International Management Test Questions
Course Introduction
International Management explores the strategies, structures, and processes that organizations use to operate effectively in the global marketplace. The course examines the challenges and opportunities presented by cultural differences, diverse economic environments, legal systems, and political frameworks. Topics include cross-cultural communication, global leadership, international human resource management, market entry strategies, and the ethical considerations of multinational operations. Through case studies and real-world examples, students develop skills to analyze and implement business practices that facilitate success in an increasingly interconnected world.
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International Business The New Realities 4th Edition by S. Tamer Cavusgil
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Page 2
Chapter 1: Introduction: What Is International Business
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Sample Questions
Q1) The CEO introduced another overseas effort by noting that it represented an attempt to confront an international competitor. The CEO was most likely referring to which of the following efforts?
A)a new plant established in Vietnam to benefit from low-cost labor
B)a sales outlet established in Indonesia, where Sterling could charge more for its products
C)a marketing and advertising partnership established with a successful French car retailer
D)a distribution center established in London to preempt the growth of a British car manufacturer
Answer: D
Q2) Which of the following is an example of a new global challenger?
A)a firm from Russia that is rapidly growing in the communications industry
B)a U.S. non-profit that focuses on fundraising for children's health care
C)an MNE from France with large-scale operations across the globe
D)an SME from Canada that began international operations early in its development
Answer: A
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3
Chapter 2: Globalization of Markets and the
Internationalization of the Firm
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Sample Questions
Q1) Which of the following is an example of a supranational institution?
A)the World Intellectual Property Organization
B)the UNICEF
C)the Red Cross
D)the World Trade Organization
Answer: D
Q2) ________ refers to the tendency of a financial or monetary crisis in one country to spread rapidly to other countries, due to the ongoing integration of national economies.
A)Contagion
B)Nationalization
C)Internationalization
D)Codetermination
Answer: A
Q3) Industrialization implies that emerging markets are increasing their dependence on low-cost labor.
A)True
B)False
Answer: False
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Chapter 3: The Cultural Environment of International Business
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Sample Questions
Q1) How is culture like an iceberg? In a short essay, explain the relationship between the iceberg theory and international business relationships.
Answer: Anthropologists use the iceberg metaphor to call attention to the many dimensions of culture-some obvious and some not so obvious. Above the surface, certain characteristics are visible, but below, unseen to the observer, is a massive base of assumptions, attitudes, and values that strongly influence decision making, relationships, conflict, and other dimensions of international business. We are usually unaware of the nine-tenths of our cultural makeup that exists below the surface. In fact, we are often not aware of our own culture unless we come in contact with another one. In cross-border business, we step into different cultural environments characterized by unfamiliar languages, and unique value systems, beliefs, and behaviors. We encounter customers and business partners who display differing lifestyles, norms, consumption behavior, shopping, and use patterns. These differences influence all dimensions of international business. Understanding cultural differences is necessary in the creation and maintenance of international business relationships.
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Chapter 4: Ethics, Corporate Social Responsibility,
Sustainability and Corporate Governance
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Sample Questions
Q1) An individual who believes in ethical normativism is most likely to view ethical behavioral standards as ________.
A)universal
B)constantly changing
C)dependent on societal norms
D)superior to religious beliefs
Q2) Piracy is equivalent to counterfeiting.
A)True
B)False
Q3) Corruption is defined as ________.
A)the system of procedures and processes by which corporations are managed, directed, and controlled
B)a manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of customers
C)the abuse of power to achieve illegitimate personal gain
D)the tendency to make decisions based purely on cognitive factors
Q4) What is a code of ethics? What function does it serve for businesses?
Q5) In a short essay, explain the concept of CSR. List some typical CSR values.
Q6) In a short essay, explain the five-step framework for making ethical decisions.
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Chapter 5: Theories of International Trade and Investment
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Sample Questions
Q1) Competitive advantage refers to the ________.
A)belief that national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports
B)superior features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national policies
C)distinctive assets or competencies of a firm that are difficult for competitors to imitate and are typically derived from specific knowledge, capabilities, skills, or superior strategies
D)relative absence of restrictions to the flow of goods and services between nations
Q2) According to the ________, a country benefits by producing only those products in which it has complete advantage or that it can produce using fewer resources than another country.
A)absolute advantage principle
B)comparative advantage principle
C)factor proportions theory
D)international product cycle theory
Q3) Explain the limitations of early trade theories. Discuss born global firms.
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Chapter 6: Political and Legal Systems in National Environments
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Sample Questions
Q1) Democracy is characterized by limited governmental interference.
A)True
B)False
Q2) Which of the following is an element of socialism often found in democratic societies?
A)government subsidies for foreign firms
B)government sponsored businesses
C)government intervention in the affairs of individuals and firms
D)government control of information technology
Q3) Boycotts and protests have the potential to harm businesses by ________.
A)preventing businesses from shipping their products to foreign markets
B)lost sales and increased costs for public relations activities
C)destroying the ability of all local firms to carry on normal business operations
D)raising concerns about a firm's foreign operations by initiating lawsuits
Q4) Explain command economies. Provide examples of nations that exhibit characteristics of command economies and why command economies are no longer common today.
Q5) Explain the purpose of special interest groups. How do these organizations affect international business? Provide examples to support your answer.
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Chapter 7: Government Intervention and Regional Economic Integration
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Sample Questions
Q1) ________ refer to rules that limit the ability of foreign firms to invest in certain industries or acquire local firms.
A)Quotas
B)Regulations and technical standards
C)FDI and ownership restrictions
D)Administrative and bureaucratic procedures
Q2) Given the high trade barriers in Mexico, the management of NAC is most likely to consider ________ to be an inappropriate entry strategy.
A)exporting
B)FDI
C)joint ventures
D)licensing
Q3) Subsidies can help counterbalance harmful consequences that disproportionately affect the poor.
A)True
B)False
Q4) In a short essay, describe the negative effects to the economy when a government intervenes in international trade.
Page 9
Q5) What has NAFTA accomplished for its members?
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Chapter 8: Understanding Emerging Markets
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Sample Questions
Q1) Which of the following is true of the Grameen Bank founded by Prof. Muhammad Yunus?
A)It provides funding primarily to global conglomerates.
B)It is a family conglomerate based in Bangladesh.
C)It provides small-scale financial services to aspiring entrepreneurs in poor countries.
D)It sells insurance in India for less than 20 cents.
Q2) Which of the following is an example of a developing economy?
A)Australia
B)Bangladesh
C)France
D)Brazil
Q3) The strategies that MNEs developed decades ago and refined in mature advanced-economy markets are considered most suitable for achieving success in emerging markets.
A)True
B)False
Q4) Briefly explain how microfinancing has helped individuals to rise out of poverty in many developing nations.
Q5) Write a short essay on technology and emerging markets.
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Chapter 9: The International Monetary and Financial Environment
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Q1) The Central Bank is an international agency that provides loans and technical assistance to low-and middle-income countries, with the goal of reducing poverty.
A)True
B)False
Q2) Which of the following statements is true about currencies?
A)The British pound is an example of a nonconvertible currency. B)Hard currencies are highly unstable currencies.
C)Currencies that are used for international transactions are called nonconvertible. D)Convertible currencies can be readily exchanged for other currencies.
Q3) The global financial system establishes the rules and procedures for exchanging national currencies in international business transactions.
A)True
B)False
Q4) Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?
Q5) Explain the concept of currency risk. How can inflation and interest rates create currency risk?
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Chapter 10: Financial Management and Accounting in the Global Firm
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Sample Questions
Q1) Transfer pricing is defined as ________.
A)methods for transferring funds exclusively from foreign subsidiaries to parent corporations
B)compensation paid to owners of intellectual property
C)the means by which subsidiaries and affiliates charge each other as they exchange goods and services
D)the process through which a parent deposits a large sum in a foreign bank, which transfers it to a subsidiary as a loan
Q2) When a Japanese firm sells yen-denominated bonds in the United States, it is issuing foreign bonds.
A)True
B)False
Q3) A fronting loan would most likely be utilized by an MNE attempting to ________.
A)increase transfer pricing
B)reduce dividend payments
C)minimize taxes
D)conceal corporate debt
Q4) Discuss two reasons why a nation might NOT consider a firm's high debt ratio a risky approach to international business.
Page 12
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Chapter 11: Strategy and Organization in the International Firm
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Sample Questions
Q1) When using a multidomestic strategy, products and services are carefully adapted to suit the unique needs of each country.
A)True
B)False
Q2) During the interview, Dan states that he expects Ace to surpass the competition in two years if he becomes CEO. Which of the following traits does Dan most likely exhibit with his statement that might appeal to the board of directors?
A)commitment to the success of Ace
B)arrogance about his abilities to help Ace
C)recognition of the homogeneity across communities
D)subjective ethical standards
Q3) Armaz Inc. , a manufacturing company, has its headquarters located in Texas, U.S. , and subsidiaries in India, China, and Vietnam. Which of the following decisions will be the LEAST decentralized?
A)decision about building factories in Cambodia
B)decision about hiring a marketing manager in the United States
C)decision to open a retail store in Vietnam
D)decision about developing new products for foreign markets
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Chapter 12: Global Market Opportunity Assessment
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Sample Questions
Q1) Global market opportunities depend on timing and location, and they often enhance a firm's performance.
A)True
B)False
Q2) Industry market potential is identical to company sales potential.
A)True
B)False
Q3) Explain the four factors contributing to product suitability for international markets, and describe how these factors can help an international firm with a gradual elimination screening methodology.
Q4) Which of the following tasks in the global market opportunity assessment process should be performed directly before the task of estimating company sales potential?
A)analyze the company's readiness to internationalize
B)screen countries to identify target markets
C)assess industry market potential
D)choose qualified foreign business partners
Q5) Describe the purpose of CORE. How does it aid managers?
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Page 14
Chapter 13: Exporting and Global Sourcing
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Sample Questions
Q1) The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers is known as
A)outsourcing
B)franchising
C)offshoring
D)licensing
Q2) ________ will internationalize via FDI because they require direct contact with customers.
A)Insurance firms
B)Accountants
C)Construction firms
D)Retailing firms
Q3) Which of the following activities is applicable to the final stage of exporting?
A)The firm engages appropriate bankers and international trade attorneys.
B)The firm screens the most attractive export markets.
C)The firm modifies advertising and public relations to suit individual markets.
D)The firm acquires product development and foreign language skills.
Q4) Describe the four-step process many managers use to achieve successful exporting.
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Chapter 14: Foreign Direct Investment and Collaborative Ventures
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Sample Questions
Q1) Which of the following most likely supports a decision to enter the Asian market through a project-based, non-equity collaborative venture with an Asian appliance manufacturer to create an environmentally-friendly dishwasher?
A)Asian firms have offered to pool their resources with ABC to create a new legal entity.
B)Managers of both firms have decided not to seek ownership, rather they have decided to pool resources.
C)ABC managers have the financial resources to quickly build a new Asian plant.
D)The Asian government has offered incentives to ABC if the firm builds a plant.
Q2) Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?
A)the foreign firm can fill an important gap in the focal firm's value chain
B)the foreign firm requires the focal firm's financial resources to compete locally as well
C)the focal firm wants to duplicate a competitor's marketing strategies abroad
D)the market abroad is saturated; there is no scope for the focal firm's products or services
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Page 16
Chapter 15: Licensing, Franchising, and Other Contractual Strategies
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Sample Questions
Q1) Which of the following statements is true of infringement of intellectual property?
A)The most commonly counterfeited goods include heavy machinery and computer manufacturing.
B)It amounts to piracy and takes the form of production and distribution of counterfeit goods.
C)It is the ability to control important intellectual property before it reaches competitors.
D)Counterfeiting and piracy can be particularly troublesome in advanced economies because of subjective ethical standards.
Q2) Which of the following statements is true about international franchisors?
A)Entry into numerous foreign markets is tough and costly.
B)Maintaining control over franchisees is seldom difficult.
C)Franchisors need to invest substantial capital.
D)Franchisees may use franchise knowledge to start a competing business.
Q3) In a licensing agreement, the licensee is both the owner and user of intellectual property.
A)True
B)False
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Page 17
Chapter 16: Marketing in the Global Firm
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Sample Questions
Q1) In a short essay, discuss the three common pricing strategies. How do firms employ each strategy? What are the main advantages and disadvantages of using such strategies?
Q2) Incremental pricing refers to setting prices to cover only the firm's variable costs, but not its fixed costs.
A)True
B)False
Q3) Frequent business travelers, who are also affluent and eager spenders, represent a global market segment.
A)True
B)False
Q4) Channel length refers to the number of distributors or other intermediaries that it takes to get the product from the manufacturer to the market.
A)True
B)False
Q5) The strength of a global brand is best measured by its brand equity.
A)True
B)False
Q6) Briefly discuss the principal advantages of standardization.
Page 18
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Chapter 17: Human Resource Management in the Global Firm
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Sample Questions
Q1) In a short essay, discuss the factors that complicate the job of international human resource managers.
Q2) Which of the following, if true, most seriously undermines the argument in favor of hiring Devon Parks as manager for CCC's facility in New Delhi?
A)Devon has few local connections in New Delhi where success is largely determined by local connections and networking.
B)CCC wants to maintain strong control over all its foreign operations including India.
C)Devon is capable of working independently and with little direction.
D)CCC has significantly benefitted in the past by hiring PCNs for training local managers in Asia.
Q3) Which of the following most likely complicates international performance appraisals?
A)overproduction
B)distance from the headquarters
C)lack of general consensus among managers with regard to reward systems
D)cost of doing business abroad
Q4) Discuss the reasons why labor union membership has declined in recent years.
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