure time
B)an adherence to some attributes that lead to economic growth
C)the belief that material success is related to salvation
D)the degree of ethnocentrism exhibited in a culture
Answer: B
Q2) Where future orientation is high, people are more willing to delay gratification by investing.
A)True
B)False
Answer: True
Q3) ________ consists of specific learned norms based on attitudes, values, and beliefs of a group of people.
A)Ethnology
B)Civilization
C)Culture
D)Doctrine
Answer: C
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Page 4
Chapter 3: The Political and Legal Environments Facing Business
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Q1) Multilateral development banks encourage development in risky environments through financial incentives.
A)True
B)False
Answer: True
Q2) Countries with a ________ legal system tend to encourage precise, detailed contracts, whereas countries with a ________ legal system tend to encourage shorter and less specific contracts.
A)theocratic; mixed
B)common; civil
C)civil; customary
D)customary; common
Answer: B
Q3) Which of the following problems in China is blamed for the annual loss of $250 billion by American MNEs?
A)intellectual property violations
B)environmental hazards
C)child labor violations
D)embezzlement
Answer: A
Page 5
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Chapter 4: The Economic Environments Facing Businesses
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Q1) 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
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) Which of the following is most likely a true statement about the global economy since the 1980s?
A)Socialist governments are intervening more in global exchanges.
B)Wealthy countries are exercising total control over emerging markets.
C)Developing countries are losing growing shares of their foreign-exchange reserves.
D)Emerging economies are adopting the principles and practices of free markets.
Q4) What is state capitalism? Why do you think state capitalism is becoming increasingly popular around the world?
Q5) What issues complicate international economic analysis?
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Chapter 5: Globalization and Society
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Q1) The Foreign Corrupt Practices Act applies only to companies registered in the United States.
A)True
B)False
Q2) Which of the following is a reason for an MNE to base its standards for ethical behavior on a country's laws?
A)The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct.
B)The law contains unenforceable rules that are impossible for society to follow.
C)The law represents a consensus derived from significant deliberation.
D)The law is based on precisely defined moral concepts.
Q3) 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
Q4) Which stakeholders must companies satisfy? What role should stakeholders play in a firm's internal code of conduct?
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Chapter 6: International Trade and Factor-Mobility Theory
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Q1) Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal.In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal.According to the theory of comparative advantage, ________.
A)there would be no basis for trade
B)the United States should import potatoes from Canada and export coal to Canada
C)the United States should export both potatoes and coal to Canada
D)the United States should export potatoes to Canada and import coal from Canada
Q2) Eight of the top 10 exporting and importing countries are countries with ________.
A)cheap labor forces
B)small land masses
C)natural advantages
D)developed economies
Q3) Under the theory of absolute advantage, countries hold two types of advantages-acquired advantages and technological advantages.
A)True
B)False
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Chapter 7: Governmental Influence on Trade
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Q1) What is the main motive for countries' protection of their film/cinema industries?
A)to keep prices low for their citizens
B)to improve their balance of payments
C)to diversify their economies
D)to preserve their national culture
Q2) Why are offsets considered protectionist measures?
A)Exporters must often find markets for goods outside their lines of expertise.
B)Exports must be sold at a certain percentage price below the price of domestic producers.
C)Companies must submit samples to government authorities before receiving export permission.
D)Trading companies must incur additional inventory carrying charges and pay significantly higher tariffs.
Q3) Many companies and industries argue that they should have the same access to foreign markets as foreign industries and companies have to their markets.In a short essay, discuss this issue of "comparable access," or "fairness."
Q4) What are the main arguments for limiting trade in services? What is your opinion on limiting trade in services?
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Page 9
Chapter 8: Cross-National Cooperation and Agreements
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Q1) Which of the following statements most accurately describes the relationship between trading groups and MNEs?
A)Trading groups have no influence on the size of the regional market.
B)Regional trading groups can define the rules under which companies must operate within that region.
C)Companies never need to change their organizational structure to take advantage of regional trading groups.
D)Regional trading groups have no influence on an MNE's strategy since they operate worldwide.
Q2) What are the rules of origin and regional content provisions of NAFTA?
Q3) One of the reasons that neighboring countries tend to ally is similar consumer tastes.
A)True
B)False
Q4) Regional integration is better known as global integration through the World Trade Organization.
A)True
B)False
Q5) What has been the impact of NAFTA on trade and employment in NAFTA nations?
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Chapter 9: Global Foreign-Exchange Markets
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Sample Questions
Q1) Options are more flexible than forward contracts.
A)True
B)False
Q2) When selecting a commercial and/or investment bank to deal in foreign exchange, corporations are most likely to use ________.
A)the exchange-based market rather than the over-the-counter market
B)more than one bank to meet different needs
C)banks located in the home country
D)investment banks only
Q3) An irrevocable letter of credit ________.
A)is issued by a global credit agency
B)is the basis for multilateral credit netting
C)can be amended only if all parties involved agree
D)obligates the exporter's bank to pay interest to the importer
Q4) An offer is the right but not the obligation to buy or sell foreign currency.
A)True
B)False
Q5) A tariff is the price of a currency.
A)True
B)False
11
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Chapter 10: The Determination of Exchange Rates
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Q1) Dollarization of a currency occurs when a country takes all of its own currency out of circulation and replaces it with U.S.dollars.
A)True
B)False
Q2) Although central banks are responsible for foreign-exchange policy, they have no power to intervene in exchange rate markets.
A)True
B)False
Q3) The International Fisher Effect links interest rates and exchange rates.
A)True
B)False
Q4) Which type of exchange rate arrangement is based on supply and demand?
A)soft peg
B)hard peg
C)crawling
D)floating
Q5) What is a black market? Under what conditions might one exist?
Q6) In a short essay, discuss purchasing power parity and the short-run problems that affect PPP.
Page 12
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Chapter 11: Global Capital Markets
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Q1) The Eurocurrency market is a retail, rather than wholesale, market.
A)True
B)False
Q2) What are the major sources of internal funds for MNEs? Why do many MNEs acquire external funds through the Eurodollar market?
Q3) How do countries differ in terms of taxation? In regards to taxation, why do some MNEs turn to offshore financial centers? Why are offshore financial centers a concern to the OECD?
Q4) The financial management activity that determines the proper mix of debt and equity is ________.
A)capital structure
B)long-term financing
C)capital budgeting
D)working capital management
Q5) The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore taxes for MNEs and the countries where they operate.
A)True
B)False
Q6) Why do many MNEs acquire external funds through the Eurodollar market?
Page 13
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Chapter 12: The Strategy of International Business
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Q1) A differentiation strategy is a unique mixture of the localization and global strategies whereby the company attempts to capture the advantages of both.
A)True
B)False
Q2) A global strategy drives performance by making standardized products that are marketed with minimum adaptation to local conditions.
A)True
B)False
Q3) 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)localization
C)international
D)continental
Q4) Describe the two basic ways that companies can create value.What role does the value chain play in these methods?
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Chapter 13: Country Evaluation and Selection
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Q1) The crowding of a foreign market to prevent competitors' advantages is known as
A)oligopolistic reaction
B)concentration strategy
C)liability of foreignness
D)a harvesting strategy
Q2) Which of the following is most likely a true statement about companies' acquisition of resources/assets abroad?
A)Regardless of industry, cheap labor is the most sought after resource.
B)Resource availability limits a firm's production location choices.
C)Regardless of industry, raw materials are the most sought after resource.
D)Risks are higher for resource-seeking than for sales-seeking foreign operations.
Q3) Committing resources to one country usually means forgoing or delaying projects in others.
A)True
B)False
Q4) What problems are common with the published data available about different countries?
Q5) Why do companies engage in international harvesting or divestment?
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Chapter 14: Export and Import
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Q1) Export intensity, the percentage of total revenues coming from exports, is not always correlated with company size.
A)True
B)False
Q2) The opportunity to increase profitability is the primary reason that firms decide to export.
A)True
B)False
Q3) An export trading company (ETC)works with many manufacturers rather than representing a single manufacturer
A)True
B)False
Q4) Which of the following is NOT a primary duty of the U.S.Customs and Border Protection?
A)assessing all duties, taxes, and fees on imported merchandise
B)collecting import and export tariffs
C)protecting the U.S. from threatening imports
D)policing smuggling operations
Q5) What difficulties of exporting can be minimized by customs brokers?
Q6) Why are financial risks a key concern of SMEs considering international trade?
Page 16
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) When a company's primary motive for entering a collaborative arrangement is to learn from its partner, it is likely to ________.
A)leave control to its partner
B)"go it alone" after it has learned what it needs to know
C)have disagreements with the partner over quality issues
D)prefer the arrangement to be a licensing agreement
Q2) What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?
Q3) What is a key industry?
A)an industry that is locked up competitively by domestic producers
B)a turnkey operator specializing in the construction of infrastructure components
C)an industry that receives government subsidies
D)an industry that significantly affects the economy by virtue of its size or influence on other sectors
Q4) Explain how franchising agreements differ from licensing agreements.
Q5) According to the appropriability theory and the internalization theory, why would companies want to control their foreign operations?
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Chapter 16: The Organization of International Business
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Q1) Explain the major types of classical organization structures and the advantages and disadvantages of each for international operations.
Q2) The concept of organization includes how a company does all of the following EXCEPT ________.
A)specifies the framework for work
B)develops systems that coordinate and control tasks
C)cultivates a common workplace culture among employees
D)plans leadership and training programs to develop the managerial staff
Q3) A major benefit of the international division structure is ________.
A)outsourcing distribution and shipping tasks
B)responding quickly to foreign events
C)diversifying most product groups
D)hiring low-cost, local workers
Q4) Organization ________ refers to the formal arrangement of roles, responsibilities, and relationships within an organization.
A)structure
B)systems
C)culture
D)strategy
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Chapter 17: Marketing Globally
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Q1) Agreements on international product standards are hampered by all the following factors EXCEPT ________.
A)the fact that standardization increases production costs
B)consumer reluctance to change
C)the cost of redesigning and retooling
D)governments' desires to protect investments
Q2) A company that prices its products at a desired margin over cost is using a cost-plus strategy.
A)True
B)False
Q3) A positive brand image cannot overcome negative perceptions of the country where the product is made.
A)True
B)False
Q4) ________ is the most common way of identifying market segments within a country.
A)Psychographics
B)The Internet
C)Gap analysis
D)Demographics
Q5) In a short essay, discuss gap analysis.
Page 19
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) Which of the following elements is often overlooked when firms estimate the costs of outsourcing to low-wage countries?
A)language barriers
B)overabundance of skilled and educated workers
C)lack of inventory
D)long distances
Q2) Bocce Shoes, an Italian firm, set up a production facility in Vietnam to manufacture the firm's line of athletic shoes.Bocce is most likely using a(n)________ strategy.
A)dependability
B)flexibility
C)innovation
D)efficiency/cost
Q3) Which of the following is most likely a true statement about using the Internet in supply chain management?
A)The Internet is universally accessible.
B)The Internet slows internal processes in a company.
C)The Internet minimizes efficiency gains to a company's suppliers.
D)The Internet prevents a deeper level of collaboration and communication.
Q4) Describe total quality management.
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Chapter 19: International Accounting and Finance Issues
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Q1) The ________ is the number of years it will take a firm to recover from its initial investment.
A)rate of return
B)accumulated translation adjustment
C)remittance period
D)payback period
Q2) In which quadrant of a disclosure/assessment matrix for accounting systems would you most likely find less-developed Latin countries?
A)conservatism and secrecy
B)transparency and conservatism
C)secrecy and transparency
D)optimism and secrecy
Q3) Sources of influence on accounting standards and practices include all of the following EXCEPT ________.
A)capital markets
B)regulatory environment
C)cultural environment
D)levels of exports
Q4) How do exchange rates affect budgets used to evaluate performance in MNEs?
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Chapter 20: International Human Resource Management
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Q1) Growing demand for expatriates stems from which of the following trends?
A)the emergence of developing countries as high-growth markets
B)the resurgence of developed countries as high-growth markets
C)the reduced need for localized expatriate assignments
D)the longer-term assignments created in response to the global credit crisis
Q2) The headquarters-based compensation method bases the expatriate's compensation on the salary of a comparable job in the city where the MNE has its headquarters.
A)True
B)False
Q3) Dixon Manufacturing, a British MNE, believes that its business practices are superior, so it does not make any policy changes in foreign markets.Dixon Manufacturing most likely takes a(n)________ approach to staffing.
A)ethnocentric
B)polycentric
C)geocentric
D)monocentric
Q4) Expatriates are locals from the country of the foreign subsidiary.
A)True
B)False
Page 22
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