Test Bank For International Management Culture Strategy and Behavior 11th Edition Fred Luthans Jonathan Doh

Chapter 01 - Globalization and International Linkages
Test Bank for International Management:

Culture, Strategy, and Behavior, 11th Edition
Fred Luthans Jonathan Doh
Full version at:
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management-culture-strategy-and-behavior-11th-edition-fred-
luthans-jonathan-doh/
Chapter 01
Globalization and International Linkages
True/False Questions
1. Internationalization is the vision of creating one world unit, a single market entity.
Answer: False
Feedback: Internationalization is the process of a business crossing national and cultural
borders, while globalization is the vision of creating one world unit, a single market entity.
AACSB: Analytic
Bloom's: Remember
Learning Objective: 01-01 ASSESS the implications of globalization for countries, industries,
firms, and communities.
Level of Difficulty: 1 Easy
Topic: Globalization and Internationalization
2. In the context of the changing global demographics, elderly populations spend money on
housing and other capitally financed purchases.
Answer: False
Feedback: While elderly populations spend money on health care services, younger
populations spend income on housing and other capitally financed purchases.
AACSB: Analytic
Bloom's: Remember
3. North American Free Trade Agreement (NAFTA) members are better integrated as a
single market than the European Union (EU) or the allied Asian countries.
Answer: False
Feedback: Even though long-standing cultural differences remain, and the European Union
has recently experienced some substantial challenges, the European Union is more integrated
as a single market than NAFTA, CAFTA, or the allied Asian countries.
AACSB: Analytic
Bloom's: Remember
1-1
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prior written consent of McGraw-Hill Education.
4. General Electric (GE) has strategically leveraged social media to improve its long-term
brand image.
Answer: True
Feedback: General Electric (GE) has strategically leveraged social media to improve its long-
term brand image. By interacting daily with customers across a variety of social networks, the
100-year-old company aims to transform the way that its brand is perceived while
simultaneously building a new generation of consumers.
AACSB: Analytic
Bloom's: Remember
Topic: An Interconnected World
5. An increase in the ease of travel between countries is an important development that has
occurred because of the North American Free Trade Agreement (NAFTA).
Answer: True
Feedback: An increase in the ease of travel between countries is an important development
that has occurred because of the North American Free Trade Agreement (NAFTA). Other
important developments include the elimination of tariffs as well as import and export quotas,
the opening of government procurement markets to companies in Canada and Mexico, an
increase in the opportunity to make investments in each other’s country, and the removal of
restrictions on agricultural products, auto parts, and energy goods.
AACSB: Analytic
Bloom's: Remember
6. According to a Goldman Sachs global economics team report, it is estimated that the
economies of Brazil, Russia, India, and China, which it collectively coined as the "BRIC"
nations, will surpass the collective economies of the G7 nations by 2032.
Answer: True
Feedback: According to a Goldman Sachs global economics team report, it is estimated that
the economies of Brazil, Russia, India, and China, which it collectively coined as the "BRIC"
nations, will surpass the collective economies of the G7 nations by 2032.
AACSB: Analytic
Bloom's: Remember
1-2
7. Foreign direct investment has been falling alarmingly since the global recession of 2009 in
most regions of the world.
Answer: False
Feedback: Foreign direct investment (FDI)—the term used to indicate the amount invested in
property, plant, and equipment in another country—has been growing at a slow but steady
rate in the years since the global recession of 2009.
AACSB: Analytic
Bloom's: Remember
8. In a command economy, a general balance between supply and demand sustains prices,
while an imbalance creates a price fluctuation.
Answer: False
Feedback: In a command economy, the government has explicit control over the price and
supply of a good or service. The particular goods and services offered are not necessarily in
response to consumers' stated needs but are determined by the theoretical advancement of
society.
AACSB: Analytic
Bloom's: Remember
Learning Objective: 01-02 REVIEW the major trends in global and regional integration.
Topic: Global Economic Systems
9. Monopolies are a danger to the market economy system because they tend to stifle
economic growth.
Answer: True
Feedback: Monopolies are a danger to the market economy system because they tend to stifle
economic growth and consumer choice with their power to determine supply. Factors such as
efficiency of production and quality and pricing of goods can be chosen arbitrarily by
monopolies, leaving consumers without a choice and at the mercy of big businesses.
AACSB: Analytic
Bloom's: Remember
10. In the context of the emerging markets of Asia, India is attractive to multinationals,
especially U.S. and British firms.
Answer: True
Feedback: India is attractive to multinationals, especially U.S. and British firms. Many Indian
people speak English, are very well educated, and are known for advanced information
technology expertise.
AACSB: Analytic
Bloom's: Remember
Learning Objective: 01-03 EXAMINE the changing balance of global economic power and
trade and investment flows among countries.
1-3

Topic: Economic Performance and Issues of Major Regions
11. The United States has considerable foreign direct investment in Germany, more than in
any other country.
Answer: False
Feedback: The United States has considerable foreign direct investment in Canada, more than
in any other country. Canada is the United States' largest trading partner, a position it has
held for many years.
AACSB: Analytic
Bloom's: Remember
12. Despite being unable to take full advantage of globalization, there is still hope in the
future for Africa because the potential of African countries remains virtually untapped.
Answer: True
Feedback: Despite being unable to take full advantage of globalization, there is still hope in
the future for Africa because the potential of African countries remains virtually untapped.
Not only are there considerable natural resources, but the diversity itself also can be used to
advantage.
AACSB: Analytic
Bloom's: Remember
13. One of the factors that contributed to the early success of the Japanese economy is the
presence of chaebols.
Answer: False
Feedback: One of the factors that contributed to the early success of the Japanese economy is
the Ministry of International Trade and Industry (MITI). This is a governmental agency that
identifies and ranks national commercial pursuits and guides the distribution of national
resources to meet these goals.
AACSB: Analytic
Bloom's: Remember
14. About 46 percent of employees in both the United States and Russia would prefer a work
schedule that fluctuates between work and leisure, mirroring a pattern of recurring
sabbaticals.
Answer: True
1-4
Feedback: About 46 percent of employees in both the United States and Russia would prefer
a work schedule that fluctuates between work and leisure, mirroring a pattern of recurring
sabbaticals. This similarity can be taken into account by a U.S. firm when considering
opening a business in Russia.
AACSB: Analytic
Bloom's: Remember
15. The ultimate objective of the European Union (EU) is to eliminate all trade barriers
among member countries.
Answer: True
Feedback: The ultimate objective of the European Union is to eliminate all trade barriers
among member countries (like between the states in the United States).
AACSB: Analytic
Bloom's: Remember
16. The economy of Argentina outweighs that of any other South American country with an
economic output comparable to that of France and has become a worldwide presence.
Answer: False
Feedback: The Brazilian economy outweighs that of any other South American country with
an economic output comparable to that of France and has become a worldwide presence.
Given Brazil's large and relatively well-educated population, ample natural resources,
existing industrial base, and strategic geographic position, longer-term prospects are still
potentially positive.
AACSB: Analytic
Bloom's: Remember
17. The Brazilian economy outweighs that of any other South American country with an
economic output comparable to that of France.
Answer: True
Feedback: The Brazilian economy outweighs that of any other South American country with
an economic output comparable to that of France. Longer-term prospects are still potentially
positive because of its large and relatively well-educated population, ample natural resources,
existing industrial base, and strategic geographic position.
AACSB: Analytic
Bloom's: Remember
1-5

18. China remains a major risk for investors because they are required to maintain a delicate
balance between the country's communist and capitalist systems.
Answer: True
Feedback: China remains a major risk for investors. The one country, two systems
(communism and capitalism) balance is a delicate one to maintain, and foreign businesses are
often caught in the middle.
AACSB: Analytic
Bloom's: Remember
19. Hungary's economy was the only economy in the EU to continue to grow during the
global recession of 2008–2009.
Answer: False
Feedback: Poland's economy was the only economy in the European Union to continue to
grow during the global recession of 2008–2009. In 2015, Poland's GDP grew by around 4
percent. Although the relatively swift transition to a market economy has been very difficult
for the Polish people, with very high inflation initially, continuing unemployment, and the
decline of public services, Poland's economy has done relatively well.
AACSB: Analytic
Bloom's: Remember
20. Singapore has emerged as an urban planner's ideal model and the leader and financial
center of Southeast Asia.
Answer: True
Feedback: Singapore has emerged as an urban planner's ideal model and the leader and
financial center of Southeast Asia. It is a major success story, and its solid foundation leaves
only the question of how to continue expanding in the face of increasing international
competition.
AACSB: Analytic
Bloom's: Remember
Multiple Choice Questions
1-6
21. _____ is the process of applying management concepts and techniques in a multinational
environment and adapting management practices to different economic, political, and cultural
environments.
A. Strategic management
B. Internationalization
C. Globalization
D. International management
Answer: D
Feedback: International management is the process of applying management concepts and
techniques in a multinational environment and adapting management practices to different
economic, political, and cultural contexts.
AACSB: Analytic
Bloom's: Remember
Topic: Introduction
22. To qualify as a multinational corporation (MNC), a firm must meet all of the following
criteria except:
A. operations in more than one country.
B. international sales.
C. a mix of nationalities among managers and owners.
D. sales of at least one million dollars per year.
Answer: D
Feedback: An MNC is a firm that has operations in more than one country, international
sales, and a mix of nationalities among managers and owners.
AACSB: Analytic
Bloom's: Understand
Level of Difficulty: 2 Medium
Topic: Introduction
23. Critics of globalization believe that:

A. the offshoring of business services jobs to lower-wage countries inherently creates greater
opportunities at home.
B. growing trade deficits and slow wage growth are damaging economies.
C. when production moves to countries to take advantage of less-regulated environments, an
upward pressure is created on wages and working conditions.
D. the main winners of globalization are the low-wage workers.
Answer: B
Feedback: In the context of globalization, critics believe that growing trade deficits and slow
wage growth are damaging economies. They also believe that globalization may be moving
too fast for some emerging markets, which could result in economic collapse.
AACSB: Analytic
Bloom's: Understand
1-7

24. The subcontracting or contracting out of activities to external organizations that had
previously been performed by a firm is called _____.
A. homesourcing
B. insourcing
C. offshoring
D. outsourcing
Answer: D
Feedback: Outsourcing is the subcontracting or contracting out of activities to external
organizations that had previously been performed by a firm.
AACSB: Analytic
Bloom's: Remember
25. _____ is the process by which companies undertake some activities at offshore locations
instead of in their countries of origin.
A. Homesourcing
B. Insourcing
C. Offshoring
D. Globalization
Answer: C
Feedback: Offshoring is the process by which companies undertake some activities at
offshore locations instead of in their countries of origin.
AACSB: Analytic
Bloom's: Remember
26. The _____ is the global organization of countries that oversees rules and regulations for
international trade and investment, including agriculture, intellectual property, services,
competition, and subsidies.
A. WTO
B. NAFTA
C. WIPO
D. ITO
Answer: A
Feedback: The WTO is the global organization of countries that oversees rules and
regulations for international trade and investment, including agriculture, intellectual property,
services, competition, and subsidies.
AACSB: Analytic
Bloom's: Remember
1-8
27. The _____ is a free-trade agreement among the United States, Canada, and Mexico that
has removed most barriers to trade and investment.
A. AFTA
B. EFTA
C. CAFTA
D. NAFTA
Answer: D
Feedback: The United States, Canada, and Mexico make up the North American Free Trade
Agreement (NAFTA), which in essence has removed all barriers to trade among these
countries and created a huge North American market.
AACSB: Analytic
Bloom's: Remember
28. Identify a true statement about the Development Round in which the members of the
World Trade Organization (WTO) met and launched a round of negotiations at Doha, Qatar
in November 2011.
A. The WTO members agreed upon the opening of government procurement markets to
companies in the developed nations.
B. There was a lack of consensus among WTO members regarding agricultural subsidies.
C. There was a lack of consensus among WTO members regarding unbalanced population
pyramids.
D. The WTO members agreed upon the issues of competition.
Answer: B
Feedback: During the Development Round in which the members of the World Trade
Organization (WTO) met, in November 2011, and successfully launched a new round of
negotiations at Doha, Qatar, there was a lack of consensus among WTO members regarding
agricultural subsidies and the issues of competition and government procurement.
AACSB: Analytic
Bloom's: Remember
29. The United States, Canada, and Mexico make up the _____, which in essence has
removed all barriers to trade among these countries and created a huge North American
market.
A. General Agreement on Tariffs and Trade
B. North American Common Market
C. North American Free Trade Agreement
1-9
D. North American Trade Union

Answer: C
Feedback: The United States, Canada, and Mexico make up the North American Free Trade
countries and created a huge North American market.
AACSB: Analytic
Bloom's: Remember
30. Agreements like NAFTA and CAFTA:

A. not only reduce barriers to trade but also require additional domestic legal and business
reforms in developing nations to protect property rights.
B. do not include supplemental commitments like the FTAA does on labor and the
environment to encourage countries to upgrade their working conditions and environmental
protections.
C. rely exclusively on MNCs exporting or setting up operations locally rather than buying out
a domestic firm.
D. provide firms with enough security so they cannot go out of business, which simply
encourages a lack of efficiency or incentive to monitor costs.
Answer: A
Feedback: Agreements like NAFTA and CAFTA not only reduce barriers to trade but also
require additional domestic legal and business reforms in developing nations to protect
property rights.
AACSB: Analytic
Bloom's: Understand
31. In the context of the changing global demographics, identify a change that will be seen in
developed nations.
A. Developed Asian nations will be able to easily replace the retiring, aging population.
B. In Japan, the number of nonworkers will be nearly equal to that of workers by 2050.
C. In South Korea, the immigration policy will ease by 2050.
D. In Germany, there will be a removal of restrictions on agricultural products, auto parts,
and energy goods.
Answer: B
Feedback: Demographic changes are projected to occur globally, and the most dramatic
impact will be seen in the developed nations. In Japan, the number of nonworkers will be
nearly equal to that of workers by 2050. Both Japan and South Korea will face a loss of over
25 percent of their working-class population.
AACSB: Analytic
Bloom's: Understand
1-10

32. According to some critics, agreements like North American Free Trade Agreement
(NAFTA) and Central American Free Trade Agreement (CAFTA):
A. have been successful in ensuring environmental standards.
B. have been successful in preventing the decline of the global working-age population.
C. do not go far enough in ensuring worker rights.
D. do not go far enough in protecting property rights.
Answer: C
Feedback: According to some critics, agreements like North American Free Trade Agreement
(NAFTA) and Central American Free Trade Agreement (CAFTA) do not go far enough in
ensuring worker rights. They also believe that the agreements do not go far enough in
ensuring environmental standards.
AACSB: Analytic
Bloom's: Understand
33. The Asian economic block, made up of Indonesia, Malaysia, the Philippines, Singapore,
Brunei, Thailand, Cambodia, Myanmar, and Vietnam, is referred to as the:
A. Association of Southeast Asian Nations (ASEAN).
B. Southeast Asia Free Trade Agreement (SWAFTA).
C. Southeast Asia Common Market.
D. Asian Economic Union.
Answer: A
Feedback: The Association of Southeast Asian Nations (ASEAN) is made up of Indonesia,
Malaysia, the Philippines, Singapore, Brunei, Thailand, and, in recent years, Cambodia,
Myanmar, and Vietnam.
AACSB: Analytic
Bloom's: Remember
34. A method that adjusts GDP to account for different prices in countries is called:
A. cumulative distribution function.
B. nominal GDP.
C. current currency exchange rate.
D. purchasing power parity.
Answer: D
Feedback: Purchasing power parity (PPP) is a method that adjusts GDP to account for
different prices in countries.
AACSB: Analytic
Bloom's: Remember
1-11
35. Unlike the Group of Seven (G7) economies, the Emerging Seven (E7) economies are:
A. primarily located in North America and Europe.
B. located throughout Latin America and Asia.
C. mature economies in which economic growth is slow.
D. incentivizing citizens to have more children.
Answer: B
Feedback: Unlike the Group of Seven (G7) economies, the Emerging Seven (E7) economies
are located throughout Latin America and Asia. In March 2006, the term E7 was coined by
PricewaterhouseCoopers (PwC) to describe seven major emerging economies of Brazil,
China, India, Indonesia, Mexico, Russia, and Turkey that are expected to expand significantly
in the coming decades.
AACSB: Analytic
Bloom's: Understand
36. Which of the following statements is true according to the reports that were released in
2004 and 2011 by the Goldman Sachs global economics team?
A. The economies of Russia and Brazil would remain unaffected by the low prices for oil and
other commodities in the years 2015 and 2016.
B. The BRIC (Brazil, Russia, India, and China) economies' share of world growth could rise
significantly from 2003 to 2025.
C. The economies of Indonesia, Mexico, and Turkey could expand significantly in the
coming decades.
D. The E7 (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) economies would
mature and slow down in terms of market exchange rates.
Answer: B
Feedback: According to the reports that were released in 2004 and 2011 by the Goldman
Sachs global economics team, the BRIC (Brazil, Russia, India, and China) economies' share
of world growth could rise significantly from 2003 to 2025. It could rise from 20 percent in
2003 to more than 40 percent in 2025. The reports also predicted that the BRIC's total weight
in the world economy would rise from approximately 10 percent in 2004 to more than 20
percent in 2025.
AACSB: Analytic
Bloom's: Understand
37. _____ is the term used to indicate the amount invested in property, plant, and equipment
in another country.
1-12
A. Exporting
B. Foreign direct investment
C. Importing
D. Trade imperfection
Answer: B
Feedback: Foreign direct investment (FDI) is the term used to indicate the amount invested in
property, plant, and equipment in another country.
AACSB: Analytic
Bloom's: Remember
38. According to the World Trade Organization, in 2014 merchandise exports:

A. reached a record high.
B. declined for the first time since 1983.
C. remained fairly consistent.
D. decreased by almost 50 percent.
Answer: A
Feedback: According to the World Trade Organization, in 2014 merchandise exports reached
a record high $18.2 trillion, and commercial services exports have rebounded to $4.2 trillion.
AACSB: Analytic
Bloom's: Understand
39. In 2009, global FDI _____.

A. nearly doubled
B. nearly tripled
C. dropped substantially
D. remained fairly constant
Answer: C
Feedback: In 2009, global FDI dropped significantly by almost 50 percent to $896 billion. It
rebounded to $1.5 trillion by 2013.
AACSB: Analytic
Bloom's: Understand
40. By 2017, foreign direct investment (FDI) is estimated to:

A. surpass the all-time high set a decade earlier in 2007.
B. reach an all-time low due to political instability and uncertain markets.
C. experience a significant drop similar to the global recession of 2009.
D. experience an insignificant rise due to a slow rate of increase of merchandise exports.
1-13
Answer: A
Feedback: By 2017, foreign direct investment (FDI) is estimated to surpass the all-time high
set a decade earlier in 2007. Despite dropping almost 50 percent in 2009 to $896 billion,
global FDI rebounded to $1.5 trillion by 2013.
AACSB: Analytic
Bloom's: Understand
41. In the context of the shifting balance of economic power in the global economy, which of
the following factors has helped boost incomes and wealth in the African continent between
2000 and 2015?
A. A one-child policy
B. An increase in the price of agricultural products
C. An increase in the size of the elderly population
D. An easy immigration process for workers
Answer: B
Feedback: In the context of the shifting balance of economic power in the global economy, an
increase in the price of agricultural products has helped boost incomes and wealth in the
African continent between 2000 and 2015. Also, increases in the price of commodities, such
as oil, gas, and mineral and mining products have helped boost incomes and wealth in the
continent.
AACSB: Analytic
Bloom's: Understand
42. The Trans-Pacific Partnership (TPP) is a trade agreement among 12 Pacific Rim
countries, including:
A. Peru, the United States, and Vietnam.
B. Great Britain, New Zealand, and China.
C. India, Canada, and Australia.
D. Singapore, Russia, and Chile.
Answer: A
Feedback: The Trans-Pacific Partnership (TPP) is a trade agreement among 12 Pacific Rim
countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, the United States, and Vietnam.
AACSB: Analytic
Bloom's: Remember
1-14
43. Which of the following economies is projected to become the largest by 2050 using
market exchange rates?
A. China
B. India
C. Australia
D. Brazil
Answer: A
Feedback: The economy of China is projected to become the largest by 2050 using market
exchange rates. China would surge past the United States and Japan as the largest world
economic power by 2050.
AACSB: Analytic
Bloom's: Remember
44. A _____ is comparable to a monopoly in the sense that an organization, in this case the
government, has explicit control over the price and supply of a good or service.
A. command economy
B. market economy
C. mixed economy
D. socialist economy
Answer: A
Feedback: A command economy is comparable to a monopoly in the sense that an
organization, in this case the government, has explicit control over the price and supply of a
good or service.
AACSB: Analytic
Bloom's: Remember
45. Identify a characteristic of a market economy.

A. The state reserves the right to monitor the production and distribution of goods and
services.
B. Private enterprises reserve the right to own property.
C. Monopolies boost economic growth.
D. Competition is discouraged because it hinders penetration into niche markets.
Answer: B
Feedback: A market economy exists when private enterprise reserves the right to own
property and monitor the production and distribution of goods and services while the state
simply supports competition and efficient practices. Management is particularly effective
here since private ownership provides local evaluation and understanding, opposed to a
nationally standardized archetype.
AACSB: Analytic
Bloom's: Understand
1-15
46. Unlike a market economy, a command economy is characterized by:

A. private ownership of businesses.
B. an appropriate response to consumers' stated needs and desires.
C. insufficient security provided by government subsidies.
D. an ignorance of demographic information by management.
Answer: D
Feedback: Unlike a market economy, a command economy is characterized by an ignorance
of demographic information by management. In a market economy, individuals within the
community disclose wants, needs, and desires to which businesses may appropriately
respond.
AACSB: Analytic
Bloom's: Understand
47. A _____ exists when private enterprise reserves the right to own property and monitor the
production and distribution of goods and services while the state simply supports competition
and efficient practices.
A. command economy
B. market economy
C. mixed economy
D. socialist economy
Answer: B
Feedback: A market economy exists when private enterprise reserves the right to own
property and monitor the production and distribution of goods and services while the state
simply supports competition and efficient practices.
AACSB: Analytic
Bloom's: Remember
48. The challenge for the future of the European Union is to:
A. have common custom duties.
B. have unified industrial and commercial policies.
C. be able to manufacture high-quality, low-cost goods.
D. absorb its eastern neighbors.
Answer: D
Feedback: The challenge for the future of the European Union is to absorb its eastern
neighbors, the former communist-bloc countries. This could result in a giant, single European
market. In fact, a unified Europe could become the largest economic market in terms of
purchasing power in the world.
AACSB: Analytic
Bloom's: Understand
1-16

49. _____ is the United States' largest trading partner, a position it has held for many years.
A. England
B. Canada
C. Japan
D. Mexico
Answer: B
Feedback: Canada is the United States' largest trading partner, a position it has held for many
years.
AACSB: Analytic
Bloom's: Remember
50. After becoming part of the North American Free Trade Agreement (NAFTA) in 1994,
Mexico:
A. exhibited significant economic stability.
B. was able to take advantage of the U.S. market.
C. experienced a tremendous increase in transportation costs.
D. experienced a significant increase in labor costs.
Answer: B
Feedback: After becoming part of NAFTA in 1994, Mexico was able to take advantage of the
U.S. market. Mexican businesses are producing goods for the U.S. market that were
previously purchased by the United States from Asia.
AACSB: Analytic
Bloom's: Understand
51. In the context of established economies, the United States has considerable foreign direct
investment in _____.
A. the Netherlands
B. Mexico
C. the United Kingdom
D. Canada
Answer: D
Feedback: In the context of established economies, the United States has considerable foreign
direct investment in Canada.
AACSB: Analytic
Bloom's: Remember
1-17
52. Which of the following statements is true of the economic system of North America?
A. The free-market-based economy of this region allows considerable freedom in decision-
making processes of private firms.
B. The command economy of this region allows for high flexibility with decisions and low
barriers for other countries to establish business.
C. The free-market-based economy of this region results in low trade barriers when
attempting to move into other countries.
D. The command economy of this region allows competition to strive while the government
can extend assistance to individuals or companies.
Answer: A
Feedback: The free-market-based economy of North America allows considerable freedom in
decision-making processes of private firms.
AACSB: Analytic
Bloom's: Understand
53. By the early 1990s _____ had recovered from its economic problems of the previous
decade and had become the strongest economy in Latin America.
A. Brazil
B. Argentina
C. Mexico
D. Chile
Answer: C
Feedback: By the early 1990s Mexico had recovered from its economic problems of the
previous decade and had become the strongest economy in Latin America.
AACSB: Analytic
Bloom's: Remember
54. U.S. firms maintain particularly dominant global positions in all of the following
industries except:
A. telecommunications.
B. biotechnology.
C. media.
D. textiles.
Answer: D
Feedback: U.S. firms maintain particularly dominant global positions in technology-intensive
industries, including computing (hardware and services), telecommunications, media, and
biotechnology.
AACSB: Analytic
Bloom's: Remember
1-18
55. A factory, the majority of which are located in Mexican border towns, that imports
materials and equipment on a duty- and tariff-free basis for assembly or manufacturing and
re-export is referred to as _____.
A. a vertically integrated corporation
B. a keiretsu
C. a maquiladora
D. a governmental agency
Answer: C
Feedback: A factory, the majority of which are located in Mexican border towns, that imports
materials and equipment on a duty- and tariff-free basis for assembly or manufacturing and
re-export is referred to as a maquiladora.
AACSB: Analytic
Bloom's: Remember
56. In the context of established economies, which of the following observations about
NAFTA is incorrect?
A. Mexican businesses are able to take advantage of the U.S. market by producing goods for
that market that were previously purchased from Asia.
B. Mexican firms are now able to produce products at highly competitive prices thanks to
lower-cost labor and proximity to the American market.
C. Mexican firms can now export goods into the European community only by paying a
heavy tariff.
D. Mexico's trade with Asia is on the rise, which is important to the country as it wants to
reduce its overreliance on the U.S. market.
Answer: C
Feedback: Mexican firms, taking advantage of a new arrangement that the government has
negotiated with the EU, can also now export goods into the European community without
having to pay a tariff.
AACSB: Analytic
Bloom's: Understand
57. A major development in South America is:

A. the implementation of a single currency and a regional central bank.
B. the growth of intercountry trade, spurred on by the progress toward free-market policies.
C. the privatization of traditionally nationalized industries.
D. the elimination of all trade barriers among member countries.
1-19
Answer: B
Feedback: Despite the ups and downs, a major development in South America is the growth
of intercountry trade, spurred on by the progress toward free-market policies.
AACSB: Analytic
Bloom's: Understand
58. A survey of businesspeople from Argentina, Brazil, Chile, Columbia, and Venezuela
found that the _____ market, on average, was more important for their economic well-being
than any other market.
A. Mexican
B. Japanese
C. U.S.
D. European Union
Answer: C
Feedback: A survey of businesspeople from Argentina, Brazil, Chile, Colombia, and
Venezuela found that the U.S. market, on average, was more important for them than any
other market.
AACSB: Analytic
Bloom's: Remember
59. The ultimate objective of the European Union is to:

A. develop separate custom duties for member countries.
B. eliminate all trade barriers among member countries.
C. have a single government that represents all European Union countries.
D. increase imports into European Union countries.
Answer: B
Feedback: The ultimate objective of the European Union is to eliminate all trade barriers
among member countries (like between the states in the United States).
AACSB: Analytic
Bloom's: Understand
60. In the context of established economies, the European Union:

A. has largely achieved the reality of a single currency and a regional central bank.
B. has eliminated all trade barriers among member countries.
C. subjects member nations to quotas on the manufacture and shipment of high-quality, low-
cost goods.
1-20
D. imposes duties on member nations for the manufacture and shipment of high-quality, low-
cost goods.
Answer: A
Feedback: In the context of established economies, the European Union's goal of a single
currency and a regional central bank has finally largely become a reality.
AACSB: Analytic
Bloom's: Understand
61. In the context of emerging and developing economies in Central and Eastern Europe,
which of the following is a pervasive challenge in Russia?
A. Privatization
B. Dismantling of Russian price controls
C. Lack of public security
D. Expansion of the middle class
Answer: C
Feedback: In the context of emerging and developing economies in Central and Eastern
Europe, lack of public security is a pervasive challenge in Russia. Persistent crime and
corruption also attribute to its pervasive set of challenges.
AACSB: Analytic
Bloom's: Understand
62. Russia, _____ receive the most media coverage and are among the largest of the former
communist countries.
A. Romania, Poland, and Bulgaria
B. Czech Republic, Bulgaria, and Poland
C. Hungary, Romania, and Albania
D. Poland, Hungary, and the Czech Republic
Answer: D
Feedback: The Czech Republic, Hungary, and Poland receive the most media coverage and
are among the largest of the former communist countries.
AACSB: Analytic
Bloom's: Remember
63. Which of the following statements is true about the economy of Poland?
A. The consensus decision-making system of Poland turns out to be too time-consuming in
the new speed-based economy.
B. During the 1970s and 1980s, Poland's economic success had been without precedent.
1-21
C. Poland is among the largest of the former communist countries that receive the least media
coverage.
D. Poland's economy was the only economy in the European Union to grow during the global
recession of 2008–2009.
Answer: D
Feedback: Poland's economy has done relatively well. Its economy was the only economy in
the European Union to continue to grow during the global recession of 2008–2009.
AACSB: Analytic
Bloom's: Understand
64. A _____ can be defined as an organizational arrangement in Japan in which a large, often
vertically integrated group of companies cooperate and work closely with each other to
provide goods and services to end users.
A. vertically integrated corporation
B. keiretsu
C. maquiladora
D. chaebol
Answer: B
Feedback: A keiretsu can be defined as an organizational arrangement in Japan in which a
large, often vertically integrated group of companies cooperate and work closely with each
other to provide goods and services to end users. Its members may be bound together by
cross-ownership, long-term business dealings, interlocking directorates, and social ties.
AACSB: Analytic
Bloom's: Remember
65. Ministry of International Trade and Industry (MITI) is a _____ government agency that
identifies and ranks national commercial pursuits and guides the distribution of national
resources to meet these goals.
A. Chinese
B. Japanese
C. South Korean
D. Philippine
Answer: B
Feedback: Ministry of International Trade and Industry (MITI) is a Japanese governmental
agency that identifies and ranks national commercial pursuits and guides the distribution of
national resources to meet these goals.
AACSB: Analytic
Bloom's: Remember
1-22
66. In the context of established economies, despite setbacks, _____ remains a formidable
international competitor and is well poised in all three major economic regions: the Pacific
Rim, North America, and Europe.
A. Japan
B. Chile
C. China
D. Argentina
Answer: A
Feedback: In the context of established economies, despite setbacks, Japan remains a
formidable international competitor and is well poised in all three major economic regions:
the Pacific Rim, North America, and Europe.
AACSB: Analytic
Bloom's: Remember
67. In addition to Japan and China, the important economies in Asia are:
A. South Korea, Hong Kong, Singapore, and Taiwan.
B. Indonesia, South Korea, Japan, and Taiwan.
C. Thailand, South Korea, Indonesia, and Hong Kong.
D. Singapore, South Korea, Indonesia, and Thailand.
Answer: A
Feedback: In addition to Japan and China, the important economies in Asia are South Korea,
Hong Kong, Singapore, and Taiwan.
AACSB: Analytic
Bloom's: Remember
68. In the context of emerging and developing economies, identify a true statement about
China.
A. Multinational corporations find it extremely easy to do business in and with China because
of the undervaluation of the Chinese currency.
B. China's policy toward its foreign investors is rigid yet predictable.
C. Trade relations between China and developed countries and regions have significantly
improved after the revaluation of the Chinese currency.
D. Foreign businesses need to maintain a delicate balance between the communist and the
capitalist systems in China.
Answer: D
Feedback: Foreign businesses need to maintain a delicate balance between the communist
and the capitalist systems in China. Most MNCs find it very difficult to do business in and
with China.
AACSB: Analytic
1-23
Bloom's: Understand
69. In _____, chaebols are very large, family-held conglomerates that have considerable
political and economic power.
A. Thailand
B. Japan
C. South Korea
D. China
Answer: C
Feedback: In South Korea, chaebols are very large, family-held Korean conglomerates that
have considerable political and economic power.
AACSB: Analytic
Bloom's: Remember
70. In the context of emerging and developing economies, identify a true statement about
India.
A. The overwhelmingly diverse people of India mostly speak tribal languages and dialects.
B. Its political instability is pervasive, which generates substantial risks for foreign investors.
C. Indians are known for their advanced information technology expertise.
D. Indian government is unable to provide funds for economic development.
Answer: C
Feedback: Indians are known for their advanced information technology expertise. This is
one of the reasons that make India attractive to multinationals, especially U.S. and British
firms.
AACSB: Analytic
Bloom's: Understand
71. Which of the following countries was not among the world's 10 most competitive nations
in 2015?
A. Germany
B. Singapore
C. Mexico
D. Norway
Answer: C
Feedback: In the year 2015, the 10 most competitive nations were the United States,
Switzerland, China–Hong Kong, Sweden, Singapore, Norway, Canada, Luxembourg,
Germany, and Denmark.
1-24
AACSB: Analytic
Bloom's: Remember
Essay Questions
72. What is a multinational corporation? Why would a company want to be a multinational

corporation?
Answer: A multinational corporation is a firm that has operations in more than one country,
international sales, and a nationality mix of managers and owners. Firms pursue international
markets to increase their sales and net income. In recent years such well-known American
MNCs as Apple, Chevron, Johnson & Johnson, Coca-Cola, Ford Motor Company,
ExxonMobil, Caterpillar, Walmart, Microsoft, and Google have all earned more annual
revenue in the international arena than they have in the United States.
AACSB: Analytic
Bloom's: Understand
Topic: Introduction
73. List the important economic developments that have occurred because of the North
American Free Trade Agreement (NAFTA).
Answer: The United States, Canada, and Mexico make up the North American Free Trade
countries and created a huge North American market. A number of economic developments
have occurred because of this agreement and are designed to promote commerce in the
region. Some of the more important developments include (1) the elimination of tariffs as
well as import and export quotas; (2) the opening of government procurement markets to
companies in the other two nations; (3) an increase in the opportunity to make investments in
each other's country; (4) an increase in the ease of travel between countries; and (5) the
removal of restrictions on agricultural products, auto parts, and energy goods.
AACSB: Analytic
Bloom's: Understand
74. In the context of global economic systems, explain a market economy.

Answer: A market economy exists when private enterprise reserves the right to own property
and monitor the production and distribution of goods and services while the state simply
supports competition and efficient practices. Management is particularly effective here since
private ownership provides local evaluation and understanding, opposed to a nationally
standardized archetype. This model contains the least restriction as the allocation of resources
1-25
is roughly determined by the law of demand. Since the interaction of the community and
firms guides the system, organizations must be as versatile as the individual consumer.
Competition is fervently encouraged to promote innovation, economic growth, high quality,
and efficiency. The government may prohibit such things as monopolies or restrictive
business practices in order to maintain the integrity of the economy.
AACSB: Analytic
Bloom's: Understand
75. Describe how the European Union (EU) has made significant progress over the past
decade in becoming a unified market.
Answer: The European Union (EU) has made significant progress over the past decade in
becoming a unified market. In 2003 it consisted of 15 nations: Austria, Belgium, Denmark,
Finland, France, Germany, Great Britain, Greece, the Netherlands, Ireland, Italy,
Luxembourg, Portugal, Spain, and Sweden. In May 2004, 10 additional countries joined the
EU: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Slovakia, and Slovenia. In January 2007, Romania and Bulgaria acceded to the EU, and in
July 2013, Croatia became the 28th and newest member of the EU. Not only have most trade
barriers between the members been removed, but a subset of European countries has adopted
a unified currency called the euro.
As a result, it is now possible for customers to compare prices between most countries and
for business firms to lower their costs by conducting business in one uniform currency. Even
though long-standing cultural differences remain, and the European Union has recently
experienced some substantial challenges, the European Union is more integrated as a single
market than NAFTA, CAFTA, or the allied Asian countries.
AACSB: Analytic
Bloom's: Understand
76. Discuss the factors that contributed to Japan's phenomenal economic success.
Answer: During the 1970s and 1980s, Japan's economic success had been without precedent.
The country had a huge positive trade balance, the yen was strong, and the Japanese became
recognized as the world leaders in manufacturing and consumer goods. Analysts ascribe
Japan's phenomenal success to a number of factors. Some areas that have received a lot of
attention are the Japanese cultural values supporting a strong work ethic and group/team
effort, consensus decision making, the motivational effects of guaranteed lifetime
employment, and the overall commitment that Japanese workers have to their organizations.
However, at least some of these assumptions about the Japanese workforce have turned out to
be more myth than reality and some of the former strengths have become weaknesses in the
new economy. Some of the early success of the Japanese economy can be attributed to the
Ministry of International Trade and Industry (MITI). Another major reason for Japanese
success may be the use of keiretsus. Being able to draw from the resources of the other parts
of the keiretsu, a Japanese MNC often can get things done more quickly and profitably than
its international competitors.
1-26
Despite setbacks, Japan remains a formidable international competitor and is well poised in
all three major economic regions: the Pacific Rim, North America, and Europe.
AACSB: Analytic
Bloom's: Understand
1-27

Test Bank For International Management Culture Strategy and Behavior 11th Edition Fred Luthans Jonathan Doh

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Test Bank For International Management Culture Strategy and Behavior 11th Edition Fred Luthans Jonathan Doh

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Chapter 01 - Globalization and International Linkages

Test Bank for International Management:

Level of Difficulty: 1 Easy

Level of Difficulty: 1 Easy

Multiple Choice Questions

23. Critics of globalization believe that:

Level of Difficulty: 2 Medium

D. North American Trade Union

30. Agreements like NAFTA and CAFTA:

Level of Difficulty: 2 Medium

38. According to the World Trade Organization, in 2014 merchandise exports:

39. In 2009, global FDI _____.

40. By 2017, foreign direct investment (FDI) is estimated to:

45. Identify a characteristic of a market economy.

Topic: Global Economic Systems

46. Unlike a market economy, a command economy is characterized by:

Level of Difficulty: 2 Medium

Topic: Economic Performance and Issues of Major Regions

57. A major development in South America is:

59. The ultimate objective of the European Union is to:

60. In the context of established economies, the European Union:

Topic: Economic Performance and Issues of Major Regions

72. What is a multinational corporation? Why would a company want to be a multinational

74. In the context of global economic systems, explain a market economy.

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