Test Bank for International Business: A Managerial Perspective, 9th Edition

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1International Business, 9e(Griffin/Pustay)Chapter 1An Overview of International Business1) Which of the following would be considered an international business transaction?A) purchasing products in one country and assembling them in the same countryB) recruiting employees internationallyC) borrowing money from a major bank to finance capital improvementsD) shipping finished products from one country to another for retail saleAnswer: DDiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Analytical Thinking2) Trade between nations can be traced back as far as ________.A) 2000 BCB) 500 BCC) 1200D) 1600Answer: ADiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge3) Which country was a significant focal point for international business during the MiddleAges?A) ChinaB) EnglandC) ItalyD) RussiaAnswer: CDiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB:Application of Knowledge4) Which of the following is a primary source of revenue for the IOC during the Olympics?A) television coverageB) public donationsC) real estate salesD) international loansAnswer: ADiff: 1Skill: ConceptLO: 1.1:Discuss the meaning of international business.AACSB: Application of Knowledge

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25) A boundary less economy is one in which ________.A) exported goods are predominantB) regional borders are significantC) trade laws are strictly enforcedD) national borders are irrelevantAnswer: DDiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge6) Business transactions between parties from more than one country are known as internationalbusiness.Answer: TRUEDiff: 1Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge7) International business is more complex than domestic business.Answer: TRUEDiff: 2Skill: ConceptLO: 1.1: Discuss the meaningof international business.AACSB: Application of Knowledge8) Small businesses are usually not involved in international business given the cost restrictions.Answer: FALSEDiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge9) The growth of FDI and MNCs first started during the American colonial period.Answer: TRUEDiff: 2Skill: ConceptLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge

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310) How are the Olympic Games symbolic of international business?Answer: The Olympics reflect an intense version of international business. Cities compete witheach other to host the games because hosting the Olympics brings recognition and publicity tothe cityjust as it does to a company brand name. In addition, the city benefits from increasedtravel, tourism, and investment by businesses supporting the Olympic games.Diff: 3Skill: Critical ThinkingLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge11) How does international business differ from domestic business? Why is it important forbusiness students to learn about international business?Answer: Domestic business involves transactions that occur within a singlecountry, whileinternational business involves transactions that cross national borders. Students should learnabout IB because most large firms have global operations and many small firms are expandinginto the international arena.Diff: 3Skill: SynthesisLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge12) International business differs from domestic business in several ways. Identify at least threeof these differences and describe their implications for companies.Answer: The countries involved may use different currencies, requiring currency conversion andintroducing exchange rate risk. Because the legal systems are different, one or more parties mustadjust their practices to comply with local laws. Cultural differences and the availability ofresources affects production of various items and production methods.Diff: 3Skill: SynthesisLO: 1.1: Discuss the meaning of international business.AACSB: Application of Knowledge13) The Internet has helped small businesses compete in global markets because it ________.A) allows them to establish a physical presence in each countryB) avoids transactions involving foreign exchangeC) eliminates price controlsD) reduces entry costsAnswer: DDiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge

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414) According to the CAGE Model, which of the following refers to the physical,communications, and transportation links between countries?A) cultural distanceB) administrative distanceC) geographic distanceD) economic distanceAnswer: CDiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge15) Individuals shouldmost likely study international business to ________.A) comply with graduate school certification requirementsB) ensure that an employer has a global online presenceC) remain current on the latest business methodsD) obtain bilingual business experienceAnswer: CDiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge16) Which of the following has most likely triggered the increase of small businesses involved ininternationalbusiness?A) e-commerceB) economic recessionC) foreign-made materialsD) increased cultural literacyAnswer: ADiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge17) Just-in-time systems were created in ________.A) the United StatesB) JapanC) GermanyD) ChinaAnswer: BDiff: 1Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge

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518) Just-in-time systems are used by firms to ________.A) store important dataB) manage inventoryC) monitor productionD) screen job applicantsAnswer: BDiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Applicationof Knowledge19) Sony's suppliers deliver necessary inputs as they are needed by Sony. Sony is most likelyusing a(n) ________ system.A) cross-functionalB) just-in-timeC) inventory managementD) on-demand deliveryAnswer: BDiff: 1Skill: ApplicationLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge20) Capital supplied by residents of one country to residents of another is known as ________.A) international investmentsB) host-country financingC) international franchisingD) domestic inversion financingAnswer: ADiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge21) International business originally consisted of ________.A) FDIB) international tradeC) licensingD) contract manufacturingAnswer: BDiff: 1Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge

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622) It is important to study international business because you may work for a firm that is ownedby a corporation that is headquartered in another country.Answer: TRUEDiff: 2Skill: ConceptLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge23) Why are small businesses becoming more involved in international business? What is thesimplest way for a small business to globalize?Answer: Technology allows small businesses to have access to customers without the previousexpenseand investment. Exporting is the simplest form of international business.Diff: 3Skill: SynthesisLO: 1.2: Explain the importance of understanding international business.AACSB: Information Technology24) Why is it relevant for today's business students to study international business and to becomeculturally literate?Answer: There are several reasons to study international business. Most large organizations willhave international operations or be affected by the global economy. In addition, an understandingof international business will allow students to better assess career opportunities, interact moreeffectively with other managers, and keep pace with competitors. Furthermore, students mayeventually work for a company headquartered in another country. Finally, small businesses arebecoming more involved in international business. Being culturally literate means having anunderstanding of different countries and cultures. Having some knowledge of how a country orcompany fits into the global economy can help a business person earn respect, confidence, and acompetitive edge.Diff: 3Skill: Critical ThinkingLO: 1.2: Explain the importance of understanding international business.AACSB: Application of Knowledge25) You are a manager at a smallbusiness, and the firm's CEO wants the firm to globalize. Whatsuggestions would you offer to accomplish this task? Should the firm globalize? Why or whynot?Answer: Many small businesses today can take advantage of opportunities in foreign marketsthatwere previously closed to them. The Internet has in a sense leveled the playing field to somedegree for small businesses. A good Website allows companies to sell to consumers all over theworld without the cost of developing a physical presence in each market. In addition, the Internetcan allow companies to become more efficient in areas such as communication.Diff: 3Skill: Critical ThinkingLO: 1.2: Explain the importance of understanding international business.AACSB: Analytical Thinking

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726) Whichof the following could be considered a major reason that a city would want to host theOlympic Games?A) to prevent the economic growth of competing nationsB) the long-term benefits of tourismC) to test the capacity of national infrastructureD) to promote international harmonyAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Analytical Thinking27) Black and Decker produces tools at a plant in North Carolina and ships the tools to retailersin England. This is an example of which type of international business activity?A) merchandisingB) importingC) exportingD) tradingAnswer: CDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of internationalbusiness activities.AACSB: Application of Knowledge28) ________ is the buying of products made in other countries for use or resale in one's owncountry.A) ExportingB) ImportingC) MerchandisingD) TransportingAnswer: BDiff: 1Skill: ConceptLO:1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge29) Sam's Club purchases kalamata olives from Greece for sale in its stores. Which internationalbusiness activity does this represent?A)exportingB) importingC) merchandisingD) franchisingAnswer: BDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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830) The British term for the trading of tangible goods is ________.A) visible tradeB) invisible tradeC) merchandisingD) service franchisingAnswer: ADiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge31) The British term for the trading of intangible goods is ________.A) visible tradeB) invisible tradeC) merchandise exports and importsD) service exports and importsAnswer: BDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic formsof international business activities.AACSB: Application of Knowledge32) Boeing, an American firm, sells commercial aircraft to Lufthansa in Germany. This is anexample of ________.A) exportingB) importingC) licensingD) franchisingAnswer: ADiff:2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge33) Exports account for about ________ of Germany's gross domestic product?A) 31.2 percentB) 27.0 percentC) 50.3 percentD) 15.2 percentAnswer: DDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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934) The international business activity called ________ occurs when capital is supplied byresidents of one country to residents of another country.A) international investmentB) global direct investmentC) portfolio financingD) state capitalismAnswer: ADiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic formsof international business activities.AACSB: Application of Knowledge35) ________ are investments made for the purpose of actively controlling property, assets, orcompanies located in host countries.A) Licensing investmentsB) Portfolio investmentsC) Foreign direct investmentsD) Indirect global investmentsAnswer: CDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge36) Which term refers to the location ofa parent company's headquarters?A) host countryB) home countryC) third countryD) local countryAnswer: BDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge37) If a company is headquartered in Taiwan, then Taiwan is the company's ________.A) host countryB) home countryC) dominant countryD) competitive countryAnswer: BDiff: 1Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1038) Ford Motor Company is based in Detroit, Michigan. It also has offices in Germany, England,and China. Which of the following is Ford's home country?A) GermanyB) EnglandC) ChinaD) United StatesAnswer: DDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge39) The ________ is where a company operates but is not headquartered.A) host countryB) home countryC) parental countryD) third party countryAnswer: ADiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge40) Siemens is headquartered in Germany but maintains operations in the United States. TheUnited States is the ________ country.A) homeB) hostC) parentD) subsidiaryAnswer: BDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB:Application of Knowledge41) ________ are purchases of foreign financial assets for a purpose other than control.A) Foreign direct investmentsB) Global business investmentsC) Foreign portfolio investmentsD) Indirect investmentsAnswer: CDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1142) If a Dutch pension fund purchases 1,000 shares of Sony's stock, the Dutch company has mostlikely ________.A) made aforeign direct investmentB) made a foreign portfolio investmentC) earned a higher return on assetsD) earned a lower rate of returnAnswer: BDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge43) Compared to Thailand, the United Kingdom has a ________ level of exports of goods andservices as a percentage of GDP.A) slightly lowerB) slightly higherC) significantly lowerD) significantly higherAnswer: CDiff: 3Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge44) Kraft purchased all of the common stock of Cadbury PLC. This is an example of ________.A) foreign portfolioinvestmentB) foreign direct investmentC) international expansionD) global licensingAnswer: BDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge45) McDonald's has licensed its brand name, operational systems, and trademarks to individualrestaurant owners in Europe. This is called international ________.A) leasingB) marketingC) franchisingD) diversifyingAnswer: CDiff: 2Skill: ApplicationLO: 1.3:Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1246) ________ is a contractual arrangement in which a firm in one country allows the use of itsintellectual property by a firm in a second countryin return for a royalty payment.A) LeasingB) FranchisingC) LicensingD) MerchandisingAnswer: CDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge47) Licensing usually involves permission to use which of the following?A) real estateB) trademarksC) labor leasingD) production facilitiesAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge48) Walt Disney permits a German clothing manufacturer to market children's pajamasembroidered with Mickey Mouse in return for a percentage of company sales. This is an exampleof ________.A) franchisingB) licensingC) leasingD) piracyAnswer: BDiff: 2Skill: ApplicationLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge49) A(n) ________ involves a firm in one country agreeing to operate facilities for a firm inanother country for an agreed fee.A) franchising agreementB) licensing agreementC) management contractD) indirect investmentAnswer: CDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1350) Any organization that engages in cross-border commercial transactions with individuals,private firms, and/or public sector organizations is a(n) ________.A) multinational corporationB) multinational enterpriseC) international businessD) international franchiseAnswer: CDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge51) The term ________ is used to identify firms that have extensive involvement in internationalbusiness.A) global operationB) multinational corporationC) international conglomerateD) multidomestic organizationAnswer: BDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms ofinternational business activities.AACSB: Application of Knowledge52) The International Red Cross is an example of a(n) ________.A) international businessB) multinational enterpriseC) multinational organizationD) multinational corporationAnswer: CDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge53) Which of the following is a common activity of MNCs?A) training of international managersB) buying resources in various countriesC) inventing goods in a variety of countriesD) establishing foreign exchange ratesAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1454) Toyota, ExxonMobil, General Electric, and Volkswagen are all examples of ________.A) multinational corporationsB) management contractsC) portfolio investmentsD) franchised firmsAnswer: ADiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge55) International nonprofit organizations are called ________.A) multinational corporationsB) multinational organizationsC) multinational enterprisesD) multinational nonprofitsAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge56) Which of the following is considered a BRIC nation?A) BritainB) RussiaC) IndonesiaD) ChileAnswer: BDiff: 1Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge57) By 500 B.C.E., ________ merchants were exporting silk and jade to India and parts ofEurope.A) AmericanB) ChineseC) JapaneseD) GreekAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge

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1558) Which of the following isnotconsidered a dominant institution in the Era of Globalization?A) World Trade OrganizationB) International Olympic CommitteeC) World BankD) International Monetary FundAnswer: BDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge59) The highest profile level in corporate sponsorship of the Olympics is that of worldwidepartner.Answer: TRUEDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge60) The primary benefit of worldwide partnership is the right to use the Olympic logo on alladvertising by the sponsor.Answer: FALSEDiff: 3Skill: ConceptLO: 1.3: Identify and describethe basic forms of international business activities.AACSB: Application of Knowledge61) A well-developed web-site can draw the business of consumers throughout the world withoutthe need to establish a physical presence in each country.Answer: TRUEDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Application of Knowledge62) The Internet has facilitated the entry of small businesses into international markets.Answer: TRUEDiff: 2Skill: ConceptLO: 1.3: Identify and describe the basic forms of international business activities.AACSB: Information Technology

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