IB300 – Exam 1 – Study Guide – Chapters 1-5 Complete Q&A 2025.

IB300 – Exam 1 – Study Guide – Chapters 1-5 recommend Chapter 1 1. Which of the following statements best defines a multinational enterprise (MNE)? a. It is a firm that engages in exports and manages value-added activities. b. It is a firm that engages in foreign direct investment. c. It is a firm that engages in outsourcing. d. It is a firm that engages in imports. 2. _____ refers to doing business abroad. a. Multinational enterprise (MNE) b. International business c. The Great Transformation d. Emerging economics 3. Which of the following is true of the Great Transformation of the global economy? a. It is the tremendous shift in economic weight and engines of growth toward emerging economies. b. It is the linear story of the high speed economic growth of the developed world. c. Emerging economies unsuccessfully compete with developed nations in terms of weight and influence in the global economy. d. It does not take purchasing power parity into account. 4. Which of the following is NOT true of the emerging economies of Brazil, Russia, India, China, and South Africa, collectively known as BRICS? a. They contain 40% of the world's population. b. They cover a quarter of the world's land area. c. They contribute more than 50% of global GDP (on a PPP basis). d. They challenge developed economies in terms of weight and influence in the global economy. 5. A manager who works outside of his or her native country is known as an _____. a. out-of-towner b. international businessperson c. expatriate manager (expat) d. global leader 6. Which of the following statements is true of emerging economies in the world today? a. Emerging economies as a group will not be able to grow their absolute GDP and their percentage of world GDP relative to developed economies. b. Most emerging economies have experienced some significant slowdown recently. c. Emerging economies are likely to repeat the rapid growth they experienced during the decade between 1998 and 2008. d. They include the economies of Japan and Western Europe. 7. Which of the following statements is true of domestic firms? a. They engage in foreign direct investment. b. They actively compete and collaborate with foreign entrants. c. They are given as much importance as foreign entrants in International Business (IB) textbooks. d. They invest, manage, and control value-added activities in other countries while operating from their home country. 8. Which of the following is true of emerging economies? a. They contribute approximately 50 percent of the global gross domestic product (GDP). b. They refer to developed countries. c. They continue to repeat their extraordinary growth sprint. d. They are likely to experience a decline in their absolute gross domestic product (GDP) as a group relative todeveloping countries. 9. Which of the following statements is true of the gross domestic product (GDP)? a. It determines the equivalent amount of goods and services different currencies can purchase. b. It is the sum of value added by residents, households, and governments operating in an economy. c. It is the investment made by firms within an industry in other countries. d. It is the average per-person income of all individuals in a country that acts as an indicator of the existing living conditions. 10. Purchasing power parity is an adjustment made to the gross domestic product (GDP) to reflect the differences in _____. a. cost of living b. exchange rates c. time zones d. populations 11. Which of the following statements is true of the top tier of the global economy pyramid? a. It mostly consists of people who live in the developing countries. b. It mostly consists mostly of people who live in North America, Western Europe, and Japan. c. It consists of the vast majority of human population who make less than $2,000 a year. d. It consists of a billion people making $2000 to $20,000 a year. 12. The _____ is comprised of the vast majority of humanity, about five billion people, who make less than $2,000 a year. a. base of the pyramid b. Triad c. top tier of the pyramid d. second tier of the pyramid 13. Which of the following statements is most likely a reason to study global business? a. It helps in determining the success and failure of firms around the globe. b. It advances one's employability and career in the domestic economy. c. It is often a prerequisite to join the top ranks of large firms. d. It is offered only by a few select schools, and students are likely to get more employment opportunities for choosing a rare subject. 14. Which of the following statements is true of international premium in compensation? a. It is the pay raise given to local employees to match the level specified by the international wage law. b. It is a significant pay raise given to employees when they are working overseas. c. It is the compensation offered to an employee based on his or her international work experience at the time of hiring. d. It is the pay raise given to local employees to match the compensation packages offered by the international competitors operating within the same industry. 15. Which of the following is likely to have the greatest impact in defining the field of global business? a. The focus on firm performance around the globe b. The focus on mergers and acquisitions around the globe c. The focus on global, low-cost strategies d. The focus on product-differentiation strategies 16. A(n) _____ suggests that the success and failure of firms are enabled and constrained by the rules of the game. a. liability of localization b. institution-based viewc. resource-based view d. liability of foreignness 17. Which of the following statements is true of formal institutions? a. They include laws, regulations, and rules. b. They include culture, ethics, and norms. c. They focus on a firm's internal resources and capabilities. d. They focus on how competitor firms innovate in an effort to outcompete the winning firms. 18. Which of the following is true of informal institutions? a. They are fundamentally about limiting oneself to one's home country. b. They focus on a firm's internal environment. c. They include culture, ethics, and norms. d. They include laws, regulations, and rules. 19. A major drawback of an institution-based view is that when this view is pushed to its logical extreme, it suggests that firm performance around the globe would be entirely: a. dependent on human resources. b. determined by environments. c. dependent on its internal resources. d. determined by its top management. 20. The liability of foreignness is: a. the institutional framework that governs competition in various countries b. the base of the global economic pyramid (BoP) c. the international premium expatriate managers can expect when doing business abroad d. the inherent disadvantage that foreign firms experience in host countries because of their nonnative status 21. In the context of the three views on globalization, the arguments against globalization _____. a. focus on an ideal world free of environmental stress b. provide a number of clear alternatives to present economic order c. focus on unfortunate events and ways to prevent them d. provide a number of protectionist measures 22. Which of the following statements is NOT true of globalization? a. It is the close integration of countries and peoples of the world. b. Critics argue that it exploits workers and harms the environment. c. It is widely accepted as recent phenomenon brought about by technological advancements in transportation. d. It was blamed by many for the Great Recession of 23. In the history of globalization, the Four Tigers refers to ____. a. The triad of developed economies—North America, Western Europe, and Japan—plus China b. The noncommunist countries (Argentina, Brazil, India, and Mexico) that focused on fostering and protecting domestic industries in the aftermath of WWII c. The emerging economies of Brazil, Russia, India and China d. The economies of Hong-Kong, Singapore, South Korea, and Taiwan that achieved developed (high income) status and inspired more countries to join the world economy. 24. Harpsico, a MNE, wants to market a fizzy water drink in 25 different nations around the globe. Instead of marketing a different version of the product to each of the25 nations, they decide to clump the nations into four regions, and market four versions of their product globally. This strategy is an example of engaging with: a. total isolation on a nation state basis b. semiglobalization c. scenario planning d. total globalization 25. Which of the following is NOT true of The Great Recession of ? a. The crisis showed how interconnected the global economy had become. b. It was caused by Deteriorating housing markets in the United States, fueled by unsustainable subprime lending practices. c. It caused Global output, trade, and investment to plummet. d. The crisis led to massive government bailouts of failed firms and banks only in the United States 26. Advocates and anti-globalization protesters often argue that globalization: a. is a process similar to the swing of a pendulum, with several ups and downs. b. is neither recent nor one-directional. c. should be prohibited. d. should be slowed down, if not stopped. 27. According to the pendulum view on globalization, which of the following statements is true of globalization? a. It is one-directional. b. It is a fairly new concept. c. It exclusively refers to the domination of world markets through multinational enterprises (MNEs). d. It is the close integration of the countries and peoples of the world 28. According to the pendulum view on globalization, globalization _____. a. is nothing new and will always exist b. exploits workers in rich countries c. is neither recent nor one-directional d. does not change over time 29. _____ is the identification and assessment of dangers and the preparation to minimize the impact of unfortunate events. a. Benchmarking process b. Quality management c. Risk management d. Break-even analysis 30. Which of the following statements best describes scenario planning? a. It is a technique to prepare for multiple high- or low-risk situations. b. It is a measure used for assessing and classifying risks. c. It identifies ways to prevent unfortunate events that occur only in domestic markets. d. It identifies ways to prevent unfortunate events that are used only in international markets. 31. _____ is a perspective that suggests that barriers to market integration at borders are high, but not high enough to insulate countries from each other completely a. Semiglobalization b. A resource-based view c. The pendulum view on globalization d. Localization 32. One frequent observation in the globalization debate is the _____.a. enormous size of multinationals b. elimination of risk c. identification of domestic firms d. unprecedented government intervention Chapter 2 1. According to Richard Scott, the _____ is the coercive power of governments exercised through laws and rules. a. normative pillar b. regulatory pillar c. cognitive pillar d. authoritative pillar 2. Fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect firms as players are known as _____. a. institutional transitions b. regulatory pillars c. new firm behaviors d. authoritative pillars 3. According to Richard Scott, which of the following statements is true of the regulatory pillar? a. It is the secondary supportive pillar of informal institutions. b. It is the primary supportive pillar of formal institutions. c. It refers to the internalized values and beliefs that guide individual and firm behavior. d. It refers to those values that are taken for granted within a firm. 4. According to Richard Scott, the _____ refers to how the values, beliefs, and actions of other relevant players influence the behavior of focal individuals and firms. a. normative pillar b. regulatory pillar c. cognitive pillar d. legal pillar 5. According to Richard Scott, which of the following statements is true of the cognitive pillar? a. It is a support for informal institutions. b. It is the coercive power of governments. c. It acts as the primary supportive pillar of formal institutions. d. It includes laws, regulations, and rules. 6. Which of the following is NOT true of opportunism? a. It is defined as the act of seeking self-interest with guile. b. Examples include misleading, cheating, and confusing other parties in transactions. c. It is an important source of transaction costs. d. It often decreases transaction costs 7. The key role of institutions is to: a. eliminate risks. b. reduce uncertainty. c. maximize opportunism. d. increase transaction costs 8. Which of the following statements best defines transaction costs?a. These are the costs associated with an opportunity forgone. b. These are the costs associated with doing business. c. These are the costs associated with switching suppliers. d. These are the refunds provided to customers for the differences in the cost of a product. 9. Which of the following are prominent examples of formal institutions? a. normative and cognitive pillars b. political, legal, and economic systems c. institutions, firms, and firm behaviors d. command and mixed economies 10. Which of the following is a core proposition of an institution-based view of global business? a. Firm behavior is exclusively controlled by formal institutions. b. Firm behavior is exclusively controlled by informal institutions. c. Informal constraints increase uncertainty for managers and firms in situations where formal constraints are unclear. d. Informal constraints provide constancy for managers and firms in situations where formal constraints are unclear. 11. Which of the following statements is true of informal constraints? a. They increase uncertainties for managers and firms in situations where formal constraints are unclear. b. They are relevant only to firms in emerging economies. c. They decrease constancy for managers and firms in situations where formal constraints are unclear. d. They are pervasive in developed economies. 12. Which of the following would a person living in a democracy be subject to? a. the right to pursue greater income and self-expression through the act of starting a business b. political freedom restricted by one party backed by the military c. the threat of arrest when establishing a private firm d. pronouncing allegiance to a religious figurehead 13. _____ is a political system in which citizens elect representatives to govern the country on their behalf. a. Monarchy b. Communism c. Totalitarianism d. Democracy 14. _____ is defined as a political system in which one person or party exercises absolute political control over the population. a. Monarchy b. Communism c. Totalitarianism d. Democracy 15. Which of the following statements is true of totalitarian countries? a. They often experience wars, riots, protests, chaos, and breakdowns. b. They have a low level of political risk. c. They experience tremendous economic growth than democratic countries. d. They are preferred over democratic countries by foreign firms. 16. _____ uses comprehensive statutes and codes as a primary means to form legal judgments. a. Religious law b. Theocratic lawc. Civil law d. Common law 17. Jewish and Islamic laws are examples of _____. a. code law b. theocratic law c. civil law d. common law 18. _____ is shaped by precedents and traditions from previous judicial decisions. a. Religious law b. Theocratic law c. Civil law d. Common law 19. An economy with insecure property rights may experience: a. a lack of long-term investment in research and development b. smaller firm size than economies with secure property rights c. more funding through informal means than formal means d. all of the above 20. ____ is the widespread yet unauthorized use of international property rights (IPR). a. Copyright b. Patenting c. Piracy d. Trademark 21. _____ are the legal rights to use an economic resource and to derive income and benefits from it. a. Property rights b. Remedial rights c. Conditional rights d. Subjective rights 22. Property rights include rights associated with _____. a. the ownership of intellectual property (IP) b. intangible property c. patents, copyrights, and trademarks d. homes, offices, and factories 23. Unlike property rights, intellectual property rights (IPR): a. are associated with tangible pieces of property. b. are enforced through an informal system designed to provide incentives for innovation. c. include rights associated with homes, offices, and factories. d. include rights associated with patents, copyrights, and trademark 24. Which of the following statements is true of patents? a. They are the exclusive legal rights of authors and publishers to publish and disseminate their work.b. They are legal rights awarded by government authorities to inventors of new products or processes. c. They are the exclusive legal rights of firms to use specific brands to differentiate their products from others. d. They are the legal rights used to derive income and benefits from an economic resource. 25. In the debate on the drive of economic development, the geography side argues that: a. rich countries have a culture based on strong work ethics and a high motivation for success. b. institutions are the basic determinants of the performance of an economy. c. rich countries tend to be landlocked and located near the equator. d. rich countries tend to be well endowed with natural resources. 26. A _____ is an economy in which the government takes a laissez faire approach. a. planned economy b. mixed economy c. market economy d. command economy 27. Which of the following statements is true of a command economy? a. It is an economy in which all factors of production are state owned and state controlled. b. It is an economy which is characterized by the "invisible hand" of market forces. c. It is an economy in which the government takes a laissez faire approach. d. It is an economy in which the government performs only functions the private sector cannot perform. 28. A _____ is an economy which has elements of both a market economy and a command economy. a. planned economy b. participatory economy c. traditional economy d. mixed economy 29. Which of the following statements is a characteristic of a mixed economy? a. It is the economic system that is followed by most of the countries. b. In a mixed economy, all factors of production are state owned and state controlled. c. It is defined by a government taking, in the words of Vladimir Lenin, the "commanding heights" in the economy. d. In a mixed economy, the government performs only functions the private sector cannot perform. 30. In the debate on the drive of economic development, the culture side argues that: a. institutions have a significant impact on economic development by affecting the incentives and the costs of doing business. b. institutions are the basic determinants of the performance of an economy. c. rich countries tend to be well endowed with natural resources. d. rich countries have a smarter and harder working population driven by a stronger motivation for success. 31. Which of the following is most likely a characteristic of developed economies? a. Such economies often follow a command economy in which all factors of production are strictly state owned and state controlled. b. Such economies often have relatively weak legal systems, and personal relationship building is often used to substitute for the lack of strong legal protection. c. Most developed economies have a strong propensity for informal, relational exchanges. d. Most developed economies are supported by strong, effective, and market-supporting formal institutions. 32. Sam is a manager doing business in a Caribbean nation, where there is a strong propensity for informal relational exchanges. He is going to meet with his potential clients and they suggest that before talking business they all go out as a group together for a meal first. Which of the following strategies will help Sam be successful in this meeting? a. Sam should spend time investing in personal relationships with his potential clients. b. Sam should maintain a "business first, relationships afterwards" attitude and suggest that they go out for a meal after the meeting.c. It is not important to try to understand the formal institutions governing firm behavior in this country. d. Sam should go out for a meal with them, but insist on formalizing a contract immediately to secure his firm's business interests 33. When markets work smoothly in developed economies, formal market-supporting institutions are: a. often weak and ineffective b. almost invisible and taken for granted. c. nonexistent d. conspicuous 34. Which of the following is an implication for action for managers doing business around the globe? a. Managerial choices must be made rationally within the constraints of a given institutional framework. b. Managerial choices must give more importance to formal constraints as they will play a larger role in reducing uncertainty than informal constraints. c. Firms entering a new country that emphasizes relational exchanges must ensure that all business contracts are formalized right away. d. Firms entering a new country that lacks formal market-supporting institutions must adopt a "business first, relationship afterwards" attitude. Chapter 3 1. _____ is a self-centered mentality held by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right. a. Lingua franca b. Polycentrism c. Ethnocentrism d. Individualism 2. Which of the following statements is true of informal institutions? a. They only make up a small part of the rules of the game that govern firm behavior. b. They are underpinned by the normative and cognitive supportive pillars. c. They are supported by the regulatory pillar. d. They include politics, laws, and economics. 3. Which of the following best defines culture? a. It is the collective programming of the mind that distinguishes the members of one group or category of people from another. b. It is the idea that an individual's identity is fundamentally tied to the identity of his or her collective group. c. It is the idea that the identity of an individual is fundamentally his or her own. d. It is the self-centered mentality held by a group of people who perceive their own ethics and norms as natural, rational, and morally right. 4. The dominance of _____ as a global business language, or lingua franca, is unmistakable. a. Spanish b. English c. Hindi d. Chinese5. Which of the following is true of an expatriate manager who is fluent in English, but does not know the local language? a. She will not be able to effectively do business as an expatriate manager in that country. b. She may miss cultural subtleties. c. She will be just as effective as an expat who knows the local language. d. She will be able to detect translation errors more easily. 6. Which of the following are the four leading religions in order of greatest number of adherents? a. Christianity, Islam, Hinduism, Buddhism b. Muslim, Hinduism, Christianity, Buddhism c. Christianity, Islam, Hinduism, Judaism d. Islam, Judaism, Christianity, Buddhism 7. Which of the following is a factor for the dominance of English as a global business language? a. English is the spoken language in all countries. b. English-speaking countries contribute the largest share of global output. c. All English-speaking countries are ethnocentric. d. English is the largest language in terms of the number of native speakers. 8. Which of the following statements is true of religion? a. Religion is a major manifestation of culture. b. A majority of the world's population has no religious beliefs. c. Everybody claiming to be an adherent actively practices a religion. d. Religion is not important for the non-religious managers. 9. Which of the following statements is true of high-context cultures? a. Messages are explicitly stated and have no underlying meaning. b. Messages are taken at face value without much reliance on unspoken conditions. c. Communication relies heavily on assumptions. d. Communication is straightforward. 10. A _____ is the highest cultural grouping of people and the broadest level of cultural identity people have. a. context b. cluster c. culture d. civilization 11. _____ refers to the idea that an individual's identity is fundamentally tied to the identity of his or her shared group, be it a family, village, or company. a. Ethnocentrism b. Individualism c. Collectivism d. Relativism 12. In ____, communication is usually taken at face value without much reliance on unspoken conditions or assumptions.a. high femininity cultures b. high-context cultures c. low-context cultures d. cultures where Hinduism is the dominant religion 13. Which of the following statements is true of power distance? a. In high power-distance countries, wealth is spread more evenly among the people than in low power-distance countries. b. It is the extent to which members of a culture accept or avoid ambiguous situations and uncertainty. c. When subordinates address their bosses on a first name basis it is a reflection of a high power distance. d. It is the extent to which less powerful members within a country accept that power is distributed unequally. 14. Elsa and Liam are a couple living in Sweden. Elsa works as a successful lawyer at one of Stockholm's biggest firms, while Liam cares for their three children. Sweden is most likely a: a. country with a high power distance b. high masculinity country c. country with high uncertainty avoidance d. high femininity country 15. Which of the following is true of a country with a low uncertainty avoidance culture? a. It is characterized by a greater willingness to take risks and less resistance to change. b. High value is placed on job security and retirement benefits. c. Members tend to avoid ambiguous situations. d. Religious freedom tends to be restricted. 16. Unlike managers in high masculinity societies, managers in high femininity societies are: a. accustomed to being assertive and decisive. b. more aggressive. c. more visible. d. accustomed to seeking consensus. 17. Which of the following statements best defines ethics? a. It refers to the idea that the identity of an individual is fundamentally his or her own. b. It is the extent to which less powerful members within a culture expect and accept that power is distributed unequally. c. It refers to the principles, standards, and norms of conduct that govern individual and firm behavior. d. It is a self-centered mentality held by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right. 18. Which of the following statements is true of an instrumental view on firms' ethical motivations? a. It believes that good ethics may simply be a useful way to help make money. b. It suggests that firms may simply jump onto the ethics bandwagon under social pressure. c. It maintains that some firms may be self-motivated to be ethical regardless of social pressure. d. It suggests that firms are ethical to appear more legitimate without necessarily becoming better. 19. A(n) _____ on firms' ethical motivations suggests that firms may simply jump onto the ethics bandwagon under social pressure to appear more legitimate without necessarily becoming better. a. progressive view b. instrumental view c. negative viewd. positive view 20. _____ refers to the absolute belief that "There is only one set of Ethics (with a capital E), and we have it." a. Ethical relativism b. Ethical imperialism c. Ethical pluralism d. Ethical egoism 21. Which of the following is a guiding principle proposed by Thomas Donaldson to manage ethics overseas? a. Respecting human dignity and basic rights b. Adopting an ethnocentric ethical attitude c. Respecting one's own ethical values and applying it universally d. Always practicing one's own tradition even in foreign countries 22. A firm's set of guidelines for making ethical decisions is known as: a. ethics b. a code of conduct c. an instrumental view d. ethical relativism 23. Serge is from a country where not wearing a tie has become the norm. However, Serge is conducting business in Hillistan where not wearing a tie is considered rude and inappropriate. By wearing a tie in Hillistan, Serge is adhering to which guideline of managing ethics overseas? a. ethical imperialism b. respect for local traditions c. respect for institutional context d. respect for human dignity and basic rights 24. Which of the following statements is NOT true of corruption? a. Ethics serve to combat corruption. b. Corruption distorts the basis that competition should be based on products and services, causing misallocation of resources and slowing economic development. c. Corruption encourages foreign direct investment (FDI). d. Corruption is defined as the abuse of public power for private benefits usually in the form of bribery, 25. The _____, enacted by the US Congress in 1977, bans bribery of foreign officials. a. Corruption of Foreign Public Officials Act (CFPOA) b. Foreign Assistance Act c. Foreign Intelligence Surveillance Act (FISA) d. Foreign Corrupt Practices Act (FCPA) 26. The Foreign Corrupt Practices Act (FCPA) makes exceptions for _____ to get through customs abroad. a. bribes b. small grease payments c. small amounts of black money d. smuggled goods27. _____ are the prevailing practices of relevant players that affect the focal individuals and firms. a. Contexts b. Clusters c. Ethics d. Norms 28. In the context of strategic response to ethical challenges, which of the following statements is a characteristic of a reactive strategy? a. It is passive. b. It readily accepts responsibility. c. It focuses on regulatory compliance. d. It helps anticipate institutional changes and involves doing more than is required. 29. In the context of strategic response to ethical challenges, which of the statements is true of firms adopting a reactive strategy? a. They do not feel compelled to act when problems arise. b. They admit responsibility but fight it. c. They anticipate institutional changes and do more than is required. d. They focus on regulatory compliance. 30. In the context of strategic response to ethical challenges, which of the following statements is true of a defensive strategy? a. It is passive. b. It features emerging organizational norms to accept responsibility. c. It focuses on regulatory compliance. d. It helps anticipate institutional changes and involves doing more than is required. 31. In the context of strategic response to ethical challenges, which of the following is a difference between a defensive strategy and an accommodative strategy? a. A defensive strategy involves denying responsibility and doing less than is required, whereas an accommodative strategy acknowledges only partially the responsibility issues raised by a firm's stakeholders. b. A defensive strategy is passive, whereas an accommodative strategy is active. c. A defensive strategy involves doing the least that is required, whereas an accommodative strategy involves doing all that is required. d. A defensive strategy attempts to satisfy stakeholder demands, whereas an accommodative strategy accepts and anticipates stakeholder interests. 32. In the context of strategic response to ethical challenges, which of the following statements is true of an accommodative strategy? a. Higher levels of ethical responsibility, beyond the minimum of what is legally required, are accepted. b. The need to take action is neither internalized through cognitive beliefs nor embodied in any practicable norm. c. Firms adopting this strategy do not feel compelled to act when problems arise, and denial is usually the first line of defense. d. Firms adopting this strategy anticipate institutional changes and do more than is required. 33. In the context of strategic response to ethical challenges, firms that adopt a(n) _____ do more than is required. a. reactive strategy b. accommodative strategy c. proactivestrategy d. defensive strategy 34. In the context of strategic response to ethical challenges, which of the following statements is true of firms adopting a proactive strategy? a. They admit responsibility but fight it. b. They use denial as their first line of defense. c. They do not feel compelled to act when problems arise. d. They anticipate institutional changes. 35. Which of the following statements is true of cultural intelligence? a. It suggests that managers should adopt an ethnocentric attitude. b. It emphasizes the importance of stereotypes. c. It passes through three phases—awareness, knowledge, and skills. d. It features emerging organizational norms to accept responsibility. 36. Which of the following statements is true of the awareness phase in the acquisition of cultural intelligence? a. You have to agree with all of the values of other cultures. b. It is the third phase in the acquisition of cultural intelligence. c. It involves developing an appreciation for other cultures. d. As an expat your employer will give you ample time to develop awareness of other cultures. 37. Which of the following statements is true of awareness, the first phase in the acquisition of cultural intelligence? a. It refers to the appreciation of people from other cultures. b. It is the ability to identify the symbols, rituals, and taboos in other cultures. c. It is also known as cross-cultural literacy. d. It is the ability to stereotype other cultures. 38. Which of the following statements is true of the skills phase in the acquisition of cultural intelligence? a. Skills are best taught in a classroom. b. It is the first phase in the acquisition of cultural intelligence. c. It is also known as cross-cultural literacy. d. Skills are based on the awareness and knowledge of other cultures. Chapter 4 1. Which of the following statements is true of a SWOT analysis? a. It identifies a firm's strengths, weaknesses, opportunities, and threats. b. It deals with external opportunities and threats, constrained solely by formal rules of the game. c. It concentrates exclusively on a firm's internal strengths and weaknesses. d. It is concerned with a firm's capacity to dynamically deploy resources, constrained solely by informal rules of the game. 2. Which of the following best defines resources? a. They are the key to examine whether a firm has capabilities to perform a particular activity in a manner superior to competitors. b. They are the tangible and intangible assets a firm uses to choose and implement its strategies. c. They refer to the socially complex ways of organizing typical of many firms. d. They refer to the difficulty of identifying the causal determinants of successful firm performance. 3. _____ are the tangible and intangible assets a firm uses to choose and implement its strategies. a. Complementary assets b. Commoditiesc. Value chains d. Capabilities 4. Which of the following statements is true of tangible resources? a. They are observable. b. They include reputational resources and capabilities. c. They include human and innovational resources. d. They are hard to quantify. 5. Which of the following statements is true of intangible resources? a. They are observable and quantifiable. b. They include technological and organizational resources and capabilities. c. They include financial and physical resources. d. They are hard to observe and more difficult to quantify. 6. Which of the following is a feature of a value chain analysis? a. It concentrates on a firm's internal strengths and weaknesses. b. It identifies a firm's opportunities and threats. c. It consists of primary activities and support activities. d. It deals with external opportunities, enabled by formal rules of the game. 7. Which of the following is an example of a tangible resource? a. a firm's stock holdings b. a firm's reputation c. a firm's employees d. the training and development of an expatriate manager 8. What question do managers ask during the first stage of SWOT analysis? a. "Is this activity valuable, rare, and difficult to imitate?" b. "What is the best location for offshoring?" c. "Do we have the resources and capabilities that add value in a way better than rivals do?" d. "Do we really need to perform this activity in-house?" 9. A firm recognizes that one of their in house activities is gaining a high degree of commoditization on the world market. They should: a. work in house and globally to reduce commoditization b. continue operations as normal c. consider outsourcing d. add proprietary value to the service by any means necessary 10. Which of the following is an example of offshoring? a. Dell producing computer components in Michigan b. Apple using low cost workers in India for IT customer service c. General Motors' in house production of auto parts d. Detroit automakers bringing jobs back to Michigan from Mexico 11. Critics of offshoring argue that: a. Offshoring produces a net positive result for the economies of developing nations. b. Large firms in developed economies use increasingly ethical means to gain labor overseas and employees areconsidered valuable assets to the firm. c. Most of jobs that are sent to developing nations are in manufacturing, resulting in a net loss of manufacturing jobs for the developed country. d. Native White collar workers in high-end areas such as design, R&D, and IT/ BPO are losing jobs, resulting in a negative net impact on the developed economy. 12. Which of the following statements is true of a value chain analysis? a. It forces managers to think about firm resources and capabilities at an activity-based level. b. It identifies a firm's strengths, weaknesses, opportunities, and threats. c. It deals with external opportunities and threats, constrained by formal rules of the game. d. It consists of only one set of primary activities. 13. _____ is examining whether a firm has the resources and the capabilities to perform a particular activity in a manner superior to competitors. a. Benchmarking b. Commoditization c. Reshoring d. Ambidexterity 14. Which of the following statements in true of outsourcing? a. It is the process of acquiring necessary capabilities and resources in-house. b. It involves the difficulty of identifying the actual cause of a firm's successful performance. c. It involves turning over an activity to an outside supplier that will perform it on behalf of the focal firm. d. It involves moving formerly offshored activities back to the home country of the focal firm. 15. Which of the following statements is true of offshoring? a. It means moving outsourced activities back to the home country. b. It means setting up subsidiaries abroad. c. It means outsourcing to a domestic firm. d. It means outsourcing to an international firm. 16. In the context of a VRIO framework, _____ can lead to competitive advantage. a. only substitutable resources b. only imitable resources c. only easily available resources d. only value-adding resources 17. If firms are unable to get rid of non-value-adding assets, they are most likely to _____. a. suffer from below-average performance b. have only temporary competitive advantage c. to increase the number of employees d. become successful 18. A firm's valuable but common resources and capabilities are most likely to lead to: a. competitive advantage. b. competitive parity. c. above-average performance. d. extinction 19. Which of the following statements is true of valuable and rare resources and capabilities that are easy to imitate? a. They will provide temporary competitive advantage.b. They will provide competitive parity but not competitive advantage. c. They will lead to below-average firm performance. d. They will lead to persistently above-average firm performance. 20. Which of the following is a reason why imitation is difficult? a. Social complexity b. Ambidexterity c. Causal ambiguity d. Offshoring 21. _____ refers to the difficulty of identifying the causal determinants of successful firm performance. a. Social complexity b. Causal ambiguity c. Ambidexterity d. Causal resolution 22. Which of the following statements is true of complementary assets? a. They lead to competitive parity but not competitive advantage. b. They are unnecessary resources for a firm. c. They include only innovation. d. They enable a firm to gain a competitive advantage. 23. Which of the following statements best defines complementary assets? a. They are the resources and capabilities that a firm's competitor has to perform a particular activity in a superior manner. b. They are the intangible assets that drain a firm's capital resources. c. They are the tangible assets that drain a firm's capital resources. d. They are the combination of numerous resources and assets that enable a firm to gain a competitive advantage. 24. In the context of management literature, which of the following statements is true of ambidexterity? a. It describes capabilities to simultaneously deal with paradoxes. b. It refers to the socially complex ways of organizing typical of many firms. c. It is the difficulty of identifying the causal determinants of successful firm performance. d. It leads to competitive parity but not an advantage. 25. In emerging economies, _____ to manage both market forces and government forces simultaneously—as a bundle of complementary resources—is key to navigate the competitive waters. a. causal ambiguity b. commoditization c. social complexity d. ambidexterity 26. _____ refers to how firms overcome cultural differences and are organized as one corporate entity and achieve corporate goals.a. Benchmarking b. Commoditization c. Causal ambiguity d. Social complexity 27. The "LEGO" view of a firm in which the firm can be assembled from modules of technology and people fails to realize that: a. benchmarking can be a source of competitive advantage. b. commoditization can be a source of competitive advantage. c. social complexity can be a source of competitive advantage. d. the substitutability of resources can be a source of competitive advantage. 28. According to the VRIO framework, if a firm has a resource or capability that is valuable, rare, and costly or difficult to imitate, yet is not gaining a sustained competitive advantage, then it is likely that the firm: a. is utilizing ambidexterity to its advantage b. has a high degree of casual ambiguity c. is not properly organized d. is suffering from competitive parity 29. A successful Brazilian agricultural firm wants to expand into a new region of the country, but after spending millions of dollars to develop the region, failed to get proper permits from the government and were unsuccessful with their expansion. This is an example of a firm failure in: a. causal ambiguity b. commoditization c. social complexity d. ambidexterity 30. Which of the following statements is true of the "LEGO" view of a firm? a. It fails to realize that social capital associated with complex relationships and knowledge permeating many firms can be a source of competitive advantage. b. It states that in order to attain competitive advantage, market-based and nonmarket- based (political) capabilities need to complement each other c. It is another way of saying "casual ambiguity" d. It is a term used to describe a firm's ambidexterity 31. Harpin Co. has valuable, rare, and hard-to-imitate capabilities that are organizationally embedded and exploited. Harpin Co. can expect _____ firm performance. a. below average b. average c. above average d. persistently above average 32. ______ enables firms to anticipate future needs and move early to identify, develop, and leverage resources and capabilities for future competition.a. Social complexity b. Valuable, rare, and hard-to-imitate resources c. Easily imitable capabilities d. Strategic foresight 33. Which of the following determines the success and failure of firms around the globe? a. Non-value-adding capabilities b. Valuable, rare, and hard-to-imitate resources c. Easily imitable capabilities d. Easily substitutable and imitable resources 34. Which of the following implications is suggested by the resource-based view for managers' success in global business? a. Managers need to build firm strengths based on the VRIO framework. b. Imitation and benchmarking are important and successful strategies. c. Managers need to build up resources and capabilities for internal competition. d. Managers should create jobs that can be easily outsourced. 35. Using the VRIO framework, a _____ is most likely to help managers make decisions on what capabilities to focus on in-house and what to outsource. a. value chain analysis b. discourse analysis c. static analysis d. sociological analysis 36. In the context of the resource-based view, which of the following is least likely to be a successful strategy in global business? a. Assessing how one's resources and capabilities compare with those of their rivals b. Imitating or benchmarking the best in the industry relentlessly c. Building firm strength based on VRIO framework d. Using a value chain analysis to make decisions on what capabilities to focus on in-house and what to outsource 37. Which of the following statements is most likely to be true of best-performing firms globally? a. They often create new ways of adding value. b. They create competitive advantage by meticulously replicating every resource possessed by winning firms. c. They relentlessly benchmark the best in the industry to create a sustainable competitive advantage. d. They build common capabilities that are easy to imitate. Chapter 5 1. Which of the following statements best describes merchandise trade? a. It is the buying and selling of intangible services. b. It exclusively refers to intangible products sold abroad. c. It exclusively refers to the buying of tangible services from abroad. d. It refers to the tangible products being bought and sold.2. Which of the following statements best describes service trade? a. It is the buying and selling of intangible services. b. It exclusively refers to intangible products sold abroad. c. It exclusively refers to the buying of tangible services from abroad. d. It refers to the tangible products being bought and sold. 3. Trade deficit occurs when a nation _____. a. imports as much as it exports b. imports more than it exports c. only exports d. engages only in domestic trade 4. Which of the following statements best defines balance of trade? a. It is the country-level trade surplus or deficit. b. It is the economic condition when a nation imports more than it exports. c. It is the cost of pursuing one activity at the expense of another activity. d. It is the extent to which different countries possess various factors of production for trade. 5. Which of the following is an example of a trade surplus? a. Sweden exports more than it imports b. Portugal has an absolute advantage over England in grape production c. Guatemala imports more than it exports d. Taiwan imports more rice than it export 6. According to the resource-based view, why are there economic gains from international trade? a. Free market forces determine the buying and selling of goods and services with little or no government intervention. b. The wealth of the world is fixed and a nation that exports more than it imports will enjoy the net inflows of gold and silver and become richer. c. Different rules governing trade are designed to determine how such gains are shared. d. Some firms in one nation generate exports that are valuable, unique, and hard to imitate that firms from other nations find it beneficial to import 7. Adam Smith wrote The Wealth of Nations in 1776 to challenge which earlier economic theory? a. mercantilism b. free trade theory c. comparative advantage d. strategic trade theory 8. The relative advantage in one economic activity that one nation enjoys in comparison with other nations is known as _____. a. comparative advantage b. free trade c. absolute advantage d. strategic trade 9. The Heckscher-Ohlin theory is also known as the ____. a. strategic trade theory b. diamond model c. factor endowment theoryd. product life cycle theory 10. Which of the following is NOT an aspect of competitive advantage within the theory of national competitive advantage of industries? a. domestic demand conditions b. firm structure, strategy, and rivalry c. country factor endowments d. national protectionism 11. The theories of international trade assume perfect _____, which is defined as the assumption that a resource used in producing for one industry can be shifted and put to use in another industry. a. strategic trade b. institutional mobility c. resource mobility d. Resource endowment 12. Which of the following statements is true of the theory of mercantilism? a. It suggested that the wealth of the world was fixed. b. It is the relative advantage in one economic activity that one nation enjoys. c. It proposed the first dynamic theory to account for changes in the patterns of trade over time. d. It is also referred to as a modern trade theory. 13. _____ is the idea that government should actively guard domestic industries from imports and vigorously promote exports. a. Trade embargo b. Trade boycott c. Protectionism d. Strategic trade 14. Which of the following statements is true of free trade? a. It is the idea that government should actively guard domestic industries from imports and vigorously promote exports. b. It suggests that the wealth of the world is fixed, so a nation that exports more than it imports would enjoy the net inflows of gold and silver and become richer. c. It is the idea that open market forces should determine the buying and selling of goods and services with little or no government intervention. d. It is the relative advantage in one economic activity that one nation enjoys in comparison with other nations. 15. According to Adam Smith, a nation that is more efficient than anyone else in the production of any good or service is said to have a(n) _____ in the production of that good or service. a. late-mover advantage b. first-mover advantage c. comparative advantage d. absolute advantage 16. Which of the following statements is true of opportunity cost? a. It is the expense that a firm has to pay, independent of any business activity. b. It is the cost that rises as production increases and falls as production decreases. c. It is the cost of pursuing one activity at the expense of another activity. d. It is the change in the total cost arising when the quantity produced is incremented by one unit.17. Which of the following statements is true of the Heckscher-Ohlin theory? a. It refers to the cost of pursuing one activity at the expense of another activity, given the alternatives. b. It is the first dynamic theory to account for changes in the factors of production such as labor, land, and technology over time. c. It proposed that nations will develop comparative advantages based on their locally abundant factors. d. It is the idea that free market forces should determine the buying and selling of goods and services with little or no government intervention. 18. Which of the following statements is true of the product life cycle theory? a. It is the first dynamic theory to account for changes in the patterns of trade over time. b. It suggested that the wealth of the world was fixed. c. It is the idea that governments should actively protect domestic industries from imports. d. It was advocated by Adam Smith in 1776. 19. Which of the following is a reason why the product life cycle theory is criticized? a. It argues that absolute and comparative advantages stem from different factor endowments. b. It assumes that China is absolutely inefficient in the production of both wheat and aircraft. c. It assumes that by trying to be self-sufficient and producing a wide range of goods, the wealth of a nation is reduced. d. It assumes that the United States will always be the lead innovation nation for new products 20. Which of the following statements is true of strategic trade theory? a. It is the idea that free market forces should determine the buying and selling of goods and services with little or no government intervention. b. It proposes that governments help a few industries, such as those centered on clean energy like electric cars and batteries. c. It is the first dynamic theory to account for changes in the patterns of trade over time. d. It argues that by trying to be self-sufficient and producing a wide range of goods, the wealth of a nation is reduced. 21. Which of the following is a reason why strategic trade theory is criticized? a. Most products are created to satisfy domestic demand first. b. Many scholars and policy makers are uncomfortable with government intervention. c. Many industries claim that they are not strategically important. d. Most countries are rich in natural resources but short on population. 22. The _____ is popularly known as the diamond theory because its principal architect, Harvard strategy professor Michael Porter, presents it in a diamond-shaped diagram. a. theory of national competitive advantage of industries b. theory of absolute advantage c. product life cycle theory d. Heckscher-Ohlin theory 23. Which of the following statements is true of the theory of national competitive advantage of industries? a. It is the first multilevel theory to realistically connect firms, industries, and nations. b. It proposes that governments help only a few strategically important industries. c. It was first proposed in the 1960s by the American economist Raymond Vernon. d. It is the idea that governments should actively protect domestic industries from imports and vigorously promote exports. 24. Which of the following statements is true of import tariff? a. It discourages imports using various means such as subsidies, import quotas, and export restraints.b. It is a government payment to domestic firms. c. It is imposed on a good brought in from another country. d. It includes local content requirements, administrative policies, and antidumping duties. 25. Singapore recently banned imports of Malaysian water guns, citing safety concerns. This is an example of: a. import quotas b. local content requirements c. administrative policies d. antidumping duties 26. ____ is an international agreement that shows that an exporting country voluntarily agrees to restrict its exports. a. import quota agreement b. voluntary export restraints c. trade embargo d. nontariff barrier 27. Which of the following is true of local content requirements? a. They allow that 100% of the value of a good may originate from foreign markets. b. It includes a cost levied on imports that have been sold below cost to unfairly drive domestic firms out of business c. They are Politically motivated trade sanctions d. They are rules stipulating that a certain proportion of the value of the goods made in one country must originate from that country 28. Which of the following statements is true of deadweight costs? a. They are net losses that occur in an economy as the result of tariffs. b. They are the cost of pursuing one activity at the expense of another activity. c. They are the change in the total cost that arises when the quantity produced is incremented by one unit. d. They are the material, labor, and distribution costs associated with producing a product. 29. Which of the following statements is true of non-tariff barriers? a. It is a government payment to domestic firms. b. It is a tax imposed on a good brought in from another country. c. It includes subsidies, import quotas, and export restraints. d. It is a means of encouraging imports by placing quotas on imported goods. 30. Which of the following definitions best describe import quotas? a. They are government payments to domestic firms. b. They are restrictions on the quantity of goods that can be brought into a country. c. They are rules stipulating that a certain proportion of the value of the goods made in one country must originate from that country. d. They are bureaucratic rules that make it harder to import foreign goods. 31. The oldest and most frequently used economic argument against free trade is the urge to _____. a. shield only commodity producers b. protect domestic industries, firms, and jobs from unfair foreign competition c. protect defense-related industries d. increase agricultural subsidies in developing countries to promote competition 32. Which of the following is an economic argument against free trade?a. The need to shield only commodity producers b. The need to shield infant industries c. The need to protect defense-related industries d. The need to protect international industries 33. _____ are politically motivated trade sanctions against foreign countries to signal displeasure. a. Trade subsidies b. Trade tariffs c. Trade quotas d. Trade embargos 34. In order to ensure the success of firms' exports, managers need to: a. nurture the current comparative advantage of a location. b. keep away from politics. c. keep away from new locations. d. realize that comparative advantage is fixed. 35. _____ can determine the success and failure of a firm's exports around the globe. a. Realizing that comparative advantage is fixed b. Being politically active to advance the gains from international trade c. Realizing that absolute advantage is fixed d. Developing capabilities that are substitutable and easy to imitate