International Business

44. (1) Mechanisms to maintain culture include all of the following except

The hiring and promotional practices of the organization

Reward strategies

Socialization processes

Ongoing cultural assessments

45. (1) Exporting may not be appropriate if lower-cost locations for manufacturing the product can be found abroad.

True

False

46. (1) The main advantage of greenfield investment is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.

True

False

47. (1) The advantages frequently associated with entering a market early are commonly known as

Primary advantages

First-mover advantages

Initial-entrant premiums

Proactive-mover benefits

48. (1) A strategic commitment

Has a short-term impact alone

Is difficult to reverse

Cannot change the competitive playing field

Does not have any influence on the nature of competition in a market

49. (1) A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with

Demand preemption

Diseconomies of scale

Pioneering costs

Diseconomies of scope

50. (1) The _____ entrant is more likely than the _____ entrant to be able to capture the first-mover advantages associated with demand preemption, scale economies and switching costs.

Small scale; large scale

Small scale; moderate scale

Large scale; small scale

Moderate scale; large scale

51. (1) Most service firms have found that _____ with local partners work best for controlling subsidiaries.

Joint ventures

Licensing agreements

Greenfield investments

Turnkey projects

52. (1) To increase the potential for a successful acquisition, a firm should

Always bid low to allow for partial failure

Try to acquire a firm with a very different corporate culture so there is no forced “overlap”

Seek companies only from similar national cultures

Screen the foreign enterprise to be acquired

53. (1) Which of the following is not important in the acquisition process?

Firms should strive to limit unwanted management attrition after acquisition

An integration plan should quickly be implemented

Proper screening of the company to be acquired should take place

The hubris hypothesis should be maintained

54. (1) The letter of credit system effectively transfers the issue of trust to the bank.

True

False

55. (1) Which of the following is true of reactive firms?

They may not even consider exporting until their domestic market is saturated

They create excess productive capacity and actively hunt for opportunities in foreign markets

Almost all large firms fall under this category

They systematically scan foreign markets for profitable export opportunities

56. (1) Great trading houses in Japan are called

Kaizen

Sogo shosha

MITI

Gaunxi

57. (1) One drawback of relying on EMCs is that

They are not conversant with the ins and outs of the exporting process

They have no knowledge of different business mores

The company can fail to develop its own exporting capabilities

The company is unable to avoid common pitfalls

58. (1) Because of the low value-to weight ratio of many pharmaceutical and electronics products, there is great pressure to produce these products in the optimal location and serve the world from there.

True

False

59. (1) Concentration of production makes most sense when trade barriers are high.

True

False

60. (1) A firm that has integrated horizontally is making all or part of a product in-house.

True

False

61. (1) Identify an advantage of a low minimum efficient scale.

Allows the firm to accommodate demands for local responsiveness

Discounts currency risk by manufacturing all products in one location

Helps keep overheads low at the expense of fixed costs

Helps a firm to standardize its products for all markets

62. (1) Differences in technical standards can prevent a firm from standardizing products across markets.

True

False

63. (1) This refers to impact a firm’s pricing strategy in one market may have on its rivals’ pricing strategy in another market.

Multipoint pricing

Experience curve pricing

Predatory pricing

Competitive pricing

64. (1) The most attractive staffing policy is the ethnocentric approach.

True

False

65. (1) There is an increasing trend towards an ethnocentric staffing policy.

True

False

66. (1) Research into expatriate failure revealed that consistently, one of the reasons for the premature return of employees for U.S. multinationals was the inability of the spouse to adjust.

True

False

67. (1) An expatriate’s base salary normally varies from the base salary for a similar position in the home country.

True

False

68. (1) Which of the following is a problem that limits a firm’s ability to pursue a geocentric policy?

The lack of management transfers from home to host countries and vice versa, can lead to a lack of integration between corporate headquarters and foreign subsidiaries

The higher pay managers on an international fast track enjoy may be a source of resentment within a firm

The firm fails to understand host-country cultural differences that require different approaches to marketing and management

It limits advancement opportunities for host-country nationals

69. (1) Which of the following is true about cultural training?

It should be provided only to the expatriate

Training should be limited to a study of language and business practices

It helps the expatriate appreciate the host-country culture

It can be offered to the spouse/family after it is clear the foreign posting is a success

70. (1) _____ makes it difficult to evaluate the performance of expatriate managers objectively.

Soft data

Hard data

Knowledge

Bias

71. (1) Unions’ bargaining power is derived largely from their

Ability to threaten to disrupt production

Ability to change the organizational culture

Willingness to adapt to new employment practices

Ability to show restraint in negotiations

72. (1) Similarities in the accounting systems of countries are sometimes due to the countries’ close political and/or economic ties.

True

False

73. (1) The purpose of consolidated financial statements is to provide accounting information about a group of companies that recognize their economic interdependence.

True

False

74. (1) Identify the incorrect statement pertaining to accounting information.

It is often referred to as “the language of business.”

It is means by which firms report their income to the government

It is consistent and standard across all countries

It enables the providers of capital to assess the value of their investments

75. (1) Which of the following occurs when an investor based in one country enters the capital market of another nation to invest in the stocks or bonds of a firm based in that country?

Transnational financing

Transnational development

Transnational sale

Transnational investment

76. (1) The International Accounting Standards Board

Has enough power to enforce its standards

Was formed to replace the International Accounting Standards Committee

Has 120 members responsible for the formulation of new financial reporting standards

Requires approval from 80 percent of its 120 members to issue a new standard

77. (1) This method translates assets valued in a foreign currency into the home-country currency using the exchange rate that exists when the assets are purchased.

Temporal method

Current rate method

Operating cost accounting method

Historic cost principle

78. (1) If the net present value of the discounted cash flows is slightly less than zero, the firm should go ahead with the project.

True

False

79. (1) The relationship between a country’s relative inflation rates and changes in exchange rates is,

Much closer than what theory would predict

Not reliable in the short run

Totally reliable in the long run

According to empirical studies, non existent in the long run

80. (1) This is a loan between a parent and its subsidiary channeled through a financial intermediary, usually a large international bank.

International loan

Fronting loan

Transfer loan

Unbundling loan