International Business, 14e (Daniels et al.) Chapter 1 Globalization and International Business

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What is Globalization?

The broadening set of interdependent relationships among people from different parts of the world.

What is International Business?

It includes all business transactions involving two or more countries.

What impact does global competition has on firms?

Most firms depend either on foreign markets and supplies or compete against companies that do.

What is the effect of shifting national borders for International Business?

Has led to a situation where most firms depend either on foreign markets and supplies or compete against companies that do.

What is an indication of the increased globalization of business since the end of World War II?

World trade has grown more rapidly than world production.

According to the A.T. Kearny/Foreign Policy Globalization Index, how do countries rank?

Sometimes rank high on one dimension and low on another.

What has NOT been a major force increasing globalization in recent decades?

Decreasing prices of natural resources.

How has Institutional development of services by business and government aided the expansion of international business?

Developing means to ease the flow of goods among countries.

What has MOST influenced consumers to demand access to foreign-made products?

Consumers have become more efficient in using media and technologies to compare prices worldwide.

What explains why international business has grown rapidly in the past few decades?

The end of the political schism between the Communist and non-Communist blocs.

How have Advanced communication systems contributed to growth in international business?

Enabling better oversight of global operations.

Imported flowers are now a stronger competitor to U.S. grown flowers in the U.S. market. Which of the following is likely the MOST important factor to this increase in imports?

Advances in transportation, such as stronger than U.S. grown flowers.

Because consumers want a greater variety of goods and services at lower prices, what many governments have done?

Reduced their restrictions on the international movement of goods and services.

What explains recent governmental relaxation of restrictions on cross-border trade or resource movements?

Governments believe that domestic producers will become more efficient as a result of foreign competition.

A company starting out with a global focus ,is called what?

Born-global company.

In a strategy that involves locating near competitors and suppliers, what is this strategy called?

Clustering.

When a company successfully responds to foreign production and market opportunities, what is likely to happen?

Other companies will likely emulate its successful practices.

What is NOT one of the three main reasons affecting international business for governments to cooperate with each other?

To establish a common language.

What is the primary reason why Governments have signed treaties to protect foreign-owned property rights?

to gain reciprocal advantages

All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT

The Panama and Suez Canals.

What is the most likely reason that governments cooperate with each other through treaties, agreements, and consultations?

To attack problems jointly that one country acting alone cannot solve.

Which of the following is the LEAST likely reason that small countries worry about overdependence caused by globalization?

A large country may substantially increase its demand for the small country's production.

Which of the following statements would most likely be made by a supporter of globalization?

Globalization encourages the adoption of uniform and superior standards for combating environmental problems.

What does the example of the Amazon region best illustrate?

How global interests can conflict with a country's local interests.

Although globalization may bring economic growth, critics nevertheless contend that

The inequality of gains puts some people in a relatively worse economic situation.

The process of shifting production from a domestic to a foreign location is best known as

Offshoring.

Which of the following statements would most likely NOT be supported by an advocate of offshoring?

Offshoring is fundamentally better for workers than the introduction of labor-saving technologies.

A major criticism of offshoring is that it

Exchanges good jobs for bad jobs.

Critics of offshoring claim all EXCEPT which of the following?

Offshoring reduces the incomes of people in low-wage countries.

What factor best supports a decision to expand sales globally?

Its costs of making additional sales would not increase disproportionately.

Marketing director Kevin's decision will help to accomplish which of the following goals?

Increasing sales and profits.

Which of the following is the LEAST likely reason for doing so when a firm is currently seeking resources from foreign countries?

Following a customer into the global market.

How a firm BEST reduces risks with operations internationally?

Taking advantage of business-cycle differences among countries.

An example of a U.S. merchandise import is an automobile made in and sold .

Japan by a Japanese company; in the United States.

What are Visible exports and imports?

Merchandise imports and exports.

An example of a Japanese service export is a visit by a .

U.S. citizen to Tokyo Disneyland in Japan.

Reebok pays the German Soccer League a royalty for what type of arrangement?

Licensing agreement.

A foreign direct investment occurs when .

A company has a controlling interest in a foreign company.

Which term refers to two or more companies that share ownership of an FDI?

Joint venture.

A multinational enterprise (MNE) is best defined as a firm .

With foreign direct investments.

The term used by the United Nations as a synonym for multinational enterprise is .

Transnational company.

Politics, law, culture, and economy are all examples of factors.

Social.

Managers who are knowledgeable about are better able to identify the location, quantity, quality, and availability of the world's natural resources.

Geographic.

Although the U.S. film industry depends heavily on revenue in foreign countries, revenue from international markets is usually low for a sports-themed film. This is most likely due to factors.

Behavioral.

In addition to understanding the laws affecting business in countries where their companies operate, it is most important for managers to understand the .

Degree of law enforcement.

Some key factors in a company's international business external environment are its product strategy and access to resources.

Competitive.

The same automobile company produces Fiats and Ferraris. The company builds an engine plant in China with low production costs for Fiats but not Ferraris. The probable reason is that .

Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focus strategy.

A computer firm has high foreign sales in Asia and wants to expand sales into Europe. Which of the following statements provides the most appropriate advice for Elway executives?

Being a leader in one country does not guarantee market leadership in another country.

When companies face the same competitors in almost all countries where they operate, .

What they learn about each other in one country is useful in predicting the other's strategies and actions elsewhere.

The view that globalization is inevitable is most likely based on the belief that .

Technical advances in transportation and communications are highly pervasive.

Critics of the view that regionalization will prevail over globalization most likely base their argument on the belief that .

Regionalization is a transition stage toward globalization.

Which of the following is NOT a common argument for the slowing of future globalization?

Technological, transportation, and communication advances will decline in the near future.

Some observers feel that international institutions and the people working in them cannot adequately handle the complexities of an interconnected world. Based on this, these observers believe that .

Globalization will slow in the future.

The owner of a U.S. football team and the owner of a Canadian hockey team purchase a British soccer team. This is an example of a .

Joint venture.

Carnival Cruise Lines lowers its taxes by all of the following EXCEPT .

Hiring host-country nationals who pay no taxes.

A flag of convenience is .

The registration of a shipping company in a country that charges low taxes.