MGT 215 Midterm

The _____ was established to remove barriers to the free flow of goods, services, and capital between nations.
a.UN
b.IMF
c.GATT
d.IDA

c GATT

The growing integration of the world economy is:
a.increasing the intensity of competition in a wide range of manufacturing and service industries.
b.decreasing the intensity of competition in manufacturing industries, and increasing the intensity of comp

a increasing the intensity of competition in a wide range of manufacturing and service industries.

The ______ is primarily responsible for policing the world trading system and making sure nationstates adhere to the rules laid down in trade treaties signed by member states.
a.International Development Association
b.World Bank
c.International Court of j

d. World Trade Organization

Identify the incorrect statement pertaining to the World Wide Web.
a.It makes it much easier for buyers and sellers to find each other.
b.Viewed globally, it is emerging as an equalizer.
c.It rolls back all of the constraints of location, scale, and time

c.
It rolls back all of the constraints of location, scale, and time zones.

The _____ was created in 1944 by 44 nations that met in Breton Woods, New Hampshire to promote economic development.
a.World Bank
b.International Trade Center
c.World Trade Organization
d.United Nations

a.
World Bank

The most global markets currently are markets for:
a.services.
b.consumer goods.
c.consumer durables.
d.industrial goods.

d.
industrial goods.

Which of the following does not help create an economic system that is favorable to international business?
a.Decreased privatization
b.Widespread deregulation
c.Open markets
d.Falling trade and investment barriers

a.
Decreased privatization

Globalization has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap.
a.reduced, reduced
b.increased, increased
c.increased, reduced
d.reduced, incre

c.
increased, reduced

By 2006 some 24 of the world's 100 largest non financial multinationals were:
a.Chinese enterprises.
b.British enterprises.
c.U.S. enterprises.
d.Japanese enterprises.

c.
U.S. enterprises.

Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by encouraging all of the following except:
a.privatizing state owned enterprises.
b.regulating markets.
c.increasing competition.
d.

b.
regulating markets.

According to World Bank numbers,
a.developing nations currently account for more than 60 percent of world economic activity.
b.rich nations currently account for more than 70 percent of world economic activity.
c.today's rich nations may account for 55 pe

d.
today's developing nations may account for more than 60 percent of world economic activity by 2020.

The reduction in the average tariff rates on manufactured products since 1950 implies all of the following except that
a.firms are dispersing parts of their production process to global locations to drive down production costs and increase product quality

c. nations are becoming increasingly independent of each other for important goods and services.

Which of the following countries has been the largest recipient of foreign direct investment and received about $70 billion a year in inflows in 2005 and 2006?
a.Brazil
b.Russia
c.India
d.China

d.
China

Which of the following is not characteristic of globalization?
a.National economies are turning into independent economic systems.
b.Material culture is starting to look similar the world over.
c.Perceived distance is shrinking due to advances in transpor

a.National economies are turning into independent economic systems.

Before NAFTA was passed
a.Mexico agreed to establish a higher minimum wage.
b.the U.S. agreed to limit the number of jobs that could be exported to Mexico.
c.Mexico committed to tougher enforcement of environmental protection regulations.
d.Canada committ

c.
Mexico committed to tougher enforcement of environmental protection regulations.

What is the total cumulative value of foreign investments best referred to as?
a.Accumulation of foreign shares
b.Portfolio investments
c.Stock of foreign direct investments
d.Stock market investments

c.Stock of foreign direct investments

_____ occur(s) when a firm exports goods or services to consumers in another country.
a.International trade
b.Foreign direct investment
c.Inward investment
d.Merger and acquisitions

a.International trade

Which of the following statements about socialism is false?
a.Modern socialists' intellectual roots can be traced to Karl Marx.
b.Elements of socialist thought can be traced to Plato.
c.Socialist ideology is split into two camps´┐Żcommunists and individuali

c.
Socialist ideology is split into two camps´┐Żcommunists and individualists.

Antitrust laws in the United States are designed to:
a.encourage business practices designed to monopolize a market.
b.discourage private ownership.
c.restrict privatization.
d.outlaw monopolies.

d.
outlaw monopolies.

A _____ grants the inventor of a new product or process exclusive rights for a defined period of time to the manufacture, use, or sale of that invention.
a.copyright
b.trademark
c.contract
d.patent

d.
patent

A _____ system is based on a very detailed set of laws organized into codes.
a.democratic law
b.theocratic law
c.civil law
d.common law

c.
civil law

Identify the United Nations body that establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.
a.IMF
b.GA

d. CIGS

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved is BEST known as a:
a.contract.
b.business letter.
c.memorandum.
d.civil code.

a.
contract.

A theocratic law system is:
a.one in which the law is based on religious teachings.
b.based on tradition, precedent, and custom.
c.based on a detailed set of laws organized into codes.
d.the body of law that governs contract enforcement.

a.
one in which the law is based on religious teachings

Interdependent political, economic, and legal systems of a country make up its:
a.administrative agenda.
b.socioeconomic fabric.
c.economic environment.
d.political economy.

d.
political economy.

Individualism can best be described by which of the following statements?
a.It as a philosophy suggests that an individual should have freedom over his/her economic and political pursuits.
b.It is a political system in which government control over all fa

a.
It as a philosophy suggests that an individual should have freedom over his/her economic and political pursuits.

In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.
a.market
b.private
c.command
d.mixed

d.
mixed

_____ is consistent with the notion that an individual's right to do something may be restricted because it runs counter to "the good of society" or "the common good."
a.Entrepreneurship
b.Collectivism
c.Free enterprise
d.Capitalism

b.
Collectivism

Which of the following refers to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource?
a.Theocratic right
b.Property right
c.Trade right
d.Financial right

b.
Property right

According to _____, socialism can only be achieved through violent revolution.
a.capitalists
b.communists
c.social democrats
d.democrats

b.
communists

A state where political power is monopolized by a party, group, or individual that governs according to religious principles is best described as following:
a.theocratic totalitarianism.
b.tribal totalitarianism.
c.right-wing totalitarianism.
d.communist

a.
theocratic totalitarianism

In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.
a. market
b. private
c. command
d. mixed

d. mixed

The TRIPS agreement was designed to:
a.exclude China from all intellectual property agreements.
b.oversee a much stricter enforcement of intellectual property regulations.
c.lobby for more lax intellectual property rights for poor countries.
d.support tra

b.
oversee a much stricter enforcement of intellectual property regulations.

Identify the incorrect statement pertaining to intellectual property rights.
a.Its violation cost personal computer software firms revenues equal to $48 billion in 2007.
b.The protection of intellectual property rights is more or less the same in all coun

b.
The protection of intellectual property rights is more or less the same in all countries.

Totalitarianism:
a.is a form of government in which one person or political party exercises absolute control over all spheres of human life.
b.refers to a political system in which government is by the people, exercised either directly or through elected

a.
is a form of government in which one person or political party exercises absolute control over all spheres of human life.

Design and names by which merchants or manufacturers designate and differentiate their products are known as:
a.patents.
b.copyrights.
c.trademarks.
d.licenses.

c.
trademarks.

In a pure market economy:
a.all productive activities are owned by the state.
b.all productive activities are privately owned.
c.the government plans the goods and services that a country produces.
d.resources are allocated for "the good of society.

b.
all productive activities are privately owned.

Which of the following statements about political systems and their interrelated dimensions is false?
a.Systems that emphasize collectivism tend toward totalitarianism.
b.Systems that place a high value on individualism tend to be democratic.
c.Democratic

d.
It is impossible to have totalitarian societies that are not collectivist.

In a pure command economy:
a.all productive activities are owned by the state.
b.all productive activities are privately owned.
c.the goods and services that a country produces are not planned by anyone.
d.production is determined by the interaction of su

a.
all productive activities are owned by the state.

The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines:
a.society.
b.value systems.
c.principles.
d.culture.

d.
culture.

The emergence of class consciousness in Great Britain can be attributed to:
a.the relative lack of class mobility.
b.a high degree of social mobility.
c.an extreme emphasis on individualism.
d.most of the population perceiving itself to be middle class.

a.
the relative lack of class mobility.

The emphasis on individualism in the United States results in all of the following disadvantages except:
a.managers tend to develop good general skills but lack the company-specific experience.
b.difficulty in building teams within an organization to perf

c.
executives are not exposed to different ways of doing business.

_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like.
a.Values
b.Beliefs
c.Mores
d.Folkways

d. Folkways

According to Max Weber:
a.principles embedded in Hinduism encourage high levels of entrepreneurial activity.
b.Hindu values emphasize that individuals should be judged by their material achievements.
c.pursuit of material well-being makes the attainment o

d. devout Hindus would be less likely to engage in entrepreneurial activity than devout Protestants.

During the 1960s and 1970s, class divisions in _____ raised the cost of doing business there, relative to other European countries.
a.Great Britain
b.Switzerland
c.Norway
d.Germany

a.
Great Britain

An act, as simple as shaking hands when meeting new people is an example of:
a.values.
b.symbolic behavior.
c.mores.
d.social stratification.

b.
symbolic behavior.

Ethical systems are:
a.a set of moral principles, or values, that are used to guide and shape behavior.
b.shared beliefs and rituals that are concerned with the realm of the sacred.
c.routine conventions of everyday life.
d.social rules that govern people

a.
a set of moral principles, or values, that are used to guide and shape behavior.

Which of the following is not true regarding culture?
a.Culture is static
b.Culture is evolving
c.It is a system of values and norms that are shared among a group of people
d.It involves the knowledge and beliefs of people

a.
Culture is static

The _____ dimension of Hofstede's study explores how a society deals with the fact that people are unequal in physical and intellectual capabilities.
a.power distance
b.individualism vs. collectivism
c.uncertainty avoidance
d.masculinity vs. femininity

a.
power distance

This is a less rigid form of social stratification in which social mobility is possible.
a.Social system
b.Caste system
c.Cultural system
d.Class system

d.
Class system

Which of the following refers to the extent to which individuals can move out of the strata into which they are born?
a.Caste stratification
b.Class system
c.Social mobility
d.Individual potential

c.
Social mobility

The individualism vs. collectivism dimension of Hofstede's study explored:
a.the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty.
b.the relationship between gender and work roles.

d.
the relationship between the individual and his/her fellows.

According to sociologists, which of the following branches of Christianity has the most important economic implications?
a.Catholic
b.Orthodox
c.Protestant
d.Mormon

c.
Protestant

The social organization of Western society tends to emphasize on:
a.a group orientation.
b.the family.
c.individual achievement.
d.work groups.

c.
individual achievement.

According to Islam, those who hold property are regarded as:
a.trustees.
b.owners.
c.tenants.
d.speculators.

a.
trustees.

A central value of Japanese culture is the importance attached to:
a.the individual.
b.group membership.
c.individual achievement.
d.personal accomplishments.

b.
group membership.

A _____ is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime.
a.caste system
b.class system
c.social syst

a.
caste system

The belief in the superiority of one's own culture is known as:
a.ethnocentrism.
b.egocentrism.
c.polycentrism.
d.theocentricism.

a.
ethnocentrism.

According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law.
a.the naive immoralist
b.the righteous moralist
c.cultural relativism
d.the Friedman doctrine

d. the Friedman doctrine

Which of the following refers to the values and norms that the employees of an organization share?
a.Vision statement
b.Cultural relativism
c.Organization culture
d.Power orientation

c.
Organization culture

To guard against abuse of employment practices in other nations, multinationals should do all of the following except:
a.establish minimal acceptable standards that safeguard the basic rights and dignity of employees.
b.adhere to working conditions of the

b.
adhere to working conditions of the host country if they are clearly inferior to those in a multinational's home nation.

Ethical dilemmas exist because of all of the following reasons except:
a.many real-world decisions are complex and difficult to frame.
b.decisions may involve first, second, and third-order consequences that are hard to quantify.
c.doing the right thing,

c.
doing the right thing, or knowing what the right thing might be, is often far too easy.

Grease payments:
a.are not the same as facilitating payments or speed money.
b.are facilitating payments made to expedite routine government action.
c.are payments to gain exclusive preferential treatments.
d.can be used to secure contracts that would oth

b.
are facilitating payments made to expedite routine government action.

Which of the following is not likely to lead to unethical behavior?
a.An organizational culture that deemphasizes business ethics.
b.A process that does not incorporate ethical considerations into business decision making.
c.A strong personal ethical code

c.
A strong personal ethical code governing the conduct of an individual.

External stakeholders:
a.are individuals or groups who own the business.
b.include all employees, the board of directors, and stockholders.
c.typically comprise customers, suppliers, lenders, etc.
d.are individuals or groups who work for the business.

c.
typically comprise customers, suppliers, lenders, etc.

Which of the following enables managers to walk away from a decision that is profitable, but unethical?
a.Noblesse oblige
b.Moral courage
c.The difference principle
d.The Friedman doctrine

b.
Moral courage

The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except:
a.just and favorable work conditions.
b.equal pay for equal work.
c.prohibition of trade unions.
d.protection against unemployment.

c.
prohibition of trade unions.

The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.
a.tragedy of the commons
b.noblesse oblige
c.ethical dilemma
d.Friedman system

a.
tragedy of the commons

According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people.
a.naive immoralist
b.Friedman doctrine
c.utilitarian
d.Kantian

c.
utilitarian

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons except:
a.they are away from their ordinary social context and supporting culture.
b.they are psychologicall

b.
they are psychologically and geographically closer to the parent company.

The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:
a.busine

d. social responsibility.

Identify the incorrect statement regarding ethical issues in international business.
a.They are often rooted in the fact that political systems, law, economic development, and culture of nations vary significantly.
b.Human rights and environmental regulat

c.
Ethical practices of all nations are similar in nature.

Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?
a.Sullivan's principles
b.Ethical dilemma
c.Tragedy of the
d.Noblesse oblige

d.
Noblesse oblige

The Kantian approach to ethics suggests that:
a.human beings have fundamental rights and privileges that transcend national boundaries.
b.the moral worth of actions or practices is determined by their consequences.
c.people should be treated as ends and n

c.
people should be treated as ends and never purely as means to the ends of others.

The utilitarian approach to business ethics suggests that:
a.people should be treated as ends and never purely as means to the ends of others.
b.the moral worth of actions or practices is determined by their consequences.
c.people have dignity and need to

b.
the moral worth of actions or practices is determined by their consequences.

Cultural relativism suggests that:
a.ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operating.
b.the only social responsibility of business is to increase profits.
c.managers of

a.
ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operating.

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:
a.speed payments to secure contracts that would otherwise not be secured.
b.grease payments to gain exclusive preferential treatment.
c.facili

c.
facilitating payments made to expedite routine government action.

Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the:
a.inequality principle.
b.equity principle.
c.difference principle.
d.indifference principle.

c.
difference principle

Facilitating payments are:
a.permitted under the amended Foreign Corrupt Practices Act.
b.a direct violation of the Foreign Corrupt Practices Act.
c.permitted so long as they designed only to gain exclusive preferential treatment.
d.used to secure contrac

a.
permitted under the amended Foreign Corrupt Practices Act.

Which of the following observations about the Foreign Corrupt Practices Act is true?
a.The act outlawed the paying of bribes to foreign government officials to gain business.
b.There is enough evidence that it put U.S. firms at a competitive disadvantage.

a.
The act outlawed the paying of bribes to foreign government officials to gain business

The righteous moralist suggests that:
a.ethics are nothing more than the reflection of culture.
b.a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.
c.the social responsibility of busi

b.
a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries

Global expansion allows firms to achieve all of the following, except:
a.standardize their product offering, marketing strategy, and business strategy for all national conditions.
b.realize location economies by dispersing value creation activities to the

a.
standardize their product offering, marketing strategy, and business strategy for all national conditions.

A firm focusing on _____ will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity.
a.organi

b.
location economies

Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as:
a.factor economies.
b.production economies.
c.location economies.
d.value creation economies.

c.
location economies

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through:
a.location economies.
b.value creation effects.
c.experience curve effects.
d.learning effects.

d.
learning effects.

_____ exist when the tastes and preferences of consumers in different nations are similar if not identical.
a.Universal needs
b.Homogenous needs
c.Basic needsd.Bundle
d needs

a.
Universal needs

A firm will face intense pressure for cost:
a.when competitors are based in low-cost locations.
b.where there is persistent excess capacity.
c.where industries produce commodity-type products.
d.where consumers have low switching costs.

c.
where industries produce commodity-type products.

Michael Porter has argued that _____ and _____ are two basic strategies for creating value and attaining a competitive advantage in an industry.
a.differentiation

...

price competition
b.economies of scale

...

diversification.
c.low cost

...

differentiation
d.efficiency

...

promotion

c.
low cost

differentiation

...

A strategy that focuses on increasing the attractiveness of a product is referred to as a(n):
a.differentiation strategy.
b.low cost strategy.
c.effectiveness strategy.
d.efficiency strategy.

a.
differentiation strategy.

The _____ shows all of the different positions a firm can adopt with regard to adding value to the product and low cost assuming the firm's internal operations are configured efficiently to support a particular position.
a.strategic choice curve
b.strateg

c.
efficiency frontier

_____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.
a.Efficiency matrixes
b.Diminishing returns
c.Cost plus curves
d.Strategy conv

b.
Diminishing returns

An arrangement whereby a firm grants the right of intangible property to another entity for a specified time period in exchange for royalties is a(n) _____ agreement.
a.wholly owned subsidiary
b.turnkey
c.licensing
d.exporting

c.
licensing

Patents, inventions, formulas, processes, designs, copyrights, and trademarks are all forms of
a.licensing agreements.
b.franchising agreements.
c.intangible property.
d.tangible property.

c.
intangible property.

Firms engaging in _____ with a local company can benefit from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems.
a.turnkey projects
b.joint ventures
c.greenfield investment

b.
joint ventures

Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable in:
a.politically unstable developing nations that operate with a mixed or command economy.
b.nations where there is a dramatic upsurge in either inflation rates or p

c.
politically stable developed and developing nations that have free market systems.

Which of the following is not an advantage of a small-scale entry?
a.A small-scale entrant is more likely to be able to capture first-mover advantages associated with demand preemption, scale economies, and switching costs.
b.Small-scale entry is a way to

a.
A small-scale entrant is more likely to be able to capture first-mover advantages associated with demand preemption, scale economies, and switching costs.

Which of the following statements about small-scale entry is true?
a.The commitment associated with a small-scale entry makes it possible for the small-scale entrant to capture first-mover advantages.
b.Small-scale entry is a way to gather information abo

b.
Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale.

A turnkey strategy:
a.is always riskier than conventional FDI.
b.is never used in a country with unstable political and economic environments.
c.is useful where FDI is limited by host-government regulations.
d.is a strong indicator of a firm's long-term i

c.
is useful where FDI is limited by host-government regulations.

If a firm can realize location economies by moving production elsewhere, it should avoid:
a.exporting.
b.turnkey contracts.
c.licensing.
d.wholly owned subsidiaries.

a.
exporting.

When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service.
a. wholly owned subsidiary
b. franchising arrangement
c. turnkey operation
d. licensing

a. wholly owned subsidiary

Which of the following is not an advantage associated with entering a foreign market before other international businesses?
Selected name.
a. Ability to preempt rivals and capture demand by establishing a strong brand name.
b. Ability to ride down the exp

d. Ability to avoid pioneering costs.

Which of the following statements about franchising is true?
a.It guarantees consistent product quality.
b.It tends to involve more short-term commitments than licensing.
c.It is a specialized form of licensing.
d.It is employed primarily by manufacturing

c.
It is a specialized form of licensing.

Which of the following is a disadvantage of licensing?
a.It does not help firms that lack capital to develop operations overseas.
b.It does not give a firm the tight control over strategy that is required for realizing experience curve and location econom

b.
It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies.

When local agents carry the products of competing firms and have divided loyalties, _____ is not appropriate.
a.franchising
b.licensing
c.exporting
d.greenfield investment

c.
exporting

All of the following are examples of pioneering costs except the costs of:
a.business failure.
b.educating consumers.
c.promoting and establishing a product offering.
d.learning from the mistakes of early entrants.

d.
learning from the mistakes of early entrants.

Which of the following is a distinct advantage of exporting?
a.It avoids the often substantial costs of establishing manufacturing operations in the host country.
b.Benefits from a local partner's knowledge of the host country's competitive conditions.
c.

a.
It avoids the often substantial costs of establishing manufacturing operations in the host country.

Which of the following is an advantage of franchising?
a.A firm takes profits out of one country to support competitive attacks in another.
b.A firm is relieved of many of the costs and risks of opening a foreign market on its own.
c.It guarantees consist

b.
A firm is relieved of many of the costs and risks of opening a foreign market on its own.

Firms may prefer acquisitions to greenfield investments for all of the following reasons except:
a.they allow companies to completely sidestep government regulations on investment.
b.they are quick to execute.
c.they enable the firm to preempt competitors

a.
they allow companies to completely sidestep government regulations on investment