Deck 2: Globalization of Markets and the Internationalization of the Firm

Question 1

Nationalization refers to the gradual integration and growing interdependence of national economies.

Answer 1

False

Question 2

The fourth phase of globalization ________.

A) is characterized by the rise of electricity and steel production
B) is characterized by the rise of MNEs from Japan
C) witnessed the Bretton Woods Conference of twenty-three nations in 1947 that led to the General Agreement on Tariffs and Trade
D) facilitated the globalization of the service sector in such areas as banking and retailing

Answer 2

D

Question 3

Over time, the GATT evolved into the ________.

A) World Bank
B) International Monetary Fund
C) World Trade Organization
D) World Intellectual Property Organization

Answer 3

C

Question 4

The initial phase of globalization was triggered by the introduction of the railroads and ocean transport.

Question 5

Which of the following is a societal consequence of market globalization?

A) greater emphasis on proactive internationalization
B) internationalization of firm's value chain
C) new risks and instant rivalry from foreign competitors
D) offshoring and the flight of jobs

Question 6

The ________ phase of globalization began around 1900 and was associated with the rise of electricity and steel production.

A) first
B) second
C) third
D) fourth

Question 7

Internationalization Conference (Scenario)
At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country.
The representative from Business C is most likely from ________.

A) Italy
B) Brazil
C) the United States
D) France

Question 8

Firms that are more successful at global competition display each of the following qualities EXCEPT ________.

A) identifying foreign market opportunities aggressively
B) approaching internationalization from a reactive standpoint
C) actively pursuing partnerships with foreign firms
D) focusing intensively on building organizational capacities

Question 9

The Great Depression marked the beginning of the second phase of globalization.

Question 10

Which of the following is characteristic of globalization of markets?

A) lack of skilled labor
B) conservatism
C) declining trade barriers
D) diminishing gap between the rich and the poor

Question 11

Internationalization Conference (Scenario)
At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country.
The representative from Business A is most likely from ________.

A) China
B) United Kingdom
C) Mexico
D) Brazil

Question 12

Which of the following reflects the major contribution of GATT to globalization?

A) It instituted strict controls on international currencies.
B) It simplified patent and copyright laws.
C) It reduced barriers to international trade and investment.
D) It eliminated the divide between the rich and the poor.

Question 13

Early multinationals from the third phase of globalization originated in ________.

A) Japan
B) China
C) India
D) Brazil

Question 14

Which of the following is a driver of globalization?

A) greater emphasis on proactive internationalization
B) internationalization of firm's value chain
C) integration of world financial markets
D) globalization of services

Question 15

Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past 20 years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia.
To which of the following drivers of market globalization is Markus most likely to attribute his company's expansion to Eastern Europe?

A) advances in technology
B) integration of world financial markets
C) market liberalization
D) industrialization

Question 16

As market globalization intensifies, ________.

A) the gap between the rich and the poor shrinks rapidly
B) the distance between consumers worldwide expands
C) individual firms respond to the challenges and new advantages that it brings
D) firms internationalize solely as a reaction to it

Question 17

Internationalization Conference (Scenario)
At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies. Business A is located in a country that internationalized during the second phase of globalization. Business B is based in a country that internationalized during the third phase of globalization. Business C is located in an emerging market country.
The representative from Business B is most likely from ________.

A) Panama
B) Hungary
C) Uganda
D) Japan

Question 18

The first phase of globalization was characterized by the ________.

A) rise of steel production
B) rise of SMEs
C) dominance of MNEs in the agricultural industry
D) growth of railroads

Question 19

The fourth phase of globalization is characterized by ________.

A) the rise of railroads and ocean transport
B) the reduction of barriers to trade by Western industrialized countries
C) the initiation of the Marshall Plan to reconstruct Europe
D) the enormous growth of cross-border trade and investment

Question 20

The third phase of globalization was triggered by ________.

A) the end of World War II
B) the invention of electricity
C) the end of World War I
D) the Great Depression

Question 21

Describe the role of GATT and the WTO in reducing barriers to trade and investment worldwide, and explain how this reduction has led to the integration and interdependence of national economies.

Question 22

Offshoring and the flight of jobs are prime drivers of market globalization.

Question 23

Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past 20 years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia.
Which of the following drivers of market globalization is Lavonne's research most likely to recognize as the factor responsible for the company's expansion to Japan?

A) integration of world financial markets
B) the highly conservative nature of the Japanese economy
C) the rise of monopoly markets in Japan
D) reduction of barriers to investment

Question 24

Industrialization implies that emerging markets are increasing their dependence on low-cost labor.

Question 25

How has the adoption of free markets worldwide served as a driver of market globalization? Provide three examples to support your answer.

Question 26

Firms often internationalize proactively in order to pursue new markets, find lower-cost inputs, or obtain other advantages.

Question 27

What is implied by industrialization? How does it bring about economic development?

Question 28

Firms expand abroad mainly as a reaction to market globalization.

Question 29

The globalization of finance ________.

A) enables companies to minimize offshoring
B) contributes to firms' abilities to develop and operate world-scale production and marketing
C) discourages innovation
D) discourages free international exchange of goods and services

Question 30

What is meant by the internationalization of a firm's value chain?

Question 31

The third phase of globalization was triggered by the development of personal computers, the Internet, and Web browsers.

Question 32

________ marked the end of the 50-year Cold War and smoothed the integration of former command economies into the global economy.

A) The end of World War II
B) The Bolshevik Revolution in Russia
C) Free-market reforms in China and the former Soviet Union
D) China's move to join the WTO

Question 33

Globalization of production activities and services is a dimension of market globalization.

Question 34

Firms are sometimes motivated to enter new markets because of unfavorable conditions in the home market, such as regulation or declining local industry sales.

Question 35

Falling trade barriers are facilitated by the WTO.

Question 36

Which of the following statements is TRUE of technological advances?

A) It provides a means for globalization to happen.
B) It discourages internationalization.
C) It inhibits the growth of new products and services.
D) It helps consolidate traditional values among consumers worldwide.

Question 37

Global Operations Report (Scenario)
As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past 20 years. Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas. Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible to foreign companies. Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries. Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia.
In describing the main driver behind Pax's expansion to China, Rashid is most likely to emphasize ________.

A) the high rate of employee attrition in China
B) advances in technology
C) reduction of barriers to trade
D) integration of world financial markets

Question 38

Describe the fourth phase of globalization. What is contagion?

Question 39

Financial market integration makes it easier for internationally active firms to ________.

A) nationalize manufacturing industries
B) minimize offshoring
C) increase tariffs on the import of automobiles and industrial machinery
D) engage in foreign currency transactions

Question 40

The end of the Cold War in 1989 hindered the forces of market liberalization in Eastern Europe.

Question 41

Technological leapfrogging is defined as ________.

A) adopting new technology late in the hype cycle
B) adopting new technology as soon as it is released
C) bypassing certain stages of technology to come up with a radical innovation when upgrading to new products
D) boosting demand artificially by postponing the sale of new technology in the market

Question 42

Stella manages the production team at Camden Inc., a manufacturer of heavy industry machinery in the United States. She needs to decide if her firm should export finished products or manufacture abroad. Which of the following would most likely help her evaluate the best alternative in this instance?

A) What is the gross national income of the United States?
B) What are the costs of transporting raw materials, components, and finished products?
C) Is employee empowerment culturally favored in the United States?
D) What is the average annual rate of employee turnover in the manufacturing industry?

Question 43

In terms of international business, market globalization can be viewed as a ________.

A) consequence of a strong emphasis on traditional values worldwide
B) consequence of the loss of national sovereignty
C) driver and consequence of firm-level internationalization
D) prime cause of rising diseconomies of scale in emerging economies

Question 44

Convergence of consumer preferences has led to an enhanced emphasis on standardization, which implies that ________.

A) the consistently rising prices of consumer goods have led to a demand vacuum in the market
B) the distance between consumers worldwide has increased with the advent of technology
C) the raw materials, parts, and components sourced by professional buyers are very similar in design and structure
D) the globalization of services has adversely affected the quality of service worldwide

Question 45

The free movement of capital around the world is also known as ________.

A) bond-based debt financing
B) contagion
C) the globalization of capital
D) common market arrangement

Question 46

While the number of containers transported internationally has decreased, the cost of transportation has increased dramatically.

Question 47

Companies strive to drive down prices ________, among other strategies.

A) by centralizing manufacturing and procurement to a single source
B) by standardizing what they sell
C) by thwarting the growth of supranational institutions
D) by discouraging competition

Question 48

Technological advances have contributed to manufacturing by ________.

A) promoting traditional lifestyles and values
B) reducing cross-border flow of factors of production
C) promoting nationalization
D) reducing production costs

Question 49

Regional economic integration blocs ________.

A) reduce trade and investment barriers
B) reduce private investments
C) adopt a hostile stance toward the private sector
D) hinder the cross-border flow of factors of production

Question 50

Technological advances have helped make internationalization affordable for all sizes of firms.

Question 51

The 2011 "Arab Spring" in the Middle East was facilitated in large part by social media.

Question 52

The science and process of creating and using information resources is known as ________.

A) information design
B) information technology
C) psychographics
D) demographics

Question 53

In a short essay, identify the four areas in which technological advances had their greatest impact on business. Describe the impact of each area on business today.

Question 54

Which of the following benefits of IT is specific to smaller firms?

A) It mitigates organizational anarchy.
B) It creates competitive advantages by encouraging organizational learning.
C) It aids in the consolidation of market monopolies.
D) It allows firms to design and produce customized products they can target to narrow, cross-national market niches.

Question 55

Which of the following is an example of a supranational institution?

A) the World Intellectual Property Organization
B) UNICEF
C) the Red Cross
D) the World Trade Organization

Question 56

Governments have facilitated economic integration by ________.

A) increasing barriers to international trade and investment
B) creating supranational institutions to further reduce trade barriers
C) adopting different monetary and fiscal policies within the same regional economic integration blocs
D) standardizing consumer lifestyles and preferences

Question 57

________ are the most transformative technology in developing economies.

A) Mobile phones
B) Televisions
C) Intranets
D) E-mails

Question 58

The Internet has increased the cost of transmitting voices, data, and images.

Question 59

A value chain is ________.

A) the sequence of administrative policies implemented to promote economic integration by a government
B) the process of relocating manufacturing and production to valuable and cost-effective locations abroad
C) the process of integrating national economies during a financial crisis
D) the sequence of value-adding activities performed by a firm in the course of developing, producing, marketing, and servicing a product

Question 60

________ is transforming interactions among customers, employees, business partners and investors, by connecting locations, products, services, and data.

A) Digitization
B) A supply chain
C) A value chain
D) Value migration

Question 61

The ability of a nation to govern its own affairs is known as ________.

A) sovereignty
B) liberalization
C) interdependence
D) homogenization

Question 62

In a "common market," barriers to the cross-border flow of factors of production are removed.

Question 63

The most direct implication of market globalization is on the firm's ________.

A) value chain
B) founders
C) internal stakeholders
D) top management

Question 64

Converging tastes of consumers worldwide promote traditional lifestyles.

Question 65

Which of the following statements is TRUE about the firm-level consequences of market globalization?

A) The globalization of markets has narrowed down new business opportunities for internationalizing firms.
B) Globalization drives firms to relocate key value-adding activities to the most advantageous locations around the world.
C) A firm's value chain is not subject to internationalization.
D) Through offshoring, a firm relocates a major value-chain activity by establishing a factory or subsidiary in the home market.

Question 66

In a typical value chain, the firm ________.

A) rarely conducts research and development
B) performs most upstream value-chain activities abroad, when exporting
C) performs marketing activities such as pricing, promotion, and selling
D) performs most downstream activities in the home market, when exporting

Question 67

Which of the following stages comes before procurement in a firm's value chain?

A) research and development
B) marketing
C) manufacturing
D) distribution

Question 68

Acme Software (Scenario)
Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research that shows that German health care companies have a strong demand for the type of software that Acme offers.
Which of the following would be most important for Acme to determine before outsourcing its programming services to India?

A) What benefits have Indian companies gained historically from internationalizing their value-chain activities?
B) Do Indian businesses outsource value-chain activities to Europe?
C) Would the lower cost of outsourcing allow Acme to sustain a competitive advantage in its business operations?
D) Is either of the Indian health care companies interested in moving their operations abroad?

Question 69

Globalization results in more demanding buyers who shop for the best deals worldwide.

Question 70

Market globalization compels firms to organize their sourcing, manufacturing, marketing, and other value-adding activities on a strictly local scale.

Question 71

Which of the following statements is TRUE about value chain and international business?

A) Exporting firms perform most of the downstream value chain activities in the home market.
B) Exporting firms perform most of the upstream value chain activities in the home market.
C) Exporting firms perform most of the upstream value chain activities abroad.
D) Exporting firms perform most of the research and product development and production abroad.

Question 72

Acme Software (Scenario)
Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research that shows that German health care companies have a strong demand for the type of software that Acme offers.
Which of the following activities in Acme's value chain would be internationalized if Acme decides to establish a development contract with one of the Indian software firms?

A) sales
B) distribution
C) marketing
D) procurement

Question 73

Reduction in trade barriers is associated with the emergence of ________.

A) fragmentary monetary and fiscal policies across the borders
B) regional economic integration blocs
C) widespread violation of intellectual property rights law
D) violation of GATT provisions

Question 74

Acme Software (Scenario)
Acme Software is a U.S.-based maker of software products for the health care industry. Recently Acme has been investigating whether it would be beneficial to internationalize some of its value-chain activities. Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth. The consulting group identifies two health care software development companies in India that could provide programming services at a lower cost than Acme's current expenditures for programming. In addition, the consultants conduct international market research that shows that German health care companies have a strong demand for the type of software that Acme offers.
Which of the following would be most important for the consulting group to consider when deciding whether to recommend that Acme internationalize its sales efforts to Germany?

A) Will Acme save money on advertising by targeting small rather than large companies?
B) How intense is the competition from German companies offering similar products?
C) What type of training is received by programmers in software firms abroad?
D) Is employee empowerment culturally favored in Germany?

Question 75

Which of the following represents the final stage in a firm's value chain?

A) marketing
B) procurement
C) research and development
D) sales and service

Question 76

________ refers to the tendency of a financial or monetary crisis in one country to spread rapidly to other countries, due to the ongoing integration of national economies.

A) Contagion
B) Nationalization
C) Internationalization
D) Codetermination

Question 77

The globalization of capital refers to the aggregate activities of firms that gives rise to economic integration.

Question 78

Governments have facilitated economic integration by lowering barriers to international trade and investment, harmonizing their monetary and fiscal policies within regional economic integration blocs.

Question 79

In a short essay, discuss the impact of market globalization on consumer lifestyles and preferences around the world. Provide examples to illustrate your answer.

Question 80

Companies strive to decrease their costs and reduce their selling prices through economies of scale and standardization of finished products, among other possibilities.