capital, which is calculated by dividing the net profits of the firm by total invested
C. Cash flow
2. _____ activities are basically concerned with creating the product, marketing and
delivering the product to buyers, and providing support and after-sales service.
3. It has been observed in the aircraft industry that, each time cumulative output of
airframes was doubled, unit costs typically declined to 80 percent of their previous
level. This is an example of:
A. the core performance curve.
B. the location curve.
C. the strategic curve.
D. the experience curve.4. When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide
scale, the firm should follow a(n) _____ strategy.
A. global standardization
5. Organizational structure means all of the following, EXCEPT:
A. the establishment of integrating mechanisms to coordinate the activities of
B. the location of decision-making responsibilities with a structure.
C. the manner in which decisions are made and work is performed by individuals.
D. the formal division of the organization into subunits such as product divisions and
A. gives top management time to focus on critical issues by delegating more routine
issues to lower-level managers.
B. can give top-level managers the means to bring about needed major
organizational changes by concentrating power and authority in one individual or
a management team.
C. permits greater flexibility because decisions do not have to be "referred up the
hierarchy" unless they are exceptional in nature.
D. can be used to establish relatively autonomous, self-contained subunits within an
organization.7. In which of the following organizational structures are the domestic operations and
foreign operations isolated from each other leading to coordination problems?
A. Global matrix structure
B. International division structure
C. Worldwide product division structure
D. Worldwide area structure
8. A(n) _____ is valuable because it can be used as a nonbureaucratic conduit for
information flows within a multinational enterprise.
A. liaison network
B. matrix structure
C. organizational structure
D. knowledge network
9. Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable
A. politically unstable developing nations that operate with a mixed or command
B. nations where there is a dramatic upsurge in either inflation rates or private-sector
C. politically stable developed and developing nations that have free market
D. developing nations where speculative financial bubbles have led to excess
borrowing.10. In _____, the contractor agrees to handle every detail of the project for a foreign
client, including the training of operating personnel.
D. turnkey projects
11. _____ is pursued primarily by manufacturing firms and _____ is employed primarily
by service firms.
A. Licensing; franchising
B. Franchising; licensing
C. Franchising; exporting
D. Exporting; licensing
12. If a firm's core competency is based on control over proprietary technological knowhow, _____ and _____ arrangements should be avoided if possible to minimize the
risk of losing control over that technology.
A. licensing; joint-venture
B. wholly owned subsidiary; exporting
C. turnkey contracts; exporting
D. exporting; joint-venture13.Which of the following statements is true of exporting?
A. It increases the trade deficit that nations have.
B. Exporting leads to diseconomies of scope.
C. It helps a firm achieve economies of scale
D. Exporting is not beneficial to a country's economy.
14. In theory, the advantage of EMCs is that they are _____.
A. managed by governments that provide export subsidies
B. not-for-profit organizations that provide free service
C. subsidized by the Department of Commerce
D. experienced specialists who can help the neophyte exporter.
15.A _____ is simply an order written by an exporter instructing an importer, or an
importer's agent, to pay a specified amount of money at a specified time.
A. letter of credit
B. bill of lading
D. banker's letter16. _____ denotes a whole range of barter-like agreements and its principle is to trade
goods and services for other goods and services when they cannot be traded for
D. Letter of credit
17. Logistics is the activity that controls the _____.
A. transmission of physical materials through the value chain
B. customer contact points of a business
C. activities involved in creating a product
D. information exchange between a business and its customers
18.According to the concept of economies of scale, as plant output expands, _____.
A. productivity decline
B. total costs decrease
C. unit costs decrease
D. utilization of capital decline19.When a company's product has a low value-to-weight ratio, the company should
A. produce the product from two or three optimal locations and ship products from
B. manufacture products from a centralized location
C. ignore transportation costs as they would only be a minor part
D. produce the product in multiple locations close to major markets
20.An advantage of engaging in in-house production of products and components is
A. the firm will have fewer subunits to control by making products in-house
B. it will help the firm capture more orders from other countries
C. it enables a firm to protect the proprietary technologies that it has
D. firms can make better use of the location advantages of certain countries
21. If market segments transcend national borders:
A. the company should develop unique products for each national market.
B. the company can view the global market as a single entity and pursue a global
C. a localization strategy would be appropriate.
D. consumers will have differing purchasing behavior in different nations.22.Which of the following countries has a concentrated retail system?
23.Which of the following statements about the choice of distribution strategy is true?
A. The longer a channel, the greater the aggregate markup, and the higher the price
that consumers are charged for the final product.
B. If price is an important competitive weapon and if the firm does not want to see its
profit margins squeezed, other things being equal, the firm would prefer to use a
C. The shorter a channel, the greater the aggregate markup, and the higher the
price that consumers are charged for the final product.
D. An international business must use shorter channels in countries where the retail
sector is fragmented and longer channels in countries where the retail sector is
24.Which of the following is mainly concerned with the selection of employees for
A. Retention policy
B. Staffing policy
C. Incentive policy
D. Appraisal policy25.What is the most important advantage of using a geocentric staffing policy?
A. It enables the firm to build a cadre of international executives who feel at home
working in a number of cultures.
B. It may be less expensive to implement than other policies, reducing the costs of
C. The higher pay managers on an international fast track enjoy is a source of
inspiration within a firm.
D. It reduces the need for futile and time consuming documentation.
26. _____ is the ability to understand why people of other countries behave the way
B. Cultural myopia
C. Perceptual ability
D. Cultural toughness
27.Which of the following is the most common approach to expatriate pay?
A. Balance sheet approach
B. Net-to-net approach
C. Host-country approach
D. Cost-based approach28.Which of the following is an accounting problem that only international businesses
A. Lack of consistency in the accounting standards
B. Inaccurate filing of profit-and-loss statements
C. False reporting of income to the government
D. Lack of a dedicated accounting function within the firm
29.Most international businesses require all budgets and performance data within the
firm to be expressed in the "corporate currency," which is normally _____.
A. a common currency such as the U.S. dollar
B. the home currency
C. a foreign currency
D. the currency of the country where products are sold
30. _____ is the technique financial managers use to try to quantify the benefits, costs,
and risks of an investment.
A. Capital budgeting
B. External audit
C. Transfer pricing
D. Control system analysis
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