,Chapter 1—Globalizing Business
x
TRUE/FALSE
1. A multinational enterprise is a firm that engages in foreign direct investment by directly managing
value-addedxactivities in other countries.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 4 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
2. The term “emerging markets” refers to all markets other than thexdeveloped markets.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governmentsxoperating in anxeconomy.
ANS: T PTS: 1 DIF:
Difficulty: Moderate REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
4. Majority of the global GDP is contributed by thexemerging markets.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods and
services different currencies can purchase.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
6. Purchasing powerxparity (PPP) is calculated as the sum of valuexadded by resident firms, households,
and governments operating in an economy.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
7. Emerging markets contribute about 26% of global GDP without adjusting for purchasingxpower parity
(PPP).
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 7 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 8. Morexthanxhalf the GDP produced by emerging markets comes from outside the BRIC countries.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 7 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Western Europe, and Japan.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
11. The second tier of the global economic pyramid is made up of countries with a per capita annual i
ncome of more than $20,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
12. The emergingxmarkets of the world are placed at the top of thexglobal economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
13. The global economic pyramid does not represent countries that have a per capita annual income of less t
han $2,000.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
14. The term "basexof the pyramid" represents economies where individuals make less than $2,000 a year.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
15. Reverse innovations are innovations that arexadopted first inxthe Triad-
based multinationals and then diffused around the world.
ANS: F PTS: 1 DIF:
Difficulty: Moderate REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 16. Reverse innovationxis an example of bottomxup innovation.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 10 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
17. The Group of 20 includes the European Union (EU)—a regional bloc.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 11 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
18. Globalizationxhas driven up the salaries of low-level jobs.
ANS: F PTS: 1 DIF:
Difficulty: Moderate REF: p. 12 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Comprehension
19. An international premium is a significant pay raise awarded to expatriate employees working abroad.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 12 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
20. Approximately 80 millionxpeople worldwidexare employed by foreign-owned firms.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 13 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
21. Overall, the focus on firm performance around the globe defines the field of global business more than
anything else.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
22. An institution-
based view suggests that thexsuccess and failure of firms are enabled and constrained by business norms
of the host nation.
ANS: T PTS: 1 DIF:
Difficulty: Moderate REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Comprehension
23. Formal institutions include laws, regulations, andxrules.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
x
TRUE/FALSE
1. A multinational enterprise is a firm that engages in foreign direct investment by directly managing
value-addedxactivities in other countries.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 4 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
2. The term “emerging markets” refers to all markets other than thexdeveloped markets.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governmentsxoperating in anxeconomy.
ANS: T PTS: 1 DIF:
Difficulty: Moderate REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
4. Majority of the global GDP is contributed by thexemerging markets.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods and
services different currencies can purchase.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
6. Purchasing powerxparity (PPP) is calculated as the sum of valuexadded by resident firms, households,
and governments operating in an economy.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 5 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
7. Emerging markets contribute about 26% of global GDP without adjusting for purchasingxpower parity
(PPP).
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 7 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 8. Morexthanxhalf the GDP produced by emerging markets comes from outside the BRIC countries.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 7 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Western Europe, and Japan.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
11. The second tier of the global economic pyramid is made up of countries with a per capita annual i
ncome of more than $20,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
12. The emergingxmarkets of the world are placed at the top of thexglobal economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
13. The global economic pyramid does not represent countries that have a per capita annual income of less t
han $2,000.
ANS: F PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
14. The term "basexof the pyramid" represents economies where individuals make less than $2,000 a year.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
15. Reverse innovations are innovations that arexadopted first inxthe Triad-
based multinationals and then diffused around the world.
ANS: F PTS: 1 DIF:
Difficulty: Moderate REF: p. 9 OBJ: LO: 1-1
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 16. Reverse innovationxis an example of bottomxup innovation.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 10 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
17. The Group of 20 includes the European Union (EU)—a regional bloc.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 11 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
18. Globalizationxhas driven up the salaries of low-level jobs.
ANS: F PTS: 1 DIF:
Difficulty: Moderate REF: p. 12 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Comprehension
19. An international premium is a significant pay raise awarded to expatriate employees working abroad.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 12 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
20. Approximately 80 millionxpeople worldwidexare employed by foreign-owned firms.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 13 OBJ: LO: 1-2
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
21. Overall, the focus on firm performance around the globe defines the field of global business more than
anything else.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
22. An institution-
based view suggests that thexsuccess and failure of firms are enabled and constrained by business norms
of the host nation.
ANS: T PTS: 1 DIF:
Difficulty: Moderate REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Comprehension
23. Formal institutions include laws, regulations, andxrules.
ANS: T PTS: 1 DIF:
Difficulty: Easy REF: p. 15 OBJ: LO: 1-3
NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
