Global Business Environment
Exam Answer Key
Course Introduction
The Global Business Environment course examines the dynamic forces that shape international commerce, including economic, political, cultural, legal, and technological factors. Students explore how globalization impacts markets, multinational strategies, and cross-border operations. The course emphasizes understanding the complexities and risks of operating in diverse environments, analyzing international trade theories, foreign direct investment, and global financial frameworks. Through case studies and contemporary examples, students gain insight into how organizations adapt strategies to thrive in an interconnected and rapidly changing global landscape.
Recommended Textbook
International Business 7th Edition by Ricky
W. Griffin
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19 Chapters
2470 Verified Questions
2470 Flashcards
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Page 2
Chapter 1: An Overview of International Business
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Sample Questions
Q1) The ratio of international trade to economic activity has been falling steadily in recent years.
A)True
B)False
Answer: False
Q2) The International Red Cross is an example of a(n) ________.
A) international business
B) multinational enterprise
C) multinational organization
D) multinational corporation
Answer: C
Q3) The term ________ is used to identify firms that have extensive involvement in international business.
A) global operation
B) multinational corporation
C) international conglomerate
D) multidomestic organization
Answer: B
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Page 3
Chapter 2: Global Marketplaces and Business Centers
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Sample Questions
Q1) Which of the following is NOT a similarity between India and Great Britain?
A) parliamentary system
B) independent judiciary
C) professional bureaucracy
D) state-owned industry
Answer: D
Q2) Which of these countries is NOT a member of the EU?
A) Austria
B) Monaco
C) Norway
D) Portugal
Answer: C
Q3) Which two countries make up the Indian subcontinent?
A) India and Egypt
B) India and Pakistan
C) Afghanistan and India
D) India and Iran
Answer: B
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Page 4
Chapter 3: Legal, Technological, Accounting, and Political Environments
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Sample Questions
Q1) Which results in a loss of assets?
A) repatriation
B) confiscation
C) expropriation
D) inflation
Answer: B
Q2) The civil law system is based on a detailed listing of what is or is not permissible.
A)True
B)False
Answer: True
Q3) BGL Enterprises, a global firm, operates a facility in Angola. Managers want to reduce the firm's vulnerability to political risk in Angola. All of the following actions would most likely accomplish this task EXCEPT ________.
A) reducing net investment in the subsidiary
B) purchasing capital equipment outright
C) buying inputs from local suppliers
D) being a good corporate citizen
Answer: B
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Chapter 4: The Role of Culture
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Sample Questions
Q1) According to Ronen and Shenkar, which of the following countries is NOT in the same cultural cluster?
A) Austria
B) Norway
C) Denmark
D) Sweden
Q2) Before finalizing a new advertisement for the Chinese market, Barton Soda assigns one person to translate the advertisement from English to Chinese and another person to translate the translated version back into English. Barton is most likely using ________.
A) translation
B) backtranslation
C) proofreading
D) market pre-testing
Q3) Language can provide important clues about the cultural values of a society.
A)True
B)False
Q4) How are the HR practices of MNEs affected by status systems and religious practices in certain cultures? Illustrate your answer with specific examples.
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Chapter 5: Ethics and Social Responsibility in International Business
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Sample Questions
Q1) Firms conduct corporate social audits to assess the ethical values and behaviors of employees.
A)True
B)False
Q2) According to the text, the primary ethics concerns surrounding BP related to ________.
A) corruption
B) child labor
C) worker safety
D) market price control
Q3) An individual's personal beliefs regarding whether a decision, behavior, or action is right or wrong is known as ethics.
A)True
B)False
Q4) Gift exchanges in a business situation in Japan are best described as ________.
A) common
B) trendy
C) rare
D) illegal
Q5) What are ethics? How does culture affect ethics for global organizations?
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Chapter 6: International Trade and Investment
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Sample
Questions
Q1) How can an MNE gain a competitive advantage by exploiting the experience curve? Provide an example to illustrate your answer.
Q2) In the U.S., sugar growers, steel companies, and the AFL-CIO are supporters of mercantilist policies. These groups are best characterized as ________.
A) protectionists
B) communists
C) isolationists
D) federalists
Q3) Which of the following is not one of the conditions specified in eclectic theory for the occurrence of foreign direct investment?
A) ownership advantage
B) location advantage
C) home country advantage
D) internalization advantage
Q4) What motivates firms to become involved in international trade and foreign direct investment?
Q5) Why are the islands of Caribbean so important to the United States both as a source and a destination of investment?
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Chapter 7: The International Monetary System and the Balance of Payments
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Sample Questions
Q1) Describe the major outcomes of the Bretton Woods conference.
Q2) The ________ shows the difference between a country's exports of services and its imports of services.
A) trade in visibles balance
B) balance in merchandise trade
C) balance on services trade
D) capital account
Q3) How can capital inflows occur as credits in the BOP accounting system?
Q4) London became a major international financial center under the gold standard because of the international trust in the British currency.
A)True
B)False
Q5) The interest rate on soft loans is traditionally set at ________.
A) 0 percent
B) 1 percent
C) 5 percent
D) 10 percent
Q6) The Smithsonian agreement established a fixed exchange rate system.
A)True
B)False Page 9
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Page 10
Chapter 8: Foreign Exchange and International Financial Markets
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Sample Questions
Q1) ________ attempt to exploit small differences in the price of a currency between markets by buying currencies in lower-priced markets and selling in higher-priced markets.
A) Commercial customers
B) Speculators
C) Arbitrageurs
D) Individuals
Q2) The equilibrium point between the quantity of a currency supplied and the quantity of the currency demanded is the exchange rate.
A)True
B)False
Q3) What is a correspondent relationship between banks? What services are performed by correspondent banks?
Q4) What is a Eurodollar?
A) a euro held by an American
B) a U.S. dollar deposited in a European bank
C) a euro deposited in a U.S. bank.
D) any currency deposited in a country other than the country of issue
Q5) Why is the foreign exchange market moving online?
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Chapter 9: Formulation of National Trade Policies
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Sample Questions
Q1) Most tariffs imposed by developed countries are ad valorem.
A)True
B)False
Q2) What type of tariff includes both ad valorem components and specific components?
A) transit tariff
B) harmonized tariff
C) export tariff
D) compound tariff
Q3) Strategic trade theory applies best to which industry identified below?
A) air transportation
B) commercial aircraft construction
C) farming
D) automobile manufacturing
Q4) Retail prices are irrelevant in determining whether dumping has occurred.
A)True
B)False
Q5) How is a countervailing duty determined?
Q6) What is the infant industry argument? How did Japan use the infant industry argument to rebuild its economic strength following World War II? What tools did it use?
Page 12
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Chapter 10: International Cooperation Among Nations
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Sample Questions
Q1) The European Free Trade Association has joined with the ________ to form the European Economic Area.
A) Mercosur
B) European Union
C) Commonwealth of Independent States
D) Benelux nations
Q2) What organization replaced the GATT?
A) World Bank
B) World Trade Organization
C) International Trade Commission
D) NAFTA
Q3) What function is served by the European Commission?
A) executive
B) administrative
C) legislative
D) judicial
Q4) The Asia-Pacific Economic Cooperation Initiative was developed in response to the growing interdependence of the Asia-Pacific economies.
A)True
B)False
Page 13
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Chapter 11: International Strategic Management
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Sample Questions
Q1) What are the three types of corporate strategies an MNC might choose to follow?
Q2) Which strategy combines the benefits of global scale efficiencies and local responsiveness?
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Q3) When is a global strategy most appropriate?
Q4) According to the text, Disney has been more effective at capturing its synergies in the domestic market than in the international market.
A)True
B)False
Q5) Carvel Industries, an MNE, broadens its product line in each of the countries that it enters. Carvel most likely benefits from ________.
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Q6) What is a related diversification strategy?
Page 14
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Chapter 12: Strategies for Analyzing and Entering Foreign Markets
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Sample Questions
Q1) Compare and contrast the three forms of foreign direct investment.
Q2) Explain the meaning of internalization advantages.
Q3) Which form of market entry should a firm use when it needs to coordinate the activities of its foreign subsidiaries to achieve strategic synergies?
Q4) Foreign direct investment offers both high profit potential and high financial risk.
A)True
B)False
Q5) Unlike an export management company, an international trading company
A) offers customer financing
B) facilitates customs documentation
C) manages international transportation logistics
D) participates in exporting and importing activities
Q6) The ________ acts as a foreign sales department for domestic producers by selling those firms' goods in foreign markets.
A) manufacturers' agent
B) export and import broker
C) freight forwarder
D) manufacturers' export agent
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Chapter 13: International Strategic Alliances
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Sample Questions
Q1) Chrysler and BMW formed a joint venture to build engines in South America. Which term best describes this type of alliance?
A) franchise agreement
B) financial alliance
C) licensing agreement
D) production alliance
Q2) Under a(n) ________, one partner assumes primary responsibility for the operations of the alliance.
A) shared management agreement
B) assigned arrangement
C) delegated arrangement
D) consensual arrangement
Q3) Agro Corporation, a French firm, formed a joint venture with Woxhu, a Chinese firm. According to the text, which of the following has the most power to make decisions in this joint venture?
A) CCP party secretary
B) managing partners
C) board of directors
D) alliance CEO
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Page 16
Chapter 14: International Organization Design and Control
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Sample
Questions
Q1) What is organizational design? What are the different types of organizational design?
Describe each one briefly.
Q2) Why is the control function important to the success or failure of an international business? What factors are necessary to understand before establishing a control system?
Q3) Which of the following is an advantage of using a global area design?
A) eliminating duplication of functional areas
B) gaining cost efficiencies in manufacturing
C) tailoring the product mix in a region
D) encouraging global product planning
Q4) Cadbury Schweppes PLC has five basic divisions, each representing a different area of the world. Which organization design does it use?
A) global product design
B) global area design
C) global functional design
D) global hybrid design
Q5) What is the meaning of functional knowledge?
Q6) What strategies can firms implement to achieve desired coordination?
Q7) What elements of performance are relatively easy to measure?
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Chapter 15: Leadership and Employee Behavior in International Business
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Sample Questions
Q1) What personality trait refers to one's comfort level with relationships?
A) agreeableness
B) extroversion
C) openness
D) emotional stability
Q2) The composition of a team plays a minimal role in team dynamics.
A)True
B)False
Q3) In a study of stress among executives from 10 countries, executives from ________ experienced the least stress.
A) Egypt
B) Japan
C) Sweden
D) Germany
Q4) Herzberg's two-factor theory suggests that different factors affect satisfaction and dissatisfaction.
A)True
B)False
Q6) How are managers affected by bounded rationality? Page 18
Q5) Using examples, compare and contrast leadership and management.
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Page 19
Chapter 16: International Marketing
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Sample Questions
Q1) What are the three basic approaches in deciding whether to standardize or customize the firm's marketing mix?
Q2) Which element of the marketing mix includes the development of policies that bring in revenue and strategically shape the competitive environment?
A) product
B) pricing
C) promotion
D) place
Q3) Industrialized products are more likely to be customized than consumer products.
A)True
B)False
Q4) Which element of the promotion mix consists of efforts aimed at enhancing a firm's reputation and image with the general public?
A) sales promotion
B) personal selling
C) public relations
D) brand placement
Q5) What are the three factors firms must consider as they develop an advertising strategy?
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Chapter 17: International Operations Management
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Sample Questions
Q1) What increases the difficulty and expense for international businesses that try to enforce contracts with foreign suppliers?
A) changes in technology
B) fluctuating exchange rates
C) differences in national legal systems
D) lack of oversight from World Trade Organization
Q2) In today's age of quick communication, the location of a factory has little impact on a firm's ability to respond to customer tastes and preferences.
A)True
B)False
Q3) Infrastructure and country-of-origin effects are the primary determinants of whether an individual country is a suitable location for a facility.
A)True
B)False
Q4) The business strategy followed by the firm sets the stage for the role of operations management within an international firm.
A)True
B)False
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Chapter 18: International Financial Management
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Sample Questions
Q1) If exchange rates were fixed, translation exposure would not exist.
A)True
B)False
Q2) Long-term investments in property, plant, and equipment are especially vulnerable to economic exposure.
A)True
B)False
Q3) Why do companies hold working capital? Why do firms need to minimize their working capital balances?
Q4) Payment in advance is the riskiest method from the exporter's perspective.
A)True
B)False
Q5) The net present value approach is based on a basic precept of finance theory that a dollar today is worth less than a dollar in the future.
A)True
B)False
Q6) What are the two roles of the bill of lading?
Q7) When does a firm face transaction exposure?
Q8) Discuss the various forms of countertrade.
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Chapter 19: International Human Resource Management and Labor Relations
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Sample Questions
Q1) Having the freedom to choose whether to accept or reject an expatriate assignment increases the likelihood a manager will be successful at the assignment.
A)True
B)False
Q2) What are the four phases of acculturation?
Q3) According to research, host country citizens react negatively towards female executives on foreign assignments because of cultural attitudes about women working outside of the home.
A)True
B)False
Q4) What kinds of skills and abilities are necessary to work in a foreign location?
Q5) What is the first step in the international human resource management process?
A) training and development
B) performance appraisal
C) recruitment and selection
D) compensation and benefits
Q6) How does the scope of internationalization affect recruiting, training, and retaining managers?
Q7) What is a cost-of-living allowance?
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