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Chapter 1

All commercial transactions between two or more countries are known

as ________.
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
The conditions within foreign countries affect the best way to conduct business
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

Lower tax rates on incomes.
The slower rise of prices in general than prices of transportation and
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
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

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 ________


All commercial transactions between two or more countries are known

as globalization.

Understanding some of the complexities of international business help

you to make more informed decisions in support of government

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

Globalization of business has been stimulated by consumers' greater

efficiency in using the Internet to compare prices worldwide.

As a result of expansions in transportation technology, more countries

can compete for sales in a given market.

Countries have reduced import trade barriers because they believe

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

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


Governments cooperate through treaties, agreements, and consultation

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

People favoring globalization contend that the biggest problem of

environment despoliation occurs in the countries that are least

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

saves costs.

The televising of sports competition to viewers in multiple countries is

an example of an international objective of sales expansion.

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

merchandise export.

A direct investment occurs when foreign ownership is in private rather

than government securities.

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

for multinational enterprise.

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.