International Business Law
Chapter Exam Questions
Course Introduction
International Business Law explores the legal frameworks governing cross-border commercial activities, examining the rules, regulations, and treaties that impact international trade and investment. The course covers topics such as international sales contracts, dispute resolution mechanisms, intellectual property rights, foreign direct investment, and the role of organizations like the World Trade Organization (WTO). Students will gain insights into how legal systems interact globally, addressing issues such as trade restrictions, ethical considerations, and the enforcement of international agreements. Through case studies and practical examples, the course prepares students to navigate the complex legal environment of global business.
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International Business 16th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) The terms multinational corporation and multinational company are frequently used synonyms for strategic alliances.
A)True
B)False
Answer: False
Q2) Reebok pays a royalty to the German Soccer League to use the team's logo on t-shirts that it sells.Reebok and the German Soccer League most likely have a ________.
A)turnkey operation contract
B)licensing agreement
C)portfolio investment
D)joint venture
Answer: B
Q3) When a company successfully responds to foreign production and market opportunities, ________.
A)other companies will likely emulate its successful practices
B)it likely has a long-term advantage over competitors
C)it will downsize its domestic operations
D)its home government likely raises taxes on the company
Answer: A
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Chapter 2: The Cultural Environments Facing Business
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Q1) A culture in which people prefer to finish one task before starting another is most accurately characterized as which of the following?
A)low-context
B)monochronic
C)pragmatic
D)high power-distance
Answer: B
Q2) People in the port city of Jeddah were less culturally conservative than people in the interior of the country.The most likely reason for this is that ________.
A)people in the port cities have more contact with foreigners
B)the coastal area has to trade with countries using different religious holidays
C)the coastal area has a culture with a higher uncertainty avoidance
D)the coastal area is secular, whereas the interior of Saudi Arabia has a state religion
Answer: A
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4
Chapter 3: The Political and Legal Environments Facing Business
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Q1) International law takes precedence over national laws in determining permissible practices in pricing, distribution, advertising, and promotion of products and services in a particular country.
A)True
B)False
Answer: False
Q2) A U.S.firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.
A)civil
B)common
C)customary
D)mixed
Answer: D
Q3) The protection of intellectual property rights is very similar from country to country.
A)True
B)False
Answer: False
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Page 5
Chapter 4: The Economic Environments Facing Businesses
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Q1) Uneven income distribution ________.
A)exists in almost every country
B)is largely a problem for poorer nations
C)primarily affects people in urban settings
D)is limited to a small share of the world population
Q2) Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________.
A)destabilize poverty rates
B)achieve low unemployment
C)restrict economic growth
D)inequitably distribute wealth
Q3) Which of the following is NOT a characteristic of capitalism?
A)private ownership of assets
B)right to profit from individual effort
C)state control of factors of production
D)private control of investment
Q4) There is a positive correlation between economic freedom and economic growth.
A)True
B)False
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Chapter 5: Globalization and Society
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Q1) Which of the following statements is most likely true regarding relationships between MNEs and stakeholders?
A)An MNE typically serves all stakeholder groups equally at any given time.
B)No individual stakeholder group is powerful enough to cause the demise of an MNE.
C)All stakeholders of an MNE have the same short-term and long-term goals and interests.
D)The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
Q2) The teleological approach asserts that individuals make moral judgments independent of consequences.
A)True
B)False
Q3) Studies indicate that employee morale is largely unaffected by a company's corporate behavior.
A)True
B)False
Q4) 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) Factor mobility refers to the movement of which of the following combinations?
A)capital, technology and people
B)currency, profits and raw materials
C)labor, capital and management
D)trade, profits and materials
Q2) Understanding trade theories helps companies know if they will need to compete against goods and services produced abroad.
A)True
B)False
Q3) Countries with large land areas are generally less dependent on trade than countries with small land areas because of ________.
A)highly restricted economic scales
B)self-sufficiency with natural resources
C)higher transportation costs related to foreign trade
D)the development of unique products that have a limited demand
Q4) What is the difference between the free trade theories of absolute advantage and comparative advantage? How can free trade improve global efficiency?
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Chapter 7: Governmental Influence on Trade
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Q1) People who argue for lifting the U.S.trade embargo with Cuba claim all of the following EXCEPT ________.
A)the embargo has not achieved its purpose of changing Cuba's economic and political system
B)U.S. companies lose Cuban sales to competitors from other countries
C)increased exposure to the United States would be a more effective force of change
D)Cuba has largely become a market economy already
Q2) Describe and compare the different types of tariffs (duties).
Q3) Agricultural subsidies by developed countries impede the competitiveness of agricultural exports by developing countries.
A)True
B)False
Q4) The argument for using protectionism to bring about industrialization in developing countries presumes that gains will occur because the industry will become internationally competitive.
A)True
B)False
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Chapter 8: Cross-National Cooperation and Agreements
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Q1) Which of the following members of the European Union has NOT adopted the euro?
A)Denmark
B)Estonia
C)Germany
D)Greece
Q2) The formation of CARICOM has primarily been triggered by the desire of Jamaica, Trinidad, and Tobago to expand the region's market size and attract more FDI.
A)True
B)False
Q3) A free trade agreement is likely to increase efficiency because of ________.
A)decreased competition
B)increased competition
C)decreased trade diversion
D)decreased trade creation
Q4) One of the reasons that neighboring countries tend to ally is similar consumer tastes.
A)True
B)False
Q5) Are commodity agreements effective? Why or why not?
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Chapter 9: Global Foreign-Exchange Markets
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Q1) As a trading currency, the euro is ________.
A)more widely traded than the U.S. dollar in seven of the top ten currency markets in the world
B)widely traded in London but not in any other major foreign-exchange markets in the world
C)becoming more popular than the U.S. dollar because of its global acceptance
D)gaining ground against the U.S. dollar in Eastern European countries
Q2) What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?
Q3) A currency sells at a forward premium when the forward rate is greater than the spot rate.
A)True
B)False
Q4) What is a futures contract? What institutions handle futures contracts?
Q5) What are the characteristics of the spot market? What institutions handle spot exchanges?
Q6) A tariff is the price of a currency.
A)True
B)False
Page 11
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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) Which of the following BEST describes the special drawing right?
A)an international reserve asset created to supplement members' existing reserve assets
B)the official currency for international trade established by the World Bank
C)a substitute for the fixed value of gold as determined by currency rates
D)a contribution made by countries to join the IMF
Q3) In order to join the IMF, a country must contribute a certain sum of money, called a ________.
A)special drawing right
B)trade balance
C)monetary reserve
D)quota
Q4) Describe the exchange rate arrangements used in the EU, Hong Kong, China, and the U.S.
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Chapter 11: Global Capital Markets
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Q1) A French company floating a bond issued in Swiss francs in Switzerland would be selling a foreign bond.
A)True
B)False
Q2) Tax-haven subsidiaries categorically referred to as International Offshore Financial Centers have all of the following characteristics EXCEPT ________.
A)a low tax on foreign investment or sales income earned by resident corporations and a low dividend withholding tax on dividends paid to the parent firm.
B)a stable currency to permit easy conversion of funds into and out of the local currency. This requirement can be met by permitting and facilitating the use of Eurocurrencies.
C)a stable government that encourages the establishment of foreign-owned financial and service facilities within its borders.
D)All of these answer choices are characteristics of tax-haven subsidiaries.
Q3) What are the major sources of internal funds for MNEs? Why do many MNEs acquire external funds through the Eurodollar market?
Q4) Why do many MNEs acquire external funds through the Eurodollar market?
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Page 13
Chapter 12: The Strategy of International Business
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Q1) Dispersing value activities where and in how many places in the world is the issue of
A)logistics
B)clustering
C)coordination
D)configuration
Q2) An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations, both independently and jointly, and then diffused throughout the worldwide organization, is following a ________ strategy.
A)transnational
B)localization
C)global
D)matrix
Q3) A global strategy drives performance by making standardized products that are marketed with minimum adaptation to local conditions.
A)True
B)False
Q4) Describe the pressures for local responsiveness that international companies face.
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Page 14
Chapter 13: Country Evaluation and Selection
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Q1) Which of the following statements is NOT true about risk as it affects companies' choice of locations for foreign operations?
A)Companies and their managers differ in their perception of what is risky.
B)One company's risk may be another company's opportunity.
C)There are means to reduce risk other than avoiding locations.
D)Companies choose the cheapest location regardless of risks.
Q2) In which of the following situations would tax rate differences among countries be most important for deciding where to place an investment?
A)Companies find advantages in being located near specialized private and public institutions.
B)Companies must compare the benefits of labor- versus capital-intensive production.
C)Companies want to serve an entire region within a regional trading bloc.
D)Companies must deal with difficult start-up regulations.
Q3) Although capital intensity is growing in most industries, labor compensation remains a significant cost for most companies.
A)True
B)False
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15
Chapter 14: Export and Import
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Q1) 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?
Q2) Barton Accessories has two retail stores and one production facility where the firm's line of leather belts and purses are assembled.Barton employs 430 people and generates nearly $1 million in revenue each year through domestic and international sales.Which term best describes the status of Barton?
A)SME
B)MNE
C)MNC
D)FDI
Q3) According to the text, technological advances such as e-mail and VoIP have increased the appeal of international trade because it is now easy and inexpensive to manage customer needs and communicate with customers frequently.
A)True
B)False
Q4) Why is countertrade considered inefficient?
Q5) Why are financial risks a key concern of SMEs considering international trade?
Q6) What is a born global? How has technology triggered the growth of born globals?
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Chapter 15: Direct Investment and Collaborative Strategies
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Q1) What motives do businesses have for entering into collaborative arrangements? What are some of the problems associated with collaborative arrangements?
Q2) What is a consortium?
A)the ownership of a company by a government and a foreign company
B)an agreement signed by most governments to protect intellectual property rights
C)an international joint venture owned by at least three organizations
D)an agreement between two or more governments to provide for reciprocal foreign investment protection
Q3) Appropriability theory describes a firm's desire to deny rivals access to its competitive resources.
A)True
B)False
Q4) Wholly owned operations abroad inhibit a company's ability to pursue a global strategy.
A)True
B)False
Q5) What is an equity alliance? What motives would a firm have for forming an equity alliance?
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Chapter 16: The Organization of International Business
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Q1) 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
Q2) Decision making in a functional structure tends to be ________.
A)decentralized
B)centralized
C)horizontal
D)collaborative
Q3) A company adopting a ________ strategy will likely aim to develop an organization culture that helps employees around the world unconditionally accept common goals and practices.
A)domestic
B)multidomestic
C)national
D)global
Q4) In a brief essay, discuss how decentralized management and organizational culture affect Johnson & Johnson.
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Page 18
Chapter 17: Marketing Globally
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Questions
Q1) What is the gray market? Why are companies concerned about it?
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) A company that adapts its marketing to foreign differences without deviating very much from its experience is following a customer orientation.
A)True
B)False
Q4) The most common way of identifying market segments is through demographics.
A)True
B)False
Q5) A company that exports products at a price lower than its domestic market price is using a skimming policy abroad.
A)True
B)False
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Chapter 18: Global Manufacturing and Supply Chain Management
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Q1) In deciding whether to make or buy, MNEs should focus on those parts that are ________ to the product and that they are ________ at making.
A)critical; distinctively good
B)incremental; distinctively good
C)critical; marginally good
D)incremental; marginally good
Q2) Which of the following should an MNE most likely consider in a make-or-buy decision?
A)organizational hierarchy
B)supplier capabilities
C)employee morale
D)niche markets
Q3) Independent suppliers can connect to a company's intranet to help automate and organize delivery of components to that company.
A)True
B)False
Q4) Why are the concepts of dependability and quality important when developing a global manufacturing strategy?
Q5) Describe total quality management.
Page 20
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Chapter 19: International Accounting and Finance Issues
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Q1) According to the accounting concept of mutual recognition, companies are required to reconcile financial statements to local GAAP.
A)True
B)False
Q2) When analyzing a project's capital budget, if the ________ is positive, then the project is considered positive.
A)payback period
B)internal rate of return
C)net present value (NPV)
D)cash flow
Q3) How do U.S.companies recognize transaction gains and losses in the financial statements?
A)They are recognized as gains and losses in the income statement.
B)They are recognized as gains and losses in owners' equity.
C)Gains are recognized in the income statement, but losses are not.
D)Losses are recognized in the income statement, but gains are recognized in owners' equity.
Q4) What is the role of the controller in an MNE? What are some of the challenges that a controller faces in an international environment?
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Chapter 20: International Human Resource Management
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Q1) A hardship allowance nullifies the risk that an expatriate will suffer a decline in his or her standard of living due to the exorbitant expense of a particular city.
A)True
B)False
Q2) Advantages of adopting a polycentric approach include which of the following?
A)capitalizing on the availability of qualified local managers
B)helping transfer core competencies from the home nation to local subsidiaries
C)increasing the international career mobility for local managers
D)offsetting tendencies for the company to adapt excessively to the local market
Q3) A geocentric staffing policy seeks the best qualified people for key jobs throughout the organization, irrespective of their nationality.
A)True
B)False
Q4) The three types of interpretative frameworks in international businesses are
A)ethnocentric, polycentric, and geocentric
B)ethnocentric, intercentric, and monocentric
C)monocentric, neocentric, and polycentric
D)intracentric, geocentric, and neocentric
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