Deck 8: Global Management

Question 1

Export restraints, government subsidies, and quotas are all examples of nontariff trade barriers.

Answer 1

True

Question 2

The two general kinds of trade barriers are:

A) government import standards and industry import standards
B) qualitative and quantitative barriers
C) voluntary and involuntary barriers
D) nationalistic and geocentric barriers
E) tariff barriers and nontariff barriers

Answer 2

E

Question 3

Two factors help determine the growth potential of foreign markets. They are foreign competition and:

A) communications and transportation systems
B) purchasing power
C) political stability
D) creative differences
E) product diffusion rate

Answer 3

B

Question 4

The North American Free Trade Agreement (NAFTA) is a regional trade agreement between Canada and the
United States. No other nations have signed this trade agreement.

Question 5

Direct foreign investment is an increasingly important and common method of conducting global business.

Question 6

Multinational corporations are corporations that own businesses in two or more countries.

Question 7

A European car manufacturer signing a contract to manufacture cars in a Chinese factory is an example of direct foreign investment.

Question 8

Historically, companies have generally followed the phase model of globalization.

Question 9

In a multinational company, managers at company headquarters may value global consistency as a company policy because global consistency simplifies decision-making at corporate headquarters.

Question 10

Which of the following represents the correct sequence for the phase model of globalization?

A) exporting; wholly owned affiliates; cooperative contracts; strategic alliances
B) exporting; cooperative contracts; wholly owned affiliates; strategic alliances
C) exporting; cooperative contracts; strategic alliances; wholly owned affiliates
D) exporting; strategic alliances; cooperative contracts; wholly owned affiliates
E) home country sales; exporting; job ventures; strategic alliances, and direct investment

Question 11

More than any other regional trade agreement, the Maastricht Treaty of Europe liberalizes trade between countries so that businesses can plan to operate in a single market instead of multiple national markets.

Question 12

Global business is defined as the buying and selling of goods and services by people from different countries.

Question 13

The trade agreement that represented the most significant change to the regulations governing global trade during the 1990s was the:

A) Maastricht Treaty of Europe
B) North American Free Trade Agreement
C) General Agreement on Tariffs and Trade
D) Mercosur
E) Asian Free Trade Arrangement

Question 14

What are the strategies that can be used to minimize or adapt to the political risk inherent to global business?

A) protectionist, avoidance, and offensive strategies
B) creative, cooperative, and defensive strategies
C) cooperative, customary, and nationalistic strategies
D) avoidance, protectionist, and guerrilla strategies
E) control, avoidance, and cooperative strategies

Question 15

An expatriate is someone who:

A) claims dual citizenship
B) lives and works outside of his or her own country
C) believes strongly in nationalization
D) is unhappy with his or her present residence
E) desires to be employed in a country outside of his or her own

Question 16

In a multinational firm, managers at company headquarters typically prefer an emphasis on simplifies decisions.

A) local consistency
B) local adaptation
C) global adaptation
D) global consistency
E) domestic adaptation

Question 17

A country or region that has an attractive business climate for companies that want to go global has:

A) a large population of unskilled workers
B) an effective and cost-efficient place to build an office or manufacturing site
C) a small youth population
D) natural boundaries
E) all of these

Question 18

Regional trading is defined as a method of investment in which a company builds a new business or buys an existing business in a foreign country.

Question 19

The Maastricht Treaty of Europe was designed to create the European Union and make the euro, the one common currency, for all members.

Question 20

Hofstede's research has shown there are:

A) no cultural differences among nations in which Spanish is the national language
B) two distinct methods for dealing with cultural differences--adaptation and continuation
C) direct relationships existing between type of infrastructures and growth potential
D) five consistent dimensions of cultural differences across countries
E) four factors upon which a company should base its decision to globalize

Question 21

The biggest disadvantage associated with licensing is that the licensor gives up control over the quality of the good or service sold by the foreign licensee.

Question 22

One of the disadvantages of global joint ventures is that, unlike licensing and franchising, they do not help companies to avoid tariff and nontariff barriers to entry.

Question 23

It appears that all companies follow the phase model of globalization when entering foreign markets.

Question 24

Global business is defined as .

A) the buying and selling of goods and services to people from different countries
B) includes any sale of goods and services
C) only involves companies with more than 50 employees
D) refers to sales made to people from different cultures, different regions, and different nations
E) is unregulated

Question 25

A joint venture is an example of a strategic alliance.

Question 26

The criteria for choosing an office/manufacturing location are different from the criteria for entering a foreign market.

Question 27

The three strategies used to minimize or to adapt to the political risk inherent to global business are avoidance, control, and cooperation.

Question 28

Unlike licensing, franchising, or joint ventures, wholly owned affiliates are 100 percent owned by the parent company.

Question 29

Two factors that help companies determine the growth potential of foreign markets are the purchasing power of the consumers and types of foreign competitors already in the market.

Question 30

Different businesses often need different combinations of global consistency and local adaptation.

Question 31

When conducting global business, companies should attempt to identify the two types of political risk, which are political uncertainty and economic uncertainty.

Question 32

The phase model of globalization means that companies made the transition from a domestic company to a global company in three sequential phases. The three phases are exporting, followed by wholly owned subsidiaries, and finishing with strategic alliances.

Question 33

Global new ventures bring a good or service to market in one foreign market at a time.

Question 34

Historically, companies have generally followed the phase model of globalization.

Question 35

Multinational companies typically have no difficulty determining the correct balance between global consistency and local adaptation.

Question 36

An attractive business climate is defined by one single dimension: Does the business minimize the political risk to the company?

Question 37

Deciding where to "go global" is just as important as deciding how your company will go global.

Question 38

The evidence clearly shows that how well an expatriate's spouse and family adjust to the foreign culture is the most important factor in determining the success or failure of an international assignment.

Question 39

Global joint ventures can be difficult to manage because they represent a merging of four cultures.

Question 40

The two kinds of cooperative contracts are licensing and franchising.

Question 41

A is a nontax method of increasing the cost or reducing the volume of imported goods.

A) tariff
B) nontariff barrier
C) trade roadblock
D) risk-aversive boycott
E) subsidy quota

Question 42

The acronym GATT stands for the .

A) Global Agreement on Temporal Trade
B) Governing Agreement on Trade and Transactions
C) General Agreement on Tariffs and Trade
D) Government Aid of Trade and Transactions
E) Global Arrangement for Trade and Taxes

Question 43

The Japanese government has proclaimed that its snow is different from that found in any other region of the world. As a result, all snow skis marketed in Japan must be manufactured in Japan. This is an example of a(n) ____.

A) tariff
B) nontariff barrier
C) import boycott
D) industry subsidy
E) industry nationalization

Question 44

The General Agreement on Tariffs and Trade (GATT) .

A) decreases both tariffs and nontariff barriers
B) puts stricter limits on government subsidies
C) eliminates tariffs in ten specific industries
D) protects intellectual property, such as trademarks, patents, and copyright
E) does all of these

Question 45

Which of the following countries has the largest direct foreign investment in the United States?

A) Netherlands
B) Germany
C) Japan
D) Canada
E) United Kingdom

Question 46

As Malta got ready for its admittance into the European Union (EU), all taxes on the importation of goods manufactured in Malta were eliminated. Malta was preparing to become part of a(n) .

A) zone of ethnocentricity
B) regional trading zone
C) neutral trading area
D) international cartel
E) global market

Question 47

Protectionism is the use of trade barriers to protect local companies and their workers from .

A) international unions
B) foreign competition
C) trademark infringements
D) patent violations
E) all of these

Question 48

In 2000, the United States imposed a tax on all steel imports in an effort to protect about 5,000 jobs. This tax is an example of a(n) .

A) import duty
B) voluntary import restraint
C) subsidy
D) financial boycott
E) tariff

Question 49

The signing of the created a regional trading zone in Europe.

A) Maastricht Treaty
B) Pact for Free Trade Agreement
C) Global Agreement for Transactional Trading (GATT)
D) South-East Asia Pact
E) all of these

Question 50

The two general kinds of trade barriers are .

A) government import standards and industry import standards
B) qualitative and quantitative barriers
C) voluntary and involuntary barriers
D) nationalistic and geocentric barriers
E) tariff barriers and nontariff barriers

Question 51

As Malta got ready for its admittance into the European Union (EU), the EU removed all taxes on the importation of goods manufactured in Malta. In other words, the EU abolished for Malta-manufactured merchandise.

A) import quotas
B) customs classifications
C) import standards
D) tariffs
E) boycotts

Question 52

The Japanese government continues to use the high tariffs to make sure local farmers can earn a living. The tariff on rice is an example of .

A) a voluntary government restriction
B) geocentrism
C) protectionism
D) a security quota
E) a bureaucratic subsidy

Question 53

The trade agreement that represented the most significant change to the regulations governing global trade during the 1990s was the .

A) Maastricht Treaty of Europe
B) North American Free Trade Agreement
C) World Trade Organization
D) Mercosur
E) Asian Free Trade Arrangement

Question 54

The Japanese government has proclaimed that its snow is different from that found in any other region of the world and as a result ensures that all snow skis marketed for sale in Japan must be manufactured in Japan. This is an example of a(n) .

A) tariff
B) government subsidy
C) voluntary export restraint
D) government import standard
E) subsidy

Question 55

_{40. A(n) is a direct tax on imported goods designed to make it more expensive to buy those goods, instituted in}
Hopes of reducing the volume of those imported goods in a given country.

A) tariff
B) nontariff barrier
C) trade roadblock
D) boycott quota
E) import subsidy

Question 56

To protect its farmers, Japan put limitations on the amount of mushrooms and leeks that could be imported into Japan from China. This limitation is an example of a(n) .

A) tariff
B) voluntary import restraint
C) subsidy
D) agricultural import standard
E) quota

Question 57

Several Arab countries boycott Coca-Cola products because the soft-drink company maintains product distributors in Israel. This boycott is an example of .

A) geocentrism
B) nationalism
C) nationalization
D) a trade barrier
E) acculturation

Question 58

Russia imposed limits on how much poultry, beef, and pork could be imported into the nation from the European Union (EU) in retaliation to limits the EU placed on how much grain Russia could export. What type of nontariff barrier did Russia use to control the amount of poultry, beef, and port it imported from the EU?

A) quotas
B) subsidies
C) boycotts
D) customs classifications
E) duties

Question 59

The European Union (EU) bans the importation of hormone-fed U.S. beef and bioengineered corn and soybeans on safety grounds. This ban is so consumers in the EU will buy domestic beef and products made from domestically produced corn and soybeans. This ban is an example of .

A) a subsidy
B) an involuntary import restraint
C) geocentrism
D) expropriation
E) a government import standard

Question 60

Nestlé is a company headquartered in Switzerland with manufacturing plants in Columbia, Australia, Canada, Egypt, Kenya, and more than 90 other nations. Nestlé is an example of a .

A) multidomestic global company
B) multinational corporation
C) ethnocentric organization
D) acculturated corporation
E) macro-marketer

Question 61

Historically, most companies have used the to successfully enter foreign markets.

A) phase model of globalization
B) global new venture approach
C) ripple approach
D) market echo approach _{e. guerrilla approach}
Because it

Question 62

One of the major questions that a company must typically answer about its future, once it has decided to go global is ____.

A) How many additional employees will the company need?
B) To what extent should the company standardize or adapt business procedures?
C) To what extent should a company abide by global or regional trade agreements?
D) Will the organization's mission statement need to be changed?
E) How many new shareholders will be influenced by global activities?

Question 63

All global new ventures share two common factors. One is that the company founders successfully develop and communicate the company's global vision from the start. The other is .

A) the bringing of a good or service to several different foreign markets at the same time
B) the use of local adaptation strategy
C) a mechanistic organizational culture
D) the ability to respond quickly and efficiently to any changes in the external environment
E) the development of culturally-specific implementation policies

Question 64

Sodima is a French cooperative that owns the name, the trade secrets, and the patents on Yoplait yogurt. General Mills pays Sodima for the right to sell Yoplait yogurt in the United States. This is an example of .

A) licensing
B) a global joint venture
C) exporting
D) a strategic alliance
E) direct investment

Question 65

are both examples of cooperative contracts.

A) Licensing and joint ventures
B) Franchising and licensing
C) Direct investment and indirect investment
D) Direct exporting and indirect exporting
E) Joint ventures and strategies alliances

Question 66

Which of the following represents the correct sequence for the phase model of globalization?

A) exporting; wholly-owned affiliates; cooperative contracts; strategic alliances
B) exporting; cooperative contracts; wholly-owned affiliates; strategic alliances
C) exporting; cooperative contracts; strategic alliances; wholly-owned affiliates
D) exporting; strategic alliances; cooperative contracts; wholly-owned affiliates
E) home country sales; exporting; job ventures; strategic alliances, and direct investment

Question 67

In terms of Hofstede's cultural differences, the people who are described as happy­go­lucky and are people who are comfortable with an unstructured life and deal well with sudden changes. In terms of Hofstede's cultural differences, these people have a .

A) culture based on equity
B) low degree of uncertainty avoidance
C) masculine culture
D) high degree of uncertainty avoidance
E) feminine culture

Question 68

Fran Wilson Creative Cosmetics is a medium-sized U.S. company that sells 1.5 million tubes of its lipstick annually in Japan. It has no physical presence within the country beyond the fact its products are sold there. Fran Wilson Creative Cosmetics uses to reach the Japanese market.

A) franchising
B) direct investment
C) licensing
D) a strategic alliance
E) exporting

Question 69

Robert Mondavi Wineries entered into an agreement with Baron Philippe de Rothschild, owner of Boreaux's First Growth chateau, to produce a top quality wine in California. The two companies working together to create a new product is an example of .

A) exporting
B) licensing
C) a joint venture
D) a cooperative contract
E) a wholly-owned subsidiary

Question 70

_{53. A multinational company that acts with has offices, manufacturing plants, and distribution facilities in different}
Countries all which run based on the same rules, guidelines, policies, and procedures.

A) policy certainty
B) global consistency
C) global adaptation
D) global certainty
E) regiocentrism

Question 71

Starbucks is expanding its global operations into South America in spite of the real probability of civil wars and terrorist activities in many of the continent's nations. As Starbucks expands into South America, it must deal with
____.

A) political uncertainty
B) economic uncertainty
C) infrastructure regulation
D) nationalistic equity
E) strategy risk

Question 72

In a multinational firm, managers at company headquarters typically prefer an emphasis on simplifies decisions.

A) local consistency
B) local adaptation
C) global adaptation
D) global consistency
E) domestic adaptation

Question 73

A is a strategic alliance in which two existing companies collaborate to form a third, independent company.

A) joint venture
B) Franchise
C) wholly owned affiliate
D) global new venture
E) cooperative contract

Question 74

_{59. A(n) is an agreement in which a foreign business owner pays a company a fee for the right to conduct that}
Business in his or her country.

A) exporting agreement
B) cooperative contract
C) joint venture
D) strategic alliance
E) direct investment

Question 75

A news article on Latin America read, "Mexico is the closest Latin America gets to the U.S. both geographically and culturally." According to Hofstede, this means the Mexican culture .

A) does not support individualism
B) is strong in power distance
C) has a masculine orientation
D) is not oriented towards individualism
E) is accurately described by all of these

Question 76

All global new ventures share two common factors. One is the bringing of a good or service to several different foreign markets at the same time. The other is .

A) the development of culturally-specific implementation policies
B) the use of local adaptation strategy
C) a mechanistic organizational culture
D) the ability to respond quickly and efficiently to any changes in the external environment
E) none of these

Question 77

Starbucks is a chain that is rapidly expanding its global operation. As it expanded into South America, its research showed that Chileans on average drink only 150 cups of coffee annually, and people in Argentina only drink about half that amount. An average citizen of the United States drinks 345 cups annually. These differences in annual coffee consumption most likely reflect .

A) policy uncertainties
B) nationalistic motivations
C) cultural differences
D) economic uncertainties
E) differences in internal marketing strategies

Question 78

occurs when a company sells domestically produced products to customers in foreign countries.

A) Direct foreign investment
B) Franchising
C) Licensing
D) Exporting
E) A joint venture

Question 79

_{51. The is a regional trade agreement that liberalizes trade between countries more than any other such}
Agreement.

A) Maastricht Treaty of Europe
B) Association of South East Nations
C) Asia-Pacific Economic Cooperation agreement
D) North American Free Trade Agreement
E) Free Trade Area of South America

Question 80

Ernst & Young, an international accounting and management consulting company, entered Hungary first by establishing a joint venture with a local firm. Ernst & Young later acquired the company with which it had the alliance. As a result Ernst & Young then had a(n) in Hungary.

A) franchise
B) licensing arrangement
C) cooperative contract
D) wholly owned affiliate
E) export agency