International Trade Study Guide Questions
Course Introduction
International Trade explores the theories, policies, and practices that govern the exchange of goods and services across national borders. The course examines the benefits and challenges of trade, the role of international organizations, trade agreements, and the impact of globalization on economies and societies. Through analysis of concepts such as comparative advantage, trade barriers, tariffs, and trade policy, students gain a comprehensive understanding of how international trade shapes economic development, influences political relations, and affects domestic markets. The course also integrates real-world case studies to illustrate contemporary issues in global commerce and policy-making.
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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) Imported flowers are now a stronger competitor to U.S.grown flowers in the U.S.market.Which of the following is likely the MOST important factor for this increase in imports?
A) more effective production techniques
B) advances in communication systems
C) advances in transportation and logistics
D) cross-national cooperation
Answer: C
Q2) What is the most likely reason that governments cooperate with each other through treaties,agreements,and consultations?
A) to gain an advantageous division of labor
B) to be in compliance with United Nations' requirements
C) to attack problems jointly that one country acting alone cannot solve
D) to assure that all countries get an equitable share of taxes from multinational enterprises
Answer: C
Q3) A joint venture is an example of a portfolio investment.
A)True
B)False
Answer: False
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Chapter 2: The Cultural Environments Facing Business
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Q1) Most people's basic value system is ________.
A) modified significantly between childhood and adulthood
B) altered during adulthood through imposition
C) affected primarily by teenage peer pressure
D) acquired mainly during early childhood
Answer: D
Q2) Contact among countries brings about cultural change,which is a process called
A) cultural collision
B) cultural imperialism
C) cultural diffusion
D) polycentrism
Answer: C
Q3) When divergent cultures come in contact,________ occurs.
A) power distance
B) culture shock
C) cultural collision
D) group membership
Answer: C
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Page 4
Chapter 3: The Political and Legal Environments Facing Business
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Q1) Wharton Enterprises,a U.S.firm,manufactures small kitchen appliances.The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable.Currently,Wharton has production facilities in the U.S.and China.Wharton executives are trying to determine where the new product should be manufactured.Which of the following best supports a decision to manufacture the new product in the U.S.instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
B) A strategic marketing plan can be quickly developed in the U.S.
C) Contract enforcement is a simple process in the U.S.
D) The U.S. is experiencing an economic recession.
Answer: A
Q2) A ________ law system is based on tradition,judge-made precedent,and usage and assigns a preeminent position to existing case law as a guide to dispute resolution.
A) theocratic
B) common
C) customary
D) civil
Answer: B
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Chapter 4: The Economic Environments Facing Businesses
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Q1) Describe the three ways economies can be categorized.Which one do you believe is best? Why?
Q2) ________ typically results when demand decreases and supply increases.
A) Inflation
B) Chronic inflation
C) Reflation
D) Deflation
Q3) A government increases its internal debt for all of the following reasons EXCEPT ________.
A) the tax system is so poorly run that the government cannot collect all the revenues it expects
B) government costs such as security and social programs exceed total tax revenues
C) the government borrows money from international financial institutions
D) state-owned enterprises run large deficits
Q4) What issues complicate international economic analysis?
Q5) What general characteristics of a country should managers consider when analyzing an economic environment? What specific indicators help managers measure the economic development,performance,and potential of a country?
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) Costa Rica's recent economic transformation to depend more on high-tech manufacturing is largely due to its adoption of ________ trade policy.
A) an import substitution
B) a comparative advantage
C) a factor proportions
D) a strategic
Q2) One way that developed countries specialize in order to gain acquired advantages is by ________.
A) allocating research efforts more heavily in specific sectors
B) emphasizing production in natural resource endowments
C) restricting imports to those in the service sector
D) subsidizing the transport of exports
Q3) Factor mobility refers to the movement of which of the following combinations?
A) capital, technology and people
B) currency, profits and raw materials
C) labor, capital and management
D) trade, profits and materials
Q4) An objective of neomercantilism is to build up gold reserves.
A)True
B)False
Page 7
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Chapter 6: Governmental Influence on Trade
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Q1) Governments sometimes prohibit operations of private companies,foreign or domestic,in some sectors because they feel these services should not be sold at a profit.
A)True
B)False
Q2) Protectionism will most likely affect which aspect of a company's operations?
A) selecting employees
B) investing short-term capital
C) acquiring foreign supplies
D) relocating personnel overseas
Q3) Export prices of primary products fluctuate less than export prices of manufactured products.
A)True
B)False
Q4) Infant-industry protection requires some segment of the economy to incur the higher costs when local production is inefficient.
A)True
B)False
Q5) What is dumping? What are the possible effects of dumping on a country's economy?
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Chapter 7: Cross-National Cooperation and Agreements
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Q1) Very few commodity agreements are successful in bringing together supplier and consumer countries to stabilize commodity prices.
A)True
B)False
Q2) What was the primary purpose of the formation of Sinergia?
A) charge tariffs on Walmart imports
B) purchase Walmart's major suppliers
C) better compete with Walmart on price
D) include Walmart in the regional supply chain
Q3) What are the rules of origin and regional content provisions of NAFTA?
Q4) The role of most commodity agreements now is to ________.
A) discuss issues and disseminate information about commodities
B) keep consumer countries from controlling commodity prices
C) allow producer countries to control inflation by keeping commodity prices low
D) stabilize prices through regional alliances between producer and consumer countries
Q5) What has been the impact of NAFTA on trade and employment in NAFTA nations?
Q6) The major trade groups in South America are CAN and MERCOSUR.
A)True
B)False
Page 9
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Chapter 8: Global Foreign-Exchange Markets
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Q1) An exchange rate is the number of units that buys one unit of another currency.
A)True
B)False
Q2) The top location for trading foreign exchange is ________.
A) London
B) New York
C) Zurich
D) Tokyo
Q3) A(n)________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.
A) forward rate
B) bid
C) offer
D) option
Q4) Companies use the foreign-exchange market to convert money for use in financial transactions.
A)True
B)False
Q5) What is a futures contract? What institutions handle futures contracts?
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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) Although central banks are responsible for foreign-exchange policy,they have no power to intervene in exchange rate markets.
A)True
B)False
Q3) Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.
A)True
B)False
Q4) According to the text,which currency is expected to experience the most change in the upcoming years?
A) yen
B) yuan
C) euro
D) U.S. dollar
Q5) What is a black market? Under what conditions might one exist?
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Chapter 10: Global Capital Markets
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Q1) What are the major sources of external funds for an MNE's normal operations? Why do MNEs use offshore financial centers to raise funds?
Q2) Which of the following financing tactics would most likely help an MNE avoid bankruptcy?
A) integrating e-commerce opportunities with domestic sales in order to maintain a steady balance of income and expenditures
B) agreeing to forward contracts with customers and hedging purchases and sales on future currency rates
C) organizing the capital structure so that the amount of debt financing is twice the level of equity financing
D) keeping the percentage of debt in the capital structure to a level that can be managed even during difficult business conditions
Q3) Capital budgeting requires companies to determine free cash flows,which are affected by factors such as local tax rates.
A)True
B)False
Q4) What is a transfer price? Why are transfer prices used?
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12
Chapter 11: Globalization and Society
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Q1) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________.
A) competitive advantage
B) the Kyoto Protocol
C) sustainability
D) externality
Q2) According to the Ethical Trading Initiative (ETI),________.
A) child labor cannot be used unless there are no suitable alternatives
B) employment need not be freely chosen in order to be acceptable
C) no harsh or inhumane treatment of workers should be allowed
D) MNEs are not responsible for establishing codes of conduct
Q3) Transparency International,the OECD,and the ICC are all working to stop bribery around the world.
A)True
B)False
Q4) What is the primary concern regarding anti-corruption measures in the EU?
A) resistance to an official anti-fraud commission
B) inability to adopt a corruption definition
C) lack of uniform laws across nations
D) failure to conduct internal auditing
Page 13
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Chapter 12: The Strategy of International Business
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Q1) Which strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader?
A) international strategy
B) multidomestic strategy
C) global strategy
D) transnational strategy
Q2) Which of the following is NOT a disadvantage of the international strategy?
A) Headquarters can misread foreign-market opportunities and threats.
B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.
C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.
D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.
Q3) A differentiation strategy works well when ________.
A) a company designs a universal product for a broad market
B) buyers believe minor product differences are irrelevant to price
C) buyers are highly sensitive to price shifts and quality control
D) a company can continually develop products that have unique features
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Page 14
Chapter 13: Country Evaluation and Selection
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Q1) A manager has the task of collecting and analyzing data that will help the firm decide where to locate its international operations.Which of the following best describes how the manager should handle this task?
A) conduct extensive research, regardless of the expense, in order to avoid costly mistakes
B) compare the costs of data collection with the probable payoff for the firm in order to budget and schedule the collection
C) continue data gathering until all data have been collected, regardless of how long this takes
D) focus all data collection on governmental resources because they have the highest reliability
Q2) Which of the following best explains why U.S.firms typically place earlier and greater emphasis on expansion into Canada and the U.K.?
A) most significant sales opportunities
B) similarities in culture and legal systems
C) availability of necessary natural resources
D) government incentives for allied nations
Q3) Why do companies engage in international harvesting or divestment?
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Chapter 14: Export and Import
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Q1) Serendipity is often an export trigger for companies that purposefully look to internationalize their operations.
A)True
B)False
Q2) Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price
D) importers using foreign sourcing to optimize their supply chains
Q3) You are the manager of an SME in the United States,and your firm wants to begin exporting.Since you have never been involved with exporting,there are many compelling reasons that encourage contacting the ________ to obtain expert counseling on exporting.
A) U.S. Treasury Department
B) Small Business Administration
C) Federal Credit Insurance Association
D) U.S. Commerce Department
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Page 16
Chapter 15: Direct Investment and Collaborative Strategies
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Q1) When entering foreign countries,many franchisors encounter difficulty in transferring the domestic success factors of product and service standardization.
A)True
B)False
Q2) What is an equity alliance? What motives would a firm have for forming an equity alliance?
Q3) All of the following are differences that need to be overcome for international collaborative arrangements to be effective EXCEPT ________.
A) national disparities in governmental policies
B) company variances in strategic directions and objectives
C) governmental differences in export restrictions
D) company diversity in management styles and structures
Q4) All of the following are ways that Coca-Cola has been attempting to increase its global sales EXCEPT ________.
A) gaining licenses to use brand names of other companies
B) acquiring companies with complementary products
C) adding alcoholic beverages to its product line
D) distributing soft drinks from other companies
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Chapter 16: The Organization of International Business
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Q1) Neoclassical structures aim to support organizations ________.
A) in which the location of control in a network alliance is evident
B) that centralize decision-making authority to those who can make informed decisions
C) that dismantle horizontal, vertical, or external boundaries that block ideas and relationships
D) that create predictable workplaces with minimal collaboration among subsidiaries
Q2) Horizontal differentiation is concerned with how the managers of a firm decide to divide the company into discrete subunits.
A)True
B)False
Q3) Which of the following is the most likely benefit of a network structure?
A) encouraging competition among members for resources
B) facilitating supplier changes anywhere in the value chain
C) developing core competencies in a broad range of value activities
D) maintaining a strong sense of organization in the face of dynamic partnerships
Q4) Describe how an MNE might use reports as a control mechanism.
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18
Chapter 17: Marketing Globally
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Q1) Which of the following statements is most likely true?
A) Consumers in most countries believe that imported products are better than locally made products.
B) Brand names have little impact on perceptions about a product's country-of-origin.
C) Consumers in most countries favor locally made products over imported products.
D) A positive brand image helps overcome negative perceptions about a product's country-of-origin.
Q2) Compton Cereal Company sells its cereals in most global markets,and overall sales at the firm remain strong.However,the firm is losing sales to some of its competitors because Compton lacks a gluten-free cereal.Which of the following best describes Compton's current problem?
A) usage gap
B) competitive gap
C) distribution gap
D) product-line gap
Q3) In a short essay,compare push and pull promotional strategies.
Q4) In a short essay,discuss gap analysis.
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) When firms estimate the costs of outsourcing to low-wage countries,they often overlook elements such as shipping distances.
A)True
B)False
Q2) Before the strong emphasis on zero defects,U.S.companies operated under the premise of ________,which allowed a level of poor quality with the assumption that service warranties and repair facilities would deal with product defects.
A) Six Sigma
B) acceptable quality level
C) just-in-time inventory management (JIT)
D) ISO 9000
Q3) All of the following tend to be more expensive when sourcing abroad,EXCEPT ________.
A) transportation costs
B) inventory holding costs
C) brokers and agents fees
D) labor rates
Q4) Why are the concepts of dependability and quality important when developing a global manufacturing strategy?
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Chapter 19: International Accounting and Finance Issues
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Q1) How do cultural values such as optimism,conservatism,transparency,and secrecy affect country differences in accounting systems?
Q2) The global integration of capital markets ________.
A) is a major force leading to the convergence of accounting standards
B) is a counterforce to regional political and economic harmonization
C) is being led by the strengthening of worldwide unions rather than investors
D) highlights the importance of maintaining differences in accounting worldwide
Q3) Larson Shoes is a British company.Which balance sheet format is most likely used by Larson?
A) assets + liabilities = shareholders' equity
B) liabilities + shareholders' equity = assets
C) noncurrent assets + current assets - current liabilities - noncurrent liabilities = shareholders' equity
D) noncurrent assets - net current assets = liabilities + capital and reserves
Q4) Germanic and Japanese companies tend to be more optimistic than U.S.and U.K.companies.
A)True
B)False
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) Expatriate failure,broadly defined,indicates there is a breakdown in a company's selection policies to staff its foreign operations.
A)True
B)False
Q3) Expatriate failure,defined in broad terms,refers to the ________.
A) manager's premature return home due to poor job performance
B) manager's miscues, which give competitors a market advantage
C) unintentional dilution of the company's core competency
D) poor expatriate selection procedures of the MNE
Q4) The various activities of HRM perform best when managers link them to the strategy of the firm.
A)True
B)False
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