Chapter 01 Globalization and International Linkages Answer Key

True / False Questions

1. (p. 4) The process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political and cultural environments is called international management. TRUE

Difficulty: Medium

2. (p. 4) Multinational corporations can be defined as firms having operations in more than one country, international sales and a nationality mix of managers and owners. TRUE

Difficulty: Easy

3. (p. 6) Internationalization is the vision of creating one world unit, a single market entity. FALSE

Difficulty: Medium

4. (p. 8) Nongovernmental organizations believe that everyone benefits from globalization, as evidenced in lower prices, greater availability of goods, better jobs and access to technology. FALSE

Difficulty: Medium

5. (p. 10) NAFTA is a free trade agreement between the United States, Canada and Mexico that has in essence removed all barriers to trade and investment between the three nations. TRUE

Difficulty: Medium

6. (p. 11) NAFTA is better integrated as a single market than the EU or the allied Asian countries. FALSE

Difficulty: Medium

7. (p. 12) The countries of the Association of Southeast Asian nations are challenging China's position as destinations for low cost production and export. TRUE

Difficulty: Medium

8. (p. 15) Foreign direct investment remained strong and even grew in some regions despite the 20082009 global recession. FALSE

Difficulty: Medium

9. (p. 19) United States multinationals have more foreign direct investment in Germany than any other country. FALSE

Difficulty: Medium

10. (p. 19) In recent years, Canadian firms have begun investing heavily in the United States. TRUE

Difficulty: Medium

11. (p. 19) Mexican firms cannot export goods into the European community without paying a tariff. FALSE

Difficulty: Medium

12. (p. 19) Mexico believes that the United States is its most important market and that little effort should go into expanding trade with Europe and Asia at least for now. FALSE

Difficulty: Medium

13. (p. 24) Like most South American economies, Brazil's economy is faced with grave economic problems. Its GDP through 2009 continued to fall and inflation and unemployment increased. FALSE

Difficulty: Medium

14. (p. 20) The ultimate objective of the EU is to eliminate all trade barriers among member countries. TRUE

Difficulty: Medium

15. (p. 21) One of the ways that Russia is attempting to get its economy going is by removing many administered prices and subsidies and letting free market forces take over. TRUE

Difficulty: Hard

16. (p. 22) As a result of some continuing problems, the international business climate in Poland has not done well. FALSE

Difficulty: Medium

17. (p. 20) A keiretsu is a government agency in South Korea. FALSE

Difficulty: Medium

18. (p. 20) MITI is a South Korean government agency that identifies and ranks national commercial pursuits and guides the distribution of national resources to meet these goals. FALSE

Difficulty: Medium

19. (p. 23) Chaebols are very large, family held Korean conglomerates that have considerable political and economic power. TRUE

Difficulty: Medium

20. (p. 21) Emerging markets are developed economies that exhibit sustained economic reform and growth. FALSE

Difficulty: Medium

Multiple Choice Questions

21. (p. 4) The process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political and cultural environments is: A. Strategic management B. Internationalization C. Globalization D. International management

Difficulty: Easy

22. (p. 4) To qualify as a multinational corporation, a firm must meet all of the following criteria except: A. Operations in more than one country B. International sales C. A nationality mix of managers and owners D. Sales of at least one million dollars per year

Difficulty: Medium

23. (p. 6) Globalization: A. Is the growth of interstate trade, spurred on by the progress toward free-market policies B. Is the subcontracting of activities to endogenous organizations that had previously been performed within the firm C. Is the process of social, political, economic, cultural and technological integration among countries around the world D. Is the process of a business crossing national and cultural borders

Difficulty: Medium

24. (p. 6) Identify the statement that is false of globalization. A. It can be defined as the process of social, political, economic, cultural and technological integration among countries around the world B. It is the process of a business crossing national and cultural borders C. Evidence of globalization can be seen in increased levels of trade, capital flows and migration D. It has been facilitated by technological advances in transnational communications, transport and travel

Difficulty: Medium

25. (p. 6) The subcontracting or contracting out of activities to endogenous organizations that had previously been performed by the firm is called: A. Homesourcing B. Insourcing C. Offshoring D. Outsourcing

Difficulty: Medium

26. (p. 6) The process by which companies undertake some activities at offshore locations instead of in their countries of origin is: A. Homesourcing B. Insourcing C. Offshoring D. Globalization

Difficulty: Medium

27. (p. 8) Antiglobalization activists: A. Contend that even within the developing world, it is protectionist policies, not trade and investment liberalization, that result in environmental and social damage B. Believe globalization will force higher-polluting countries such as China and Russia into an integrated global community that takes responsible measures to protect the environment C. Assert that if corporations are free to locate anywhere in the world, the world's poorest countries will relax or eliminate environmental standards and social services in order to attract first-world investment and the jobs and wealth that come with it D. Believe that industrialization will create wealth that will enable new industries to employ more modern, environmentally friendly technology

Difficulty: Medium

28. (p. 9) The global organization of countries that oversees rules and regulations for international trade and investment, including agriculture, intellectual property, services, competition and subsidies is the: A. WTO B. NAFTA C. WIPO D. ITO

Difficulty: Easy

29. (p. 10) A free-trade agreement between the United States, Canada and Mexico that has removed most barriers to trade and investment is: A. AFTA B. CEFTA C. CAFTA D. NAFTA

Difficulty: Easy

30. (p. 10) The World Trade Organization (WTO) meeting in Cancun in September of 2003 was led by: A. India and Brazil B. The U.S. and Japan C. The U.K. and France D. EU members

Difficulty: Medium

31. (p. 9) The World Trade Organization (WTO) meeting in Doha in November of 2001 was referred to as: A. The "Annecy Round" B. The "Development Round" C. The "Tokyo Round" D. The "Torquay Round"

Difficulty: Easy

32. (p. 10) The United States, Canada and Mexico make up the _____, which in essence has removed all barriers to trade between 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 D. North American Trade Union

Difficulty: Medium

33. (p. 11) 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 on labor and the environment to encourage countries to upgrade their working conditions and environmental protections like the FTAA 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

Difficulty: Medium

34. (p. 11) The NAFTA agreement and the DR-CAFTA agreement are examples of: A. Defunct bilateral agreements B. Regional trade agreements C. Plurilateral agreements D. Proposed bilateral agreements

Difficulty: Easy

35. (p. 11) Due to the stalled progress with the WTO and FTAA, the United States has pursued _____ with a range of countries, including, Australia, Bahrain, Chile, Colombia, Israel, Jordan, Malaysia, Morocco, Oman, Panama, Peru, Malaysia and Singapore. A. Plurilateral trade agreements B. Multilateral trade agreements C. Bilateral trade agreements D. Regional trade agreements

Difficulty: Medium

36. (p. 12) The Asian economic block, made up of Indonesia, Malaysia, the Philippines, Singapore, Brunei, Thailand, Cambodia, Myanmar and Vietnam is referred to as: A. Association of Southeast Asian Nations (ASEAN) B. Southeast Asia Free Trade Agreement (SWAFTA) C. Southeast Asia Common Market D. Asian Economic Union

Difficulty: Medium

37. (p. 12) A method which 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

Difficulty: Medium

38. (p. 12) The following are characteristics of the BRIC economies except: A. Demand for higher priced goods is expected to continue to be low in the future B. The BRIC economies share of world growth is expected to rise to about 40 percent by 2025 C. Per capita income in the BRIC countries is rising D. Demand for basic goods will be strong

Difficulty: Medium

39. (p. 12) The Goldman Sachs global economics team: A. Estimates that Chile will occupy a dominant role in the global economic system and will surpass the United States in output by 2035 B. Reports that the economic potential of Brazil, Russia, India and China is such that they may become among the four most dominant economies by the year 2050 C. Estimates that the BRIC economies' share of world growth could rise from 40 percent in 2000 to more than 70 percent in 2025 D. Reports that Germany, followed by India a decade later, will overtake the United States as the world's largest car market

Difficulty: Medium

40. (p. 15) The term used to indicate the amount invested in property, plant and equipment in another country is: A. Exporting B. Foreign direct investment C. Importing D. Trade imperfection

Difficulty: Medium

41. (p. 41) In 2009, global merchandise exports and global commercial services exports: A. Declined for the first time since 1983 B. Nearly doubled C. Remained fairly consistent D. Decreased by almost 50 percent

Difficulty: Medium

42. (p. 15) In 2009, FDI inflows and outflows: A. Nearly doubled B. Nearly tripled C. Fell substantially D. Remained fairly constant

Difficulty: Medium

43. (p. 15) The emerging global community is becoming increasingly: A. Socially isolated B. Economically interdependent C. Culturally interdependent D. Financially independent

Difficulty: Medium

44. (p. 18) A _____ is comparable to a monopoly in the sense that the 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

Difficulty: Medium

45. (p. 17) 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

Difficulty: Medium

46. (p. 19) _____ is the United States' largest trading partner, a position it has held for many years. A. England B. Canada C. Japan D. Mexico

Difficulty: Medium

47. (p. 19) Which country receives the most foreign direct investment (FDI) by U.S. companies? A. Netherlands B. Mexico C. Great Britain D. Canada

Difficulty: Medium

48. (p. 18) Which of the following statements is false with regard to a mixed economy? A. Regulations concerning minimum wage standards, social security, environmental protection and the advancement of civil rights may raise the standard of living B. Ownership of organizations seen as imperative to the nation may be transferred to the state to subsidize costs and allow the firm to flourish C. Regulations concerning minimum wage standards, social security, environmental protection and the advancement of civil rights ensure that those who are elderly, sick or have limited skills are taken care of D. Businesses in this model are owned by the state to ensure that investments and practices are done in the best interest of the nation despite the often opposing outcomes

Difficulty: Medium

49. (p. 19) The following statements are true about the United States and Canada except: A. The legal and business environments of the two countries are very different B. Both countries are participants in NAFTA C. Canada is the largest trading partner of the U.S D. In recent years, Canadian firms have begun investing heavily in the U.S

Difficulty: Hard

50. (p. 19) Which of the following statements is true of the economic system of North America? A. The free-market-based economy of this region allows for more freedom in decision-making processes of private firms B. The command economy of this region allows for greater flexibility with decisions and low barriers for other countries to establish business C. The free-market-based economy of this region results in lowering 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

Difficulty: Medium

51. (p. 19) In the early 1990s, _____ had recovered from its economic problems of the previous decade and become the strongest economy in Latin America. A. Brazil B. Argentina C. Mexico D. Chile

Difficulty: Medium

52. (p. 19) The United States holds a dominant position in all of the following industries except: A. telecommunications B. biotechnology C. media D. textiles

Difficulty: Medium

53. (p. 19) A factory, located in a Mexican border town, that imports materials and equipment on a duty and tariff-free basis for assembly or manufacturing and re-exports is called a: A. Vertically integrated corporation B. Keiretsus C. Maquiladora D. Chaebols

Difficulty: Medium

54. (p. 19) The term "maquiladora" is used to describe a specific kind of _____ industry. A. Brazilian B. Mexican C. South Korean D. Chinese

Difficulty: Medium

55. (p. 19) Identify the statement which is not true of Mexico. A. When it joined NAFTA, Mexico was on the verge of becoming the major economic power in Latin America B. Mexico has free-trade agreements with more than 50 countries C. Mexico's trade with Asia is declining D. Mexico's government are probusiness

Difficulty: Medium

56. (p. 19) Which of the following observations about NAFTA is incorrect? A. Mexican businesses are finding themselves able to take advantage of the U.S. market by replacing goods that were previously purchased from Asia B. Mexican firms are now able to produce products at highly competitive prices thanks to lowercost 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

Difficulty: Medium

57. (p. 24) A major development in South America is: A. Is the implementation of the single currency and the regional central bank B. The growth of inter-country trade, spurred on by the progress toward free-market policies C. Is the privatization of traditionally nationalized industries D. Is the elimination of all trade barriers among member countries

Difficulty: Medium

58. (p. 24) A recent survey (reported in our textbook) of businesspeople from Argentina, Brazil, Chile, Columbia and Venezuela found that the _____ market, on average, was more important to their economic well being than any other. A. Mexican B. Japanese C. U.S D. European Union

Difficulty: Medium

59. (p. 20) The ultimate objective of the EU 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 EU countries D. Increase imports into EU countries

Difficulty: Medium

60. (p. 20) The European Union: A. Has 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 D. Imposes duties on member nations for the manufacture and shipment of high-quality, low-cost goods

Difficulty: Medium

61. (p. 21) The Central and Eastern European republics: A. Have attempted to grow in terms of intercountry trade, spurred on by the progress toward freemarket policies B. Have attempted to decrease inflation by lowering the GDP C. Are attempting to make a shift from centrally planned economies to market based economies D. Are attempting to make a shift from a centrally planned economy to a mixed economy

Difficulty: Medium

62. (p. 22) The former communist countries that have become most visible in the international arena include: A. Romania, Poland and Bulgaria B. Czech Republic, Bulgaria and Poland C. Hungary, Romania and Albania D. Poland, Hungary and the Czech Republic

Difficulty: Medium

63. (p. 22) Which of the following statements is true with regard to 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 C. Poland is among the largest of the former communist countries which receives the least media coverage D. Political instability and risk, large external debts, a deteriorating infrastructure and only modest education levels have led to continuing economic problems in Poland

Difficulty: Medium

64. (p. 22) Which of the following statements is not true of Hungary's economic reform measures? A. In Hungary, state-owned hotels have been privatized B. Western firms have been entering into joint ventures with local companies in Hungary, attracted by the low cost of highly skilled, professional labor C. Hungary had a head start on the other former communist-bloc countries in terms of adopting economic reform measures D. MNCs have been making direct investments in Hungary, as in the case of General Electric's purchase of Tungsram

Difficulty: Medium

65. (p. 20) Which of the following statements is not true of Japan? A. During the 1970s and 1980s, Japan's economic success had been without precedent B. During the 1970s and 1980s, the country had a huge positive trade balance, the yen was strong and they recognized as the world leaders in manufacturing and consumer goods C. 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 D. Japan's consensus decision making system turns out to be very efficient and effective in the new speed-based economy

Difficulty: Medium

66. (p. 20) An organizational arrangement in Japan in which a large group of vertically integrated companies bound together by cross-ownership, interlocking directorates and social ties provide goods and services to end users is: A. Vertically integrated corporation B. Keiretsus C. Maquiladora D. Chaebols

Difficulty: Medium

67. (p. 20) 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

Difficulty: Medium

68. (p. 20) 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

Difficulty: Medium

69. (p. 23) The four other widely recognized powerhouses in Asia, in addition to Japan and China 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

Difficulty: Medium

70. (p. 22) Identify the statement false of China's economic condition. A. China's GDP has remained strong, maintaining at 11.5 percent growth in 2009 B. In the first quarter of 2010, China's GDP grew at a blistering 11.7 percent causing some concerns that the Chinese government has been unable to tap the breaks on this rapid growth C. Trade relations between China and developed countries and regions, such as the United States and the EU, are lax D. Massive savings glut in the corporate sector, the globalization of manufacturing networks are major challenges faced by China

Difficulty: Medium

71. (p. 23) Chaebols are large, family-held conglomerates in: A. Thailand B. Japan C. South Korea D. China

Difficulty: Medium

72. (p. 24) Which of the following is true of India today? A. It has a relatively small middle class B. Education levels tend to be low C. It is attractive to MNCs D. There is a distinct lack of government funds for economic development

Difficulty: Medium

73. (p. 28) Which of the following countries was not amongst the world's 10 most competitive nations in 2010? A. United States B. Singapore C. United Kingdom D. Norway

Difficulty: Medium

74. (p. 28) Identify the emerging market which is projected to have the largest market size in 2010. A. China B. India C. Mexico D. Argentina

Difficulty: Medium

75. (p. 28) According to the projections for 2010, which of the following countries has the best commercial infrastructure? A. China B. Hong Kong C. India

Chapter 02 The Political, Legal, and Technological Environment Answer Key

True / False Questions

1. (p. 36) Many firms try to work collaboratively with governments as new laws, policies, and regulations are introduced. TRUE

Difficulty: Hard

2. (p. 36) Government policies toward the dissemination of information that can be viewed as a threat to national security are common. TRUE

Difficulty: Easy

3. (p. 36) The domestic and international political environment has a major impact on multinational corporations. TRUE

Difficulty: Medium

4. (p. 38) Collectivism emerged in Italy and France as "national socialism". FALSE

Difficulty: Easy

5. (p. 38) Great Britain's Labour Party practices "democratic socialism". TRUE

Difficulty: Medium

6. (p. 38) According to the text, Russia presents the extreme example of how the political environment impacts on international management. TRUE

Difficulty: Medium

7. (p. 40) Vietnam and Laos have moved towards a totalitarian environment due to the evolution of modern global business. FALSE

Difficulty: Medium

8. (p. 42) Socialist law comes from the Marxist socialist system and continues to influence regulations in former communist countries. TRUE

Difficulty: Medium

9. (p. 42) Common law is derived from Roman law and is found in the non-Islamic and non-socialist countries such as France, some countries in Latin America and even Louisiana in the United States. FALSE

Difficulty: Medium

10. (p. 42) The territoriality principle holds that governments have the right to rule themselves as they see fit. FALSE

Difficulty: Medium

11. (p. 42) The protective principle holds that every nation has the right of jurisdiction within its legal territory. FALSE

Difficulty: Medium

12. (p. 42) The doctrine of civility holds that there must be mutual respect for the laws, institutions and government of other countries in the manner of jurisdiction over their own citizens. FALSE

Difficulty: Medium

13. (p. 43) Under the act of state doctrine, all acts of other governments are considered to be valid by U.S. courts, even if such acts are inappropriate in the United States. TRUE

Difficulty: Medium

14. (p. 43) The FCPA makes it illegal to influence foreign officials through the granting of favorable tariff rates. FALSE

Difficulty: Easy

15. (p. 43) The objectives of the FCPA were to stop U.S. MNCs from initiating or perpetuating corruption in foreign governments and to upgrade the image of both the United States and its businesses abroad. TRUE

Difficulty: Medium

16. (p. 46) The current move toward privatization by an increasing number of countries is an example of the changing international regulatory environment. TRUE

Difficulty: Hard

17. (p. 48) Trade agreements do not require that trade benefits accorded to one nation be extended to other nations' parties to that agreement. FALSE

Difficulty: Hard

18. (p. 51) Embedded learning technology will allow thinking to occur in machines. TRUE

Difficulty: Medium

19. (p. 54) One reason for the rapid increase in telecommunications services is that many countries believe that without an efficient communications system, their economic growth may stall. TRUE

Difficulty: Easy

20. (p. 55) Technology does not have the potential to displace employees holding positions traditionally reserved for human thinking. FALSE

Difficulty: Medium

Multiple Choice Questions

21. (p. 36) In a business context, individualism is synonymous with: A. Collectivism B. Socialism C. Totalitarianism D. Capitalism

Difficulty: Easy

22. (p. 37) Aristotle and David Hume contributed to the principle of: A. Socialism B. Collectivism C. Individualism D. Communism

Difficulty: Easy

23. (p. 38) Which of the following are characteristics of fascism? A. Anticollectivism B. Anticommunism C. Opposition only to political liberalism D. Antinationalism

Difficulty: Medium

24. (p. 37) Which two countries led the effort to mobilize public and private support for Greece in 2010? A. France and Germany B. Britain and France C. Spain and France D. Germany and Britain

Difficulty: Hard

25. (p. 38) One of the biggest impediments to attracting more foreign investment in Russia is: A. Legal mandates B. Economic opportunities C. Political corruption D. Religious practices

Difficulty: Hard

26. (p. 38) Communism as an economic system has failed due to the tendency of common goals to stunt: A. Progression and individual creativity B. Individual productivity C. Individual freedom D. Profit and growth

Difficulty: Medium

27. (p. 40) Governmental power in a democracy is limited by: A. The accountability of the elected representatives to the general public B. Individual freedom-such as freedom of expression and assembly C. The police force which is independent of the state D. Limiting the number of terms for which a representative may be elected

Difficulty: Hard

28. (p. 40) Political repression and denial of rights and civil liberties are dominant ideals of: A. Totalitarianism B. Socialist democracy C. Collectivism D. Monarchy

Difficulty: Medium

29. (p. 40) The totalitarian form of government is to be seen in: A. Singapore and Cambodia B. Germany and Italy C. Latin America only D. Vietnam, Cuba and North Korea

Difficulty: Medium

30. (p. 41) The Chinese political environment is very: A. Complex B. Stable C. Straightforward and streamlined D. Safe and secure

Difficulty: Easy

31. (p. 41) Multinational corporations in China are faced with a multitude of problems except: A. Government regulations B. Questionable treatment C. Market growth opportunities D. Understanding what is needed from investors

Difficulty: Medium

32. (p. 41) Sentiments regarding the war in Iraq have primarily affected business relationships in: A. The Middle East B. Asia C. Asia and the U.S D. Europe and the U.S

Difficulty: Hard

33. (p. 42) _____ law comes from the Marxist socialist system and continues to influence regulations in former communist countries, especially those from the former Soviet Union, as well as presentday China, Vietnam, North Korea and Cuba. A. Socialist B. Civil or code C. Common D. Islamic

Difficulty: Medium

34. (p. 42) _____ law comes from English law and is the foundation of the legal system in the United States, Canada, England, Australia, New Zealand and others. A. Civil or code B. Islamic C. Socialist D. Common

Difficulty: Medium

35. (p. 42) Identify from the following the correct statement on civil law. A. It comes from English law and is found in nonsocialist countries B. It is to be found in countries of Central Asia C. It is derived from Roman law and is found in nonsocialist countries D. It is the foundation of the legal system in the United States, Canada, England, Australia, New Zealand and other nations

Difficulty: Medium

36. (p. 42) The _____ holds that governments have the right to rule themselves as they see fit. A. Principle of sovereignty B. Nationality principle C. Territoriality principle D. Protective principle

Difficulty: Medium

37. (p. 42) International law includes the following types of jurisdictional principles: A. Nationality, territoriality and protective B. Territoriality, sovereignty and nationality C. Good citizenship, territoriality and protective D. Protective, comity and sovereignty

Difficulty: Medium

38. (p. 42) The _____ principle holds that every country has jurisdiction (authority or power) over its citizens no matter where they are located. A. Comity B. Nationality C. Territoriality D. Sovereignty

Difficulty: Medium

39. (p. 42) The _____ principle holds that every nation has the right of jurisdiction within its legal territory. A. Sovereignty B. Protective C. Territoriality D. Nationality

Difficulty: Medium

40. (p. 43) The _____ principle holds that every country has jurisdiction over behavior that adversely affects its national security, even if that conduct occurred outside the country. A. Territoriality B. Nationality C. Sovereignty D. Protective

Difficulty: Medium

41. (p. 43) The _____ holds that there must be mutual respect for the laws, institutions and government of other countries in the matter of jurisdiction over their own citizens. A. Doctrine of protectionism B. Doctrine of civility C. Doctrine of mutual understanding D. Doctrine of comity

Difficulty: Medium

42. (p. 42) U.S. laws require equality in the workplace for all employees, U.S. citizens who take a job in Japan cannot sue their Japanese employer under the provisions of U.S. law for failure to provide equal opportunity for them. This is in line with the: A. Principle of sovereignty B. Nationality principle C. Doctrine of comity D. Act of state doctrine

Difficulty: Hard

43. (p. 43) Under the _____, all acts of other governments are considered to be valid by U.S. courts, even if such acts are inappropriate in the United States. A. Act of state doctrine B. Act of international civility C. Act of judicial sovereignty D. Act of international understanding

Difficulty: Medium

44. (p. 43) Countries have the legal right to refuse admission of foreign citizens and to impose special restrictions on the following except: A. Conduct B. Right of travel C. Spending D. What business they may conduct

Difficulty: Easy

45. (p. 43) The statute that makes it illegal to influence foreign officials through personal payment of political contributions is referred to as the: A. Fairness in International Affairs Act B. Foreign Corrupt Practices Act C. Global Ethics Act D. Fair Treatment of Foreign Citizens Act

Difficulty: Easy

46. (p. 45) Critics of the Foreign Corrupt Practices Act feared the loss of sales to foreign competitors, especially in those countries where: A. Customs are adhered to B. Political stability exists C. Common law is applicable D. Bribery is an accepted means

Difficulty: Easy

47. (p. 45) It was reported that since the passage of the Foreign Corrupt Practices Act (FCPA): A. MNCs could not function within the set guidelines B. Internal politics problems for U.S. Allies increased C. There was a thirty percent loss of sales to foreign competitors D. U.S. exports to "bribe prone" countries actually increased

Difficulty: Medium

48. (p. 45) One analysis, cited in the text, reported that since the passage of the Foreign Corrupt Practices act, U.S. exports to "bribe prone" countries: A. Increased B. Decreased C. Stopped completely D. Remained exactly the same, showing that the law had no effect

Difficulty: Medium

49. (p. 45) U.S. MNCs always assumed that bribes were required to ensure contracts in: A. India B. The Middle East C. Asia Pacific D. Eastern Europe

Difficulty: Medium

50. (p. 45) According to the text, _____ is one of the biggest problems facing MNCs. A. Fear of investing abroad B. Loss of sales to foreign competitors C. Uneven ethical standards D. Very restrictive foreign bureaucracies

Difficulty: Medium

51. (p. 46) Japanese companies are aware that their dependency on the world market for many goods and services is negatively impacted by _____, resulting in local consumers paying the price. A. The balance of payments B. Bureaucratization C. Trade imbalances D. Financial exchange

Difficulty: Hard

52. (p. 46) Which country does not rank high on the ease-of-doing-business index? A. the Philippines B. Singapore C. Japan D. the United States

Difficulty: Hard

53. (p. 49) The case with cellular phones and networks and open-source models in software are cited to substantiate the fact that: A. The possibilities of digital and wireless technologies are vast B. Internet allowing easy dissemination of information C. Global connections do not necessarily level the playing field D. Satellites will play a role in learning

Difficulty: Hard

54. (p. 53) The term "e-cash" stands for: A. Easy cash B. Export cash C. Electronic cash D. Exchange cash

Difficulty: Easy

55. (p. 52) According to the text, the most popular form of e-business is: A. B2B dealings B. B2C dealings C. Financial dealings D. E-retailing

Difficulty: Medium

56. (p. 53) The area of e-business that will most affect global customers is: A. E-marketing B. E-retailing and financial services C. Retailing D. Internet sales

Difficulty: Medium

57. (p. 53) The most obvious dimension of the technological environment facing international managers today is: A. Telecommunications B. Transportation C. Agricultural mechanization D. Improved service technologies

Difficulty: Easy

58. (p. 53) Identify the correct statement on cellular infrastructure. A. It is expensive to install B. It is quick and relatively inexpensive to install C. It is relatively inexpensive to install but takes time D. It cannot be installed easily and cheaply in rural areas

Difficulty: Medium

59. (p. 54) Over the next decade, the merging of the Internet and wireless technology will radically change the ways in which people: A. Spend B. Socialize C. Communicate D. Invest

Difficulty: Medium

60. (p. 54) MNCs are unwilling to put up high investments unless they are assured of: A. Operating control on their investment in telecommunications B. Expanding demand for telecommunication service C. Complete financial control D. Monopoly on local services

Difficulty: Medium

61. (p. 52) Governments are accepting the belief that the only way to attract foreign investment and know-how in telecommunications is to: A. Cede control to private industry B. Get cheaper service providers C. Get cheap and efficient labor D. Get private partners

Difficulty: Medium

62. (p. 54) According to the text, NYNEX holds a stake in: A. Telecom New Zealand B. Thailand's Telecom Asia C. Australia's Optus D. Thailand's Globe Telecom

Difficulty: Medium

63. (p. 54) The Hong Kong office of Salomon Brothers, a U.S. investment bank, estimates that to meet the expanding demand for telecommunication service in Asia, companies will need: A. Cheaper technology B. Cheap and efficient labor C. Considerable increase in investment D. Cheaper service providers

Difficulty: Easy

64. (p. 54) Some observers have noted that technology already has eliminated much and in the future will eliminate even more of the work now being done by: A. Top level managers B. Middle managers and white-collar staff C. Maintenance workers D. Line employees and service staff

Difficulty: Medium

65. (p. 54) _____ has placed pressure on MNCs to outsource production. A. Mounting cost pressure and profit expectations B. Lack of cheap and expert labor C. Global and Internal competition D. Profit expectation by governments

Difficulty: Medium

66. (p. 55) Identify the option that would constitute white-collar service industries. A. Steel and autos B. Agriculture C. Insurance only D. Insurance and banks

Difficulty: Easy

67. (p. 55) Emerging information technology has made work: A. More portable B. More risky C. More tedious D. More complicated

Difficulty: Easy

68. (p. 55) MNCs have moved certain production activities overseas to capitalize on: A. Increasing costs B. Cheap labor C. Larger markets D. Higher purchasing power

Difficulty: Medium

69. (p. 55) Low-paid workers in India and Asian countries now are being given subcontracted work such as: A. Insurance jobs B. Auto industry jobs C. Labor-intensive hardware development D. Code-writing jobs

Difficulty: Medium

70. (p. 55) According to the text, a positive side of the opportunities that technology offers would be: A. Decline in the cost of doing business worldwide B. Price rise due to cost of equipments C. Elimination of higher-priced labor D. Replacement of employees by machines

Chapter 03 Ethics and Social Responsibility Answer Key

True / False Questions

1. (p. 63) The study of morality and standards of conduct is referred to as ethics. TRUE

Difficulty: Easy

2. (p. 63) Kantian philosophical traditions focus on core, individual behaviors and actions and how they express and form individual character. FALSE

Difficulty: Medium

3. (p. 64) Utilitarianism favors the greatest good for the greatest number of people under a given set of constraints. TRUE

Difficulty: Medium

4. (p. 65) Despite a heightened sensitivity in recent years, sexual harassment remains a minor social issue in Japan. FALSE

Difficulty: Medium

5. (p. 66) Although French women are making strides in the management ranks, they still are underrepresented in corporate management. TRUE

Difficulty: Medium

6. (p. 66) One thing that has inhibited the progress of women in French management is that French law does not guarantee equal treatment and equal professional opportunities for men and women. FALSE

Difficulty: Medium

7. (p. 76) The Foreign Corrupt Practices Act makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions. TRUE

Difficulty: Easy

8. (p. 71) Corporate social responsibility includes organizational actions that go beyond the requirements of the law and the direct interests of the firm. TRUE

Difficulty: Easy

9. (p. 74) Sustainability may be defined as the development that meets humanity's needs at the cost of the future generations. FALSE

Difficulty: Medium

10. (p. 71) NGOs are public organizations that monitor the practices of private corporations. FALSE

Difficulty: Easy

11. (p. 71) Trust in business is currently at one of the highest levels in history in the United States and Europe. FALSE

Difficulty: Easy

12. (p. 71) NGOs have urged MNCs to be more responsive to the range of social needs in developing countries. TRUE

Difficulty: Medium

13. (p. 72) Though the force of NGOs have been felt in a range of major public policy debates, NGO activism has been least responsible for major changes in corporate behavior and governance. FALSE

Difficulty: Medium

14. (p. 73) MNCs have a very low chance of exporting "best practices" in corporate responsibilities to local firms in developing nations. FALSE

Difficulty: Medium

15. (p. 73) MNCs are increasingly engaged in a range of responses to growing pressures to contribute positively to the social and environmental progress of the communities in which they do business. TRUE

Difficulty: Medium

16. (p. 75) "Insider" systems of corporate governance are most responsive to shareholders and other stakeholders. FALSE

Difficulty: Medium

17. (p. 75) Corporate governance may be defined as the system by which business corporations are directed and controlled. TRUE

Difficulty: Easy

18. (p. 76) As pressure for accountability and responsiveness continues to increase, corporate governance will undoubtedly remain high on the agenda of governments, investors, NGOs and corporations in the coming years. TRUE

Difficulty: Medium

19. (p. 78) Governments and corporations are increasingly collaborating to provide assistance to communities around the world through global partnerships. TRUE

Difficulty: Medium

20. (p. 79) The Global Fund to Fight AIDS, Tuberculosis and Malaria constitutes contributions by international organizations to assist developing countries in dealing with these diseases. FALSE

Difficulty: Hard

Multiple Choice Questions

21. (p. 64) Which of the following views the individual as part of rather than separate from nature? A. Aristotelian virtue ethics B. Utilitarianism C. Kantian philosophical traditions D. Eastern philosophy

Difficulty: Easy

22. (p. 64) John Stuart Mill and Jeremy Bentham are associated with which of the following? A. Aristotelian virtue ethics B. Kantian philosophical traditions C. Utilitarianism D. Eastern philosophy

Difficulty: Medium

23. (p. 63) The study of morality and standards of conduct is referred to as: A. Social responsibility B. Law C. Governance D. Ethics

Difficulty: Easy

24. (p. 63) All of the following statements about ethics are true except: A. It is the study of morality and standards of conduct B. It is the victim of subjectivity as it yields to the will of cultural relativism C. It is the belief that the ethical standard of a country is based on the culture that created it and that moral concepts lack universal application D. It is not related to the area of corporate social responsibility

Difficulty: Medium

25. (p. 63) Which of the following is false about the adage, "When in Rome, do as the Romans do?" A. It is derived from the idea of cultural relativism B. It suggests that businesses and the managers should behave in accordance with the ethical standards they are active in C. It suggests that it is necessary, to some extent, to rely on local teams to execute under local rule D. It is derived from the idea of cultural materialism

Difficulty: Medium

26. (p. 65) According to the text, which country has experienced widespread human trafficking in recent years? A. South Africa B. India C. Russia D. China

Difficulty: Medium

27. (p. 66) According to the World Economic Forum, which country ranked highest in 2009 on economic opportunities and political empowerment of women? A. Japan B. The United States C. Iceland D. Great Britain

Difficulty: Easy

28. (p. 66) Which of the following statements is not true with regard to child labor? A. Child labor continues to climb B. Child labor has declined for girls C. The ILO has been involved in developing standards regarding child labor D. UNICEF and the World Bank recognize that family survival sometimes depends on children working

Difficulty: Medium

29. (p. 66) The issue of relatively low wages paid by subcontractors to workers in ______ made headlines in 2010 after a series of suicides by factory workers. A. Vietnam B. Malaysia C. Mexico D. China

Difficulty: Medium

30. (p. 67) Which of the following companies was accused in 2010 of cutting corners on environmental protection and ethical business practices? A. Nike B. Russell Athletics C. Chevron D. BP

Difficulty: Easy

31. (p. 70) Identify the incorrect statement regarding the transfer of the labor force overseas. A. It creates an interesting dynamic in the scope of ethics B. It seeks to employ local citizens who tend to identify themselves with the corporation and not the outside environment C. It creates an interesting dynamic in the scope of corporate responsibility D. It seeks to move individuals offshore who will identify themselves with the corporation and not the outside environment

Difficulty: Medium

32. (p. 70) The transfer of the labor force overseas creates A. An interesting dynamic in the scope of ethics and corporate responsibility B. A general ambiance of nondiscriminatory practices C. An ideal environment for women to work in D. Equal employment opportunities for both men and women

Difficulty: Medium

33. (p. 66) One of the major reasons why _____ remains a problem in Japan is that traditionally many male managers regard female employees as mere secretaries and, following a stereotype, feel that women employees will soon marry and leave the firm. A. Sexual harassment B. Workman's compensation C. Wage parity D. Collective bargaining

Difficulty: Medium

34. (p. 65) All of the following are accurate in regard to the issue of sexual harassment in the Japanese workplace except: A. Sexual harassment remains a minor social issue in Japan, despite a heightened sensitivity in recent years. B. Traditionally many male managers regard female employees as secretaries and, feel that women employees will soon marry and leave the firm. C. Sexual harassment is a new concept to many Japanese managers. D. Japanese women face a glass ceiling.

Difficulty: Easy

35. (p. 65) According to the text, one violation of human rights that resonated with MNCs and made them question whether to move operations into China was: A. The imposition of restrictions on religious practice by foreigners in China in January 1994 B. The violent June 1989 crackdown on student protesters in Beijing's Tiananmen Square C. The dramatic increase in the use of death penalty in China D. The open discrimination against women in China since 1979

Difficulty: Medium

36. (p. 66) All of the following statements are accurate with regard to the status of women in the French workplace except: A. From a legal standpoint, French law guarantees equal treatment and equal professional opportunities for men and women B. As in the United States and Japan, French women face many obstacles when trying to break the glass ceiling C. As a result of strong efforts to gain equality, French women are no longer underrepresented in the workplace D. France has seen an increase in the number of women not only in the workforce but also in management positions

Difficulty: Medium

37. (p. 66) Identify the incorrect statement with regard to equal employment opportunity in Germany. A. Unlike some other countries, Germany in the last decade has introduced laws that mandate equal opportunity and the creation of equal opportunity positions throughout the public sector B. Today, all German states ensure that their legislation provides for equal treatment of men and women in the workplace C. In the private sector, there has been some progress toward increasing the number of women in upper-level management positions through the introduction of voluntary equal opportunity programs D. Opportunities for female managers in Germany are no longer limited and appear to be improving significantly for the future

Difficulty: Medium

38. (p. 76) This legislative measure makes it illegal to influence foreign officials through personal payments or political contributions. A. Foreign Corrupt Practices Act B. Global Bribery Act C. International Ethics and Bribery Act D. Export-Import Ethical Standards Act

Difficulty: Easy

39. (p. 77) According to the latest corruption index of countries around the world specified in the text, the least corrupt country is: A. Japan B. Chile C. United States D. New Zealand

Difficulty: Easy

40. (p. 77) According to the latest corruption index of countries around the world specified in the text, the most corrupt country is: A. Somalia B. Chile C. Ukraine D. Poland

Difficulty: Easy

41. (p. 71) This can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. A. Corporate social responsibility B. Law C. Governance D. Ethics

Difficulty: Easy

42. (p. 71) Corporate social responsibility: A. Is not related to ethics B. Refers to the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm C. Involves the study of or the learning process involved in understanding morality, while ethics involves taking action D. Is not based on voluntary actions

Difficulty: Medium

43. (p. 78) Transparent Agents Against Contracting Entities: A. Was created to prevent the shifting of corrupt practices to suppliers and intermediaries B. Entered into force in March 1997 and has more than 25 Western Hemisphere countries as signatories C. Outlaws most payments to political party leaders D. Makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments

Difficulty: Medium

44. (p. 77) Which of the following statements about the "antibribing" legislation is incorrect? A. It outlaws the practice of bribing foreign government officials B. It outlaws most payments to political party leaders C. Its provisions are much narrower than U.S. negotiators wanted D. It is a step in the direction of a more ethical and level playing field in global business

Difficulty: Easy

45. (p. 78) As a way to prevent the shifting of corrupt practices to suppliers and intermediaries, the _____ standard was developed. A. OAS B. FCPA C. TRACE D. OECD

Difficulty: Easy

46. (p. 77) Latin American countries have established the _____ Inter-American Convention Against Corruption, which entered into force in March 1997. A. OECD B. FCPA C. OAS D. TRACE

Difficulty: Easy

47. (p. 78) Which of the following statements with to the Transparent Agents Against Contracting Entities (TRACE) is incorrect? A. It was developed after a review of the practices of 34 companies B. It applies to business intermediaries C. It was developed as a way to prevent the shifting of corrupt practices to suppliers and intermediaries D. It was established by the Latin American companies

Difficulty: Easy

48. (p. 73) NGOs that seek to promote ethical and socially responsible business practices are generating substantial changes in all of the following areas except A. Corporate management B. Business development C. Strategy D. Corporate governance

Difficulty: Medium

49. (p. 74) Development that meets humanity's needs without harming future generations is termed as: A. Corporate responsibility B. Sustainability C. Social responsibility D. Governance

Difficulty: Easy

50. (p. 74) The United Nations chapter dedicated to the education, promotion, facilitation and advocacy of sustainable practices and environmentally sound concerns is called the: A. UNRWA B. UNIFEM C. UNODC D. UNEP

Difficulty: Easy

51. (p. 72) Which of the following MNCs announced in January 2004 that it would no longer finance certain projects in emerging markets identified by the Rainforest Action Network (RAN) as damaging to the environment? A. JPMorgan Chase B. HSBC C. Citigroup D. Merrill Lynch

Difficulty: Medium

52. (p. 72) All of the following are examples of NGOs except: A. Save the Children B. CARE C. OECD D. Oxfam

Difficulty: Medium

53. (p. 72) Identify the statement about NGOs that is false. A. Large global NGOs are active in all parts of the world B. NGO activism has been responsible for minor changes in corporate behavior and governance C. NGOs are regarded as a counterweight to business and global capitalism D. The force of NGOs has been felt in a range of major public policy debates

Difficulty: Easy

54. (p. 72) According to the text, all the following companies have been criticized for actions portraying lack of social responsibility in developing countries except: A. Nike B. Levi's C. Chiquita D. Hewlett-Packard

Difficulty: Hard

55. (p. 73) Which of the following is likely to present an opportunity for MNCs to make a positive impact in developing countries? A. Low wage rates B. Lax environmental standards C. Adoption and exportation of best practices D. Underdeveloped infrastructure

Difficulty: Hard

56. (p. 73) Besides fighting unethical practices, another way to meet social responsibilities is to provide assistance to: A. Multinational companies B. Cartel agreements C. Top management stockholders D. Underdeveloped countries

Difficulty: Easy

57. (p. 73) The elimination of discrimination with respect to employment and occupation is a principle of the Global Compact which applies to: A. Human rights B. Labor C. Environment D. Anticorruption

Difficulty: Easy

58. (p. 73) Freedom of association and the effective recognition of the right to collective bargaining' is a principle of the Global Compact which applies to: A. Human rights B. Anticorruption C. Environment D. Labor

Difficulty: Easy

59. (p. 75) The following countries have "outsider" systems of corporate governance except: A. The U.S B. Canada C. The U.K D. Spain

Difficulty: Medium

60. (p. 75) Corporate governance: A. Can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm B. Seeks to serve society's interests by focusing on social, political and economic issues such as poverty, social justice, education, health and the environment C. Can be defined as the system by which business corporations are directed and controlled D. Can be defined as the development that meets humanity's needs without harming future generations

Difficulty: Easy

61. (p. 75) The _____ specifies the distribution of rights and responsibilities among different participants in the corporation and spells out the rules and procedures for making decisions on corporate affairs. A. Corporate governance structure B. Nongovernmental organizations C. Foreign Corrupt Practices Act D. Rainforest Action Network

Difficulty: Easy

62. (p. 75) The U.K. and U.S. systems have been termed _____ systems because of dispersed ownership of corporate equity among a large number of external investors. A. "Cascade" B. "Hausbanken" C. "Outsider" D. "Insider"

Difficulty: Easy

63. (p. 76) "Crony capitalism" describes business practices in countries with: A. Highly developed legal and institutional protections B. Market-oriented economic systems C. Weak, concentrated corporate governance D. Limited government interference

Difficulty: Medium

64. (p. 75) The following regions are most associated with "crony capitalism" except: A. Asia B. Europe C. Latin America D. Africa

Difficulty: Easy

65. (p. 79) The eight Millennium Development goals are to be achieved by the year: A. 2010 B. 2015 C. 2040 D. 2050

Difficulty: Easy

66. (p. 78) Which of the following is the most urgent need of developing countries? A. Accelerated industrialization B. Malnutrition and disease control C. Enhanced college education D. Institutional reform

Difficulty: Easy

67. (p. 79) The Millennium Development goals constitute an ambitious agenda by the _____ to improve the human condition. A. UN B. WTO C. GATT D. EU

Difficulty: Medium

68. (p. 79) Which of the following constitutes an ambitious agenda to significantly improve the human condition by 2015? A. Human Right Act 1993 B. The eight Millennium Development Goals C. Foreign Corrupt Practices Act D. NAFTA

Difficulty: Easy

69. (p. 79) Which of the following is not one of the eight Millennium Development goals? A. Reducing poverty B. Ensuring environmental sustainability C. Increasing life expectancy D. Eradicating discrimination against women

Difficulty: Easy

70. (p. 79) Which of the following is not one of the U.N. Millennium Development Goals? A. Eradicate extreme poverty and hunger B. Eradicate female infanticide in China C. Reduce child mortality D. Improve maternal health

Chapter 04 The Meanings and Dimensions of Culture Answer Key

True / False Questions

1. (p. 108) The word "culture" comes form the Latin cultural, which is related to cult or worship. TRUE

Difficulty: Easy

2. (p. 108) Culture is acquired knowledge that people use to interpret experience and generate social behavior. TRUE

Difficulty: Easy

3. (p. 108) The characteristic transgenerational means that culture has structure and is integrated; a change in one part will bring changes in another. FALSE

Difficulty: Medium

4. (p. 109) Although culture is an important variable in understanding international management, it falls well short of affecting how people think and behave. FALSE

Difficulty: Medium

5. (p. 109) According to the text, in Japan, the top cultural priority is independence. FALSE

Difficulty: Medium

6. (p. 110) Increasingly, individual rewards are an accepted norm in countries across the globe. FALSE

Difficulty: Medium

7. (p. 113) A major dimension in the study of culture is values. TRUE

Difficulty: Easy

8. (p. 114) In a study of the differences in work values across cultures, it was found that U.S. managers place high value on deference to superiors, on company commitment and on the cautious use of aggressiveness and control. FALSE

Difficulty: Hard

9. (p. 114) George England found that personal value systems are relatively stable and do not change rapidly. TRUE

Difficulty: Easy

10. (p. 116) Geert Hofstede's four dimensions of culture are: power distance, uncertainty avoidance, tolerance for ambiguity and masculinity. FALSE

Difficulty: Medium

11. (p. 116) Power distance is "the extent to which less powerful members of institutions and organizations accept that power is distributed unequally". TRUE

Difficulty: Medium

12. (p. 117) Countries with low uncertainty-avoidance cultures have a great deal of structuring of organizational activities, more written rules, less risk-taking by managers, lower labor turnover and less ambitious employees. FALSE

Difficulty: Hard

13. (p. 117) Masculinity is defined by Hofstede as "a situation in which the dominant values in society are success, money and things". TRUE

Difficulty: Medium

14. (p. 118) Cultures with a high masculinity index tend to favor earnings, advancement and challenge. TRUE

Difficulty: Medium

15. (p. 122) According to the text, the most masculine country is Germany. FALSE

Difficulty: Medium

16. (p. 123) Universalism is the belief that ideas and practices can be applied everywhere without modification. TRUE

Difficulty: Medium

17. (p. 126) United Kingdom is considered a high-neutral culture. TRUE

Difficulty: Medium

18. (p. 126) A specific culture is a culture in which both public and private space are similar in size and individuals guard their public space carefully, because entry into public space affords entry into private space as well. FALSE

Difficulty: Medium

19. (p. 127) An achievement culture is a culture in which status is attributed based on who or what a person is. FALSE

Difficulty: Medium

20. (p. 131) Results of the GLOBE project indicate that there are leader behaviors, attributes and organizational practices that are universally accepted and effective across cultures. FALSE

Difficulty: Medium

Multiple Choice Questions

21. (p. 107) Japanese firms tend to have a culture of deference which is supported by all of the following except A. the unwillingness of workers to report problems to their superiors B. the unwillingness of workers to question their superiors C. the unwillingness of workers to challenge what has been decided D. the unwillingness of workers to be loyal to the firm

Difficulty: Easy

22. (p. 18) Culture is: A. Individual B. Acquired C. Inherited D. Unstructured

Difficulty: Easy

23. (p. 108) _____ is acquired knowledge that people use to interpret, experience and generate social behavior. A. Edification B. Culture C. Symbol D. Cognition

Difficulty: Easy

24. (p. 108) All of the following are accurate descriptions of the main characteristics of culture except: A. Culture is inherited or biologically based; it is not acquired by learning and experience B. People as members of a group, organization or society share culture; it is not specific to a single individual C. Culture is cumulative, passed down from one generation to the next D. Culture is based on the human capacity to symbolize or use one thing to represent another

Difficulty: Medium

25. (p. 108) The following definitions accurately match their dimension of culture except: A. People as members of a group, organization or society share culture B. Culture has structure and is integrated C. Culture is based on the human capacity to change or adapt D. Culture is cumulative, passed down from one generation to another

Difficulty: Medium

26. (p. 109) Identify the handshake that does not accurately match the culture it is associated. A. Asian-gentle B. French-light and quick C. Latin America-moderate grasp; repeated frequently D. United States-soft

Difficulty: Easy

27. (p. 109) Culturally, a German can be expected to have a _____ handshake. A. Gentle B. Light and quick C. Brusk and firm D. Long and involved

Difficulty: Easy

28. (p. 109) According to the text, the highest cultural priority (or value) in the U.S. is considered as: A. Family security B. Belonging C. Freedom D. Cooperation

Difficulty: Medium

29. (p. 109) According to the text, the highest cultural priority (or value) in Japan is considered as: A. Cooperation B. Individualism C. Family security D. Belonging

Difficulty: Medium

30. (p. 110) If a culture encourages stability, it means that it: A. Is averse to formal procedures B. Encourages innovation C. Is resistant to change D. Focuses on short-term horizons

Difficulty: Medium

31. (p. 110) If cultural norms do not give employees bonuses or commissions as a form of recognition, it means that the culture: A. Encourages stability B. Is informal C. Is high on organizational loyalty D. Frowns upon individual rewards

Difficulty: Medium

32. (p. 110) In the graphic representation of the model of culture, the center or heart of culture is the: A. Explicit artifacts and products of the society B. Norms and values that guide the society C. Implicit, basic assumptions that guide people's behavior D. History of a nation and the resulting norms of behavior

Difficulty: Hard

33. (p. 111) Buildings and art are considered to be the _____ of a culture. A. Explicit artifacts and product B. Norms and values C. Formal values D. Basic assumptions that govern behavior

Difficulty: Medium

34. (p. 111) All the following are true regarding business customs in South Africa except: A. Most South Africans prefer face-to-face interactions B. First meetings are less about business and more about establishing a relationship C. Appointments should be made as far in advance as possible D. Female representatives may encounter condescending behavior or "tests" that would not be extended to male counterparts

Difficulty: Medium

35. (p. 113) The U.S. cultural value that suggests that individuals can influence the future is reflected in which management function? A. goal setting and career development B. loyalty and commitment C. career development and marketing D. planning and scheduling

Difficulty: Medium

36. (p. 113) _____ are basic convictions that people have regarding what is right and wrong, good and bad, important or unimportant. A. Tenets B. Edicts C. Norms D. Values

Difficulty: Easy

37. (p. 113) Differences in work values have been found to reflect: A. Culture only B. Culture and education C. Culture and industrialization D. Industrialization only

Difficulty: Easy

38. (p. 113) Which of the following would be considered a typical U.S. cultural value? A. Competition leads to imbalances and disharmony B. Withholding information to gain or maintain power is acceptable C. Competition stimulates high performance D. Symbols and the process are more important than the end points

Difficulty: Medium

39. (p. 113) Even though there are distinctions among organization cultures, research shows that managers from different countries often have: A. Same organization policies B. Value similarities C. Class similarities D. Similar political views

Difficulty: Medium

40. (p. 114) According to a cross-cultural study of differences in work values, _____ managers place a high value on deference to superiors, on company commitment and on the cautious use of aggressiveness and control. A. U.S B. German C. French D. Japanese

Difficulty: Medium

41. (p. 114) According to a cross-cultural study of differences in work values, _____ managers place a high value on the tactful acquisition of influence and regard for others. A. Chinese B. German C. French D. U.S

Difficulty: Medium

42. (p. 114) According to a study conducted by England and Lee, all of the following are accurate descriptions of the similarities in cultural values across nations except: A. Although there are country differences in the relationship between values and success, findings across the four countries included in the study are quite similar B. It is evident that value patterns predict managerial success and could be used in selection and placement decisions C. There is a relatively weak relationship between the level of success achieved by managers and their personal values D. The general pattern indicates that more successful managers appear to favor pragmatic, dynamic, achievement-oriented values, while less successful managers prefer more static and passive values

Difficulty: Medium

43. (p. 114) George England, a researcher in the area of culture and values, found that personal value systems are: A. Relatively stable and do not change rapidly B. Relatively stable but change rapidly C. Relatively unstable and change rapidly D. Relatively unstable and do not change rapidly

Difficulty: Medium

44. (p. 115) Which of the following is an accurate values profile of successful U.S. managers? A. High moral orientation, highly individualistic and a strong focus on organization compliance and competence B. Highly pragmatic, highly individualistic and strong achievement and competence orientation C. Highly pragmatic, high achievement and competence orientation, an emphasis on profit maximization, organizational efficiency and high productivity D. Highly pragmatic, strong emphasis on size and growth and high value on competence and achievement

Difficulty: Hard

45. (p. 115) Which of the following is an accurate values profile of successful Japanese managers? A. Highly pragmatic, highly individualistic and strong achievement and competence orientation B. Highly pragmatic, strong emphasis on size and growth and high value on competence and achievement C. Highly pragmatic high achievement and competence orientation, an emphasis on profit maximization, organizational efficiency and high productivity D. High moral orientation, high humanistic orientation and low value on achievement, success, competition and risk

Difficulty: Hard

46. (p. 115) Identify common characteristics found between Australian and Indian managers. A. Both are highly individualistic B. Both are highly pragmatic C. Both have high moral orientation D. Both strongly lay emphasis on competition and risk

Difficulty: Hard

47. (p. 114) Paternalism, measured by a manager's involvement in both personal and off-the-job problems of subordinates is very important in: A. The United States B. Australia C. Japan D. France

Difficulty: Easy

48. (p. 116) According to Dutch researcher Geert Hofstede, there are four dimensions of culture. These are: A. Power distance, uncertainty avoidance, individualism and masculinity B. Tolerance, group orientation, aggressiveness and forwardness C. Group orientation, uncertainty avoidance, aggressiveness and masculinity D. Tolerance, power distance, individualism and aggressiveness

Difficulty: Medium

49. (p. 115) Confucianism, associated with China, does not lay emphasis on: A. Respect for authority B. Balance C. Harmony D. Profit

Difficulty: Easy

50. (p. 116) _____ is "the extent to which less powerful members of institutions and organizations power is distributed unequally". A. Uncertainty avoidance B. Individualism versus collectivism C. Tolerance versus intolerance D. Power distance

Difficulty: Medium

51. (p. 116) Countries in which people blindly obey the orders of their superiors have a high: A. Uncertainty avoidance B. Masculinity index C. Power distance D. Individualism index

Difficulty: Hard

52. (p. 117) _____ is "the extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these". A. Power distance B. Uncertainty avoidance C. Individualism versus collectivism D. Masculinity versus femininity

Difficulty: Medium

53. (p. 117) Cultures with low _____ have people who are more willing to accept that risks are associated with the unknown and that life must go on in spite of this. A. Individualism versus collectivism B. Power distance C. Uncertainty avoidance D. Masculinity versus femininity

Difficulty: Hard

54. (p. 117) Hofstede's _____ dimension focused on the tendency of people to look after themselves and their immediate family rather than the tendency to belong to groups to look after each other in exchange for loyalty. A. Individualism versus collectivism B. Masculinity versus femininity C. Uncertainty avoidance D. Power distance

Difficulty: Medium

55. (p. 117) Hofstede's _____ dimension looked at the relationship between gender and work roles. A. Power distance B. Uncertainty avoidance C. Masculinity versus femininity D. Individualism versus collectivism

Difficulty: Medium

56. (p. 117) According to Hofstede, countries with a high _____ index, place great importance on earnings, recognition, advancement and challenge. A. Power distance B. Masculinity C. Uncertainty avoidance D. Individualism

Difficulty: Hard

57. (p. 118) Cultures with a low masculinity place great importance on conservation of the environment and tend to favor: A. Third world countries B. Less developed countries C. Underdeveloped countries D. Small-scale enterprises

Difficulty: Hard

58. (p. 119) Countries that have high individualism and relatively low power distance show the following features: A. Prefer others to do things for them B. Are upset when others have more power than they do C. Are not upset when others have more power than they do D. Are collectivist in their approach

Difficulty: Medium

59. (p. 119) Nations that are collectivist in their approach tend to be characterized by: A. Large power distance and low individualism B. Low power distance and high individualism C. Small power distance and weak uncertainty avoidance D. Large power distance and weak uncertainty avoidance

Difficulty: Hard

60. (p. 123) _____ is the belief that ideas and practices can be applied everywhere in the world without modification. A. Particularism B. Universalism C. Communitarianism D. Individualism

Difficulty: Medium

61. (p. 123) _____ is the belief that circumstances dictate how ideas and practices should be applied. A. Universalism B. Individualism C. Communitarianism D. Particularism

Difficulty: Medium

62. (p. 124) In his early research, Trompenaars found that in countries such as the United States, Australia, Germany, Sweden and the United Kingdom, there was high: A. Particularism B. Communitarianism C. Universalism D. Specificism

Difficulty: Hard

63. (p. 125) According to Trompenaars, _____ refers to people regarding themselves as individuals, while _____ refers to people regarding themselves as part of a group. A. Individualism; communitarianism B. Individualism; specificism C. Universalism; particularism D. Communitarianism; universalism

Difficulty: Easy

64. (p. 126) A(n) _____ culture is one in which emotions are held in check. A. Emotional B. Buoyant C. Neutral D. Specific

Difficulty: Medium

65. (p. 126) A(n) _____ culture is one in which both public and private space are similar in size and individuals guard their public space carefully, because entry into public space affords entry into private space as well. A. Diffuse B. Neutral C. Emotional D. Specific

Difficulty: Medium

66. (p. 126) Austria, the United Kingdom, the United States and Switzerland are all _____ cultures. A. Diffuse B. Specific C. Emotional D. Neutral

Difficulty: Medium

67. (p. 127) A(n) _____ culture is one in which people are accorded status based on how well they perform their functions. A. Achievement B. Ascription C. Diffuse D. Specific

Difficulty: Medium

68. (p. 127) A(n) _____ culture is one in which status is attributed based on who or what a person is. A. Diffuse B. Ascription C. Specific D. Achievement

Difficulty: Medium

69. (p. 131) Societal collectivism refers to the degree to which: A. Individuals express pride, loyalty and cohesiveness in their organizations or families B. Individuals in organizations or societies encourage and reward individuals for being fair C. Organizational and societal institutional practices encourage and reward collective distribution of resources and collective action D. Individuals in organizations or societies are confrontational

Difficulty: Medium

70. (p. 132) Under GLOBE analysis, which of the following countries were the most assertive? A. Spain and U.S B. Egypt and U.S C. Spain and Ireland D. Ireland and Sweden

Chapter 06 Organizational Cultures and Diversity Answer Key

True / False Questions

1. (p. 169) Regardless of the external environment or their national culture, managers and employees must understand and follow their organization's culture to be successful. TRUE

Difficulty: Easy

2. (p. 169) Organizational culture is complex and cannot be defined as a set of norms regulating the behavior of the employees of a firm. FALSE

Difficulty: Medium

3. (p. 169) Organizational culture is a pattern of shared basic assumptions that are developed by a group as it learns to cope with problems of external adaptation and internal integration; and it is taught to new members as the correct way to perceive, think and feel in relation to these problems. TRUE

Difficulty: Easy

4. (p. 170) Hofstede's research found that the national cultural values of employees have an insignificant impact on their organizational performance and these values are easily changed by the organization. FALSE

Difficulty: Medium

5. (p. 170) Andre Laurent's research found that cultural differences actually are more pronounced among foreign employees working within the same multinational organization than among personnel working for firms in their native lands. TRUE

Difficulty: Hard

6. (p. 171) It has been found that when cultural comparisons were made between different subsidiaries of an MNC, nearly identical cultures typically existed within each one. FALSE

Difficulty: Medium

7. (p. 174) Organizational cultures of MNCs are shaped by a number of factors, including the cultural preferences of the leaders and employees. TRUE

Difficulty: Easy

8. (p. 176) Under this Eiffel Tower culture, jobs are well defined, employees know what they are supposed to do and everything is coordinated from the top. TRUE

Difficulty: Easy

9. (p. 177) Guided missile organizational cultures generally are made up of cooperative project teams. TRUE

Difficulty: Medium

10. (p. 178) Incubator culture is characterized by a strong emphasis on the hierarchy and orientation to the person. FALSE

Difficulty: Medium

11. (p. 180) As firms began exporting to foreign clients, they became what Alder called "international corporations". TRUE

Difficulty: Medium

12. (p. 182) Among international firms, which focus on exporting and producing abroad, cultural diversity has a relatively weak impact on their external relationships with potential buyers and foreign employees. FALSE

Difficulty: Medium

13. (p. 183) An example of a token group would be a group of male German bankers who are forecasting the economic outlook for a foreign investment. FALSE

Difficulty: Medium

14. (p. 183) A bicultural group is a group in which two or more members represent each of two distinct cultures, such as four Mexicans and four Canadians who have formed a team to investigate the possibility of investing in a venture. TRUE

Difficulty: Easy

15. (p. 183) As the diversity of a group increases, the likelihood of all members perceiving things in the same way increases sharply. FALSE

Difficulty: Medium

16. (p. 183) An example of a token group is a group of three American, three German, three British and three Japanese managers who are looking into oil exploration opportunities in Russia. FALSE

Difficulty: Medium

17. (p. 185) One main benefit of diversity is the generation of more and better ideas. TRUE

Difficulty: Medium

18. (p. 185) A disadvantage of diversity is that it often leads to groupthink, which is social conformity and pressures on individual members of a group to conform and reach consensus. FALSE

Difficulty: Medium

19. (p. 185) Multiculturally diverse teams have a great deal of potential to be either very effective or very ineffective. TRUE

Difficulty: Medium

20. (p. 186) In the entry stage of group development, the focus is typically on decision making and implementation. FALSE

Difficulty: Medium

Multiple Choice Questions

21. (p. 167) To ensure good communication in global teams, managers should do all of the following except A. Hold an initial meeting in which all members introduce themselves and describe their jobs B. Hold regular meetings throughout the project to ensure everyone is "on the same page" C. Avoid the use of email, and use only video conferencing of telephone communication to avoid misunderstandings D. Put the details of the project in writing

Difficulty: Medium

22. (p. 168) To build trust among virtual team members, managers should A. Deep-six the egos and be friendly B. Build a shared mythology C. Avoid long lags in responding, unilateral priority shifts, and failure to follow up on commitments D. Keep the door open except when on private calls
Difficulty: Medium

23. (p. 168) Which of the following is not an advantage of virtual teams? A. They can reduce problems associated with personality conflicts B. They can keep a project moving around the clock C. They provide a competitive advantage D. They force managers to rely on subjective data when assessing team members' work

Difficulty: Medium

24. (p. 168) When individuals join a multinational corporation they bring their national culture, which greatly affects all the following except: A. Learned beliefs B. Ethnicity C. Attitudes and values D. Behaviors

Difficulty: Medium

25. (p. 169) PepsiCo, personnel are expected to be cheerful, positive, enthusiastic and have committed optimism. This is an example of: A. Being influenced by the external environment B. Trying to "fit-in" C. A top-down form of management D. Promoting community values

Difficulty: Medium

26. (p. 169) _____ is a pattern of basic assumptions that are developed by a group as it learns to cope with problems of external adaptation and internal integration and that are taught to new members as the correct way to perceive, think and feel in relation to these problems. A. Organizational culture B. Organizational learning C. Organizational change D. Organizational structure

Difficulty: Easy

27. (p. 169) Rules that dictate the dos and don'ts of employee behavior relating to areas such as productivity, customer relations and intergroup cooperation, are characteristics associated with organizational: A. Ethics B. Ambience C. Culture D. Structure

Difficulty: Medium

28. (p. 169) Observed behavioral regularities are typified by the following except: A. Common language B. Terminology C. Customer relations D. Rituals

Difficulty: Medium

29. (p. 169) Organizational climate is reflected by: A. The degree of cooperation between management and employees B. Common language, terminology and rituals C. High product and service quality D. The way participants interact with each other

Difficulty: Medium

30. (p. 169) Norms are reflected by things such as: A. Common language, terminology and rituals B. How employees and customers should be treated C. The amount of work to be done D. By the way participants feel about the way they are treated by higher-level management

Difficulty: Easy

31. (p. 170) A widely held belief that has not been found to be accurate is that organizational culture: A. Tends to erase the impact of national culture B. Tends to be affected by national culture C. Cannot easily change the cultural values employees bring to the workplace D. Is different in different subsidiaries

Difficulty: Hard

32. (p. 170) When UpJohn Company merged with Pharamcia AB, problems emerged forcing the partners to meet and talk about their cultural differences. This is an example which illustrates that: A. Organizational culture clashes often occur when partners do not fully understand the culture of the new partner B. There often are substantial differences between the organizational cultures of different subsidiaries and of course, this can cause coordination problems C. Organizational culture tends to moderate or erase the impact of national culture D. Companies deliberately maintain distinct business cultures because they do not want one culture influencing the other

Difficulty: Medium

33. (p. 172) Which of the following shows the identity dimension of corporate culture? A. To put the demands of the job before the needs of the individual B. To put the needs of the individual before the needs of the job C. To identify with and uphold the expectations of the employing organizations D. To strive for accuracy and attention to detail

Difficulty: Hard

34. (p. 172) Which of the following would be associated with the dimension of pragmatic conduct? A. To put the expertise and standards of the employing organization first B. To put the demands and expectations of the customers first C. To comply with clear and definite systems D. To pursue clear aims and objectives

Difficulty: Hard

35. (p. 173) The United Kingdom shows the following characteristics regarding the corporate dimension: A. Administrative B. Industrial C. Pragmatic D. Commercial

Difficulty: Medium

36. (p. 173) Dirigiste' is used to describe the _____ dimension. A. Economics B. Philosophical C. Cultural D. Structural

Difficulty: Easy

37. (p. 172) Which of the following sets of characteristics is typical of French negotiators? A. Look for a meeting of people, social competence is very important, persuasion through emotional appeal is employed B. Trust is developed on the basis of frequent and warm interpersonal contact and transaction C. A contract is viewed as a long-lasting relationship, socialization always precedes negotiations, which are characterized by an exchange of grand ideas and general principles, social competence is very important D. Look for a meeting of minds, intellectual competence is very important and a contract is viewed as a well-reasoned transaction

Difficulty: Hard

38. (p. 175) There are three aspects of organizational functions that seem to be especially important in determining an MNC's organizational culture. These are: A. The general views that employees hold about the MNC's purpose, destiny, goals and their places in them; the age of the organization; and the degree of cultural diversity among the members of the organization B. The general relationship between the managers and rank-and-file employees in the organization; the degree of cultural diversity among the members of the organization; and the hierarchical system of authority that defines the roles of managers and subordinates C. The degree of cultural diversity among the members of the organization; the age of the organization; and the strength of the organization's leadership D. The general relationship between the employees and their organization; the hierarchical system of authority that defines the roles of managers and subordinates; and the general views that employees hold about the MNC's purpose, destiny, goals and their places in them

Difficulty: Hard

39. (p. 175) The following are the steps outlined by Numeroff and Abrahams used during mergers and acquisitions except: A. Establishing the purpose, goal and focus of the merger B. Developing mechanisms to identify the least important organizational structures and management roles C. Determining who has authority over the resources needed for getting things done D. Identifying the expectations of all involved parties and facilitate communication

Difficulty: Medium

40. (p. 176) _____ culture is characterized by a strong emphasis on the hierarchy and orientation to the person. A. Family B. Eiffel Tower C. Incubator D. Guided missile

Difficulty: Medium

41. (p. 175) _____ culture is a project-oriented culture. A. Family B. Eiffel Tower C. Guided missile D. Incubator

Difficulty: Medium

42. (p. 176) Trompenaars found that a(n) _____ organizational culture is common in countries such as Turkey, Pakistan, Venezuela, China, Hong Kong and Singapore. A. Eiffel Tower B. Family C. Guided missile D. Incubator

Difficulty: Medium

43. (p. 176) When it works well, the _____ culture can catalyze and multiply the energies of the personnel and appeal to their deepest feelings and aspirations. A. Incubator B. Guided missile C. Eiffel Tower D. Family

Difficulty: Medium

44. (p. 176) The family culture is foreign to most in: A. China B. United States C. Venezuela D. Turkey

Difficulty: Medium

45. (p. 176) _____ culture is characterized by a strong emphasis on the hierarchy and orientation to the task. A. Incubator B. Family C. Guided missile D. Eiffel Tower

Difficulty: Medium

46. (p. 176) Under a(n) _____ culture, jobs are well defined, employees know what they are supposed to do and everything is coordinated from the top. A. Guided missile B. Family C. Eiffel Tower D. Incubator

Difficulty: Medium

47. (p. 177) Eiffel Tower cultures are most commonly found in: A. Northwestern European countries, such as Germany, Denmark and France B. Asian countries, such as Taiwan, South Korea and Japan C. South American countries, such as Brazil, Argentina and Chile D. North Atlantic countries, such as England, Ireland and Canada

Difficulty: Hard

48. (p. 177) _____ culture is characterized by a strong emphasis on equality in the workplace and orientation to the task. A. Guided missile B. Family C. Incubator D. Eiffel Tower

Difficulty: Medium

49. (p. 177) The _____ organizational culture is oriented to work, which typically is undertaken by teams or project groups. A. Family B. Incubator C. Guided missile D. Eiffel Tower

Difficulty: Easy

50. (p. 178) A(n) _____ organizational culture is characterized by a strong emphasis on equality and orientation to the person. A. Incubator B. Eiffel Tower C. Family D. Guided missile

Difficulty: Medium

51. (p. 178) _____ cultures often create environments where participants thrive in an intense, emotional commitment to the nature of the work. A. Eiffel Tower B. Family C. Guided missile D. Incubator

Difficulty: Medium

52. (p. 178) Change in the incubator culture is: A. Slow and calculated B. Almost non-existent C. Moderate and methodological D. Fast and spontaneous

Difficulty: Medium

53. (p. 179) Which of the following describes the "relationships between employees" in a family corporate culture? A. Diffuse relationships to organic whole to which one is bonded B. Specific role in mechanical system of required interaction C. Specific tasks in cybernetic system targeted on shared objectives D. Diffuse, spontaneous relationships growing out of shared creative process

Difficulty: Medium

54. (p. 179) Which of the following describes the "attitude toward authority" in an Eiffel Tower corporate culture? A. Status is achieved by individuals exemplifying creativity and growth B. Status is achieved by project group members who contribute to a targeted goal C. Status is ascribed to superior roles that are distant yet powerful D. Status is ascribed to parent figures that are close and powerful

Difficulty: Hard

55. (p. 179) Which of the following describes the "ways of thinking and learning" in a guided missile culture? A. Process oriented, creative, ad hoc, inspirational B. Problem centered, professional, practical, cross-disciplinary C. Logical, analytical, vertical and rationally efficient D. Intuitive, holistic, lateral and error-correcting

Difficulty: Hard

56. (p. 180) As firms begin exporting to foreign clients and become what Alder calls "international corporations", they must: A. Increase the standardization of products and services B. Adapt their products but not their approach to those of the local market C. Adapt their approach and products to those of the local market D. Adapt their approach but not their products to those of the local market

Difficulty: Medium

57. (p. 181) The following deal with largest, global markets: A. International Corporations B. Domestic Corporations C. Global Corporations D. Multinational Corporations

Difficulty: Medium

58. (p. 181) As companies become what Alder calls "multinational firms", they often find that _____ tends to dominate all other considerations and the direct impact of culture may lessen slightly. A. Quality B. Serviceability C. Durability D. Price

Difficulty: Medium

59. (p. 181) According to Adler, the primary orientation of a global firm is: A. Strategy B. Price C. Market D. Product or service

Difficulty: Easy

60. (p. 182) Global firms need: A. Neither an internal nor an external diversity focus B. Both an internal and an external diversity focus C. An internal but not an external diversity focus D. An external but not an internal diversity focus

Difficulty: Medium

61. (p. 178) A _____ group is a group that is characterized by members who share similar backgrounds and generally perceive, interpret and evaluate events in similar ways. A. Multicultural B. Bicultural C. Token D. Homogeneous

Difficulty: Easy

62. (p. 183) A _____ group is a group in which all members but one have the same background, such as a group of Japanese retailers and a British attorney. A. Token B. Multicultural C. Bicultural D. Homogeneous

Difficulty: Easy

63. (p. 183) A _____ group is a group in which two or more members represent each of two distinct cultures, such as four Mexicans and four Taiwanese who have formed a team to investigate the possibility of investing in a venture. A. Multicultural B. Bicultural C. Token D. Homogeneous

Difficulty: Easy

64. (p. 183) A _____ group is a group in which there are individuals from three or more different ethnic backgrounds, such as three U.S., three German, three Uruguayan and three Chinese managers who are looking into mining operations in South America. A. Homogeneous B. Token C. Multicultural D. Bicultural

Difficulty: Medium

65. (p. 183) Which of the following is an example of a multicultural group? A. A group of male German bankers are forecasting the economic outlook for a foreign investment B. A group of Japanese retailers and a British attorney are looking into the benefits and shortcomings of setting up operations in Bermuda C. A group of four Mexicans and four Canadians have formed a team to investigate the possibility of investing in Russia D. A group of three Americans, three Germans, three Uruguayan and three Chinese managers are looking into mining operations in Chile

Difficulty: Hard

66. (p. 185) The benefits or advantages of culturally diverse groups include the following except: A. Enhanced creativity B. Improved decision-making C. Increased effectiveness of organization performance D. Glass-ceiling protection

Difficulty: Medium

67. (p. 185) When _____ occurs, group participants believe that their ideas and actions are correct and that those who disagree with them are either uninformed or deliberately trying to sabotage their efforts. A. Group cognitive inertia B. Group reverse vigilance C. Groupthink D. Static decision-making

Difficulty: Medium

68. (p. 186) Multicultural teams are most effective when they face tasks requiring: A. Cost-cutting B. Confidentiality C. The application of routine technologies D. Innovativeness

Difficulty: Medium

69. (p. 186) In the _____ stage of group development, the focus should be on building trust and developing team cohesion. A. Entry B. Work C. Action D. Reflection

Difficulty: Medium

70. (p. 186) In the _____ stage of group development, attention may be directed more toward describing and analyzing the problem or task that has been assigned. A. Entry B. Work C. Action D. Reflection

Chapter 07 Cross-Cultural Communication and Negotiation Answer Key

True / False Questions

1. (p. 195) Communication is the process of transferring meanings from sender to receiver. TRUE

Difficulty: Easy

2. (p. 195) The information that surrounds a communication and helps convey the message is termed as context. TRUE

Difficulty: Easy

3. (p. 195) In low-context societies, messages are often highly coded and implicit. FALSE

Difficulty: Medium

4. (p. 196) The personal communication style is often associated with high power distance, collective, high-context cultures. FALSE

Difficulty: Medium

5. (p. 196) In high-context societies, the succinct style of communication is very common. FALSE

Difficulty: Medium

6. (p. 196) The exacting communication style focuses on precision and the use of the right amount of words to convey the message. TRUE

Difficulty: Medium

7. (p. 197) The affective communication style is characterized by language, which requires the listener to carefully note what is being said and to observe how the sender is presenting the message. TRUE

Difficulty: Medium

8. (p. 196) The instrumental style of communication is more commonly found in individualistic, lowcontext cultures such as the United States. TRUE

Difficulty: Medium

9. (p. 199) The primary purpose of downward communication flow is to provide feedback, ask questions or obtain assistance from higher-level management. FALSE

Difficulty: Easy

10. (p. 201) Upward communication is the transfer of information from subordinate to superior. TRUE

Difficulty: Easy

11. (p. 203) Written communication has been getting increased attention, because poor writing is proving to be a greater barrier than poor talking. TRUE

Difficulty: Easy

12. (p. 209) The area of communication that deals with conveying messages through the use of eye contact and gaze is referred to as kinesics. FALSE

Difficulty: Easy

13. (p. 209) Timing and pauses within verbal behavior are one of the many common forms of nonverbal communication. TRUE

Difficulty: Medium

14. (p. 210) Communicating through the use of written means is referred to as haptics. FALSE

Difficulty: Easy

15. (p. 210) Proxemics is the study of communication through body movement and facial expressions. FALSE

Difficulty: Easy

16. (p. 212) The personal and impersonal systems of feedback help affiliates keep their home office aware of progress and, in turn, help the home office monitor and control affiliate performance as well as set goals and standards. TRUE

Difficulty: Easy

17. (p. 215) Negotiation often follows assessing political risk and can be used as an approach to conflict management. TRUE

Difficulty: Medium

18. (p. 216) The interpersonal relationship building phase of the negotiation process is considered by many to be the most important. FALSE

Difficulty: Medium

19. (p. 220) Time limits cannot be used tactically if the negotiators meet at a neutral site. FALSE

Difficulty: Medium

20. (p. 222) When negotiators make a definitive decision before engaging in discussion, they may soon find out that the terms never even surface. TRUE

Difficulty: Medium

Multiple Choice Questions

21. (p. 195) Communication is the process of: A. Transferring meanings from sender to receiver B. Choosing a course of action among alternatives C. Giving teams the resources they need to develop ideas and effectively implement them D. Using reports and other written forms to control business operations

Difficulty: Easy

22. (p. 956) _____ is the information that surrounds a communication and helps convey the message. A. Contingency B. Stipulation C. Context D. Circumstance

Difficulty: Easy

23. (p. 195) Messages are implicit and often highly coded in: A. Low-context societies B. Moderate-context societies C. High-context societies D. Variable-context societies

Difficulty: Medium

24. (p. 195) In terms of communication styles, which of the following countries has a low-context society? A. The United States B. Japan C. Italy D. Arab countries

Difficulty: Medium

25. (p. 195) In terms of communication styles, which of the following countries has a high-context society? A. Germany B. Scandinavia C. Canada D. Japan

Difficulty: Medium

26. (p. 196) Researchers have found that the contextual style is often associated with: A. Low-power distance, collective, high-context cultures B. Low-power distance, individualistic, high-context cultures C. High-power distance, individualistic, low-context cultures D. High-power distance, collective, high-context cultures

Difficulty: Medium

27. (p. 197) The three degrees of communication quantity are: A. Elaborate, exacting and succinct B. Precise, imprecise and elaborate C. Succinct, affective and precise D. Coarse, precise and elaborate

Difficulty: Medium

28. (p. 197) In high-context societies, the _____ style of communication is common. A. Exacting B. Elaborate C. Succinct D. Compact

Difficulty: Medium

29. (p. 197) Which style of communication focuses on precision and the use of the right amount of words to convey the message? A. Coarse B. Succinct C. Elaborate D. Exacting

Difficulty: Medium

30. (p. 197) This communication style is most common in Asia where people tend to say few words and allow understatements, pauses and silence to convey meaning. A. Succinct B. Exacting C. Coarse D. Elaborate

Difficulty: Medium

31. (p. 197) Which style of communication focuses on the speaker and relationship of the parties? A. Personal B. Contextual C. Individual D. Indigenous

Difficulty: Medium

32. (p. 197) This style of communication focuses on the speaker and the reduction of barriers between the parties. A. Personal B. Contextual C. Affective D. Instrumental

Difficulty: Medium

33. (p. 197) In contrast to the contextual style, the personal style is more popular in: A. Low-power distance, collective, high-context cultures B. Low-power distance, individualistic, low-context cultures C. High-power distance, individualistic, low-context cultures D. High-power distance, collective, high-context cultures

Difficulty: Medium

34. (p. 197) Identify the country which has a low-power-distance, individualistic, low-context culture. A. The United States B. Japan C. Ghana D. India

Difficulty: Medium

35. (p. 199) This style of communication is characterized by language, which requires the listener to carefully note what is being said and to observe how the sender is presenting the message. A. Instrumental B. Conductive C. Affective D. Facilitating

Difficulty: Medium

36. (p. 199) The transmission of information from manager to subordinate is referred to as: A. Lateral communication B. Upward communication C. Downward communication D. Horizontal communication

Difficulty: Easy

37. (p. 201) _____ communication is the transfer of information from subordinate to superior. A. Upward B. Lateral C. Downward D. Horizontal

Difficulty: Easy

38. (p. 201) The primary purpose of subordinate-initiated _____ communication is to provide feedback, ask questions or obtain assistance from higher-level management. A. Lateral B. Horizontal C. Upward D. Downward

Difficulty: Easy

39. (p. 202) Many multinational corporations use _____ as the common language for international communication. A. French B. English C. Spanish D. Japanese

Difficulty: Easy

40. (p. 209) The nonverbal method of communicating through the use of eye contact and gaze is: A. Proxemics B. Haptics C. Oculesics D. Chronemics

Difficulty: Medium

41. (p. 210) Communicating through the use of bodily contact is known as: A. Proxemics B. Oculesics C. Chronemics D. Haptics

Difficulty: Easy

42. (p. 210) The gesture of putting the thumb and index finger together to form an "O" as the sign for "okay" in the United States is an example of: A. Chromatics B. Haptics C. Chronemics D. Proxemics

Difficulty: Medium

43. (p. 210) This is the study of the way people use physical space to convey messages. A. Proxemics B. Haptics C. Kinesics D. Chronemics

Difficulty: Medium

44. (p. 210) Which of the following is used for communicating very confidential communication? A. Social distance B. Public distance C. Personal distance D. Intimate distance

Difficulty: Easy

45. (p. 210) Which of the following "distances" is used for talking with family and close friends? A. Intimate B. Social C. Personal D. Public

Difficulty: Easy

46. (p. 210) In communicating on a face-to-face basis, _____ distance is used to handle most business transactions. A. Social B. Public C. Personal D. Intimate

Difficulty: Easy

47. (p. 210) _____ distance is used when calling across the room or giving a talk to a group. A. Personal B. Public C. Intimate D. Social

Difficulty: Easy

48. (p. 210) Office layout is a good example of: A. Proxemics B. Haptics C. Oculesics D. Kinesics

Difficulty: Medium

49. (p. 211) The way in which time is used in a culture is referred to as: A. Oculesics B. Chronemics C. Proxemics D. Kinesics

Difficulty: Medium

50. (p. 211) A monochronic time schedule is one in which: A. Things are done in a linear fashion B. People tend to do several things at the same time irrespective of the amount of work involved C. People tend to place higher value on personal involvement than on getting things done on time D. Things are done in a planar manner

Difficulty: Medium

51. (p. 211) Chromatics: A. Is the use of sound to communicate messages B. Is the use of symbols to communicate messages C. Is the use of gestures to communicate messages D. Is the use of color to communicate messages

Difficulty: Medium

52. (p. 211) In the United States, it is common to wear black when one is in mourning, while in some locations in India people wear white when they are in mourning. This is an example of: A. Chronemics B. Chromatics C. Proxemics D. Haptics

Difficulty: Medium

53. (p. 215) Which of the following is a persuasion tool generally used by the Japanese during negotiations? A. Time pressure B. Intergroup connections C. Hospitality D. Emphasis on family

Difficulty: Hard

54. (p. 214) In which of the following countries do people like to be greeted by their title? A. Germany B. Japan C. Mexico D. Arab countries

Difficulty: Medium

55. (p. 215) The process of bargaining with one or more parties for the purpose of arriving at a solution that is acceptable to all is: A. Negotiation B. Conflict C. Compromise D. Arbitration

Difficulty: Easy

56. (p. 215) All of the following are true of negotiation except: A. It is used in creating joint ventures with local firms and in getting the operation off the ground B. It is a learnable skill that is imperative for the international manager but not for the domestic manager C. It often follows assessing political risk D. It can be used as an approach to conflict management

Difficulty: Medium

57. (p. 216) Integrative negotiation: A. Occurs when two parties with opposing goals compete over a set value B. Involves cooperation between the two groups to integrate interests, create value and invest in the agreement C. Focuses on the individual relationships and is based on a short-term interaction D. Is sometimes called a win-lose situation

Difficulty: Medium

58. (p. 215) Distributive negotiation: A. Occurs when two parties with opposing goals compete over a set value B. Focuses on the group and is based on long-term interaction C. Is sometimes called a win-win scenario D. Involves cooperation between the two groups to integrate interests, create value and invest in the agreement

Difficulty: Medium

59. (p. 216) The first step in the negotiation process is: A. Interpersonal relationship building B. Planning C. Exchanging task-related information D. Persuasion

Difficulty: Medium

60. (p. 216) In the context of negotiations, _____ starts with the negotiators identifying those objectives they would like to attain. A. Planning B. Interpersonal relationship building C. Exchanging task-related information D. Persuasion

Difficulty: Easy

61. (p. 217) In which step of the negotiation process does each group set forth its position on critical issues? A. Persuasion B. Exchanging task-related information C. Interpersonal relationship building D. Planning

Difficulty: Medium

62. (p. 217) Which of the following steps in the negotiation process is considered by many to be the most important? A. Interpersonal relationship building B. Planning C. Exchanging task-related information D. Persuasion

Difficulty: Medium

63. (p. 217) The final step in the negotiation process is: A. The persuasion phase B. Interpersonal relationship building C. The agreement phase D. Exchanging task-related information

Difficulty: Easy

64. (p. 218) In the context of negotiation, Trompenaars and Hampden-Turner have noted that U.S. negotiators: A. Tend to open negotiations with an extreme initial position B. Tend to use an emotional appeal in their negotiation style C. Typically have authority to bind their party to an agreement D. Treat deadlines as only general guidelines for wrapping up negotiations

Difficulty: Medium

65. (p. 218) Research by Trompenaars and Hampden-Turner shows that Arab negotiators: A. Tend to open negotiations with a neutral initial position B. Analyze things subjectively and treat deadlines as only general guidelines for wrapping up negotiations C. Do not believe in making concessions and never reciprocate an opponent's concessions D. Never use an emotional appeal in their negotiation style

Difficulty: Medium

66. (p. 220) Which of the following places would be the best neutral site for a Chilean firm carrying on negotiations with a German firm? A. Santiago B. Munich C. Berlin D. New York City

Difficulty: Medium

67. (p. 221) Which of the following is not a principle advocated by Fisher and Ury, authors of the book Getting to Yes, to help avoid disasters while negotiating for mutual benefit? A. Separate the people from the problem B. Focus on positions rather than interests C. Generate a variety of options before settling on an agreement D. Insist that the agreement be based on objective criteria

Difficulty: Medium

68. (p. 223) In the context of negotiations, all of the following is true of a neutral third party except: A. He/she can be bought in to assess the desires of each side B. He/she can compose an initial proposal C. He/she has the last word in what the true "final draft" is D. He/she has the right to force the parties to the negotiation to accept its proposal

Difficulty: Medium

69. (p. 223) All of the following are true of an extreme bargaining position except: A. It shows the other party that the bargainer will not be exploited B. It extends the negotiation and gives the bargainer a better opportunity to gain information on the opponent C. It lets the bargainer gain less than would probably be possible if a more extreme initial position had been taken D. It modifies the opponent's beliefs about the bargainer's preferences

Difficulty: Hard

70. (p. 224) Research conducted by John L. Graham shows that during a buyer-seller negotiation simulation: A. Brazilians use a discussion of rewards and commands less than Americans B. Brazilians use self-disclosures more than the Americans C. Americans make first offers that have equal profit levels as their opponents D. Americans make more use of commands than their Japanese counterparts

Chapter 08 Strategy Formulation and Implementation Answer Key

True / False Questions

1. (p. 271) Strategic management is required to keep track of increasingly diversified operations in a continuously changing international environment. TRUE

Difficulty: Easy

2. (p. 273) There is definitive evidence that strategic planning in the international arena always results in higher profitability. FALSE

Difficulty: Easy

3. (p. 273) Many MNCs are convinced that strategic planning is critical to their success and these efforts are being conducted both at the home office and in the subsidiaries. TRUE

Difficulty: Medium

4. (p. 273) MNCs that focus on the political imperative employ a worldwide strategy based on cost leadership, differentiation and segmentation. FALSE

Difficulty: Easy

5. (p. 273) An economic imperative approach to strategic planning is used when a product is regarded as a generic good and therefore does not have to be sold based on name brand. TRUE

Difficulty: Medium

6. (p. 275) TQM covers the full gamut, from strategy formulation to implementation. TRUE

Difficulty: Easy

7. (p. 277) A bureaucratic coordination approach to formulation and implementation is one in which the MNC makes strategic decisions based on the merits of the individual situation. FALSE

Difficulty: Easy

8. (p. 277) National responsiveness is the need to understand different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous agencies. TRUE

Difficulty: Medium

9. (p. 277) To a growing extent, the customers of MNCs have heterogeneous tastes and this has helped to spread international consumerism. FALSE

Difficulty: Easy

10. (p. 278) When the need for national responsiveness is low and the need for global integration is high, a global strategy is appropriate. TRUE

Difficulty: Medium

11. (p. 279) When the need for national responsiveness is high and the need for global integration is high, a multi-domestic strategy is appropriate. FALSE

Difficulty: Hard

12. (p. 279) International strategies are characterized by increased international standardization of products and services. TRUE

Difficulty: Easy

13. (p. 280) Strategy formulation attempts to provide management with accurate forecasts of trends that relate to external changes in geographic areas where the firm is currently doing business. FALSE

Difficulty: Easy

14. (p. 282) External resource analysis helps the firm to evaluate its current financial strengths and weaknesses. FALSE

Difficulty: Medium

15. (p. 284) Profitability and marketing goals almost always dominate the strategic plans of today's multinational corporations. TRUE

Difficulty: Medium

16. (p. 284) Firms that have done well domestically with a product usually have done so because the competition is effective. FALSE

Difficulty: Medium

17. (p. 285) In choosing a location, today's MNC has two primary considerations: the country and the specific locale within the chosen country. TRUE

Difficulty: Medium

18. (p. 286) In selecting a geographic location to operate, Japanese firms favor heavily unionized areas. FALSE

Difficulty: Medium

19. (p. 290) In emerging economies undergoing rapid changes such as privatization, governments have generally been apprehensive and uncooperative with MNCs. FALSE

Difficulty: Medium

20. (p. 296) The term "born global" is used for firms that engage in significant international activity a short time after being established. TRUE

Difficulty: Medium

Multiple Choice Questions

21. (p. 271) The process of determining an organization's basic mission and long-term objectives and then implementing a plan of action for attaining these goals is: A. Strategic management B. Tactical management C. Contingency management D. Functional management

Difficulty: Easy

22. (p. 272) Ford Motor's strategic plan in Thailand is based on: A. Offering the right price and product B. Offering the right combination of price and financing to a carefully identified market segment C. Offering the right combination of price and financing to all market segments D. Offering the right financing only

Difficulty: Medium

23. (p. 272) Honda and General Motors have both built plants in Thailand to take advantage of A. Demand and low delivery costs B. Strategic pricing C. New technologies and low wages D. Tax incentives and demand

Difficulty: Medium

24. (p. 273) According to the text, strategic planning helps MNCs to do all of the following except: A. Coordinate and monitor its far-flung operations B. Deal with political risks C. Determine performance D. Get higher profitability

Difficulty: Medium

25. (p. 273) A worldwide strategy based on cost leadership, differentiation and segmentation is referred to as the: A. Economic imperative B. Political imperative C. Quality imperative D. Administrative coordination strategy

Difficulty: Easy

26. (p. 273) These individuals are the key to stimulating profit growth within a company. A. Supervisors B. Middle managers C. First-line managers D. Top managers

Difficulty: Medium

27. (p. 273) Companies that pursue this strategy typically sell products for which a large portion of value is added in the upstream activities of the industry's value chain. A. Quality imperative B. Political imperative C. Economic imperative D. Administrative coordination

Difficulty: Medium

28. (p. 274) MNCs using the _____ approach to strategic planning are country-responsive; their approach is designed to protect local market niches. A. Administrative coordination strategy B. Economic imperative C. Quality imperative D. Political imperative

Difficulty: Easy

29. (p. 274) The products sold by MNCs pursuing this approach often have a large portion of their value added in the downstream activities of the value chain. A. Political imperative B. Cost imperative C. Quality imperative D. Economic imperative

Difficulty: Medium

30. (p. 274) Typically, MNCs utilizing this approach to strategic planning use a country-centered or multi-domestic strategy. A. Quality imperative B. Administrative coordination C. Political imperative D. Economic imperative

Difficulty: Medium

31. (p. 275) The approach to strategic formulation and implementation utilizing strategies of TQM to meet or exceed customers' expectations and continuously improve products and/or services is referred to as the: A. Value-added imperative B. Quality imperative C. Political imperative D. Economic imperative

Difficulty: Easy

32. (p. 275-276) All of the following are characteristics of TQM except: A. Quality is operationalized by meeting or exceeding customer expectations B. The quality strategy is formulated by the front-line employees and is diffused throughout the organization C. Everyone from top executives to hourly employees operates under a TQM strategy of delivering quality products/services to internal and external customers D. TQM techniques range from traditional inspection and statistical quality control to cutting-edge human resource management techniques

Difficulty: Hard

33. (p. 277) This approach to formulation and implementation is one in which the MNC makes strategic decisions based on the merits of the individual situation rather than using a predetermined economic or political strategy. A. Administrative coordination B. Bureaucratic coordination C. Value-added D. Functional

Difficulty: Easy

34. (p. 277) _____ is the production and distribution of products and services of a homogeneous type and quality on a worldwide basis. A. Global integration B. Nationalism C. Cross-border integration D. Market standardization

Difficulty: Easy

35. (p. 277) The need to understand the different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous governments and agencies is: A. Global integration B. International entrepreneurship C. National responsiveness D. Statutory compliance

Difficulty: Easy

36. (p. 279) This strategy is appropriate when the need for national responsiveness is low and the need for globalization integration is high. A. International B. Multi-domestic C. Global D. Transnational

Difficulty: Medium

37. (p. 279) When the need for national responsiveness is high and the need for global integration is also high, this strategy is appropriate. A. Transnational B. Globalization C. International D. Multi-domestic

Difficulty: Medium

38. (p. 279) When the need for national responsiveness is high and the need for global integration is low, a(n) _____ strategy is appropriate. A. Transnational B. Multi-domestic C. International D. Globalization

Difficulty: Medium

39. (p. 279) When the need for national responsiveness is low and the need for global integration is also low, which of the following strategies would be appropriate? A. Globalization B. Transnational C. International D. Multi-domestic

Difficulty: Medium

40. (p. 279) Which foreign marketing strategy is characterized by niche companies that adapt their products to satisfy the high demands of differentiation and ignore economies of scale because integration is not very important? A. Multi-domestic B. International C. Globalization D. Transnational

Difficulty: Hard

41. (p. 279) Which of the following strategies has the highest need for integration and differentiation? A. National responsiveness B. Globalization C. International D. Transnational

Difficulty: Medium

42. (p. 281) _____ attempts to provide management with accurate forecasts of trends that relate to external changes in geographic areas where the firm is currently doing business or considering setting up operations. A. Environmental scanning B. Functional scanning C. Tactical scanning D. Operational scanning

Difficulty: Easy

43. (p. 281) One of the most important foci in _____ is the market and includes the role of all potential competitors and the relationships surrounding those competitors, such as affiliation with one another or the connection between the company and its customers and suppliers. A. Strategy implementation B. Goal formulation C. Environmental scanning D. Internal resource analysis

Difficulty: Medium

44. (p. 282) The strategic planning process that helps a firm evaluate its current managerial, technical, material and financial strengths and weaknesses is: A. Environmental scanning B. Operational analysis C. Internal resource analysis D. Tactical analysis

Difficulty: Medium

45. (p. 282) This analysis identifies the key factors for success that will dictate how well the firm is likely to do. A. External B. Internal C. Competitive D. Market

Difficulty: Medium

46. (p. 282) A key success factor is a factor that is necessary for a firm to compete effectively in a(n): A. International market B. Highly-restricted market C. Market niche D. Broad market domain

Difficulty: Medium

47. (p. 284) According to the text, which of the following sets of goals almost always dominate the strategic plans of today's MNCs? A. Quality and cost control B. Finance and operations C. Accounting and R&D D. Profitability and marketing

Difficulty: Medium

48. (p. 284) Once strategic goals are set, an MNC will develop specific _____ goals and controls, usually through a two-way process at the subsidiary or affiliate level. A. Bureaucratic B. Operational C. Strategic D. Contingency

Difficulty: Medium

49. (p. 284) The process of providing goods and services in accord with a plan of action is: A. Strategy implementation B. Strategy formulation C. Strategy control D. Strategy contingency

Difficulty: Easy

50. (p. 284) An MNC must consider all of the following general areas in strategy implementation except: A. Management must implement functional strategies in areas such as marketing B. It should consider investing only in advanced nations C. It must carry out entry and ownership strategies D. It must decide where to locate operations

Difficulty: Medium

51. (p. 285) A primary consideration for an MNC in investing in a foreign country would be a decision based on: A. Corporate culture B. Business ethics C. Specific locale D. Operating norms

Difficulty: Medium

52. (p. 285) Opportunities to increase market share through increased sales of goods and services result in MNCs investing into: A. Advanced industrialized countries B. Bribes and kickbacks C. Corporate cultures D. Syndicate operations

Difficulty: Easy

53. (p. 286) All of the following act as disincentives for MNCs except: A. Restrictions on profit repatriation B. Controls on the transfer of technology C. Export maximums for generating foreign currency D. Limits on local market growth

Difficulty: Medium

54. (p. 286) A multinational firm's choice of a locale is affected by all of the following factors except: A. Desirability of the location for employees B. The number of market shares invested in their home country C. Proximity to competitors D. Nature of the workforce

Difficulty: Medium

55. (p. 288) For products like computers, Japanese firms: A. Move from their home market directly into fully developed countries and then on to the newly developing nations B. Move from their home market directly into developing nations and then on to developed markets C. Go only to developed countries to market products D. Go only to developing countries to market products

Difficulty: Medium

56. (p. 288) The implementation of a marketing strategy in international areas is built around the wellknown "four Ps". These are: A. Place of origin, price, productive life and product B. Promotion, price, production method and productive life C. Product, price, promotion and place D. Place of origin, production method, price and people

Difficulty: Easy

57. (p. 289) If a firm operates production plants in different countries but makes no attempt to integrate its overall operations, the company is known as a: A. Multi-domestic B. Global C. Transnational D. International

Difficulty: Easy

58. (p. 288) MNCs have found that whether they are exporting or producing the goods locally in the host country, consideration of worldwide production is important. All of the following are factors to be taken into consideration except: A. Goods may be produced in foreign countries for export to other nations B. A plant will specialize in a particular product and export it to all the MNC's markets C. A plant will produce goods for many locales D. A plant will produce one or more components that are shipped to a larger network of assembly plants

Difficulty: Hard

59. (p. 290) To respond to risks in emerging markets, MNCs must do all of the following except: A. Limiting equity investments B. Avoiding joint ventures C. Collaborating with a local partner D. Encouraging shared ownership structures

Difficulty: Medium

60. (p. 290) When market liberalization is delayed: A. It gives first movers a significant advantage over later entrants B. First movers get clear, significant advantages in transitional markets C. It gives later entrants a significant advantage over first movers D. Substantial risks to premature entry are removed

Difficulty: Medium

61. (p. 290) Which of the following is not an advantage of first-mover strategies? A. Capturing learning effects important for increasing market share B. Achieving scale economies C. Development of alliances with the most attractive local partners D. Capitalizing on well-established legal, institutional and political frameworks

Difficulty: Medium

62. (p. 291) Within the context of international management, the "base of the pyramid" refers to: A. Front-line employees at the bottom of the organizational hierarchy B. Younger generations of the population pyramid C. Understanding the foundational issues in international management D. Potential low-income customers at the bottom of the economic pyramid

Difficulty: Medium

63. (p. 291) Which of the following is likely to be the most effective strategic approach for the "base of the pyramid"? A. Incremental adaptation of existing technologies and products B. Establishing partnerships with central governments of emerging economies C. Leapfrog technologies including disruptive technologies D. Large-scale strategies

Difficulty: Hard

64. (p. 292) Which of the following findings regarding BOP strategy has significant implications for the globalization-national responsiveness framework? A. Building relationships directly and at the local level contributes to the reputation and fosters the trust necessary to overcome the lack of formal institutions such as the rule of law B. The BOP may be an ideal environment for incubating new, leapfrog technologies C. These business models may travel profitably to higher-income markets because adding features to a low-cost model may be easier than removing features from high-cost models D. It brings focus to those who are too poor to be viable customers for multinational companies

Difficulty: Hard

65. (p. 292) All of the following are challenges firms could face in the implementation of a BOP strategy except: A. Offering affordable goods B. Generating awareness regarding the product C. Nonexistent distribution channels D. Coordinating administrative functions

Difficulty: Hard

66. (p. 295) International management activities of entrepreneurial and new-venture firms have been made possible by all of the following except: A. Customized, old access channels B. Advances in telecommunication C. Greater efficiencies and lower costs in shipping D. Allowing firms to access international customers

Difficulty: Easy

67. (p. 296) Firms that internationalize after being domestically established have to overcome all of the following barriers except: A. Their domestic orientation B. Their internal domestic political ties C. Their domestic decision-making inertia D. Their anti-risk seeking behavior

Difficulty: Medium

68. (p. 296) The technological learning gained from varied international environments: A. Enhances efforts to integrate knowledge throughout a firm B. Shows a fall in venture performance C. Leads to minimal diversity of national environments D. Has no effect on cross-functional teams

Difficulty: Hard

69. (p. 296) Firms that engage in significant international activity a short time after being established are called: A. Greenfield ventures B. Born globals C. Brownfield firms D. Traditional exporters

Difficulty: Easy

70. (p. 296) All of the following are features of a "born-global" firm except: A. They export products to close markets B. They employ strategies like unique-products development C. They indulge in significant international activity a short time after being established D. They seek joint ventures or acquisitions as a method to expand internationally

Chapter 09 Entry Strategies and Organizational Structures Answer Key

True / False Questions

1. (p. 305) An overseas operation that is totally owned and controlled by an MNC is a wholly owned subsidiary. TRUE

Difficulty: Easy

2. (p. 305) The primary reason for the use of licensing agreements is a desire by the MNC for total control over its products in overseas markets. FALSE

Difficulty: Medium

3. (p. 310) A joint venture is an agreement in which two or more partners own and control an overseas business. TRUE

Difficulty: Easy

4. (p. 312) A license is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups. FALSE

Difficulty: Medium

5. (p. 312) A franchise is an agreement that allows one party to use an industrial property right in exchange for payment to the other party. FALSE

Difficulty: Easy

6. (p. 315) Franchising provides the franchisor with a new stream of income and the franchisee with a time-proven concept and products that can be quickly brought to market. TRUE

Difficulty: Easy

7. (p. 317) Companies in the mature stage of international business involvement are the most likely to adopt an international division structure. FALSE

Difficulty: Medium

8. (p. 318) A disadvantage of the international division structure is that it separates a firm's domestic and international managers, which can result in two different camps with divergent objectives. TRUE

Difficulty: Medium

9. (p. 318) A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a global area division structure. FALSE

Difficulty: Medium

10. (p. 319) Firms that pursue a global product division structure typically have products that are in the maturity stage of the product life cycle. FALSE

Difficulty: Medium

11. (p. 319) One disadvantage of the global product division structure is the necessity of duplicating facilities and staff personnel within each division. TRUE

Difficulty: Medium

12. (p. 320) A structure under which global operations are organized on a geographic rather than a product orientation is referred to as a global area structure. TRUE

Difficulty: Easy

13. (p. 320) Companies that are in growing businesses and have broad product lines most often use a global area division structure. FALSE

Difficulty: Medium

14. (p. 320) An advantage of the global area division structure is that it allows the division manager to cater to the tastes of the local market and make rapid decisions to accommodate environmental changes. TRUE

Difficulty: Medium

15. (p. 321) An advantage of the global functional division structure is that only the CEO can be held accountable for the profits. FALSE

Difficulty: Medium

16. (p. 325) One of the main objectives in developing the structure for joint ventures is to help the partners address and effectively meld their different values and organizational preferences. TRUE

Difficulty: Medium

17. (p. 327) In most companies, mutual adjustment is achieved by assigning people to a specific project and having them meet face-to-face and work out a plan of action of designing the new product. TRUE

Difficulty: Medium

18. (p. 328) Formalization is an organizational characteristic that assigns individuals to specific, welldefined tasks. FALSE

Difficulty: Easy

19. (p. 329) Specialization is the use of defined structures and systems in decision-making, communicating and controlling. FALSE

Difficulty: Easy

20. (p. 330) Centralization is a management system in which important decisions are made at the top. TRUE

Difficulty: Easy

Multiple Choice Questions

21. (p. 305) The primary reason for the use of _____ is a desire by the MNC for total control and the belief that managerial efficiency will be better without outside partners. A. Licensing agreements B. Franchising C. Wholly owned subsidiaries D. Joint ventures

Difficulty: Medium

22. (p. 310) This is an agreement in which two or more partners own and control an overseas business. A. Franchise B. Wholly owned subsidiary C. Licensing agreement D. Joint venture

Difficulty: Easy

23. (p. 310) The equity joint venture: A. Is characterized by one group merely providing a service for another B. Involves a financial investment by the MNC in a business enterprise with a local partner C. Organizes worldwide operations based primarily on function and secondarily on product D. Provides the most benefits when the need for product specification or differentiation is high

Difficulty: Medium

24. (p. 310) The nonequity venture: A. Is characterized by one group merely providing a service for another B. Provides the most benefits when the need for product specification or differentiation is high C. Involves a financial investment by the MNC in a business enterprise with a local partner D. Organizes worldwide operations based primarily on function and secondarily on product

Difficulty: Medium

25. (p. 310) The two types of joint ventures are: A. Equity and non-equity ventures B. Proprietary and public ventures C. Statutory and unofficial ventures D. External and internal ventures

Difficulty: Medium

26. (p. 312) This is an agreement that allows one party to use an industrial property right in exchange for payment to the other party. A. Franchise B. Joint venture C. License D. Certificate of proprietary usage

Difficulty: Easy

27. (p. 313) A _____ is a business arrangement under which one party allows another to operate an enterprise using its trademark, logo, product line and methods of operation in return for a fee. A. License B. Franchise C. Certificate of proprietary usage D. Joint venture

Difficulty: Easy

28. (p. 313) These agreements typically require payment of a fee upfront and then a percentage of the revenues. A. Franchise B. Wholly owned subsidiary C. Export D. Joint venture

Difficulty: Medium

29. (p. 316) Aircraft manufacturing fits which of the following globalization versus local responsiveness combination? A. High pressure for globalization, high pressure for local responsiveness B. High pressure for globalization, low pressure for local responsiveness C. Low pressure for globalization, low pressure for local responsiveness D. Low pressure for globalization, high pressure for local responsiveness

Difficulty: Hard

30. (p. 316) Clothing manufacturing fits which of the following globalization versus local responsiveness combination? A. Low pressure for globalization, low pressure for local responsiveness B. Low pressure for globalization, high pressure for local responsiveness C. High pressure for globalization, low pressure for local responsiveness D. High pressure for globalization, high pressure for local responsiveness

Difficulty: Hard

31. (p. 316) A common first choice among manufacturing firms, especially those with technologically advanced products, would be to develop a(n): A. Domestic policy B. Export arrangement C. Cartel arrangement D. Import quota

Difficulty: Easy

32. (p. 317) In a company that has a narrow product line, the export manager usually reports directly to the head of: A. Purchasing B. Personnel C. Production D. Marketing

Difficulty: Medium

33. (p. 318) The structural arrangement that allows a company to develop an overall, unified approach to international operations and helps the firm develop a cadre of internationally experienced managers is an advantage of a(n): A. Mixed organization structure B. Global area division structure C. Global product division structure D. International division structure

Difficulty: Easy

34. (p. 317) Pressure by local foreign government for continued growth of international sales encourage on-site: A. Maintenance B. Supply and distribution operations C. Manufacturing operations D. Safety operations

Difficulty: Medium

35. (p. 317) A structural arrangement that handles all international operations out of a division created for this purpose is referred to as a(n): A. Worldwide organizational structure B. Global matrix structure C. International division structure D. Overseas network structure

Difficulty: Easy

36. (p. 317) Companies still in the development stages of international business involvement are most likely to adopt the: A. International division structure B. Global product division structure C. Global area division structure D. Global functional division structure

Difficulty: Easy

37. (p. 317) According to the text, all of the following types of companies are likely to adopt the international division structure except: A. Companies with limited geographic diversity B. Companies with a large number of executives with international expertise C. Companies still in the developmental stage of international business D. Companies with small international sales

Difficulty: Medium

38. (p. 318) A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a(n): A. International division structure B. Global product division structure C. Global area division structure D. Global functional division structure

Difficulty: Easy

39. (p. 319) The products sold by firms that adopt a global product division structure are generally in the _____ stage of the product life cycle. A. Introduction B. Growth C. Maturity D. Decline

Difficulty: Medium

40. (p. 319) Which of the following provides the most benefits when the need for product specification or differentiation is high? A. International division B. Global product division C. Global area division D. Global functional division

Difficulty: Easy

41. (p. 320) A structure under which global operations are organized on a geographic rather than a product basis is referred to as a(n): A. Global area division structure B. Global product division structure C. International division structure D. Global functional division structure

Difficulty: Easy

42. (p. 321) That division managers may pursue currently attractive geographic prospects for their products and neglect other areas with better long-term potential is a major drawback of the: A. International division structure B. Global product division structure C. Global area division structure D. Global functional division structure

Difficulty: Medium

43. (p. 320) Which of the following is an advantage of a global area division structure? A. The structural arrangement helps a firm manage a diverse product line B. The structural arrangement helps a firm cater to local needs in foreign markets C. The marketing, production and finance divisions of the firm can be coordinated on a productby-product global basis D. The structural arrangement helps a firm develop an overall, unified approach to international markets

Difficulty: Medium

44. (p. 320) A global area division structure most often is used by companies that are in _____ businesses and have _____ product lines. A. Growing; broad B. Mature; narrow C. Growing; narrow D. Mature; broad

Difficulty: Medium

45. (p. 321) The difficulty encountered in reconciling a product emphasis with a geographic orientation is the primary disadvantage of a(n): A. International division structure B. Global product division structure C. Global area division structure D. Global functional division structure

Difficulty: Medium

46. (p. 321) Which of the following organizes worldwide operations based primarily on function and secondarily on product? A. International division structure B. Global product division structure C. Global area division structure D. Global functional division structure

Difficulty: Easy

47. (p. 321) A global functional division structure is used primarily by: A. Service companies B. Extractive companies C. Light manufacturing companies D. Heavy manufacturing companies

Difficulty: Medium

48. (p. 321) All of the following are advantages of the global functional division structure except: A. An emphasis on functional expertise B. A tight centralized control C. A relatively lean managerial staff D. The chief executive officer is held accountable for the profits

Difficulty: Medium

49. (p. 321) A structure that is a combination of a global product, an area or a functional arrangement is referred to as a(n) _____ organizational structure. A. Assimilated B. Transnational C. Mixed D. Team-based

Difficulty: Easy

50. (p. 322) A multinational structural arrangement that combines elements of function, product and geographic designs, while relying on a network arrangement to link worldwide subsidiaries is referred to as a: A. Transnational network structure B. Cross-cultural matrix structure C. Transnational divisional structure D. Cross-cultural network structure

Difficulty: Easy

51. (p. 322) A _____ is designed to help MNCs take advantage of global economies of scale while also being responsive to local customer demands. A. Global matrix structure B. Transnational network structure C. Worldwide divisional structure D. Cross-cultural matrix structure

Difficulty: Medium

52. (p. 322) At the center of the _____ are nodes, which are units charged with coordinating product, functional and geographic information. A. Cross-cultural matrix structure B. Worldwide divisional structure C. Transnational network structure D. Global product division structure

Difficulty: Medium

53. (p. 323) Subsidiaries that are located anywhere in the world where they can benefit the organization are called: A. Chaebols B. Keiretsus C. Specialized subunits D. Dispersed subunits

Difficulty: Medium

54. (p. 323) Specialized operations are: A. Designed to tap specialized expertise or other resources in the company's worldwide subsidiaries B. Subsidiaries that are located anywhere in the world where they can benefit the organization C. Designed to take advantage of low factor costs, while others are responsible for providing information on new technologies or consumer trends D. Used to share information and resources throughout dispersed and specialized subunits

Difficulty: Medium

55. (p. 323) Interdependent relationships are: A. Designed to tap specialized expertise or other resources in the company's worldwide subsidiaries B. Subsidiaries that are located anywhere in the world where they can benefit the organization C. Used to share information and resources throughout the dispersed and specialized subunits D. Designed to take advantage of low factor costs, while others are responsible for providing information on new technologies or consumer trends

Difficulty: Medium

56. (p. 324) In terms of cultural control in a global area division: A. It is treated like all other MNC structural divisions B. Local subsidiary culture is often the most important C. It is possible for some companies, but not always necessary D. Culture must support the shared decision making

Difficulty: Hard

57. (p. 324) In which of the following MNC structures are tight process bureaucratic controls used to maintain product quality and consistency? A. Transnational network structure B. Global area division C. Matrix structure D. Global product division

Difficulty: Medium

58. (p. 324) The decision-making control in which local units are given autonomy is characteristic of a(n): A. Global area division structure B. International division structure C. Global product division structure D. Transnational network structure

Difficulty: Medium

59. (p. 324) The output control in which profit responsibility is shared with product and geographic units is characteristic of a(n): A. Global area division structure B. International division structure C. Matrix structure D. Transnational network structure

Difficulty: Medium

60. (p. 324) Bureaucratic control is not very important in which type of multinational structure? A. Global product division structure B. Global area division structure C. Matrix structure D. International division structure

Difficulty: Easy

61. (p. 326) Which basic value is not common in Asian firms? A. Group B. Trust C. Confrontation D. Fluid

Difficulty: Medium

62. (p. 326) Individuals who work for a company, usually via the Internet and move on to other employment when their assignment is done are known as: A. Purchasing agents B. Marketing managers C. International outsourcers D. Electronic freelancers

Difficulty: Medium

63. (p. 328) _____ is the use of defined structures and systems in decision-making, communicating and controlling. A. Formalization B. Specialization C. Concentration D. Interpretation

Difficulty: Easy

64. (p. 328) In a study of U.S. and Japanese firms in Taiwan, objective formalization was measured by: A. Use of informal controls B. The extent to which goals were vague and unspecified C. The number of different documents given to employees D. Use of culturally induced values in getting things done

Difficulty: Medium

65. (p. 329) As an organizational characteristic, _____ is the assigning of individuals to specific, welldefined tasks. A. Interpretation B. Concentration C. Formalization D. Specialization

Difficulty: Easy

66. (p. 329) Specialization in an international context can be classified into: A. Diagonal and vertical specialization B. Vertical and parallel specialization C. Horizontal and vertical specialization D. Diagonal and parallel specialization

Difficulty: Easy

67. (p. 330) The assignment of jobs so that individuals are given a particular function to perform and tend to stay within the confines of this area is referred to as: A. Diagonal specialization B. Parallel specialization C. Vertical specialization D. Horizontal specialization

Difficulty: Medium

68. (p. 330) The assignment of work to groups of departments where individuals are collectively responsible for performance is referred to as: A. Horizontal specialization B. Vertical specialization C. Lateral specialization D. Parallel specialization

Difficulty: Medium

69. (p. 330) _____ is a management system in which important decisions are made at the top. A. Centralization B. Decentralization C. Horizontal specialization D. Vertical specialization

Difficulty: Easy

70. (p. 330) Pushing decision making down the line and getting the lower-level personnel involved is referred to as: A. Centralization B. Decentralization C. Horizontal specialization D. Vertical specialization

Chapter 10 Managing Political Risk, Government Relations, and Alliances Answer

Key

True / False Questions

1. (p. 338) Political risk is the likelihood that a multinational corporation's foreign investment will be constrained by a host government's policies. TRUE

Difficulty: Easy

2. (p. 338) Over the past decade and with the recent terrorist attacks on the U.S., political risk assessment has become less vital to MNCs. FALSE

Difficulty: Medium

3. (p. 338) China's decision regarding restrictions on foreign exchange transactions is a micro political risk because it affects all MNCs. FALSE

Difficulty: Hard

4. (p. 340) Micro political risk analysis is directed toward government policies and actions that influence selected sectors of the economy or specific foreign businesses. TRUE

Difficulty: Easy

5. (p. 339) China's decision regarding restrictions on foreign exchange transactions represents a macro political risk because it affects all MNCs. TRUE

Difficulty: Medium

6. (p. 342) Macro risk issues often take forms such as industry regulations, taxes of specific types of business activity and various restrictive local laws. FALSE

Difficulty: Medium

7. (p. 344) Firms that are at the greatest risk in regard to expropriation are in extractive, agricultural or infrastructural industries such as utilities and transportation because of the importance of these industries to the country. TRUE

Difficulty: Medium

8. (p. 345) Examples of ownership-control risks include tariffs on export and imports and well as restrictions on exports. FALSE

Difficulty: Medium

9. (p. 345) Operational risks result from government policies and procedures that directly constrain the management and performance of local operations. TRUE

Difficulty: Easy

10. (p. 345) In a conglomerate investment, the goods or services produced are not similar to those produced at home. TRUE

Difficulty: Easy

11. (p. 345) Conglomerate investments usually are rated as low risk, because foreign governments see them as providing fewer benefits to the MNC and greater benefits to the country than other investments. FALSE

Difficulty: Hard

12. (p. 345) Vertical investments run the risk of being taken over by government because they are export-oriented and governments like a business that helps it to generate foreign capital. TRUE

Difficulty: Hard

13. (p. 345) There are three sectors of economic activity: the primary sector, the secondary sector and the service sector. FALSE

Difficulty: Medium

14. (p. 347) Some MNCs attempt to manage political risk through a quantification process in which a range of variables are simultaneously analyzed to derive an overall rating of the degree of political risk in a given jurisdiction. TRUE

Difficulty: Medium

15. (p. 349) Protective and defensive techniques are designed to encourage the host government to actively participate in the management of the MNC. FALSE

Difficulty: Medium

16. (p. 350) Comprehensive political strategies are most important in stable policy environments. FALSE

Difficulty: Easy

17. (p. 352) Local knowledge can be internalized primarily as a result of an MNC operating in that market. FALSE

Difficulty: Medium

18. (p. 352) In the context of international strategic alliances, value-claiming activities are competitive and distributive. TRUE

Difficulty: Hard

19. (p. 352) The most difficult cultural differences to manage in international strategic alliances are power distance and uncertainty avoidance. FALSE

Difficulty: Medium

20. (p. 353) Host government mandates that require foreign investors to partner with local stateowned firms or follow local-content rules may still have a positive impact on MNCs. TRUE

Difficulty: Medium

Multiple Choice Questions

21. (p. 338) Which of the following is not a challenge of doing business in Russia? A. Corruption B. Red tape C. Strong faith in government policies D. Security concerns

Difficulty: Medium

22. (p. 338) Not all MNCs are confident about international investment in countries with: A. Low labor costs B. Political unrest C. Emerging economies D. Cultural differences

Difficulty: Easy

23. (p. 338) The following is not an example of risk factors for an MNC: A. Freezing the movement of assets out of the host country B. Limits on the remittance of profits or capital C. Devaluing the currency D. Complying with contractual terms of agreements

Difficulty: Medium

24. (p. 338) _____ risk is the likelihood that a multinational corporation's foreign investment will be constrained by a host government's policies. A. Social B. Development C. Legal D. Political

Difficulty: Medium

25. (p. 338) Over the past decade political risk has become: A. An area closely watched by developing countries, but virtually ignored by developed countries B. A vital area for MNCs to assess and manage C. A much less pervasive and minor threat facing international management D. Virtually obsolete for international firms as a result of controls imposed by the UNO

Difficulty: Medium

26. (p. 339) The following actions raise the political risk of doing business in China except: A. Interpretation of rules and regulations by officials B. Industrial piracy C. Pressure on the MNCs to do things in a particular way D. Concerns on safety and reliability of product quality

Difficulty: Easy

27. (p. 339) _____ reviews major political decisions that are likely to affect all business conducted in a particular country. A. Macro political risk analysis B. Micro political risk analysis C. Standard political risk analysis D. Multidimensional political risk analysis

Difficulty: Easy

28. (p. 339) China's decision regarding restrictions on foreign exchange transactions is a _____ political risk because it affects all MNCs. A. Micro B. Standard C. Macro D. Multidimensional

Difficulty: Medium

29. (p. 340) In recent years _____ risk analysis has become of increasing concern to MNCs because of the growing number of countries that are finding their economies in trouble as in Southeast Asia or even worse, unable to make the transition to a market-driven economy. A. Micro B. Basic C. Macro D. Complex

Difficulty: Medium

30. (p. 340) China's government policies regarding investment in the telecommunications industry fall into the _____ political risk category. A. Macro B. Micro C. Integrative D. Relative

Difficulty: Easy

31. (p. 340) The economies of China, Russia, India and Vietnam present _____ political risk for MNCs. A. Macro B. Micro C. Proactive D. Relative

Difficulty: Easy

32. (p. 342) _____ risk issues often take forms such as industry regulation, taxes on specific types of business activity and various restrictive local laws. A. Macro B. Standard C. Direct D. Micro

Difficulty: Medium

33. (p. 341) According to the 2009 Transparency International Corruption Perceptions Index, which of the following is the least corrupt nation? A. India B. United States C. Spain D. New Zealand

Difficulty: Easy

34. (p. 341) According to the 2009 Transparency International Corruption Perceptions Index, which of the following is the most corrupt nation? A. El Salvador B. Columbia C. Lebanon D. Somalia

Difficulty: Easy

35. (p. 343) The following are internal factors which MNCs may use to evaluate political risk except: A. Power struggles among elites B. Ethnic confrontations C. Regional struggles D. Regional instabilities

Difficulty: Medium

36. (p. 343) The following is not an external factor used by MNCs for evaluating political risks: A. Alliances with major and regional powers B. Anti-establishment movements C. Internal groupings D. Sources of key raw materials

Difficulty: Medium

37. (p. 344) Laws that require that nations hold a majority interest in the operation are known as: A. Commercial laws B. Appropriation laws C. Indigenization laws D. Expropriation laws

Difficulty: Medium

38. (p. 344) The seizure of businesses by a host country with little, if any, compensation to the owners is referred to as: A. Nationalization B. Expropriation C. Dispossession D. Removal

Difficulty: Easy

39. (p. 344) Expropriation is more likely to occur in: A. Non-Western governments that are poor, relatively unstable and suspicious of foreign multinationals B. Western governments that are rich, relatively stable and are experienced in dealing with foreign multinationals C. Non-Western governments that are neither rich nor poor, relatively stable and are unsure about the presence of foreign multinationals D. Western governments that are moderately wealthy, relatively stable and are new at dealing with foreign multinationals

Difficulty: Hard

40. (p. 343) According to the text, the following are all forms of terrorism except: A. Classic terrorism B. Amateur terrorism C. Religious motivated terrorism D. Political terrorism

Difficulty: Medium

41. (p. 343) When terrorism entails a specific, well-defined objective pursued by well-trained, professional, underground members, it is called A. traditional terrorism B. amateur terrorism C. religiously motivated terrorism D. classic terrorism

Difficulty: Medium

42. (p. 344) Political risks can be broken down into three basic categories. These are: A. Transfer risks, ownership risks and labor risks B. Ownership risks, operational risks and economic risks C. Operational risks, bureaucratic risks and transfer risks D. Transfer risks, operational risks and ownership-control risks

Difficulty: Medium

43. (p. 344) _____ risks stem from government policies that limit the transfer of capital, payments, production, people and technology in or out of a country. A. Operational B. Bureaucratic C. Transfer D. Expropriation

Difficulty: Easy

44. (p. 345) Tariffs on exports and imports, restrictions on exports, dividend remittance and capital repatriation are examples of: A. Transfer risks B. Expropriation risks C. Operational risks D. Exchange risks

Difficulty: Medium

45. (p. 345) _____ risks result from government policies and procedures that directly constrain the management and performance of local operations. A. Transfer B. Operational C. Ownership-control D. Exchange

Difficulty: Easy

46. (p. 345) Price controls, financing restrictions, export commitments, taxes and local-sourcing requirements are examples of: A. Ownership-control risks B. Operational risks C. Transfer risks D. Functional risks

Difficulty: Medium

47. (p. 345) _____ risks are brought about by government policies or actions that inhibit ownership or control of local operations. A. Transfer B. Functional C. Operational D. Ownership-control

Difficulty: Easy

48. (p. 345) Foreign ownership limitations, pressure for local participation, confiscation, expropriation and abrogation of property rights are examples of: A. Transfer risks B. Functional risks C. Ownership-control risks D. Tactical risks

Difficulty: Medium

49. (p. 345) In a _____ investment, the goods or services produced are not similar to those produced at home. A. Horizontal B. Vertical C. Network D. Conglomerate

Difficulty: Medium

50. (p. 345) _____ investments include the production of raw materials or intermediate goods that are to be processed into final products. A. Vertical B. Matrix C. Conglomerate D. Horizontal

Difficulty: Easy

51. (p. 345) _____ investments run the risk of being taken over by the host-country government because they are export-oriented and governments like a business that helps it to generate foreign capital. A. Conglomerate B. Vertical C. Horizontal D. Lateral

Difficulty: Medium

52. (p. 345) _____ investments involve the production of goods or services that are the same as those produced at home. A. Conglomerate B. Lateral C. Horizontal D. Vertical

Difficulty: Easy

53. (p. 345) _____ investments typically are made with an eye toward satisfying the host country's market demands. As a result, they are not very likely to be takeover targets. A. Vertical B. Horizontal C. Conglomerate D. Hierarchical

Difficulty: Medium

54. (p. 345) The special nature of foreign direct investment is not related to: A. Sector B. Technology C. Ownership D. Operations

Difficulty: Medium

55. (p. 347) Some multinational corporations attempt to manage political risk through simultaneously analyzing a range of variables to derive an overall rating of the degree of political risk in a given jurisdiction. This is referred to as a: A. Quantification process B. Quantification circle C. Quantity risk analysis D. Quantity management

Difficulty: Hard

56. (p. 347) MNCs attempt to manage political risk through a quantification process, to derive an overall rating of the degree of political risk in a given jurisdiction. The factors that are quantified reflect all of the following except: A. Political and economic environment B. Domestic economic conditions C. Social conditions D. External economic conditions

Difficulty: Easy

57. (p. 347) Which of the following criteria involves maximum political risk? A. International financial standing B. Economic growth during previous 5 years C. Restrictions imposed on imports D. Effectiveness of public administration

Difficulty: Medium

58. (p. 348) The following are listed as techniques for responding to political risks except: A. Relative bargaining power analysis B. Realistic bargaining power analysis C. Integrative techniques D. Proactive political strategies

Difficulty: Medium

59. (p. 348) The theory behind _____ is quite simple. The MNC works to maintain a stronger bargaining power position than that of the host country. A. Analogous negotiating power B. Pertinent bargaining power C. Proportionate negotiating power D. Relative bargaining power

Difficulty: Medium

60. (p. 348) _____ techniques are designed to help the overseas operation become part of the host country's infrastructure. A. Protective B. Defensive C. Integrative D. Statutory

Difficulty: Easy

61. (p. 349) All of the following are examples of integrative techniques except: A. Developing good relations with the host government and other local political parties B. Doing as little local manufacturing as possible and conducting all research and development outside the country C. Producing as much of the product locally as possible with the use of in-country suppliers and subcontractors, thus making it a "domestic" product D. Developing effective labor-management relations

Difficulty: Hard

62. (p. 349) _____ techniques are designed to discourage the host government from interfering in operations. A. Integrative and unifying B. Consolidating and defensive C. Protective and unifying D. Protective and defensive

Difficulty: Easy

63. (p. 349) Examples of protective and defensive techniques include all of the following except: A. Limiting the responsibility of local personnel and hiring only those who are vital to the operations B. Raising capital from local banks and the host government as well as outside forces C. Diversifying production of the product among a number of countries D. Producing as much of the product locally as possible with the use of in-country suppliers and subcontractors, thus making it a "domestic" product

Difficulty: Hard

64. (p. 350) Benefits of proactive political strategies include all of the following except: A. Enhancing government relations in unstable and transitional policy environments B. Mitigating risk before it becomes unmanageable C. Providing support for national and sub-central governments in transitional economies D. Counteracting competitors' efforts to influence government policy

Difficulty: Hard

65. (p. 350) Examples of proactive political strategies include all of the following except: A. Formal lobbying B. Campaign financing C. Seeking advocacy through embassies and consulates of the home country D. Downsizing and transferring business elsewhere

Difficulty: Hard

66. (p. 352) All the following are motivations for firms to enter into international strategic alliances except: A. Faster entry and payback B. Economies of scale C. Co-opting or blocking competition D. Stronger control over technologies and patents

Difficulty: Medium

67. (p. 352) Which of the following cultural differences tend to more disruptive for international joint ventures than the others? A. Power distance B. Uncertainty avoidance C. Individualism D. Masculinity

Difficulty: Medium

68. (p. 353) Which of the following is not a critical legal issue for successful termination of international alliances? A. Conditions of termination B. Disposition of assets and liabilities C. Distributorship arrangements D. People-related issues

Difficulty: Medium

69. (p. 353) Which of the following is not a critical business issue for successful termination of international alliances? A. The basic decision to exit B. People-related issues C. Rights over sales territories and obligations to customers D. Relations with the host government

Difficulty: Medium

70. (p. 353) When host governments do not require alliances as a condition for entry many MNCs: A. Are advised not to voluntarily pursue alliances as they tend to be problematic B. Are usually indifferent about establishing alliances C. Find that having an alliance is advantageous to their entry and expansion D. Are likely to consider alliances, except in emerging markets and highly regulated industries

Chapter 14 Human Resource Selection and Development Across Cultures Answer Key

True / False Questions

1. (p. 498) Home-country nationals are managers who are citizens of the country where the MNC is headquartered. TRUE

Difficulty: Easy

2. (p. 498) Historically, MNCs have staffed key positions in their foreign affiliates with host-country nationals. FALSE

Difficulty: Medium

3. (p. 498) Home-country nationals are local managers who are hired by the MNC. FALSE

Difficulty: Easy

4. (p. 498) Managers who live and work outside their home country are called expatriates. TRUE

Difficulty: Hard

5. (p. 498) An individual from a host-country who is assigned to work in the host-country is referred to as a multipatriate. FALSE

Difficulty: Easy

6. (p. 503) Factors used to choose personnel for international assignments are referred to as international selection criteria. TRUE

Difficulty: Easy

7. (p. 505) Most MNCs strive for a balance between age and experience in their expatriate employees. TRUE

Difficulty: Medium

8. (p. 511) The most common recruiting and selection procedures for international assignments would be background and reference checks. FALSE

Difficulty: Medium

9. (p. 510) Anticipatory and in-country factors will influence the expatriate's mode and degree of adjustment to an overseas assignment. TRUE

Difficulty: Medium

10. (p. 512) One of the reasons why there has been a decline in the number of expats in recent years is that MNCs have found that the expense can be prohibitive. TRUE

Difficulty: Medium

11. (p. 513) Base salary is the amount of money that an expatriate normally receives in the home country plus a cost-of-living adjustment. FALSE

Difficulty: Medium

12. (p. 514) Allowances are an expensive feature of expatriate compensation packages. TRUE

Difficulty: Medium

13. (p. 515) An approach to developing an expatriate compensation package that is based on ensuring the expat is "made whole" and does not lose money by taking the assignment is referred to as the balance-sheet approach. TRUE

Difficulty: Medium

14. (p. 515) An approach to developing an expatriate compensation package that involves giving the expat a predetermined amount of money and letting the individual make his/her own decisions regarding how to spend it is referred to as localization. FALSE

Difficulty: Medium

15. (p. 518) For most overseas managers, repatriation occurs within five years of the time they leave. TRUE

Difficulty: Medium

16. (p. 519) Repatriation agreements typically promise an expatriate a specific position and salary when he/she returns to the home office. FALSE

Difficulty: Medium

17. (p. 520) The hardest training, in terms of preparation time is to place a cultural integrator in each foreign operation. FALSE

Difficulty: Medium

18. (p. 522) An ethnocentric MNC puts host-office people in charge of key international management positions. FALSE

Difficulty: Medium

19. (p. 523) Learning is the acquisition of skills, knowledge and abilities that results in a relatively permanent change in behavior. TRUE

Difficulty: Easy

20. (p. 525) The primary reason for training overseas managers is to improve their ability to interact effectively with local people in general and their personnel in particular. TRUE

Difficulty: Medium

Multiple Choice Questions

21. (p. 498) There are four basic sources that MNCs can tap for positions. These are: A. Host-country nationals, third-country nationals, United Nations placements and IMF placements B. Home-country nationals, IMF placements, inpatriates and multipatriates C. Home-country nationals, host-country nationals, IMF placements and multipatriates D. Home-country nationals, host-country nationals, third-country nationals and inpatriates

Difficulty: Medium

22. (p. 498) Expatriate managers who are citizens of the country where the multinational corporate is headquartered are referred to as: A. Host-country nationals B. Home-country nationals C. Inpatriates D. Third-country nationals

Difficulty: Easy

23. (p. 498) Headquarters nationals is another term used for: A. Third-country nationals B. Home-country nationals C. Inpatriates D. Host-country nationals

Difficulty: Easy

24. (p. 498) Home-country nationals are frequently called _____, which refers to those who live and work away from their home country. A. Inpatriates B. Third-country nationals C. Expatriates D. Multipatriates

Difficulty: Easy

25. (p. 498) Historically, MNCs have staffed key positions in their foreign affiliates with: A. Home-country nationals B. Host-country nationals C. Inpatriates D. Third-country nationals

Difficulty: Medium

26. (p. 498) _____ are local managers who are hired by the MNC. A. Inpatriates B. Indigenous-nationals C. Host-country nationals D. Home-country nationals

Difficulty: Easy

27. (p. 500) Which of the following statements about third-country nationals is false? A. TCN managers can often achieve corporate objectives more effectively than do expatriates B. During periods of rapid expansion, TCNs can substitute for expatriates in well-established operations C. During rapid expansion, TCNs can offer different perspectives that can expand on the narrowly focused viewpoints of local nationals D. In joint ventures, TCNs can demonstrate a global image and bring unique cross-cultural skills to the relationship

Difficulty: Medium

28. (p. 499) These are managers who are citizens of countries other than the one in which the MNC is headquartered or the one in which they are assigned to work by the MNC. A. Multipatriates B. Home-country nationals C. Inpatriates D. Third-country nationals

Difficulty: Easy

29. (p. 500) An individual from a host-country or a third-country national who is assigned to work in the home country is a(n): A. Expatriate B. Multipatriate C. Inpatriate D. Quasi-patriate

Difficulty: Easy

30. (p. 503) Factors used to choose personnel for international assignments are referred to as: A. Global placement criteria B. International selection criteria C. Global selection heuristics D. International recruitment and selection heuristics

Difficulty: Easy

31. (p. 505) All of the following are correct with regard to the impact of age, experience and education on expatriate managers except: A. There is universal agreement that degrees in marketing or engineering are the most desirable for expatriate managers B. Most MNCs strive for a balance between age and experience C. Many companies consider an academic degree, preferably a graduate degree, to be of critical importance to an international executive D. There is evidence that younger managers are more eager for international assignments than older managers

Difficulty: Medium

32. (p. 506) This is the primary language of international business and most expatriates from all countries can converse in it. A. French B. German C. Spanish D. English

Difficulty: Easy

33. (p. 507) Borstorff and her associates examined the factors associated with employee willingness to work overseas and concluded that: A. Married couples with teenage children are probably the most willing to move B. Prior international experience appears associated with willingness to work as an expatriate C. Unmarried employees are least willing, compared to any other group, to accept expat assignments D. Careers and attitudes of spouses have an insignificant impact on employee willingness to move overseas

Difficulty: Medium

34. (p. 507) The process of evaluating how well a family is likely to stand up to the stress of overseas life is referred to as: A. Suitability assessment B. Selection fitness C. Adaptability screening D. Expatriate fitness

Difficulty: Medium

35. (p. 510) The two most common selection procedures used by MNCs are: A. Assessment centers and tests B. References and interviews C. Application forms and assessment centers D. Tests and interviews

Difficulty: Medium

36. (p. 510) In general, some evidence suggests that testing is: A. Extremely popular among MNCs B. Not extremely popular among MNCs C. Used more in the selection of overseas managers than domestic managers D. Used by a high percentage of MNCs in selecting expatriate managers

Difficulty: Medium

37. (p. 510) In recent years, international human resources management scholars have developed theoretical models that help to explain the factors involved in effectively adjusting to overseas assignments. These models are called: A. Adjustment models B. Adaptation theorems C. Alignment models D. Congruence theorems

Difficulty: Easy

38. (p. 510) There are two major types of adjustments that an expatriate must make when going on an overseas assignment. These are: A. Pre-deployment adjustment and post-deployment adjustment B. Direct adjustment and indirect adjustment C. Anticipatory adjustment and in-country adjustment D. Iterative adjustment and continuous adjustment

Difficulty: Medium

39. (p. 510) The adjustment model of the selection procedure for international assignments would include: A. Training and previous experience B. Education and modification C. Work experience and exposure D. Abilities and behavior

Difficulty: Medium

40. (p. 510) The organizational input into anticipatory adjustment is most directly related and concerned with the: A. Motivation process B. Selection process C. Compensation plan D. Quality of leadership

Difficulty: Hard

41. (p. 510) Traditionally, what was the only selection criterion MNCs relied on for overseas assignments? A. Training B. Education C. Previous experience D. Technical competence

Difficulty: Medium

42. (p. 513) The most common elements in the typical expatriate compensation package include: A. Base salary, benefits, allowances, incentives and taxes B. Base salary, bonuses, stock options and free housing C. Base salary, benefits, free housing and free education for the expatriate's children D. Base salary, benefits, free travel, free housing and taxes

Difficulty: Medium

43. (p. 513) Expatriate salaries typically are set according to the base pay of: A. An index of 13 firms maintained by the United Nations B. The home country C. The host-country D. A neutral third-country determined by the expatriate and his/her company

Difficulty: Medium

44. (p. 514) These are an expensive feature of expatriate compensation packages. A. Base salaries B. Allowances C. Incentives D. Taxes

Difficulty: Easy

45. (p. 514) The benefits of a lump-sum incentive system would include all of the following except: A. One-time payment retaining its value as an incentive B. Cost containment of firm due to one-time payment C. Separate payment distinguishable from regular pay D. Employees being encouraged to be motivated by financial incentives

Difficulty: Hard

46. (p. 515) An approach to developing an expatriate compensation package that is based on ensuring that the expat is "made whole" and does not lose money by taking the assignment is referred to as the: A. Balance-sheet approach B. Lump-sum method C. Localization approach D. Cafeteria approach

Difficulty: Medium

47. (p. 515) An approach to developing an expatriate compensation package that involves paying the expat a salary comparable to that of local nationals is referred to as: A. The cafeteria approach B. The balance-sheet approach C. Localization D. The lump-sum method

Difficulty: Medium

48. (p. 515) An approach to developing an expatriate compensation package that involves giving the expat a predetermined amount of money and letting the individual make his/her own decisions regarding how to spend it is referred to as the: A. Localization approach B. Cafeteria approach C. Lump-sum method D. Balance-sheet approach

Difficulty: Medium

49. (p. 516) This approach to developing an expatriate compensation package entails giving the individual a series of options and letting the person decide how to spend the available funds. A. Lump-sum method B. Cafeteria approach C. Localization approach D. Balance-sheet approach

Difficulty: Medium

50. (p. 516) Which of the following approaches is used to develop an expatriate compensation package that involves setting a compensation system for all expats who are assigned to a particular region and paying everyone in accord with that system? A. Regional system B. Balance-sheet approach C. Cafeteria approach D. Lump-sum method

Difficulty: Medium

51. (p. 518) The return to one's home country from an overseas management assignment is referred to as: A. Repatriation B. Reintroduction C. Recruiting D. Reentry

Difficulty: Medium

52. (p. 519) Strategies used to help smooth the adjustment from an overseas to a stateside assignment are: A. Readjustment strategies B. Transition strategies C. Changeover strategies D. Progression strategies

Difficulty: Medium

53. (p. 519) An agreement whereby the firm tells the individual how long she/he will be posted overseas and promises to give the individual, on return, a job that is mutually acceptable is a: A. Strategic plan B. Human resource plan C. Labor-contract agreement D. Repatriation agreement

Difficulty: Medium

54. (p. 520) This is the process of altering employee behavior and attitudes in a way that increases the probability of goal attainment. A. Organizing B. Planning C. Training D. Controlling

Difficulty: Easy

55. (p. 520) An individual who is responsible for ensuring that a firm's business systems are in accord with those of the local culture is a(n): A. Cultural integrator B. Global facilitator C. International transition specialist D. Global socialization specialist

Difficulty: Medium

56. (p. 522) The four basic philosophical positions that multinationals can assume and influence a company's training program are: A. Polycentric, geocentric, multicentric and ultracentric B. Ethnocentric, globalcentric, regiocentric and unicentric C. Multicentric, globalcentric, geocentric and unicentric D. Ethnocentric, polycentric, regiocentric and geocentric

Difficulty: Medium

57. (p. 522) A(n) _____ MNC puts home-office people in charge of key international management positions. A. Ethnocentric B. Polycentric C. Regiocentric D. Geocentric

Difficulty: Medium

58. (p. 523) Which of the following MNCs places local nationals in key positions and allows these managers to appoint and develop their own people? A. Geocentric B. Polycentric C. Regiocentric D. Ethnocentric

Difficulty: Medium

59. (p. 523) This type of MNC relies on local managers from a particular geographic region to handle operations in and around that area. A. Ethnocentric B. Geocentric C. Polycentric D. Regiocentric

Difficulty: Medium

60. (p. 523) This type of MNC seeks to integrate diverse regions of the world through a global approach to decision making. A. Polycentric B. Ethnocentric C. Geocentric D. Regiocentric

Difficulty: Medium

61. (p. 523) These MNCs do all of their training at their headquarters. A. Geocentric B. Regiocentric C. Polycentric D. Ethnocentric

Difficulty: Medium

62. (p. 523) This is the acquisition of skills, knowledge and abilities that results in a relatively permanent change in behavior. A. Learning B. Development C. Motivation D. Controlling

Difficulty: Easy

63. (p. 523) "Learning organizations" continually focus on activities such as: A. Planning and development B. Organizing and controlling C. Training and development D. Planning and organizing

Difficulty: Medium

64. (p. 524) Training programs are useful in preparing people for overseas assignments for many reasons. These reasons can be put into two general categories which are: A. Organizational and personal B. Economic and philosophical C. Personal and impersonal D. Financial and psychological

Difficulty: Medium

65. (p. 524) The belief that one's own way of doing things is superior to that of others is: A. Polycentrism B. Geocentrism C. Ethnocentrism D. Regiocentrism

Difficulty: Easy

66. (p. 524) This is common in many large MNCs where managers believe that the home office's approach to doing business can be exported intact to all other countries, because this approach is superior to anything at the local level. A. Regiocentrism B. Ethnocentrism C. Geocentrism D. Polycentrism

Difficulty: Medium

67. (p. 526) Research shows that small firms undertaking international business generally rely on: A. Standard training programs B. Strategic alliances C. Trade zones D. Uniform commercial codes

Difficulty: Hard

68. (p. 526) Which of the following training programs are created for the specific needs of the participants? A. Generic B. Standardized C. Tailor-made D. Universal

Difficulty: Easy

69. (p. 529) A(n) _____ is a programmed learning technique that is designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs and values of another. A. Cultural assimilator B. Ethnocentric regulator C. Educational regulator D. Developmental assimilator

Difficulty: Medium

70. (p. 529) Which of the following terms refer to the quality of being effective and producing the desired results? A. Capacity B. Validity C. Reliability D. Stability