Test Bank International Business
b b b
A global company is an organization with multicountry affiliates, each o
b b b b b b b b b b
f which formulates its own business strategy based on perceived mark
b b b b b b b b b b
et differences.
b
False
One variable commonly used to measure where and how fast internati
b b b b b b b b b b
onalization takes place is the increase in total foreign direct investment
b b b b b b b b b b
.
True
The forces in the foreign environment operate the same way as those i
b b b b b b b b b b b b
n the domestic environment except that they occur in foreign nations.
b b b b b b b b b b
False
An international manager has two choices on what to do with a concept
b b b b b b b b b b b b
or technique employed in domestic operations: (1) transfer it intact or (
b b b b b b b b b b b b
2) adapt it to local conditions.
b b b b b
False
Financial, economic, and distributive forces are examples of controllab
b b b b b b b b
le forces influencing the life and development of a firm.
b b b b b b b b b
False
All the following are true about a global company except that it:
b b b b b b b b b b b
A)maintains a presence in key markets around the world. b b b b b b b b
B)looks for differences among markets.
b b b b
C)integrates its operations worldwide. b b b
D)standardizes operations worldwide in one or more of the firm's functi b b b b b b b b b b
onal areas. b
B. Looks for differences among markets
b b b b b
The major globalization drivers include all of the following except:
b b b b b b b b b
A)political.
B)social.
C)technological.
D)market.
B. Social b
Due to the expanding importance of foreign-
b b b b b b
owned firms in local economies, host governments have made their pol
b b b b b b b b b b
icies toward these companies _____.
b b b b
A)more strict b
,B)more liberal b
C)less powerless b
D)more confronting b
B. More liberal
b b
Management has no direct control over the external environment of the
b b b b b b b b b b
bfirm but can exert influence by:
b b b b b
A)heavy promotion of new products to change cultural attitudes.
b b b b b b b b
B)focusing on the strategic plan. b b b b
C)increasing the number of people. b b b b
D)exerting control over the inventory. b b b b
A. heavy promotion of new products to change cultural attitudes
b b b b b b b b b
Unconscious reference to one's own cultural values when judging beh b b b b b b b b b
avioral actions of others in a new and different cultural environment is c
b b b b b b b b b b b b
alled:
A)self-reference culture. b
B)self-reference values. b
C)self-reference criterion. b
D)self-reference environment. b
C. self-reference criterion
b b
The Heckscher- b
Ohlin theory states that differences in production costs occur because
b b b b b b b b b b
of differences in the supply of production factors.
b b b b b b b
False
An important outcome of Leontief's work was recognizing the potential
b b b b b b b b b b
for differences in the kinds of labor as well as differences in natural and
b b b b b b b b b b b b b b
capital resources. b
True
Recent research on the first mover theory also confirms that firms movi
b b b b b b b b b b b
ng first into a market soon dominate it.
b b b b b b b
False
Internalization theory suggests that to obtain a higher return on its inve
b b b b b b b b b b b
stment, a firm should transfer its superior knowledge in the open marke
b b b b b b b b b b b
t rather than selling it to a foreign subsidiary.
b b b b b b b b
False
The eclectic theory of international production is sometimes referred to
b b b b b b b b b b
as the OLI model.
b b b
True
Adam Smith claimed that: b b b
A)government, not market forces, should determine the direction, volu b b b b b b b b
me, and composition of international trade.
b b b b b
B)a nation could trade advantageously if it had a comparative advanta
b b b b b b b b b b
ge.
C)market forces, not government controls, should determine the directi
b b b b b b b b
, on, volume, and composition of international trade.
b b b b b b
D)customers' tastes are affected by income levels. b b b b b b
C. market forces, not government controls, should determine the direct
b b b b b b b b b
ion, volume, and composition of international trade.
b b b b b b
Which of the following is not true about the international product life cyc
b b b b b b b b b b b b
le?
A)Concerns the role of innovation in trade patterns. b b b b b b b
B)Can be applied to new product introduction by firms in any of the ind
b b b b b b b b b b b b b
ustrialized nations. b
C)Views a product as going through a full life cycle from the standardiz
b b b b b b b b b b b b
ation stage to internationalization.
b b b
D)The initial innovation stage of the cycle borrows from the Linder theo
b b b b b b b b b b b
ry.
C. Views a product as going through a full life cycle from the standardiz
b b b b b b b b b b b b b
ation stage to internationalization.
b b b
Economies of scale and the experience curve effect are important for i
b b b b b b b b b b b
nternational trade because: b b
B)they allow a nation's industries to become low-
b b b b b b b
cost producers without requiring that the nation have an abundance of
b b b b b b b b b b b
a certain class of production factors.
b b b b b
To sum up international trade theory, we can say that the primary reaso
b b b b b b b b b b b b
n for trade is:
b b b
A)similarities in endowments of the factors of production. b b b b b b b
B)differences in interest rates for investments. b b b b b
C)the existence of price differentials among nations.
b b b b b b
D)effective utilization of factor intensities. b b b b
C. the existence of price differentials among nations
b b b b b b b
Dunning's Eclectic Theory of International Production states that if a fir
b b b b b b b b b b
m is going to invest in production facilities abroad, it must have the follo
b b b b b b b b b b b b b
wing kinds of advantages:b b b
A)ownership-specific, location-specific, and internationalization. b b b
B)strategic, location-specific, and technological. b b b
C)ownership-specific, location-specific, and internalization. b b b
D)technological, financial, and ownership-specific. b b b
C. ownership-specific, location-specific, and internalization
b b b b
The national culture is a key determinant for the evaluation of manager
b b b b b b b b b b b
s.
True
Legal characteristics and political structures are components of culture
b b b b b b b b
.
True
The demonstration effect is a result of the backward-
b b b b b b b b
bending labor supply curve. b b b
b b b
A global company is an organization with multicountry affiliates, each o
b b b b b b b b b b
f which formulates its own business strategy based on perceived mark
b b b b b b b b b b
et differences.
b
False
One variable commonly used to measure where and how fast internati
b b b b b b b b b b
onalization takes place is the increase in total foreign direct investment
b b b b b b b b b b
.
True
The forces in the foreign environment operate the same way as those i
b b b b b b b b b b b b
n the domestic environment except that they occur in foreign nations.
b b b b b b b b b b
False
An international manager has two choices on what to do with a concept
b b b b b b b b b b b b
or technique employed in domestic operations: (1) transfer it intact or (
b b b b b b b b b b b b
2) adapt it to local conditions.
b b b b b
False
Financial, economic, and distributive forces are examples of controllab
b b b b b b b b
le forces influencing the life and development of a firm.
b b b b b b b b b
False
All the following are true about a global company except that it:
b b b b b b b b b b b
A)maintains a presence in key markets around the world. b b b b b b b b
B)looks for differences among markets.
b b b b
C)integrates its operations worldwide. b b b
D)standardizes operations worldwide in one or more of the firm's functi b b b b b b b b b b
onal areas. b
B. Looks for differences among markets
b b b b b
The major globalization drivers include all of the following except:
b b b b b b b b b
A)political.
B)social.
C)technological.
D)market.
B. Social b
Due to the expanding importance of foreign-
b b b b b b
owned firms in local economies, host governments have made their pol
b b b b b b b b b b
icies toward these companies _____.
b b b b
A)more strict b
,B)more liberal b
C)less powerless b
D)more confronting b
B. More liberal
b b
Management has no direct control over the external environment of the
b b b b b b b b b b
bfirm but can exert influence by:
b b b b b
A)heavy promotion of new products to change cultural attitudes.
b b b b b b b b
B)focusing on the strategic plan. b b b b
C)increasing the number of people. b b b b
D)exerting control over the inventory. b b b b
A. heavy promotion of new products to change cultural attitudes
b b b b b b b b b
Unconscious reference to one's own cultural values when judging beh b b b b b b b b b
avioral actions of others in a new and different cultural environment is c
b b b b b b b b b b b b
alled:
A)self-reference culture. b
B)self-reference values. b
C)self-reference criterion. b
D)self-reference environment. b
C. self-reference criterion
b b
The Heckscher- b
Ohlin theory states that differences in production costs occur because
b b b b b b b b b b
of differences in the supply of production factors.
b b b b b b b
False
An important outcome of Leontief's work was recognizing the potential
b b b b b b b b b b
for differences in the kinds of labor as well as differences in natural and
b b b b b b b b b b b b b b
capital resources. b
True
Recent research on the first mover theory also confirms that firms movi
b b b b b b b b b b b
ng first into a market soon dominate it.
b b b b b b b
False
Internalization theory suggests that to obtain a higher return on its inve
b b b b b b b b b b b
stment, a firm should transfer its superior knowledge in the open marke
b b b b b b b b b b b
t rather than selling it to a foreign subsidiary.
b b b b b b b b
False
The eclectic theory of international production is sometimes referred to
b b b b b b b b b b
as the OLI model.
b b b
True
Adam Smith claimed that: b b b
A)government, not market forces, should determine the direction, volu b b b b b b b b
me, and composition of international trade.
b b b b b
B)a nation could trade advantageously if it had a comparative advanta
b b b b b b b b b b
ge.
C)market forces, not government controls, should determine the directi
b b b b b b b b
, on, volume, and composition of international trade.
b b b b b b
D)customers' tastes are affected by income levels. b b b b b b
C. market forces, not government controls, should determine the direct
b b b b b b b b b
ion, volume, and composition of international trade.
b b b b b b
Which of the following is not true about the international product life cyc
b b b b b b b b b b b b
le?
A)Concerns the role of innovation in trade patterns. b b b b b b b
B)Can be applied to new product introduction by firms in any of the ind
b b b b b b b b b b b b b
ustrialized nations. b
C)Views a product as going through a full life cycle from the standardiz
b b b b b b b b b b b b
ation stage to internationalization.
b b b
D)The initial innovation stage of the cycle borrows from the Linder theo
b b b b b b b b b b b
ry.
C. Views a product as going through a full life cycle from the standardiz
b b b b b b b b b b b b b
ation stage to internationalization.
b b b
Economies of scale and the experience curve effect are important for i
b b b b b b b b b b b
nternational trade because: b b
B)they allow a nation's industries to become low-
b b b b b b b
cost producers without requiring that the nation have an abundance of
b b b b b b b b b b b
a certain class of production factors.
b b b b b
To sum up international trade theory, we can say that the primary reaso
b b b b b b b b b b b b
n for trade is:
b b b
A)similarities in endowments of the factors of production. b b b b b b b
B)differences in interest rates for investments. b b b b b
C)the existence of price differentials among nations.
b b b b b b
D)effective utilization of factor intensities. b b b b
C. the existence of price differentials among nations
b b b b b b b
Dunning's Eclectic Theory of International Production states that if a fir
b b b b b b b b b b
m is going to invest in production facilities abroad, it must have the follo
b b b b b b b b b b b b b
wing kinds of advantages:b b b
A)ownership-specific, location-specific, and internationalization. b b b
B)strategic, location-specific, and technological. b b b
C)ownership-specific, location-specific, and internalization. b b b
D)technological, financial, and ownership-specific. b b b
C. ownership-specific, location-specific, and internalization
b b b b
The national culture is a key determinant for the evaluation of manager
b b b b b b b b b b b
s.
True
Legal characteristics and political structures are components of culture
b b b b b b b b
.
True
The demonstration effect is a result of the backward-
b b b b b b b b
bending labor supply curve. b b b
