Test bank for international business the new realities 2nd edition by cavusgil knight and riesenberger

A the end of World War II B the invention of electricity C the end of World War I D economic growth in emerging markets AACSB: Dynamics of the global economy 18 Which of the following re

Chapter 2 Globalization of Markets and the Internationalization of the Firm

4) Firms that pursue internationalization as a strategic move tend to approach global

competition more aggressively than do firms that internationalize for reactive reasons Answer: TRUE

Diff: 2 Page Ref: 34

AACSB: Dynamics of the global economy

7) One method used by global companies to drive down prices is product standardization Answer: TRUE

Diff: 1 Page Ref: 36

AACSB: Dynamics of the global economy; Use of information technology

13) The rate of speed at which nations integrate into the global economy is relatively consistent, regardless of income level

15) The first phase of globalization was characterized by which of the following?

A) the rise of steel production

B) the growth of railroads

C) the spread of electricity

16) The third phase of globalization was triggered by

A) the end of World War II

B) the invention of electricity

C) the end of World War I

D) economic growth in emerging markets

AACSB: Dynamics of the global economy

18) Which of the following reflects the major contribution of GATT to globalization?

A) strict controls on international currencies

B) worldwide economic downturn

C) reduction of barriers to international trade

D) advent of new communications technology

19) The most recent phase of globalization is characterized by which of the following?

A) rise of multinational companies from Japan

B) reduction of barriers to trade by Western industrialized countries

C) trade of commodities by trading companies

D) enormous growth of cross-border trade and investment

B) International Monetary Fund

C) World Trade Organization

AACSB: Dynamics of the global economy

22) Firms that are more successful at global competition display each of the following qualities except

A) identifying foreign market opportunities aggressively

B) approaching internationalization from a reactive standpoint

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C) actively pursuing partnerships with foreign firms

D) focusing intensively on building organizational capacities

23) Value-chain activities are defined as which of the following?

A) the methods through which governments promote economic integration

B) the aggregate activities of internationally active firms

C) the process of designing a product for a global market

D) the sequence of value-adding activities performed by a firm

A) the reduction of investment flows among members

B) the implementation of common business regulations

C) jointly harmonized fiscal and monetary policies

D) the reduction of trade barriers among members

Skill: Application

Objective: 2-3

AACSB: Dynamics of the global economy

26) The free movement of capital around the world is known by which of the following terms? A) bond-based debt financing

B) regional economic integration

C) the globalization of capital

D) common market arrangements

A) avoid the pressures of global competition

B) benefit from low labor costs

C) reduce the impact of regional recessions

D) avoid oversight by international agencies

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A) Japan's transition to a command economy

B) regional economic integration blocs

C) member defection from the WTO

D) violation of GATT provisions

Answer: B

Diff: 2 Page Ref: 37

Skill: Concept

Objective: 2-4

AACSB: Dynamics of the global economy

30) The end of the Cold War was signaled by each of the following except

A) the collapse of the Soviet Union's economy

B) the tearing down of the Berlin Wall

C) free market reforms in China

D) China's move to join the WTO

Diff: 1 Page Ref: 38-39

AACSB: Dynamics of the global economy

34) is a financial network through which individuals can transfer money to

individual recipients in other countries A) International Monetary Fund

35) Technological leapfrogging is defined as which of the following?

A) combining analog and digital technologies in the same product

B) adopting new technology as soon as it is released

C) bypassing certain stages of technology when upgrading to new products

D) waiting to sell new technology until it has proven market success

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36) Which of the following countries are considered to be the beachheads of technological

advances?

A) Japan and China B)

Hungary and Poland

C) Brazil and Mexico

D) China and India Answer:

AACSB: Dynamics of the global economy; Use of information technology

38) Which of the following is the most transformative technology for developing economies? A) cell phone

AACSB: Dynamics of the global economy

42) Each of the following represents a firm-level consequence of market globalization except

A) firms must proactively internationalize to reduce potential threats

B) firms must deal with new business risks

C) an international focus is viable only in certain industries

D) firms must manage intense rivalry from foreign competitors

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43) Highly advanced internationalizing firms seek a simultaneous presence in which of

the following trading regions? A) North America, Europe, and Asia

B) North America, Africa, and Central America

C) Eastern Europe, Australia, and North America

D) Asia, Europe, and South America

A) the firm's global sourcing contracts

B) the offshoring potential of particular activities

C) research and development costs faced by the firm

D) the firm's entire value chain

45) Which stage comes before procurement in a firm's value chain?

A) research & development

AACSB: Dynamics of the global economy

46) Which of the following represents the final stage in a firm's value chain?

A) marketing

B) procurement (sourcing)

C) research & development

D) distribution & after-sales service

Internationalization Conference (Scenario)

At a conference on business internationalization strategies, representatives of three different businesses meet to discuss a joint venture between their companies Business A is located in a country that internationalized during the second phase of globalization Business B is based in a country that internationalized during the third phase of globalization Business C is located in an emerging market country

AACSB: Dynamics of the global economy

49) The representative from Business C is most likely from which of the following countries? A) Italy

B) Brazil

C) United States

D) France

Global Operations Report (Scenario)

As Vice President of Global Expansion for Pax Telecom, Deva Mikiri is tasked with preparing a comprehensive report on the company's global operations over the past twenty years Deva assigns three strategists to collaborate on the History portion of the report, which details the rationale behind Pax's decisions to expand operations in particular areas Rashid Ahl focuses on early expansion to China, which occurred after China began to make its market more accessible

to foreign companies Markus Teller focuses on Pax's expansion to Eastern Europe, which was motivated by increased industry privatization in key countries Lavonne Jackson focuses on expansion to Japan, which happened when the company's commercial bank expanded its service network to Asia

C) reduction of barriers to trade

D) integration of world financial markets

52) Lavonne's research most likely recognizes which of the following drivers of market

globalization as responsible for the company's expansion to Japan?

A) integration of world financial markets

B) modernization

C) adoption of free markets

D) reduction of barriers to investment

Globalization Debate (Scenario)

In his international business class, Professor Jang organizes a debate on the societal effects of market globalization Juan Prince takes a position that highlights the negative effects of market globalization He emphasizes how multinational enterprises can wield so much influence that they threaten national sovereignty He also notes the prevalence of low wages and sweatshop conditions as firms utilize low-cost labor abroad Juan then describes the detrimental effects of corporate pollution on the environment, and he ends his argument by explaining how market globalization helps homogenize national cultures Rina Taylor is assigned to counter Juan's position

53) Which of the following does Rina most likely cite as a counter example to Juan's argument regarding the influence of MNEs on national sovereignty?

A) passage of the Sarbanes-Oxley Act of 2002

B) technological advances in computer-aided design of products

C) the political influence of large firms such as Walmart

D) the actual GDPs of Israel, Greece, and Poland

Answer: A

Diff: 3 Page Ref: 46

Skill: Critical Thinking

A) Most African countries today still suffer from low or negative GDP growth

B) Vietnam has experienced a five-fold increase in wages as a result of the growth of the

footwear industry there

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C) The move of Electrolux to Mexico cost Michigan 2,700 jobs

D) Minimum wages should be established at set levels, regardless of the impact on the number of jobs

Answer: B

Diff: 3 Page Ref: 47

Skill: Critical Thinking

Objective: 2-6

AACSB: Dynamics of the global economy; Reflective thinking skills

55) Rina most likely counters Juan's claim regarding environmental effects by pointing out

which of the following?

A) Land preservation is more important than pollution reduction for preserving the environment B) China's landscape was permanently altered by the construction of the Three Gorges Dam C) Environmental destruction tends to diminish in the long run, as economies develop

D) Attempts at foreign cultural imperialism are often blocked by national governments

Answer: C

Diff: 3 Page Ref: 50

Skill: Critical Thinking

C) Material goods such as cell phones and computers are found in most homes throughout the world

D) In most industries, domestic operation alone cannot sustain competitive business growth Answer: A

Diff: 3 Page Ref: 51

Skill: Critical Thinking

Objective: 2-6

AACSB: Dynamics of the global economy; Reflective thinking skills

Acme Software (Scenario)

Acme Software is a U.S.-based maker of software products for the health care industry Recently Acme has been investigating whether it would be beneficial to internationalize some of its

valuechain activities Acme hires a consulting group to help determine which, if any, value-chain activities could be conducted abroad to promote business growth The consulting group

identifies two health care software development companies in India that could provide

programming services at a lower cost than Acme's current expenditures for programming In addition, the consultants conduct international market research which shows that German health care companies have a strong demand for the type of software that Acme offers

57) Which of the following activities in Acme's value chain would be internationalized if Acme decides to establish a development contract with one of the Indian software firms? A) sales B) distribution

C) What type of training is received by programmers in software firms abroad?

D) How successful have German companies been at marketing to U.S customers? Answer: B Diff: 3 Page Ref: 52

Skill: Critical Thinking

Objective: 2-7

AACSB: Dynamics of the global economy; Reflective thinking skills

59) Which of the following questions would be most important to for Acme to evaluate when making the decision regarding whether to hire one of the Indian companies for software

Diff: 3 Page Ref: 52

Skill: Critical Thinking

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Objective: 2-7

AACSB: Dynamics of the global economy; Reflective thinking skills

60) In a short essay, describe the four phases of globalization Explain the major triggers for each phase

Answer: The first phase of globalization began about 1830 and peaked around 1880

International business became widespread in this period due to the growth of railroads, efficient ocean transport, and the rise of large manufacturing and trading companies Inventions of the telegraph and telephone in the late 1800s facilitated information flows between and within nations and greatly aided early efforts to manage companies' supply chains

The second phase of globalization began around 1900 and was associated with the rise of

electricity and steel production The phase reached its height just before the Great Depression, a worldwide economic downturn that began in 1929 In 1900, Western Europe was the most industrialized region Europe's colonization of countries in Asia, Africa, the Middle East, and beyond led to the establishment of some of the earliest subsidiaries of multinational firms

The third phase of globalization began after the end of World War II It was triggered by the

formation of GATT, the conclusion of the war, and the reconstruction of Europe through the Marshall plan In this phase, the U.S became the world's dominant economy Several

industrialized countries, including Australia, Britain, and the United States, systematically

sought to reduce barriers to international trade Growing MNE activities and early efforts at trade liberalization resulted in substantial increases in international trade and investment beginning in the 1960s

The fourth and current phase of globalization began in the early 1980s This period witnessed

enormous growth in cross-border trade and investment The current phase was triggered by key trends, including the commercialization of the personal computer, the Internet and the web browser; advances in communication and manufacturing technologies; the collapse of the Soviet Union and ensuing market liberalization in central and Eastern Europe; and industrialization and modernization efforts of East Asian economies, including China During this phase, growing international prosperity began to reach emerging markets such as Brazil, India and Mexico The 1980s also witnessed huge increases in FDI, especially in capital- and technology-intensive sectors

Diff: 2 Page Ref: 32-34

Skill: Concept

Objective: 2-1

AACSB: Dynamics of the global economy

61) Describe the role of GATT and the WTO in reducing barriers to trade and investment

worldwide, and explain how this reduction has led to the integration and interdependence of national economies

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Answer: In 1947 several nations enacted the General Agreement on Tariffs and Trade (GATT) and a series of negotiations that, over time, reduced barriers to international trade and

investment Participating governments recognized that liberalized trade would stimulate

industrialization, modernization, and better living standards The GATT eventually transformed into the World Trade Organization, a multilateral governing body that grew to include 149 member nations The WTO aims to regulate and ensure fairness and efficiency in global trade and investment Global cooperation in the post-war era gave birth to other international

organizations such as the International Monetary Fund and the World Bank

Internationally active firms devise multicountry operations through trade, investment, geographic dispersal of company resources, and integration and coordination of value-chain activities Governments have facilitated this integration by lowering barriers to international trade and investment, harmonizing their monetary and fiscal policies within regional economic integration blocs (also known as trade blocs), and developing supranational institutions —the World Bank, International Monetary Fund, World Trade Organization, and others —that seek further

reductions in trade and investment barriers

Diff: 3 Page Ref: 33, 35

Skill: Synthesis

Objective: 2-1, 2-3

AACSB: Dynamics of the global economy

62) How do governments help promote international economic interdependence? In a short essay, describe three ways that government activities increase economic integration and provide

an example that illustrates one approach

Answer: Governments contribute to economic interdependence by three means First, they gradually lower barriers to international trade and investment (for example, by negotiating trade

agreements) Second, they increasingly harmonize their monetary and fiscal policies within trade

blocs, such as the European Union Third, they devise and supervise supranational institutions

such as the World Bank, International Monetary Fund, and the World Trade Organization that seek further reductions in trade and investment barriers

Diff: 2 Page Ref: 35