#final - asian perspective

8/17/2019 #Final - Asian Perspective

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CHAPTER 1

Most global markets are for consumer goods despite the national differences in tastes and preferences.

False

Foreign direct investment occurs when a firm invests resources in business activities outside its home country.

True

The crisis that began in the financial sector of the United States during 200 and 200! swept around the world and

plunged the global economy into a deep recession is something new and without precedent in the history of

globali"ation.

False

#lobali"ation has been blamed for

unemployment in developed nations.

The two main components of globali"ation are$

the globali"ation of markets and the globali"ation of production.

The %MF$

has been critici"ed for making inappropriate policy recommendations.

Since the beginning of the 2&st century' the flow of F(%$

had reached about )&.! trillion in 200.

*hich of the following best describes the technological change that has been a driver of globali"ation+

The microprocessor may be the single most important innovation.

*hich of the following is ,-T one of drivers that has made the globali"ation of production feasible+


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,ew applications for social media

%n the early &/0s' the United States was by far the worlds dominant industrial power' but$

even with the relative decline' it is still the largest industrial power.

The foreign direct investment by non1U.S. firms was motivated primarily by the following two factors the desire to$

disperse production activities to optimal locations and build a direct presence in ma3or foreign markets.

Medium1si"e and small multinationals 4mini1multinationals5$

are becoming increasingly involved in international business.

%n Seattle' during (ecember &' massive protests against globali"ation captured the attention of the world. *hich of

the following was not an issue the protesters raised+

6nvironmental standards that were too strict

-ne of the criticisms of the *T- is the concern that the organi"ation will undermine the sovereignty of nations who

are members. *hich of the following is not a criticism in this area+

The power of the organi"ation rests largely on the ability to persuade member states to follow a certain action.

Successful managers in international business$

face issues more comple7 than the issues managers face in strictly domestic business.

CHAPTER 2

8oth U.S. law and -69( conventions condemn all forms of bribery with the e7ception of grease payments' which

e7pedite the performance of routine government action.

True


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is based on the cost of living in the United States.

:martya Sen.

The collapse of totalitarian and communist states' new information and communications technologies' and economic

advances in many countries have led to$

the spread of democracy

: nation may


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:ccording to >ofstede


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CHAPTER /

Mercantilism advocated that countries should simultaneously encourage e7ports and discourage imports.

True

:dam Smith and (avid @icardo were able to demonstrate that international trade is fundamentally a "ero1sum game.

False

@esearch has shown that countries that adopt an open economy and embrace free trade will en3oy higher economic

growth rates.

True

*hen a government does not attempt to influence through trade barriers what its citi"ens can buy from another

country' or what they can sell to another country' the government is promoting$

free trade.

:lthough import controls may benefit


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>ecksher and -hlin e7amined


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8oth governments and consumers reali"e significant gains as a result of tariffs' while domestic producers typically see

a negative effect.

False

Until the development of strategic trade policy' most economists in modern times saw little benefit in government

intervention and staunchly advocated a free trade policy.

True

: strategic trade policy that aims to establish domestic firms in a global industry might attract retaliation and a trade

war.

True

*hich of the following is ,-T one of the seven main instruments of trade policy+

Buota rents

:


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The


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-nly a few countries choose pragmatic nationalism preferring instead either the free market or radical view.

False

%f a company wants a ;uick entry into a foreign market'


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the deficit must be financed by the sales of assets of the country.

:ll of the following are types of incentives designed to encourage foreign firms to invest in their countries e7cept$

double ta7ation.

%t was not until the &0s that there was consistent involvement of a multinational institution in governing F(%. This

changed with the formation of


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%f' prior to ,:FT:' the U.S. produced its own te7tiles at a higher cost than Me7ico' but after ,:FT: imports them

from Me7ico

85 trade has been created

Three cornerstones of the current 6uropean Union are$

95 the Treaty of @ome' the Maastricht Treaty and the Single 6uropean :ct

The 6uropean 9ommission:5 is responsible for proposing 6U legislation' implementing it' and monitoring compliance with 6U laws by member

states

The introduction of the euro has resulted in all of the following e7cept

(5 individual countries will be able to set their own interest rates

9ritics have suggested that the decision by the 6U to adopt the euro was wrong because

the 6U is not an optimal currency area of the similarities in the underlying structure of economic activity that make it

unnecessary it should have occurred at the common market stage its shifts responsibility for national monetary

policies to the individual countries

:5 the 6U is not an optimal currency area

TurkeyHs application to 3oin the 6uropean Union has presented the 6U with difficult issues. *hich of the following is

not one of those issues+

:5 Eess than a ;uarter of TurkeyHs international trade is with the 6U.

The 9aribbean Single Market and 6conomy$

85 has the primary aim of lowering trade barriers between the US and the member countries.

=rogress toward a Free Trade of the :mericas has been slow because

:5 of debates over intellectual property rights and agricultural subsidies

*hich of the following is not a member of the :ssociation of Southeast :sian ,ations 4:S6:,5 with a combined

membership of half a billion people and combined #(= of more than )I0 billion$

(5 Taiwan

*hich of the following countries is not a member of :=69+

95 %ndia

:frican countries have been e7perimenting with regional trade blocks with the following result$

85 There are nine trade blocks' often with countries members of more than one block.

@egional economic integration' say in the 6U' offers significant opportunities to US businesses including$

85 9ompanies can reali"e significant cost economies by centrali"ing operations where factor costs and skills are

optimal.


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9>:=T6@ 0

&. The foreign e7change market serves two main functions to convert currency of one country in the currency of

another and to provide special discounts on currency for international business travelers. 85 False

2. The simultaneous purchase and sale of a given amount of foreign e7change for two different value dates is a

currency swap. :5 True

C. 67change rates are determined by the demand and supply of one currency relative to the demand and supply ofanother. :5 True

I. %nternational businesses use the foreign e7change markets for all of the following reasons e7cept$

:5 to buy and sell goods in a foreign market.

D. 9urrency speculation$

95 typically involves the short1term movement of funds from one currency to another to profit from e7change rates.

/.*hen a firm insures itself against foreign e7change risk' it is called


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CHAPTER 1

*hen the income earned by the residents of a country from e7ports is e;ual to the money that is paid for imports' a

country is said to be in balance of payments e;uilibrium. T"ue

The fre;uency of government intervention in the foreign e7change market e7plains why the current system is

sometimes thought of as a managed1float system. T"ue

8ecause of the criticism the %MF received after its handling of the :sian crisis' the %MF has stayed away frominterventions in the 2001200 global financial crisis. False

=egging currencies to gold and guaranteeing convertibility is known as


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9>:=T6@ && $

=roblems of limited li;uidity are limited to less developed nations' which tend to have smaller domestic capital

markets 1 False

>arvard economist Martin Feldstein has argued that owners and managers tend to keep long1term investments at home

and speculate with Lhot moneyL in foreign markets. 1 True

Using forward e7change markets is a risk1free approach to short1term borrowing. False

The function of a capital market is to$ bring together those who want to invest money with those who want to borrow

money.

%nvestors using the global capital market have a wider range of investment opportunities than a purely domestic

capital market. -ne of the most significant conse;uences of their choice is that


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Eocation economies are$ the economics achieved by performing value creation activities in the optimal location'

transportation costs and trade barriers permitting.

The


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%n firms pursuing a4an5


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decentrali"e.

Firms following a local responsiveness strategy are more likely to choose to$

integrating mechanisms

-ne way to coordinate units of a firm is through centrali"ation' but if the units are large' diverse or geographicallydispersed' the firm may instead use formal and informal


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:re product lines wide and deep enough with sufficient inventories+

: firm considering foreign e7pansion must make three basic decisions. *hich of the following is not one of thosethree+

8e established before rules and regulations change so the firm can be e7empt from the changes

*hich of the following is not considered one of the first1mover advantages+

rapid entry

6ntering on a large scale involves the commitment of significant resources and implies


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avoid cross1licensing agreements.

: company that is concerned that technology that should remain proprietary will be transferred to a strategicalliance partner should do all of the following e7cept$

1Franchising has many of the same advantages as licensing' but there might be problems taking profits out of the

host country and in ;uality control. True1The greater the pressures for cost reductions' the more likely a firm will want to pursue$ some combination ofe7porting and wholly owned subsidiaries.

1 :c;uisitions fail for all of the following reasons e7cept$ anticipated synergies prove to be more significantthan anticipated.1 %n general' a greenfield investment will be preferred when$ when the market seems attractive but there areno incumbent firms to be ac;uired.1 *hich of the following is not considered an advantage of strategic alliances+ Strategic alliances do not takemuch management time and attention once they are set up.1 : good strategic alliance is structured so that$ safeguards against opportunism are build into the agreement.1 : company that is concerned that technology that should remain proprietary will be transferred to a

strategic alliance partner should do all of the following e7cept$ avoid cross licensing agreements.

CHAPTER 1/

T@F True

The advantage of the letter of credit system is that importers and e7porters are likely to trust reputable banks' even if they do not trust each other.

False

TKF$: sight draft is payable in up to /0 days' while a time draft is payable 0 days and beyond.

True

TKF$The 671%m 8ank is an independent agency of the U.S. government that provides financing aid that facilitatese7ports' imports' and the e7change of commodities between the U.S. and other countries.

(eveloping the added production capacity to support e7porting

*hich of the following is not one of the challenges small to medium1si"ed businesses face in e7porting+

67porting


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about &0 percent

:ccording to a U.,. report' a typical international trade transaction can involve C0 parties' /0 original documentsand C/0 copies of documents' all of which have costs associated with them. These costs can amount to


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CHAPTER 10

T@F False

Total ;uality management is a philosophy and approach that grew out of Si7 Sigma.

True

TKF$%n order to reali"e all ma3or plant1level scale economies' a plant must operate at the minimum efficient scale ofoutput.

True

TKF$Eogistics should create value and create competitive advantages for the firm by reducing costs and serving customer

needs.

being able to respond ;uickly to shifts in customer demand

=roduction and logistics can have particular importance for the international business by being able to accommodatedemands for local responsiveness and


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global learning.

Many international businesses are moving toward seeing factories as potential centers of e7cellence where designand advanced manufacturing can take place. This part of a transnational strategy is known as$

resist the temptation to relocate because an underlying variable like wage rate might rise.

-nce a factory has been established and skills have been accumulating' managers of an international businessshould$

volatility of countriesH political economies' e7change rate movements' and changes in relative factor costs.

*hile outsourcing decisions are often difficult for purely domestic businesses' they are even more so forinternational businesses. These decisions are complicated by$

(ynamic capabilities


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The marketing mi7 is the set of choices a firm offers to its targeted markets' which often varies from country to

country depending on culture' economic development and so on. True

Source effects and country of origin effects always have a negative impact on the firm. False

Multipoint pricing is the use of price as a competitive weapon to drive weaker competitors out of a national market.

False

*hich of the following is not true about market segmentation+ Managers can use the same marketing mi7 in differentsegments once the mi7 has proven successful in one.


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CHAPTER 1

False

:hile su%e"io" human "esou"ce management ea"ns "ecognition and %"aise fo" the fi"m as a good %lace to

!o")& it has not %"oven to be a sou"ce of com%etitive advantage*

T"ue

TKF$

Failure rates for :merican e7patriates sent to developing countries run as high as 0 percent.

T"ue

TKF$9ultural training' language training' and practical trading all seem to reduce e7patriate failure.

P"ocesses

>@M professional have a strategic role in each of the following elements of organi"ational architecture e7cept$

cultu"al myo%ia

: danger of an ethnocentric policy is that it can lead to a firmHs failure to understand host1country culturaldifferences that re;uire different approaches to marketing and management. This is known as


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consult !ith home(office manage"s befo"e the te"mination evaluation

8ias in performance evaluations can be e7tremely difficult to overcome' especially in a formal terminationevaluation' which could be based on a cultural understanding. -ne common practice to mitigate this bias isto


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CHAPTER 1;

1 *hich of the following is not one of the three main steps of the control process of a subunit in the typical firm+ 5( The head office must submit annual cont"ol and com%liance "e%o"ts to each of the national gove"nments of the

count"ies in !hich the subunit o%e"ates*

1 The purpose of


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t"ansfe" %"ices

%nternational businesses pursuing global or transnational strategies often ship component parts and finished goods between subsidiaries' and the need to record the costs of these goods and services gives rise to


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The problem of blocked earnings creates more and more problems for investors as host countries have increasinglyerected barriers to moving fund out of the countries. FalseThe higher the discount rate' the higher the pro3ected net cash flows must be for an investment to have a positive new

present value. T"ue: firm that sets low transfer prices for goods supplied to a subsidiary and high transfer prices for the goods sourcedfrom the subsidiary is probably trying to move funds out of a country. False

1

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