International Business 3660 Exam 1

the stock of foreign direct investment refers to

the total cumulative value of foreign investments

what action was implemented in the Uruguay Round, finalized in December 1993?

establishment of WTO

which factor contributed to the Great Depression?

countries progressively raised trade barriers against each other

opponents of globalization argue that falling trade barriers

allow firms to move manufacturing activities to countries with lower wage rates

at the Doha Round of the WTO in late 2001, an agenda was established to

phase out subsidies to agricultural producers

which statement pertains to changes in the global economy of the 21st century?

the world is moving toward an economic system that is more favorable for intl business

T or F: cultural differences have no effect on the way an intl firm conducts its business around the globe

false

globalization has enabled organizations to reduce their costs of production by

creating manufacturing units in developing countries

globalization critics argue that the decline in unskilled wage rates is due to the

migration of low wage manufacturing jobs offshore

what is often see as the lender of last resort?

International Monetary Fund (IMF)

an international business is

any firm that exports or imports

what was created in 1944 by 44 nations that met in Breton Woods, NH to promote economic development?

World Bank

what is one reason why managing an international business is different from managing a purely domestic business?

an intl business must find ways to work within the limits imposed by govt intervention in the international trade and investment system

one of the UN's Millennium Goals was to cut in half the number of people living in extreme poverty by 2015. Which of the following is an accurate statement concerning this goal or its impact?

this goal was reached five years ahead of schedule

T or F: Since the 1960s, a notable trend in the demographics of the multinational enterprise has been the rise of US multinationals

false

T or F: In a command 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

false

which of the following is a more attractive place to do business?

a nation with a market-based economic system

T or F: in the early twentieth century, the socialist ideology split into two broad camps: communists and social democrats

true

T or F: a common feature of many right-wing dictatorships is that they support socialist or communist ideas

false

the role of the government in a market economy involves

encouraging vigorous free and fair competition among private producers

contracts drafted under a common law framework tend to be

very detailed with contingencies spelled out

T or F: in a market economy, a supply restriction occurs when a single firm monopolizes a market

true

which of the following statements is true about trademarks?

trademarks are designs and names by which businesses differentiate their products

which of the following is a feature of right-wing totalitarianism?

provision of partial individual economic freedom along with restricted individual political freedom

which of the following philosophies can be traced back to the ancient Greek philosopher Plato?

collectivism

the benefits, costs, and risks associated with doing business in a country are a function of that country's

political, economic, and legal systems

historically, command economies were found in ______ where collectivist goals were given priority over individual goals

communist countries

T or F: since the demise of communism in the late 1980s, the number of command economies has risen dramatically

false

T or F: a civil law system tends to be more adversarial than a common law system

false

the ______ committed themselves to achieving socialism without resorting to violent revolution and dictatorship

social democrats

which of the following is true about the economic risks of doing business in a country?

the inflation rate in a country is an indicator of the economic risks of doing business in a country

T or F: in calculating data in some countries, the official figures take into account the barter agreements as part of daily business

false

in Samuel Huntington's thesis, global terrorism is a product of the ______

clash of value systems and ideology

T or F: deregulation involves the establishment and operation of private enterprises

true

which of the following is true about planned economies?

in a planned economy, the state owns all means of production

countries with free market economies in which property rights are protected tend to have ______ than command economies or economies where property rights are poorly protected

greater economic growth rates

T or F: "not free" countries are characterized by some restrictions on political rights and civil liberties, often in the context of corruption, weak rule of law, ethnic strife, or civil war

false

T or F: it can be more costly to do business in a country where there are no laws and regulations with regard to product safety

false

UN has developed the Human Development Index (HDI) to measure the

quality of human life in different nations

GNI/person figures can be misleading because they don't consider differences in the cost of living

true

many of the national markets of Eastern Europe, Latin Ameria, Africa, and Asia may still be underdeveloped, but they are potentially enormous. Which of the following is a risk to business moving into these regions?

there is no guarantee that democracy will thrive in many of the world's newer democratic states

Amazon.com was the earliest major online bookstore which allowed it to generate brand awareness and have a significant presence in the market. It has had a head start on later entrants to the online bookstore market

first-mover advantages

T or F: During the late 1980s and early 1990s, a wave of democratic revolutions swept the world

true

during the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments that were typically _____ than their predecessors had been

more committed to free market capitalism

which of the following exemplifies privatization?

a country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding

T or F: a mudarabah contract of Islamic banks is similar to a profit-sharing scheme

true

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

ethical system

T or F: Hofstede's power distance dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities

false

Hofstede's masculinity vs femininity dimension examined

the relationship between gender and work roles

T or F: people who violate folkways are considered to be evil or bad

false

what is true about the caste system?

it is a rigid form of social stratification

what is the most widely practiced religion in the world?

christianity

indulgence refers to

a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun

T or F: entrepreneurs and business-owners of high uncertainty avoidance cultures will be more willing to take risks and make changes

false

according to the findings of the World Values Survey

as countries get richer, there seems to be a shift from survival values to well-being values

values are

abstract ideas about what a group believes to be good, right, and desirable

T or F: one of the biggest dangers confronting a company that goes abroad for the first time is the danger of being ill-informed

true

which of the following aspects of Protestantism paved the way for the subsequent emphasis on individual economic and political freedoms?

the emphasis on individual religious freedom

T or F: the value systems and norms of a country have little influence on the costs of doing business in that country

false

folkways are

the routine conventions of everyday life

T or F: using Hofstede's dimensions of social culture, research has shown that companies headquartered in cultures where masculinity and power distance are important attributes were more likely to emphasize the importance of behaving ethically

false

From an international business perspective, some argue that what is ethical

depends on one's cultural perspective

kids working for low wage rates at factory vs without jobs on street corners leads to an

ethical dilemma

as a philosophy for business ethics, utilitarianism focuses attention on the need to

weigh carefully all of the social benefits and costs of a business action

General Motors' stand against apartheid in South Africa was based upon what came to be known as

the human rights movement

T or F: the naive immoralist claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries

false

T or F: building an organizational culture that places a high value on ethical behavior requires incentive and reward systems that reward people who engage in ethical behavior

true

to make sure that a business behaves in an ethical manner, a number of companies have hired _____, who are responsible for making sure the company's code of ethics is followed in every business decision

ethics officers

the term ______ refers to the values and norms that are shared among employees of an organization

organizational culture

The Foreign Corrupt Practices Act was amended to

allow for "facilitating payments"

T or F: a code of ethics is a formal statement of the ethical priorities that a business follows

True

T or F: Kantian ethics hold that the moral worth of actions or practices is determined by their consequences

false

T or F: The convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member states to make facilitating payments made to expedite routine government action on a criminal offense

false

the practice of "gift-giving" between the parties to a business negotiation is considered right and proper behavior in many Asian cultures, while some Westerners view the practice as a form of bribery. What is this an example of?

an ethical dilemma

the ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, and environmental pollution are

not always clear-cut

T or F: The new trade theory stresses that countries should have favorable factor endowments to excel in the production of a good

false

Porter argues that a nation's firms should

adopt policies that promote strong competition within domestic markets

Which of the following theories explains global trade in terms of the international differences in labor productivity?

Ricardo's theory of comparative advantage

The _____ theory argues that such advanced nations as the United States have an incentive to develop consumer products and hence such nations tend to produce newer products.

product life-cycle

T or F: Underlying most trade theories is the notion that different countries have particular advantages in different productive activities.

true

T or F: Theories of international trade claim that promoting free trade is generally in the best interests of a country, although it may not always be in the best interest of an individual firm.

true

Which of the following theories proposes that a country should specialize in producing those goods for which it has an absolute advantage?

Adam Smith's theory

T or F: Paul Samuelson's critique looks at what happens when a rich country enters into a free trade agreement with a poor country.

true

What is the term for unit cost reductions associated with a large amount of output?

economies of scale

What are first-mover advantages?

economic and strategic advantages that accrue to early entrants into an industry

Which of the following is an example of an advanced factor that a nation will possess as proposed by Porter?

skilled labor

T or F: A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.

true

T or F: New trade theorists argue that getting a first-mover advantage is not a significant determinant of international trade.

false

Constant returns to specialization occurs when

units of resources remain stable for any number of goods produced

Free trade refers to a situation where _____.

a government does not try to influence what its citizens can buy from global markets

T or F: Dumping is viewed as a method by which firms unload excess production in foreign markets.

true

Most economists would probably argue that the best interests of international business are served by

a free trade stance

_____ argues that a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry is a beggar-thy-neighbor policy that boosts national income at the expense of other countries.

Paul Krugman

_____ suggests that a government should use subsidies to support promising firms that are active in newly emerging industries.

strategic trade policy

T or F: An import quota is a specific tax levied on imports.

false

T or F: Governments always act in the national interest of their countries when they intervene in the economy.

false

The lack of progress in the Doha Round negotiations has resulted in countries

forging ahead with their own bilateral agreements

T or F: The strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade.

true

In the 1986 Uruguay Round, GATT members sought to write rules for promoting which of the following?

GATT's monitoring and enforcement mechanisms

T or F: The GATT was a multilateral agreement whose objective was to liberalize trade.

true