A holder of a _____ estate has a possessory but not an ownership interest.

A) fee simple absolute

B) life

C) conditional

D) leasehold

Answer: D

A life estate:

A) is granted only for a period of 30 years to an individual.

B) typically passes to the heirs when the life holder dies.

C) typically goes to another party, designated by the original grantor, on the occasion of the life holder's death.

D) possesses the same interest as the owner of a fee simple absolute, but the future holder cannot claim any damages from the life holder.

Answer: C

Beck, the elder son of Ted, recently claimed that he was the owner of the house where he lived with his parents (Ted and his wife) and his younger sister Lily. However, Ted claimed that he was the true owner as the property was in his name and he had not given the property to his son. Beck, however, stated that he had been living in the place for the past 28 years and has also paid taxes out of his salary and other maintenance charges to take care of the property. The scenario best exemplifies a case of:

A) bailment.

B) adverse possession.

C) condemnation.

D) mortgage.

Answer: B

Laura was riding her new motorbike in a residential area. She had to swerve suddenly to avoid hitting a small child who had run onto the street after a ball. As a result, Laura hit a tree and fractured three ribs and her right arm. The motorbike also sustained considerable damage. Laura sued the father of the child who was present at the scene of the accident for negligence, but in court the defense argued that Laura had exceeded the speed limit. Which defenses to negligence has been used here by the defendant?

A) Negligence per se

B) Contributory negligence

C) Assumption of the risk

D) Superseding cause

Answer: B

Ian, a door-to-door salesman, filed a negligence case against Mark. While ringing the doorbell on Mark's front porch, he was bitten by a venomous snake that Mark kept as a pet. Ian had no previous warning of the snake being loose. In this scenario, Ian is most likely to have filed for damages under _____.

A) intentional tort

B) strict liability

C) negligence per se

D) last-clear-chance doctrine

Answer: B

To establish proximate cause in a negligence claim, it is necessary to prove that the:

A) damages or losses suffered by a plaintiff were above $5 million.

B) plaintiff would have suffered losses even if the defendant had fulfilled his or her duty of care.

C) defendant's actions were intended to cause injury to the plaintiff.

D) defendant could reasonably foresee the damages that the plaintiff suffered as a result of his or her action.

Answer: D

To win a negligence case after it has been established that the defendant owes a duty to the plaintiff, it must be proved that the:

A) defendant intended to cause injury.

B) defendant failed to live up to the standard of care.

C) plaintiff suffered damages above $5 million.

D) plaintiff could not avoid the situation.

Answer: B

What is the outcome if a defendant successfully proves contributory negligence?

A) The plaintiff will be denied any recovery of damages.

B) The defendant has to pay for half the damages incurred by the plaintiff.

C) The plaintiff and the defendant will be incarcerated for three months.

D) The plaintiff will pay a sum to the defendant for filing a case.

Answer: A

A contract entered into by a person suffering from mental problems yet who still understands the nature of the contract and the obligations it imposes is considered ________.

Answer: Valid

When is a contract voidable?

A) When the contract is entered into by a minor

B) When the contract is entered into by a person adjudicated insane

C) When the contract is entered into by a person adjudicated as a habitual drunkard

D) When the contract is entered into by an intoxicated person who understands his or her contractual obligations

Answer: A

Which of the following elements of a contract refers to the mental ability of a person to understand his or her rights and obligations under a contract and comply with the terms? 

A) Fair consideration

B) Recognizance

C) Legal capacity

D) Agreement

Answer: C

In a contract made by a minor, the: 

A) minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority

B) minor can choose to disaffirm only a portion of the contract

C) other party will have no recourse against the minor in any state if the consideration has been damaged or destroyed

D) adult parties to the contract can disaffirm the contract

Answer: A

When there is no dispute over the amount of debt or existence of debt, it is referred to as a _____.

Answer: Liquidated debt

In a liquidated debt, ________.

A) the parties in a contract come to a settlement by entering into an accord and satisfaction

B) the debtor and the creditor disagree about the amount of money owed

C) once the debtor provides a different, agree, performance, the debt is satisfied and the creditor may not collect anything else

D) if the debtor pays the money agreed to, the creditor cannot sue for the balance it believes is owed

Answer: C

Maya pays $5,000 and purchases a car from her friend, Jane. Later, Maya realizes that the car is worth less than $3,000. Which of the following statements will be true if Maya plans to sue her friend? 

A) The court will hold Jane liable as she made an illusory promise

B) Jane will be held guilty because her action is a breach of promissory estoppel

C) Maya cannot sue Jane because the court seldom considers adequacy of consideration

D) The court will hold the contract to be invalid as it involves falsification of data

Answer: C

Kevin is offered a job by a reputed company in a different city. To take up the new job, Kevin quits his previous job and moves to the new city along with his family. When he shows up at work, he is told that there is no job. Kevin can sue the employer under the theory of ________.

Answer: Promissory Estoppel

If a party to a contract asks for an additional amount of money and agrees to do more work than the contract requires, the result is that the promise:

A) Becomes an option contract

B) to do the extra work is an illusory promise

C) to do the extra work is valid consideration

D) becomes a part of the party's preexisting duty

Answer: C

Lucas is planning to buy a house owned by Janet. He gives her an initial amount of $10,000 to hold the offer open for a 45-day period. Janet will deduct the $10,000 from the purchase price if Lucas purchases the property within those 45 days. If he does not, Janet can keep the $10,000 and offer the house to another party. Which of the following contracts does this scenario best illustrate?

Answer: Option contract

Felipe, Adam, and Shirley are neighbors. Felipe overhears Adam's offer to sell an antique clock to Shirley for $3,000. Under these circumstances, _____.

A) Shirley cannot make a counteroffer to Adam to buy the clock for $2,500

B) Felipe makes a new offer to Adam when he offers to buy the clock for $3,000

C) Felipe accepts the original offer made to Shirley when he accepts to buy the clock from Adam for $3,000

D) Adam cannot make a new offer to sell the clock for $3,500 to Felipe

Answer: B

Jason agrees to buy Sara's car for $10,000. However, Sara tells Jason that she will only sell the car to him if he pays $12,000. In this scenario, Sara makes a(n):

Answer: Counteroffer

Which of the following conditions must be present for an offer to have a legal effect? 

A) Invitation to negotiate

B) Definite and certain terms

C) Neutral third parties

D) Expression of interest in an exchange

Answer: B

A(n) ____ is defined as a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.

Answer: Contract

Which of the following statements accurately brings out the difference between bilateral and unilateral contracts?

A) Unilateral contracts call for actions, not promises, whereas bilateral contracts involve promises in exchange for promises

B) Bilateral contracts are implied, whereas unilateral contracts are explicitly expressed

C) Bilateral contracts come under the jurisdiction of common law, whereas unilateral contracts come under the UCC

D) Unilateral contracts are made in writing, whereas bilateral contracts are made orally

Answer: A

What falls under Article 2 of the UCC?

Answer: Contract for the sale of a good

In which of the following situations do the parties to a contract lack contractual capacity? 

A) When the parties to the contract are from different countries

B) When the parties to the contract are from different states

C) When one of the parties to the contract is intoxicated

D) When one of the parties to the contract is physically impaired

Answer: C

What defense to a crime is established by the irresistible-impulse test?

Answer: Insanity

____ is best described as the intentional burning of another's dwelling

Answer: Arson

The term ________ refers to a global company that thrives on seeking unique ideas and insights from locations around the world and then leveraging that knowledge in international markets.

A) multidomestic

B) domestic

C) metanational

D) cross-cultural

Answer: C) metanational

Marrin Associates is an MNE with operations in Hong Kong, India, and Canada. The firm strives to leverage its core competencies worldwide, reduce costs by exploiting location economics, and adapt when efficient to local conditions. Marrin is most likely following a(n) ________ strategy.

A) global

B) multidomestic

C) transnational

D) international

Answer: C) transnational

Which of the following is the primary limitation of the transnational strategy?

A) poor local adaptation

B) cross-unit coordination difficulties 

C) duplication of subsidiary activities 

D) inability to leverage core competencies

Answer: B) cross-unit coordination difficulties

An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations, both independently and jointly, and then diffused throughout the worldwide organization, is following a ________ strategy.

A) transnational

B) multidomestic

C) global

D) matrix

Answer: A) transnational

Which strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader?

A) international strategy

B) multidomestic strategy

C) global strategy

D) transnational strategy

Answer: C) global strategy

The MNE that applies a global strategy aims to ________.

A) compete essentially the same way wherever the company does business

B) empower local operations to make decisions about value activities

C) adapt activities to the industry standards in critical markets

D) customize its business practices to consumer expectations

Answer: A) compete essentially the same way wherever the company does business

A global strategy tends to be more successful when ________.

A) buyers are looking for customized products at bargain prices

B) the industry's product is a commodity

C) entry barriers are low for new firms

D) suppliers have little bargaining power

Answer: B) the industry's product is a commodity

Google essentially views the entire world as one market and assumes that there are no fundamental differences among countries with regard to consumers' preferences. Google is engaging a(n) ________ strategy.

A) international

B) multidomestic

C) transnational

D) global

Answer: D) global

A disadvantage of the ________ strategy is that firms that adopt this strategy can decentralize too much autonomy to national subsidiaries.

A) multidomestic

B) continental

C) international

D) transnational

Answer: A) multidomestic

Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local conditions. Many subsidiaries have their own manufacturing, marketing, research, and human resource functions. This value chain configuration illustrates the ________ strategy.

A) transnational

B) global

C) multidomestic

D) international

Answer: C) multidomestic

Preston Electronics is an MNE with facilities located in Taiwan, Singapore, and Germany. Preston gives its local operations the authority to adapt value activities to prevailing local economic, political, legal, and cultural conditions. Preston is most likely using a(n) ________ strategy.

A) global

B) multidomestic

C) international

D) continental

Answer: B) multidomestic

Darvin Foods is an MNE that is in the process of revising its international business strategy. Most of the firm's top executives believe that Darvin should implement a multidomestic strategy. Which of the following conditions would most likely support this type of strategy? 

A) a high need for local responsiveness and a low need to reduce costs via global integration

B) a high need for local responsiveness and a high need to create efficiencies via global integration

C) a low need for local responsiveness and a low need to reduce costs via global integration

D) a low need for local responsiveness and a high need to create efficiencies via global integration

Answer: A) a high need for local responsiveness and a low need to reduce costs via global integration

A distinct disadvantage of an international strategy is ________.

A) restricting the movement of core competencies to local markets

B) capitalizing on the benefits of global learning

C) customizing product offerings to local conditions

D) relying on home managers' knowledge of foreign markets

Answer: D) relying on home managers' knowledge of foreign markets

A distinct advantage of an international strategy is ________.

A) transferring core competencies to foreign markets

B) reaping benefits of global learning

C) customizing product offerings to local conditions

D) leveraging local managers' knowledge of their markets

Answer: A) transferring core competencies to foreign markets

Which of the following is NOT a disadvantage of the international strategy?

A) Headquarters can misread foreign-market opportunities and threats.

B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.

C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.

D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.

Answer: B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.

Firms that pursue a(n) ________ strategy create value by transferring core competencies from the home market to foreign markets in which local rivals lack a competitive alternative.

A) transnational

B) multidomestic

C) global

D) international

Answer: D) international

When the pressure for global integration is high and the pressure for local responsiveness is low, a company is most likely to pursue a(n) ________ strategy.

A) global

B) transnational

C) multidomestic

D) international

Answer: D) international

The integration-responsiveness (IR) grid expresses how a company's ________ is a function of the relationship between its value chain and the prevailing pressures for global integration or local responsiveness in its industry.

A) value proposition

B) target market

C) mission

D) strategy

Answer: D) strategy

In the global environment, firms use an international strategy, a multidomestic strategy, a global strategy, or a ________ strategy.

A) regional

B) standardization

C) transnational

D) locational

Answer: C) transnational

According to the integration-responsiveness (IR) grid, consumer electronics and corporate banking are two types of industries with ________ industry pressure for global integration and ________ industry pressure for local responsiveness.

A) low; low

B) high; high

C) low; high

D) high; low

Answer: B) high; high

Host governments' growing demands for increasing operational transparency will most likely spur companies to make their value chains more ________.

A) locally responsive

B) globally integrated

C) concise 

D) complex

Answer: A) locally responsive

Advantages of following a strategy of local responsiveness include the ________.

A) improved ability to transfer skills to employees in different locations

B) opportunity to adopt a global advertising program

C) ease in standardizing manufacturing methods across countries

D) flexibility to apply location-specific skills to local opportunities

Answer: D) flexibility to apply location-specific skills to local opportunities

Which of the following is NOT a factor driving local responsiveness among global firms?

A) cross-national differences in distribution channels

B) diverging consumer tastes and preferences

C) cross-national differences in product standards

D) host government support of freer international trade

Answer: D) host government support of freer international trade

Which of the following is LEAST likely to trigger the standardization of consumer preferences? 

A) intrinsic functions of money

B) global access to common media 

C) increasing nationalism

D) improved communications technologies

Answer: C) increasing nationalism

Which of the following would most likely pressure an MNE to globally integrate its value activities?

A) costs of producing in separate facilities exceeding those of producing in a single facility

B) variability in consumers' tastes and preferences shifting across countries

C) market pressures to add new product features continually

D) demands imposed by host country governments

Answer: A) costs of producing in separate facilities exceeding those of producing in a single facility

In the demand-pull versus supply-push views of the market, which of the following is best classified as a push dynamic that drives supply in the global market?

A) digitization

B) media access 

C) standardization

D) market globalization

Answer: C) standardization

No matter the country or culture, money has three fundamental features that motivate consumers around the world to maximize purchasing power by buying the highest possible quality product for the lowest possible price. These three features include all of the following EXCEPT which one?

A) scarcity

B) difficulty of acquisition

C) difficulty of allocation

D) difficulty of saving

Answer: C) difficulty of allocation

Firms that compete in the global marketplace typically face the asymmetric forces of pressures for ________ and ________.

A) global integration; local responsiveness

B) price reductions; cost reductions

C) politically sensitivity; market leadership

D) cost reductions; customer satisfaction

Answer: A) global integration; local responsiveness

Social network analysis indicates that information flows more efficiently in a(n) ________ manner.

A) collaborative

B) competitive

C) hierarchical

D) impersonal

Answer: A) collaborative

Which of the following refers to the means by which management applies the systems that link a company's value activities, whether those activities are performed in one or in many countries?

A) configuration

B) logistics

C) coordination

D) core competency

Answer: C) coordination

A ________ is a special outlook, skill, capability, or technology that runs through the firm's operations, weaving together all value activities into an integrated value chain.

A) core competency

B) value proposition

C) mission statement

D) learning curve

Answer: A) core competency

Johnson Enterprises manufactures computer chips used in cell phones. The MNE has long production runs that lower the per unit cost of each chip. The firm also purchases materials in bulk from its suppliers with whom Johnson has long-term contracts. Johnson is most likely benefiting from ________.

A) economies of scale

B) the cluster effect

C) digitization

D) location economies

Answer: A) economies of scale

Zara creates, produces, and distributes most of its products from its headquarters in Spain. Zara is most likely using a ________ configuration. 

A) concentrated

B) coordinated

C) dispersed

D) logical

Answer: A) concentrated

Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls. Citibank is exploiting ________ by running a call center in India.

A) value configuration synergies

B) location economies

C) geographic arbitrage

D) value offshoring

Answer: B) location economies

Dispersing value activities where and in how many places in the world is the issue of ________.

A) logistics

B) clustering

C) coordination

D) configuration

Answer: D) configuration

Which of the following is considered a primary activity in a company's value chain?

A) shipping

B) product design

C) systems and solutions

D) materials and equipment

Answer: B) product design

In the context of value chain analysis, the support activities of a firm include ________.

A) outbound logistics, human resources, and information systems

B) production, marketing, and operations

C) shipping and customer service

D) research and development

Answer: C) shipping and customer service

A company's value chain is best described as the ________.

A) variable sequence of converting product ideas into value for shareholders

B) mixture of activities taken to define product value standards and price points

C) discrete series of steps taken to move a product from conception to end-users

D) blueprint that must be followed to leverage the core capabilities of a global firm

Answer: C) discrete series of steps taken to move a product from conception to end-users

A useful way to understanding the purpose of strategy is to think of the firm as a(n) ________, composed of a series of distinct activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure.

A) activity network

B) value constellation

C) task succession

D) value chain

Answer: D) value chain

Successful implementation of a ________ strategy requires a company to develop unique competencies that rivals find hard, if not impossible, to match or copy.

A) differentiation

B) cost leadership

C) globalization

D) marketing

Answer: A) differentiation

A differentiation strategy works well when ________.

A) a company designs a universal product for a broad market

B) buyers believe minor product differences are irrelevant to price 

C) buyers are highly sensitive to price shifts and quality control

D) a company can continually develop products that have unique features

Answer: D) a company can continually develop products that have unique features

The essence of a differentiation strategy is to ________.

A) target the most sophisticated segment of the market

B) incorporate the greatest number of features into a product

C) offer a unique product that supports a premium price

D) outspend rivals on product advertising

Answer: C) offer a unique product that supports a premium price

A company that employs a ________ strategy creates value by generating customer insights and translating those insights into innovations.

A) differentiation

B) diversification 

C) cost leadership

D) innovation

Answer: A) differentiation

_______ are the two basic strategies for creating value and attaining a competitive advantage in an industry.

A) Diversification and niche marketing 

B) Industry leadership and market dominance

C) Customer satisfaction and product innovation

D) Cost leadership and differentiation

Answer: D) Cost leadership and differentiation

Value-Mart has achieved the status of overall low-cost producer in its industry, which means that Value-Mart ________. 

A) can strongly defend its market position in the event of a price war

B) will earn the largest profits of any company in the industry

C) makes the most appealing product in its industry

D) can block the entry of new firms into the industry

Answer: A) can strongly defend its market position in the event of a price war

A strategy that focuses on lowering operating costs is referred to as a ________ strategy.

A) differentiation 

B) cost leadership 

C) niche market

D) diversification

Answer: B) cost leadership

Which of the following is the purpose of a company's value proposition?

A) to exceed customers' expectations

B) to force competitors into a price war

C) to identify consumers for whom the company creates products

D) to explain why a consumer should buy the company's products

Answer: D) to explain why a consumer should buy the company's products

Which of the following has the greatest potential to transform an industry's structure?

A) a change in a competitor's management

B) a change in a competitor's pricing structure

C) the expansion of a distribution channel

D) the exit of a competitor from the industry

Answer: D) the exit of a competitor from the industry

As a result of the global economic crisis, the potential for profitability in all sorts of industries has ________.

A) decreased

B) increased

C) become less predictable

D) become more projectable

Answer: C) become less predictable

Improving explanatory power of the IO paradigm can be done by considering the potential for ________ to lead to a company's sustained competitive advantage.

A) bright, motivated managers

B) political trends and events

C) cultural institutions

D) new markets

Answer: A) bright, motivated managers

Which of the following is the most important constraint on the explanatory power of the IO paradigm?

A) Many industries are imperfectly competitive. 

B) Many companies are locally but not internationally competitive.

C) Most customers have perfect knowledge of the products they select.

D) Most industries have many firms that each have small market shares.

Answer: A) Many industries are imperfectly competitive.

The Industry Organization (IO) paradigm assumes which of the following?

A) stable political and cultural trends 

B) shifting foreign-exchange rates

C) perfect competition

D) unequal value

Answer: C) perfect competition

The industry organization (IO) paradigm reports that, on average, the best predictor of firm strategy is the ________.

A) company's stockpile of assets, skills, and capabilities

B) aggressiveness of a company's marketing objectives

C) link between a company's products and processes

D) structure of the industry in which it competes

Answer: D) structure of the industry in which it competes

Which of the following is the best example of a product disruption driving industry change?

A) redesign of Toyota's Prius 

B) introduction of Apple's iPad

C) AT&T's purchase of T-Mobile

D) merger of United and Continental

Answer: B) introduction of Apple's iPad

Which of the following is NOT among the five forces in the Five-Forces Model of Industry Structure?

A) governments

B) substitute products

C) potential new entrants

D) suppliers of raw materials

Answer: A) governments

Which force in Toyota's immediate environment would most likely have the greatest impact on its strategy? 

A) interest rate trends 

B) technology developments 

C) shifts in U.S. political attitudes

D) actions taken by Honda and Mercedes Benz

Answer: D) actions taken by Honda and Mercedes Benz

_____ is the framework that managers apply to determine the competitive moves and business approaches that run the company.

A) Competition

B) Growth

C) Strategy

D) Vision

Answer: C) Strategy

Phillip is an international business manager with Corbin Manufacturing. Which of the following serves as an external influence on the business decisions that Phillip makes?

A) production plant locations

B) host country monetary policy

C) supply chain linkages

D) product design standards

Answer: B) host country monetary policy

Political, legal, economic, monetary, and institutional forces comprise the ________ of international business and influence managers' actions.

A) environment

B) competition

C) culture

D) threat

Answer: A) environment

Which of the following statements about Zara is most likely FALSE?

A) Zara puts fewer products on clearance racks than most of its competitors in the industry. 

B) Zara's large advertising budget generates word-of-mouth and attracts new buyers.

C) New products and designs are delivered to Zara stores every three to four weeks. 

D) Most of Zara's products move through the firm's distribution center in Spain.

Answer: B) Zara's large advertising budget generates word-of-mouth and attracts new buyers.

What is NOT a tax issue that multinational corporations (MNCs) face?

a. Corporate income tax

b. Sales tax

c. Payroll tax

d. Property tax

e. Culture tax

Answer: e. Culture tax

What can investors who want to compare one company's profit margin to another company's profit margin utilize?

a. The financial statements to conduct a trend analysis

b. The financial statements to calculate the current ratio

c. The financial statements to perform financial ratio analysis

d. The financial statements to calculate the debt ratio

Answer: c. The financial statements to perform financial ratio analysis

What is the goal of the International Accounting Standards Board (IASB)?

a. To distinguish the financial statements from one country to another

b. To achieve domestically recognized accounting and reporting standards

c. To achieve globally recognized or harmonized standards of accounting and reporting

d. To increase the reporting requirements for multinational corporations (MNCs)

Answer: b. To achieve domestically recognized accounting and reporting standards

Which of the following best illustrates a function of generally accepted accounting principles?

a. Supplying domestic Company B with International Accounting Standards Board (IASB) requirements

b. Supplying private Company B with International Accounting Standards Board (IASB) requirements

c. Supplying domestic, publicly traded Company B with guidance in preparing financial statements

d. Supplying private Company B with guidance in preparing financial statements

Answer: d. Supplying private Company B with guidance in preparing financial statements

Which source of funds to financing international trade and investment is the International Monetary Fund (IMF) a part of?

a. Private funding

b. International stock markets

c. Government financing

d. The International Bank

e. International bond markets

Answer: c. Government financing

How do options contracts hedge exchange rate risk?

a. By giving an investor the right to buy or sell a specified amount of currency at a future date at a predetermined price

b. By giving investors the flexibility of future contracts that are market-to-market daily

c. By requiring investors to make small commitments to purchase future contracts

d. By investors buying a currency in future option

e. By allowing an investor the ability to exchange a specified amount of currency at a previously agreed exchange rate

Answer: d. By investors buying a currency in future option

What are two short-term effects of currency movement?

a. Translation risk

b. Accounting risk

c. Economic risk

d. Exchange rate fluctuation

e. Transaction risk

f. Consolidated accounting statements

Answer: 

e. Transaction risk

A successful shoe manufacturer has long been subcontracting production of their shoes to countries such as Vietnam. Which of the following concepts was likely considered when selecting production in this country?

a. Political uproar

b. Integrity

c. Contract law

d. Value-to-weight ratio

e. Comparative advantage of labor

Answer: d. Value-to-weight ratio

What is most likely to happen if a computer company decided to own and operate its own fleet of trucks instead of using shipping companies to deliver its computers?

a. The computer company would decrease its expertise in supply chain matters

b. The computer company would produce incentives to make its computers better

c. The computer company would be able to compete in international markets

d. The computer company would be increasing the complexity of its process

Answer: d. The computer company would be increasing the complexity of its process

Why may companies outsource?

a. To increase their competition

b. To focus on non-value-added inputs

c. To learn a new business

d. To control the supply chain

e. To take advantage of lower wages

Answer: e. To take advantage of lower wages

What should a smart company do regarding customer complaints to improve the company's customer service in the future?

a. Make customer complaint policies as clear as possible before purchases are made

b. Welcome customer complaints to use as feedback

c. Seek out dissatisfied customers through social media outlets

d. Reward customers who provide positive feedback

Answer: b. Welcome customer complaints to use as feedback

What are international pricing objectives that keep competitors out of a foreign market with low prices?

a. Gray marketing

b. Prevention

c. Performance

d. Maintenance

Answer: b. Prevention

Which marketing method uses contests and sweepstakes as the most widely-used promotional technique in foreign markets?

a. Sales promotion

b. Direct mail 

c. Perception

d. Advertising 

e. Personal selling

Answer: a. Sales promotion

Which appropriate set of steps should companies follow when developing new products for overseas markets?

a. Concept testing, business analysis, market testing, and commercialization

b. Business analysis, evaluation of new product ideas, development, and commercialization

c. Commercialization, business analysis, development, and evaluation of new product ideas 

d. Identification of sources of new products, evaluation of new product ideas, development, business analysis, and commercialization

e. Identification of sources of new product ideas, evaluation of new product ideas, concept testing, business analysis, development, market testing, and commercialization

Answer: e. Identification of sources of new product ideas, evaluation of new product ideas, concept testing, business analysis, development, market testing, and commercialization

How are standardization strategies defined?

a. Approaches in which global products are developed

b. Approaches that compromise marketing strategies

c. Approaches in which marketing strategies used in international operations will be the same as those being used domestically

d. Approaches in which marketing strategies used in international operations will be different than those used domestically 

e. Approaches in which concept testing is delivered to the whole market

Answer: c. Approaches in which marketing strategies used in international operations will be the same as those being used domestically

What is one factor that distinguishes market intelligence systems from marketing research?

a. Collecting information in the United States

b. Collecting information regularly over time

c. Collecting information of women by country 

d. Collecting information in France

Answer: b. Collecting information regularly over time

Which issues was discussed as a concern during the establishment of North American Free Trade Agreement (NAFTA)?

a. The exclusion of Canada from the agreement

b. Uncertainty about whether or not profit for companies would increase

c. The exclusion of Mexico from the agreement

d. A fear that companies would move American manufacturing jobs to Mexico

Answer: d. A fear that companies would move American manufacturing jobs to Mexico

Which issues are associated with expatriate compensation?

a. Collective performance appraisals

b. Language barriers

c. Variability in taxes between countries

d. Major corporation presence

Answer: c. Variability in taxes between countries

What is needed when a U.S. company sends an employee to work in a foreign country for several years?

a. Host country nationals

b. Third country nationals

c. Heavy reassignment costs

d. Training in the foreign language

Answer: d. Training in the foreign language

What is NOT an issue for a business considering outsourcing and offshoring?

a. Wage equality concerns

b. Quality of product comparison

c. Costs structure comparison

d. Available technology concerns

Answer: d. Available technology concerns

What is the name for an organizational structure in which people are grouped simultaneously by function and by divisions?

a. Functional 

b. Matrix

c. Divisional

d. Hybrid

e. Market

Answer: b. Matrix

Which issue can result from creating international divisions in global business?

a. Creation of company unity

b. Call option

c. Employees considering themselves first-class citizens

Answer: d. Conflicts between domestic and international operations

What will an organization structure which inhibits people from clearly knowing if they have decision making authority most likely to do?

a. Increase innovation

b. Prohibit innovation

c. Prohibit employee breaks

d. Increase quality 

e. Decrease organizational structure

Answer: b. Prohibit innovation

What are stateless corporations?

a. Corporations that produce goods in one country and export them to other countries

b. Corporations that source work wherever it is most efficient and transcend international boundaries

c. Corporations who set up operations in other countries, but maintain ties to a home country

d. Corporations that establish foreign subsidiaries to handle exports from their home country

Answer: b. Corporations that source work wherever it is most efficient and transcend international boundaries

Smalltown Times newspaper has a norm of "highest quality in journalism." In this context, the newspaper's reporters don't require close supervision to do great journalistic work. What is this norm an example of?

a. Organizational background

b. Organizational customs

c. Organizational culture

d. Organizational traditions

Answer: c. Organizational culture

How do interpersonal control systems help manage global business?

a. By outlining a system of rules and procedures

b. By controlling profit and market share with output controls and measurements

c. By using Six Sigma initiatives

d. By having executives engage in personal contact with subordinates

Answer: d. By having executives engage in personal contact with subordinates

How do knowledge management and systems overcome impediments to strategic implementation of global business?

a. By allowing for the ability to write things down

b. By allowing for the Jubilee stake

c. By allowing for in-person supervision

d. By allowing for legal impediments

e. By allowing for wider dissemination of tacit and explicit knowledge

Answer: e. By allowing for wider dissemination of tacit and explicit knowledge

Which arrangement best outlines Miles and Snow's four basic types of longer-term strategic implementation?

a. Coordinators, reactors, defenders, and prospectors

b. Analyzers, prospectors, defenders, and reactors

c. Prospectors, expansionists, analyzers, and defenders

d. Reactors, coordinators, defenders, and prospectors

e. Defenders, prospectors, analyzers, and expansionists

Answer: b. Analyzers, prospectors, defenders, and reactors

What do companies use as a blueprint in their strategy formulation and control functions?

a. Statement of goals

b. Missions statement

c. Shareholder model

d. Stockholder plan

e. Vision statement

Answer: b. Missions statement

How does the government of a country with a good investment climate attract foreign direct investment (FDI)?

a. By passing tariffs that protect domestic market

b. By maximizing shareholder wealth

c. By implementing transparent governance structures

d. By supporting monopolistic competition

Answer: c. By implementing transparent governance structures

Mr. Chavez banned U.S. oil company operations in Venezuela. Which cost of foreign direct investment (FDI) is this an example of?

a. Prevention of human capital development

b. Lack of corporate social responsibility

c. Tarnishing of the country's image

d. Sacrifice of natural resources

e. Unfair political interference

Answer: d. Sacrifice of natural resources

What might government entities use tax revenue generated by foreign direct investments (FDIs) for?

a. To decrease domestic competition

b. To reduce poverty

c. To slow economic development

d. To increase tax rates

Answer: b. To reduce poverty

What is the primary intention when multinational enterprises (MNEs) invest internationally?

a. To utilize Dunning's eclectic theory

b. To diversify their workforce

c. To identify new market structures

d. To gain competitive advantage

Answer: d. To gain competitive advantage

A parent firm provides startup cost, promotional materials, and pricing to its subsidiary firm. Which strategy is this firm using for entering emerging markes?

a. Franchising

b. Wholly-owned subsidiary

c. Licensing

d. Export-import business

e. Cross-border merger

Answer: a. Franchising

Which entry strategy generally requires a large capital investment and is associated with a high degree of risk?

a. Joint venture

b. Licensing

c. Wholly-owned foreign subsidiary

d. Strategic alliance

Answer: c. Wholly-owned foreign subsidiary

What can internal controls protect honest employees from?

a. Accusations of impropriety

b. Accidentally making errors

c. Discrimination in the workplace

d. Harassment by coworkers

Answer: a. Accusations of impropriety

Which scandal included improperly adjusting accounting reserves to meet earnings?

a. Parmalat

b. Enron

c. Vivendi

d. Overton

e. WorldCom

Answer: c. Vivendi

What is the goal of corporate social responsibility?

a. To apply the informal policies of the company

b. To fulfill federal mandates

c. To follow personal moral intuition

d. To create a balance between private profits and public goods

Answer: c. To follow personal moral intuition

What is the result if a large online retailer does NOT secure customer's financial information?

a. Decrease in public trust

b. Increase in federal regulations

c. Decrease in internal controls

d. Decrease in corporate responsibility

Answer: d. Decrease in corporate responsibility

Why is intellectual property protection critical in today's global business environment?

a. To maintain the current level of innovation

b. To continue encouraging innovation, creativity, and investment

c. To provide jobs for the unskilled

d. To reduce inequality in society

Answer: b. To continue encouraging innovation, creativity, and investment

Which risk occurs with a change in political governance?

a. Macropolitical

b. Private corruption

c. Terrorism

d. Economic

Answer: a. Macropolitical

What is an economic ideology in which the government or state plays a strong role in the economy, may own stakes in certain businesses, but does NOT aspire to be classless?

a. Totalitarianism

b. Communism

c. Capitalism

d. Socialism

Answer: d. Socialism

Which of the following should take place in an effort to successfully conduct business in China?

a. Developing personal relationships with high level business executives

b. Focusing on equal relationship exchanges 

c. Attending to relationships between subordinates and superiors (Guanxi)

d. Maintaining a level of dominance and superiority throughout a business dealing

Answer: c. Attending to relationships between subordinates and superiors (Guanxi)

What example is considered a primary source that can be used to learn about foreign countries' culture?

a. Talking to employees who have lived or worked abroad

b. Consulting encyclopedia for information

c. Reading Price Waterhouse Coopers Doing Business in 118 Countries

d. Referring to the U.S. Department of Commerce Commercial Guide

Answer: a. Talking to employees who have lived or worked abroad

What is a component of the forward market?

a. Spot rates

b. Past rates 

c. Managed rates

d. Forward rates

e. Non-hedge rates

Answer: d. Forward rates

What statement of account summarizes all transactions between one country and the rest of the world for a given period of time?

a. Income balance

b. Balance of payment

c. Trade account

d. Flow of funds

Answer: b. Balance of payment

Which regional bloc is dedicated to South America?

a. APEC

b. CEFTA

c. NAFTA

d. MERCOSUR

Answer: d. MERCOSUR

How does regional integration affect countries?

a. Decreased sustainable development

b. Less international drug trafficking

c. Enhanced social welfare

d. Decreased job opportunities

Answer: c. Enhanced social welfare

Which aspects of economic geography affect international trade?

a. Size of the countries involved

b. Higher economic barriers

c. Reduced specialization of products closed interaction between emerging markets

d. Advantage of location

Answer: 

a. Size of the countries involved

d. Advantage of location

What must countries do to create regional economic integration?

a. Develop independent operations

b. Have individualized regional strategies

c. Have spatial transformation

d. Disallow geographic distribution of economic activities among countries

Answer: c. Have spatial transformation

What is NOT a rationale for managing trade?

a. Countertrade

b. Mercantilism

c. Export cartels

d. National security

e. Infant industry argument

Answer: b. Mercantilism

What does trade policy have a direct impact on?

a. Infrastructure of large cities

b. The level of inequality in society

c. A country's consumer debt

d. The value of volume of a country's imports and exports

Answer: d. The value of volume of a country's imports and exports

Workers from Poland are free to work in the United Kingdom to fill shortages there. What is this scenario an example of?

a. Trade surplus

b. Factor price equalization

c. Comparative advantage

d. Specialization

e. Absolute advantage

Answer: b. Factor price equalization

How does foreign direct investment (FDI) create jobs and enhance skills of workers?

a. By generating losses from capital

b. By increasing tax policies

c. By creating inflows of capital from abroad

d. By selling domestic companies

Answer: c. By creating inflows of capital from abroad

Which of the following may lead to an increase in the standard of living, according to free-trade theory?

a. The right to import and export goods freely

b. Increased inflation

c. Laws against importing and exporting goods

d. Increased taxes on goods and services

Answer: a. The right to import and export goods freely

Economists have argues that nationals policies should be implemented to help retrain and educate displace workers. How might these efforts affect the displaced workers?

a. By capping the level of competitiveness

b. By increasing productivity

c. By increasing unemployment

d. By reducing in wages

Answer: b. By increasing productivity

What is one argument against globalization?

a. Collaborative trading will occur

b. Jobs will be lost

c. Economic control will increase

d. New industries will develop

Answer: b. Jobs will be lost

How has technology bridged the global digital divide?

a. By decreasing communication costs

b. By increasing stagnant wages

c. By causing job loss

d. By limiting who has access to the Internet

Answer: a. By decreasing communication costs

What do property rights enable buyers and sellers to do?

a. Name buildings after them

b. Improve their quality of life

c. Increase currency rates

d. Conduct transactions with a high degree of trust

Answer: d. Conduct transactions with a high degree of trust

What helps make globalization sustainable?

a. Restrictive laws

b. Transparency in government policy

c. Rising shipping prices

d. Lin intellectual property law

Answer: b. Transparency in government policy

What do countries with politicians that sustain transparency in global competition tend to have?

a. Firms that resist globalization

b. A system of poor checks and balances

c. A slow free enterprise system

d. A competitive market structure

Answer: d. A competitive market structure

How do major international institutions facilitate globalization?

a. By enacting stringent labor laws

b. By placing tariffs on imported goods

c. By weakening their currencies

d. By creating an international monetary system

Answer: d. By creating an international monetary system

Which of the following is a characteristic of globalization?

a. Culture

b. Tax law

c. Trade negotiations

d. Transparency

Answer: a. Culture