Deck 8: Section 1: Global Management

Question 1

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

Answer 1

True

Question 2

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.

Answer 2

False

Question 3

The two kinds of cooperative contracts are licensing and franchising.

Answer 3

True

Question 4

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

Question 5

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 6

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

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

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 9

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

Question 10

A joint venture is an example of a strategic alliance.

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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 16

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 17

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

Question 18

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

Question 19

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 20

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

Question 21

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 22

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 23

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 24

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 25

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 26

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 27

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 28

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

Question 29

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 30

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 31

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 32

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

Question 33

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 34

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 35

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

Question 36

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 37

_______is a method of investment in which a company builds a new business or buys an existing business in a foreign country.

A) A strategic alliance
B) Direct foreign investment
C) A global new venture
D) A joint venture
E) Direct exporting

Question 38

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

Question 39

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

Question 40

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 41

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 42

___________ are long-term, low-interest loans, cash grants, and tax deductions used to develop and protect companies or special industries.

A) Quotas
B) Voluntary export restraints
C) Cooperative contracts
D) Subsidies
E) Tariffs

Question 43

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 44

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 45

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 46

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 47

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 48

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 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

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 51

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 52

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 53

__________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 54

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

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

Question 55

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 56

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 57

__________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 58

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 59

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 60

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 61

In Canada, two automobile companies have entered into a__________ to create CAMI Automotive. One firm's management runs the plant, which makes the other's cars. The agreement gives one access to the other's dealers

A) licensing agreement
B) subsidiary arrangement
C) cooperative contract
D) exporting agency
E) joint venture

Question 62

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 63

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 64

Which of the following is a trend that has allowed companies to skip the phase model when going global?

A) quick, reliable air travel
B) the globalization of the cocooning trend
C) a critical need for resources
D) the metamorphosis of marketplaces
E) all of these

Question 65

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 66

Which of the following forms of organizing a global business help companies to avoid tariff and nontariff barriers to entry of a given foreign market?

A) licensing
B) franchising
C) global joint ventures
D) wholly owned affiliates
E) all of these

Question 67

New companies with sales, employees, and financing in different countries that are found with an active global strategy are called__________ .

A) global new ventures
B) strategic alliances
C) wholly owned affiliates
D) franchisees
E) subsidized corporations

Question 68

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 69

German chip manufacturer Infineon AG has joined with Motorola Inc. and Agere Systems Inc. to establish a new company to develop and license chip designs for cellphones. These three companies have created a__________ .

A) license facilitator
B) subsidized corporation
C) global new venture
D) joint venture
E) export merchant

Question 70

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

A) easy access to growing markets
B) experienced marketplace metamorphosis
C) eliminated all political risks
D) a limited infrastructure
E) all of these

Question 71

The primary disadvantage of using wholly owned affiliates as the means of entering a foreign market is__________ .

A) dumping
B) countertrading
C) nontariff barriers
D) acculturation
E) costs

Question 72

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 73

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

Question 74

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 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

Ford Motor Company owns and operates a $1.9 billion manufacturing plant in Brazil. What method for organizing for global business has Ford used in this example?

A) joint venture
B) strategic alliance
C) cooperative contract
D) wholly owned affiliate
E) strategic franchise

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

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 79

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 80

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