International Business and Trade

What is the relationship between foreign direct investment (FDI) and multinational enterprises (MNEs)?

• An MNE never involves FDI.
• All MNEs involve FDI.
• FDI is never done by an MNE.
• All FDI is done by MNEs.

~Hasnewline~New trade theory suggests that the ability of firms to gain economies of scale (unit cost reductions associated with a large scale of output) can have important implications for international trade.

• True
• False

A company can increase its growth rate by taking goods or services developed at home and selling them internationally.

• True
• False

It is committed to preserving peace through international cooperation and collective security.

• United Nations (CORRECT IN MEXAM)
• International Monetary Fund
• World Trade Organization
• World Bank

Maan live in The Philippines and she wants to mak a greenfield investment in Singapore, which is a developing country. What type of investment does Maan want to make?

• She will be investing in an environmentally friendly enterprise
• She will be investing in agriculture
• She will be investing in clear-cutting rainforests
• She will be creating a new foreign enterprise

Currently, the most global of markets are for industrial goods and materials that serve a universal need the world over.

• True
• False

~Hasnewline~Governments can restrict outward FDI through limiting capital outflows, manipulate tax rules, or outright prohibit FDI.

Substantial impediments such as barriers to foreign direct investment make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe.

• True
• False

~Hasnewline~Heckscher and Ohlin predict that countries will export goods that make intensive use of locally abundant factors.

• True
• False

~Hasnewline~Firms prefer to acquire new assets because greenfield investments are quicker to execute than mergers and acquisitions.

• True
• False

~Hasnewline~Better quality control helps firms reduce costs because:

• ~Hasnewline~time is not wasted manufacturing poor quality products that cannot be sold
• ~Hasnewline~warranty costs and the time used too fix defective products are lower
• all of the above

Diminishing returns imply that when a firm already has significant value built into its product offering, increasing value by relatively small amount requires significant additional costs.

• True
• False

It is primarily responsible for policing the word trading systems and making sure nation-state adhere to the rules laid down in the trade treaties.

• International Monetary Fund
• World Bank
• World Trade Organization
• United Nations

Which of the following is not one of the policies recommended for dealing with outsourcing/offshoring in the United States?

• Prohibit imports that have been produced with foreign labor.
• Provide wage insurance.
• Provide additional assistance to workers who lose their jobs because of it.
• Gather more data about it.

It is where all productive activities are privately owned, as opposed to being owned by the state.

• command economy
• market economy
• mixed economy
• none of the above

The internet has been a major force facilitating international trade services.

• True
• False

Zero sum game is one in which a gain by one country results in a loss by another.

• True
• False

~Hasnewline~Ricardo states that comparative advantage arises from differences in national factor endowments.

• True
• False

The Six Sigma quality improvement program aims to:

• reduce defects
• boost productivity
• eliminate waste
• all of the above

Tariff Jumping occurs when

• A firm buys inputs from domestic firms rather than importing them from abroad over a tariff
• A country raises a tariff against a foreign exporter who sells to it below cost.
• A firm that otherwise would have exported to a country instead invests there in order to avoid paying the country’s tariff.
• Countries raise (and lower) their tariffs in an effort to stabilize the price of a product on the domestic market.

Demand conditions is one of the determinants of National Competitive Advantage.

• True
• False

It is based on a detailed set of laws organized into codes.

• universal law
• common law
• civil law
• theocratic law

Low-cost communication networks such as the World Wide Web are not helping to create electronic global marketplaces.

• True
• False

Which of the following statements would a mercantilist not agree with?

• Imports are desirable.
• Policies should promote exports and discourage imports.
• The purpose of trade is to amass revenues from exports.
• Trade is a zero-sum activity.

Follower of Islam is called a Muslim.

• True
• False

The regular and repeated way in which something happens or is done is called pattern.

• True
• False

In terms of attaining a competitive advantages with support activities can be as a important as, if not more important than, the “secondary” activities of the firm.

• True
• False

~Hasnewline~Foreign direct investment (FDI) occurs when a firm invests directly in new facilities to produce and/or market in a foreign country.

• True
• False

Decentralized production will be favored when:

• all of the above
• The product’s value-to-weight ratio is high.
• There are substantial differences in political economy.
• Fixed costs are high.

Upon meeting a foreign business executive, a Japanese executive will holdhis business card in both hands and bow while presenting the card to theforeigner. Bowing is a way to avoid touching.

• True
• False

Which of the following is not considered as GATT criticism?

• ~Hasnewline~Economic theories don’t fit the ‘real world’ model.
• ~Hasnewline~US global preeminence has declined.
• ~Hasnewline~Shift from cutting tariffs to eliminating non-tariff barriers angered countries.
• none of the above

How can foreign direct investment (FDI) be best described?

• When a government invests in another government
• When a country looks for foreign aid
• When you invest in a foreign stock market or buy foreign bonds
• When an investor starts or acquires a business in a foreign country

How does offshoring affect an industry’s productivity?

• It reduces productivity by replacing workers with low-quality machines, produced abroad.
• It reduces productivity by making workers anxious and unable to concentrate on their jobs.
• It increases productivity by eliminating the activities at which the firm is least efficient.
• It has no measurable effect on productivity, according to studies that have sought to measure it.

The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.

• True
• False

Segmentation of international markets on basis of monetary regulations is an example of political and legal factors.

• True
• False

~Hasnewline~Offshore investments is the establishment of a wholly new operation in a foreign country.

• True
• False

The rise of Islamic fundamentalism is portrayed as a response to the alienation produced by modernization.

• True
• False

It would be dubbed more a way of life than a religion. Followers believe that a moral force in society requires the acceptance of certain responsibilities.

• Christianity
• Buddhism
• Confucianism
• Hinduism

Free trade is a situation where a government attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country.

• True
• False

_________________ refers to nonverbal communication.

• spoken language
• unspoken language
• sign language
• none of the above

Segmentation on basis of values and attitudes and behavioral patterns is an example of

• cultural factors
• geographic location
• economic factors
• political and legal factors

In many Asian societies, the individual is the basic building block of social organization.

• True
• False

What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)?

• When a country’s firms invest abroad, this helps to create CA in the same industry at home.
• Nothing. CA has nothing to do with FDI.
• Countries often engage in FDI in industries where the country they invest in has a comparative disadvantage.
• Countries often engage in FDI in industries where the country they invest in has a comparative advantage.

Most successful products are those which are

• differentiated
• solve customer problems
• ffering customer value proposition
• all of above

In positioning statement, first thing that must be stated is differentiation.

• True
• False

~Hasnewline~The theory of comparative advantage suggests that countries should specialize in the production of those goods they produce most efficiently and buy goods that they produce less efficiently from other countries.

• True
• False

~Hasnewline~The flow of Foreign Direct Investment is the total accumulated value of foreign-owned assets at a given time.

• True
• False

Culture is constant; it does not evolves over time.

• True
• False

The following are work-related values except for:

• glass ceiling
• individualism
• power distance
• uncertainty avoidance

~Hasnewline~An employee who actively searches out foreign markets for the firm’s goods and services.

• commission agent
• foreign investor
• export manager
• broker

~Hasnewline~International trade allows a country to specialize in the manufacture and export of products and services that it can produce efficiently.

• True
• False

~Hasnewline~A person or firm who represents businesses in foreign transactions in return for a negotiated percentage of each transaction’s value.

• export manager
• commission agent
• none of the above
• import manager

~Hasnewline~In-house production makes sense when substantial investments in specialized assets (assets whose value is contingent upon a particular relationship persisting) are required to manufacture a component.

• True
• False

~Hasnewline~A firm should consider manufacturing a part in-house if the firm is more efficient at that a production activity than any other enterprise.

• True
• False

~Hasnewline~Import quotas requires some specific fraction of a good to be produced domestically.

• True
• False

The _______________refers to the merging of historically distinct and separate national markets into one huge global marketplace.

• Foreign Direct Investment
• Globalization of Production
• Globalization
• Globalization of Markets

~Hasnewline~Logistics refers to the procurement and physical transmission of material through the supply chain, from suppliers to customers.

• True
• False

According to this religion, suffering originates in people's desires for pleasure.

• Judaism
• Confucianism
• Christianity
• Buddhism

Outsourcing is

• A firm having someone else do part of what it previously did itself
• Exporting
• Building a factory in another country to produce for that country’s market.
• Importing

~Hasnewline~A payment to a domestic producer can be:

• cash grants
• low- interest loans
• tax breaks
• all of the above

It refers to a set of moral principles, or values, that are used to guide and shape behavior.

• moral
• ethical systems
• values
• customs

The __________________refers to the merging of historically distinct and separate national markets into one huge global marketplace.

• Globalization
• Globalization of Markets
• Globalization of Production
• Foreign Direct Investment

Segmentation of international markets on basis of common languages, religions and customs is example of economic factors.

• True
• False

One of the biggest dangers confronting a company that goes abroad for the first time is the danger of being ill-informed.

• True
• False

~Hasnewline~Individual customization implies that a firm may be able to customize its product range to suit the needs of different customer groups without bearing a cost penalty.

• True
• False

The __________ of a country refers to the rules, or laws, that regulate behavior along with the processes by which the law are enforced and through which redress for grievances is obtained.

• social system
• political system
• legal system
• economic system

~Hasnewline~Government policy can't affect demand through product standards.

• True
• False

~Hasnewline~A country may dominate in the export of a good simply because it was lucky enough to have one or more firms among the first to produce that good.

• True
• False

Nations that invest more in education will have lower growth rates because an educated population is less productive.

• True
• False

________________is based on tradition, precedent, and custom.

• civil law
• common law
• theocratic law
• none of the above

Terrorism represents one of the major drivers to world peace and economic progress in the 21st century.

• True
• False

The ________________of a country refers to the rules, or laws, that regulate behavior along with the process by which the law are enforced and through which redress for grievances is obtained.

• legal system
• economic system
• political system
• social system

It is where citizens' right to freedom of expression and organization, a free media, and regular elections are all denied.

• socialism
• democracy
• totalitarianism
• collectivism

The theory of international trade also teaches us that due to differences in factor costs, certain countries have an absolute advantage in the production of certain product.

• True
• False

Communications slowed down transportation of goods.

• True
• False

This religion requires unconditional acceptance of the uniqueness, power, and authority of God and the understanding that the objective of life is to fulfill the dictates of His will in the hope of admission to paradise.

• Christianity
• Protestants
• Hinduism
• Islam

~Hasnewline~Adam Smith argued that a country has a competitive advantage in the production of a product when it is more efficient than any other country in producing it.

• True
• False

A company has to be a major multinational corporation to facilitate, and benefit from, the globalization of markets.

• True
• False

Which of the following is one of the three ways that a company in one country can serve (sell its product to) a market in a foreign country?

• Licensing
• Exporting
• FDI
• All of the above

Like the economic system of a country, the legal system is influenced by prevailing political system.

• True
• False

~Hasnewline~Six Sigma is a direct descendant of total quality management (TQM).

• True
• False

Strategy to integrate larger gains with smaller losses involved

• lining principle
• segregate principle
• golden lining principle
• cancellation principle

It is the most widely practiced religion in the world.

• Islam
• Hinduism
• Judaism
• Christianity

Which of the following is not one of the costs of inward FDI for a host country?

It refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of production.

• Foreign Direct Investment
• Globalization
• Globalization of Markets
• Globalization of Production

Marketing system in which two or more companies join together at one level to seek new marketing opportunity is classified as vertical marketing system.

• True
• False

If all prices in one country (country A) are higher than all prices in another country (B) when compared at the wage rates that happen to prevail in the two countries, and if the countries share the same currency, then if the nominal wage rate in country B remains fixed

• Unemployment must be higher in country B than in country A.
• Trade cannot be beneficial for country A.
• The real wage in country A must be higher than in country B
• The nominal wage rate in country A will have to fall

The following are needed in organizing for international operations except:

• import manager
• commission agent
• internal corporation
• multinational corporation

~Hasnewline~The strategic objectives of the production and logistics function are to lower costs to increase product quality by eliminating defective products from both the supply chain and the manufacturing process.

• True
• False

~Hasnewline~Trade is a positive sum game.

An international business is any firm that engages in international trade or investment.

• True
• False

The lowering of trade barriers made globalization of markets and production a theoretical possibility.

• True
• False

By political system we mean the system of government in a nation.

• True
• False

Highly automated storage house to receive products from various suppliers, fill area efficiently and send orders to customers efficiently is classified as distribution center.

• True
• False

Globalization always go as planned.

• True
• False

It refers to its basic social organization.

• social structure
• group
• strata
• none of the above

Transnational company is a large global firm that operates in a number of countries.

• True
• False

These are typically defined on the basis of characteristics such as family background, occupation, and income.

• social mobility
• social strata
• social class
• social organization

All are determinants of culture except for:

• social structure
• gender
• religion
• language

t is not legal to charge interest under Islamic laws therefore Islamic banks have a difficult time earning a profit.

• True
• False

~Hasnewline~Capitalism views trade as a zero-sum game.

• True
• False

Firms will prefer concentrated production when:

• There are substantial differences in political economy.
• Minimum efficient scale is high.
• Exchange rates are volatile.
• Fixed costs are high.

Large societal forces that affects organizations close factors are known as microenvironment.

• True
• False

_________________ is based on tradition, precedent, and custom.

• civil law
• common law
• theocratic law
• none of the above

~Hasnewline~If the value-to-weight ratio is high, it is not practical to produce the product in a single location and export it.

• True
• False

Firm that operates in more than one country gains production, marketing and financial advantages that are not available to domestic competitors is called expanding firm.

• True
• False

The mixing of world cultures through different ethnicities, religions and nationalities has increased with advanced communication, transportation and technology is called cross- culture.

• True
• False

A company does not need a large size to facilitate, and benefit from, the globalization of markets.

• True
• False

International business refers to the shift toward a more integrated world economy.

• True
• False

Secondary activities have to do with the design, creation, and delivery the product: its marketing and its support and after sales service.

• True
• False

According to the theory of comparative advantage, which of the following is not a reason why countries trade?

• Exports give a country a political advantage over other countries that export less.
• Comparative advantage.
• The productivity of labor differs across countries and industries.
• Costs are higher in one country than in another.

A person, who offers informal reviews or advice about specific category is called as

• opinion leader
• group leader
• associative leader
• inspiration leader

It refers to the sourcing of goods and services from location around the globe to take advantage of national differences in the cost of production.

• Globalization of Production
• Globalization
• Globalization of Markets
• Foreign Direct Investment

Foreign policy decision makers for spreading their information they rely on

• Investors
• Politicians
• Media
• Public

~Hasnewline~Firms should locate manufacturing activities where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity.

• True
• False

Communist states practice representative election.

• True
• False

It refers to a philosophy that an individual should have freedom in his or her economic and political pursuits.

• socialism
• individualism
• communism
• collectivism

Anti-dumping policies defined variously as selling goods in a foreign market below production costs and below fair market value.

• True
• False

The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil.

• True
• False

~Hasnewline~Making component parts in-house (vertical integration) is attractive because of the following except:

• increase competition
• It is associated with lower costs.
• ~Hasnewline~It protects proprietary technology. 1.protects proprietary technology
• It facilitates investments in highly specialized assets.
• 1.facilitates investments in highly specialized assets

~Hasnewline~Mercantilism suggests that it is in a country’s best interest to maintain a trade surplus -to export more than it imports.

• True
• False

___________may be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred.

• Religion
• Culture
• Ethical systems
• none of the above

Low-cost communication networks such as the World Wide Web are not helping to create electronic global market places.

• True
• False

Which of the following jobs is“offshorable”?

• Pediatrics
• Architects
• Geriatrics
• Builders

When deciding where to locate production facilities, firms must consider country factors alone.

• True
• False

The Leontief Paradox suggests that as products mature both the location of sales and the optimal production location will change affecting the flow and direction of trade.

• True
• False

Factors that affect Company's ability to maintain customer relationships are known as

• Marketing environment
• both A & B
• Marketing strategy
• Marketing dashboard

Which of the following best defines a multinational corporation?

• A company that produces goods and services for a large market
• A large company that imports from many countries
• A company that exports to many countries
• A company that operates in many different countries

In a ________, certain sectors of the economy of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.

• market economy
• ideal economy
• mixed economy
• command economy

It is primarily responsible for policing the world trading systems and making sure nation-state adhere to the rules laid down in trade treaties.

• United Nations
• World Trade Organization
• World Bank
• International Monetary Fund

International business refers to the shift toward a more integrated and interdependent world economy.

• True
• False

~Hasnewline~The term flexible manufacturing technology or lean production covers a range of manufacturing technologies that are designed to:

• lower the manufacturing time
• improve production output
• reduce set up times for complex equipment
• lower the maintenance cost

Offshoring is

• Importing
• Substituting foreign for domestic labor.
• Subcontracting a part of production to another firm.
• Exporting

The following are political arguments for intervention except:

• Global warming
• ~Hasnewline~Protecting jobs and industries
• National security
• Retaliation

Outsourcing is a process that is limited to manufacturing enterprises.

• True
• False

If a German manufacturer of household appliances wants to take advantage of the cheaper labor available in the Czech Republic, which of the following actions will not serve that purpose?

• Build a plant in the Czech Republic and send all German workers to operate it.
• License a Czech firm to produce its products under its own label.
• Contract for a Czech firm to do some of the processing for it.
• Build a manufacturing subsidiary there and employ Czech workers.

As firms follow each other around the world, greater diversity replaces uniformity.

• True
• False

In a _________________, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.

• command economy
• market economy
• mixed economy
• ideal economy

Consumer's seek, for answer of 'how we like to view ourselves' is a concept named by

• actual self-concept
• self-concept
• self-monitors
• ideal self-concept

It is built around a comprehensive ethical code that sets down guidelines for relationships with others.

• Islam
• Hinduism
• Buddhism
• Confucianism

Gold and silver are the currency of trade in mid 16th century.

• True
• False

~Hasnewline~Adopting flexible manufacturing technologies can help improve the competitive position of firms by allowing the firm to customize products to meet the demands of small customer groups in different national markets.

• True
• False

According to the theory of comparative advantage, a country will export a good only if

• It can produce it using less labor than other countries.
• Its productivity is higher in producing the good than the productivity of other countries in producing it.
• Its cost of producing the good, relative to other goods, is at least as low as in other countries.
• All of the above.

Economic freedom does not necessarily equate with political freedom.

• True
• False

The emphasis on the individual in the United States may raise the costs ofdoing business due to its adverse impact on managerial stability and cooperation.

• True
• False

The basic principles of Judaism, Christianity, and Islam have nothing in common.

• True
• False

Regulations affecting FDI and trade can't affect the appropriateness of specific countries.

• True
• False

Free trade is beneficial because it allows country to specialize in the manufacture and export of products and services that it can produce efficiently.

• True
• False

It was established to maintain order in the international monetary system.

• World Trade Organization
• World Bank
• International Monetary Fund
• United Nations

A Firm’s Strategy can be defined as the actions that managers take to attain the goals of the firm.

• True
• False

~Hasnewline~Production refers to activities involved in creating a value for a product.

• True
• False

Set of organizations interdependent on each other that help in making market offerings available to customer are called marketing channels.

• True
• False

Which of the following is not one of the benefits of inward FDI for a host country?

The following are technological factors when deciding where to locate production except for:

• The level of fixed costs involved
• The minimum efficient scale of the technology
• The flexibility of the technology
• none of the above

The internet has been a major force facilitating international trade in services.

• True
• False

Tastes and preferences of consumers in different nations are beginning to converge on some global norm.

• True
• False

Targeting affluent customers with luxurious goods is an example of

• psychographic segmentation
• income segmentation
• behavioral segmentation
• geographic segmentation

~Hasnewline~Tariffs are considered to be the oldest form of trade policy.

• True
• False

It refers to the extent to which individuals can move out of the strata into which they are born.

• social change
• social transfer
• social development
• social mobility

Flexible manufacturing technologies enable firms to produce a wide variety of end products at a unit cost that traditionally would require mass production of a standardized output.

• True
• False

It refers to systematic reductions in production costs that have been observe the occur over the life of a product.

• economies of sclae
• factor costs
• experience curve
• learning effects