Deck 6: International Management

Question 1

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

Answer 1

False
Explanation:
U.S. industries that have benefited in the short run from NAFTA include capital goods suppliers, manufacturers of consumer durables, grain producers and distributors, construction equipment manufacturers, the auto industry, and the financial industry.

Question 2

Which country has received the most foreign direct investment in recent years?

A)Brazil
B)China
C)Mexico
D)The United States
E)Vietnam

Answer 2

D
Explanation: A consequence of increased global integration is that foreign direct investment (FDI) is playing an ever-increasing role in the global economy as companies of all sizes invest overseas. In recent years, the United States has received more foreign direct investment than any other country.

Question 3

What caused Mexico to emerge as the third-largest trading partner of the United States?

A)NAFTA
B)The World Trade Organization
C)APEC
D)The International Monetary Fund
E)ASEAN

Answer 3

A
Explanation: Although the United States has had a longer-standing agreement with Canada, Mexico has quickly emerged as the third-largest trading partner of the United States as a result of NAFTA.

Question 4

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

Question 5

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

Question 6

For the past several years, FuturaCloud hired a firm in India to handle its technical customer support. Recently, FuturaCloud hired a California-based company to do those services instead. This change is an example of _____.

A)offshoring
B)outsourcing
C)inshoring
D)insourcing
E)offsourcing

Question 7

Gerard's company used to have one of its clothing lines manufactured by an outside supplier. That line is now manufactured at a new factory built by Gerard's company. This change is an example of _____.

A)offshoring
B)outsourcing
C)inshoring
D)insourcing
E)offsourcing

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

The most significant disadvantage concerning franchising is brand name recognition.

Question 13

Which of the following is a major exporter of petroleum, or oil?

A)Australia
B)The Middle East
C)Japan
D)The South Pacific
E)India

Question 14

Which of the following is one of the three regions that dominate the global economy?

A)South America
B)Australia
C)Middle East
D)Asia
E)Eastern Europe

Question 15

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

Question 16

What did the Maastricht Treaty establish?

A)The NAFTA trade zone
B)The European Union
C)The CAFTA-DR trade zone
D)The Association of Southeast Asian Nations
E)The Asia Pacific Economic Cooperation group

Question 17

Which of the following countries is a member of the Asia-Pacific Economic Cooperation Group?

A)Russia
B)Germany
C)Brazil
D)Nigeria
E)Italy

Question 18

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

Question 19

Which of the following is the largest export market of the United States?

A)Brazil
B)Canada
C)China
D)Germany
E)Mexico

Question 20

The practice followed by some companies of moving jobs to another country is called _____.

A)offshoring
B)outsourcing
C)inshoring
D)insourcing
E)offsourcing

Question 21

Which model should a company adopt when pressures for local responsiveness are high and pressures for global integration are low?

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

Question 22

Which of the following is a major disadvantage of the multinational model?

A)Lack of response to local political conditions
B)Duplication of efforts
C)Inability to customize products
D)Centralized decision making
E)Rigid procedures

Question 23

Which of the following businesses is the most likely to use the franchising model?

A)An automotive plant
B)A smartphone manufacturer
C)A pipe fabricator
D)A restaurant chain
E)A clothing factory

Question 24

Which of the following is the preferred strategy when a company's competitive advantage is based on technology and the company wishes to enter the global marketplace?

A)Exporting
B)Licensing
C)Franchising
D)Creating a joint venture
E)Creating a wholly owned subsidiary

Question 25

Superior Appliances moved some of its manufacturing operations to another country where wages are lower. This is an example of which of the following?

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

Question 26

While Cork Commercial Containers was planning how it was going to open a plant in the Philippines, it brought in Rodrigo, a native of the country, to teach the development team about the country's culture and economy. Rodrigo is an example of a(n) _____.

A)expatriate
B)inpatriate
C)third-country national
D)host-country national
E)global transnational

Question 27

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 countries to produce more varied goods.

Question 28

Which of the following factors would increase the pressure for local responsiveness?

A)The existence of widely worn traditional clothing styles
B)A food product that has international popularity
C)A technical component used in electronic devices worldwide
D)Pressure on a company to reduce costs significantly
E)The existence of competitors engaged in global strategic coordination

Question 29

Which of the following is a reason that companies adopt a common global strategy?

A)Significant differences in consumer tastes among countries
B)Differences in traditional practices among countries
C)Varying sales practices among countries
D)Political demands by host countries
E)Competitive pressures to reduce costs

Question 30

U.S. business people working abroad may face ethical challenges, in particular because of cultural differences regarding _____.

A)murder
B)bribery
C)marriage
D)bureaucracy
E)etiquette

Question 31

Colas have become available around the globe, and they are used in similar ways worldwide. The situation in which consumer tastes and preferences regarding a product are similar in many different countries is an example of _____.

A)local demand
B)customized products
C)traditional practices
D)universal needs
E)political demands

Question 32

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

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

Question 33

Dan is sent on a short-term work assignment from the United States to Great Britain, where traffic laws require driving on the left side of the road. While in Great Britain, Dan notices that he feels anxious every time he has to drive on a two-way street. What is Dan experiencing?

A)Offshoring
B)Failure rate
C)Culture shock
D)Ethnocentrism
E)Panic attack

Question 34

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

A)local tastes
B)decentralized structures
C)local politics
D)traditional practices
E)cost considerations

Question 35

Which of the following is an effective way to prevent failed global assignments?

A)Using validated screening criteria
B)Keeping the assignment structure open
C)Avoiding the assignment of mentors
D)Delaying the creation of job objectives
E)Reducing dependency by communicating rarely

Question 36

Jamila is a native of the country where Regal Industries is building its new plant. If Jamila goes to work at Regal's factory, she will be considered a(n) _____.

A)third-country national
B)host-country national
C)immigrant
D)expatriate
E)inpatriate

Question 37

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

A)World output and trade have decreased to dramatically low levels.
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 38

Research suggests that regardless of nationality or religion, most people embrace a set of five core values. Which of the following is one of the five core values?

A)Ambition
B)Competitiveness
C)Greed
D)Submission
E)Compassion

Question 39

Which of the following has been an unexpected effect of offshoring?

A)Companies who use offshoring find that their travel costs decrease.
B)Energy costs for the company rise, increasing the benefits of offshoring.
C)Wages in the foreign countries rise, reducing the expected cost savings.
D)It helps reduce wage stagnation of workers in the home country.
E)It has reversed the trend of increased automation.

Question 40

One of the drawbacks of exporting is

A)loss of scale economies.
B)decreased scale volume.
C)loss of control over quality.
D)high transportation costs.
E)loss of control over technology.

Question 41

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 42

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)farming out core functions, such as research and development, to subsidiaries around the world.

Question 43

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 44

Strong pressures for local responsiveness emerge when

A)consumer tastes and preferences differ significantly.
B)competitive pressures to reduce costs are high.
C)traditional practices among countries are similar.
D)competitors engage in global strategic coordination.
E)sales practices are uniform from country to country.

Question 45

The 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 46

Threats to China's economic future include

A)political instability.
B)aging population.
C)small labor force.
D)decreasing consumer demand.
E)high labor costs.

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

What does an integration-responsiveness grid help a manager to do?

A)Determine the profit-loss ratio for a new product.
B)Choose a price point by graphing a product's supply and demand.
C)Identify the best strategy for competing in a global marketplace.
D)Do a cost-benefit analysis for outsourcing.
E)Compare the economic advantages of outsourcing versus inshoring.

Question 49

When One-World Fashion tries to open its clothing stores in a new country, it learns that local rules require a certain percentage of its products to be manufactured locally. This example fits into which category of pressures for local responsiveness?

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 50

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

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

Question 51

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 52

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 53

An organization's economic environment includes

A)growth of developing nations.
B)anticorruption laws.
C)free-trade agreements.
D)bribery concerns.
E)climate change.

Question 54

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

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

Question 55

_____ create strong pressure for a global strategy.

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

Question 56

NewGen Communications Technology has subsidiaries in each country in which it does business. As the parent company, NewGen runs its R&D department from its home country, so that each foreign 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 57

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 58

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 59

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 transfers ultimate control to the subsidiaries.

Question 60

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 system lowers manufacturing costs by eliminating duplication of effort.

Question 61

Très Chic, a cosmetics manufacturer, assumes that people all over the world will view and use its products in the same way. Therefore it produces exactly the same makeup products, using the same color palettes, in several countries with attractive labor rates, and offers them to all of its markets around the world. Très Chic uses the _____ model of international competition.

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

Question 62

Which model involves fostering communication among subsidiaries to permit transfer of skills?

A)International
B)Multinational
C)Intranational
D)Global
E)Transnational

Question 63

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 64

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 65

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 66

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 67

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 68

What is an advantage of exporting as a global expansion entry mode?

A)It is consistent with a pure global strategy.
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 69

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

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

Question 70

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 71

A disadvantage of the global model is that it

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

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 the

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

Question 74

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)Customer satisfaction is high.
D)Large amount of discretion is given to the subsidiaries.
E)The products are standardized.

Question 75

A disadvantage of a multinational model is that it

A)cannot easily 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)cannot easily launch a coordinated global attack against competitors.
E)centralizes functions of research and development to the parent company.

Question 76

Foam Cutters is a speedboat manufacturing company based in California. The company operates a subsidiary in Australia, marketing products that are customized to appeal to Australian tastes. In this case, Foam Cutters is following the _____ model.

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

Question 77

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

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

Question 78

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 79

_____ 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)Franchising
B)International licensing
C)Entering a joint venture
D)Exporting
E)Patenting

Question 80

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)It reduces the duplication of efforts.
E)It increases profits because of economies of scale.