ib midterm questions
Terms in this set (59)
A born global firm, a company that adopts a global perspective and engages in international business from inception, does NOT ________.
A. sell traditional products and benefit from technology
B. become international competitors in less than three years' time.
C. wait at least a year before exporting products and expanding operations globally
D. tend to have an innovative culture and knowledge-based organizational capabilities
use electronic distribution for digitized products
Multinational corporations do NOT ________.
What is any commercial transaction that crosses the borders of two or more nations?
Which of the following can best describe born global firms?
A. Companies that employ thousands of workers
B. Import firms
C. Multinational corporations
D. Custom brokers
E. Companies that adopt a global perspective and engages in international business from the start
Which of the following is NOT a benefit that companies obtain from the globalization of production?
A. Technical expertise
B. Low-cost labor
C. Raw materials
D. Production inputs
E. High-cost labor
Companies that sell global products can reduce costs by ________.
standardizing certain marketing activities
Global products and global competition characterize many industries and markets, including all of the following EXCEPT ________.
A. environmentally harmful products
B. consumer goods
What is the name given to the trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies?
Which of following options helps companies reduce costs when they sell consumer goods globally?
A.Hiring international staff to have better control and operate more efficiently
B.Receiving payment in U.S. dollars only
C.Standardizing certain marketing activities
D.Outsourcing most of their business
E.Considering foreign direct investment
When IBM USA sources computer materials from different locations around the world to reduce the cost of production, this is called ________.
globalization of production
Innovation in the shipping industry is helping globalize markets and production by ________.
making shipping more efficient and dependable
Innovations that have had a considerable impact on globalization include all of the following EXCEPT ________.
A. increasing the number of intermediaries
Which of the following is a treaty designed to promote free trade by reducing tariffs and nontariff barriers to international trade?
What forces underlie the globalization of markets and production?
Falling barriers to trade and investment and technological innovation
What is the major flaw of the original GATT, which led to the creation of the WTO?
Lacked the power to enforce world trade rules
Which of the following is the main issue raised by critics of globalization?
It eliminates jobs and lowers wages in developed nations
Which of the following is claimed by supporters of globalization?
Openness of international trade increases production, wealth, and efficiency
Arguments in favor of globalization state that ________.
globalization increases wealth and efficiency in both developed and developing nations
Arguments against globalization state that ________.
gains to national economies are not worth the lost livelihoods of individuals
Some allege that, when a manufacturing job is lost in a wealthy nation, the new job pays less than the previous one. As a result those opposed to globalization say this decreases all of the following EXCEPT ________.
India became attractive as a location for software-writing operations because of its low-cost, well-trained, English-speaking technicians. What is this an example of?
Globalization advancing developing nations' economies
Globalization supporters argue that developing countries can boost incomes for its poorest citizens and reduce income inequality by ________.
integrating into the global economy
Opponents of globalization argue that freer trade and companies' continuous tendency to reduce costs has led companies to move into lower wage cost locations. This has resulted in ________
an increase in the wage gap between white-collar and blue-collar occupations in rich nations
The main aspects of the debate about inequality include all EXCEPT ________
A. inequality within nations
inequality between nations
Which of the following statements supports the opponents of globalization's viewpoint on its effect on income? Globalization increases income inequality among people within nations
Freer trade and investment allows international companies to close factories in high-wage, developed nations and cause income inequality
If we compare average incomes in high-income countries with average incomes in middle- and low-income nations, we find a ________ gap
Critics of the WTO and the IMF role believe that these global organizations' policies cause the erosion of ________.
the ability of governments to have control over their own economics and societies
A nation's ability to enter into binding international agreements is referred to as having ________
Globalization's detractors say that ________
it homogenizes our world and destroys its rich diversity of cultures
Which of the following is NOT an argument in the debate over globalization's influence on culture?
Deeper values that embody the essence of cultures are resistant to a global consumer culture.
Local values and traditions are being replaced by U.S. companies promoting "Western" values.
Global consumer-goods companies destroy cultural diversity by putting local companies out of business.
D. A poor marketing effort can cause great products to fade into obscurity.
Globalization fosters two important values: tolerance and diversity.
Some say that globalization erodes national sovereignty. National sovereignty does not mean that a nation-state ________.
cannot intervene in the affairs of other nations
cannot enter into binding international agreements*
can freely select its government
can control movements across its borders
________ is the study of how a country manages its affairs by using its political, economic, and legal systems.
Political economies of nations differ in the degree of openness, individualism, equality, transparency, and flexibility. Which of the following political economic systems stresses the primacy of the group over individual needs?
A political system includes all of the following EXCEPT ________.
the structures by which a nation governs itself
the processes by which a nation governs itself
the laws by which a nation governs itself
the language by which a nation governs itself*
the activities by which a nation governs itself
What are the benefits of doing business in a totalitarian nation?
International companies can be relatively less concerned with local political opposition to their activities.
In _________, the government makes nearly all economy-related decisionslong dash—including who produces what and what the prices of products, labor, and capital will be
Centrally planned economy
What is the name for the selling of government-owned economic resources to private operators?
Which of the following BEST describes the ideology of a centrally planned economy?
achieving economic equality
Which of the following is NOT a characteristic of a market economy?
Which of the following is NOT an ethical issue facing international companies?
Changing a nation's political system
The term ________ refers to an increase in the economic well-being, quality of life, and general welfare of a nation's people
Which of the following BEST describes an emerging economy?
Developed some (but not all) of their operations and export capabilities
Which of the following is the likelihood that a society will undergo political change that negatively affects local business activity?
A government may nationalize an industry to do all EXCEPT ________
use subsidies to protect an industry for ideological reasons
invest in sectors, such as public utilities, that private companies cannot afford
control industry profits so they cannot be transferred to low tax-rate countries
save local jobs in an ailing industry to gain political clout
The main sources of political risk do NOT include ________.
international content requirements
Which of the following is NOT a method of managing political risk?
Conducting market research*
The international product life cycle theory follows the path of a good through its life cycle in order to determine where it will be produced. Which of the following BEST defines the standardized product stage?
Competition pressures companies to lower prices in order to maintain sales levels.
________ says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle
international product life cycle theory
iplc: 1. the new product stage
the high purchasing power and demand of buyers in an industrialized country drive a company to design and introduce a new product concept
iplc: 2. maturing product stage
the domestic market and markets abroad become fully aware of the existence of the product and its benefits
iplc: 3. standardized product stage
competition from other companies selling similar products pressures companies to lower prices in order to maintain sales levels
According to ________, as a company increases the extent to which it specializes in the production of a particular good, output rises because of gains in efficiency
the new trade theory
The new trade theory states that companies' specialization and output increase because of gains in efficiency that lowers the unit cost of production. This is a benefit from ________.
economies of scale
Which of the following is NOT stated by the new trade theory?
Government may play a role in assisting its home companies.
The companies first to market can create barriers to entry.
Government should play no role in assisting home companies.*
There are gains to be made from increasing economies of scale.
There are gains to be made from specialization.
Governments intervene in international trade for the following reasons EXCEPT ________.
A. protecting national identity
promoting free trade*
protecting national security
protecting infant industries
Which of the following is NOT an instrument of trade restriction?
Local content requirements
Special government agencies*
Why are embargoes rarely used today?
they are difficult to enforce
Which of the following was NOT a benefit of the General Agreement on Tariffs and Trade (GATT)?
GATT defined protection of intellectual property rights.
GATT reduced average tariffs on merchandise trade.
GATT covered trade in services.*
GATT lowered subsidies for agricultural products.
GATT significantly improved the climate for trade
Which of the following is NOT part of the World Trade Organization's (WTOs) mandate?