Chapter 1: Globalization and International Business

All commercial transactions between two or more countries are known as ________. foreign trade international business the balance of payments globalization

Which of the following is not a reason to study international business? The conditions within foreign countries affect the best way to conduct business there. A company operating internationally may engage in modes of business that differ from those it is accustomed to domestically. International business comprises a large and growing portion of the world's total business. All business taking place outside your home country is international.

A difficulty in comparing the globalization of business over time is that ________. many private companies were once government owned countries differ in their extent of globalization shifting borders obsolesce figures on what is international companies adopt different operating forms

Which of the following has been a major force behind recent globalization? Institutional development of services that aid foreign trade and investment. Greater prohibitions on the placement of capital in countries with secretive bank-holding laws. The slower rise of prices in general than prices of transportation and communications. Lower tax rates on incomes.

Which of the following is a result of the recent expansion of transportation technology? Transportation costs have risen more rapidly than costs in general. Governments have increased restrictions to prevent competition among carriers from different countries. Producers from farther away are competing for sales in a given market. Companies have lessened their dependence on producing components in multiple countries.

Which of the following is a reason for recent governmental decreases in restrictions on cross-border trade or resource movements? Most countries face shortages of workers; thus they compete to attract foreign workers so they can produce more. Consumers increasingly want to buy goods and services produced in their own countries, thus making restrictions less necessary. Governments hope to induce other nations to reduce their barriers in return. Governments believe this will decrease the need to make their own companies more innovative.

Potential pressures of increased foreign competition can persuade companies to ________. use more domestic inputs in their production expand their business into international markets raise prices to improve the quality-image of their products seek fewer barriers to imports

Which of the following is a reason why governments cooperate through treaties, agreements, and consultation? To assure that all countries get an equitable share of taxes from multinational enterprises. To be in compliance with United Nations' requirements.

To gain a division of labor, such as by performing research and development in one country and production in another. To deal with areas of concern that lie outside the territory of all countries.

All of the following are major criticisms of globalization except ________. countries lose control to act in their own best interest globalization creates winners and losers, thus leading to greater inequality globalization increases the cost of production globalization brings economic growth that uses too many nonrenewable resources and despoils the environment

The major argument companies use to support off-shoring is that it ________. reduces home-country unemployment saves costs reduces pollution helps poor countries improve their economies

An advantage that an international company may have over a purely domestic one is that it can ________. more easily control its opening units deal with a less complex external environment save transportation costs acquire cheaper resources to use in production

An example of a Mexican merchandise export would be a shirt made ______ and sold _______. in Mexico by either a Mexican or a U.S. company; outside Mexico

in the United States by a Mexican company; in the United States in Mexico by either a Mexican or a U.S. company; in Mexico in the United States by a Mexican company; outside the United States

When a company owns foreign bonds or bills, this is an example of a ________. portfolio investment direct investment joint venture transnational corporation

A company that takes a global approach to foreign markets and production is called a _______. multinational enterprise strategic alliance enterprise collaborative participant multiglobal company

In Japan, baseball games may end in a tie; in the United States, teams play until one wins. This difference is most likely due to ________ factors. economic legal geographic behavioral

All commercial transactions between two or more countries are known as globalization. True

False

Understanding some of the complexities of international business help you to make more informed decisions in support of government policies. True False

World production has grown more rapidly than world trade in almost every year since World War II. True False

Globalization of business has been stimulated by consumers' greater efficiency in using the Internet to compare prices worldwide. True False

As a result of expansions in transportation technology, more countries can compete for sales in a given market. True False

Countries have reduced import trade barriers because they believe their domestic producers will become more efficient as a result of foreign competition. True False

A born-global company is one that starts out with a global focus.

True False

Governments cooperate through treaties, agreements, and consultation to assure that they all get an equitable share of taxes from multinational enterprises. True False

People favoring globalization contend that the biggest problem of environment despoliation occurs in the countries that are least globalized. True False

The major argument companies use to support off-shoring is that it saves costs. True False

The televising of sports competition to viewers in multiple countries is an example of an international objective of sales expansion. True False

The production by a U.S. company in Canada for sale in Canada is a U.S. merchandise export. True False

A direct investment occurs when foreign ownership is in private rather than government securities. True False

Stateless company is a term used by the United Nations as a synonym for multinational enterprise. True False

Managers need a working knowledge of their physical and societal environments to help them understand the aggregate of conditions outside their companies that influence their success. True False

The text lists seven factors that have contributed to the increased growth in globalization in recent decades. List fourof the seven factors that seem most important to you and give an example of each.

There is much debate about whether globalization is inevitable or not. What arguments are advanced to support the idea that it is inevitable?

Chapter 1 talks about the 'downside' of globalization. What are some examples of the effects of globalization that could be considered a 'downside'?

The text describes the different "modes of international business." What are three of those modes and the major differences between them?

What is the importance of the competitive environment on operating in international business? Question 1 All commercial transactions between two or more countries are known as ________. Correct: international business Question 2 Which of the following is not a reason to study international business? Incorrect: A company operating internationally may engage in modes of business that differ from those it is accustomed to domestically. Question 3 A difficulty in comparing the globalization of business over time is that ________. Incorrect: companies adopt different operating forms Question 4 Which of the following has been a major force behind recent globalization? Incorrect: Lower tax rates on incomes Question 5 Which of the following is a result of the recent expansion of transportation technology? Correct: Producers from farther away are competing for sales in a given market. Question 6 Which of the following is a reason for recent governmental decreases in restrictions on crossborder trade or resource movements? Incorrect: Most countries face shortages of workers; thus they compete to attract foreign workers so they can produce more.

Question 7 Potential pressures of increased foreign competition can persuade companies to ________. Correct: expand their business into international markets Question 8 Which of the following is a reason why governments cooperate through treaties, agreements, and consultation? Incorrect: To assure that all countries get an equitable share of taxes from multinational enterprises. Question 9 All of the following are major criticisms of globalization except ________. Correct: globalization increases the cost of production Question 10 The major argument companies use to support off-shoring is that it ________. Correct: saves costs Question 11 An advantage that an international company may have over a purely domestic one is that it can ________. Correct: acquire cheaper resources to use in production Question 12 An example of a Mexican merchandise export would be a shirt made ______ and sold _______. Incorrect: in the United States by a Mexican company; outside the United States Question 13 When a company owns foreign bonds or bills, this is an example of a ________. Correct: portfolio investment Question 14 A company that takes a global approach to foreign markets and production is called a _______. Incorrect: collaborative participant Question 15 In Japan, baseball games may end in a tie; in the United States, teams play until one wins. This difference is most likely due to ________ factors. Incorrect: legal Question 16 All commercial transactions between two or more countries are known as globalization. Correct: False Question 17 Understanding some of the complexities of international business help you to make more informed decisions in support of government policies. Incorrect: False Question 18 World production has grown more rapidly than world trade in almost every year since World War II. Correct: False Question 19 Globalization of business has been stimulated by consumers' greater efficiency in using the Internet to compare prices worldwide. Incorrect: False Question 20 As a result of expansions in transportation technology, more countries can compete for sales in a given market. Correct: True

Question 21 Countries have reduced import trade barriers because they believe their domestic producers will become more efficient as a result of foreign competition. Correct: True Question 22 A born-global company is one that starts out with a global focus. Incorrect: False Question 23 Governments cooperate through treaties, agreements, and consultation to assure that they all get an equitable share of taxes from multinational enterprises. Incorrect: True Question 24 People favoring globalization contend that the biggest problem of environment despoliation occurs in the countries that are least globalized. Correct: False Question 25 The major argument companies use to support off-shoring is that it saves costs. Incorrect: False Question 26 The televising of sports competition to viewers in multiple countries is an example of an international objective of sales expansion. Incorrect: False Question 27 The production by a U.S. company in Canada for sale in Canada is a U.S. merchandise export. Correct: False Question 28 A direct investment occurs when foreign ownership is in private rather than government securities. Correct: False Question 29 Stateless company is a term used by the United Nations as a synonym for multinational enterprise. Incorrect: True Question 30 Managers need a working knowledge of their physical and societal environments to help them understand the aggregate of conditions outside their companies that influence their success. Correct: True Question 31 The text lists seven factors that have contributed to the increased growth in globalization in recent decades. List four of the seven factors that seem most important to you and give an example of each. Increase in and expansion of technology; Liberalization of cross-border trade and resource movements; Development of services that support international business; Growing consumer pressures; Increased global competition; Changing political situations; Expanded cross-national cooperation. Question 32 There is much debate about whether globalization is inevitable or not. What arguments are advanced to support the idea that it is inevitable? Technical advances in transportation and communications will lead consumers to demand the best products, regardless of their origins. Question 33

Chapter 1 talks about the 'downside' of globalization. What are some examples of the effects of globalization that could be considered a 'downside'? The three broad categories of problems with Globalization. They are threats to national sovereignty, growth and environmental stress, and growing income inequality. Question 34 The text describes the different "modes of international business." What are three of those modes and the major differences between them? The six modes are: 1) importing and exporting; 2) tourism and transportation; 3) licensing and franchising; 4) turnkey operations; 5) management contracts; 6) direct and portfolio investment. The major differences are levels of involvement in the foreign country and questions of nonproduct or product international earnings. Question 35 What is the importance of the competitive environment on operating in international business? Companies with different strategies may choose different locations to reflect their strategic needs. Market size may vary greatly from country to country, thus smaller country firms may seek international markets more.

1 INCORRECT

Which of the following will not improve a candidate's chances to obtain an overseas post? A)Making sure that you keep your interest in obtaining an overseas post to yourself. B)Studying international business. C)Meeting people in the home office who work with foreign subsidiaries. D)Making sure that your boss and the Human Resources Management department personnel are aware of your interest.

2 INCORRECT

A global company is defined as an organization that attempts to have a worldwide presence in its market, to standardize operations worldwide in one or more of the firm's functional areas, and to integrate its operations worldwide. According to this definition, a global firm's management: A)Looks for differences among markets. B)Avoids maintaining a presence in key markets. C)Uses domestic products, raw materials and financing whenever possible. D)Searches the world for market opportunities.

3 INCORRECT

The Japanese term dochakuka means: A)Supranational corporation. B)Global localization. C)Use of technology to communicate. D)Multinational enterprise.

4 INCORRECT

A multidomestic company is: A)An organization that attempts to standardize and integrate operations worldwide in all functional areas. B)The same as a global company. C)An organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market

differences. D)An organization that standardizes and integrates operations on a domestic basis.

5 CORRECT

One of the first multinational companies in existence in the late 1800's to own foreign production facilities, worldwide distribution networks, and market its products under global brands was: A)Eastman Kodak. B)Singer Sewing Machines. C)Ford Motor Company. D)Coca-Cola.

6 INCORRECT

Which of the following is not a major kind of driver leading international firms to the globalization of their operations? A)Political. B)Market. C)Environmental. D)Technology.

7 CORRECT

The most common definition of globalization is that of: A)Political globalization - the international integration of political laws and customs. B)Geographical globalization - the international integration of countries in geographical proximity to one another. C)Cultural globalization - the international integration of people with similar cultural characteristics. D)Economic globalization - the international integration of goods, technology, labor, and capital.

8 INCORRECT

Advances in computers and communications technology are permitting an increased flow of ideas and information across boarders. This enables: A)Manufacturing personnel to concentrate more on domestic production. B)Customers to learn about foreign goods. C)Sellers of products to travel to more locations worldwide in search of buyers. D)Advertisers to focus more on specific countries where demand is the greatest.

9 INCORRECT

One of management's goals is utilizing economies of scale to reduce unit costs. Which of the following would not necessarily result in economics of scale being realized? A)Globalizing product lines to reduce development costs. B)Locating production in countries where the costs of the factors of production are lower. C)Locating production in countries where the labor force is the most highly educated.

D)Globalizing product lines to reduce production and inventory costs.

10 INCORRECT

The nation that was the largest acquirer of foreign companies in 1999 was: A)The United Kingdom. B)Japan. C)The United States. D)China.

11 INCORRECT

In 1999, the United Nations Conference on Trade and Development estimated that there were over __________ companies with half a million foreign affiliates that accounted for 25% of global output. A)40,00 0 B)60,00 0 C)80,00 0 D)100,000

12 INCORRECT

The number 7 ranked nation according to GNP or total sales in 1998 was: A)France. B)Canada. C)Italy. D)China.

13 INCORRECT

In 1999, _____________ had the greatest number of firms in the top ten listing for the automobile industry. A)France. B)Germany. C)Japan. D)The United States.

14 CORRECT

The country with the most companies on the 1999 Fortune Global 500 list is: A)Germany. B)Japan. C)The United Kingdom. D)The United States.

15

INCORRECT

International business differs from domestic business in that a firm operating across borders must deal with the forces of three kinds of environments. Which of the following is not one of the three kinds of environments? A)Domestic. B)Foreign.

C)International. D)Local.

16 CORRECT

Uncontrollable forces that management has no direct control over include: A)Political. B)Capital. C)Raw materials. D)Production.

17 UNANSWERED

Controllable forces that management administers to adapt to changes in uncontrollable forces include: A)Financial. B)Legal. C)Technological. D)Personnel. The forces in the foreign environment are the same as those in the domestic environment except that they occur in foreign nations. However, they operate differently for several reasons. Which of the following is not one of the reasons? A)Different force values. B)Changes are difficult to access. C)Physical and sociocultural forces are not important. D)The forces are interrelated.

18 CORRECT

19 INCORRECT

Self-reference criterion is _____________________________ when judging behavioral actions of others in a new and different environment: A)The conscious reference to the manager's own cultural values. B)The unconscious reference to the manager's own cultural values. C)The conscious ignoring of the manager's own cultural values. D)The unconscious ignoring of the manager's own cultural values.

20 INCORRECT

In international business, the international manager has ________ choices in what to do with a concept or technique employed in domestic operations. A)Two B)Three C)Four D)Five.