Lower-cost locations for manufacturing the product

Question

Question 1:  Mechanisms to maintain culture include all of the following except

• The hiring and promotional practices of the organization
• Reward strategies
• Socialization processes
• Ongoing cultural assessments

Question 2: Exporting may not be appropriate if lower-cost locations for manufacturing the product can be found abroad.

• True
• False

Question 3: 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.

• True
• False

Question 4: The advantages frequently associated with entering a market early are commonly known as

• Primary advantages
• First-mover advantages
• Initial-entrant premiums
• Proactive-mover benefits

Question 5: A strategic commitment

• Has a short-term impact alone
• Is difficult to reverse
• Cannot change the competitive playing field
• Does not have any influence on the nature of competition in a market

Question  6: A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with

• Demand preemption
• Diseconomies of scale
• Pioneering costs
• Diseconomies of scope

Question 7: The _____ entrant is more likely than the _____ entrant to be able to capture the first-mover advantages associated with demand preemption, scale economies and switching costs.

• Small scale; large scale
• Small scale; moderate scale
• Large scale; small scale
• Moderate scale; large scale

Question 8: Most service firms have found that _____ with local partners work best for controlling subsidiaries.

• Joint ventures
• Licensing agreements
• Greenfield investments
• Turnkey projects

Question 9: To increase the potential for a successful acquisition, a firm should

• Always bid low to allow for partial failure
• Try to acquire a firm with a very different corporate culture so there is no forced "overlap"
• Seek companies only from similar national cultures
• Screen the foreign enterprise to be acquired

Question 10: Which of the following is not important in the acquisition process?

• Firms should strive to limit unwanted management attrition after acquisition
• An integration plan should quickly be implemented
• Proper screening of the company to be acquired should take place
• The hubris hypothesis should be maintained

Question 11: The letter of credit system effectively transfers the issue of trust to the bank.

• True
• False

Question 12: Which of the following is true of reactive firms?

• They may not even consider exporting until their domestic market is saturated
• They create excess productive capacity and actively hunt for opportunities in foreign markets
• Almost all large firms fall under this category
• They systematically scan foreign markets for profitable export opportunities

Question 13: Great trading houses in Japan are called

• Kaizen
• Sogo shosha
• MITI
• Gaunxi

Question 14: One drawback of relying on EMCs is that

• They are not conversant with the ins and outs of the exporting process
• They have no knowledge of different business mores
• The company can fail to develop its own exporting capabilities
• The company is unable to avoid common pitfalls

Question 15: Because of the low value-to weight ratio of many pharmaceutical and electronics products, there is great pressure to produce these products in the optimal location and serve the world from there.

• True
• False

Question 16: Concentration of production makes most sense when trade barriers are high.

• True
• False

Question 17: A firm that has integrated horizontally is making all or part of a product in-house.

• True
• False

Question 18: Identify an advantage of a low minimum efficient scale.

• Allows the firm to accommodate demands for local responsiveness
• Discounts currency risk by manufacturing all products in one location
• Helps keep overheads low at the expense of fixed costs
• Helps a firm to standardize its products for all markets

Question 19: Differences in technical standards can prevent a firm from standardizing products across markets.

• True
• False

Question 20: This refers to impact a firm's pricing strategy in one market may have on its rivals' pricing strategy in another market.

• Multipoint pricing
• Experience curve pricing
• Predatory pricing
• Competitive pricing

Question 21: The most attractive staffing policy is the ethnocentric approach.

• True
• False

Question 22: There is an increasing trend towards an ethnocentric staffing policy.

• True
• False

Question 23: Research into expatriate failure revealed that consistently, one of the reasons for the premature return of employees for U.S. multinationals was the inability of the spouse to adjust.

• True
• False

Question 24: An expatriate's base salary normally varies from the base salary for a similar position in the home country.

• True
• False

Question 25: Which of the following is a problem that limits a firm's ability to pursue a geocentric policy?

• The lack of management transfers from home to host countries and vice versa, can lead to a lack of integration between corporate headquarters and foreign subsidiaries
• The higher pay managers on an international fast track enjoy may be a source of resentment within a firm
• The firm fails to understand host-country cultural differences that require different approaches to marketing and management
• It limits advancement opportunities for host-country nationals

Question 26: Which of the following is true about cultural training?

• It should be provided only to the expatriate
• Training should be limited to a study of language and business practices
• It helps the expatriate appreciate the host-country culture
• It can be offered to the spouse/family after it is clear the foreign posting is a success

Question 27: _____ makes it difficult to evaluate the performance of expatriate managers objectively.

• Soft data
• Hard data
• Knowledge
• Bias

Question 28: Unions' bargaining power is derived largely from their

• Ability to threaten to disrupt production
• Ability to change the organizational culture
• Willingness to adapt to new employment practices
• Ability to show restraint in negotiations

Question 29: Similarities in the accounting systems of countries are sometimes due to the countries' close political and/or economic ties.

• True
• False

Question 30: The purpose of consolidated financial statements is to provide accounting information about a group of companies that recognize their economic interdependence.

• True
• False

Question 31: Identify the incorrect statement pertaining to accounting information.

• It is often referred to as "the language of business."
• It is means by which firms report their income to the government
• It is consistent and standard across all countries
• It enables the providers of capital to assess the value of their investments

Question 32: Which of the following occurs when an investor based in one country enters the capital market of another nation to invest in the stocks or bonds of a firm based in that country?

• Transnational financing
• Transnational development
• Transnational sale
• Transnational investment

Question 33: The International Accounting Standards Board

• Has enough power to enforce its standards
• Was formed to replace the International Accounting Standards Committee
• Has 120 members responsible for the formulation of new financial reporting standards
• Requires approval from 80 percent of its 120 members to issue a new standard

Question 34: This method translates assets valued in a foreign currency into the home-country currency using the exchange rate that exists when the assets are purchased.

• Temporal method
• Current rate method
• Operating cost accounting method
• Historic cost principle

Question 35: If the net present value of the discounted cash flows is slightly less than zero, the firm should go ahead with the project.

• True
• False

Question 36: The relationship between a country's relative inflation rates and changes in exchange rates is,

• Much closer than what theory would predict
• Not reliable in the short run
• Totally reliable in the long run
• According to empirical studies, non existent in the long run

Question 37: This is a loan between a parent and its subsidiary channeled through a financial intermediary, usually a large international bank.

• International loan
• Fronting loan
• Transfer loan
• Unbundling loan