IB Massa Exam (All Quizzes)
Terms in this set (198)
International business refers to ________.
any commercial transaction that crosses the borders of two or more nations
Multinational corporations are key players in the international business and can be described as companies that __________.
have direct investments in the form of marketing or manufacturing subsidiaries abroad in multiple countries
What is a company that adopts a global perspective and engages in international business from or near its inception known as?
A born global firm
________ is the name we give to the trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies.
The convergence in buyer preferences in countries around the world is referred to as ________.
globalization of markets
Companies that sell global products can standardize certain market activities in order to ________.
reduce marketing costs
Globalization of markets can benefit companies that sell a global product and creates new market opportunities abroad especially if their home market _________.
is small or becoming saturated
A firm that produces a product with universal but seasonal appeal and is trying to level its income stream and reduce or eliminate wide variations in domestic sales can supplement its domestic sales with ________.
Although companies that sell global products can reduce costs by standardizing certain marketing activities, when might this approach NOT benefit the company?
When the benefit of serving the customers with an adapted product may outweigh the benefit of a standardized product
Which of the following describes the sourcing of key production inputs, such as raw materials or products, for assembly as well as the international outsourcing of services?
Globalization of production
Why do companies produce goods and services abroad?
To reduce their overall labor costs
Japan's largest paper company, Nippon Seishi, has decided to own huge forests and corresponding processing facilities in Australia, Canada, and the U.S. in order to ________.
guarantee a steady flow of its wood pulp
Which are the two main forces that underlie the globalization of markets and production?
Falling barriers to trade and investment and technological innovation
The revision in 1994 of the GATT clearly defined intellectual property rights in order to ________.
give more protection to copyrights, trademarks, and patents
Which is a major flaw of the original GATT?
It lacked the power to enforce trade rules.
The power of WTO that sets it apart from GATT is its capability to do which of the following?
Penalize offending nations and the power to settle trade disputes
Which is an agency that was created to regulate fixed exchange rates and to enforce the rules of the international monetary system?
International Monetary Fund
The main purpose for establishing regional trade agreements such as NAFTA and APEC is to ________.
foster trade and boost cross-border investment
Operating across borders and time zones could complicate the job of coordinating and controlling international business activities especially for smaller firms. To operate more efficiently, international companies tend to ________.
accelerate the use of technology, email, video conferencing, the Internet, and intranets.
Some of the critics of globalization argue that the relentless pursuit of low-cost goods has led to ________.
sending manufacturing jobs abroad
Globalization supporters argue that globalization increases wealth and efficiency in both developed and underdeveloped nations. What is this due to?
Openness to international trade increases national production
The opponents of globalization argue that the increasing income inequality within nations means companies cut the cost of production and that freer trade and investment allows international companies to ________.
close factories in high-wage-area developed nations and move them to low-wage developing countries
The globalization impact on the gap between rich and poor nations varies. One group of nations, such as in China and India, is closing the gap with rich economies while a second group of poor countries is falling further behind, such as most countries in Africa. On closer inspection this is due to which of the following?
The level of embracing globalization by developing countries
Opponents of globalization claim that globalization empowers organizations such as WTO, IMF, and the UN undermining the ________.
sovereignty of a nation
Why do most international firms today support reasonable environmental laws?
They recognize that healthy future markets require a sustainable approach to the business expansion for future local markets for their goods and services.
The definition of __________ centers around the set of values, beliefs, and rules of society.
We usually refer to British and Indonesians cultures as if all Britons and Indonesians are culturally identical. This generalization is because we are conditioned to think in terms of ________.
French laws limit the use of English in product packaging and store front signs in order to ________.
stem the English invasion and preserve the national culture
____________ is a group of people who share a unique way of life within a larger, dominant culture.
In order for Frito Lay to increase sales of its products in the U.S., the company had to appeal to the Latino market, which is a huge subculture of 46 million people. What did the company do?
Introduce new brands from its Mexican subsidiary
The belief that one's own ethnic group or culture is superior to that of others is referred to as ________.
While managers increasingly treat the world as a single, intercontinental marketplace, which one of the following helps managers avoids failure?
Eliminating the bias inherent in ethnocentric thinking
Which of the following methods will NOT help managers develop a global mindset?
Focusing on aesthetics
Celebrating the Dragon Boat Festival in China and the art of belly dancing in Turkey are examples of ________.
Which of the following statements best describe values?
Values are the ideas, beliefs, and customs to which people are emotionally attached.
An important aspect of social structure is the way a culture divides its population according to status. Which of the following terms refer to the process of ranking people into social layers or class?
Which of the following terms describes a system of social stratification in which personal ability and actions determine social status and mobility?
Which of the following describes a system of social stratification in which people are born into a social ranking, with no opportunity for social mobility and are prejudged by their social ranking in this system?
Countries with poorly educated populations attract the lowest paying manufacturing jobs. International companies searching for untapped markets or new factory locations should consider, among other factors, the ________.
From the perspective of international business, one important aspect of nations with solid basic education systems is that they ________.
attract relatively well-paying industries
__________ is the world's single largest religion.
Which of the following religions prohibits the consumption of pork and shellfish?
Charging interest for money lent violates the law of which religion?
Which of the following statements is TRUE about Hinduism?
The caste system is integral to the Hindu faith.
American-born Thomas Kwan, who works for a health products company in Shanghai, China, says that a lot of expatriate managers fail in China because ________.
the Chinese don't tell you what they think
You are working as an international manager for a major U.S. hotel chain in Russia. To provide good service for tourists, the local hotel staff put a sign in the hotel lobby that reads, "You are welcome to visit the cemetery where famous Russian composers, artists, and writers are buried daily except Thursday." What is wrong with this sign's text?
The Kluckhohn-Strodtbeck Framework dimension looks at whether a people are easily controlled and not to be trusted, or whether they can be trusted to act freely and responsibly. Within the traditional Japanese business model dealings among Japanese companies, the Kluckhohn-Strodtbeck defines that they are ________.
based heavily on trust so as not to "lose face"
According to Hofstede's Index, which country has the highest score on valuing hard work and promoting entrepreneurial risk taking, meaning that responsibility for poor business decisions is placed primarily on the individual in charge?
According to Hofstede, which of the following cultural dimensions conveys the degree to which a culture accepts social inequality among its people?
Local culture is important for a company exploring the international market for their products. A great example of this is the export of luxury items to wealthy upper class, such as expensive jewelry and high-priced cars, which factors significantly in which of the following cultural dimensions?
`High power distance
Which of the following statements BEST describes political economy?
The study of how a country manages its affairs by using political, economic, and legal systems
In which of the following political systems do individuals govern without the support of the people, tightly control people's lives, and do not tolerate opposing viewpoints?
Which of the following are features of totalitarianism?
Lack of and/or denying citizens constitutional guarantees; restricts political representations
People have a constitutional right to voice opinion freely and without fear would be possible in (a) ________.
________ refers to a country where the political system is under the control of totalitarian religious leaders that govern according to religious principles.
Which form of political system provides full civil and property rights?
Which of the following statements about doing business in totalitarian countries is FALSE?
The government has far less direct involvement.
In which of the following economic systems does the government own a nation's land, factories, and other economic resources?
Centrally planned economy
In which type of economy is the majority of a nation's land, factories, and other economic resources privately owned, either by businesses or by individuals?
There are far fewer communist nations than there were two decades ago. According to your textbook, which two countries remain hard-liner communist nations?
Cuba and North Korea
According to your textbook, economists, historians, and political scientists all of the following factors contributed to the decline of centrally planned economies EXCEPT ________.
failure of governments to slow down the creation of new technologies
In which of the following economies are resources, such as land, factories, and other economic resources, equally split between private and government ownership?
Which one of the following statements about a market economy is FALSE?
All productive activities are owned by the state.
Which legal system reflects interpretation of the law with reference to these three characteristics: tradition, precedent, and usage?
Which of the following statements BEST describes the theocratic legal system?
It is a legal tradition based on religious teachings.
Which of the following is NOT an example of intellectual property?
A machine-tool manufacturer
According to an annual study made by Business Software Alliance of software piracy, business software piracy averages around 42 percent globally and costs business software makers nearly $59 billion annually. Which country has the highest rate of pirated software in the world?
Republic of Georgia
Which of the following is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention?
The Nike "swoosh" and the name "Lexus" are protected by ________.
Industrial property is protected internationally under the ________ for the Protection of Industrial Property to which nearly 100 countries are signatories.
Which of the following statements BEST describes antitrust regulations?
They are laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair monopoly advantages.
Which of the following philosophies of business ethics and social responsibility support the view that a company's sole responsibility is to maximize profits for its owners (or shareholders) while operating within the law?
Which of the following multinational companies (cited by the text) had a case publicized by human rights and labor groups investigating charges of worker abuse?
Which of the following multinational companies (cited by the text) works hard to operate in a socially responsible manner by trying to ease the plight of citizens in countries where their product is produced and sells fair trade products?
The well-publicized Enron corporation case is an example of ________.
The World Bank classifies countries' economic development according to ________.
Countries that are highly industrialized and highly efficient, and whose people enjoy a high quality of life are called ________.
________ are the countries that have recently increased the portion of their national production and exports derived from industrial operations.
Newly industrialized countries
According to your textbook, which of the following sets of countries are classified as newly industrialized countries?
Brazil, India, China, and South Korea
Which of the following is counted as part of the gross domestic product (GDP)?
The value of all goods and services produced within the borders of the nation over a one-year period
Which of the following measures the quality of life in different countries?
Using gross product figures to compare production across countries does not account for the different cost of living in each country. Which of the following indicators helps in adjusting the GDP to reflect the cost of living in each country?
Purchasing power parity
The economic transition process involves the following key reform measures to promote economic development EXCEPT ________.
expanding state ownership of economic resources
The governments of many countries in transition cannot afford all the investment required to develop and upgrade their infrastructure system, including highways, bridges, and rail networks. Which of these financing resources do they tend to source?
Through outside sources such as the World Bank, IMF, and the Asian Development Bank
Some of the factors included in the assessment of political risk levels include all of the following EXCEPT ________.
a multinational company management team
According to your textbook, ExxonMobil suspended production of liquid natural gas at its facility in Indonesia's Aceh province when separatist rebels targeted the complex with violence. What is the main origin of this conflict that forced Exxon to make this decision?
People's resentment toward their own government
________ is the forced transfer of assets from a company to the government without compensation.
Which of the following means government takeover of an entire industry?
Which political risk is indicated when the laws of the foreign country stipulate a specified amount of goods or services be supplied by produce in the domestic market?
Local content requirements
Nationalization is more common than confiscation and expropriation. Likely candidates for nationalization include industries important to a nation's security and those that generate large revenues. In general, a government may nationalize an industry for the following reasons EXCEPT ________.
attracting foreign direct investment
Confiscation, expropriation, and nationalization can have an impact on the economic development of the country. Which of the following reflects the long-term impact on the country's economic development?
Slower economic development because of foreign investors being more reluctant to invest in the country
Which of the following means incorporating risk into business strategies, often with the help of local officials?
Adaptation is one of the main methods of managing political risks. Which of the following is a type of adaptation that allows an international business to assist the host country or region in improving the quality of life for locals?
Insurance against political risk can be essential to companies entering risky business environments. Which type of insurance that insures U.S. companies that invest abroad against losses created by violent events, including war and terrorism, can also provide project financing?
Overseas Private Investment Corporation
________ forbids U.S. companies from bribing government officials or political candidates in other nations (except when a person's life is in danger).
Foreign Corrupt Practices Act
International firms attempt to gather information that will help them predict and manage political risk. Which source should company use to gain insight into local culture and politics?
Current employees who have worked in a country for an extended period
Personal relationships, or guanxi, in China, are very important in order to successfully do business in China. Which of the following characteristics of doing business with China is FALSE?
Obtain a legal contract first
________ is largely a key factor that leads to an increase in the unemployment level, intensified competition, and the entry of international companies into China.
Which of the following is a result of Russia's annexation of the Ukraine's peninsula of Crimea?
Trade in services accounts for around 20 percent of total world trade. Although the importance of trade in services is growing for many nations, it tends to be relatively more important for the world's ___________ countries.
Which agencies/departments/organizations in most countries record the destination of exports, the source of imports, and the physical quantities and values of goods crossing their borders?
Which of the following statements BEST explains the benefits of international trade to nations?
International trade is an important engine for job creation.
There has been a persistent pattern of merchandise trade among nations. Trade between which economies of the world represents the highest level of total world merchandise trade?
Trade between the world's high-income economies
Which major region of the world's economy represents the highest intraregional exports?
____________ advocates that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports.
The main problem with mercantilism is that it views trade as a(n) ________.
zero sum game
Which of the following statements BEST expresses the core beliefs of mercantilism?
Nations should increase their wealth by increasing their exports and minimizing their imports.
The practice of mercantilism rested on three essential pillars. Which of the following are these three pillars?
Trade surpluses, government intervention, and colonialism
Mercantilism advocates that governments should actively intervene in international trade in order to maintain a trade surplus. Which of the following tools have mercantilist nations used to support this policy?
Subsidize export, ban import, and impose tariff charges and quotas.
According to Adam Smith, a nation should concentrate on producing the goods in which it ________.
has an absolute advantage in producing the product
Which of the following trade theories states occurs when a country is unable to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good?
Which of the following does NOT describe the theory of absolute advantage?
It allows for government intervention in international trade.
Country X specializes in the production of corn more efficiently than any other nation and buys rice which it produces less efficiently than corn from Country Z, despite the fact that Country Z produces rice less efficiently than Country X. Which of the following international trade theories agree with Country X's decision to buy rice from Country Z?
Which of the following is TRUE with regard to the factor proportions theory?
Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.
The difference between the comparative advantage theory and the factor proportions theory is that the factor proportions theory ________.
states that a country specializes in producing and exporting goods using the factors of production that are most abundant and thus cheapest—not the goods in which it is most productive
International product life cycle theory says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle. Which of the following BEST defines the maturing product stage?
Exports begin to account for an increasingly greater share of total product sales.
________ says that a company will begin by exporting its product and later undertake foreign direct investment. The theory also says that, for a number of reasons, a country's export eventually becomes its import.
The product life cycle theory
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.
The theory of the product life cycle's ability to accurately depict the trade flow of nations is being challenged. This is due to the fact that ________.
more companies are operating in international markets from their inception
Which of the following statements BEST describes the new trade theory?
There are gains to be made from specialization and increasing economies of scale.
Which of the following trade theories indicates that government may play a role in assisting its home companies and that government involvement has always been widely accepted in undertakings such as space exploration for national security reasons?
Which of the following is NOT a component of Porter's diamond?
A nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
Which of the following of Porter's diamond components supports the concept that companies that belong to a nation's internationally competitive industries do not exist in isolation, rather, supporting industries spring up to provide the inputs required by the industry?
Related and supporting industries
Which of the following is the pattern of imports and exports that occurs in the absence of trade barriers?
For which of the following political motives do governments intervene in trade in order to ban certain defense-related goods from export to other nations?
Preserve national security
According to the infant industry argument, a country's emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally. Which of the following represents a major consequence to this argument?
Complacency toward innovation
Consumers often end up paying more for products because of a lack of competition. Which of the following is a type of government intervention that leads to this problem?
Protection of infant industries
All of the following are political motives behind government intervention in trade EXCEPT ________.
Pursuing strategic trade policy
You are a manager of a U.S. firm that plans on exporting a product that is designated as a dual use product and you need to have a U.S. government approval before export can take place. What is the political motive behind this intervention?
To preserve national security
The United States has banned all trade and investment with Cuba since 1962. This is an example of which type of government political intervention?
Which of the following is considered government subsidy?
Providing tax breaks and product price support
Governments often promote exports by helping companies finance their export activities. Which U.S. financing entity finances the export activities of companies in the United States and offers insurance on foreign accounts receivable?
Which of the following is a restriction on the amount (measured in units or weight) of a good that can enter or leave a country during a certain period of time?
One of the most common instruments that government uses to promote trade with other nations is the establishment of a foreign trade zone. Which of the following is not an advantage of a free trade zone?
Increase government revenue by applying additional import tariff.
Governments of most nations have special agencies responsible for promoting exports. Which of the following is NOT a type of export promotion?
Paying import duties
Export tariff is levied mostly by the government of a country that is ________.
exporting products that consist mostly of low-priced natural resources
A(n) ________ is levied as a percentage of the stated price of an imported product.
ad valorem tariff
A government may impose an import quota to protect its domestic producers by placing a limit on the amount of goods allowed to enter the country. Who are the winners of imposing such quotas?
In 1980, the closing of U.S. carmakers' production facilities in the United States was creating a volatile anti-Japan sentiment among the population and the U.S. Congress. Fearing punitive legislation, the Japanese government and its carmakers decide to limit its automobile exports to the United States. Which of the following is this an example of?
Voluntary export restraint (VER)
What method of trade restriction is the U.S. using with Cuba?
When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cost of a product must come from domestic sources, this is the result of _________.
local content requirements
Which of the following describes administrative delays?
Regulatory controls or bureaucratic rules designed to impair the flow of imports into a country
Which of the following has eliminated all tariffs and nontariff trade barriers on goods originating within North America?
Tariffs that are called specific tariffs are levied based on ________.
a specific fee for each unit (measured by number, weight, etc.) of an imported product
Western European plastic producers considered retaliating against Asian competitors whose prices were substantially lower in European markets than at home. Which of the following is this an example of?
The General Agreement on Trade in Services (GATS) created during the Uruguay Round identifies four different forms that international trade in services can take. Which of the following is NOT one of those forms?
The creation of the ________ was perhaps the greatest achievement of the 1986 Uruguay Round.
World Trade Organization
Which of the following is an additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy?
Which of the following is the purchase of physical assets or a significant amount of the ownership (stock) of a company in another country in order to gain a measure of management control?
Foreign direct investment
According to the U.S. ________, foreign direct investment (FDI) occurs when purchase of physical assets or a significant amount of the ownership (stock) of a company at least 10 percent of stock ownership in a company abroad.
Department of Commerce
Acer, headquartered in Singapore but founded in Taiwan, manufactures personal computers and computer components. Just 20 years after it opened for business, Acer had spawned 10 subsidiaries worldwide and had become the dominant industry player in many emerging markets. What is this an example of?
Foreign direct investment
Historically, firms from ________ nations are accounting for an ever greater share of global merger and acquisition activity.
Which of the following is NOT a driver of cross-border merger and acquisition deals?
The company wishing to ease its entry into the market in phases
According to the textbook, the number of cross-border investment activities and their rising values over time underlie long-term growth in foreign direct investment. Which form of investments is the majority of these activities?
Mergers and acquisitions
Which of the following is limited in its power to explain why companies choose foreign direct investment over other forms of market entry?
International product life cycle theory
According to your textbook, which of the following is one of the reasons that a large number of Korean manufacturers invested in production facilities in Tijuana, Mexico, just south of Mexico's border with California?
Lack of an import tariff
When a company's specialized knowledge is embodied in its employees, which of the following options would you recommend the company to take to exploit a market opportunity?
Foreign direct investment
An oil company is seeking market opportunity in the Middle East. Which of the following options is a compelling reason for the company to favor foreign direct investment over other options?
Which of the following theories stipulate tight control when the firm's concern is controlling the company's activities?
Market imperfections (internalization)
A greenfield investment is the best choice when:
A suitable acquisition target doesn't exist
Which of the following BEST describes building a new subsidiary abroad from the ground up?
Which of the following is NOT an advantage of merger and acquisitions?
There is an opportunity to build a new manufacture from the ground up.
The decision of whether to build facilities in a market abroad or to purchase existing operations in the local market can be difficult. Which of the following local issues do managers NOT have to worry about?
Preparing the home office travel schedule
Poland is a source of skilled and inexpensive labor; it is an appealing location for automobile manufacturers. But the country had little in the way of advanced automobile-production facilities when General Motors considered investing there. What type of investment options did GM decide to take to exploit this market opportunity?
Consider the typical stuffed animal made in China, whose components are almost all imported to China. The stuffed animal's eyes are molded in Japan. Its outfit is imported from France. The polyester-fiber stuffing comes from either Germany or the United States. And the pile-fabric fur is produced in Korea. Only final assembly of these components occurs in China. This is an example of which management issue as it relates to foreign direct investment?
A cologne or perfume producer might want to bottle its fragrance in France and give it a French name. This type of image appeal can be strong enough to encourage foreign direct investment. What is this an example of?
Which of the following is a national accounting system that records all receipts coming into the nation and all payments to entities in other countries?
Balance of payments
Import of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country are tallied under the ________.
When a U.S. company's subsidiary abroad remits profits back to the parent in the United States, it is recorded as ________.
Which of the following is NOT a reason why host governments intervene in foreign direct investment?
Increase capital outflows.
Which of the following is considered host country performance demand?
Require that certain technologies be transferred to local business
Which of the following that is NOT home country foreign direct investment (FDI) promotion?
Apply differential tax rates.
Which of the following is the process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital?
Regional economic integration (regionalism)
A ________ is the lowest extent of national integration.
free trade area
What is the main difference between a free trade area and a customs union?
Members of a customs union agree to treat trade with all nonmember nations in a similar manner.
Which of the following is NOT a positive effect of regional trade agreements?
Which of the following is NOT a negative effect of regional trade agreements?
Which of the following is NOT a main regional trading bloc?
Today, the EU has ________ members
The currency of the EU is the
Which of the following is NOT criteria for member nations to use the euro as outlined in the Maastricht Treaty?
a lack of price transparency
The structure of the EU includes all of the following EXCEPT the ________.
European Free Trade Association (EFTA)
Candidates for EU membership become members after they meet certain demands. Which of the following is NOT one of those demands?
Adopting an EU culture
Which of the following is a reason that some European countries did not join the EU?
They feared destructive rivalries and loss of national sovereignty
Which of the following is NOT a provision of NAFTA?
Adding new countries to the European Union
Criteria that determine whether a good meets NAFTA rules of origin do NOT include which of the following?
Goods using materials sourced in China
Which of the following is NOT an effect of NAFTA?
NAFTA has created jobs in the United States.
Which of the following is NOT a trade bloc in the Americas?
Which of the following statements about ASEAN is FALSE?
ASEAN consists of five countries.
Which of the following is NOT a fact about ASEAN that warrants consideration?
Common tariffs and standards
Which of the following does NOT describe Asia Pacific Economic Cooperation (APEC)?
The stated aim of APEC is to build a trading bloc
Which of the following is NOT an area of progress for The Economic Community of West African States (ECOWAS)
Which of the following statements does not describe the African Union (AU)?
the AU aims to continue the policies of colonialism.
Which of the following statements about the Gulf Cooperation Council (GCC) is FALSE?
GCC was formed in 2014.
Which organization is NOT integrated in Asia and the Pacific Rim?
Is APEC a trade deal?
No, but it promotes free trade
Which of the following is NOT a problem facing Economic Community of West African States (ECOWAS)?
good economic policies
Which of the following does NOT describe the Closer Economic Relations (CER) Agreement?
Goods cannot be sold within the other country's borders.