Chapter 4
Managing in a Global Environment
True/False Questions
1.Wal-Mart is a well-established company with a global interest who is facing minimal challenges in developing a successful international business.
Answer: FalseLevel: 2Page: 118Type: F
2.Large companies such as America Online and Yahoo have proven that Internet development is rapidly expanding and has fewer difficulties than traditional business operations.
Answer: FalseLevel: 1Page: 118Type: F
3.The reality of today's borderless companies also means that consumers can easily identify from which country they are buying.
Answer: FalseLevel: 2Page: 119Type: F
4.ABC Manufacturing is in the domestic stage. It has its market potential open to the countries that border its home country.
Answer: False Level: 2 Page: 120 Type: A
5.To deal with the marketing of products in several countries individually, a company in the international stage often uses an international division.
Answer: True Level: 1 Page: 120 Type: F
6.The second stage in the process of globalization is the international stage, where the company usually adopts a multidomestic approach.
Answer: TrueLevel: 2Page: 120Type: F
7.The multinational stage of corporate international development transcends any single home country. The ownership, control, and top management tend to be dispersed among several nationalities.
Answer: FalseLevel: 1Page: 121Type: F
8.As the number of stateless corporations increases, the awareness of national borders increases as well.
Answer: FalseLevel: 2Page: 121Type: F
9.Whether a company operates domestically or internationally, the basic management functions of planning, organizing, leading, and controlling are the same.
Answer: TrueLevel: 1Page: 121Type: F
10.The sub-divisions of the international environment are the economic, the sociocultural, and the legal-political environments.
Answer: True Level: 2 Page: 122 Type: F
11.Some economic environments of business include resource and product markets, language, religion, and per capita income.
Answer: FalseLevel:1Page: 122Type: F
12.LDC's are less developed countries and tend to be found in the Southern Hemisphere including Africa, Asia and South America.
Answer: True Level: 2 Page: 123Type: F
13.Because of cheap labor, most international business firms are headquartered in the less developed countries of Asia and South America.
Answer: FalseLevel: 2Page: 123Type: F
14.Changes in the exchange rates can have major implications for the profitability of international operations.
Answer: TrueLevel: 1Page 125Type: F
15.The countries experiencing political, ethnic, and religious stability face the greatest threat of violence.
Answer: FalseLevel: 1Page: 125Type: F
16.The belief in the right to vote, the right of choice and equal rights is part of the beliefs, values and ways of thinking that defines our society's culture.
Answer: True Level: 2 Page: 127 Type: A
17.Countries that value high power distances normally have cities that are geographically separated and so have the need to transport electrical energy over large distances.
Answer: False Level: 2 Page: 127 Type: A
18.The social value of uncertainty avoidance is evident in countries like Japan which support beliefs that provide stability and conformity among its citizenry.
Answer: True Level: 1 Page: 128 Type: F
19.In countries with strong masculine social values including Austria and Japan, both men and women subscribe to the dominant masculine value.
Answer: True Level: 1 Page: 128 Type: F
20.Collectivism means a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members’ interests.
Answer: TrueLevel:1Page: 128Type: F
21.The fifth dimension of Hofstede’s social values is preliminary-term orientation and extended-term orientation.
Answer: FalseLevel:2Page: 128Type: F
22.A tendency to regard their own culture as superior and to downgrade other cultures reflects an attitude called geocentric.
Answer: FalseLevel: 1Page: 130Type: F
23.The primary tools GATT uses to increase trade are tariff enhancements, coercion, and most favored nation clause.
Answer: FalseLevel: 2Page: 131Type: F
24.The most familiar nation clause, calls for each member country to grant to every other member country the most familiar treatment it accords to any country with respect to imports and exports.
Answer: FalseLevel:2Page: 131Type: F
25.An organization developed for the purpose of eliminating tariffs in trading between Canada and the United States is called The North American Freedom of Tariffs Administration (NAFTA).
Answer: False Level: 2 Page: 135 Type: F
26.An example of global sourcing is seen when Gap, Inc uses low-cost Caribbean labor to cheaply produce their clothing, and then finish off and sell their clothing in the United States.
Answer: True Level: 2 Page: 137 Type: A
27.With exporting, the corporation transfers its products for sale and its production facilities in foreign countries.
Answer: FalseLevel: 2Page: 138Type: F
28.Countertrade is the barter of products for products rather than the sale of products for currency.
Answer: True Level: 1 Page: 139 Type: F
29.An estimated 55 percent of world trade is countertrade.
Answer: False Level: 2 Page: 139 Type: F
30.When Harbor Trades, a Korean-based company, makes resources including technology, managerial skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby allowing Nano to make products similar to CBA, it is engaging in a countertrade agreement.
Answer: FalseLevel: 2Page: 139Type: A
31.A form of direct investment is franchising.
Answer: False Level: 1 Page: 139 Type: F
32.Joint venture is the most risky type of direct investment.
Answer: False Level: 2 Page: 140 Type: F
33.When a company builds a subsidiary from scratch in a foreign country it is called a greenfield venture.
Answer: True Level: 1 Page: 140Type: F
34.Multinational corporations typically receive more than 35 percent of its total sales revenues from operations outside the parent’s home country.
Answer: FalseLevel:3Page: 141Type: F
35.Large international firms typically are called multinational corporations.
Answer: True Level: 1 Page: 141 Type: F
36.An MNC is managed as an integrated worldwide business system.
Answer: True Level: 1 Page: 141 Type: F
37.The primary emphasis of polycentric companies is on their home countries.
Answer: False Level: 2 Page: 141 Type: F
38.Most managers, given the trend toward globalization, do not need preparation to work in foreign cultures.
Answer: False Level: 2 Page: 142 Type: F
39.Managers in Latin America must show respect for employees as individuals with needs and interests outside of work.
Answer: True Level: 3 Page: 143 Type: F
Multiple Choice Questions
1. Wal-Mart’s challenges in Germany stem from a difference in ______culture.
- business
- marketing
- shopping
- European
- American
Answer: cLevel: 2Page: 117Type: F
2.Wal-Mart has embarked on a crusade to bring “everyday low prices” to which emerging market?
a.China
b.Taiwan
c.Brazil
d.Japan
e.El Salvador
Answer: cLevel:2Page: 105Type: F
3.Which of the following companies rely on international business for a substantial portion of sales and profits?
a.IBM
b.Coca-Cola
c.Kellogg
d.Texas Instruments
e.All of the above
Answer: e Level: 3 Page: 118 Type: F
4.Which of these statements best describes the importance of international business to the study of management?
a.International business is more important than the study of management.
b.International business is less important than the study of management.
c.Since the management functions are universal, international business in not important to the study of management.
d.If you are not thinking international, you are not thinking business management.
e.International business has noting to do with the study of management.
Answer: d Level: 2 Page: 118 Type: F
5.Companies that think ______have a competitive edge.
- globally
- regionally
- nationally
- strategically
- “customers first”
Answer: aLevel: 2Page: 119Type: F
6.In which stage, market potential is limited to home country, with all production and marketing facilities located at home?
a.Domestic
b.International
c.Global
d.Multinational
e.Stateless
Answer: aLevel: 1Page: 120Type: F
7.In which stage does the company usually adopt a multidomestic approach?
a.Global
b.Multinational
c.Stateless
d.International
e.Domestic
Answer: dLevel: 2Page: 120Type: F
8.Global Dandelion, with marketing and production facilities located in many countries, is participating at what stage in the international arena?
a.International stage
b.Global stage
c.Domestic stage
d.Multinational stage
e.Interdomestic stage
Answer: d Level: 2 Page: 120 Type: A
9.Zaman Telecom with an international division would be participating in what stage of the international arena?
a.Domestic stage
b.International stage
c.Multinational stage
d.Global stage
e.Binational stage
Answer: b Level: 2 Page: 120 Type: A
10.The process of globalization typically passes through all of the following stages EXCEPT
a.domestic stage.
b.global stage.
c.international stage.
d.interdomestic stage.
e.multinational stage.
Answer: d Level: 1 Page: 120 Type: F
11.Stateless stage is also referred to as the stage.
a.multinational
b.global
c.multidomestic
d.international
e.domestic
Answer: bLevel: 1Page: 121Type: F
12.Color Copiers operates in a true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost, what stage of international development is it in?
a.Stateless stage
b.Multinational stage
c.International stage
d.Domestic stage
e.Multidomestic stage
Answer: a Level: 3 Page: 121 Type: A
13.Which of the following is a foreign-owned corporation?
a.Nike
b.Ford Motor Co.
c.Nestle'
d.IBM
e.Coca-Cola
Answer: c Level: 2 Page: 121 Type: F
14.The management of business operations conducted in more than one country is called
a.global management.
b.international management.
c.outsourcing management.
d.planning management.
e.domestic management.
Answer: b Level: 2 Page: 121 Type: F
15.When doing business internationally, ______aspects of management does not change?
a.planning
b.organizing
c.controlling
d.leading
e.all of the above
Answer: e Level: 1 Page: 121 Type: F
16.Which of the following sectors present the greatest potential for international mistakes?
a.Internal
b.Sociocultural
c.Governmental
d.All of the above
e.b and c only
Answer: b Level: 2 Page: 122 Type: F
17.Language, values, religion, and education all describe which dimension in the international environment?
- Economic
- Legal
- Political
- Sociocultural
- Technological
Answer: dLevel:1Page: 123Type: F
18.In international operations, the economic environment represents all of the following factors EXCEPT
a.infrastructure.
b.resource and product markets.
c.laws and regulations.
d.inflation.
e.exchange rates.
Answer: c Level: 2 Page: 122 Type: F
19.In international operations, the economic environment includes
a.shared knowledge, beliefs and values.
b.political risks.
c.social organizations.
d.infrastructure.
e.tariffs, quotas, and taxes.
Answer: d Level: 2 Page: 122 Type: F
20.Resource development, infrastructure, and exchange rates all describe which dimension in the international environment?
- Economic
- Legal
- Political
- Sociocultural
- Technological
Answer: aLevel:1Page: 123Type: F
21.______is a sociocultural factor in the international environment.
a.Language
b.Exchange rates
c.Tariffs, taxes, and quotas
d.Per capita income
e.Infrastructure
Answer: aLevel: 2Page: 123Type: F
22.Which of these is normally used to classify countries as developed or developing?
a.Exchange rates
b.Interest rates
c.Gross national product
d.Per capita income
e.Inflation rates
Answer: d Level: 2 Page: 123 Type: F
23. generally are located in Asia, Africa and South America.
a.MNCs
b.EUs
c.LDCs
d.WTOs
e.MFNs
Answer: cLevel: 2Page: 123Type: F
24.A country's physical facilities that support economic activities make up its .
a.resource markets
b.infrastructure
c.physical markets
d.product markets
e.plants and equipment
Answer: b Level: 1 Page: 123 Type: F
25.If you built a computer company in Africa and then found that your product was having difficulty being distributed to customers because of the road system, your problem would be related to
a.an inadequate infrastructure.
b.an economy incapable of supporting growth.
c.a poor resource market.
d.a poor product market.
e.none of the above.
Answer: a Level: 2 Page: 123 Type: A
26.Exchange rates are included in which of the following international environments?
a.The legal-political sector
b.The economic environment
c.The sociocultural environment
d.The barter system environment
e.The government sector
Answer: b Level: 2 Page: 125 Type: F
27.Your grocery store in India is having trouble getting the local farmers to supply you with the proper produce. This is a problem with India’s
a.product market.
b.resource market.
c.infrastructure.
d.economy.
e.power distance.
Answer: b Level: 2 Page: 125 Type: A
28.Which of the following is NOT a legal-political factor in the international environment?
a.Laws and regulations
b.Language
c.Tariffs, quotas, taxes
d.Political risk
e.Government takeovers
Answer: b Level: 2 Page: 125 Type: F
29.The rate at which one country's currency is exchanged for another country's currency is called a(n) ______rate.
a.interest
b.inflation
c.per capita income
d.exchange
e.economic
Answer: d Level: 1 Page: 125 Type: F
30.Assume that until yesterday, one U.S. dollar could be exchanged for 85 Japanese yens. Today, a dollar gets you 102 yens. Which of the following statements is true?
a.U.S. goods will be more expensive in Japan.
b.Japanese goods will be more expensive in the U.S.
c.U.S. goods will be the same price in Japan.
d.Japanese goods will be the same price in the U.S.
e.None of the above.
Answer: a Level: 3 Page: 125 Type: A
31.The legal-political environment, in international operations, includes which of the following?
a.Shared knowledge, beliefs and values
b.Political risks
c.Social organizations
d.Infrastructure
e.None of the above
Answer: b Level: 2 Page: 125 Type: F
32.Political risk is defined as an organization's risk of ______due to politically based events or actions by host governments.
a.loss of assets
b.managerial control
c.earning power
d.all of the above
e.b and c only
Answer: d Level: 2 Page: 125 Type: F
33.A company's risk of loss of assets, earning power, or managerial control due to politically based events or action by host government is referred to as
a.MFN.
b.political risk.
c.tariffs.
d.political instability.
e.terrorism.
Answer: bLevel: 1Page: 125Type: F
34.Rooftop International, Inc. buys insurance against host government takeover when investing in foreign countries. This is an example of which sector of the international environment?
a.Legal-political
b.Sociocultural
c.Technological
d.Economic
e.Infrastructure
Answer: a Level: 2 Page: 125 Type: A
35.A foreign terrorist kidnaps your firm's marketing VP while the VP is in the host country. This is a harsh example of
a.economic development.
b.infrastructure.
c.political risk.
d.international law.
e.social risk.
Answer: c Level: 2 Page: 126 Type: A
36. Often times organizations will refer to the ______Index to determine the impact political intervention has on business decisions in a particular country before considering to move to that region.
- Economic Freedom
- Corruption Perception
- Political Succession
- Business Motivation
- Political Effect
Answer: aLevel: 2Page: 126Type: A
37. Although the challenge in unstable countries is great, often the biggest area of ______is also there.
a. opportunity
b. consumer shopping
c. economic improvement
d. leadership
e. low governmental control
Answer: aLevel:2Page: 126Type: F
38.A nation's includes the shared knowledge, beliefs and values, as well as the common modes of behavior and ways of thinking, among members of a society.
a.power distance
b.culture
c.masculinity
d.individualism
e.uncertainty avoidance
Answer: bLevel: 1Page: 127Type: F
39.Cultural factors in foreign countries are ______the political and economic factors.
a.easier than
b.similar to
c.more perplexing than
d.less important than
e.none of the above
Answer: c Level: 2 Page: 127 Type: F
40.Which of these refers to the degree to which people accept inequality in power among institutions, organizations, and people?
a.Power distance
b.Uncertainty avoidance
c.Individualism
d.Collectivism
e.Masculinity
Answer: a Level: 1 Page: 127 Type: F
41.Countries whose social values reflect low power distance
a.are highly democratic.
b.accept inequality in power among institutions, organizations and people.
c.expect equality in power.
d.avoid uncertainty.
e.none of the above.
Answer: c Level: 2 Page: 127 Type: F
42.A loosely knit social framework in which individuals are expected to take care of themselves is called
a.culture.
b.individualism.
c.ethnocentrism.
d.masculinity.
e.power distance.
Answer: b Level: 2 Page: 128 Type: F
43.Collectivist values are represented in the social framework of which of these?
a.The United States
b.Australia
c.Ecuador
d.Great Britain
e.All of the above
Answer: c Level: 2 Page: 128 Type: F
44.Austria’s cultural preference is for achievement, heroism, assertiveness, and material success. This would be considered
a.power distance.
b.individualism.
c.masculinity.
d.ethnocentrism.
e.collectivism.
Answer: c Level: 2 Page: 128 Type: A
45.Which of these refers to a value characterized by people's intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity?
a.Power distance
b.Uncertainty avoidance
c.Certainty avoidance
d.Conformity seekers
e.None of the above
Answer: b Level: 1 Page: 128 Type: F
46.______reflects a cultural preference for cooperation, group decision making, and quality of life.
a.Individualism
b.Collectivism
c.Masculinity
d.Femininity
e.Power distance
Answer: d Level: 1 Page: 128 Type: F
47.One of Hofstede’s social values that is not well known is
- power distance.
- uncertainty avoidance.
- masculinity.
- collectivism.
- long-term orientation.
Answer: eLevel:2Page: 128Type: F
48. Recent research by the GLOBE project has extended ______research and offered new insights for managers.
- Hofstede’s
- Walton’s
- Weber’s
- Fayol’s
- Gilbreth’s
Answer: aLevel: 2Page: 128Type: F
49. All of the following are cultural dimensions as defined by the GLOBE Project, except:
- assertiveness
- gender differentiation
- social collectivism
- humane orientation
- masculinity
Answer: eLevel: 2Page: 128Type: F
50. In countries where women are often in positions of high status, the Globe Project would describe that culture as high in ______.
- assertiveness
- uncertainty avoidance
- gender differentiation
- societal collectivism
- performance orientation
Answer: cLevel: 2Page: 129Type: F
51. A country that places emphasis on fairness and values kindness would be described by the Globe Project as high in ______.
- assertiveness
- uncertainty avoidance
- gender differentiation
- humane orientation
- societal collectivism
Answer: dLevel: 2Page: 129Type: F
52.A cultural attitude marked by the tendency to regard one's own culture as superior to others is called
a.ethnocentrism.
b.polycentrism.
c.geocentrism
d.technocentrism.
e.none of the above.
Answer: a Level: 1 Page: 130 Type: F
53.Countries that use several languages
a.are ethnocentric.
b.are geocentric.
c.are likely to have high uncertainty avoidance.
d.have linguistic pluralism.
e.are polycentric.
Answer: d Level: 1 Page: 130 Type: F
54.A company may commit a mistake in which of the following sectors, when it does not check the meaning of translated words in another language?
a.Economic
b.Sociocultural
c.Legal-political
d.Technological
e.None of the above
Answer: b Level: 2 Page: 130 Type: A
55.When GATT was created in 1947, how many nations signed on for negotiation?
- 15
- 23
- 28
- 40
- 57
Answer: bLevel: 3Page: 131Type: F
56.A term describing a GATT clause that calls for member countries to grant other member countries the most favorable treatment they accord any country concerning imports and exports is referred to as the
a.preferred nation.
b.GATT favored country.
c.most favored nation.
d.Mutual GATT Courtesy.
e.Uruguay Round.
Answer: c Level: 1 Page: 131 Type: F
57.To increase trade, the primary tools GATT uses are
a.tariff concessions and most favored nation clause.
b.tariff and nontariff barriers.
c.quotas and export taxes.
d.most favored nation and LDC clauses.
e.EU and NAFTA.
Answer: aLevel: 2Page 131Type: F
58.The European Union has expanded to a -nation alliance
a.14
b.12
c.25
d.16
e.21
Answer: c Level: 1 Page: 133 Type: F
59.______has a goal to guide the nations of the world toward free trade and open markets.