Chapter 4 - Universiti Putra Malaysia · Web viewPizza Hut is one of the best known _____ internationally. a. franchises b. wholly owned foreign affiliates c. joint venturers d. greenfield

Chapter 4Managing in a Global Environment

True/False Questions

1. Wal-Mart is a well-established company with a global interest who is facing minimal challenges in developing a successful international business.

Answer: False Level: 2 Page: 118 Type: F

2. Large companies such as America Online and Yahoo have proven that Internet development is rapidly expanding and has fewer difficulties than traditional business operations.


3. The reality of today's borderless companies also means that consumers can easily identify from which country they are buying.


4. ABC Manufacturing is in the domestic stage. It has its market potential open to the countries that border its home country.

Answer: False Level: 2 Page: 120 Type: A

5. To deal with the marketing of products in several countries individually, a company in the international stage often uses an international division.

Answer: True Level: 1 Page: 120 Type: F

6. The second stage in the process of globalization is the international stage, where the company usually adopts a multidomestic approach.


7. The multinational stage of corporate international development transcends any single home country. The ownership, control, and top management tend to be dispersed among several nationalities.


Chapter Four * Managing in a Global EnvironmentTest Bank * Page 90

8. As the number of stateless corporations increases, the awareness of national borders increases as well.


9. Whether a company operates domestically or internationally, the basic management functions of planning, organizing, leading, and controlling are the same.


10. The sub-divisions of the international environment are the economic, the sociocultural, and the legal-political environments.


11. Some economic environments of business include resource and product markets, language, religion, and per capita income.


12. LDC's are less developed countries and tend to be found in the Southern Hemisphere including Africa, Asia and South America.


13. Because of cheap labor, most international business firms are headquartered in the less developed countries of Asia and South America.


14. Changes in the exchange rates can have major implications for the profitability of international operations.

Answer: True Level: 1 Page 125 Type: F

15. The countries experiencing political, ethnic, and religious stability face the greatest threat of violence.


16. The belief in the right to vote, the right of choice and equal rights is part of the beliefs, values and ways of thinking that defines our society's culture.

Answer: True Level: 2 Page: 127 Type: A


17. Countries that value high power distances normally have cities that are geographically separated and so have the need to transport electrical energy over large distances.


18. The social value of uncertainty avoidance is evident in countries like Japan which support beliefs that provide stability and conformity among its citizenry.


19. In countries with strong masculine social values including Austria and Japan, both men and women subscribe to the dominant masculine value.


20. Collectivism means a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members’ interests.


21. The fifth dimension of Hofstede’s social values is preliminary-term orientation and extended-term orientation.


22. A tendency to regard their own culture as superior and to downgrade other cultures re-flects an attitude called geocentric.


23. The primary tools GATT uses to increase trade are tariff enhancements, coercion, and most favored nation clause.


24. The most familiar nation clause, calls for each member country to grant to every other member country the most familiar treatment it accords to any country with respect to im-ports and exports.


25. An organization developed for the purpose of eliminating tariffs in trading between Canada and the United States is called The North American Freedom of Tariffs Administration (NAFTA).



26. An example of global sourcing is seen when Gap, Inc uses low-cost Caribbean labor to cheaply produce their clothing, and then finish off and sell their clothing in the United States.

Answer: True Level: 2 Page: 137 Type: A

27. With exporting, the corporation transfers its products for sale and its production facilities in foreign countries.


28. Countertrade is the barter of products for products rather than the sale of products for currency.


29. An estimated 55 percent of world trade is countertrade.


30. When Harbor Trades, a Korean-based company, makes resources including technology, managerial skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby allowing Nano to make products similar to CBA, it is engaging in a countertrade agreement.


31. A form of direct investment is franchising.


32. Joint venture is the most risky type of direct investment.


33. When a company builds a subsidiary from scratch in a foreign country it is called a greenfield venture.


34. Multinational corporations typically receive more than 35 percent of its total sales rev-enues from operations outside the parent’s home country.



35. Large international firms typically are called multinational corporations.


36. An MNC is managed as an integrated worldwide business system.


37. The primary emphasis of polycentric companies is on their home countries.


38. Most managers, given the trend toward globalization, do not need preparation to work in foreign cultures.


39. Managers in Latin America must show respect for employees as individuals with needs and interests outside of work.


Multiple Choice Questions

1. Wal-Mart’s challenges in Germany stem from a difference in __________ culture.

a. businessb. marketingc. shoppingd. European e. American

Answer: c Level: 2 Page: 117 Type: F

2. Wal-Mart has embarked on a crusade to bring “everyday low prices” to which emerging market?

a. Chinab. Taiwanc. Brazild. Japane. El Salvador



3. Which of the following companies rely on international business for a substantial portion of sales and profits?

a. IBMb. Coca-Colac. Kelloggd. Texas Instrumentse. All of the above

Answer: e Level: 3 Page: 118 Type: F

4. Which of these statements best describes the importance of international business to the study of management?

a. International business is more important than the study of management.b. International business is less important than the study of management.c. Since the management functions are universal, international business in not

important to the study of management.d. If you are not thinking international, you are not thinking business management.e. International business has noting to do with the study of management.

Answer: d Level: 2 Page: 118 Type: F

5. Companies that think __________ have a competitive edge.

a. globallyb. regionallyc. nationallyd. strategicallye. “customers first”

Answer: a Level: 2 Page: 119 Type: F

6. In which stage, market potential is limited to home country, with all production and marketing facilities located at home?

a. Domesticb. Internationalc. Globald. Multinationale. Stateless



7. In which stage does the company usually adopt a multidomestic approach?

a. Globalb. Multinationalc. Statelessd. Internationale. Domestic


8. Global Dandelion, with marketing and production facilities located in many countries, is participating at what stage in the international arena?

a. International stageb. Global stagec. Domestic staged. Multinational stagee. Interdomestic stage

Answer: d Level: 2 Page: 120 Type: A

9. Zaman Telecom with an international division would be participating in what stage of the international arena?

a. Domestic stageb. International stagec. Multinational staged. Global stagee. Binational stage

Answer: b Level: 2 Page: 120 Type: A

10. The process of globalization typically passes through all of the following stages EXCEPT

a. domestic stage.b. global stage.c. international stage.d. interdomestic stage.e. multinational stage.


11. Stateless stage is also referred to as the stage.

a. multinational


b. globalc. multidomesticd. internationale. domestic

Answer: b Level: 1 Page: 121 Type: F

12. Color Copiers operates in a true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost, what stage of international development is it in?

a. Stateless stageb. Multinational stagec. International staged. Domestic stagee. Multidomestic stage

Answer: a Level: 3 Page: 121 Type: A

13. Which of the following is a foreign-owned corporation?

a. Nikeb. Ford Motor Co.c. Nestle'd. IBMe. Coca-Cola


14. The management of business operations conducted in more than one country is called

a. global management.b. international management.c. outsourcing management.d. planning management.e. domestic management.


15. When doing business internationally, ______ aspects of management does not change?

a. planningb. organizingc. controllingd. leadinge. all of the above



16. Which of the following sectors present the greatest potential for international mistakes?

a. Internalb. Socioculturalc. Governmentald. All of the abovee. b and c only


17. Language, values, religion, and education all describe which dimension in the interna-tional environment?

a. Economicb. Legalc. Politicald. Socioculturale. Technological


18. In international operations, the economic environment represents all of the following factors EXCEPT

a. infrastructure.b. resource and product markets.c. laws and regulations.d. inflation.e. exchange rates.


19. In international operations, the economic environment includes

a. shared knowledge, beliefs and values.b. political risks.c. social organizations.d. infrastructure.e. tariffs, quotas, and taxes.


20. Resource development, infrastructure, and exchange rates all describe which dimension


in the international environment?

a. Economicb. Legalc. Politicald. Socioculturale. Technological


21. ______ is a sociocultural factor in the international environment.

a. Languageb. Exchange ratesc. Tariffs, taxes, and quotasd. Per capita incomee. Infrastructure


22. Which of these is normally used to classify countries as developed or developing?

a. Exchange ratesb. Interest ratesc. Gross national productd. Per capita incomee. Inflation rates


23. generally are located in Asia, Africa and South America.

a. MNCsb. EUsc. LDCsd. WTOse. MFNs


24. A country's physical facilities that support economic activities make up its .

a. resource marketsb. infrastructurec. physical marketsd. product markets


e. plants and equipment


25. If you built a computer company in Africa and then found that your product was having difficulty being distributed to customers because of the road system, your problem would be related to

a. an inadequate infrastructure.b. an economy incapable of supporting growth.c. a poor resource market.d. a poor product market.e. none of the above.


26. Exchange rates are included in which of the following international environments?

a. The legal-political sectorb. The economic environmentc. The sociocultural environmentd. The barter system environmente. The government sector


27. Your grocery store in India is having trouble getting the local farmers to supply you with the proper produce. This is a problem with India’s

a. product market.b. resource market.c. infrastructure.d. economy.e. power distance.


28. Which of the following is NOT a legal-political factor in the international environment?

a. Laws and regulations b. Language c. Tariffs, quotas, taxesd. Political riske. Government takeovers



29. The rate at which one country's currency is exchanged for another country's currency is called a(n) ______ rate.

a. interestb. inflationc. per capita incomed. exchangee. economic


30. Assume that until yesterday, one U.S. dollar could be exchanged for 85 Japanese yens. Today, a dollar gets you 102 yens. Which of the following statements is true?

a. U.S. goods will be more expensive in Japan.b. Japanese goods will be more expensive in the U.S.c. U.S. goods will be the same price in Japan.d. Japanese goods will be the same price in the U.S.e. None of the above.


31. The legal-political environment, in international operations, includes which of the following?

a. Shared knowledge, beliefs and valuesb. Political risksc. Social organizationsd. Infrastructuree. None of the above


32. Political risk is defined as an organization's risk of ___________ due to politically based events or actions by host governments.

a. loss of assetsb. managerial controlc. earning powerd. all of the abovee. b and c only


33. A company's risk of loss of assets, earning power, or managerial control due to


politically based events or action by host government is referred to as

a. MFN.b. political risk.c. tariffs.d. political instability.e. terrorism.


34. Rooftop International, Inc. buys insurance against host government takeover when investing in foreign countries. This is an example of which sector of the international environment?

a. Legal-politicalb. Socioculturalc. Technologicald. Economice. Infrastructure


35. A foreign terrorist kidnaps your firm's marketing VP while the VP is in the host country. This is a harsh example of

a. economic development.b. infrastructure.c. political risk.d. international law.e. social risk.

Answer: c Level: 2 Page: 126 Type: A

36. Often times organizations will refer to the __________ Index to determine the impact political intervention has on business decisions in a particular country before considering to move to that region.

a. Economic Freedomb. Corruption Perceptionc. Political Successiond. Business Motivatione. Political Effect


37. Although the challenge in unstable countries is great, often the biggest area of


__________ is also there.

a. opportunityb. consumer shoppingc. economic improvementd. leadershipe. low governmental control


38. A nation's includes the shared knowledge, beliefs and values, as well as the common modes of behavior and ways of thinking, among members of a society.

a. power distanceb. culturec. masculinityd. individualisme. uncertainty avoidance


39. Cultural factors in foreign countries are ___________ the political and economic factors.

a. easier than b. similar to c. more perplexing thand. less important thane. none of the above


40. Which of these refers to the degree to which people accept inequality in power among institutions, organizations, and people?

a. Power distanceb. Uncertainty avoidancec. Individualismd. Collectivisme. Masculinity


41. Countries whose social values reflect low power distance

a. are highly democratic.b. accept inequality in power among institutions, organizations and people.


c. expect equality in power.d. avoid uncertainty.e. none of the above.


42. A loosely knit social framework in which individuals are expected to take care of themselves is called

a. culture.b. individualism.c. ethnocentrism.d. masculinity.e. power distance.


43. Collectivist values are represented in the social framework of which of these?

a. The United Statesb. Australiac. Ecuadord. Great Britaine. All of the above


44. Austria’s cultural preference is for achievement, heroism, assertiveness, and material success. This would be considered

a. power distance.b. individualism.c. masculinity.d. ethnocentrism.e. collectivism.


45. Which of these refers to a value characterized by people's intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity?

a. Power distanceb. Uncertainty avoidancec. Certainty avoidanced. Conformity seekerse. None of the above



46. ______ reflects a cultural preference for cooperation, group decision making, and quality of life.

a. Individualismb. Collectivismc. Masculinityd. Femininitye. Power distance


47. One of Hofstede’s social values that is not well known is

a. power distance.b. uncertainty avoidance.c. masculinity.d. collectivism.e. long-term orientation.


48. Recent research by the GLOBE project has extended __________ research and offered new insights for managers.

a. Hofstede’sb. Walton’sc. Weber’sd. Fayol’se. Gilbreth’s


49. All of the following are cultural dimensions as defined by the GLOBE Project, except:

a. assertivenessb. gender differentiationc. social collectivismd. humane orientatione. masculinity


50. In countries where women are often in positions of high status, the Globe Project would


describe that culture as high in __________.

a. assertivenessb. uncertainty avoidancec. gender differentiationd. societal collectivisme. performance orientation


51. A country that places emphasis on fairness and values kindness would be described by the Globe Project as high in __________.

a. assertivenessb. uncertainty avoidancec. gender differentiationd. humane orientatione. societal collectivism


52. A cultural attitude marked by the tendency to regard one's own culture as superior to others is called

a. ethnocentrism.b. polycentrism.c. geocentrismd. technocentrism.e. none of the above.


53. Countries that use several languages

a. are ethnocentric.b. are geocentric.c. are likely to have high uncertainty avoidance.d. have linguistic pluralism.e. are polycentric.


54. A company may commit a mistake in which of the following sectors, when it does not check the meaning of translated words in another language?

a. Economic


b. Socioculturalc. Legal-politicald. Technologicale. None of the above


55. When GATT was created in 1947, how many nations signed on for negotiation?

a. 15b. 23c. 28d. 40e. 57


56. A term describing a GATT clause that calls for member countries to grant other member countries the most favorable treatment they accord any country concerning imports and exports is referred to as the

a. preferred nation.b. GATT favored country.c. most favored nation.d. Mutual GATT Courtesy.e. Uruguay Round.


57. To increase trade, the primary tools GATT uses are

a. tariff concessions and most favored nation clause.b. tariff and nontariff barriers.c. quotas and export taxes.d. most favored nation and LDC clauses.e. EU and NAFTA.

Answer: a Level: 2 Page 131 Type: F

58. The European Union has expanded to a -nation alliance

a. 14b. 12c. 25d. 16e. 21



59. __________ has a goal to guide the nations of the world toward free trade and open markets.

a. GATTb. WTOc. GLOBEd. EUe. NAFTA


60. Europe '92 is/was

a. the Olympic Games.b. the World's Fair.c. a single market system.d. global market system.e. a system that never materialized.


61. __________ was initiated in the 1980s to dramatically reform and deregulate such areas as banking, insurance, health, and airlines.

a. Europe ’94b. Asia ’96c. Asia ’80d. Europe ’92e. Europe ’80


62. Which is the single European currency that replaced 12 national currencies and unify a huge marketplace?

a. Markb. Francc. MFNd. Euroe. Pound



63. All of the following are examples of an international trade alliance EXCEPT

a. NAFTA.b. GATT.c. EU.d. ASEAN.e. none of the above.

Answer: b Level: 1 Page: 135-136 Type: F

64. In 1994, NAFTA merged with the United States, Canada, and Mexico into a megamarket with more than __________ million consumers.

a. 15.6b. 75.2c. 421d. 360e. 42.7


65. All of the following were included in the negotiated agreements in key areas of NAFTA EXCEPT

a. immediate removal of tariffs on half of U.S. farm exports to Mexico.b. immediate 100 percent cut of Mexican tariffs on autos.c. U.S. trucking of international cargo allowed in Mexico border area by mid-1990s.d. patent protection for pharmaceuticals in Mexico.e. All of the above were included in the key areas of NAFTA agreement.


66. Key area(s) of the North American Free Trade Agreement is/are

a. removal of tariffs of U.S. farm exports to Canada.b. patent protection for pharmaceutical in Mexico.c. mandatory 100% North American content on cars and trucks to qualify for duty-

free status.d. U.S. trucking of international cargo allowed in Canada.e. All of the above.


67. Which organization originated and supports the idea of small businesses operating on a global level?


a. GLOBEb. EUc. NAFTAd. ASEANe. GATT


68. The Iron Triangle of Globalization includes:

a. World Trade Organizationb. International Monetary Func. World Bankd. All of the abovee. None of the above

Answer: d Level: 2 Page: 136 Type: F69. __________ is primarily concerned with the loss of jobs as companies export work to

countries with lower wages.

a. Iron Triangle of Globalizationb. NAFTAc. ASEANd. GATTe. EU


70. Engaging in the international division of labor so as to obtain the cheapest sources of labor and supplies regardless of country is referred to as

a. franchising.b. licensing.c. market entry strategy.d. outsourcing.e. activity.


71. The Maquiladora industry along the Texas-Mexico border uses cheap labor for assembling products. This lowers the price for U.S. consumers and is an example of

a. licensing.b. joint venture.c. outsourcing.d. franchising.


e. none of the above.


72. To enter foreign markets, most firms begin with which strategy?

a. Exportingb. Greenfield venturec. Joint ventured. Acquisitione. Direct investment


73. ______ is an entry strategy in which the organization maintains its production facilities within its home country and transfers its products for sale in foreign markets.

a. Franchisingb. Licensingc. Exportingd. Greenfield venturee. Joint venture


74. What is exporting?

a. Countertradeb. The barter of products for products, often used in developing nationsc. Items produced in the home country for sale in foreign marketsd. All of the abovee. None of the above

Answer: d Level: 2 Page: 138-139 Type: F

75. A form of exporting to less-developed countries is called

a. licensing.b. franchising.c. greenfield venture.d. joint venture.e. countertrade.


76. Heineken begins by exporting its product into new markets, and then __________ to a


local brewer to establish its position in the market.

a. countertradesb. licensesc. exportsd. franchisese. markets


77. Pizza Hut is one of the best known ______ internationally.

a. franchisesb. wholly owned foreign affiliatesc. joint venturersd. greenfield venturerse. U.K.-based companies


78. Franchising is a form of

a. direct investing.b. licensing.c. exporting.d. countertrade.e. barter trade.


79. Your company is interested in producing and marketing a line of coffee that will penetrate the Chinese market. Your firm is willing to supply the equipment, products, product ingredients, trademark, and standardized operating system. What type of strategy are you going to use?

a. Wholly owned foreign affiliateb. A greenfield venture agreementc. A franchised. An export agreemente. Barter trade


80. Which of the following pairs of alternatives closely resemble each other in the amount of ownership, control and risk obtained in operating international businesses?


a. Direct investment/franchisingb. Wholly owned foreign affiliate/countertradec. Exporting/licensingd. Franchising/licensinge. All of the above


81. A foreign subsidiary over which an organization has complete control is called a

a. joint venture.b. licensing agreement.c. franchise.d. wholly owned foreign affiliate.e. foreign venture.


82. The Write Pens, Inc. wants to reduce transferring costs by producing closer to the consumer in a foreign country. This will also help in reducing transportation and storage costs. Which strategy would be the best to use given the circumstances?

a. Franchisingb. Exportingc. Direct investingd. Barter agreemente. Licensing


83. Go RVing, a U.S. company, built a subsidiary from scratch in England. This is an example of

a. franchising.b. greenfield venture.c. joint venture.d. exporting.e. licensing.


84. Jessica’s Car Care receives more than 25% of its total sales revenues from operations outside of the United States. Jessica’s would be considered a

a. foreign national.b. wealth company.


c. multinational corporation.d. globalization corporation.e. None of the above.


85. Which of the following characteristics distinguish a multinational corporation?

a. Top management is expected to take a global perspective.b. The corporation is controlled by a single management authority.c. It is managed as an integrated worldwide business system.d. All of the abovee. a and b only


86. The Mercedes-Benz plant in Alabama is an example of a/an__________.

a. greenfield ventureb. joint venturec. direct investmentd. foreign affiliatee. direct acquisition


87. ______ companies place an emphasis on their home countries.

a. Polycentric b. Geocentric c. Ethnocentric d. Global e. Regiocentric


88. Which of the following types of companies places an emphasis on a worldwide perspective?

a. Polycentric companiesb. Geocentric companiesc. Ethnocentric companiesd. Regiocentric companiese. Domestic companies



89. In relationship-oriented societies, leaders should

a. take a strong personal interest in employees.b. feel free to criticize as much as they feel they need to.c. reprimand in public whenever possible. It is an especially effective technique in

these societies.d. minimize the emphasis on relations given the society's interest.e. maintain the traditional command-and-control management style.


90. Concerning decision making, American managers working in Mexico often don’t __________.

a. explain themselvesb. ask for participationc. lead by exampled. motivate from the bottome. allow insubordination


91. Managers in foreign countries, when things go wrong, are often unable to

a. increase an employee's pay.b. get rid of an employee who is not working out.c. assess the cause of the problem.d. leave the country given their emotional attachment.e. None of the above.


Scenario Questions

Scenario—Tamara Headley

Tamara Headley was an MBA student in Detroit, Michigan, with a managerial position at the Ford Motor Company plant. She was invited to join a company that had entered into a joint venture with a German firm to manage a Volkswagen plant. Tamara would be under contract for one year, with an option to renew for a total of three years. Her salary would be 350% more than she was currently earning, and she would be given two all-expenses paid vacations each year. The money and the benefits sounded very nice, but Tamara wasn't sure what the best choice would be.


1. The degree of international involvement for the joint venture is an example of

a. outscoring.b. exporting.c. licensing.d. direct investing.e. greenfield venture.

Answer: d Type: A

2. If Tamara accepted the new position, she would be facing significant new challenges in

a. decision making.b. motivation technique.c. managerial control.d. all of the above.e. none of the above.

Answer: d Type: A

3. The American firm joining in the joint venture

a. faces lower risk than if it were using a wholly-owned foreign affiliate.b. enjoys greater control than is it were using the wholly-owned affiliate.c. can anticipate a lower cost than a company that uses global outscoring.d. all of the above.e. none of the above.

Answer: a Type: A

4. In making her decision, Tamara should

a. recognize the substantially higher salary for similar work and take the offer.b. recognize the value of salary combined with the additional benefits and take the

offer.c. recognize the higher risks involved with managing in a foreign and often hostile

culture, and refuse the offer.d. evaluate the benefits and the costs and make the best decision based on a full

cost/benefit analysis.e. ask her husband and do what he wants.

Answer: d Type: A


Short-Answer Questions 1. In the stage, exports increase, and the company usually adopts a multidomestic

approach, probably using an international division to deal with the marketing of products in several countries individually.

Answer: international Page: 120

2. In the _______ stage, the company has marketing and production facilities located in many countries and more than one-third of annual sales come from outside the home country.

Answer: multinational Page: 120

3. List the four stages of globalization. Answer: Domestic, international, multinational, and global/stateless.

Page: 120

4. is the management of business operations conducted in more than one country.

Answer: International management Page 121

5. When it comes to economic development, a currently developing country is also called a(n) __________.

Answer: less-developed country (LDC) Page: 123

6. __________ is the criterion traditionally used to classify countries as developed or devel-oping.

Answer: Per capita income Page: 123

7. A country's physical facilities that support economic activities make up its .

Answer: infrastructure Page: 123

8. List three examples of a country's infrastructure.

Answer: Transportation facilities such as railroads and airports; energy-producing facilities such as utilities and power plants; and communication facilities such as telephone lines and radio stations.


Page: 123-124

9. is the rate at which one country's currency is exchanged for another country's.

Answer: Exchange rate Page: 125

10. The risk of loss due to actions by host country governments is known as _______.

Answer: political risk Page: 125

11. Riots, revolutions, civil disorders, and frequent changes in government that affect the operations of an international company shows __________ in a country.

Answer: political instability Page: 126

12. Companies need to be cautious of _______ and _______ when going international be-cause they differ from country to country.

Answer: laws; regulations Page: 126

13. A nation's includes the shared knowledge, beliefs, and values, as well as the common modes of behavior and ways of thinking, among members of a society.

Answer: culture Page: 127

14. The degree to which people accept inequality in power among institutions, organizations, and people is called .

Answer: power distance Page: 127

15. A value characterized by people's intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity refers to .

Answer: uncertainty avoidance Page: 128

16. A preference for a loosely knit social framework in which individuals are expected to take care of themselves is called .

Answer: individualism Page: 128

17. A preference for a tightly knit social framework in which individuals look after one another and organizations protect their members' interests refers to .

Answer: collectivism Page: 128


18. stands for preference for achievement, heroism, assertiveness, work centrality (with resultant high stress), and material success.

Answer: Masculinity Page: 128

19. reflects the values of relationships, cooperation, group decision making, and quality of life.

Answer: Femininity Page: 128

20. List the four dimensions of national value systems identified by Hofstede.

Answer: Power distance, uncertainty avoidance, individualism/collectivism, and masculinity/femininity.

Page: 128

21. _______ means that people have a tendency to regard their own culture as superior to other cultures.

Answer: Ethnocentrism Page: 130

22. A term describing a GATT clause that calls for member countries to grant other member countries the most favorable treatment they accord any country concerning imports and exports is called the .

Answer: most favored nation Page: 131

23. __________ was formed to improve social and economic conditions among its 15-nation alliance.

Answer: European Union Page: 133

24. List five of the countries that make up the European Union (EU). Answer: Choose any five of the following: Sweden, Finland, Denmark, Ireland, United

Kingdom, Luxembourg, Netherlands, Germany, Belgium, France, Portugal, Spain, Austria, Italy, and Greece.

Page: 133

25. The is the single European currency that has replaced 12 national currencies.

Answer: euro Page: 135

26. _______ went into effect in early 1994, effectively creating a megamarket among the


U.S., Canada, and Mexico.

Answer: NAFTA Page: 135

27. means engaging in the international division of labor so that manufacturing can be done in countries with the cheapest sources of labor and supplies.

Answer: Global outsourcing Page: 137

28. is the barter of products for products rather than the sale of products for currency.

Answer: Countertrade Page: 139

29. Whereby a company builds a subsidiary from scratch in a foreign country, is referred to as a , and is the most risky type of direct investment.

Answer: greenfield venture Page: 140

30. List the three examples of direct investing mentioned in your text. Answer: Joint venture, wholly owned foreign affiliate, and greenfield venture.

Page: 140

31. A multinational corporation typically receives at least ______% of its total sales revenues from outside the parent's home country.

Answer: 25 Page: 141

32. The frustration and anxiety that results from constantly being subjected to strange and unfamiliar cues about what to do and how to do it is called ________.

Answer: culture shock Page: 142

33. Managing across borders calls for organizations to ______ across borders.

Answer: learn Page: 142

Essay Questions

1. Describe the four stages of globalization with specific reference to strategic orientation, stage of development, cultural sensitivity, and manager assumptions.


ANSWER:Refer to exhibit 4-1 in the text.

Level: 3 Page: 120

2. Identify and briefly explain at least two key factors in economic, sociocultural and political-legal environments that affect an organization.

ANSWER:Please refer to exhibit 4-2 in the text.

Level: 2 Pages: 123

3. Briefly explain the difference between high power distance and low power distance.

ANSWER:Power distance is the degree to which people accept inequality in power among institutions, organizations, and people. With high power distance, this inequality is accepted. With low power distance, people expect equality with respect to power.

Level: 2 Page: 127-128

4. Briefly describe the social characteristic of ethnocentrism and explain how this can have an impact on the success of an international manager.

ANSWER:Ethnocentrism is a cultural attitude marked by the tendency to regard one's own culture as superior to others. When an international manager has this characteristic, he or she is less likely to be successful, because he or she devalues the culture in which they are trying to do business. When the culture is devalued, relationships can be damaged, trust can be lost, and the willingness to maintain the business relationship can be broken.

Level: 2 Page: 130

5. Describe GATT and the World Trade Organization.

ANSWER:GATT started as a set of rules to ensure nondiscrimination, clear procedures, dispute negotiation, and including lesser developed countries into international trade. GATT and WTO use tariff concessions as a tool to increase trade. Each of the 23 nations that signed GATT agree to limit tariff levels on imports from other members and to the most favored nation clause. GATT sponsored eight rounds of international trade negotiations aimed at reducing trade restrictions. WTO guides and urges nations worldwide toward free trade


and open markets.

Level: 2 Pages: 131-133

6. Explain NAFTA.

ANSWER:Taking effect in early 1994, the North American Free Trade Agreement (NAFTA) united the U.S., Mexico, and Canada into a multi-trillion dollar market. Over a fifteen-year period, this agreement removes tariffs and trade restrictions on most manufactured and agricultural products. Potential advantages of NAFTA center on its expectations: it is expected to spur growth, increase exports, and create jobs in all three countries. Conversely, many U.S. groups have a number of reservations. These include job loss to Mexico and weakened pollution standards.

Level: 3 Page: 135-136

7. What is global outsourcing? Identify a unique variation of global outsourcing.

ANSWER:Global outsourcing is engaging in the international division of labor so that manufacturing can be done in countries with the cheapest sources of labor and supplies.

The maquiladora industry is a unique variation of global outsourcing that lies along the Texas-Mexico border.

Level: 2 Page: 137

8. Direct investing means that the company is involved in managing the productive assets in a foreign country. There are three options for direct investing. Name and compare these three options.

ANSWER:The three options are joint ventures, wholly-owned foreign affiliates, and greenfield ventures. With a joint venture, a company shares costs and risks with another firm, typically in the host country. This is often the fastest, cheapest, and least risky way to enter a foreign market. In the second option with a wholly-owned affiliate, the company has full ownership with all of the costs and risks associated with ownership, and enjoys full control of the affiliate. The most costly and risky direct investment is called a greenfield venture. The company builds a subsidiary from scratch in a foreign country. While the risks and costs are high, so is the control and the potential payoff.

Level: 3 Page: 140


9. Briefly describe two personal challenges for global managers.

ANSWER:Managers will be most successful in foreign assignments if they are culturally flexible and if they can easily adapt to new situations. Thus, the two personal challenges that exist for global managers are overcoming ethnocentric tendencies and culture shock. Ethnocentrism is a cultural attitude marked by the tendency to regard one's own culture as superior to others. Culture shock refers to the frustration and stress that result from continually being exposed to new and different situations. Proper training and preparation of incoming global managers is crucial.

Level: 2 Page: 142


Documents

Chapter 4 - Universiti Putra Malaysia · Web viewPizza Hut is one of the best known _____ internationally. a. franchises b. wholly owned foreign affiliates c. joint venturers d. greenfield