Deck 6: International Management

Question 1

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

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

Answer 1

B

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

The most significant disadvantage concerning franchising is brand name recognition.

Question 5

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 6

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

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

Question 7

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

Question 8

Mykal'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 Mykal's company.This change is an example of

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

Question 9

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

Question 10

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

Question 11

Jean-Michel is the CEO of Kronos Timepieces,a retailer and manufacturer of fashion watches and watch accessories.The company,which was founded in 1925,is based in Switzerland and employs around 1,000 people in five countries.It currently sells its watches in 27 countries,with a recent expansion into several Middle Eastern and far Eastern countries.Kronos has decided to introduce a lower-priced unisex wristwatch.Jean-Michel has been considering contracting a brand new factory located in Singapore to manufacture the lower-priced line of wristwatches,rather than using Kronos' older,main factory,which is located in nearby Grenchen.Which of the following factors best supports Jean-Michel's decision to outsource production of the watches?

A)The company's ability to rapidly and reliably deliver its watches will be increased by the state of the art facilities in the Singapore factory.
B)The manufacture of watches is standardized and the company is sufficiently well-established,making outsourcing an attractive option.
C)Automation can often achieve significant labor cost savings,increasing the advantage of moving production abroad.
D)The current supply chain is not as highly efficient and routine as it could be;using the Singapore factory could address that problem.
E)Even though Kronos will incur additional costs of sending staff from Switzerland to manage the Singapore factory,costs will be lower in the long run.

Question 12

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

A)Companies that 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 13

Family issues are the main reason expatriates return home early.

Question 14

For the past several years,CloudComm has hired a firm in India to handle its technical customer support.Recently,CloudComm 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 15

Pantera Motorcycles 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 16

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

Question 17

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 18

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 19

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

Question 20

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

Question 21

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 22

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

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

Question 23

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 24

Threats to China's economic future include

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

Question 25

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 26

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 27

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 28

To be competitive in a global economy,Europeans must

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

Question 29

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 30

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 31

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 32

The Earl of Sandwich is a fast food venture that offers healthy,whole-food,and vegetarian alternatives to traditional sandwiches.The company,which was founded in 2000,had expanded to 45 locations in the United States by 2010.Between 2010 and 2017,the company expanded to the international market,with 10 locations in Western Europe.Now Anjali,the CEO,is considering expanding into the Latin American market,with a new location in Santamaria.Anjali meets with her team to discuss researching the Santamarian market.What do you think is the first task the team should complete when making a decision about the viability of opening a location in Santamaria?

A)an investigation into how NAFTA and CAFTRA will affect the process of opening a franchise in Santamaria
B)an investigation into how widespread bribery and white-collar crime are in Santamaria compared to other Latin American countries
C)a report on the shifting cultural milieu of Santamaria,in which there is a growing demand for new products and services.
D)an investigation into Santamarian policies regarding preservation of the natural environment and health issues

Question 33

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 34

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 35

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 36

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 37

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 38

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

Question 39

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 40

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 41

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 42

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 43

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 44

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 45

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 ________ model.

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

Question 46

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 47

________ 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 48

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)A large amount of discretion is given to the subsidiaries.
E)The products are standardized.

Question 49

LEAP Communications Technology has subsidiaries in each country in which it does business.As the parent company,LEAP runs its research and development department from its home country.As a result,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 50

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 51

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 52

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 53

Crest Craft 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,Crest Craft is following the ________ model.

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

Question 54

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 55

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

Question 56

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 of the company to the subsidiaries.

Question 57

When Kumquat,a contemporary sportswear company,tries to open its clothing stores in a new country,it learns that local rules require a certain percentage of its products 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 58

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 59

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 60

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 61

Big Ed's Barbecue sells small business owners the rights to use the company's brand name in return for a lump-sum payment and a share of the buyer's profits.This practice is referred to as

A)offshoring.
B)international licensing.
C)exporting.
D)franchising.
E)royalty facilitation.

Question 62

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 63

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 64

Which of the following is a disadvantage of franchising?

A)There is a large amount of risk for the franchisor.
B)The franchisor has to put in a large amount of capital.
C)The cost of development is high.
D)There is a high amount of political risk.
E)There is a possibility of losing quality control.

Question 65

Which of the following methods of entering global competition best allows a company to have operations in other countries and maintain tight control over them?

A)exporting
B)licensing
C)a joint venture
D)franchising
E)a wholly owned subsidiary

Question 66

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

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

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

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

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

Question 69

When a company sets up its own overseas operations,independent of foreign partners or governments,it has established a(n)

A)purely global strategy.
B)competitive venture.
C)wholly owned subsidiary.
D)independent venture.
E)multinational contract.

Question 70

________ 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 71

FreshFaced,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.FreshFaced uses the ________ model of international competition.

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

Question 72

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 73

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

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

Question 74

A disadvantage of licensing is that the licensing company

A)may lose control over its technology.
B)takes on greater political risk.
C)takes on greater development costs.
D)realizes higher profit margins.
E)bears most of the risks associated.

Question 75

An advantage of licensing as a method of entering global competition is that the

A)licensee bears most of the costs and risks associated.
B)licensing company has control over its technology.
C)licensing company has control over quality levels.
D)licensing company has lower communication costs.
E)licensee has lower production costs.

Question 76

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 77

A major disadvantage of operating a wholly owned subsidiary is that

A)a loss of control over technology is likely to occur.
B)a wholly owned subsidiary offers too much flexibility over operations.
C)high costs and risk are associated with this type of operation.
D)overseas consumers are often resentful of foreigners.
E)host countries can impose higher tariffs on the firm.

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

Marko is the CEO of the advertising department at Foster-Ghent,a company that encompasses a variety of personal hygiene brands,including Lush Soap and New Gleem toothpaste.Foster-Ghent does business in 65 countries through one or more operating companies,with a total of about 50 companies in the Foster-Ghent group.Tanvi is the advertising and marketing manager for the Indian market.Based on your knowledge of the transnational model,which of the following best describes how Marco and Tanvi would divide responsibilities?

A)Tanvi designs,from start to finish,an advertising campaign for Clearly Clean,Foster-Ghent's new line of contact lens solution.Marko signs the check to pay for the billboards.
B)The new advertising campaign for Foster-Ghent's Clearly Clean contact solution are fully designed by Marco and his local team.Tanvi oversees translation of the ads.
C)Marco and his local team create an advertising campaign and strict guidelines for implementing it.Tanvi is merely responsible for ensuring the guidelines are followed by her staff.
D)The general guidelines for the new Clearly Clean contact solution advertising comes from Marco's team,but Tanvi is allowed to design campaigns that will appeal to the local market.
E)Members of Marko's local team personally direct all advertising,traveling to India to meet with Tanvi several times a year to direct the design and launch of its various campaigns.

Question 80

Which of the following methods of entering global competition runs the biggest risk of conflict between partners over who controls what?

A)exporting
B)licensing
C)joint ventures
D)franchising
E)wholly owned subsidiaries