International Management Final
Exam
Course Introduction
International Management explores the challenges and strategies involved in operating businesses across global markets. This course examines how cultural, economic, legal, and political factors impact managerial decision-making and organizational effectiveness in an international context. Students will analyze cross-cultural leadership, global strategy formulation, international entry modes, and issues such as global workforce management, ethics, and sustainability. Through case studies and real-world examples, learners gain essential skills for managing multinational teams and navigating the complexities of the global business environment.
Recommended Textbook
International Business Competing in the Global Market Place 9th editon by Charles W. L. Hill
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Page 2
Chapter 1: Globalization
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Q1) Which of the following is a consequence of globalization?
A) Decreasing interdependence between national economies
B) Increasing outsourcing of services
C) Differentiation of material culture
D) Increase in barriers to cross-border trade
Answer: B
Q2) Non-U.S.firms increasingly began to invest across national borders because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.
A)True
B)False
Answer: True
Q3) Discuss the concept of the globalization of production.
Answer: The globalization of production 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 factors of production (such as labor,energy,land,and capital).By doing this,companies hope to lower their overall cost structure or improve the quality or functionality of their product offering,thereby allowing them to compete more effectively.
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3
Chapter 2: National Differences in Political Economy
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Q1) The social democrats believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.
A)True
B)False
Answer: False
Q2) In a(n)_____ economy the government plans the goods and services that a country produces,the quantity in which they are produced,and the prices at which they are sold.
A) market
B) command
C) open economy
D) laissez-faire
Answer: B
Q3) The objective of the government in a command economy is to encourage free and fair competition between private producers.
A)True
B)False
Answer: False
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Chapter 3: Political Economy and Economic Development
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Q1) Transformation from centrally planned command economies to market-based economies can be attributed to the fact that command and mixed economies failed to deliver the sustained economic performance achieved by countries adopting market-based systems.
A)True
B)False
Answer: True
Q2) The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.
A)True
B)False
Answer: True
Q3) When communism collapsed,many of the communist countries lacked the legal structure required to protect property rights because all the property was earlier held by the state.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Differences in Culture
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Q1) A condition where people tend to perceive themselves in terms of their class background and this shapes their relationships with members of other classes is known as:
A) class stratification.
B) social mobility.
C) class mobility.
D) class consciousness.
Q2) Class consciousness refers to a condition where people tend to perceive themselves in terms of their class background.
A)True
B)False
Q3) A society's social structure refers to its:
A) system of values and norms.
B) basic social organization.
C) religious practices.
D) educational infrastructure.
Q4) Compare and contrast folkways and mores.
Q5) Consider the importance of unspoken language.Why is it important to be familiar with the unspoken language of another culture?
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Chapter 5: Ethics in International Business
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Q1) According to the _____ approach,the best decisions are those that produce the greatest good for the greatest number of people.
A) naive immoralist
B) Friedman doctrine
C) Kantian ethics
D) utilitarian
Q2) Discuss how companies such as Exxon,Kodak,and IBM helped improve human rights in South Africa.
Q3) An international U.S.based company sets up a production unit in a developing country with poor environmental regulations.This contributes to:
A) the noblesse oblige situation.
B) the inequity aversion.
C) the global tragedy of the commons.
D) the Friedman effect.
Q4) How can companies strengthen the moral courage of employees?
Q5) What are ethical dilemmas? Why do they exist?
Q6) Describe the five-step process that businesses can use to think through ethical problems?
Q7) Discuss the notion of social responsibility.What does it mean for corporations?
Page 7
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Chapter 6: International Trade Theory
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Q1) The theories of international trade claim that promoting free trade is generally in the best interests of an individual firm,although it may not always be in the best interest of a country.
A)True
B)False
Q2) The theory of comparative advantage suggests that trade is a positive-sum game in which all countries that participate realize economic gains.
A)True
B)False
Q3) Which of the following is the reason why most economists prefer Heckscher-Ohlin theory to Ricardo's theory?
A) Heckscher-Ohlin stresses on the differences in productivity between nations.
B) Ricardo's theory considers factor endowments to describe national competitiveness.
C) Heckscher-Ohlin theory makes fewer simplifying assumptions.
D) Ricardo's theory considers the law of marginal returns.
Q4) Explain how the rivalry within an industry affects international competence.
Q5) Briefly differentiate between constant returns to specialization and diminishing returns to specialization.
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Chapter 7: The Political Economy of International Trade
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Q1) GATT has not recognized the infant industry argument as a legitimate reason for protectionism.
A)True
B)False
Q2) Which of the following statements concerning a voluntary export restraint is NOT true?
A) It benefits domestic producers by limiting import competition.
B) In most cases,it benefits consumers.
C) It raises the domestic price of an imported good.
D) It is a variant of the import quota.
Q3) WTO rules do not allow countries to impose antidumping duties on foreign goods that are being sold cheaper than at home,or below their cost of production,even when domestic producers can show that they are being harmed.
A)True
B)False
Q4) What are the political reasons for governments to intervene in markets?
Q5) What is Paul Krugman's position on strategic trade policy?
Q6) Tariff barriers lower the costs of exporting products to a country.
A)True
B)False
Page 9
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Chapter 8: Foreign Direct Investment
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Q1) Explain John Dunning's position on FDI.What is the eclectic paradigm?
Q2) Which of the following is a major drawback of using the product life-cycle theory in explaining FDI?
A) It ignores the fact that firms invest in a foreign country when demand in that country will support local production.
B) It does not explain why firms invest in developing countries when cost pressures become intense.
C) It fails to identify when it is profitable to invest abroad.
D) It ignores the fact that licensing as an entry strategy has its limitations.
Q3) Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.
A)True
B)False
Q4) The pragmatic nationalist view highlights only the benefits of FDI.
A)True
B)False
Q5) The largest source country for FDI has been China.
A)True
B)False
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Chapter 9: Regional Economic Integration
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Q1) A common market entails even closer economic integration and cooperation than an economic union.
A)True
B)False
Q2) Which of the following observations is not true of the euro?
A) It is used by all member states of the European Union.
B) It required participating countries to give up their own currencies.
C) It required participating countries to give up control over monetary policy.
D) By adopting it,the EU created the second most widely traded currency in the world.
Q3) The East African Community (EAC)has been a successful integration effort in Africa during the last three decades.
A)True
B)False
Q4) Discuss the Free Trade Area of the Americas.What is hindering its progress? What is the position of the U.S.on the agreement? How does Brazil feel about the FTAA?
Q5) How will EU countries benefit from the establishment of a single currency? What,if any,are the costs of a single currency?
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Page 11
Chapter 10: The Foreign Exchange Market
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Q1) Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?
A) Currency pairing
B) Carry trade
C) Currency exchange
D) Currency swap
Q2) Assume that an American company today invests some of its spare cash in a Hungarian money market account that will earn 8 percent for a period of two months.Which of the following,if it happens during the next two months,would imply that the company will earn less than 8 percent on its investment?
A) The Hungarian forint rises in value against the dollar.
B) Interest rates in the United States move down.
C) Short-term interest rates in Hungarian money markets shoot up.
D) The dollar appreciates against the Hungarian forint.
Q3) What is transaction exposure? How can transaction exposure be minimized?
Q4) Explain PPP.Use an example to show how PPP can help explain exchange rates.
Q5) Explain the notion of economic exposure.How can economic exposure be minimized?
Q6) What are the main uses of foreign exchange markets for international business?
Q7) How can a firm minimize its foreign exchange exposure?
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Chapter 11: The International Monetary System
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Q1) Discuss the pegged exchange rate regime.
Q2) Which of the following changes were made to IMF's Articles of Agreement in the Jamaica agreement?
A) IMF members were permitted to use Dollar as the convertible currency.
B) Gold was declared as a formal reserve asset for IMF members.
C) IMF members were permitted to sell their gold reserves at the market price.
D) IMF members were restricted from entering the foreign exchange market.
Q3) A currency crisis occurs due to _____.
A) the loss of confidence in a country's banking system
B) heavy foreign debt obligations
C) high levels of trade deficit
D) a speculative attack on the exchange value
Q4) The current system of foreign exchange is a mixed system of government intervention and speculative activity.
A)True
B)False
Q5) Do you think businesses can influence government policies? Explain your answer.
Q6) Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system.
Q7) Explain the events that led to the failure of the Bretton Woods system.
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Chapter 12: The Global Capital Market
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Q1) A Eurocurrency is the currency used by the countries of the European Union.
A)True
B)False
Q2) A Chinese firm borrows 1 million U.S.dollars from an American bank.The cost of this loan will be less if U.S.dollar appreciates against the Chinese currency.
A)True
B)False
Q3) Which of the following statements is true of market makers?
A) Commercial banks are not allowed function as market makers.
B) Market makers are large investors who drive an economy.
C) Market makers facilitate only equity based loans.
D) Market makers connect investors and borrowers in a capital market.
Q4) Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency because Eurocurrency deposits _____.
A) are funded by the European union
B) lack government regulations
C) are associated with low risk
D) have minimum foreign exchange risk
Q5) Explain various types of capital market loans.
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Chapter 13: The Strategy of International Business
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Q1) Economies of scale arise from all of the following sources,EXCEPT:
A) increasing fixed costs by limiting them to small volumes.
B) serving domestic and international markets from the same production facilities
C) serving global markets.
D) bargaining with suppliers to bring down the cost of key inputs.
Q2) A firm benefits by basing each value creation activity it performs at that location where economic,political,and cultural conditions,including relative factor costs,are most conducive to the performance of that activity.Firms that pursue such a strategy can realize:
A) differentiation.
B) location economies.
C) vertical integration.
D) horizontal integration.
Q3) Profit growth is measured by the percentage increase in net profits over time.
A)True
B)False
Q4) What is an experience curve?
Q5) Discuss Michael Porter's interpretation of value creation and competitive advantage.
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Chapter 14: The Organization of International Business
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Q1) The choice between centralization and decentralization is not absolute.
A)True
B)False
Q2) By centralizing decision making,a firm can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization.
A)True
B)False
Q3) In firms pursuing a transnational strategy,some operating decisions are relatively centralized,while others are relatively decentralized.
A)True
B)False
Q4) In a matrix structure all roles are viewed as integrating roles.
A)True
B)False
Q5) It is difficult to ascertain accountability in the global matrix structure.
A)True
B)False
Q6) Discuss the issues involved in unfreezing an organization.
Q7) Explain the five reasons why a firm should decentralize its decision-making.
Page 16
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) The main advantage of greenfield investment is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.
A)True
B)False
Q2) Other things being equal,the benefit-cost-risk trade-off is likely to be most favorable in:
A) politically unstable developing nations that operate with a mixed or command economy.
B) nations where there is a dramatic upsurge in either inflation rates or private-sector debt.
C) politically stable developed and developing nations that have free market systems.
D) developing nations where speculative financial bubbles have led to excess borrowing.
Q3) _____ refer to cooperative agreements between potential or actual competitors.
A) Greenfield investments
B) Strategic alliances
C) Takeovers
D) Licensing agreements
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Chapter 16: Exporting, Importing, and Countertrade
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Q1) A _____ is issued to the exporter by the common carrier transporting the merchandise and serves as a receipt,a contract,and a document of title.
A) bill of lading
B) sight draft
C) time draft
D) letter of credit
Q2) Japan's great trading houses are called Samurai houses.
A)True
B)False
Q3) Which of the following is a major drawback of engaging in countertrade?
A) Countertrade is not useful when trading with developing nations.
B) Financing is difficult when engaging in a countertrade.
C) It is not attractive to small organizations.
D) Countertrade may involve the exchange of unusable goods.
Q4) A sight draft allows for a delay in payment.
A)True
B)False
Q5) Barter is viewed as the least restrictive countertrade arrangement.
A)True
B)False
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Chapter 17: Global Production, Outsourcing, and Logistics
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Q1) Which of the following statements is true of Six Sigma?
A) It is a statistically based philosophy to reduce defects and boost productivity.
B) At Six Sigma,a production process will have 6.6 defects per million units.
C) At Six Sigma,a production process would be 100 percent accurate.
D) A company can achieve Six Sigma perfection by reducing the number of defects to one in six thousand.
Q2) Which of the following statements is true of Web-based EDI systems?
A) Web-based EDI systems are more expensive than proprietary solutions.
B) Small firms will not be able to make use of Web-based EDI systems
C) Web-based systems are much easier to install compared to proprietary solutions.
D) Most Web-based systems are implemented to support proprietary solutions.
Q3) Just-in-time systems reduce product quality although it brings about huge cost savings.
A)True
B)False
Q4) The minimum efficient scale of production is high when fixed costs are low.
A)True
B)False
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Page 19
Chapter 18: Global Marketing and RD
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Q1) A measure of the responsiveness of demand for a product to change in price is referred to as:
A) arbitrage demand.
B) predatory pricing.
C) price elasticity of demand.
D) experience curve pricing.
Q2) Which of the following is one of the four elements that constitute a firm's marketing mix?
A) Inventory accounting
B) Product reengineering
C) Reverse engineering
D) Distribution strategy
Q3) Define market segmentation.What is its goal?
Q4) A firm may be prevented from using standardized advertising because of advertising regulations.
A)True
B)False
Q5) Explain the difference between a concentrated retail system and a fragmented one.Why is this distinction important to international businesses?
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Chapter 19: Global Human Resource Management
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Q1) Discuss Mendenhall and Oddou's assertion that an executive who performs well in a domestic setting may not adapt to a different cultural setting.
Q2) Describe the notion of management development programs as a tool for increasing the overall skill levels of managers.What is the goal of this type of program?
Q3) _____ is the ability to understand why people of other countries behave the way they do.
A) Others-orientation
B) Cultural myopia
C) Perceptual ability
D) Cultural toughness
Q4) HRM professionals have a critically important strategic role.
A)True
B)False
Q5) If a firm is serious about building an international cadre,it may have to pay its international executives the same basic salary irrespective of their country of origin or assignment.
A)True B)False
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Chapter 20: Accounting and Finance in the International Business
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Q1) Describe the three exchange rates that Lessard and Lorange pointed out.
Q2) Firms cannot use transfer prices to move funds from a subsidiary to the parent company when financial transfers in the form of dividends are blocked by host-country government policies.
A)True
B)False
Q3) Lessard and Lorange refer company-generated forecast of future spot rates as _____ rate.
A) forward exchange rate
B) internal forward rate
C) initial exchange rate
D) ending exchange rate
Q4) The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.
A)True
B)False
Q5) What are the shortcomings of IASB?
Q6) Explain the concept of transfer pricing.
Q7) Define tax credit and tax treaty.
22
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