I. (30pts) Answer each True or False
T F 1. Translation risk can be hedged against by using the forward market for
currency exchange.
T F 2. Environmental scanning involves looking for changes in environmental forces
in the global marketplace.
T F 3. The Total Product and the Physical Product mean the same thing.
T F 4. Transfer pricing is a form of intracorporate pricing that can be used to shift the
tax burden from one subsidiary to another.
T F 5. A language trap, where a person can speak two languages, occurs because the
person relies on their knowledge of a second language without seeking the
assistance of a native speaker.
T F 6. Even with the development of the internet and the virtual capabilities it is still
important to make a personal visit to a potential market before investing in the market.
T F 7. Market segment screening is based on needs across national borders.
T F 8. National borders may no longer be the relative unit of analysis for a firm in
developing a global market plan.
T F 9. A disadvantage for companies that insist on less risky transactions, such as a
letter of credit, is that they may be losing business to competitors who sell on
open accounts.
T F 10. An importer delays payment of the necessary currency exchange when she
thinks her currency will devalue in terms of the foreign payment currency.
T F 11. When using a money market hedge, the hedger will immediately convert the
currency borrowed into its own currency.
T F 12. JIT systems are more efficient than synchronous manufacturing in all situations.
T F 13. The US has adopted the International Financial Reporting Standards and they
are now in effect in the US.
T F 14. A broad statement that defines the organization's purpose and scope is a
values statement.
T F 15. Most companies can enter a market in stages. The order listed in the textbook
is establishment of a foreign sales company, exporting, local assembly, and
manufacturing.
II. (78pts) Mark the best answer.
1. Terms of Payment found in international business contracts include:
a. CFR (cost and freight, foreign port)
b. Consignment
c. Documentary Drafts
d. all of the above
e. (b) and (c) above
2. Joint Ventures have the
a. advantage of utilizing the expertise of a local partner.
b. disadvantage of not being able to make all the decisions because control is
shared.
c. advantage of being able to share the profits.
d. all of the above
e. (a) and (b) above
3. Which of the following is a reason that imports are not a measure of the total market
potential for a good?
a. lack of foreign exchange
b. a competitor decides to produce locally
c. change in a country's political structure
d. all of the above
e. none of the above
4. Businesses are using global or regional brands for the following reason(s):
a. private brands do not offer any meaningful competition.
b. economies of scale usually result in reduced costs.
c. satellite and cable TV are widely available.
d. all of the above
e. (b) and (c) above
5. The Harmonized Tariff Schedule of the US:
a. applies only to goods imported from the EU to the U.S.
b. provides for special rates for imports from countries that are not considered
friends of the US.
c. allows an importer to receive an advanced ruling from US Customs which is
binding on all customs inspectors.
d. all of the above
e. (b) and (c) above
6. E-Commerce Potential is
a) is higher for Jamaica than for Argentina.
b) is an index based on mobile phones, internet hosts, and number of PCs.
c) is a composite ranking of three indices.
d) (a) and (b) above
e) (a) and (c) above
7. Generally, industrial products require __________ adaptation than consumer products
to meet the demands of the world market.
a) greater
b) less
c) the same amount of
d) only slightly less
e) only slightly more
8. Nonequity modes of entry include
a) Strategic Alliance
b) Management contract
c) Franchising
d) All of the above
e) (b) and (c) above only
9. Management Contracts may be used
a) in a joint venture arrangement
b) in a wholly owned subsidiary situation
c) in a minority ownership situation
d) all of the above
e) (a) and (c) above
10. Terms of Sale found in international business contracts include:
a. CFR (cost and freight, foreign port)
b. Consignment
c. Documentary Drafts
d. all of the above
e. (b) and (c) above
11. The Ex-Im Bank
a. is a private corporation that supports firms that wish to export.
b. makes loans to foreign buyers and foreign governments to assist in financing
c. provides export credit insurance against commercial risk but not political risk.
d. all of the above
e. (b) and (c) above
12. According to Table 15.1
a. Google has made the greatest increase and Citi the greatest decrease in ranking.
b. IBM, Disney, and McDonalds have all improved their ranking.
c. Coca Cola is the only brand whose ranking has not changed.
d. (a) and (b) above
e. (a) and (c) above
US exports.
13. Although global sourcing can be beneficial it may have some disadvantages such as
a. added costs
b. exchange rate fluctuations affecting prices
c. quality control
d. all of the above
e. (b) and (c) above
14. In staffing
a. an ethnocentric policy is always the most effective if qualified personnel are
b. a polycentric policy is always the least effective even when qualified personnel
c. using third country personnel would be considered most frequently with
d. all of the above
e. (a) and (c) above
15. In value chain analysis the firm must answer the following question(s):
a. How will customer value be created?
b. Will decisions be made at the local or home office level?
c. Who are the company's target customers?
d. All of the above
e. (a) and (c) above only
16. In the most recent 40 years, union membership around the world has been in decline,
in part because:
a) There are more women in the workforce.
b) The unions have been successful and priced themselves out of the market.
c) Employers have made efforts to keep business union-free.
d) (a) and (c) above only
e) All of the above.
17. When a firm has less than a majority interest in a subsidiary it can still have control
by having
a) a management contract
b) the right to control the technology
c) the right to vote its shares
d) all of the above
e) (a) and (b) above only
18. The Female Wage Gap
a. is the percent of Male Wages earned by Female Employees.
b. younger females have less of a gap in all countries.
c. is the smallest for older females in Korea.
d. all of the above
e. (a) and (c) above
available.
are available.
regiocentric or geocentric policies.
19. Income earned abroad by U.S. citizens:
a) incurs a tax liability in the US with some adjustments.
b) incurs tax liability only on the portions earned in the U.S.
c) incurs no tax liability.
d) incurs a tax liability in the US on all income earned with no adjustments for
e) none of the above
20. The international structural stages model suggests that a typical evolutional path for
an international company's structure would be:
a) from international division to geographical area division to worldwide
b) from international division to worldwide product division to geographical
c) from geographical area division to worldwide product division to global
d) from functional division to horizontal company to virtual corporation.
e) from international division to worldwide product division to global
taxes paid in other countries.
product division.
area division.
matrix.
matrix.
21. Competitive advantage is acquired by developing competencies that
a. are common to all competitors so the firm can compete.
b. create value for customers even if the price is higher than customers want to
c. are difficult to imitate.
d. all of the above
e. (a) and (c) above only
22. In their measurement and disclosure for accounting systems, less developed countries tend toward:
A. transparency and conservatism.
B. transparency and optimism.
C. secrecy and optimism.
D. secrecy and conservatism.
pay.
23.Export marketing plans should be specific about:
A. the markets to be developed.
B. the marketing strategy for servicing them.
C. the tactics required to make the strategy operational.
D. cash flow projections.
E. A, B, and C.
24. Factors that are involved in the operation of a manufacturing system include:
A. Plant location
B. Plant layout
C. Material handling
D. Human asset
E. all of the above
25. Hiring and promoting employees on the basis of the specific local context in which the subsidiary
operates refers to:
A. an ethnocentric orientation.
B. a polycentric orientation.
C. a regiocentric orientation.
D. a geocentric orientation.
E. none of the above.
26. A middle ground between an ad campaign that is standardized worldwide and an
entirely local ad campaign is called a:
A. hybrid advertising campaign.
B. programmed-management approach.
C. computerized-management approach.
D. shared-management approach.
E. none of the above.
III. (16pts)
In selecting a foreign market, a screening process is used by a firm. In regard to this
process, answer the following:
a) The importance of the priority order of the steps in the screening process.
b) The reasons for participating in either a trade show or in a trade mission.(Select one)
c) The reasons for using cluster analysis in assessing global markets.
d) The importance of regional or ethnic subcultures in evaluating competitive forces.
IV. (20pts)
Select any four of the following, explain each of them, and discuss the role each of them
plays in international business activities:
a) Summarize any one of the videos from week six or eight (either one of them not both)
and discuss the role the information in this video plays in international business activities.
b) Foreign (Free) Trade Zones
c) Countertrade
d) Explain why a manager with a global assignment needs a mentor in the host country
and a mentor in the home country.
e) Quality and quantity of the labor force in a country
f) Labor Mobility and Guest Workers
V. (6pts)
Discuss how your perception of global business activity has been affected by this course
and two concepts or ideas (NOT types of assignments) discussed in this course that
contributed to these affects on your perception. Be sure to explain what each of these
concepts is and how each has affected your perception.