Deck 6: International Management

Question 1

Offshoring occurs when an organization contracts with an outside provider to produce one or more of an organization's products or services.

Answer 1

False
Explanation: Offshoring occurs when companies move jobs to another country,typically where wages are lower.This practice does not necessarily require using an outside provider,as outsourcing does.

Question 2

The creation of the European Union has resulted in an economic superpower with a larger GDP than the United States.

Answer 2

True
Explanation: The European Union was originally formed after World War II to foster cooperation through trade in place of military conflict,but the efforts have also created an economic superpower.Its 27 members now boast a population of more than 492 million and a GDP (gross domestic product)exceeding that of the United States.

Question 3

Members of APEC include South Korea,Taiwan,the United States,Australia,and Russia.

Answer 3

True
Explanation: South Korea,Taiwan,and Singapore and other Asian countries have joined with the United States,Australia,and Russia to form the 21-member Asia-Pacific Economic Cooperation (APEC)trade group.

Question 4

Foreign direct investment flows to less developed countries by firms in developed countries is declining substantially.

Question 5

NAFTA had an immediate and negative effect on the U.S.automobile industry.

Question 6

When pressures for local responsiveness are high and pressures for global integration are low,the global model is appropriate.

Question 7

The economy of the Middle East is best known for its exports of oil.

Question 8

Companies both large and small now view the world,rather than a single country,as their marketplace.

Question 9

One of the consequences of an increasingly integrated global economy is that imports are penetrating deeper into the world's largest economies.

Question 10

Companies that adopt the global model tend to base their global competitive strategy on cost considerations.

Question 11

In the international model,managers use their organization's existing core capabilities to expand into foreign markets.

Question 12

The Maastricht Treaty formally established the trade area in North America.

Question 13

The international model is an approach that enables managers to "think globally but act locally."

Question 14

When there are differences among countries in traditional practices such as driving,pressures for local responsiveness emerge.

Question 15

Japan is the largest trading partner of the United States based on the value of imports and exports between the two countries.

Question 16

Mexico has quickly emerged as the third-largest trading partner of the United States as a result of NAFTA.

Question 17

Universal needs exist when the tastes and preferences of consumers in different countries with regard to a product are similar.

Question 18

A major disadvantage of the multinational model is higher manufacturing costs and duplication of effort.

Question 19

The pressure to reduce costs is one of the reasons a firm may prefer a common global strategy rather than one tailored to individual markets.

Question 20

South America is one of the three regions that are most dominant in the global economy.

Question 21

Ethnocentrism is the tendency to judge others by the standards of one's own culture or group,which are seen as superior.

Question 22

When a company's competitive advantage is based on technology and it wishes to enter the global marketplace,the least preferred strategy is the wholly owned subsidiary.

Question 23

Cultural shock is an example of an executive coping strategy for international assignments.

Question 24

Franchising is utilized primarily by manufacturing industries,whereas licensing is used more often in service industries.

Question 25

Using host-country nationals at an overseas subsidiary is generally more expensive than using expatriates.

Question 26

One of the ways to prevent failed global assignments is to use effective,validated screening and selection criteria.

Question 27

Which of the following is a consequence of an increasingly integrated global economy?

A) World output and trade have decreased to a dramatically low level.
B) Many companies find their home markets under attack from foreign competition.
C) Companies are making foreign direct investments in home companies.
D) Imports are failing to penetrate deeper into the world's largest economies.
E) There are reduced opportunities for global tradE.

Question 28

Inpatriates are parent-company nationals who are sent abroad for a short period.

Question 29

_____ occurs when the organization contracts with an external provider to produce one or more of an organization's products or services.

A) Proscription
B) Outsourcing
C) Offshoring
D) Expatriation
E) Franchising

Question 30

Ethical behavior and decision making are surprisingly harder in a purely domestic situation than in the international arena.

Question 31

Which of the following is an advantage of offshoring?

A) It increases the wage costs,increasing the benefits of offshoring.
B) It increases the energy costs,increasing the benefits of offshoring.
C) It helps to find talent which is in short supply in the home country.
D) It helps remove wage stagnation of workers and enables a steady increase.
E) It is cheaper for managers to offshorE.

Question 32

Collaborating with other countries in trade:

A) leads to increased prices.
B) narrows down the market for managers.
C) raises the standards of living.
D) leads to reduced efficiency.
E) causes conspiracy between cultures.

Question 33

Culture shock is the disorientation and stress associated with being in a foreign environment.

Question 34

The most significant disadvantage of franchising concerns quality control.

Question 35

_____ occurs when companies move jobs to another country,typically where wages are lower.

A) Franchising
B) Outsourcing
C) Offshoring
D) Expatriation
E) Proscription

Question 36

Individuals from the parent country who are sent to work at a foreign subsidiary are known as expatriates.

Question 37

One of the advantages of exporting is that it provides scale economies.

Question 38

Family issues are the main reason for expatriates to return home early.

Question 39

Inpatriates are valuable because they bring with them extensive knowledge about how to operate effectively in their home countries.

Question 40

High transportation costs associated with exporting can make it uneconomical,particularly in the case of bulk products.

Question 41

Calabria Steel has subsidiaries in each country in which it does business.As the parent company,Calabria has located its core skills in technology and R&D overseas so that each subsidiary remains dependent on it for new products,processes,and ideas.This illustrates the _____ model for global strategy.

A) international
B) multinational
C) global
D) transnational
E) intranational

Question 42

Which of the following is an advantage of the international model?

A) It facilitates the transfer of skills from the parent company to the subsidiaries.
B) It provides maximum latitude to research and development functions.
C) It provides the opportunity to achieve a low-cost position via scale economies.
D) It requires a minimum amount of effort and coordination by the parent company.
E) It provides ultimate control to the subsidiaries.

Question 43

Which of the following existing agreements includes Costa Rica,Nicaragua,and the United States?

A) NAFTA
B) CAFTA-DR
C) FTAA
D) APEC
E) ASEAN

Question 44

NAFTA combined the economies of _____ into one of the world's largest trading blocs.

A) the United States,Canada,and Mexico
B) Canada,Mexico,and South America
C) South America,the United States,and Central America
D) Latin America,the Pacific Rim,and the European Union
E) the United States,the European Union,and Canada

Question 45

A threat to China's growing dominance include:

A) political instability.
B) aging population.
C) low birthrates.
D) low immigration.
E) high labor costs.

Question 46

Which of the following pressures for local responsiveness includes threats of protectionism and local rules?

A) Differences in distribution channels
B) Differences in traditional practices
C) Economic and political demands
D) Differences in consumer tastes
E) Global market integration

Question 47

Under the ____,member countries of the European Union agreed to adopt a common European currency called the euro.

A) NAFTA
B) Maastricht Treaty
C) GATT Agreement
D) APEC Treaty
E) European Unification Act

Question 48

Which of the following countries is on its way to becoming the largest producer and consumer of many of the world's goods?

A) Japan
B) Canada
C) Mexico
D) China
E) Vietnam

Question 49

Companies that decentralize their operations throughout the globe in order to appeal to the varying tastes and preferences of global consumers are utilizing a _____ model.

A) domestic
B) international
C) multinational
D) intranational
E) global

Question 50

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the ____ model.

A) international
B) multinational
C) global
D) transnational
E) contingency

Question 51

An organization's economic environment includes:

A) growth of developing nations.
B) anticorruption laws.
C) free-trade agreements.
D) bribery concerns.
E) intensifying demand for resources.

Question 52

_____ create strong pressure for a global strategy.

A) Universal needs
B) Differences in traditional practices
C) Political demands imposed by host countries
D) Varied consumer preferences
E) Legal demands imposed by host countries

Question 53

The international model of organizational structure involves:

A) large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries.
B) subsidiaries located in countries where the company does business with much of the control exercised by the parent company.
C) subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries.
D) manufacturing various components at appropriate sites and assembling the components at national subsidiaries.
E) the sharing of the firms experiences worldwide pursuing local responsiveness.

Question 54

When identifying the best strategy for competing in a global marketplace,it is helpful to plot a company's position on a(n):

A) Gantt chart.
B) force field analysis grid.
C) integration-responsiveness grid.
D) cost-benefit grid.
E) strategy map.

Question 55

In the integration-responsiveness grid the:

A) vertical axis measures pressures for global integration and the horizontal axis measures pressures for local responsiveness.
B) horizontal axis measures pressures for local interaction and the vertical axis measures pressures for global responsiveness.
C) horizontal axis measures financial viability and the vertical axis measures employee satisfaction.
D) vertical axis measures employee satisfaction and the horizontal axis measures management credibility.
E) vertical axis measures pressures for global systems capacity and the horizontal axis measures pressures for local financial success.

Question 56

Which of the following countries has become an important provider of online computer and software support for the United States?

A) Egypt
B) Great Britain
C) India
D) Mexico
E) Taiwan

Question 57

To be competitive in a global economy,Europeans must:

A) reduce their population density.
B) increase their level of productivity.
C) work for fewer hours.
D) increase the average workers' wages.
E) tighten immigration rules.

Question 58

The global strategy model that uses subsidiaries in each country and provides each a great deal of discretion to respond to local conditions is the _____ model.

A) international
B) multinational
C) global
D) transnational
E) domestic

Question 59

Which of the following is true of the multinational approach to international competition?

A) The subsidiaries are completely under the control of the parent company.
B) The parent company allows the subsidiaries to respond to local conditions.
C) The companies have centralized manufacturing facilities.
D) The subsidiaries depend completely on the parent company for new products.
E) The tastes and preferences of local consumers are ignored.

Question 60

Strong pressures for local responsiveness emerge when:

A) consumer tastes and preferences differ significantly.
B) there are competitive pressures to reduce costs.
C) there is similarity in traditional practices among countries.
D) competitors engage in global strategic coordination.
E) there is a uniformity in sales practices.

Question 61

Which of the following entry modes do most manufacturing companies use to begin global expansion?

A) Exporting
B) Wholly owned subsidiaries
C) Franchising
D) Licensing
E) Joint ventures

Question 62

Exporting,licensing,franchising,joint ventures,and wholly owned subsidiaries are all methods of:

A) identifying lucrative consumers on a global scale.
B) operating a transnational business.
C) entering overseas markets.
D) optimizing global profit.
E) reducing costs.

Question 63

A disadvantage of exporting is that:

A) it does not provide scale economies.
B) the company may face tariff barriers.
C) it is the most expensive method of expanding globally.
D) the company risks losing control of its intellectual property.
E) it is inconsistent with a pure global strategy.

Question 64

A disadvantage of the global model is that:

A) it is less responsive to consumer tastes and demands.
B) it has high manufacturing costs.
C) it involves spending more time and money on product customization.
D) its subsidiaries are limited to market and service functions.
E) it provides too much freedom to its subsidiaries.

Question 65

An organizational model that consists of a company's overseas subsidiaries and is characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations is known as the:

A) international model.
B) multinational model.
C) global model.
D) transnational model.
E) intranational model.

Question 66

Road Rage is a sports goods manufacturing company based and founded in Plutonia.The company operates a subsidiary in Bradford,marketing products that are customized to appeal to the people of Bradford.In this case,Road Rage is following the _____ model.

A) domestic
B) international
C) multinational
D) contingency
E) global

Question 67

Which of the following is true of the global model?

A) It is highly responsive to consumer taste.
B) Decision making is done at a local level.
C) There is a high level of customer satisfaction.
D) Large amount of discretion is given to the subsidiaries.
E) The products are standardized.

Question 68

The _____ organizational model is designed to enable a company to market a standardized product in the worldwide marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

A) international
B) multinational
C) global
D) transnational
E) decentralized

Question 69

In companies that adopt the _____ model of organizational structure,functions are centralized where it makes sense to do so,but a great deal of decision making also takes place at the local level.

A) international
B) multinational
C) global
D) transnational
E) intranational

Question 70

Candace Apparel,a women's clothing manufacturer,assumes that people all over the world will view and use its products in the same way.Therefore it produces standardized versions of its apparel in several countries with attractive labor rates,and offers them to all of its international markets.Candace Apparel uses the _____ model of international competition.

A) international
B) multinational
C) global
D) transnational
E) intranational

Question 71

Which of the following is an advantage of a multinational model?

A) Manufacturing costs are low.
B) Launching coordinated global attacks against competitors is easy.
C) Subsidiaries can customize products according to local preferences.
D) There is no chance of duplication of efforts.
E) Realizing scale economies from centralized manufacturing facilities results in standardized production.

Question 72

The two strategic models that have relatively high manufacturing costs are:

A) global and transnational.
B) international and transnational.
C) multinational and international.
D) global and international.
E) multinational and transnational.

Question 73

The organizational model that enables managers to "think globally but act locally" is known as the:

A) intranational model.
B) international model.
C) multinational model.
D) global model.
E) transnational model.

Question 74

In order to achieve cost economies,Apex Manufacturing bases its production plants in Mexico and gets its engineering services from skilled workers in Germany.In this case,Apex is using the _____ model of organizational structure.

A) international
B) multinational
C) global
D) transnational
E) intranational

Question 75

A disadvantage of a multinational model is that it:

A) is difficult to transfer core skills among international operations.
B) does not give any freedom to its subsidiaries to respond to local conditions.
C) standardizes its goods and services ignoring customers' preferences.
D) is difficult to launch a coordinated global attack against competitors.
E) centralizes functions of research and development to the parent company.

Question 76

Which of the following models of organization structure depends most heavily on communication and coordination between subsidiaries?

A) The global model
B) The transnational model
C) The international model
D) The worldwide model
E) The multinational model

Question 77

_____ is an arrangement by which an organization in another country buys the rights to manufacture a company's product in its own country for a negotiated fee.

A) Offshoring
B) International licensing
C) Entering a joint venture
D) Exporting
E) Patenting

Question 78

Which of the following companies is an example of a transnational company?

A) Sony
B) IBM
C) Heineken
D) Panasonic
E) Unilever

Question 79

An advantage of exporting as a global expansion entry mode is that:

A) scale economies are provided.
B) low cost sites are available.
C) transportation costs are generally lower.
D) it is considered responsive to local needs.
E) trade barriers may be removed.

Question 80

Which of the following is true of the transnational model?

A) It involves centralized decision making by the parent company.
B) All core functions such as marketing and service are based in the parent company.
C) The subsidiaries depend on the parent company for new products.
D) The manufacturing costs are high.
E) It involves fostering communication among subsidiaries to permit transfer of skills.