Test Bank Chapter 1

Chapter 1

1. What is the name of the superstore which exists in South Africa and other countries and is considered to be the next Wal-Mart?

a. South-Mart

b. African-Store

c. World-Mart

d. Shoprite

Answer: D

Factual, International Business, p. 5

2. Companies are no longer limited by their domestic boundaries and may conduct any business activity anywhere in the world; these companies are more likely to compete anywhere because of

a. Technology

b. Globalization

c. Free trade system

d. Business strategy

Answer: B

Conceptual, International Business, p. 6

3. Multinational companies or MNCs are

a. Small companies that have some form of international business

b. Large companies that have some form of international business

c. All companies that have some form of international business

d. None of the above

Answer: C

Conceptual, International Business, p. 6

4. The study of international business helps prepare you

a. To deal with the evolving economy

b. To develop the necessary skills to succeed in business

c. To make a business survive

d. (a) and (b)

Answer: D

Conceptual, Nature of International Business, p. 7

5. Which of the following three statements about multinationals is NOT true?

a. The largest multinationals are often privately owned

b. The smallest multinationals are often privately owned

c. The largest multinationals are often public corporations

d. All of the above are true

Answer: A

Conceptual, Nature of International Business, p. 7

6. Developed economies have

a. Mature economies with substantial per capita GDPs and international trade and investments

b. A trend to expand beyond local boundaries

c. Money flowing more freely across countries

d. Reduced government trade protection

Answer: A

Conceptual, Types of Economies in the Global Marketplace, p. 11

7. Transition economies are

a. Found in Hong Kong, Singapore, South Korea, and Taiwan

b. Countries that have changed from government-controlled, mostly communist economic systems to market or capitalistic systems

c. Useful in order to look at some commonly used classifications of the world’s businesses

d. None of the above

Answer: B

Conceptual, Types of Economies in the Global Marketplace, p. 11

8. What is the definition of low-cost countries (LCC)?

a. The poorest nations with unstable political regimes, high unemployment, and unskilled workers

b. Countries with cheap labor that are becoming the manufacturing and service providers for multinational companies

c. Nations that have substantial per capita GDP and international trade

d. Countries where the companies are converted to private ownership

Answer: B

Factual, Types of Economies in the Global Marketplace, p. 11

9. Developing economies

a. Have mature economies with substantial per capita GDPs and international trade and investments

b. Follow the trend to expand beyond local boundaries

c. Have money flowing more freely across countries

d. Have grown extensively over the past two decades but have sometimes struggled

Answer: D

Conceptual, Types of Economies in the Global Marketplace, p. 11

10. Examples of developing economies include

a. Czech Republic, Hungary, and Poland

b. USA, UK, and France

c. Indonesia, Malaysia, and the Philippines

d. None of the above

Answer: C

Factual, Types of Economies in the Global Marketplace, p. 11

11. The Czech Republic, Hungary, Poland, and Russia are all examples of

a. Developed economies

b. Low-cost countries

c. Transition economies

d. Least developed countries

Answer: C

Factual, Types of Economies in the Global Marketplace, p. 11

12. What key trends drive the globalization phenomenon?

a. Population rate, environmental pollution, climate change

b. National taxes, literacy rates, technology, international trade

c. Falling borders, rise of global products and global customers, growing use of Internet

d. People’s attitudes, international relationships, people’s role in environment

Answer: C

Conceptual, Globalization Drivers, p. 13

13. Regional trade agreements help

a. To provide undeveloped businesses with new technology so that the business can develop

b. To provide ownership and new strategy in business

c. Companies to engage in business functions across borders

d. To reduce tariffs and develop technical and economic standards

Answer: C

Conceptual, Lowering the Barriers of National Borders, p. 14

14. By what percentage did foreign direct investment increase between 1996 and 2000?

a. 34%

b. 35%

c. 36%

d. 37%

Answer: C

Factual, Locate and Sell Anywhere to Anybody, p. 15

15. Which of the following statements regarding foreign direct investment (FDI) is NOT TRUE?

a. FDI occurs when a multinational company from one country owns an organizational unit in another country

b. FDI can occur through mergers and acquisitions

c. FDI has grown by 36% between 1996 and 2000

d. FDI is only a small source of revenue for multinationals

Answer: D

Conceptual, Locate and Sell Anywhere to Anybody, p. 16

16. Rapidly developing economies (RDEs)

a. Have over 55 million employees and stock values of over 7 trillion

b. Provide low cost production sites and have an expanding market for multinational sales

c. Do not have to pay tariffs on the goods exported into the international market

d. Cause expensive foreign goods

Answer: B

Conceptual, Rise of Low-cost Countries, p. 19

17. Examples of rapidly developing economies include

a. The USA and Germany

b. The Czech Republic, Hungary, and Poland

c. China, India, Brazil, and Russia

d. South Africa, Nigeria, and Botswana

Answer: C

Factual, Rise of Low-cost Countries, p. 19

18. International outsourcing is

a. When a company in one country moves a business function such as manufacturing to another country, usually to take advantage of lower costs

b. When a company in one country contracts with a company in another country to perform some business function

c. Potentially harmful to the givers and receivers

d. None of the above

Answer: B

Conceptual, Rise of Low-cost Countries, p. 19

19. Offshoring is

a. When a company in one country moves a business function such as manufacturing to another country, usually to take advantage of lower costs

b. When a company in one country contracts with a company in another country to perform some business function

c. Potentially harmful to the givers and receivers

d. None of the above

Answer: A

Conceptual, Rise of Low-cost Countries, p. 19

20. When a company in one country moves a business function such as manufacturing to another country, usually to take advantage of lower costs, it is commonly referred to as

a. Outsourcing

b. Offshoring

c. Insourcing

d. None of the above

Answer: B

Conceptual, Rise of Low-cost Countries, p. 19

21. When companies can sell the same product or deliver the same service regardless of the nationality of the customer, the industry has

a. Global customers

b. Global business

c. Global products

d. Global recognition

Answer: C

Conceptual, Increasing Global Products, Services, and Customers, p. 24

22. Which of the following three statements about global customers is NOT true?

a. Global customers are looking for products and services and ignore national boundaries

b. Companies making industrial purchases are less likely to be global customers compared to individuals

c. Information technology is making it easier to become global customers

d. All of the above statements are true

Answer: B

Conceptual, Increasing Global Products, Services, and Customers, p. 24

23. According to the International Organization for Standardization (ISO), ISO 9000 and ISO 14000 are for

a. Quality in manufacturing and environmental management respectively

b. Environmental management and quality in manufacturing respectively

c. Quality in education and environmental management respectively

d. Environmental management and quality in education respectively

Answer: A

Conceptual, Need for Global Standards, pp. 25–26

24. Which of the following technical standards developed by the International Organization for Standardization (ISO) is relevant specifically to environmental management?

a. ISO 9000

b. ISO 14000

c. Both ISO 9000 and ISO 14000

d. None of the above

Answer: B

Factual, Need for Global Standards, pp. 25–26

25. Sustainable practices

a. Consist of practices where companies learn how to engage in international trade

b. Help in the formulation and design of management practices to take advantage of international opportunities

c. Are business practices that minimize the impact of business operations on the earth’s environment, thereby enhancing the earth’s ecosystem

d. Are a source of cheaper labor in the form of lower wage levels

Answer: C

Factual, Environmental Sustainability and Responsibility, p. 26

True/False

1. The largest multinationals are often privately owned

Answer: False

Conceptual, Nature of International Business, p. 7

2. The smallest multinationals are often privately owned

Answer: True

Conceptual, Nature of International Business, p. 7

3. Globalization is the worldwide trend of economies of the world becoming borderless

Answer: True

Conceptual, International Business, p. 6

4. Developing economies are those countries that have changed from government-controlled to market systems

Answer: False

Factual, Types of Economies in the Global Marketplace, pp. 11–12

5. Examples of transition economies are Hong Kong, Singapore, and South Korea

Answer: False

Factual, Types of Economies in the Global Marketplace, pp. 11–12

6. Hungary, Poland, Slovakia, and the Czech Republic are examples of transition economies

Answer: True

Factual, Types of Economies in the Global Marketplace, pp. 11–12

7. Countries that have yet to show progress in the evolving global economy are known as low-cost countries

Answer: False

Factual, Types of Economies in the Global Marketplace, pp. 11–13

8. In the mid-1900s worldwide tariffs averaged 45%

Answer: True

Factual, Lowering the Barriers of National Borders, p. 14

9. The European Union and North American Free Trade Agreements are examples of regional trade agreements

Answer: True

Factual, Lowering the Barriers of National Borders, p. 14

10. Foreign direct investment occurs when a multinational company in one country owns an organizational unit in another country

Answer: True

Conceptual, Locate and Sell Anywhere to Anybody, pp. 15–16

11. Foreign direct investment declined between 1996 and 2000

Answer: False

Conceptual, Locate and Sell Anywhere to Anybody, pp. 15–16

12. Multinational companies derive a significant amount of revenue from their foreign direct investments

Answer: True

Conceptual, Locate and Sell Anywhere to Anybody, pp. 15–16

13. Examples of rapidly developing economies include China, India, Brazil, and Russia

Answer: True

Factual, Rise of Low-cost Countries,, p. 19

14. The practice whereby a company moves a business function such as manufacturing to another country is known as outsourcing

Answer: False

Conceptual, Rise of Low-cost Countries, p. 19

15. International outsourcing is when a company in one country contracts with a company in another country

Answer: True

Conceptual, Rise of Low-cost Countries, p. 19

16. Outsourcing and offshoring are always beneficial to the givers and receivers

Answer: False

Conceptual, Rise of Low-cost Countries, p. 19

17. Both large and small multinational companies are involved in international outsourcing

Answer: True

Conceptual, Rise of Low-cost Countries, p. 19

18. When companies sell the same product or deliver the same service regardless of nationality, it is selling a global product

Answer: True

Conceptual, Increasing Global Products, Services, and Customers, p. 24

19. Multinationals making industrial purchases are more likely to be global customers than individuals

Answer: True

Conceptual, Increasing Global Products, Services, and Customers, p. 24

20. The Internet and information technology make it possible for anyone to be a global customer

Answer: True

Conceptual, Information Technology and the Internet, p. 23

21. Environmental management standards set by the International Organization for Standardization are usually referred to as ISO 9000

Answer: False

Factual, Need for Global Standards, p. 25

22. ISO 14000 refers to the environmental management standards set by the International Organization for Standardization

Answer: True

Factual, Need for Global Standards, p. 25

23. Business practices that minimize the impact of business operations on the environment are known as international standardization practices

Answer: False

Conceptual, Environmental Sustainability and Responsibility, p. 26

24. Sustainable practices refer to the business practices that minimize the impact of business operations on the environment

Answer: True

Conceptual, Environmental Sustainability and Responsibility, p. 26

25. Global surveys of executives show that executives see the environment as the top priority

Answer: True

Factual, Environmental Sustainability and Responsibility, p. 26