International Business

The balance-of-payment account that records onetime changes in the stock of assets is the ________ account.

Capital

A neo-mercantilist strategy would promote

boosting exports and limiting imports.

Company A entered the production of office software before its competitors. Because of this, the company’s products are more familiar among and favored by customers. This situation exemplifies

first-mover advantages

The rationale for the ________ theory is that the wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products.

Product life cycle

The simple model of free trade assumed away transportation costs between countries.

True

What was the result of the Smoot-Hawley Act?

Other countries reacted by raising their own tariff barriers.

According to the ________ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.

Infant Industry

According to the infant industry argument, many developing countries have a potential ________ in manufacturing, but new manufacturing industries cannot initially compete with established industries in developed countries.

Comparative Advantage

Administrative trade policies are bureaucratic rules designed to make it difficult for imports to enter a country.

True

________ are the highest rate that can be charged, which is often, but not always, the rate that is charged.

Bound Tariff rates

Brigitte lives in France and is in the market for a new car. Because of the adoption of the euro, Brigitte can easily compare car prices across countries in Europe.

True

In terms of regional economic integration, coordination and policy harmonization problems increase as the number of countries that seek agreement increases.

True

The Andean Pact is a highly successful common market modeled after the EU.

False

What was the main objection raised by those in the United States and Canada who opposed the ratification of the NAFTA?

Job losses

On average, studies indicate that NAFTA’s overall impact has been

Small but positive

________ can be used to formalize arrangements to swap skills and technology in a strategic alliance.

Cross-licensing agreements

The valuable asset of firms, whose competitive advantage is based on management know-how, is their

Brand name

Contractual safeguards cannot be written into an alliance agreement to guard against the risk of opportunism by a partner. True or false

False

Booze Brothers developed an alcohol-flavored additive that can be added to water to mimic the taste of a margarita, but without the alcohol. The company granted the right to use this technology to a major bottled water manufacturer. The water manufacturer produced a line of water bottles with the flavored additive and Booze Brothers receives a $1.00 royalty for every “margarita” water bottle that is sold. This is an example of

Licensing

________ is a way to bring together complementary skills and assets that neither company could easily develop on its own.

Alliance

In a seminal study, Rosalie Tung found that among American multinationals, the biggest impediment to expatriate success was the

inability of the partner to adjust.

An expatriate’s base salary typically

is in the same range as the base salary for a similar position in the home country.

________ makes it difficult to evaluate the performance of expatriate managers objectively.

Unintentional Bias

Unions’ bargaining power is

largely derived from their ability to threaten to disrupt production.

Bringing managers together in one location for extended periods and rotating them through different jobs in several countries helps the firm build

an informal management network.

Firms may choose an ethnocentric approach to staffing as opposed to a polycentric approach because of the cost savings it promotes. True or False

False