International Business, 12e (Hill)
Chapter 1 Globalization
1) Since Wally's Whistles is a medium-size business, it wouldn't benefit from
globalization.
Answer: FALSE
Explanation: A company does not have to be the size of multinational giants to facilitate,
and benefit from, the globalization of markets. In the United States, for example,
according to the International Trade Administration, more than 300,000 small and
medium-size firms with fewer than 500 employees exported in 2017, accounting for 98
percent of the companies that exported that year.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) Globalization of production can help companies lower their overall cost structure or
improve the quality or functionality of their product offering.
Answer: TRUE
Explanation: The globalization of production refers to the sourcing of goods and services
from locations around the globe to take advantage of national differences in the cost and
quality of factors of production. By doing this, companies hope to lower their overall cost
structure or improve the quality or functionality of their product offering, thereby
allowing them to compete more effectively.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
,3) Johann's business does not make consumer products; therefore, it would not be likely
to participate in global markets.
Answer: FALSE
Explanation: Most global markets currently are not markets for consumer products—
where national differences in tastes and preferences are still often important enough to act
as a brake on globalization—but markets for industrial goods and materials that serve a
universal need the world over.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) Outsourcing is a process that is limited to manufacturing enterprises.
Answer: FALSE
Explanation: Early outsourcing efforts were primarily confined to manufacturing
activities. Increasingly, however, companies are taking advantage of modern
communications technology, particularly the Internet, to outsource service activities to
low-cost producers in other nations.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The World Bank has focused on policing the world trading system and making sure
nation-states adhere to the rules laid down in trade treaties.
Answer: FALSE
Explanation: The World Trade Organization is primarily responsible for policing the
world trading system and making sure nation-states adhere to the rules laid down in trade
treaties signed by WTO member states. The World Bank was set up to promote economic
development.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
,6) When Cyprus had a financial crisis, it went to the World Bank, known as the lender of
last resort, to bail it out.
Answer: FALSE
Explanation: The IMF was established to maintain order in the international monetary
system. It is often seen as the lender of last resort to nation-states whose economies are in
turmoil and whose currencies are losing value against those of other nations.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) One of the UN's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development.
Answer: TRUE
Explanation: Although the UN is perhaps best known for its peacekeeping role, one of
the organization's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development—all
issues that are central to the creation of a vibrant global economy.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The Uruguay Round, finalized in December 1993, reduced protection for patents,
trademarks, and copyrights.
Answer: FALSE
Explanation: Under the umbrella of GATT, the most recent negotiations to be
completed, known as the Uruguay Round, were finalized in December 1993. The
Uruguay Round provided enhanced protection for patents, trademarks, and copyrights.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
, 9) "Beggar thy neighbor" retaliatory trade policies involved countries progressively
lowering trade barriers against each other, which contributed to the Great Depression of
the 1930s.
Answer: FALSE
Explanation: The typical aim of tariffs on imports of manufactured goods was to protect
domestic industries from foreign competition. One consequence, however, was "beggar
thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers
against each other. Ultimately, this depressed world demand and contributed to the Great
Depression of the 1930s.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
10) Rivers Inc., a U.S.-based sports apparel manufacturer, sets up a production unit in
China to take advantage of the lower labor costs there. This is an example of foreign
direct investment.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) World Bank gives aid of $100 million to Kenya for creating rural health care
facilities. This is an example of foreign direct investment.
Answer: FALSE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Chapter 1 Globalization
1) Since Wally's Whistles is a medium-size business, it wouldn't benefit from
globalization.
Answer: FALSE
Explanation: A company does not have to be the size of multinational giants to facilitate,
and benefit from, the globalization of markets. In the United States, for example,
according to the International Trade Administration, more than 300,000 small and
medium-size firms with fewer than 500 employees exported in 2017, accounting for 98
percent of the companies that exported that year.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) Globalization of production can help companies lower their overall cost structure or
improve the quality or functionality of their product offering.
Answer: TRUE
Explanation: The globalization of production refers to the sourcing of goods and services
from locations around the globe to take advantage of national differences in the cost and
quality of factors of production. By doing this, companies hope to lower their overall cost
structure or improve the quality or functionality of their product offering, thereby
allowing them to compete more effectively.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
,3) Johann's business does not make consumer products; therefore, it would not be likely
to participate in global markets.
Answer: FALSE
Explanation: Most global markets currently are not markets for consumer products—
where national differences in tastes and preferences are still often important enough to act
as a brake on globalization—but markets for industrial goods and materials that serve a
universal need the world over.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) Outsourcing is a process that is limited to manufacturing enterprises.
Answer: FALSE
Explanation: Early outsourcing efforts were primarily confined to manufacturing
activities. Increasingly, however, companies are taking advantage of modern
communications technology, particularly the Internet, to outsource service activities to
low-cost producers in other nations.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The World Bank has focused on policing the world trading system and making sure
nation-states adhere to the rules laid down in trade treaties.
Answer: FALSE
Explanation: The World Trade Organization is primarily responsible for policing the
world trading system and making sure nation-states adhere to the rules laid down in trade
treaties signed by WTO member states. The World Bank was set up to promote economic
development.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
,6) When Cyprus had a financial crisis, it went to the World Bank, known as the lender of
last resort, to bail it out.
Answer: FALSE
Explanation: The IMF was established to maintain order in the international monetary
system. It is often seen as the lender of last resort to nation-states whose economies are in
turmoil and whose currencies are losing value against those of other nations.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) One of the UN's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development.
Answer: TRUE
Explanation: Although the UN is perhaps best known for its peacekeeping role, one of
the organization's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development—all
issues that are central to the creation of a vibrant global economy.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The Uruguay Round, finalized in December 1993, reduced protection for patents,
trademarks, and copyrights.
Answer: FALSE
Explanation: Under the umbrella of GATT, the most recent negotiations to be
completed, known as the Uruguay Round, were finalized in December 1993. The
Uruguay Round provided enhanced protection for patents, trademarks, and copyrights.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
, 9) "Beggar thy neighbor" retaliatory trade policies involved countries progressively
lowering trade barriers against each other, which contributed to the Great Depression of
the 1930s.
Answer: FALSE
Explanation: The typical aim of tariffs on imports of manufactured goods was to protect
domestic industries from foreign competition. One consequence, however, was "beggar
thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers
against each other. Ultimately, this depressed world demand and contributed to the Great
Depression of the 1930s.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
10) Rivers Inc., a U.S.-based sports apparel manufacturer, sets up a production unit in
China to take advantage of the lower labor costs there. This is an example of foreign
direct investment.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) World Bank gives aid of $100 million to Kenya for creating rural health care
facilities. This is an example of foreign direct investment.
Answer: FALSE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
