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06 Chapter - International Management Chapter 06 International Management True / False Questions 1. (p. 210) The Maastricht Treaty formally established the trade area in North America. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 2. (p. 210) North America, South America and Africa are the three spheres of economic influence that are most dominant in the global environment. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 3. (p. 210) The goal of the unified Europe is to strengthen Europe's economic position vis--vis the United States. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 1 6-1 Chapter 06 - International Management 4. (p. 212) Japan is America's third largest export market and the fourth largest source of American imports. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 5. (p. 214) NAFTA created one of the world's largest trading blocs. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 6. (p. 214) NAFTA has had an immediate and negative effect on the U.S. automobile industry. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 7. (p. 214) Members of APEC include South Korea, the United States, Australia and India. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 1 6-2 Chapter 06 - International Management 8. (p. 216) To maintain its strong growth for the foreseeable future, Starbucks has been expanding aggressively overseas. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 9. (p. 217-218) Foreign direct investment flows to less-developed countries by firms in developed countries has dropped substantially. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 2 10. (p. 218) One consequence of an increasingly integrated global economy is imports that are penetrating deeper into the world's largest economies. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 2 11. (p. 221) Off shoring occurs when the organization contracts with an outside provider to produce one or more of an organization's products or services. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 2 6-3 Chapter 06 - International Management 12. (p. 223) Universal needs exist when the tastes and preferences of consumers in different countries, with regard to a product, are similar. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 3 13. (p. 223) The national organization model is designed to help companies exploit their existing core capabilities to expand into foreign markets. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 14. (p. 224) When there are differences in traditional practices among countries, pressures for local responsiveness emerges. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 3 15. (p. 227) Companies that adopt the global model tend to those pursuing a cost focus as a competitive strategy. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 6-4 Chapter 06 - International Management 16. (p. 227) Transnational companies are companies that produce products in one country and export these products to many overseas countries. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 17. (p. 230) A drawback of exporting is that high transportation costs can make it uneconomical, particularly in the case of bulk products. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 18. (p. 231) Licensing is primarily utilized by manufacturing industries while franchising is used more often in service industries. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 19. (p. 231) The advantages of franchising as an entry mode to global expansion are similar to the disadvantages of licensing. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 6-5 Chapter 06 - International Management 20. (p. 232) The least preferred strategy when a company's competitive advantage is based on technology is the wholly owned subsidiary. FALSE AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 4 21. (p. 232) Parent-company nationals who are sent to work at a foreign subsidiary are known as expatriates. TRUE AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 5 22. (p. 233, Table 6.3) Cultural shock is an example of an executive coping strategy for international assignments. FALSE AACSB: Group/individual dynamics Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 5 23. (p. 234) The major reason human resource managers cite for failure rate among expatriates is family issues. FALSE AACSB: Group/individual dynamics Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 6 6-6 Chapter 06 - International Management 24. (p. 237) Ethnocentrism is the tendency for people to judge foreign peoples or groups by the standard's of their home county. FALSE AACSB: Group/individual dynamics Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 7 25. (p. 238) According to Geert Hofstede's model, the U.S. is labeled as a large power distance, collectivist culture. FALSE AACSB: Group/individual dynamics Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 7 26. (p. 239) Cross-cultural management extends beyond U.S. employees going abroad. TRUE AACSB: Group/individual dynamics Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 7 27. (p. 240) Ethical behavior and decision making is (surprisingly) harder in a purely domestic situation than in the international arena. FALSE AACSB: Ethical understanding/reasoning abilities Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 7 6-7 Chapter 06 - International Management Multiple Choice Questions 28. (p. 210) The areas described in the text as the most dominant in the global economy include: A. North America, Western Europe and Asia B. North America, Mexico and Asia C. North America, South America and Western Europe D. North America, Asia and Africa E. Western Europe, Asia and Africa AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 29. (p. 210) Which of the following is NOT a goal of the European Union? A. Eliminate trade barriers with the European Union B. Create a more competitive Europe C. Become an economic superpower D. Establish the euro as a common currency E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 1 30. (p. 210) Under (the) ___________ member countries have agreed to adopt a common European currency called the euro. A. NAFTA B. Maastricht Treaty C. GATT Agreement D. APEC Treaty E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 6-8 Chapter 06 - International Management 31. (p. 210) To be competitive in a global economy, Europeans must increase their level of: A. Population density B. Productivity C. Espionage activity D. Philanthropic contributions E. Financial subsidy AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 1 32. (p. 212) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods? A. Japan B. Canady C. Mexico D. China E. Ecuador AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 33. (p. 213) One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States. A. Less than $1; about 15 B. About $2; about 15 C. Less than $1; about 25 D. $2; about 25 E. Less than $1; about 40 AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 1 6-9 Chapter 06 - International Management 34. (p. 214) NAFTA combined the economies of: A. The U.S., Canada and Mexico B. Canada, Mexico and South America C. South America, the U.S. and Latin America D. Latin America, Pacific Rim and the E.U E. The U.S., the E.U. and North America AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 1 35. (p. 214) The passage of NAFTA has provided short-term benefits to all of the following industries EXCEPT: A. The auto industry B. Grain producers C. The financial industry D. Capital-goods suppliers E. All of the above have benefited AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 36. (p. 214) Although the U.S. has had a longstanding agreement with ___________ after the passage of NAFTA, _________ became the United States' second largest trading partner. A. Canada, Venezuela B. Canada, Mexico C. Mexico, Canada D. Mexico, Venezuela E. Great Britain, Paraguay AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 6-10 Chapter 06 - International Management 37. (p. 215) Which of the following existing agreements includes Guatemala, Honduras and the United States? A. NAFTA B. CAFTA-DR C. FTAA D. APEC E. ASEAN AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 1 38. (p. 215) Which country does the text describe as having become an important provider of online computer and software support for the U.S.? A. Egypt B. Great Britain C. India D. Mexico E. Taiwan AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 1 39. (p. 218) Consequences of global integration include all of the following EXCEPT: A. World output and trade have grown at a dramatic pace B. Many companies find their home markets under attack from foreign competition C. Companies are making foreign investments in overseas operations D. Imports are failing to penetrate deeper into the world's largest economies E. All of the above are consequences of global integration AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 2 6-11 Chapter 06 - International Management 40. (p. 218-219) Today's managers operate in an environment that is _______ complex and competitive and offers more ______________. A. More, profit B. Less, profit C. More, opportunities D. Less, opportunities E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 2 41. (p. 219) Operating in a global marketplace is considered more complex because: A. Managers must compete with cost-efficient overseas competitors B. The lessening of trade barriers has presented many opportunities in previously protected markets C. Many overseas competitors operate with greater economies of scale D. Of varying cultures and coordination of globally dispersed operations E. International management is relatively risk-free as compared to domestic management AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 2 42. (p. 220, Table 6.1) Which of the following companies is NOT included in the "Fortune Global 500 2006" Top 25? A. Wal-Mart B. Chevron C. Ford Motor Company D. Microsoft E. Conoco Phillips AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 2 6-12 Chapter 06 - International Management 43. (p. 221) ____________ occurs when the organization contracts with an outside provider to produce one or more of an organization's products or services. A. International development B. Outsourcing C. Offshoring D. Expatriation E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 2 44. (p. 221) ____________ occurs when the outside provider of an organization's goods or services is located abroad. A. International development B. Outsourcing C. Offshoring D. Expatriation E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 2 45. (p. 222) Insourcing occurs when jobs are: A. Brought to the United States by foreign companies B. Taken out of the United States by foreign companies C. Taken to a third country D. Restructured to keep them in their home country E. None of the above is correct AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 2 6-13 Chapter 06 - International Management 46. (p. 222-223) When considering whether to offshore, managers should consider all of the following EXCEPT: A. What is the competitive advantage of the products offered? B. Is the business in its early stages? C. Can production savings be achieved locally? D. Can the entire supply chain be improved? E. All of the above are correct AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 2 47. (p. 223) When identifying the best strategy for competing in a global marketplace, it is helpful to plot a company's position on a(n): A. Leadership grid B. Force field analysis grid C. Integration-responsiveness grid D. Cost-benefit grid E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 2 48. (p. 223) The grid used for identifying the best strategy for competing in a global marketplace measures what two dimensions? A. Pressures for global integration and pressures for local responsiveness B. Pressure for local interaction and pressures for global responsiveness C. Financial viability and employee satisfaction D. Employee satisfaction and management credibility E. Pressures for global systems capacity and pressures for local financial success AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 2 6-14 Chapter 06 - International Management 49. (p. 223) Pressure for global integration includes: A. Pressures to reduce costs B. Variances in traditional practices C. Political demands imposed by host countries D. Consumer preferences E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 2 50. (p. 223) Which of the following is NOT one of the global strategies discussed in the text? A. International model B. Multinational model C. Global model D. Transnational model E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 51. (p. 223) The model in which managers use their organization's existing core capabilities to expand into foreign markets is called: A. International model B. Multinational model C. Global model D. Transnational model E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 6-15 Chapter 06 - International Management 52. (p. 223) The choice of whether to follow a global model or a multinational model is decided by comparing the A. Pressures for global integration to the pressures for local responsiveness B. Success of global competitors in each strategy C. Costs of producing in separate facilities to the costs of producing in a single facility D. Tastes and preferences of consumers in varying countries where you intend to compete E. Need for product differentiation across international borders AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 3 53. (p. 223) Models of organizational structure identified in the text's chapter on international management include all of the following EXCEPT: A. Global structure B. Multinational structure C. Transnational structure D. Worldwide structure E. International structure AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 54. (p. 223-224) Which of the following is NOT a reason to pursue a global strategy? A. Pressure to reduce costs through coordination of purchasing B. Universal needs C. Simplicity and ease of management D. Pressures to reduce costs in manufacturing E. All of the above are valid reasons AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 3 6-16 Chapter 06 - International Management 55. (p. 224-225) Pressure for local responsiveness includes: A. Varying consumer preferences B. Varying sales and distribution patterns C. Varying traditions D. Varying political demands E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 56. (p. 225) _______________ includes threats of protectionism, economic nationalism and local rules. A. Differences in distribution channels B. Differences in traditional practices C. Economic and political demands D. Differences in consumer tastes E. Global market integration AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 3 57. (p. 226) The Disney Corporation has marketed its facility in France somewhat differently than its United States facilities in order to appeal to the European consumer. This type of strategy is known as __________ model. A. Domestic B. International C. Multinational D. Transnational E. Global AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 6-17 Chapter 06 - International Management 58. (p. 226) Evans Manufacturing has subsidiaries in each country in which it does business and provides a great deal of discretion to those subsidiaries to respond to local conditions. Each subsidiary has its own manufacturing, marketing, research and human resource functions. This illustrates the: A. International model B. Multinational model C. Global model D. Transnational model E. Intranational model AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 59. (p. 226) The model which is appropriate where global efficiency is not required but adapting to local conditions offers advantages is: A. International model B. Multinational model C. Global model D. Transnational model E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 6-18 Chapter 06 - International Management 60. (p. 226) Schacter Corporation has subsidiaries in each country in which it does business. As the parent company, Schacter transfers its core skills in technology and R&D overseas so that each subsidiary remains dependent on it for new products, processes and ideas. This illustrates the: A. International model B. Multinational model C. Global model D. Transnational model E. Intranational model AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 3 61. (p. 226) The international model of organizational structure consists of: A. Large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries B. Subsidiaries located in countries where the company does business with much of the control exercised by the parent company C. Subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries D. Manufacturing various components at appropriate sites and assembling the components at national subsidiaries E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 6-19 Chapter 06 - International Management 62. (p. 226) The multinational model of organization structure consists of: A. Large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries B. Subsidiaries located in countries where the company does business with much of the control exercised by the parent company C. Subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries D. Manufacturing various components at appropriate sites and assembling the components at national subsidiaries E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 63. (p. 226) Companies that decentralize their operations throughout the globe in order to appeal to the varying tastes and preferences of global consumers are utilizing a _____________ model. A. Domestic B. International C. Multinational D. Transnational E. Global AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 3 6-20 Chapter 06 - International Management 64. (p. 226) Competing globally under the assumption that consumer tastes and preferences in varying countries differ is referred to as a ____________ model. A. Consumer-focused B. Transnational C. Multinational D. Global E. Domestic Domestic AACSB: and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 65. (p. 226-227) In which models of organization structure are manufacturing costs relatively high? A. Global and transnational B. International and transnational C. Multinational and international D. Global and international E. Multinational and transnational AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 66. (p. 227) Sensor, Inc. is a company that views the entire world as one market and assumes that there are no tangible differences among countries with regard to consumer tastes and preferences. Sensor, Inc. illustrates the: A. International model B. Multinational model C. Global model D. Transnational model E. Intranational model AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 6-21 Chapter 06 - International Management 67. (p. 227) The model designed to enable a company to market a standardized product in the global marketplace and to manufacture the product in a limited number of locations is called the: A. International model B. Multinational model C. Global model D. Transnational model E. All of the above are appropriate models AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 68. (p. 227) The global strategy that enables managers to "think globally but act locally" is called the: A. International model B. Multinational model C. Global model D. Transnational model E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 3 69. (p. 227) Which organizational structure realizes the advantage of local responsiveness but the disadvantage of high manufacturing costs? A. Transnational B. Global C. Worldwide D. International E. Multinational AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 6-22 Chapter 06 - International Management 70. (p. 227) A disadvantage of a multinational model is that: A. Problems in transferring core skills are created B. Each subsidiary must respond to specific consumer needs C. Transfer pricing presents difficulties D. Manufacturing costs are generally higher E. Coordination of efforts between countries is simpler AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Medium Learning Objective: 3 71. (p. 227-228) Transnational companies: A. Require effective communication and coordination networks B. Realize pressures for local responsiveness and cost economies C. May centralize production facilities in one location and marketing functions in separate locations D. Must effectively transfer core skills or know-how E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 3 72. (p. 228) In order to achieve cost economies, Tull and Ward Company bases production plants for labor-intensive products in low-wage countries such as Mexico and locates production plants that require skilled workers in high-skill countries like Japan. This illustrates the: A. International model B. Multinational model C. Global model D. Transnational model E. Intranational model AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 6-23 Chapter 06 - International Management 73. (p. 228) Which of the following companies is an example of a transnational company? A. Sony B. IBM C. Coca Cola D. Caterpillar E. Unilever AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 3 74. (p. 228) Companies that may use global-scale production plants for labor-intensive products in low-wage countries such as Mexico or Singapore would be an example of the _______________. A. Transnational organization model B. Ethnocentric organization model C. World assembly organization model D. Domestic organization model E. Regional organization model AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 75. (p. 228) The transnational model of organizational structure consists of: A. Large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries B. Subsidiaries located in countries where the company does business with much of the control exercised by the parent company C. Subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries D. Manufacturing various components at appropriate sites and assembling the components at national subsidiaries E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 6-24 Chapter 06 - International Management 76. (p. 228) The Red Fox Corporation manufactures engines for its trucks in a central location in order to attain cost economies and then sends these engines to various subsidiaries for final assembly to the truck bodies in order to meet local safety specifications. This type of organizational structure is referred to as: A. Global B. Transnational C. International D. World assembly E. Worldwide AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 3 77. (p. 228) Which of the models of organization structure depends most heavily on communication and coordination between subsidiaries? A. The global model B. The transnational model C. The international model D. The worldwide model E. The multinational model AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 3 78. (p. 229) Exporting, licensing, franchising, joint ventures and wholly owned subsidiaries are all methods of: A. Extracting consumers on a global scale B. Operating transnationally C. Entering overseas markets D. Optimizing global profit E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 4 6-25 Chapter 06 - International Management 79. (p. 229) Advantages of exporting as a global expansion entry mode are that: A. Economies of scale may be realized B. The target site may have lower production costs C. Transportation costs are generally lower D. It is considered responsive to local needs E. Trade barriers may be imposed AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 80. (p. 229) Most manufacturing companies begin global expansion through which entry mode? A. Exporting B. Wholly-owned subsidiary C. Franchising D. Licensing E. Joint venture AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 81. (p. 229-230) Exporting is: A. A common entry strategy for global expansion B. Manufacturing a product in one location and exporting to consumers in global markets C. Consistent with a pure global strategy D. Expensive E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 6-26 Chapter 06 - International Management 82. (p. 230) A disadvantage of exporting is that: A. It is quite risky B. You may not be realizing the lowest production costs possible C. It is the most expensive method of expanding globally D. It usually lowers trade barriers E. It is inconsistent with a pure global strategy AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 83. (p. 230) Selling the rights to manufacture your company's product to an overseas company for a negotiated fee is: A. Franchising B. Licensing C. Entering a joint venture D. Exporting E. Royalty facilitation AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 4 84. (p. 230) An advantage of licensing as a method of entering global competition is: A. That the licensing company takes on less risk and expense B. That the licensing company has control over its technology C. That the licensing company has control over quality levels D. That the licensing company utilizes lower production costs E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 6-27 Chapter 06 - International Management 85. (p. 230) A disadvantage of licensing is that: A. The licensing company may lose control over its technology B. The licensing company takes on greater political risk C. The licensing company takes on greater development costs D. The licensing company realizes higher profit margins E. All of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 86. (p. 231) Selling the rights to use your company's brand name in return for a lump-sum payment and a share of the profits generated is referred to as: A. Franchising B. Licensing C. Entering a joint venture D. Exporting E. Royalty facilitation AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 4 87. (p. 231) A disadvantage of franchising is that A. Loss of control over quality levels may affect an organization worldwide B. Loss of control over technology may affect future profits C. Loss of control over technology may affect an organization's ability to gain a worldwide reputation D. Development costs are greater presenting a higher level of risk in worldwide operations E. Loss of control over technology and quality may erode a company's ability to develop local markets AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 4 6-28 Chapter 06 - International Management 88. (p. 231) An advantage of joint ventures in the international marketplace is: A. The local partner may have a greater knowledge of local consumer tastes and preferences B. The local partner may have a greater understanding of local business practices and regulations C. Costs of developing the new market are shared with the joint venture partner D. The risks of entering the new market are shared with the joint venture partner E. All of the above are advantages of joint ventures AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 89. (p. 232) A disadvantage of entering global competition through a joint venture is: A. That it may present political roadblocks B. The partner's knowledge of local tastes and preferences may interfere with standardized operations C. Your partner and you may disagree on which of you controls various aspects of the venture D. It is a seldom used strategy, offering many unknowns E. All of the above are disadvantages of joint ventures AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 4 90. (p. 232) When a company sets up overseas operations, independent of foreign partners or governments, they have established: A. A purely global strategy B. Unfavorable relations with local parties C. A wholly owned subsidiary D. An independent venture E. Multinational proportions AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 4 6-29 Chapter 06 - International Management 91. (p. 232) The greatest disadvantage of operating a wholly owned subsidiary is: A. That a loss of technology is likely to occur B. Quality levels are difficult to monitor overseas C. High costs and risk are associated with this type of operation D. That overseas consumers are often resentful of foreigners E. All of the above are disadvantages of wholly owned subsidiaries AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 92. (p. 232) Advantages of operating a wholly owned subsidiary overseas include all of the following EXCEPT: A. Companies may share the control of the use of their technology B. Companies share the costs of operating overseas C. Companies can realize higher production costs by relocating D. Companies singularly control the risks of overseas operations E. None of the above are advantages of wholly owned subsidiaries AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 4 93. (p. 232) Individuals sent from a company's parent country to work in overseas operations are referred to as: A. Third-country nationals B. Host-country nationals C. Globalite executives D. Expatriates E. None of the above AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 5 6-30 Chapter 06 - International Management 94. (p. 232) Jeanette Thompson, a native Texan is being sent by her company, Nestle of Switzerland, to head up a new facility in Hong Kong. Jeannette would be considered a(n): A. Host-country national B. Third-country national C. Global trotter D. Globalite executive E. Expatriate AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Hard Learning Objective: 5 95. (p. 233) Hillary has just agreed to participate in her first expatriate experience. The first thing her employer should do is: A. Seek advice from locals and expatriate network B. Encourage support-seeking behavior C. Clarify expectations D. Encourage self-and family evaluation E. Punish dual identification AACSB: Group/individual dynamics Blooms taxonomy: Application Difficulty: Medium Learning Objective: 5 96. (p. 234) The trend away from using expatriates in top management positions is especially apparent in companies trying to create a __________ culture. A. Multinational B. Transnational C. International D. Global E. Equally evident in all of the above AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 5 6-31 Chapter 06 - International Management 97. (p. 234) It is estimated that nearly ___ percent of all employee transfers are to an international location. A. 75 B. 50 C. 15 D. 25 E. 40 AACSB: Domestic and global economic environments Blooms taxonomy: Knowledge Difficulty: Hard Learning Objective: 6 98. (p. 234) The biggest cause of failure of overseas managers is: A. A lack of technical capability B. Problems with a families' ability to adjust C. Problems with the manager's ability to adjust D. All of the above E. None of the above AACSB: Group/individual dynamics Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 6 99. (p. 237) The disorientation and stress associated with being in a foreign environment is termed: A. Foreign mores B. Homesickness C. Culture shock D. Out-of-country experience E. Uncertainty distance AACSB: Group/individual dynamics Blooms taxonomy: Knowledge Difficulty: Easy Learning Objective: 6 6-32 Chapter 06 - International Management 100. (p. 238) Colin McKay has been assigned to manage an operation in Venezuela. Upon his arrival he encouraged all of his employees (native Venezuelans) to feel free to individually approach him with ideas on improving operations. After many months, no employees had offered suggestions. Colin should have realized that Venezuelan culture has not only a _____ degree of collectivism but accepts a ______ power distance. A. Low, small B. Low, large C. High, large D. High, small AACSB: Group/individual dynamics Blooms taxonomy: Application Difficulty: Hard Learning Objective: 7 101. (p. 238) In Hofstede's chart showing individualism/collectivism and power distance, the United States is most like: A. France B. Mexico C. New Zealand D. Austria E. Japan AACSB: Group/individual dynamics Blooms taxonomy: Comprehension Difficulty: Hard Learning Objective: 7 102. (p. 240) Steps for establishing and reinforcing the codes of conduct for international business include(s) which of these? A. Communicating the company's values B. Taking action when standards are violated C. Measuring ethical performance D. Rewarding people for meeting ethical standards E. All of the above AACSB: Group/individual dynamics & Ethical understanding/reasoning abilities Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 7 6-33 Chapter 06 - International Management 103. (p. 241) Despite differences across cultures, research suggests that regardless of nationality or religion, most people embrace all of the following values EXCEPT: A. Respect for others B. Fairness C. Compassion D. Honesty E. All of the above are values most people embrace AACSB: Group/individual dynamics & Ethical understanding/reasoning abilities Blooms taxonomy: Comprehension Difficulty: Easy Learning Objective: 7 6-34 Chapter 06 - International Management Essay Questions 104. (p. 223) Discuss how an organization should identify the best strategy for competing in a global marketplace. Answer will vary. AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 3 105. (p. 230-231) Discuss the advantages of licensing and franchising. In what situations are each of these strategies most appropriate? Answer will vary. AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 4 106. (p. 232-234) What are the pros and cons of using expatriates, host-country nationals and third-country nations to run overseas operations? If you were expanding your business, what approach would you use? Answer will vary. AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Medium Learning Objective: 5 6-35 Chapter 06 - International Management 107. (p. 238) Discuss the four dimensions identified by Geert Hofstede. Choose a country and explain its classification according to Hofstede's model. Answer will vary. AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Medium Learning Objective: 7 108. (p. 240) Discuss how culture plays out in terms of ethical behavior. What can organizations do to manage these issues more effectively? Answer will vary. AACSB: Domestic and global economic environments Blooms taxonomy: Comprehension Difficulty: Medium Learning Objective: 7 6-36 Chapter 06 - International Management Multiple Choice Questions Use the following to answer questions 109-111: Suppose you are a consultant for three companies with international operations. Each of them has selected a different global strategy. Company 1 uses their established skills in producing widgets which they will sell in foreign markets. Company 2 produces locally-targeted wines for which they have built specialized plants in each local region. Company 3 has a single worldwide corporate headquarters from which they centrally manage the entire company's operations. 109. (p. 223) Which global strategy is Company 1 using? A. Global B. International C. Transnational D. Multinational E. Domestic AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Medium Learning Objective: 3 110. (p. 223) Which global strategy is Company 2 using? A. Global B. International C. Transnational D. Multinational E. Domestic AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Medium Learning Objective: 3 6-37 Chapter 06 - International Management 111. (p. 223) Which global strategy is Company 3 using? A. Global B. International C. Transnational D. Multinational E. Domestic AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Medium Learning Objective: 3 Use the following to answer questions 112-114: You have just accepted an international assignment in Sweden. On your first day in the office, you meet several new colleagues. Lars is the manager of the office and is a Swedish citizen; he has been with the company for five years. Sylvie is from France and has also just come to Sweden to work for your U.S. company. 112. (p. 232) You would be referred to as a(n): A. Expatriate B. Host-country national C. Third-country national D. Local provider E. Interloper AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Easy Learning Objective: 5 6-38 Chapter 06 - International Management 113. (p. 232) Lars would be referred to as a(n): A. Expatriate B. Host-country national C. Third-country national D. Local provider E. Interloper AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Easy Learning Objective: 5 114. (p. 233) Sylvie would be referred to as a(n): A. Expatriate B. Host-country national C. Third-country national D. Local provider E. Interloper AACSB: Domestic and global economic environments Blooms taxonomy: Application Difficulty: Easy Learning Objective: 5 Use the following to answer questions 115-117: Manager A is a "rugged individualist" who believes that every person is responsible for him/herself. Manager B is the employee who questions everything not just the decision made but whether or not the decision-maker should have made the decision. 6-39 Chapter 06 - International Management 115. (p. 237) Manager A and Manager B are being described in terms of: A. Personality characteristics B. Cultural differences defined by Geert Hofstede C. Cultural differences defined by Frederick Taylor D. Whether or not they are inpatriates or expatriates E. None of the above AACSB: Group/individual dynamics Blooms taxonomy: Application Difficulty: Easy Learning Objective: 7 116. (p. 237) Manager A could be described as: A. High power distance B. Low power distance C. Individualist D. Collectivist E. High uncertainty avoidance AACSB: Group/individual dynamics Blooms taxonomy: Application Difficulty: Easy Learning Objective: 7 117. (p. 238) Manager B could be described as: A. High power distance B. Low power distance C. Individualist D. Collectivist E. High uncertainty avoidance AACSB: Group/individual dynamics Blooms taxonomy: Application Difficulty: Hard Learning Objective: 7 6-40 ... View Full Document

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