2002 International Business Page 7
True/False. Mark "A" on the answer sheet for true statements; "B" for false statements.1. In a totalitarian political system, businesses are owned by private citizens. / a. True / b. False
2. A drawing that shows the structure of an organization is known as a flow chart. / a. True / b. False
3. A domestic company that begins to export or sell abroad is known as an international corporation. / a. True / b. False
4. If common law is the political system of a particular nation, current court cases are decided on statutes (rules) passed by the legislative bodies in that nation. / a. True / b. False
5. Intellectual property rights give citizens in democratic countries the exclusive right to patented inventions, trademarks, and copyrights. / a. True / b. False
6. A trademark is the exclusive right of an inventor to make, sell, and use a product or process. / a. True / b. False
7. When a contract contains ambiguous terms, U.S. courts will uphold handwritten terms over typewritten or printed terms. / a. True / b. False
8. Stereotyping is having an emotional attitude that one's own race, nation, or culture is superior to all others. / a. True / b. False
9. If the date in a letter from Germany is 3/10/01, the letter was written on March 10, 2001. / a. True / b. False
10. Australia is the smallest of the six inhabited continents in the world. / a. True / b. False
11. Business cards are used throughout the world. / a. True / b. False
12. The infrastructure of a country refers to the resources used in producing goods and services. / a. True / b. False
13. About 95 percent of the world's population lives outside the United States. / a. True / b. False
14. In the Middle Eastern countries, you do not offer your business card until your host offers his. / a. True / b. False
15. When a country has special natural resources to produce a product at a lower cost than any other nation in the world, that nation has what is known as a comparative advantage. / a. True / b. False
16. An embassy is an office located in a foreign country that represents the home country and services the interests and businesses of the citizens of the country it represents. / a. True / b. False
17. Ethical guidelines legislated in the United States do not have to be followed by U.S. employees working in other countries. / a. True / b. False
18. If a U.S. buyer makes a purchase using a foreign buying office to place the order, the purchase is automatically under U.S. laws. / a. True / b. False
19. An ethnocentric approach to resource management in a global environment means that the parent company uses people from its own country to staff key positions abroad. / a. True / b. False
20. Both Japanese and American businesses and organizations have been known for their lifetime employment of employees. / a. True / b. False
Multiple Choice. Mark the letter of the item that best completes each statement.
21. In a free trade area, / a. barriers to the trade of goods and services among members are removed. / b. a common currency is adopted. / c. a single parliament determines political and foreign policy. / d. a common external trade policy is adopted.
22. In a planned economy, who captures the gains from an innovation in that country? / a. Individuals / b. Private enterprise / c. Foreign multinationals / d. The state
23. A multi-domestic strategy makes most sense when there are / a. high pressures for local responsiveness. / b. high pressures for cost reduction. / c. high pressures for both cost reduction and local responsiveness. / d. low pressures for both cost reduction and local responsiveness.
24. Which statement best describes the relationship between FDI and risk? / a. FDI is less risky than exporting. / b. Licensing is always riskier than FDI, since know-how can be lost to the licensee. / c. FDI is risky, since when doing business in unfamiliar countries and cultures, there is greater probability that mistakes will be made. / d. FDI is generally a low-risk decision, since investments can be hedged in the international capital markets.
25. Countertrade is one increasingly popular solution to the problems posed by / a. the nonconvertibility of some currencies / b. floating exchange rates. / c. excess foreign reserves being held by socialistic countries. / d. the growth of trading blocks.
26. The focus of Porter's theory of national competitive advantage is to / a. explain why a nation achieves international success in a particular industry. / b. identify which industries should be targeted for government subsidies. / c. understand the role of government in making its industries competitive. / d. show why a country may import products that it could produce for itself.
27. When the exchange rate is $1 = 120Yen, and a kimono costs 120,000Yen, what is the cost of the kimono in $US? / a. $1,000 / b. $1,440 / c. $120 / d. $400
28. A nation with a large number of state-owned enterprises / a. can be classified as a free market economy. / b. would not be a democracy. / c. is often a command economy. / d. is never a communist country.
29. The most common political argument for government intervention in trade is probably / a. to protect jobs and industries from foreign competition / b. to assure national security. / c. to invest in infant industries. / d. retaliation for other countries’ policies.
30. Firms that pursue a strategy that is based on reaping the cost reductions that come from experience curve and locational economies are said to be pursuing which strategy? / a. Transnational / b. Global / c. Multidomestic / d. International
31. Countries with fragmented retail systems tend to have / a. short channels of distribution. / b. medium length channels of distribution. / c. long channels of distribution / d. few wholesalers.
32. An Eurocurrency: / a. is typically denominated in ecus. / b. can be denominated in any European currency, but not in other currencies. / c. is any currency banked outside the country that issued it. / d. cannot be exchanged for a non-Eurocurrency.
33. A core competency / a. of McDonald's is its ability to create distinctly different menus for each country. / b. cannot serve as the basis of a competitive advantage. / c. is a skill that competitors cannot easily match or imitate. / d. can be easily transferred between firms by licensing agreements.
34. Writing in 1904, Max Weber suggested that which set of religious beliefs were most consistent with capitalism? / a. Confucianism / b. Hinduism / c. Protestantism / d. Catholicism
35. A key document in international trade that is generally issued to the exporter by a common carrier and serves as a receipt, contract, and title is a / a. draft. / b. letter of credit. / c. trade acceptance. / d. bill of lading.
36. A large cadre of international managers comfortable at working in different cultures is characteristic of firms pursuing / a. an ethnocentric approach to staffing. / b. a polycentric approach to staffing. / c. a geocentric approach to staffing. / d. a heliocentric approach to staffing.
37. Subsidies typically / a. make it easier for foreign firms to import into a subsidizing country. / b. lower costs for domestic producers. / c. benefit domestic consumers, who do not have to pay the costs of the subsidy. / d. harm domestic producers.
38. An exclusive distribution channel can be defined as one / a. where the distribution channel is very concentrated. / b. where outsiders find it difficult to gain access. / c. where the product must go through a large number of intermediaries. / d. where one wholesaler has the right to distribute the product in a particular market.
39. International firms may pursue an ethnocentric staffing policy because they believe it / a. is an effective way of avoiding cultural misunderstandings. / b. creates promotional opportunities for host country nationals. / c. is cheaper to implement. / d. facilitates global promotion.
40. What is the main effect of the 1993 GATT agreement with respect to agricultural products? / a. Consumers will face higher prices. / b. Farm subsidies will be reduced. / c. Inefficient producers will be better off. / d. Nothing, GATT failed to make progress on this issue because of French farmers and other narrow-minded groups that blocked the settlement.
41. The greater the difference in the elasticities of demand between different countries / a. the easier it will be to develop a global advertising theme. / b. the more likely that a firm will be able to increase its profits through differential pricing. / c. the less attractive predatory pricing becomes. / d. the easier it is to use price proliferation.
42. Firms pursuing a(n) ______strategy frequently develop into decentralized federations in which each national subsidiary functions in a largely autonomous manner. / a. Transnational / b. Global / c. Multidomestic / d. International
43. If a firm bases different value creation activities in those countries where they can be most efficiently performed, it is focusing on realizing / a. locational economies. / b. the benefits of transnational promotion. / c. economies of scale. / d. the maximum value from its core competencies.
44. Dispersing production facilities to different locations around the world / a. is an example of the high costs floating exchange rates impose on business. / b. provides for greater strategic flexibility. / c. is an irrational response to exchange rate fluctuations. / d. should be done only for low value added manufacturing.
45. Countries with relatively high inflation tend to have / a. depreciating currencies. / b. low growth in their money supply. / c. their currencies selling at forward premiums relative to most other currencies. / d. low nominal interest rates.
46. A document used in international trade that states a bank promises to pay an exporter upon delivery of specified documents is called a(an): / a. bill of exchange. / b. exporter draft. / c. bank draft. / d. letter of credit.
47. The primary difference between a customs union and a common market is the / a. creation of a single currency. / b. mobility of factors of production between member countries. / c. free flow of goods and services among countries. / d. common tariff policy for transit of goods between member countries.
48. Foreign bonds are sold / a. inside the borrower's country and denominated in the currency of another country. / b. inside the borrower's country and funded by foreign investors. / c. outside the borrower's country and denominated in the currency of the country they are issued. / d. outside the borrower's country and denominated in the currency of the borrower's country.
49. The best way to overcome cultural barriers to international communication is to / a. use only global advertising media like MTV. / b. develop cross cultural awareness. / c. hire multi-ethnic advertising agencies. / d. minimize negative source effects.
50. An emphasis on loyalty, group affiliation, reciprocal obligations, honesty, and education all tend to boost the competitiveness of firms from / a. Japan. / b. Canada. / c. Saudi Arabia. / d. India.
51. If a firm imports 500 pounds of tea valued at $20/pound into a country with an ad valorem import tariff of 5%, how much will it have to pay in tariffs? / a. $1,000 / b. $4 / c. $500 / d. $10,000
52. Consumers' differing product preferences are often based on culture and tradition. These are particularly important in which industry? / a. Computer / b. Food / c. Motor oil / d. Automobile
53. Product liability laws / a. are common under civil law systems, but not under common law systems. / b. can assess civil, but not criminal damages. / c. are typically more lax in the US than in other countries. / d. hold firms and executives responsible if their product causes injury.
54. In a representative democracy, / a. the interests of all individuals are represented. / b. citizens periodically elect individuals to represent them. / c. individuals vote directly on most issues that affect them by referendum. / d. individual's rights to freedom and expression are repressed.
55. Which of the following is NOT an example of an administrative barrier to trade? / a. Time consuming inspection of express mail packages for pornography / b. Cutting tulip bulbs down the middle to inspect them / c. Requiring that all imports of certain products go through small and remote customs costs with "specially trained" inspectors / d. Assessing a tax equal to 25 percent of the value of light trucks
56. What is the best way to develop a cadre of cosmopolitan executives that have a great deal of cross cultural literacy? / a. International transfers and overseas assignments / b. Language courses / c. Cross cultural sensitivity classes / d. Ethnocentric development programs
57. What is "Super 301?" / a. A US trade law / b. A cellular phone technology / c. A section of the GATT regulations / d. A Toyota model that was built only in Japan until trade pressures forced foreign production
58. Adherents of which religion are encouraged to follow the Noble Eightfold Path, which includes things like undertaking only "right living" and being considerate in one’s actions? / a. Christianity / b. Islam / c. Hinduism / d. Buddhism