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USE THIS TO ANSWER QUESTIONS BELOW, HIGHLIGHT IN YELLOW: Your textbook, International Business: The Challenge of Global Competition, Thirteenth Edition, by Donald A. Ball, J. Michael Geringer, Michael S. Minor, and Jeanne M. McNett

1. The capability of one nation to produce more of a good with the same amount of input than another country is

A. a collaborative advantage

B. a comparative advantage.

C. an absolute advantage.

D. a mercantilist advantage.

2. The idea that market forces, not government controls, should determine direction, volume, and the composition of international trade came from

A. Salvador Allende.

B. Milton Friedman.

C. the Ottoman Empire.

D. Adam Smith.

3. A value-added tax (VAT) is actually a sales tax that's

A. paid in stages, from raw materials to consumer, and credited after final sale.

B. paid by the firm rather than the consumer.

C. called "value added" to put a positive spin on taxation.

D. voluntarily paid on exports.

4. The Doha Development Agenda is

A. an agreement on climate control and greenhouse gases.

B. a development rules list.

C. a decision-making approach to development.

D. a WTO conference on trade.

5. The EU began as a common market for

A. the transportation industries.

B. the textile and dairy industries.

C. the coal and steel industries.

D. all imported goods from beyond Europe.

6. The _______ has had a central role as a main central reserve asset of many countries, as a vehicle currency, and as an intervention currency.

A. British pound

B. Euro

C. U.S. dollar

D. yen

7. A/An _______ is all forces influencing the life and development of the firm.

A. local population

B. foreign exchange

C. environment

D. group pool

8. Generally speaking, developed countries use exchange controls

A. only to discourage foreign investment.

B. when needed to implement monetary policy.

C. rarely.

D. secretly

9. _______ is an agreement among the countries that make up North America.

A. NAFTA

B. OECD

C. WTO

D. EU

10. Economies of scale and the experience curve

A. explain how international trade in manufactured goods will be linked to gross national income.

B. state that a nation will trade goods that can be produced with the production factor that's most abundant.

C. allow developing countries to remain competitive in foreign trade.

D. explain why many companies will engage in international trade.

11. According to its advocates, one of the advantages of the gold standard is that it provides

A. monetary security.

B. specie.

C. discipline.

D. flexibility.

12. When countries benefit from importing products requiring large amounts of their scarce production factors and export products requiring large amounts of their abundant production factors, they're exemplifying

A. the Leontief paradox.

B. comparative advantage.

C. the theory of factor endowment.

D. absolute advantage.

13. The United States allocates quotas to 40 countries for specific tonnages of

A. sugar.

B. malt beer.

C. soybeans.

D. roast beef.

14. Offshoring is an application of

A. money market rates.

B. differences in taste.

C. comparative advantage.

D. exchange rate theory.

15. The primary motivation of tariffs is to

A. raise government revenue at the cost of importers.

B. punish countries over political issues.

C. encourage foreign consumption.

D. raise the price of imports to protect domestic goods

16. Government stability is characteristic of a government that

A. readily shifts alliances to maintain power.

B. maintains predictability in fiscal, monetary, and political policies.

C. changes often due to war.

D. makes sudden, radical policy changes.

17. Foreign reserves are used to

A. help foreigners who need additional funds.

B. support foreign operations that are branches but not subsidiaries.

C. cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter.

D. provide military support to foreign operations—for example, the French legion and UN peacekeepers.

18. In examining the volume of international trade

A. the proportion of manufacturing value added generated by Latin America has doubled since 1980.

B. the proportion of manufacturing value added generated by South and East Asia has quadrupled since 1980.

C. the proportion of manufacturing by the US has accounted for 65 percent of all global trade.

D. the proportion of world exports and imports accounted for by the 10 largest exporting and importing nations exceeded 70 percent in 2010

19. The main drivers of globalization depend on

A. the foreign environment.

B. cultural differences.

C. domestic growth.

D. change.

20. Mercantilists believed that nations should

A. produce goods for which there's a comparative advantage.

B. lower import duties to establish a level playing field.

C. allow an export surplus so they can accumulate gold.

D. import goods to raise the standard of living

1. A commitment to actions that meet present needs without compromising the ecological, social, and economic needs of future generations characterizes

A. ethnocentricity.

B. environmental sustainability.

C. economic stability.

D. socialism

2. _______ can divide a small market into even smaller ones.

A. Mountains

B. Climate

C. Rivers

D. Highways

3. The concept of strict liability, as found in the US legal system, applies

A. to children harmed by products in both the United States and the EU.

B. strictly to harm caused by the designer/manufacturer, so no penalties outside of damages can be awarded.

C. to harm done by the designer/manufacturer without the need to prove negligence.

D. to harm done within narrow limits, considering the design of the product.

4. One difference between the US and EU approaches to antitrust law is that

A. the EU forbids market dominance by cartels, no matter the conditions, whereas the United States doesn't.

B. the US focus is on impact on competition, whereas the EU focus is on the consumer.

C. the United States follows the per se concept, wherein actions are illegal whether they've done harm.

D. the EU avoids competition, whereas the United States seeks it.

5. A combination of _______ causes the same extremes in temperature and humidity in other countries as is found in Colombia.

A. rain and fog

B. mountains and lowlands

C. tropical rain forests and plains

D. heat and moisture

6. As we use frameworks to help us understand culture, it's important to remember that frameworks

A. describe other cultures with precision.

B. aren't a good way to compare cultures.

C. can't be used to describe our own cultures.

D. are comparative, with our own culture being the reference point.

7. _______ is/are economic data that serve as yardsticks for measuring the relative market strengths of various geographic areas.

A. Trend analysis

B. Market indicators

C. Cluster analysis

D. Market factors

8. The organization within the Japanese government deemed the most benign is the

A. Tariff and Taxation Bureau.

B. Justice Department.

C. Fair Trade Commission.

D. Maritime Commission.

9. Smaller nations would like patent protection

A. extended, so that their profits can increase.

B. reduced, so that they can enter the game earlier, possibly with generics.

C. extended, so that they can recoup development costs.

D. extended, to allow them to build their competitive advantage

10. Patent trolling is the process of

A. looking for loopholes in patent protection and exploiting them.

B. legal research that uncovers obscure, deceased patent holders and liberates their inventions.

C. searching out patents that have expired and negotiating their replacements.

D. recording and registering patents in foreign countries to protect the firm's IP.

11. All of the following are part of the e-commerce readiness index except for

A. Internet hosts per million people.

B. electricity consumption.

C. number of PCs per 1,000 people.

D. mobile phones per 1,000 people.

12. In a personal interview or phone survey, some respondents want to help the interviewer out of politeness or just to please the interviewer. This is known as

A. social desirability bias.

B. market research.

C. interviewer bias.

D. response bias.

13. Market screening is divided into

A. environmental screening and country screening.

B. country screening and segment screening.

C. region screening and segment screening.

D. segment screening and environmental screening

14. In what order is the country screening process presented in the textbook?

A. Basic needs, sociocultural, economic/financial, political, and competitive

B. Basic needs, political, economic/financial, competitive, and sociocultural

C. Basic needs, competitive, political, economic/financial, and sociocultural

D. Basic needs, economic/financial, political, sociocultural, and competitive

15. A statistical technique that divides objects into groups so that the objects within each group are similar is called _______ analysis.

A. factor

B. cluster

C. trend

D. group classification

16. Average growth rate in commercial energy use and real growth rate in GDP compose the _______ index.

A. market size

B. e-commerce readiness

C. market growth rate

D. market factor

17. Hong Kong is seen as a more desirable location for foreign firms than Shanghai because

A. Hong Kong has a tradition of law adopted from British colonialism.

B. the Chinese government has given Hong Kong dispensation to act as a sovereign nation.

C. Shanghai's main language is Mandarin, while Hong Kong's is Cantonese.

D. Hong Kong remains a British colony.

18. The main source/sources of international law is/are

A. bilateral and multilateral treaties, along with customary law.

B. the US Supreme Court and the EU Court of Justice.

C. the UN International Court of Justice.

D. nonexistent.

19. Hall suggests that communication tends to be implicit and indirect in

A. high context (HC).

B. the United States.

C. Australia.

D. low context (LC).

20. Intellectual property

A. excludes intangibles, which is why it's a difficult area.

B. includes anything that's the result of things created using someone's intellect.

C. includes anything that's a result of a creative process that doesn't have material qualities.

D. includes thoughts and ideas, but not tangible products

1. The common characteristic of multinationals that are organized by function at the upper level is a narrow

A. and highly integrated product mix.

B. and highly integrated customer list.

C. research and development effort.

D. variation of prices in the product mix.

2. A partnership between competitors, customers, or suppliers is called a/an

A. strategic alliance.

B. merger.

C. growth triangle.

D. affiliation.

3. The regionalized organization seems to be popular with companies that

A. operate in many diverse foreign regions.

B. manufacture products with a low technological content requiring strong marketing ability.

C. manufacture products incorporating high technology in industrialized regions.

D. favor licensing as a form of market entry.

4. Which of the following means that goods are shipped to the buyer and payment isn't made until they've been sold?

A. Consignment

B. Bank collection time draft

C. Cash in advance

D. Irrevocable letter of credit

5. The most well-known model for change that involved unfreezing, moving, and refreezing was developed by

A. John Kotter.

B. Kurt Lewin.

C. Chad Henry.

D. Adam Smith.

6. By the end of 2010, Kraft Foods had become America's

A. bigger than the Nestle Corporation.

B. the largest US employer overseas.

C. largest branded-food and beverage company with headquarters in North America.

D. the second-largest branded-food company headquartered in Brazil.

7. _______ places increasing emphasis on recruiting and developing human resources.

A. Globalization

B. Localization

C. Accounting

D. Marketing

8. The Small Business Administration (SBA) provides _______ assistance.

A. product-search and product-support

B. market analysis and web development

C. business development and financial

D. educational and placement

9. What's an export license?

A. Permission from the top management team to export

B. Permission from the US government to export

C. A shipping qualification

D. An international quality performance rating

10. The Conformité Européenne is a type of

A. export license.

B. consular invoice.

C. certificate or origin.

D. inspection certificate.

11. Basic named perils marine insurance covers

A. accidents and storms other than hurricanes.

B. perils of the sea, fires, jettisons, and hurricanes.

C. theft and larceny.

D. piracy on the seas.

12. Incoterms were developed by the International Chamber of Commerce to

A. promote trade missions.

B. clarify terms of sale.

C. translate international contracts.

D. facilitate legal price quotes between buyers and sellers.

13. Which of the following is the most risky for an importer?

A. Irrevocable letter of credit

B. Open account

C. Cash in advance

D. Bank collection time draft

14. Residents of a country who represent various noncompeting foreign suppliers and take orders in those firms' names are known as manufacturers'

A. retailers.

B. distributors.

C. agents.

D. traders.

15. Which of the following is the most risky for an exporter?

A. Open account

B. Irrevocable letter of credit

C. Cash in advance

D. Bank collection time draft

16. In the area of shipment risk, ocean vessels assume

A. that marine environments are usually safe.

B. that exporters or importers will have bought adequate insurance.

C. none of the risk for the safety of their cargo, except for negligence.

D. all of the risk for the safety of their cargo.

17. Foreign direct investment (FDI) includes all of the following except

A. joint venture.

B. strategic alliance.

C. wholly owned subsidiary.

D. management contract.

18. The term for what people are doing when they put forth less effort while members of a group is

A. individualism.

B. catatonia.

C. social loafing.

D. groupthink.

19. To increase communication among executives and encourage confidence in each other, an IC's policies may include

A. operating in many diverse foreign regions.

B. joining international business organizations.

C. resolving disputes among subsidiaries through arbitration.

D. transferring promising managers among headquarters and subsidiaries.

20. A _______ strategy is often used where there's a strong pressure to reduce costs and limited pressure to adapt products for local markets.

A. global

B. transnational

C. home replication

D. multidomestic

1. What is manufacturing rationalization?

A. Division of production among several subsidiaries so that each produces only a limited number of components for all subsidiaries

B. Concentration of production at one site to get economies of scale

C. Production by a subsidiary for its own national market

D. Allocation of scarce resources

2. When a new plant can be built that's a duplicate of others already functioning

A. vendors will be requested to furnish equipment that they've supplied previously.

B. vendors aren't needed.

C. costs will be the same as in existing locations.

D. labor trainers experienced in the operation of the machinery can be sent to the new locations without undergoing any training.

3. Control of quality in the production of goods overseas is most easily accomplished when

A. raw materials come from just one supplier.

B. production equipment overseas is similar to that used in the United States.

C. components of the machinery are made in the United States.

D. workers have advanced language skills.

4. The Sarbanes-Oxley Act was passed by Congress in response to

A. the Enron scandal.

B. a need to protect US citizens from foreign laws.

C. an international demand for antitrust protection.

D. product liability lawsuits.

5. Research found that suppliers cut invoice and ordering errors by an average of _______ percent when using an e-marketplace.

A. 24

B. 69

C. 56

D. 37

6. Activities that are involved in producing a company's products and services and how these activities are linked together are often referred to as

A. value chains.

B. operations management.

C. supply chains.

D. organization design.

7. Which of the following adds 3–5 percent to the quoted price of a product, due to the costs of importing?

A. Customhouse broker's fees

B. B2B costs

C. Invoice charges

D. Export duties

8. A traditional approach to product design that involves a sequential approach to design has been termed

A. sequenced design.

B. over the wall.

C. concurrent engineering.

D. product-based design.

9. According to the text, it has been argued that the ultimate goal of effective supply chain management systems is to

A. reduce costs.

B. reduce inventory.

C. improve quality.

D. increase sales

10. Swedish safety requirements for machinery operators

A. make exporting US machines to Sweden very easy.

B. are stricter than those imposed by the US Occupational Safety and Health Act.

C. make imports of Swedish products popular in the United States.

D. are difficult to pin down because they vary from one machine to another.

11. Documented agreements containing technical specifications or other precise criteria that will be used consistently as guidelines, rules, or definitions of the characteristics of a product, process, or service are referred to as

A. value chains.

B. logistics.

C. standards.

D. processes.

12. Relocating activities a company used to do in-house to another country is called

A. outsourcing.

B. immigration.

C. offshoring.

D. emigration.

13. Applying a total systems approach to managing the flow of materials, information, finances, and services in a value chain is called

A. luxury brand development.

B. organizational realignment.

C. information and technology management.

D. supply chain management.

14. Investigation of export and import data shows

A. American firms import twice as much from their overseas subsidiaries as foreign firms import from their US affiliates.

B. there's a strong relationship between global sourcing and ownership of the foreign sources.

C. there's no relationship between global sourcing and ownership of the foreign sources.

D. American firms, but not Japanese firms, buy from their US subsidiaries.

15. Which of the following is not a part of the total product?

A. Accessories

B. Warranty

C. Package

D. Integration

16. Taking a position in one market to offset exposure to price changes in an opposite position is called

A. consolidation.

B. centralization.

C. diversification.

D. hedging.

17. In the case of the United States, intrafirm trade accounts for _______ percent of exports of goods.

A. 30 to 40

B. 15 to 30

C. 45 to 60

D. 35 to 45

18. Providing rapid service without a distribution structure in place is called

A. floating distribution.

B. aibo.

C. indirect outletting.

D. disintermediation.

19. Backward vertical integration refers to

A. placing minorities in charge of production processes.

B. installing production facilities to consume the outputs of the production system.

C. purchasing competitive firms.

D. installing production facilities to produce inputs for the production of final products

20. Including such items as maintenance, repair, operating supplies, office equipment, and other services and supplies, indirect procurement can account for as much as _______ percent of the total purchasing expenditures in companies.

A. 80

B. 70

C. 50

D. 25