Summary GLOBAL BUS D080 Test Bank prep, fall 2022/2023, Distinction level solution guide.

GLOBAL BUS D080 Test Bank prep, fall 2022/2023, Distinction level solution guide. Members of a work team are from many different countries. They share their thoughts on developing a strategy to market a product in several different countries. 1.What is the term for the international integration of the team members' exchange of worldviews and ideas to develop the strategy? Outsourcing Globalization Job availability Wealth inequality Correct! The ability to collectively develop a better product strategy will occur by having a cross-cultural exchange of ideas to market the product globally. Globalization is when international integration arises from the interchange of worldviews, products, ideas, and other aspects of culture. 2.Match the driver of globalization with an example of that driver. 3.Which type of globalization refers to the international movement of goods, capital, and services? Cultural Anti Economic Social Correct! The movement of goods and services internationally through trade and trade agreements is economic globalization. As the world becomes smaller, increased movement of goods across borders occurs along with trade agreements.4. Match 5 stages of going global 5. The CEO of an international company reminds the executive vice presidents that while the company may do good while performing corporate social responsibilities, the business has one ultimate goal since it is engaged in commercial activities with corporate shareholders. Which ultimate goal is the CEO emphasizing to the executive vice presidents? Exporting Stakeholder satisfaction Cultural exchange Profitability Correct! Ultimately, a company is engaged in commerce to achieve a profit. Business profit is gauged in financial and economic terms. However, some level of sustained financial and economic profits is needed for a business to achieve other outcomes that are measured as social or environmental performance. A CEO is discussing an expansion of production of a company's highly perishable dairy line in a country that can offer low labor costs and good internet connections. The country has no highways, and roads are poorly maintained. Which challenge to international business expansion do the road conditions present? Ethical Infrastructure Legal Relational Correct! Since the product is perishable, having a good road system is critical to bringing a product to market before it goes bad. Infrastructure includes the basic physical and organizational structures needed for a society to operate and for an economy to function. These include the roads and highways.A CEO seeks to better use the economies of scale and scope of production to increase the international company's profits. Which type of globalization driver is the CEO seeking to use? Market Competition Government Cost Correct! Companies seek to put production in low labor-cost countries to lower labor costs and increase the contribution margin. Economies of scale and scope and the exploitation of differences in costs for product development, manufacturing, and sourcing in different parts of the world will assume greater importance as determinants of global strategy. Match the stage of globalization to its characteristics. Which factor is an element of a CAGE analysis when assessing barriers to cross-border activity? Economics Armament Gross domestic product Census Correct! When looking at economics in a CAGE analysis, the economic distance or socioeconomic differences between countries is evaluated, which includes country size, income, and access to capital. Which factor of CAGE addresses differences in country size that affect barriers to globalization? Geography Administration Culture Economics Correct! Economics in the CAGE analysis refers to demographic and economic differences between countries. When a country size is larger based on gross domestic product, it produces more products and services, which can be available for international trade. Which argument is used by critics who wish to discourage movement towards globalization? It increases the wealth of the rich rather than the poor. It decreases the pace of new product development.It decreases awareness of the international community. It increases consumer prices across the world. Correct! Critics make the argument that globalization only serves to assist the rich in becoming richer at the expense of the poor. Match each form of government with its impact on global business. Match each type of economic system with its definition. Which type of legal system is based on a code and focuses on how the law is applied to the facts? Civil Common Theocratic ReligiousCorrect! The civil law system is an inquisitorial system where the judge investigates the facts of the case. Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases? Common Civil Religious Theocratic Correct! In common law systems, judges hear arguments from both parties and make a judgment. This judgment stands as precedent for future cases. Which legal system can vary from community to community and is found in countries without strong formal justice systems? Civil Common Customary Canon Correct! This is generally found at the tribal or local level, is based on longstanding local customs, and is often transmitted orally. In which legal system does a judge decide the applicable law for the case as a jury determines the facts? Customary Canon Civil Common Correct! In common law systems, while a jury may determine the facts, a judge decides which law will be applied to the case. Module 1 Quiz: Which type of globalization is represented by Sure Start expanding into South America, Europe, and Asia? Political Economic Cultural Legal Correct! Economic globalization is the globalization of production, sales, and finance activities in international markets around the world. Sure Start is starting a new division for rechargeable batteries in different parts of the world. What was the globalization driver of this decision? Government Market Competition Cost Which antiglobalization argument could lead to Sure Start continuing to maintain its current factories instead of moving them to Asia?Tariffs for batteries made in Vietnam will make them less expensive. Labor laws in Germany will ensure the company maintains ethical labor practices. Moving manufacturing to Vietnam will result in lower profits for the company. Factory workers fear their jobs will be moved to another country. Correct! Labor in Asia can be cheaper than in NC, and critics argue that outsourcing manufacturing could lead to job loss in the home country. Which action should the U.S. government take to encourage Sure Start to keep electric battery production in the country? Impose tariffs on batteries made in Vietnam Enact more strict environmental regulations of U.S.–produced batteries Allow dumping of batteries made in Vietnam Levy a value-added tax on manufacturing activity in the United States Correct! Imposing tariffs on batteries made in Vietnam will make them more expensive. Which economic system facilitates the global expansion of Sure Start? Market Command Traditional Mixed Correct! The law of supply and demand applies to the market economy, and the goods are privately owned. Government interference is minimum. Which legal system will Sure Start be following when they begin operating in Germany? Common law Cannon law Civil law Religious law Correct! Civil law is applied in continental Europe. Germany uses a civil law system. What was the initial purpose of the International Monetary Fund (IMF) in phase one, prior to 1973? Supervised economic policies Offered loans to member organizations Provided a means for nations to easily exchange currency Regulated currency exchange between nations Correct! The initial purpose of the IMF was to regulate currency exchange between nations. What is a characteristic of the International Monetary Fund (IMF)? The IMF provides financial assistance to all nations and improves their investment capability. The IMF loans to all nations and helps increase their resources. The IMF is a cooperative institution and provides more effective currency exchange. The IMF is a developmental institution and supports developing countries. Correct! The IMF is cooperative institution and is similar to a credit union for all member nations. Which activity of the International Monetary Fund (IMF) impacts policymaking? Engaging over 10,000 staff in cultural affairs training and development Offering investment services to countriesBeing owned and directed by the governments of the member nations Supporting loans to developing countries Correct! The IMF is owned and directed by the governments of the member nations. How does the International Monetary Fund (IMF) impact international organizations and governments? It complicates the process for nations to borrow and loan. It reduces funding for social programs. It provides limited financial assistance to the wealthy populations. It over-represents the global south. Correct! The conditions put on the IMF loan require the recipient country to have a policy of austerity. This policy usually results in a cut in funding for social programs. What is a common name for the International Bank for Reconstruction and Development? Federal Reserve Bank World Bank International Monetary Fund European Central Bank Correct! World Bank is the common name for the International Bank for Reconstruction and Development. What was the first loan that the World Bank made after the end of World War II? To France to rebuild its infrastructure To Switzerland for being neutral in the war To the U.S. to rebuild Europe's infrastructure To Germany to rebuild its military Correct! The first loan made by the World Bank after World War II was used to rebuild the infrastructure of France. Which criticism is made about the World Bank? It does not consider how funding projects will affect the environment. It funds too many projects in developed countries. It supports government ownership of property. It makes too many loans to countries with strong governments. Correct! One of the criticisms of the World Bank is it does not consider how funding projects will affect the environment. Which criticism is associated with the World Bank? The developing countries of Asia and Africa have too much control over its decisions. The developed countries such as the U.S. and Europe have too much control over its decisions. It makes loans that are too large and cannot be repaid. It does not offer large enough loans to developing countries. Correct! This is one of major criticisms of the World Bank. Which organization was formed after World War II to encourage international commerce? Federal Reserve European Central Bank International Monetary Fund World Trade Organization correct! The World Trade Organization was formed after World War II to encourage international trade by creating a mechanism to negotiate trade agreements.Which strategic network was established to work towards decreasing tariff rates and protecting commerce and intellectual property globally? North American Free Trade Agreement (NAFTA) International Monetary Fund (IMF) European Union (EU) World Trade Organization (WTO) Correct! The WTO was established to work towards decreasing tariff rates and protecting the trade of goods, services, and intellectual property. What was one of the results of the Uruguay Round of the World Trade Organization negotiations? Decrease in world-wide money supply Increase in world-wide money supply Increase in tariffs Decrease in tariffs Correct! The major accomplishment of the Uruguay Round of the World Trade Organization negotiations was a reduction in the number and size of tariffs. Which criticism is made about the World Trade Organization (WTO)? It protects developing countries more than developed countries. It decreases the quantity of money in the worldwide economy. It increases the quantity of money in the worldwide economy. It protects developed countries more than developing countries. Correct! One of the criticisms of the WTO protects developed countries more than developing countries. Country A has been criticized by other countries for giving generous tax credits to its corn farmers, which enables the country's farmers to sell corn on the international markets for cheaper than all other countries. Which term is used by other countries to describe this practice? Government subsidies Mercantilism Trade surplus Free trade Correct! The farmers are getting payment in the form of tax credits. This creates an unfair advantage to the farmers of Country A. Country A exports more goods to Country B than it imports from Country B. Country A receives more monetary gain by using this practice. Which relationship does Country A have with Country B? Neo-mercantilism Trade surplus Protectionism Mercantilism Correct! Trade surplus is when a country exports more than it imports from another country. For example, China normally exports more manufactured goods to the United States than it imports from the United States. China has a trade surplus. Match each theory with its correct description.Correct! The factor endowment theory stated that countries would produce and export goods that required resources or factors that were in abundant supply. Correct! The country similarity theory states that intra-industry trade will be standard and that most trade in manufactured goods will be between countries with similar per capita incomes. Correct! The global strategic rivalry theory focused on multinational corporations and their efforts to gain a competitive advantage against other global firms in their industry. How are free trade agreements handled differently than treaties in the United States? Treaties must be approved by the House of Representatives, while a free trade agreement only needs to be approved by the Senate. Treaties must be approved by both houses of Congress, whereas a free trade agreement only needs to be approved by the Senate. Treaties must be approved by the Senate, whereas free trade agreements must be approved by the House of Representatives. Treaties must be approved by the Senate, whereas a free trade agreement must pass both houses of Congress. Correct! Since a free trade agreement involves revenue from trade, it must be approved by both houses of Congress, whereas a treaty only needs to be approved by the Senate. What is a benefit of implementing a system of free trade? Increased export quotas would result in more international sales of domestic goods. Increased tariffs would result in more revenue generated for the government. Reduced tariffs would result in lower costs of imported raw materials. Reduced import quotas would result in more domestic sales due to scarcity. Correct! In a free trade system, tariffs are reduced or eliminated to increase the ease and efficiency with which trade can be accomplished. Which type of tariff is put in place to specifically ensure that domestic industries are given an advantage? Ad valorem Export Protective Revenue Correct! A protective tariff is put into place to reduce the number of imports of a product that is produced domestically and to increase the cost of the imports to make the domestic product's price more appealing to consumers.Match each description with its corresponding term from the drop-down menu. Occurs when there is little or no government tariffs, quotas, subsidies, or prohibitions to inhibit the exchange Free Trade Purchasings goods or services from a foreign economy by a domestic economy Import Shipping goods or services out of the port of a country Export Imposing tariffs on goods or services to safeguard industries Protectionism A small clothing company based in California decided that it needed to have an application (app) and an updated website. Because this is a small company, it did not have the technological expertise to handle this improvement. The company hired a company based in Pakistan to handle its technology needs. Which common practice among companies is this an example of? Merger Dumping Acquisition Outsourcing Correct! Outsourcing is an option that can result in cheaper labor in other regions. How do antidumping laws protect a domestic market? They restrict domestic companies from selling goods at prices above the price of production. They restrict international companies from selling domestically. They prevent international companies from foreign direct investment. They prevent foreign companies from selling goods and services at or below cost. Correct! Antidumping laws prevent foreign companies from selling goods at or below production cost to ensure domestic companies can stay competitive. Which action illustrates how Sure Start is capitalizing on the comparative advantage of a country? Moving production of the batteries used in electric cars to Vietnam where labor is less expensive Adding an office in the South American market to help manage the business throughout the continent Establishing a European headquarters in Germany and moving key leaders to that country Expanding into Europe and Asia to supply batteries to electric car manufacturers in those markets Correct! Comparative advantage occurs when a country can produce a product cheaper or faster than another country. Moving production of the batteries used in electric cars from the United States to Vietnam where labor is less expensive applies comparative advantage. Which action of Sure Start represents the application of the global strategic rivalry theory? Adding an office in the South American market to help manage the business throughout the continent Launching a new research division to focus on a rechargeable battery for use in electric cars Expanding into Europe and Asia to supply batteries to electric car manufacturers in those markets Maintaining production with no investment in batteries for use in traditional vehicles Correct! Global strategic rivalry theory is about how multinational companies need to gain a competitive advantage against other multinational companies in their industry through activities such as research and development. Which benefit will Sure Start gain from opening the factory in Vietnam? It will allow them to move to the production of electric cars in the near future.They will achieve economies of scale in the production of rechargeable batteries. The U.S. government will give them subsidies for producing in Vietnam. The move will allow them to be fully integrated in production of rechargeable batteries. Correct! Because the factory in Vietnam will only produce rechargeable batteries, the company will be able to benefit from minimized production costs associated with lower labor and dedicated manufacturing operations as they scale up to mass production. The German Transportation Agency (GTA) halts imports of rechargeable batteries from Sure Start. Why would the GTA do this? To punish dumping behavior of Sure Start To protect the infant industry in Germany To respond to a product safety issue To respond to a national security issue Correct! The scenario mentioned that electric cars caught on fire. These cars had Sure Start’s battery installed so this is about product safety to halt the import. What will be the effect of the German trade policy on Sure Start's rechargeable batteries in its first year? Sure Start's profit for rechargeable batteries sold in Germany would increase. If the German automakers meet the domestic content requirement, there will be little impact. Sales to German automakers will increase. Sure Start will increase prices to German automakers. Correct! As long as German automakers meet the requirement that 75% of parts are produced domestically, there would be little impact to Sure Start's rechargeable battery imports. If the German automakers are unable to meet the requirement, the automakers will pay tariffs. Company A is located outside the home country of Company B. Company B has acquired Company A with the intent of controlling and managing Company A's assets. Which practice is being used by Company B? Portfolio investment Partnership Foreign direct investment Merger Correct! Investments made by international companies with the intention of controlling those assets in a foreign market represents foreign direct investment. Why does a company engage in foreign direct investment? The company wants to control organizational assets in another country. The company wants to identify another company with which it can partner. The company wants to find a domestic source of financing for its foreign operations. The company wants to find a foreign source of financing for its foreign operations. Correct! Foreign direct investment is when a company acquires a foreign firm or asset with the intent to control and manage it to strengthen its economic and financial market position. Which strategy is used by governments to limit the foreign direct investment in a country? Creating domestic ownership restrictions in the country Creating foreign ownership restrictions in the country Increasing the value of the country's currencyDecreasing the value of the country's currency Correct! Many countries restrict the percentage of ownership by foreign investors. Which activity is considered a foreign direct investment (FDI) by a multinational corporation? Providing guidance for franchises in the home country Providing guidance for franchises in the host country Setting up manufacturing plants in the host country Setting up manufacturing plants in the home country Correct! FDI is when a company invests in manufacturing or some other major a What is a reason for companies to engage in foreign direct investments? To increase imports to the home country To take advantage of tax exemptions offered by the home country To take advantage of tax exemptions offered by the host country To decrease imports to the host country Correct! Often countries offer tax exemptions to companies that invest in their economies Which country characteristic is most important to foreign direct investors according to a study by the World Bank? Low tax rates Political stability and security Macroeconomic stability and favorable exchange rate Access to land or real estate Correct! A recent World Bank study showed political stability and security to be the most important country characteristic when choosing a country to invest in. What is a benefit of foreign direct investment? The inflow of capital benefits global and local economies The inflow of capital benefits the local but not global economies The outflow of capital benefits the local but not global economies The outflow of capital benefits global and local economies Correct! The inflow of capital to a country helps both the global and the local economies. What is the result of the existence of multinational businesses? Political integration among countries Economic integration among countries Political separation of countries Economic separation of countries Correct! One of the results of the existence of multinational businesses is economic integration among countries. This works to promote economic development and trade between home and host countries of multinational businesses. What is a potential influence of the existence of multinational corporations (MNCs) on international relations? Creates international trade barriers Worsens relations between countries where the MNC operates Improves relations between countries where the MNC operates Eliminates international trade barriers Correct! An MNC improves relations between countries since they need to cooperate to trade.What is an accurate characterization of the relationships between multinational corporations (MNCs) and the host country governments in which they operate? The relationships are positive because MNCs provide jobs and capital to the host country. The relationships are mixed because MNCs can cause, but also solve, problems for the host country. The relationships are negative because MNCs take resources from the host country. The relationships are mixed because MNCs cause economic strife in the host country. Correct! The relationships between an MNC and the host country can be both good and bad depending on a number of factors including economic development, resource distribution, and employment. Which economic integration stage offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers? Common market Free trade area Political union Customs union Correct! A customs union offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers. Which level of economic integration permits the free movement of capital, labor and technology from member countries? Free trade area Customs union Political union Common market Correct! The common market permits the formation of economically integrated markets between member countries, removing trade barriers and any restrictions on the movement of labor, technology, and capital. Which level of economic integration is formed when trade barriers are removed between member countries but there is no mutual policy on trading with nonmember countries? Political union Common market Free trade area Customs union Correct! The free trade area allows basic economic cooperation so member countries remove barriers to trade among themselves. Which level of economic integration presents an alliance of all policies by a common organization? Political union Customs union Common market Free trade area Correct! A political union is defined as when a single nation is formed and a mutual organization confederates all policies. What is a disadvantage of regional economic integration? A higher number of trades lowers growth rates in less-developed countries. Labor movement restrictions narrow job opportunities. Integrated agreements among a small number of countries create conflicts.The exclusion of external countries reduces global free trade. Correct! Regional agreements may create trade barriers with nonmember countries, which lowers global free trade. What is an advantage of regional economic integration? Mergers and acquisitions encourage start-ups of small businesses. Flexibility on labor movement develops job opportunities. Continued discussions help nations gain additional political rights. Employment shifts preserve member countries' resources. Correct! Economic integration often removes labor movement restrictions, which help increase job opportunities. What is a benefit of creating a regional economic integration agreement? Less import potential Decreased competition Improved financial growth Increased national cultural identity Correct! Trade agreements create more growth opportunities for countries to trade among themselves as barriers to trade and investment are removed. Which drawback is involved when regional agreements are created? Countries move production to more expensive labor markets in member countries. Member countries will trade less with nonmember countries. Companies experience higher overall costs. Regions with higher economic development increase their gap over lower developed regions. Correct! When a regional agreement is made between countries, those members will trade more with each other and trade less with nonmember countries. Which agreement was established in 1988 and now has both political and economic goals to keep peace and stimulates economic growth in South American countries? CAFTA-DR NAFTA USMCA MERCOSUR Correct! This is also named the Common Market of the South, or Mercado Común del Sur, and fits the agreement described. Which agreement was implemented in 1994 and helped form a free-trade zone between Canada, the United States, and Mexico by decreasing tariffs and trade barriers? CAFTA-DR NAFTA MERCOSUR USMCA Correct! This trade agreement was implemented in 1994 and had the described trading goals. Which agreement was formalized in 1993 to create a political and economic union to help a large group of countries cooperate and coordinate key aspects of their economic policy? CAFTA-DRASEAN Mercosur EU Correct! EU fits the description and has the goals described. Which economic actors are suppliers of U.S. dollars? Foreign companies purchasing a U.S. firm Foreign tourists visiting the U.S. Foreign firms exporting to the U.S. Foreign investors buying bonds issued by the U.S. Correct! These firms will earn U.S. dollars but will need their own currency to pay the workers based in their country; thus they are suppliers of U.S. dollars and demanders of their home currency. Which exchange rate regime allows a currency's value to fluctuate according to the foreign exchange market? Crawling pegs Pegged Floating Fixed Correct! This regime automatically adjusts to economic circumstances. Which economic actor benefits as the U.S. dollar strengthens? A foreign tourist in the U.S. A U.S. exporting firm A U.S. investor abroad A foreign firm exporting to the U.S. Correct! The firm earns U.S. dollars through export sales, then converts it back into their home currency. A stronger U.S. dollar would mean they can buy more of the home currency. Which economic actor benefits as the U.S. dollar weakens? A foreign firm exporting to the U.S. A foreign investor in the U.S. A U.S. tourist abroad A U.S. investor abroad Correct! A U.S. investor abroad invests money in another country by first converting U.S. dollars to a foreign currency, making the investment, then later converting+ it back to U.S. dollars. As the U.S. dollar becomes weaker, the rate of return on the investment is larger as the investor gets more U.S. dollars from converting back from the foreign currency. A large Chinese furniture company is looking to move the production facility to offset high tariffs that have been placed on the import of furniture from China to the United States because the U.S. market is the largest consumer of furniture in the world. The strategy is to make a foreign direct investment into another country, such as the United States. What is a benefit for making a foreign direct investment (FDI)? The investment will increase the Chinese company's risk of doing business internationally. An inflow of capital into the country chosen by the Chinese company will benefit the company. The country chosen by the Chinese company will increase jobs for local people. Profits will decrease for the Chinese company because it will avoid tariffs. Correct! A benefit of foreign direct investment is an increase in jobs for the country where the investment is made.Which stage of regional economic integration is represented by the North American Free Trade Agreement (NAFTA) that benefits the U.S. furniture company's production of covers in Mexico? Trade union Common market Customs union Free trade area Free trade area the first stage of integration in which member countries try to remove trade barriers in that specific bloc. NAFTA is in the free trade area stage What is a drawback of the U.S. furniture company having its cut and sew operation in Mexico? The U.S. company may forgo trade with another company producing covers for less because they are not part of NAFTA. The number of U.S. furniture companies in Mexico are lower because of NAFTA. There are three member countries in NAFTA, so it is more difficult for U.S. furniture companies to decide on policies. There are fewer opportunities to do business with multiple furniture companies in Mexico. Correct! This drawback can lead to doing business with more expensive producers. Which economic benefit will result in the company's decision to move operations to the U.S. or Mexico? Implementing a country of origin rule Increasing access to natural resources Protecting intellectual property Eliminating tariffs and duties Correct! If the Chinese company moved its operations to the U.S. or Mexico, it would result in the elimination of tariffs and duties due to the NAFTA regional integration and trading agreement that reduces trade barriers between those nations. How will the Chinese company recognize that it is more profitable to operate business in the United States from a foreign currency exchange perspective? The regional trade bloc adopts one currency. The dollar is weaker than the Chinese currency. The foreign direct investment in Chinese currency is restricted. The dollar is stronger than Chinese currency. Correct! A stronger U.S. dollar would mean that the Chinese company would receive more of its own currency in the exchange market, which would indicate that the market for the Chinese furniture in the U.S. would be more profitable and more favorable. What is one option for the Chinese company to make a foreign direct investment (FDI)? Create a joint venture with a furniture company in Indonesia Invest 5% in a furniture company in the US. Merge with an even larger China-based multinational company Sell unfinished furniture to a company in Italy that will complete it Correct! A joint venture with a foreign company is an option for making a foreign direct investment. Which advantage will the company gain over other Chinese furniture companies if it becomes a multinational business through foreign direct investment? It will be able to avoid the tariffs that host countries have placed on furniture imports. The company will be more competitive in the home country's furniture market.There will be more risk of incurring higher costs in another country. It will be harder for them to exit the host country's market if sales begin to decrease. Correct! Because the U.S. has placed tariffs on furniture produced in China, moving production to another country that has lower tariffs or that is tariff free will benefit the company. Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices. Which entity can the United States appeal to in order to correct this apparent market manipulation? World Trade Organization World Bank International Monetary Fund European Union Correct! The World Trade Organization is designed to judge potential market manipulations of its members. The United States has accused several countries around the world of dumping steel. A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies. What caused the violation of the antitrust laws? Reduced competition Technological innovation Service disruptions Increased profits Correct! Antitrust laws are enacted to protect consumer's rights to competition in the marketplace. The sole, national company was a monopoly, and no competition occurred. A farmers market has many vendors and consumers who all sell and buy the same produce at the same price. Which type of market is represented? Perfect competition Monopoly Monopolistic competition Oligopoly Correct! Since vendors can enter and exit the market freely with no barriers and the products are homogenous, it is a pure competition. What makes the enforcement of United Nations Environmental Program regulations difficult? Sovereign rights of nations Pure competitive markets World Food Program distributions Peacekeeping missions of nations Correct! The sovereign rights of nations preclude the United Nations from enforcing the regulations. United Nations compliance is normally voluntary and agreements tend to be nonbinding. Which type of duty is required to take care of the collective environment across the nation? Customs Individual Assigned Shared Correct! Nation states and industry have a shared responsibility to take care of the collective environment of the nation. Collectively, both can accomplish more.Which governmental entity was created to provide regulatory authority regarding pollution by industry? Department of Commerce Department of Agriculture Environmental Protection Agency Federal Bureau of Investigation Correct! The agency was created in 1970 to monitor industry and industry's environmental practices. The agency is not under any cabinet-level department. Which of these agreements or treaties was to combat increased temperatures of global climate change? Maastricht Paris Versailles Antarctic Correct! This agreement was completed in 2016 to stop or at least slow global warming. Not all countries agreed to these goals. Which convention protects decent working hours for a cruise ship director who travels in international waters? Equal Remuneration Convention Forced Labor Convention Domestic Workers Convention, 2011 Maritime Labor Convention, 2006 Correct! The Maritime Labour Convention, sometimes called the "Seafarer's Bill of Rights," protects the rights of seafaring workers and is law for multiple countries. This convention protects decent working hours for a cruise ship director that travels in international waters. What did the Worst Forms of Child Labor Convention, 1999 define? The age at which a person becomes an adult Rules of workplace of safety Rights for domestic workers Hourly wage rates Correct! The Worst Forms of Child Labor Convention defines a child as an individual younger than 18 years old. A major footwear brand company is contracting the manufacturing of its products to a contractor’s manufacturing plant overseas. The footwear company has been accused of turning a blind eye to sweatshop practices at other overseas contract locations before. How should the footwear company ensure that the contractor will comply with the standards set forth in the code of conduct that explicitly prohibit this practice? Require the contractor to self-report compliance on a monthly basis prohibit the use of worker overtime Restrict authorization to daytime shifts Require that the factories be available for inspections Correct! Making the factories available for inspections and audits, sometimes unannounced, is a best practice to ensure compliance with the code of conduct. Which action is used by companies wishing to avoid working with vendors who use sweatshops?Sending a whistleblower to the job sites to ensure the vendor practices safe working conditions Allowing vendor practices to be flagged by nongovernmental organizations such as the National Labor Committee Developing and imposing a company internal code of conduct for vendor labor practices Establishing national child labor laws and requiring vendors to comply with them Correct! A code of conduct for vendors is contractually imposed, and often publicly posted, to ensure the reputation of the company is protected. Which condition is part of a contract between international companies that are based in different nations? A choice of law clause A provision against arbitration clause A clause against unfair contract terms A structure that is vertical in nature Correct! A choice of law clause specifies the laws and the jurisdiction under which international disputes will be settled. International businesses operating in different countries include such clauses in their contractual agreements to clarify ahead of time how disputes will be settled. How is contract law structured as it applies to global business among nations? Horizontal Vertical Tribunal Arbitral Correct! A horizontal business structure means that no nation is in a legally dominant position over another. Which two primary sources of law govern contracts in the United States? The UN Convention on Contracts for the International Sale of Goods and a horizontal structure The common law and U.S. Supreme Court The common law and the Uniform Commercial Code The UN Convention on Contracts for the International Sale of Goods and a vertical structure Correct! Common law comes from custom and from precedents set by other court decisions. The Uniform Commercial Code provides some a standardized laws and regulations for commercial transactions such as sales. They are the two primary sources of law that govern contracts in the United States. which result occurs when a legally enforceable contract between two businesses from different countries is broken? The party who has been affected can seek damages. The broken contract impacts political policy making. The party who broke the contract cannot sell goods. Resolution of the contract must be secured in 90 days. Correct! When a legally enforceable contract is broken, the party who has been affected can seek damages so the business can be made whole as if the breach of contract did not occur. Which organization aims to develop a global intellectual property infrastructure? WTO WRC WIPO TRIPS Correct! This stands for World Intellectual Property Organization. Its goal is to develop a global IP infrastructure, build international respect for IP, and implement global policy related to IP. Which intellectual property right describes a chemical company's filing on their innovative industrial process invention?Service mark Patent Trademark Copyright Correct! A patent is filed to protect the right to an innovative invention, which must be a manufactured product, an apparatus, chemical composition, or a manufacturing process. What is the agreement that the World Trade Organization has between its member nations that governs all intellectual property laws? Alternative Dispute Resolution (ADR) Trade-Related Aspects of Intellectual Property Rights (TRIPS) World Intellectual Property Organization (WIPO) United States Trade Representative (USTR) Correct! This agreement by the WTO governs all IP laws The Garbus company is a producer of microprocessors made with precious metals mined in Central America and is headquartered in the southwest United States. It is one of a few producers of the microprocessors that are used in the onboard computers of luxury automobiles. In the past year, it has outgrown its competitors and is looking at acquiring the next three largest competitors, who are in Europe. One of the companies that Garbus would like to acquire in the Czech Republic is under investigation for operating a sweatshop. It is suspected of having employees younger than 17 who work long hours each day. If it can complete the acquisitions, it will be able to dominate the global market for these microprocessors. The precious metals used in the microprocessors produce waste that can be toxic to the environment. Garbus wants to be an environmentally friendly company. It works closely with the Environmental Protection Agency (EPA) to ensure that all waste is disposed of properly. However, some managers in the company are concerned that if they adhere to the guidelines of the EPA, they could be limiting their productivity. The mining company in Costa Rica that provides some of the precious metals to Garbus has decided to renegotiate its contract with Garbus because it has heard of Garbus’ desire to acquire its competitors. It wants to include a provision that will require Garbus to continue to purchase precious metals for the next three years. Garbus agrees, but adds a choice of law clause that requires any contract disputes to be handled in the United States. In addition to the production of the microprocessor, Garbus has intellectual property associated with the design of the microprocessor. It regularly has its legal team search for infringements of the patents that it holds for the design. If the legal team finds something in another country that infringes on the patents, it works with the World Intellectual Property Organization (WIPO) to settle any disputes. Why does the European Union (EU) have a concern about the acquisitions of the Garbus company? The acquisitions would create a trade deficit with the United States. Garbus will be more efficient in production than other companies in Europe. The jobs in EU countries would be eliminated. Garbus will be able to unfairly raise prices. Correct! Price gouging is a concern when a single company gains an anticompetitive advantage through acquisitions. Why is the EPA assisting Garbus with ensuring its waste is disposed of properly? The EPA provides a free resource to companies to help them save money. The EPA's assistance is mandated by the U.S. Department of Labor. The EPA's mission is to help businesses in stopping environmental deterioration. The EPA ensures that global trade is not affected by environmental laws.Correct! One of the charges of the EPA is to assist businesses in stopping environmental deterioration. Which convention addresses the issue regarding the company that Garbus would like to acquire but is under investigation for operating a sweatshop? United Nations Framework Domestic Workers Worst Forms of Child Labor Maritime Labor Correct! This convention states that a person younger than 18 is considered a child and aims to eliminate practices of slavery, debt bondage, etc. Why does Garbus want to include a choice of law clause in the contract? Garbus would be able to breach the contract easier. It specifies which law applies to any disputes that could arise under the contract. The Uniform Commercial Code requires that the clause is included in contracts. Garbus is not familiar with the contract laws of Costa Rica. Correct! A choice of law clause is a provision that determines which laws would be applied in a dispute. Which type of law is applicable if Garbus contracted with another company to handle the disposal of its waste from its production plant and the waste accidentally leaked into a local water source? Antitrust Environmental Labor Contract Correct! The impact of the waste getting into the local water source is handled with environmental laws. Why is the World Intellectual Property Organization (WIPO) used to help protect intellectual property? It encourages the trade of intellectual property in the global market. It can solve any international business dispute. It can direct the local governments to resolve the dispute. It offers alternative dispute resolution to mediate disputes over intellectual property. Correct! WIPO helps mediate disputes over intellectual property at the global level. A global buyer reviews a company's ethical profile and the social responsibility section of its annual report. Understanding that the company's values match the buyer's principles, the buyer purchases the company's products. Which action did the buyer perform regarding the purchase of the company's products? The buyer practiced shareholder activism. The buyer used personal ethics. The buyer used organizational ethics. The buyer practiced ethical consumerism. Correct! When a person evaluates a company's values and then makes purchases from the company based on the person and company's matched values, this is ethical consumerism. business has experienced significant internal and external events, and the owner decides to respond effectively while maintaining the rules of behavior the company has always vocalized as being appropriate. Which component has guided this owner's response?Personal ethics Organizational ethics Ethical standardization Ethical conundrum Correct! Organizational ethics is how a business responds to stimuli in an ethical manner. A company sells products that many have reported on social media to be culturally insensitive, and sales have decreased significantly since the negative publicity began. How are consumers responding to the publicity? By notifying government agencies By voting with their purchases By focusing on supply chain By considering sustainability Correct! Consumers who do not believe the product is made in alignment with their values may not buy the product. Not buying the product is considered voting with one's wallet. What does business ethics implicitly regulate? Consumer preference External stakeholders Consumer action Employee behavior Correct! Employers want employees to self-regulate so that when a stimulus appears they will take proper action in the interest of everyone involved, either directly or indirectly. A coffee company received international criticism for an employee negatively responding towards a customer. The response was said to be racially motivated. The company needs to take swift action to improve how all employees in the organization are viewed by ethical consumers. Which course of action should the company take to meet this goal? Fire the worker's supervising manager Have employees attend sensitivity training Give the person affected company gift cards Show instances of employees helping that population Correct! This is a solution that addresses the entire company and does not cause harm to any employees for any mistakes. A company that released a new vehicle marketed as being environmentally friendly is found to have cheated when testing the vehicle's total emissions. The company would like to repair damage from the negative publicity by changing its image and catering more to ethical consumers. Which action should the company take to reach this goal? Market the original product strongly so ethical consumers receive the information Ask political supporters to modify the environmental emission regulations Hire a new leader to send the message that practices have changed Retest the vehicles using its own test environment and protocols Correct! Establishing a new image and leader can help consumers trust the company again after practices have changed. A company is reviewing how ethical consumerism is being addressed in the organization. It is hoping to improve its awareness of this factor and how it will influence future business decisions.How does this factor affect business decisions? Companies that hide their production methods can avoid negative impacts of ethical consumerism. Companies must remember that their consumers may care about more than just the final product. Companies that make good financial decisions will be perceived well by the public. Companies must consider the age of the intended audience for a product. Correct! Nearly half of North American consumers report punishing a company by not purchasing a product if they disagree with its manufacturing or other business practices. A global company has warned managers that the country involved in their current business venture typically expects small payments to be made to government officials to expedite decisions and transactions. The company has encouraged managers to avoid this type of unethical practice. Which form of activity is the company concerned about? Trade policies Unfair competition Oil payments Grease payments Correct! When a business engages in making small payments to government officials to expedite activities, it is a grease payment. An American salesperson is attempting to do business in a Middle Eastern country. What is one of the major cultural issues the salesperson needs to understand about this part of the world? Secular culture is stronger in the Middle East than in the United States. It is more relationship-based than the United States. Individualistic culture is stronger in the Middle East than in the United States. It is more rules-based than the United States. Correct! Compared to United States and other Western cultures, relationships, including those in business, are more important. Which term describes the normative beliefs and practices passed from generation to generation that help define a group of people? Legal norms Cultural norms Graft norms Office norms Correct! Shared and integrated systems of beliefs and practices that are passed down through generations and characterize a cultural group are cultural norms. A company requires one employee to be responsible for maintaining a machine. Another employee is responsible for maintaining accounting records for that machine. Which internal control has the company implemented? Segregating duties Accounting for shrinkage Reviewing cash flows Managing inventory Correct! Irregularities are intentional accounting errors with the purpose to defraud, and this action is used as an internal control to prevent irregularities.Which of the following will cause shrinkage in accounting? Management of inventory Customer trust decreased Petty theft Perishable goods going recorded Correct! Discrepancies are unintentional accounting errors due to reasons such as incorrectly entered data and shrinkage. Petty theft, mismanaged inventory, and perishable goods going unrecorded can cause accounting shrinkage. How should a company ensure that internal controls are effectively implemented? By simplifying procedures in accounting By creating systems that are new to the company By providing financial data to shareholders By performing due diligence with procedures Correct! A company ensures that internal controls are effectively implemented by ensuring that procedures are clearly articulated and by consistently auditing employees to ensure compliance. What is the purpose of internal controls? To establish procedures for manufacturing operations To ensure irregularities of a system's performance To ensure the accuracy of a system's performance To create processes for credentialing accounting staff Correct! Internal controls are built into a system to help guarantee the accuracy and reliability of the financial and accounting information. Internal controls should ensure systems run efficiently, effectively, and accurately and that they reduce accounting misstatements. Hughes Inc. is a leading producer of wool socks in New Zealand and specializes in making fabrics for furniture, mattress, and clothing manufacturers throughout the world. Recently, the company has begun to diversify by acquiring a midsize textile company in Vietnam. Because of increasing pressures from consumers throughout the world, the company must provide proof that it is operating in an ethical manner. Hughes has made it a mission to use packaging made from 85% recyclable material for all its products and to use reusable containers for shipping its wool socks. The company believes that using these items will help it minimize the impact that it has on the global environment. With the acquisition of the company in Vietnam, Hughes has begun to realize how the differences in culture between New Zealand and Vietnam affect its decisions on how to be socially responsible. New Zealand ranks as one of the lowest countries for corruption, so some of accepted business practices in Vietnam have caused some executives of Hughes to feel anxious. They feel that all business transactions should follow established rules in order to avoid corruption, but the practice of grease payments to individuals in Vietnam is widely used and has become an area of concern for Hughes. What is a benefit to Hughes Inc. that stems from providing proof of ethical behavior? Management will receive bonuses based on how well the company rates for its ethics. Consumers will be more likely to purchase products made with its fabrics. Employees in Vietnam will reduce labor costs to offset costs of being ethical. The wool industry in New Zealand will be able to sustain the necessary growth. Correct! Today's consumers use their purchasing power to cast their votes for companies that they feel are being ethical. Which component serves as the foundation underlying Hughes's decision to use reusable containers to ship wool socks?Global Reporting Initiative Trans-Pacific Partnership Corporate Social Responsibility Sarbanes-Oxley Act Correct! Corporate social responsibility is the ethical role a company plays in society. Shipping wool socks in reusable shipping containers would have a positive effect on the environment. Which action is considered a grease payment by Hughes in Vietnam? Hiring the sales manager's spouse as a salesperson Incentivizing the local telephone company to expedite the installation of telephone lines for the company’s operation in Vietnam Charging foreign customers double what it would charge a customer in New Zealand Buying raw fibers from the nephew of the plant manager Correct! Grease payments are small amounts of payments that expedite decisions and transactions. Which action is considered an unethical practice by Hughes? Hiring employees in Vietnam at wages lower than in New Zealand Using a packaging supplier that also produces nonrecycled products Employing the son of the janitor to work on the production floor Paying a government official to obtain approval for doing business in Vietnam Correct! This is an example of bribery. How should Hughes maintain internal controls in Vietnam? Have the inventory coordinator make and record all purchases, distributions, and physical counts of all raw materials Assign one employee to set up new vendors in the accounting system and assign another to pay the vendors and confirm Allow the accounts payable team to manage and record accounts receivables as well Allow the sales team to enter orders and invoice all sales Correct! This is an example of assigning specific duties to employees. An international company wants to establish links between the people at the same level of the organization to form committees. What is the name for this type of link in a company? Cooperative Horizontal Vertical Contractual Correct! Horizontal links are links between people at the same level in an organization to accomplish tasks, such as forming committees. An international company has created a diagram to show the division of labor between departments. What is the name of this diagram? Organizational chart Horizontal linkages Flowchart Vertical linkages Correct! Companies use an organizational chart to depict the division of labor in the organization.Managers at an international business are deciding the method by which it will be organized. The business is highly diversified, manufacturing a number of different components and parts for its industrialized customers. Which departmentalization structure should be used by this company? Geographic Market Functional Product Correct! When an organization is built around the products or services it sells, it is using a product departmentalization structure. Managers in an international company are arranging jobs so similar tasks are coordinated. Which activity is being completed by this company? Delegation Aggregation Segmentation Departmentalization Correct! When a company divides its work based on specific tasks or jobs, it is referred to as departmentalization. Match each organizational structure form with its description. An employee feels empowered to make decisions to solve customer problems independent of seeking manager approval and uses flexibility to meet customer needs. Which decision-making structure is being used by this employee? CentralizedFunctional Matrix Decentralized Correct! Decentralized decision-making structure is when lower-level employees, like the one mentioned, make decisions. This type of decision-making may be inconsistent. A car company wants to expand internationally but encounters much international competition to reduce cost while responding to local needs. Which strategy should the company use to meet this goal under these conditions? Web Transnational Communication Export Correct! This strategy is one in which a company must be nimble to respond to cost pressures while customizing products to local markets. Transnational strategies have to deal with the problems of standardization (cost) and multidomestic strategies (local responsiveness). A company wants to gain market share but does not want to establish operations in other countries nor tailor its products to the other countries. Which entry strategy should the company use to meet this goal under these conditions? Joint venture Multidomestic Transnational Export Correct! The scenario describes a company that is strictly domestic but wants to earn additional revenue by sending the product overseas. Normally, a company in the other country must import the product for sale. A fast food company seeks to expand internationally and changes its menu to appeal to the new country's food tastes. Which action is being sought by the company by making this change? Global integration Economy of scope Economy of scale Local responsiveness Correct! The company is responsive to its local environment when it adapts it products and services to local consumer tastes. Stanley & Sons is based in the United States and produces performance fabrics that are used in the construction industry. Its products have been revolutionary for enabling construction companies to build highways in mountainous areas, mostly in the U.S. and Canada. The company was started 15 years ago in North Carolina by Jack Stanley and his two sons. For the past two years, the growth of their company has encouraged them to think about restructuring in order to meet increasing demand for their products. Currently, the company produces 10 types of fabrics that help with soil erosion, which is a by-product of highway construction. The processes used to manufacture the different types of fabric are mostly the same, and Jack and his sons handle most of the business decisions. The company employs 50 workers on the production floor that is overseen by Jack and his sons. Because everything funnels through Jack and his sons, they are feeling overwhelmed, and the company is not being as efficient as it needs to be. Stanley & Sons wants to departmentalize employees into functions. In addition to figuring out the best organizational structure, Stanley & Sons is contemplating which steps to take to grow the company outside of the U.S. and Canada. Stanley & Sons is thinking about starting up a new manufacturing facility inGermany and is considering using a centralized decision-making method at that location. They are not sure if they should incur large amounts of debt in order to open a facility in Germany or if they should go in a different direction. They believe that providing their products to construction companies in Germany will lead to further international growth. Stanley & Sons is considering using an international standardization business strategy. Which organizational structure is appropriate for forming the departments for Stanley & Sons? Teams Divisional Matrix Functional Correct! Based on the fact that manufacturing processes are the same and they want to departmentalize employees into functions, a functional structure would be the best fit. Which structure is Stanley & Sons using to control the structural hierarchy at a low level? Tall structure Matrix structure Functional structure Flat structure Correct! The flat structure controls the hierarchy at a low level with only a few layers between frontline employees and the top level. What is an advantage of using the decision-making method proposed for a facility in Germany? Operations would be customer-centered. Decision-making processes would be consistent. Business would be flexible to meet local needs. Employees would feel empowered. Correct! An advantage of a centralized decision-making method is consistency across different international divisions. Which business strategy should Stanley & Sons use to meet goals if leaders choose not to create an international division in Germany but they would still like to serve German customers? Export Standardization Transnational Multidomestic Correct! This strategy would be used by Stanley & Sons if leaders decided to focus on their production facility in North Carolina. What is the effect on global integration and local responsiveness if Stanley & Sons chooses to use an international standardization business strategy? High global integration and low local responsiveness Low global integration and high local responsiveness Low global integration and low local responsiveness High global integration and high local responsiveness Correct! This combination of the two would represent a standardized strategy. A company decides to focus on economies of scale to decrease production costs and increase revenues. Why is this strategy effective?Manufacturing in small quantities minimizes operational costs. Ordering in small quantities ensures that shipping costs stay low. Manufacturing in large quantities keeps costs low. Ordering in large quantities takes advantage of bulk pricing. Correct! Manufacturing in large quantities means more work can be done efficiently and at a savings. This r