You are on page 1of 22

Chapter 1 The Rapid Change of International Business

True/False Questions 1. American companies want their managers to have a basic knowledge of international business. Answer: 2. A senior manager of a major multinational said that "no one will be in a general management job by the end of the decade who didn't have international exposure and experience." Answer: 3. CEOs of major American firms doing business overseas are not convinced the business graduates they hire should have some education in the international aspects of business. Answer: 4. One of every six U.S. jobs is tied to foreign investment made in the U.S. Answer: 5. Only those companies that have foreign operations need to be aware of what is occurring globally in its markets and their industry. Answer: 6. Firms with no foreign operations of any kind do not need managers with a global business perspective. Answer: 7. The United Nations uses the term transnational to describe a firm doing business in more than one country. Answer: 8. According to the text, foreign business is business whose activities are carried out across national borders.

Chapter 1 The Rapid Change of International Business


Answer:

Chapter 1 The Rapid Change of International Business


9. According to the text, a global company is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences. Answer: 10. According to the definitions in the text, a multidomestic firm is an organization that attempts to standardize operations worldwide in all functional areas. Answer: 11. The term in this text, "international company," refers to both global and multidomestic firms. Answer: 12. While international business as a discipline is relatively new, international business as a business practice is not. Answer: 13. An aim of a multicultural multinational is to exploit its knowledge and technological capabilities on a global basis. Answer: 14. There are five major kinds of drivers, all based on changes that are leading international firms to the globalization of their operations. Answer: 15. The difference between firms of the early 1900s and present day companies are their explosive growth and the increasing globalization of their products and markets. Answer: 16. One variable commonly used to measure where and how fast internationalization takes place is the increase in total foreign direct investment.

Chapter 1 The Rapid Change of International Business


Answer:

Chapter 1 The Rapid Change of International Business


17. Exporting refers to the transportation of any good or service to a destination inside a country or region. Answer: 18. In 2004, UNCTAD estimated that 70,000 corporations accounted for approximately 25 percent of world trade and two-thirds of global output. Answer: 19. Critics of large global firms compare these firms' sales with nations' total sales to illustrate the tremendous size of these firms. Answer: 20. In 2004, Wal-Mart's sales worldwide were greater than the sum of the GNIs of over 100 nations. Answer: 21. When a global firm's total sales are greater than a nation's GNI, the national government is defenseless against such a firm. Answer: 22. Supporters of globalization generally argue that it is the best strategy for advancing the world's economic development. Answer: 23. Expanded international trade is linked with the creation of more and better jobs. Answer: 24. Globalization has produced uneven results across nations and people. Answer: 25. Opponents of free trade point out that globalization has contributed

Chapter 1 The Rapid Change of International Business


to a decline in environmental and health conditions. Answer:

Chapter 1 The Rapid Change of International Business


26. International business differs from domestic business in that a firm operating across borders must deal with three kinds of environments. Answer: 27. The three environments for international business are domestic, foreign and export. Answer: 28. Environment, as used in the textbook, is the sum of all the forces surrounding and influencing the life and development of the firm. Answer: 29. The environmental forces can be classified as internal and foreign. Answer: 30. The external forces are commonly called uncontrollable forces. Answer: 31. Management must administer the controllable forces in order to adapt to changes in the uncontrollable environmental variables. Answer: 32. The domestic environment is composed of all the controllable forces originating in the home country that influence the life and development of the firm. Answer: 33. The kinds of forces in the foreign environment are the same as those in the domestic environment except they occur in foreign nations. Answer: 34. The values of the foreign and domestic forces are identical, but the forces themselves are different.

Chapter 1 The Rapid Change of International Business


Answer:

Chapter 1 The Rapid Change of International Business


35. A problem with the foreign forces is that they are frequently difficult to assess, especially their legal and political elements. Answer: 36. One part of the international environment is the interaction between the domestic and foreign environmental forces. Answer: 37. Those who work in the international environment find that decision making is not as complex as it is in a purely domestic environment. Answer: 38. The international environment is the interactions between the domestic and foreign environmental forces or between sets of foreign environmental forces. Answer: 39. Managers in the international environment find that decision making is easier because foreign countries are smaller than markets in the United States. Answer: 40. An international manager has two choices on what to do overseas with a concept or technique employed in domestic operations: (1) transfer it intact or (2) adapt it to local conditions. Answer: 41. The self-reference criterion is probably the biggest cause of international business blunders. Answer:

Chapter 1 The Rapid Change of International Business


Multiple Choice Questions 42. The increased internationalization of business requires __________ to have a basic knowledge of international business. A) all managers B) managers of multinationals C) managers of transnationals D) managers of purely domestic operations Answer: 43. There is an emphatic need for all business people to have a basic knowledge of: A) foreign travel. B) international business. C) the Pacific Rim. D) foreign exchange. Answer: 44. According the text, American CEOs want business graduates they hire to have some education in international business. A) if they are going to work overseas. B) if they are going to work in a firm with no foreign operations. C) Neither A nor B because they can learn on the job. D) Both A and B. Answer: 45. Historically, international business is: A) relatively new. B) existed before the time of Christ. C) B, and D. D) was influenced by the rise of the Ottoman Empire. Answer: 46. As used in the text, a global company is an organization A) that attempts to standardize operations worldwide in all functional areas. B) that looks for differences among markets. C) that is transnational.

10

Chapter 1 The Rapid Change of International Business


D) that is a foreign business. Answer:

11

Chapter 1 The Rapid Change of International Business


47. Business people generally define a transnational as: A) multinational firm. B) a company formed by a merger of two firms of approximately the same size that are from different countries. C) supernational company. D) either a global or a multinational firm. Answer: 48. Firms that have substantial operations in more than one country are called A) global companies. B) multidomestic firms C) affiliated companies. D) A, B, and C. E) A and B. Answer: 49. An A) B) C) D) international business is a business whose activities involve crossing national borders. denotes the domestic operations within a foreign country. is an organization with multicountry affiliates. is an organization that attempts to standardize operations worldwide.

Answer: 50. Foreign business denotes A) a business whose activities involve crossing national borders. B) the domestic operations within a foreign country. C) an organization with multicountry affiliates. D) an organization that attempts to standardize operations worldwide. Answer: 51. A multidomestic company is A) a business whose activities involve crossing national borders. B) the domestic operations within a foreign country. C) an organization with multicountry affiliates. D) an organization that attempts to standardize operations

12

Chapter 1 The Rapid Change of International Business


worldwide. Answer:

13

Chapter 1 The Rapid Change of International Business


52. A global company (GC) is A) a business whose activities involve crossing national borders. B) the domestic operations within a foreign country. C) an organization with multicountry affiliates. D) an organization that attempts to standardize operations worldwide. Answer: 53. International business really began: A) with the East India Company chartered in 1600. B) when Singer Sewing Machine put up a factory in Scotland in 1868. C) before the time of Christ. D) when Colt Fire Arms set up a plant in England. Answer: 54. The major globalization drivers include all of the following except: A) Political B) Social C) Technological D) Market E) None. All of the above are major kinds of globalization drivers Answer: 55. According to the text, one variable commonly used to measure where and how fast internationalization takes place is: A) the increase in a nation's population. B) the increase in the number of new companies formed. C) the increase in foreign direct investment. D) the increase in international trade. Answer: 56. In the United States, an overseas investment by an American resident is considered to be a foreign direct investment if it is __________ or more of the stockholder's equity. A) 10 B) 51 C) 25

14

Chapter 1 The Rapid Change of International Business


D) 100 Answer:

15

Chapter 1 The Rapid Change of International Business


57. The worldwide stock of outward FDI is estimated to have increased __ between 1980 and 2004. A) Threefold B) Eightfold C) Twelvefold D) Seventeenfold E) Twentyfold Answer: 58. The level of service exports worldwide more than __ between 1980 and 2004. A) Doubled B) Tripled C) Quadrupled D) Quintupled Answer: 59. UNCTAD, an agency of the United Nations estimates there were over __________ international firms in the world in 2004. A) 5,500 B) 12,000 C) 63,000 D) 70,000 E) 1,000,000 Answer: 60. In 2004, only _______________ nations had GNIs greater than the total sales of Wal-Mart. A) 100 B) 19 C) 5 D) 76 Answer:

16

Chapter 1 The Rapid Change of International Business


61. In 2004, the total amount of Wal-Mart's worldwide sales was greater than A) the GNIs of 112 of the world's smallest economies. B) the sum of the combined sales of Ford and General Electric. C) the total sales of Exxon Mobil and Citigroup. D) the sum of the GNI of the U.S. Answer: 62. Due to the expanding importance of foreign-owned firms in local economies, host governments have made their policies toward these companies _______________. A) more strict B) more liberal C) harsher D) more confronting E) A and C Answer: 63. Foreign subsidiaries must obey the local laws. If they don't, they are subject to: A) legal action by the host country. B) legal action by the host country and the country of the parent company. C) seizure by the host government. D) cancellation by the parent company of its right to do business in the host country. E) A and C. Answer: 64. According to supporters of the globalization of trade and investment, free trade A) creates more and better jobs. B) benefits all nations and workers. C) does not cause the loss of high-paying jobs. D) all of the above Answer: 65. According to opponents of the globalization of trade and investment,

17

Chapter 1 The Rapid Change of International Business


A) globalization has produced uneven results across nations and people. B) globalization has had harmful effects on labor and labor standards. C) globalization has contributed to a decline in environmental and health conditions. D) all of the above. Answer:

18

Chapter 1 The Rapid Change of International Business


66. Environment as used in the textbook is the forces surrounding and influencing the life and development of the firm and is classified as A) controllable and uncontrollable. B) domestic and foreign. C) internal and external. D) All of the above. E) A and C Answer: 67. Management has no direct control over the external environment of the firm but can exert influence by A) heavy promotion of new products to change cultural attitudes. B) focus on the strategic plan. C) lobbying. D) All of the above. E) A and C. Answer: 68. International business differs from domestic business in that a firm operating across borders must deal with A) C, D, and E. B) C and D. C) the foreign environment. D) the international environment. E) the domestic environment. Answer: 69. Examples of the kinds of uncontrollable forces listed in the text are: A) competitive. B) technological. C) gravitational. D) A and B. E) All of the above. Answer:

19

Chapter 1 The Rapid Change of International Business


70. The forces over which the management does have some command are called: A) internal B) controllable. C) foreign D) A and B E) B and C. Answer: 71. The domestic environment is composed of all the uncontrollable forces originating in the __________ that surround and influence the life and development of the firm. A) international arena B) host nation C) home country D) foreign country E) B and C. Answer: 72. Foreign environmental forces often operate differently than domestic environmental forces because: A) they are uncontrollable. B) force values are different. C) changes are difficult to assess. D) B and C. E) A, B, and C. Answer: 73. The kinds of forces in the foreign environment are __________ those in the domestic environment except that they occur in foreign nations. A) different from B) the same as C) less than D) more stringent than Answer:

20

Chapter 1 The Rapid Change of International Business


74. The international environment is the interactions between A) the domestic environmental forces and the foreign environmental forces. B) the foreign uncontrollable forces and the domestic uncontrollable forces. C) the foreign environmental forces of two countries when an affiliate in one country does business in another country. D) both A and C. E) All of the above. Answer: 75. Decision making in the international environment is __________ it is in a purely domestic environment. A) less complex than B) less demanding than C) more complex than D) about the same as Answer: 76. According to the text, personnel working in a foreign subsidiary are working in the international environment: A) if they work and live in a foreign country. B) if they are responsible for the subsidiary's exports. C) if they are also responsible for the management of another foreign subsidiary. D) all of the above. E) B and C. Answer: 77. Unconscious reference to one's own cultural values when judging behavioral actions of others in a new and different environment is called: A) self-reference culture. B) self-reference values. C) self-reference criterion. D) self-reference customs. E) self-reference environment Answer:

21

Chapter 1 The Rapid Change of International Business


78. The international business manager can choose to: A) transfer a management practice intact. B) transfer and adjust a management practice. C) not transfer a management practice at all. D) A and B. E) A, B and C. Answer:

22

You might also like