Global Business Strategy
Practice Questions
Course Introduction
Global Business Strategy explores the formulation and implementation of strategies in international markets, focusing on the complexities and opportunities faced by organizations operating across borders. The course covers frameworks for analyzing global competition, entry modes, cross-cultural management, global supply chains, and adaptation versus standardization of products and services. Students will learn to assess the impact of economic, political, and cultural environments on business decisions and develop skills to craft strategies that leverage global opportunities while navigating risks and ethical challenges inherent in diverse international contexts.
Recommended Textbook
International Business Environments Operations 14th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) Many companies merge with or acquire other companies to gain operating efficiencies that help them compete with or become global leaders.
A)True
B)False
Answer: True
Q2) Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________.
A) hiring host-country nationals who pay no taxes
B) taking advantage of taxation laws in foreign countries
C) sailing in international waters outside countries' tax jurisdiction
D) paying substantial port fees instead of taxes during stopovers
Answer: A
Q3) Improvements in transportation and communications enable managers to better oversee foreign operations.
A)True
B)False
Answer: True
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Chapter 2: The Cultural Environments Facing Business
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Q1) One of the potential problems for an MNE that practices too much polycentrism is
A) demanding that local communication methods be replaced with modern technology
B) underestimating the complexity of introducing new management practices
C) losing innovative capabilities to less-risky host-country practices
D) relying too much on home-country directions and policies
Answer: C
Q2) Which of the following is characterized by low dependence on an organization and a desire for personal time,freedom,and challenges?
A) collectivism
B) democracy
C) individualism
D) anarchy
Answer: C
Q3) Cultural change may come by choice or imposition.
A)True
B)False
Answer: True
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) Which of the following statements referring to intellectual property rights and violations is INCORRECT?
A) Richer countries claim looser regulation of intellectual property rights will hinder innovation.
B) Companies can register a global patent, trademark, or copyright through the World Trade Organization (WTO).
C) The International Anti-Counterfeiting Coalition estimates international trade in counterfeit products at $600 billion a year.
D) Developing markets claim tougher regulation of IPRs will slow, if not halt, their economic development.
Answer: B
Q2) Which of the following countries has an individualistic orientation?
A) Venezuela
B) Japan
C) Egypt
D) Canada
Answer: D
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Page 5
Chapter 4: The Economic Environments Facing Businesses
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Q1) The range of economic systems in the world today,when represented on a spectrum,has one end anchored by the idea of capitalism,the other with that of socialism.
A)True
B)False
Q2) In a command economy,the goods and services that a country produces,the quantity in which they are produced,and the prices at which they are sold are all planned by the government.
A)True
B)False
Q3) Which of the following countries is the best example of a mixed economic model?
A) United States
B) France
C) United Kingdom
D) Australia
Q4) The so-called "misery index" is the sum of a country's inflation and unemployment rates.
A)True
B)False
Q5) What is the difference between a command economy and state capitalism?
Page 6
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Chapter 5: Globalization and Society
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Q1) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of externalities.
A)True
B)False
Q2) An advocate of the legal-justification standard would most likely assert that the law
A) develops slowly in response to evolving societal dilemmas B) protects business activities that are unethical but not illegal C) contains enforceable rules that apply to everyone
D) offers necessary moral flexibility for a society
Q3) According to the Ethical Trading Initiative (ETI),________.
A) child labor cannot be used unless there are no suitable alternatives B) employment need not be freely chosen in order to be acceptable C) no harsh or inhumane treatment of workers should be allowed D) MNEs are not responsible for establishing codes of conduct
Q4) What types of payments are legal and illegal under the Foreign Corrupt Practices Act (FCPA)of the United States? Provide an example.
Q5) What motivations do companies have to act responsibly? How can codes of conduct help firms to act ethically?
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Chapter 6: International Trade and Factor Mobility Theory
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Q1) Labor and capital mobility are intertwined because ________.
A) illegal workers sometimes pay large sums to people who smuggle them into another country
B) people cannot emigrate to another country unless they bring capital with them
C) companies receive tax benefits for hiring immigrants
D) immigrants bring an investment in human capital with them
Q2) Tests to substantiate the factor proportions theory have had mixed results most likely because ________.
A) labor migration quickly outdates any studies
B) most countries have a favorable balance of trade
C) labor skills and education are not homogeneous
D) large and small countries have different trade policies
Q3) According to the product life cycle theory,production and sales are primarily domestic in the introductory stage because ________.
A) businesses need quick market feedback
B) tariff reductions remain under negotiation
C) international transport costs are too high
D) international patents have not been approved
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8
Chapter 7: Governmental Influence on Trade
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Q1) The government of Country X imposes import restrictions on steel to help the domestic steel industry in depressed areas. What is the most likely result of such restrictions?
A) damaging other industries in Country X
B) devaluing the currency of Country X
C) lowering steel prices in Country X
D) triggering boycotts in Country X
Q2) When customs officials set a value on which to place an import tariff,they ordinarily use the declared invoice price unless they doubt its authenticity.
A)True
B)False
Q3) The countries most likely to be successful at using trade retaliation are large trading countries.
A)True
B)False
Q4) The group most likely to become involved in disputes concerning trade protectionism is consumers.
A)True
B)False
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) The ________ is the common currency of the European Union.
A) franc
B) pound
C) euro
D) mark
Q2) NAFTA is a good example of ________.
A) trade divestment
B) trade diversion
C) the theory of trade disruption
D) the theory of trade implementation
Q3) Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result?
A) Governance processes are streamlined because local governments have been eliminated.
B) Market size is larger because of the elimination of internal tariff barriers.
C) Differential external tariff barriers exist for product shipments.
D) The EU uses English as its official language.
Q4) What has been the impact of NAFTA on trade and employment in NAFTA nations?
Q5) Are commodity agreements effective? Why or why not?
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Chapter 9: Global Foreign-Exchange Markets
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Q1) Which of the following is the price at which the trader is willing to sell foreign currency?
A) offer
B) bid
C) spread
D) cross rate
Q2) Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?
A) capability of handling specific currencies
B) capability of assessing cultural risk
C) capability of handling derivatives
D) capability of engaging in analytics
Q3) Which of the following best explains why migrant workers in Dubai send money back home?
A) Non-citizens cannot purchase property.
B) Non-citizens have temporary visas.
C) Western Union offers low rates.
D) Labor demand is flexible.
Q4) In a short essay,discuss how companies use foreign exchange.
Q5) What is currency speculation? Why is it risky?
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Chapter 10: The Determination of Exchange Rates
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Q1) The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.
A) quota
B) par value
C) gold standard
D) nominal interest rate
Q2) What role has the IMF played in the Greek financial crisis of 2010-2011?
A) setting the value of the drachma
B) releasing funds for debt payments
C) demanding the sale of state-owned assets
D) lowering interest rates for international investors
Q3) The primary objective of the International Monetary Fund is to ________.
A) encourage euro adoption
B) promote exchange rate stability
C) establish a unilateral system of payments
D) foster the power of the foreign exchange market
Q4) The International Fisher Effect links interest rates and exchange rates.
A)True
B)False
Q5) What is a Special Drawing Right (SDR)? How is it used?
Page 12
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Chapter 11: The Strategy of International Business
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Q1) In the context of value chain analysis,the support activities of a firm include
A) outbound logistics, human resources, and information systems
B) production, marketing, and operations
C) shipping and customer service
D) research and development
Q2) Zara creates,produces,and distributes most of its products from its headquarters in Spain. Zara is most likely using a ________ configuration.
A) concentrated
B) coordinated
C) dispersed
D) logical
Q3) A distinct disadvantage of an international strategy is ________.
A) restricting the movement of core competencies to local markets
B) capitalizing on the benefits of global learning
C) customizing product offerings to local conditions
D) relying on home managers' knowledge of foreign markets
Q4) What is the relationship between the five-forces model and a firm's international business strategy? Provide examples to illustrate your answer.
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Chapter 12: Country Evaluation and Selection
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Q1) Companies are usually willing to accept a lower rate of return on their investments in countries where they can more easily sell those investments and convert the proceeds at a favorable rate.
A)True
B)False
Q2) What is the relationship between a company's international market and its production location decisions? How do firms benefit from the use of scanning techniques when making location decisions?
Q3) What is meant by liability of foreignness? How might this influence location and allocation decisions?
Q4) Committing resources to one country usually means forgoing or delaying projects in others.
A)True
B)False
Q5) When choosing international operating locations,companies should outsource the preparation of grids or matrices to experts rather than preparing them with their own personnel.
A)True B)False
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Chapter 13: Export and Import
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Q1) Federal,state,and local governments that recognize the benefits of international trade,actively aid the efforts of potential and active exporters and ________.
A) ensure the quality of exported products
B) establish barriers to punish foreign rivals
C) collect a fee for each successful export sale
D) protect the interests of struggling importers
Q2) Indirect exporters sells goods to a foreign intermediary,who then sells the product in the domestic market to the final consumer.
A)True
B)False
Q3) All of the following are primary duties of the Bureau of Customs and Border Protection EXCEPT which one?
A) assessing all duties, taxes, and fees on imported merchandise
B) collecting import and export tariffs
C) protecting the U.S. from threatening imports
D) policing smuggling operations
Q4) What are some reasons that firms decide to export their products or services? What does a firm need to consider when developing an export plan?
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Chapter 14: Direct Investment and Collaborative Strategies
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Q1) What is a master franchise?
A) the original agreement between the franchisor and franchisee
B) the franchisee with the highest revenue in a region
C) a franchisee with rights to open outlets on its own or develop subfranchises
D) the set of standard terms regulating the relationship between franchisor and franchisee
Q2) A U.S. firm owns 100% of its production facility in Brazil,thus is most likely using a ________ strategy.
A) comprehensive ownership
B) vertical integration
C) appropriability
D) internalization
Q3) In a short essay,discuss how transportation,trade restrictions,domestic capacity,and country-of-origin affect companies' decisions about modes of operating internationally.
Q4) What is a turnkey operation?
A) a contract for the complete construction of an operating facility for a fee
B) a contract with a government to service one of its key industries
C) the buying of another company
D) the repatriation of equity
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Chapter 15: The Organization of International Business
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Q1) Which tool is used by most firms to monitor the data linkages among product planning,parts purchasing,and inventory maintenance activities?
A) reports
B) clan controls
C) financial metrics
D) information systems
Q2) Neoclassical structures promote tightly connected networks both vertically and horizontally to ensure that strategic requirements are fulfilled.
A)True
B)False
Q3) The benefits of managerial visits to foreign subsidiaries can easily be replicated with frequently submitted and reviewed operational reports and schedules.
A)True
B)False
Q4) Why do you think corporate universities are becoming more popular among MNEs? How do both MNEs and employees benefit from corporate universities?
Q5) Describe how an MNE might use reports as a control mechanism.
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Chapter 16: Marketing Globally
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Q1) The importance of using a brand to convey the perception of whether a firm will deliver what it promises is more critical in ________.
A) countries without strong trademark protection
B) selling to mass markets than in selling to niche markets
C) countries with strong cultural characteristics of uncertainty avoidance
D) selling industrial products than final consumer products
Q2) In advertisements aimed at different countries,companies sometimes use actors who do not speak,along with a voice and/or print overlay. What is the main reason for doing this?
A) avoiding dubbing that does not correspond to lip movements
B) altering themes and messages among countries
C) meeting legal requirements on morality
D) reaching a hearing-or sight-impaired audience
Q3) What challenges are created by selling internationally through the Internet? How does e-commerce affect pricing?
Q4) What is the gray market? Why are companies concerned about it?
Q5) How do language differences affect international branding and promotion?
Q6) What factors makes international pricing and distribution more complex than domestic pricing and distribution?
Page 18
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Chapter 17: Global Manufacturing and Supply Chain Management
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Q1) ________ manufacturing is any manufacturing that takes place in a country different from the home country.
A) Offshore
B) Multidomestic
C) Cost-minimization
D) Outsourcing
Q2) A company may use outsourcing as an implied threat to underperforming employees.
A)True
B)False
Q3) Which of the following best describes a major difference between supply chain management and logistics?
A) Supply chain management involves handling suppliers and customers.
B) Logistics involves longer distances and international distribution networks.
C) Supply chain management focuses on transportation and the storage of goods.
D) Logistics only encompasses the outbound flow of products and materials.
Q4) Rationalization is the process of specializing in manufacturing according to product or process.
A)True B)False
Q5) What are foreign trade zones? How are they used? Page 19
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Page 20
Chapter 18: International Accounting Issues
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Q1) Germany's accounting system has historically been a ________ system.
A) micro-pragmatic
B) macro-pragmatic
C) law-based
D) tax-based
Q2) Larson Shoes is a British company. Which balance sheet format is most likely used by Larson?
A) assets + liabilities = shareholders' equity
B) liabilities + shareholders' equity = assets
C) noncurrent assets + current assets - current liabilities - noncurrent liabilities = shareholders' equity
D) noncurrent assets - net current assets = liabilities + capital and reserves
Q3) What metrics are used to measure the performance of an MNE? How is the balanced scorecard approach unique?
Q4) According to U.S. GAAP,companies recognize transaction gains and losses in the income statement.
A)True
B)False
Q5) How do exchange rates affect budgets used to evaluate performance in MNEs?
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Chapter 19: The Multinational Finance Function
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Q1) A transaction exposure for a U.S. company ________.
A) occurs when the dollar value of a payable from exports changes as the exchange-rate changes
B) generally takes place when foreign currencies weaken against the dollar
C) occurs when reporting systems are inadequate
D) does not result in a gain or loss in cash flows
Q2) Which of the following is NOT a major internal source of funds available to MNEs?
A) intercompany loans
B) equity investments by the parent company in its subsidiaries
C) equity capital raised within the country where the subsidiary is located
D) intercompany receivables and payables
Q3) MNEs most likely use offshore debt markets ________.
A) to hide their cash from tax authorities
B) to take advantage of their ability to access capital in different countries
C) since debt in foreign countries is always cheaper than in the home country market
D) because investors don't like to invest in companies that only raise capital in their home markets
Q4) What is a transfer price? Why are transfer prices used?
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Page 22
Chapter 20: International Human Resources
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Q1) A key disadvantage of a polycentric staffing policy is that it limits the career mobility of subsidiary executives.
A)True
B)False
Q2) An executive with a polycentric staffing policy presumes that successful business practices at home need not change when transferred to foreign markets.
A)True
B)False
Q3) A(n)________ staffing policy framework assumes that the practices and procedures that work at headquarters will work in foreign operations; as such,executive slots are filled by home country nationals.
A) polycentric
B) intercentric
C) ethnocentric
D) geocentric
Q4) Expatriates are locals from the country of the foreign subsidiary.
A)True
B)False
Q5) List and discuss the main components of an expatriate's compensation package.
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