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Chapter 1

All commercial transactions between two or more countries are known


as ________.
globalization
foreign trade
international business
the balance of payments

Which of the following is not a reason to study international business?


All business taking place outside your home country is international.
International business comprises a large and growing portion of the world's total
business.
The conditions within foreign countries affect the best way to conduct business
there.
A company operating internationally may engage in modes of business that differ
from those it is accustomed to domestically.

A difficulty in comparing the globalization of business over time is that


________.
companies adopt different operating forms
shifting borders obsolesce figures on what is international
many private companies were once government owned
countries differ in their extent of globalization

Which of the following has been a major force behind recent


globalization?
Lower tax rates on incomes.
The slower rise of prices in general than prices of transportation and
communications.
Greater prohibitions on the placement of capital in countries with secretive bankholding laws.
Institutional development of services that aid foreign trade and investment.

Which of the following is a result of the recent expansion of


transportation technology?
Producers from farther away are competing for sales in a given market.
Transportation costs have risen more rapidly than costs in general.
Companies have lessened their dependence on producing components in multiple
countries.
Governments have increased restrictions to prevent competition among carriers
from different countries.

Which of the following is a reason for recent governmental decreases


in restrictions on cross-border trade or resource movements?
Governments hope to induce other nations to reduce their barriers in return.
Most countries face shortages of workers; thus they compete to attract foreign
workers so they can produce more.
Consumers increasingly want to buy goods and services produced in their own
countries, thus making restrictions less necessary.
Governments believe this will decrease the need to make their own companies
more innovative.

Potential pressures of increased foreign competition can persuade


companies to ________.
use more domestic inputs in their production
seek fewer barriers to imports
expand their business into international markets
raise prices to improve the quality-image of their products

Which of the following is a reason why governments cooperate through


treaties, agreements, and consultation?
To gain a division of labor, such as by performing research and development in
one country and production in another.
To deal with areas of concern that lie outside the territory of all countries.
To be in compliance with United Nations' requirements.
To assure that all countries get an equitable share of taxes from multinational
enterprises.

All of the following are major criticisms of


globalization except ________.
globalization creates winners and losers, thus leading to greater inequality
countries lose control to act in their own best interest
globalization increases the cost of production
globalization brings economic growth that uses too many nonrenewable resources
and despoils the environment

The major argument companies use to support off-shoring is that it


________.
helps poor countries improve their economies
saves costs
reduces pollution
reduces home-country unemployment

An advantage that an international company may have over a purely


domestic one is that it can ________.
deal with a less complex external environment
acquire cheaper resources to use in production
more easily control its opening units
save transportation costs

An example of a Mexican merchandise export would be a shirt made


______ and sold _______.
in the United States by a Mexican company; outside the United States
in Mexico by either a Mexican or a U.S. company; in Mexico
in Mexico by either a Mexican or a U.S. company; outside Mexico
in the United States by a Mexican company; in the United States

When a company owns foreign bonds or bills, this is an example of a


________.
direct investment
joint venture
portfolio investment
transnational corporation

A company that takes a global approach to foreign markets and


production is called a _______.
strategic alliance enterprise
multinational enterprise
multiglobal company
collaborative participant

In Japan, baseball games may end in a tie; in the United States, teams
play until one wins. This difference is most likely due to ________
factors.
economic

geographic
behavioral
legal

All commercial transactions between two or more countries are known


as globalization.
True
False

Understanding some of the complexities of international business help


you to make more informed decisions in support of government
policies.
True
False

World production has grown more rapidly than world trade in almost
every year since World War II.
True
False

Globalization of business has been stimulated by consumers' greater


efficiency in using the Internet to compare prices worldwide.
True
False

As a result of expansions in transportation technology, more countries


can compete for sales in a given market.
True
False

Countries have reduced import trade barriers because they believe


their domestic producers will become more efficient as a result of
foreign competition.
True
False

A born-global company is one that starts out with a global focus.


True
False

Governments cooperate through treaties, agreements, and consultation


to assure that they all get an equitable share of taxes from
multinational enterprises.
True
False

People favoring globalization contend that the biggest problem of


environment despoliation occurs in the countries that are least
globalized.
True
False

The major argument companies use to support off-shoring is that it


saves costs.
True
False

The televising of sports competition to viewers in multiple countries is


an example of an international objective of sales expansion.
True
False

The production by a U.S. company in Canada for sale in Canada is a U.S.


merchandise export.
True
False

A direct investment occurs when foreign ownership is in private rather


than government securities.
True
False

Stateless company is a term used by the United Nations as a synonym


for multinational enterprise.
True
False

Managers need a working knowledge of their physical and societal


environments to help them understand the aggregate of conditions
outside their companies that influence their success.
True
False