IB Exam

Foreign business is that which is conducted

by a domestic business outside its home market.

Which of these is considered an external environmental force?


Tariffs placed on products from another country may bring in more money to the government of the country that initiated the tariffs, but they may hurt consumers in that country in the form of higher prices for goods. This demonstrates how forces in the foreign environment

have different values.

Most multinationals are based in ________ countries, but recently there has been a surge in the number arising in ________ countries.

developed; emerging

Tesla recently built a factory in Shanghai to build and sell cars in China. This demonstrates the concept of

foreign direct investment.

You are interested in expanding your business into a foreign country. The government of that country exercises strict control over types and quantities of products that can be imported, so you may be limited in how much you can export. Which driver is most impacting your decision to expand?


AbbVie pharmaceutical company conducts product research all over the world. Communication is facilitated between sites with use of the Internet and communication tools like videoconferencing. Which driver is most influencing the way AbbVie does business in this example?


A company made the decision to export its products abroad to increase its sales and enable economies of scale in production. Which driver is most impacting the company's decision to export?


Which statement about the effects of globalization is accurate?

Life expectancy in the developing world has nearly doubled since WWII.

A difficulty caused by NAFTA and the maquiladora program that began before NAFTA, was

substantial increases in water and air pollution at the border.

Who advocated the early attempt to develop an international trade theory in response to the practice of mercantilism?

Adam Smith

Which regions accounted for an average of 49 percent of all inward FDI for 2015-2019?

United States and the European Union

Which element is included in Porter's diamond model of national advantage?

Demand conditions

According to the theory of comparative advantage, a nation

should produce the goods for which its absolute disadvantage is less.

When considering where to export, advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include the fact that

export and import regulations are not insurmountable.

Which of the elements in Porter's diamond model of national advantage takes into consideration the sophistication of a company's customers?

Demand conditions

Which element in Porter's diamond model of national advantage distinguishes between the land a company owns and the transportation systems available for it to use?

Factor conditions

The purchase of an existing business in another nation is known as a

cross-border acquisition.

Chow Down makes oven-ready meals that are sold in grocery stores. The company is thinking about expanding overseas by investing in a facility to make the product rather than exporting so it can avoid tariffs and transport costs. Which of Dunning's three advantages of investing overseas most relates to this decision?


Giuliana purchases Open Source bottled water from France because it is derived from natural springs and the store brand doesn't say where it comes from. What is influencing Giuliana's purchase decision?

product differentiation

All motives for FDI are linked in some way to the desire to increase or protect not only profits but also

sales and markets.

In England, mercantilists believed that

a nation should have an export surplus in order to accumulate precious metals.

How are exchange rates used in international trade?

Exchange rates are used to convert from foreign to domestic currency.

When examining the volume of international trade, how are goods and services currently represented?

Exports of services grew faster than trade in merchandise for the last 20 years.

Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have one of 3 kinds of advantages. Which one relates to firms having various alternatives to entering foreign markets, ranging from making arm's-length market transactions to operating wholly owned subsidiaries?


Sharon is a multitasker and prefers to work on more than one project at a time at work. Edward Hall would say that Sharon favors which approach to time?


In the Islamic world, green is an optimistic and hopeful color. This demonstrates the culture's


In a business setting, anthropologist Marcel Mauss viewed the ritual of gift-giving as a way to

publicly acknowledge interrelationships and obligations.

Trompenaars's specific-diffuse dimension has to do with

differentiation between public and private life.

After college, Tomas moved from California to take a job overseas. He was surprised to find that the city he moved to had strict curfew laws and all the shops and restaurants closed by 10 pm. The culture he moved into seems to want to minimize unpredictable situations which reflects which of Hofstede's dimensions?

uncertainty avoidance

Trompenaars's particularist dimension describes a culture in which

the judgment of something depends on the situation.

Uncertainty avoidance describes the search for truth, according to Hofstede, because

it describes how comfortable the culture's members feel in an unstructured situation.

Low-context cultures such as the United States tend to have these kinds of communication patterns:


Rhonda grew up in the U.S. and had never really given much thought to climate change, assuming that people could control nature. But then she moved to Sweden, a country that is leading the way in global climate change rankings. Now she believes that it is important to work with the environment, not try to control it. Which of Trompenaars's seven dimensions is described?

internal vs. external direction

In high-context cultures, direct conversations that "tell it like it is" would be viewed as


An achievement culture is one in which members are

rewarded for what they do and what they have accomplished.

Trompenaars's achievement versus ascription dimension describes social status based on what one does or who one is. In the United States, where people build who they are through work, social status tends to be

based on achievement.

The Doha Round began in 2001 to work on what agenda?

trade-related issues between developed and developing countries

The WTO is the only international organization designed to establish and help implement

rules of trade between nations.

The Chinese concept of guanxi is an example of

an informal, cognitive institution.

IMF quotas are determined by the relative size of a nation in the global economy and

are the nation's "dues" to the IMF.

The European Union is organized into nine institutions with functions similar to those performed by a national government. These institutions

represent the people of Europe and member-states.

The regional economic integration agreement that includes Argentina, Brazil, Paraguay, and Uruguay is known as


The WTO exists to

establish and help implement rules of trade among nations to increase trade flows.

The purpose of the International Financial Corporation (IFC) is to invest in companies and financial institutions in developing countries to build

domestic capital markets.

The Eurasian Economic Union, consisting of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, is an example of a

free trade area.

The economic integration of the EU is based on

national willingness to forego sovereignty for greater stability.

The United Nations is a worldwide organization that is

a forum for the promotion of peace and global stability.

The Doha Round's discussions are contentious on several major issues, including

agriculture and intellectual property rights.

What company was fined millions of dollars by the EU for not complying with EU rules?

IDK Amazon was wrong. Maybe microsoft

The ________ environment includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another.


Because of the importance of economic information to the control and planning functions at headquarters, the collection of data and preparation of reports are usually the responsibility of

the home office.

A business would rely on the GINI Index to understand

the degree to which family income is distributed equally within a country.

A developing economy is characterized as

less technically developed.

What typically occurs as the level of a government's debt increases?

More resources are redirected toward payment of interest.

A marketing manager has been tasked with the job of analyzing the economy of three South American countries to determine if they have business potential. In her final report, she makes note of national income that may not be reported because it involves illegal activity. This indicates that the marketing manager is accounting for

the underground economy

Harbinger Electric Corp. previously outsourced all the component parts it needed for its lighting products but now produces those parts in-house to use in the manufacture of these items. What concept did Harbinger Electric Corp. adopt?

vertical integration

A country with a GNI per capita of $5,000 would be categorized as


When analysts examine potential market size, they begin with

total population.

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are known as

emerging market economies.

The rural-to-urban shift is a reflection of

the movement of the population in search of jobs and conveniences.

What occurs when GNI increases faster than the population?

There probably is an expanding market.

During the meeting, David mentioned two possibilities for the future of the new product line. It could do well initially but then be undercut by competitor challenges or supplier pricing changes. Or, it could fail immediately if marketing promotions aren't effective in the European market. What is David using in his strategy formulation?


What is a disadvantage of top-down planning?

It restricts initiative at lower levels of the organization.

To create a competitive advantage that is sustainable over time, the international company should try to develop competencies that

create value for customers and for which they are willing to pay.

Multiple, plausible stories that managers consider for what might happen in the future are known as


Scenarios allow a business to

project possible outcomes of business decisions.

Knowledge that is easy for an individual to express clearly in words, pictures, or formulas is known as


An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service is known as

value chain analysis.

Companies pursuing a multidomestic strategy typically have

high levels of local market customization.

Why is scenario analyses an important tool for managers?

By anticipating the future and recognizing the warning signs of turbulence ahead, managers can develop more effective strategies.

Companies pursuing a global strategy typically have

low operating costs and high efficiency.

A company's ability to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors, is known as

competitive advantage.

Companies pursuing a home replication strategy

limit availability of local customization.

Jenna reported to the management team that their proposed investment in Great Britain could be affected by the Brexit announcement. Which aspect of strategic planning does this demonstrate?

Analyze the company's external environments.

During market screening, a company assesses the basic needs potential as

a screening of the market's need for the good or service.

Online research communities are

online platforms that connect researchers to interested consumers willing to collaborate in the research.

Parson Home Centers is in the process of a market analysis. The latest reports show that it is difficult for many consumers in their target market to obtain home improvement loans. Based on this, the company doesn't think there will be much demand for their business and decides to search elsewhere. What step in the screening process helped Parson Home Centers make this decision?

second—financial and economic forces

Trend analysis assumes that

past conditions affecting the dependent variable will remain constant.

What is a marketing research trend that is likely to occur in the future?

more focused and technology-based data collection techniques

McDonald's, the UPS Store, and Hertz are examples of


A chain of tea shops has entered into an agreement with Consumer Rail Corporation. The tea company will have a shop in each of the 50 stations located along the commuter rail line. What type of entry mode does this represent?

strategic alliance

A definable segment is one that

can be identified and measured.

A trade fair is

an opportunity for companies to promote the sale of their products.

A company can use big data to

identify outliers more readily.

Country screening differs from segment screening in that

it looks at the country level, while segment screening is within the country.

A company has been able to forecast the potential growth of its products in the Latin American market based on the pattern of growth rates its products have shown in the past. What is the company using to make these forecasts?

trend analysis

The social desirability bias is

a bias in favor of those locals who pretend to like and accept the researcher.

Parul is part of a team assessing international markets for the company. It is her job to learn the marketing strategies and pricing policies of companies already in the market. Which aspect of the screening process is Parul responsible for?

competitive forces

Local content restrictions are an example of a

political force.

Manufacturers increasingly are using global and regional advertising due to

cost, ease of transmission, brand image, and economies of scale.

In Saudi Arabia, labeling of what product line requires source stipulation?

Any meat product must identify the kind of animal that is the source of the product.

____ are the most insensitive to the foreign environment.

Industrial products

Economies of scale that reduce costs, can be achieved through


With Internet domain names, the United States follows

a first to file system.

Adaptations that are necessary to meet local legal requirements can act as

barriers to trade, in that they protect local manufacturers.

Disintermediation is

the unraveling of traditional distribution structures.

The name, logo, graphics, colors, and typeface associated with a firm make up its

corporate visual identity.

____ is a special kind of exporting that large companies use to specialize in the manufacture of some products and import others.

Transfer pricing

The development of distribution strategies is more challenging internationally, where marketing managers must concern themselves with two functions rather than one: getting the products to foreign markets (exporting) and

distributing the products within each foreign market.

The three characteristics of evolving sustainable business practices are

limits, interdependence, and equity.

Which group of renewable fuels is derived from organic materials whose energy is supplied by photosynthesis?


The stakeholder model requires businesses to think about

input from all stakeholders.

When companies rely on concentrating solar thermal power, what are they using to collect sunlight?


A company is being scrutinized by the federal government for failing to control emissions from their plant that could damage the ozone layer. Which characteristic of an environmentally sustainable business is the company ignoring?

Resources are limited.

Tropical rain forests are

a barrier to economic development.

In more dense populations, international managers can expect

lower marketing and distribution costs.

What is the current status of nuclear power?

It has been growing.

What is the correlation between population density and bodies of water?

Densely populated regions coincide with rivers, lakes, and seacoasts.

Certain geologic structures have led to the development of separate languages within the same country. These barriers include

mountain barriers.

What country produces more than 80 percent of the nonfuel minerals that are required for use in defense and manufacturing?


Australia's topography is

an inland plain and desert, with population concentrated along the coasts.

When a new plant can be built that is a duplicate of others already functioning,

vendors will be requested to furnish equipment that they have supplied previously.

Manufacturing rationalization is

producing a limited number of components for use by many or all of an international company's subsidiaries.

Backward vertical integration refers to

the installation of production facilities to produce inputs for the production of final products.

It has been argued that the ultimate goal of effective supply chain management systems is to

reduce inventory.

The purchasing of goods and services that are not part of finished goods is called

indirect procurement.

An automated manufacturing plant found that its process slowed down at one point because a part had to be inserted manually. This ________ set the limit for the entire system's output.


Which arrangement can provide a firm with foreign products?

wholly owned subsidiary

wholly owned subsidiary


Pilar's employees were overwhelmed with work, so she sent some accounting functions to an accounting firm and kept the rest in-house. Pilar was engaging in


If a firm has a large volume of imports and the dollar is unstable, management may want a quotation in a foreign currency. In that case, the chief financial officer of the importing company probably will protect the company from exchange rate risk by using various financial ________ techniques.


Why did many early efforts at developing e-procurement systems fail?

They were made in isolation from the company's overall business system.

A apparel manufacturer has always made its clothing in the United States, but as prices have gotten more competitive it has had to move some of its production to Indonesia. This demonstrates


In synchronous manufacturing, a production increase at the bottleneck means an increase

for the entire production system.

The output of a synchronized manufacturing system is set

at the level that permits the system to be balanced.

The specific conditions identified in the international context that contribute to globalization's complexity are increased multiplicity, increased interdependence, and increased ______, which refers to the multiple ways we have to interpret an increasing amount of data.


What does the leader want to accomplish when establishing the team?

Encourage strong member identification with the team and team norms.

Jenny and Parul both work for the marketing team at Nylor Corporation Jenny works at the San Francisco office and Parul works in Italy. Most of their colleagues in their department also work in different geographic areas, so they communicate mostly through email and video conferencing. This is an example of a(n)

global team.

Jane was pleased when the team leader asked William to stop using offensive language during the weekly international web calls. She found his language offensive and felt it reflected poor manners. The team leader's response is a reflection of

norms of consideration.

What is the final stage of Lewin's change model when the new behaviors are either accepted and institutionalized or rejected?


Research indicates that many CEOs feel that a prerequisite for global industry dominance is

developing a company global mind-set.

One way a company can foster cooperation in a global team is to

establish a reward structure.

When they examined the work characteristics of more than 12,000 global leaders, researchers from the Corporate Executive Board (CEB) found that, in comparison to their peers who operated in single markets, global leaders

worked with far more stakeholders.

The inclination in diverse global teams is to

avoid discussing differences and focus on commonalities.

Electronics Group has always been a leader in the domestic market. After entering the global market, the company has been challenged by the ever-changing market which the company finds more difficult to predict than the domestic market. Which aspect of global complexity is Electronics Group being challenged by?


After entering the international market, a company was faced with a mountain of data. Production team and marketing team members interpreted this data differently, which caused frustration as the teams struggled to determine the best way to analyze it. Which element of complexity does this scenario demonstrate?


______ contributes to increased levels of interdependence among the various activities of the firm's value chain.


When host-country nationals are employed, companies know that

they are familiar with local customs, culture, and language.

Companies that use a polycentric staffing policy would

rely on home country policies for issues related to human resources.

Which factor does not account for increased labor mobility in the modern world?

growth of sustainability initiatives

Of those listed, which countries have lost the largest number of people to emigration?

China and India

Ramey asked his team to find out how many potential employees were available in the proposed foreign market that had the data analysis skills the company needed to complete the task. This information will help him decide if this market is viable for the company to enter into. What type of information is Ramey looking for?

labor market

The anxiety that people often experience when they move from a familiar culture to one that is entirely different is known as

culture shock.

A local labor market is made up of

the pool of available employees with the necessary skills and who are within commuting distance.

Green Energy Solutions has adopted an ethnocentric staffing policy. Based on this, where are most of the decisions made for the home and host country facilities?

at the company's headquarters, using the home country's frame of reference

For cost-of-living allowances, the U.S. Department of State index is

based on costs in Washington, D.C.

Migrant labor is often involved in "3-D" jobs, which stands for

dirty, dangerous, and degrading.

Developing nations are greatly concerned when highly-skilled professionals such as scientists, IT specialists, teachers, and health care professionals leave the country to seek better living arrangements. What term is given to this type of emigration?

brain drain

A polycentric staffing policy is appropriate when

there are low levels of pressure for cost reduction and high levels for local responsiveness.

One challenge presented to employers by the rural to urban migration is

supporting the necessary social and psychological adjustments.