Chapter 1

Globalization and trends in Management System

End Chapter Quizzes

1. What is the role of World Trade Organization?

a) settle trade-related disputes between countries
b) promote free trade between countries
c) make rules about trade between counties
d) All of the above

2. Which of the following organizations was established by industrialized nations to loan

money to underdeveloped and developing countries?
a) OPEC
b) The World Bank
c) The IMF
d) The United Nations

3. Which of the following is an example of a globalized product?

a) different formulations of leading soft drink in France, the United Kingdom, and
Canada
b) Lever Brothers bar soaps tailored to different countries' water conditions
c) American movies, and music
d) Colgate-Palmolive's hand-powered washing machine for LDCs

4. Which of the following is not a major driver leading behind globalization?

a) Political
b) Market
c) Environmental.
d) Technology

5. The most common definition of globalization is that of:

a) integration of political laws and customs
b) integration of countries in geographical proximity to one another
c) integration of people with similar cultural characteristics
d) integration of goods, technology, labor, and capital

6. Advances in computers and communications technology are permitting an increased

flow of ideas and information across boarders. This enables:
a) Manufacturing personnel to concentrate more on domestic production
b) Customers to learn about foreign goods
c) Sellers of products to travel to more locations worldwide in search of buyers
d) Advertisers to focus more on specific countries where demand is the greatest
7. One of management's goals is utilizing economies of scale to reduce unit costs.
Which of the following would not necessarily lead to realization of economics of scale?
a) Globalizing product lines to reduce development costs.
 b) Locating production in countries where the costs of the factors of production are
lower.
c) Locating production in countries where the labor force is the most highly
educated.
d) Globalizing product lines to reduce production and inventory costs

8. GATT stands for

a) General Agreement on Trade and Tariffs
b) General Agreement on Tariffs and Trade
c) General Arrangement on Tariffs and Trade
d) General Arrangement on Trade and Tariffs

9. Which of the following is not an advantage of globalization?

a) More job opportunities
b) goods and services available at less cost
c) helps companies to focus on their core competencies
d) MNCs shift to countries having liberal environmental and labor regulations

10. One of the first multinational companies in existence in the late 1800's to own
foreign production facilities, worldwide distribution networks, and market its products
under global brands was:
a) Eastman Kodak.
b) Singer Sewing Machines.
c) Ford Motor Company.
d) Coca-Cola

Chapter 1
1 d, 2 c, 3 c, 4 c, 5 d, 6 b , 7 c, 8 b, 9 d, 10 b
 Chapter 2
International Trade Theory
End Chapter Quizzes

1. Which one of the following is not an assumption of the Ricardo Model:

a) Constant returns to scale
b) Factors of production can be transferred easily one sector to another
c) There is perfect competition in the market
d) Technological innovation is a unique feature of the market structure

2. Which of the following statement describes the Heckscher-Ohlin Theory?

a) Countries should export goods that are made of factors of production that are
available in abundance in the economy
b) Countries should produce and export those goods in which they have absolute
advantage
c) Countries should produce and export those goods in which they have
comparative advantage
d) Increase in the endowment of one of the factors will reduce the production of
goods that intensively use the other factor

3. “If US is capital rich and innovation increases the productivity of capital, then labor
intensive industries in US will get hurt” is
a) Stolper-Samuelson Theorem
b) Leontief Paradox
c) Rybczynski Theorem
d) Heckscher-Ohlin Theory

4. Which of the following pair is wrongly matched?

a) Theory of Absolute Advantage – Adam Smith
b) Theory of Comparative Advantage – David Ricardo
c) Heckscher-Ohlin Theory – Wassily Leontif
d) Product Life Cycle Theory – Raymond Vernon

5. According to Porter, which of the following factors will not help in determining the
Global Competitive Advantage of the company?

a) Monopoly market conditions i.e. Absence of Rivals

b) Firm Strategy
c) Presence of related and supporting industry
d) Factor conditions
6. The international product lifecycle is a theory explaining why:
a) all international products eventually lose their profitability.
b) a product that begins as a nation's import eventually becomes its export.
c) a product that begins as a nation's export eventually becomes its import.
d) the demand for international products changes over time

7. Observation that “US exports were less capital intensive the US imports” which is the
contradiction to the HO model is known as
a) Leontif Paradox
b) Stopler-Samuelson Theorem
c) Rybczynski Theorem
d) New Product Life Cycle Theorem

8. The international product lifecycle is a theory explaining why:

a) all international products eventually lose their profitability.
b) a product that begins as a nation's import eventually becomes its export.
c) a product that begins as a nation's export eventually becomes its import.
d) the demand for international products changes over time.

9. International trade occurs primarily because of:

a) price differences among nations.
b) supply and demand.
c) capitalism.
d) none of the above

10. The Heckscher-Ohlin theory of factor endowment states that international and
interregional differences in production costs occur because of:

a) differences in the supply of production factors.

b) government controls.
c) differences in technology factors.
d) import and export regulations

Chapter 2
1 d, 2 a, 3 b, 4 c, 5 a, 6 c, 7 a, 8 c, 9 b, 10 a
 Chapter 3
Strategies for Going Global
End Chapter Quizzes

Q 1) One of the following is not among the main internal factors affecting the choice for
market entry mode:
a) international experience.
b) firm size.
c) product.
d) demand uncertainty.

Q 2) One of the following is not a main external factor affecting the choice for market
entry mode:
a) intensity of competition.
b) international experience.
c) market size.
d) demand uncertainty.

Q3) An appropriate entry strategy for a company seeking a limited form of participation
in global markets is:
a) licensing.
b) Internet selling.
c) Piggybacking.
d) joint-venturing.

Q 4) firm globalizing within the international tourism industry must be aware of the fact
that comparable international data is:
a) somewhat limited.
b) censored.
c) non-existent.
d) widely available.

Q 5) Which factors affecting the choice for foreign market entry are categorized as
being external?
a) Country risk, demand uncertainty and intensity of competition.
b) Direct and indirect trade barriers.
c) Socio-cultural distance between home country and host country.
d) All of the above.

Q 6) ______ is Africa's largest country.

a) Kenya
b) Zimbabwe
c) South Africa
d) Sudan
Q 7) Which country continues to be ruled by one of the most repressive regimes in the
world?
a) Burma
b) China
c) Belarus
d) Namibia

Q 8) When GDP growth falls below 2 %, tourism growth tends to:

a) double.
b) be higher.
c) be even lower.
d) stagnate.

Q 9) Franchising is a common route to internationalization used by

a) manufacturing industries
b) small firms
c) service industries
d) industrial conglomerates

Q 10) The Grummond Group buys computer peripherals in industrialized countries and
sells them to developing countries. Grummond would most likely be classified as a
a) trading company.
b) strategic alliance.
c) joint venture.
d) licensee.
e) subsidiary

Chapter 3
1 d, 2 b, 3 a, 4 a, 5 d, 6 d, 7 a, 8 c, 9 c, 10 a
 Chapter 4
Organization of International Business
End Chapter Quizzes

Q 1) Which of the following is an example of a globalized product?

a) different formulations of Hills Bros. Coffee in France, the United Kingdom, and
Canada
b) Lever Brothers bar soaps tailored to different countries' water conditions
c) American clothing, movies, and music
d) Colgate-Palmolive's hand-powered washing machine for LDCs

Q 2) Being a global organization means:

a) customizing the product range for each segment in part.
b) creating standardized products for homogeneous markets.
c) creating both standardized and customized products.
d) any of the above.

Q 3) A global market leader is an organization which:

a) has more than 50% global market share.
b) is recognized as being ahead of the rest in terms of market share.
c) has the monopoly over several foreign markets.
d) is ahead of the competition in terms of global innovation.

Q 4) What elements can a global company choose to emphasize in selecting its

organization structure?
a) Technology, teamwork, or culture.
b) Regions, functions, or products.
c) Functions, technology, or country.
d) Regions, teamwork, or conflict.

Q 5) Why would a company expanding internationally choose to have an international

division?
a) It allows the firm to focus on international operations separately from domestic
operations.
b) Having an international division helps a company to find general managers with
international experience.
c) It allows the international division to develop critical mass and thus compete
effectively for scarce resources.
d) All of the above are correct.

Q 6) What kinds of organizations should use the matrix organizational structure?

a) Moderate sized organizations that have only a few product lines.
b) Large sized organizations that have many product lines.
c) Complex organizations that operate in several different industries.
d) Simple organizations that have a single product.
Q 7) What factors cause organizational structures to evolve over time?
a) Technology, cultural trends, and teamwork.
b) Technology, competition, and employee empowerment.
c) Growth, integration, and industry crisis.
d) Growth, strategy, and business crisis.

Q 8) Which of the following terms is incorrectly matched with its definition?

a) Vertical firms are companies in which decisions are made by matrix managers.
b) Horizontal firms are companies in which decisions are made by teams rather
than through organizational hierarchy.
c) Horizontal differentiation - degree to which labor is divided.
d) Vertical differentiation - distribution of authority from lower to higher level
managers.

Q 9) Which organizational structure is considered to be the most complex one

a) Product structure
b) Matrix structure
c) Functional structure
d) Area structure

Q 10) when firms began to expand abroad they typically group their international
activities through
a) Product structure
b) International division
c) Functional structure
d) Area structure

Chapter 4
1 c, 2 c, 3 b, 4 b, 5 d, 6 a, 7 d, 8 a, 9 b,10 b
 Chapter 5
The Cultural, Political, Legal and Economic environment facing Global Business
End Chapter Quizzes

Q 1) Standardized Nike and Adidas shoes worldwide is an example of

a) globalization.
b) customization.
c) collateralization.
d) internationalization.

Q 2) Culture includes
a) a country's political system and national laws.
b) the concepts, values, and tangible items that make up a particular society.
c) a measure of a nation's economic standing.
d) quotas on imports and stringent health and safety requirements.
e) the stability of the government.

Q 3) ) When a glove manufacturer is allowed to sell only a certain number of plastic

gloves in a particular country, the firm is facing
a) a tariff.
b) an embargo.
c) a restrictive product standard.
d) a quota.
e) a balance of trade restriction

Q 4) Taxes levied by a nation on goods bought outside its borders and brought in are
called
a) import duties.
b) export duties.
c) export tariffs.
d) quotas.
e) import tariffs.

Q 5) ) When a firm's products are marketed outside its home market and home
production is used to supply these markets, the firm is engaging in
a) international marketing.
b) global marketing.
c) exporting.
d) domestic marketing.
e) unplanned exporting.
Q 6) Regionalism is:
a) an international management orientation.
b) a protectionist policy created to exclude third world countries from certain forms
of international trade.
c) an international management orientation and a protectionist policy created to
exclude third world countries from certain forms of international trade.
d) the grouping of countries into regional clusters based on geographic proximity.

Q 7) The highest level of international business involvement is the

a) multinational corporation.
b) joint venture.
c) strategic alliance.
d) franchise.
e) contract manufacturer.

Q 8) The most recent round of GATT provided new rules to prevent dumping. This
round was the

a) Kennedy Round.
b) Uruguay Round.
c) Merry-Go Round.
d) American Round.

Q 9) If IBM was concerned about the interest rate it must pay in the next quarter to
acquire needed financial resources, this concern would involve which one of the
following
a) A business environment input
b) Its marketing mix
c) Its business approach
d) A business environment output

Q 10) Many companies view political forces as:

a) easily ignored
b) easily influenced
c) simple to recognize
d) beyond their control

Chapter 5
1 a, 2 b, 3 d, 4 e, 5 c, 6 d, 7 a, 8 b, 9 a,10 d
 CHAPTER 6
Control Strategies
End Chapter Quizzes

Q 1) A marketing plan
a) is characteristic of production-oriented firms and other mass producers.
b) provides a framework for implementing and controlling marketing activities.
c) always increases the marketing manager's operating costs.
d) produces plans that are short-term in orientation.
e) restricts the marketing manager's future options.

Q 2) A firm should develop a marketing plan

a) for each strategic business unit.
b) for each different marketing strategy.
c) for each different target market.
d) for each good or service.
e) once a month.

Q 3) A marketing plan usually begins with a(n)

a) executive summary.
b) introduction to the company's marketing objectives.
c) summary of current performance as compared with past performance.
d) situation analysis.
e) opportunity and threat analysis.

Q 4) The __________ is sometimes considered to be the most important part of a

marketing plan because it is often given to people outside the firm.
a) SWOT analysis
b) market analysis
c) mission statement
d) marketing strategy
e) executive summary

Q 5) Which of the following is NOT a purpose of a marketing plan?

a) it specifies how resources are to be allocated
b) it co-ordinates marketing and production activities
c) it assigns responsibilities, tasks and timing
d) it assists in management control
e) it offers a road map for implementing marketing strategy
Q 6) In the marketing planning cycle, the final stage is:
a) implementation of the marketing plan.
b) revision or formulation of marketing strategy.
c) development or revision of marketing objectives
d) assessment of marketing opportunities and resources.
e) development or revision of the plan for implementation and control.

Q 7) Marketing plans that cover a period of more than 5 years are

a) long-range plans.
b) short-range plans.
c) medium-range plans.
d) average-range plans.
e) normal-range plans.

Q 8) An intuitive manager could best be described as one who:

a) uses scientific problem solving
b) eliminates uncertainty in decision making
c) searches out facts and data systematically
d) uses an orderly approach to gathering information
e) uses personal knowledge and experience to make decisions

Q 9) In a specific strategic market plan, a profit centre that is self-supporting in terms of

sales, markets, production, and other resources is known as:
a) profit unit.
b) strategic business unit.
c) marketing unit.
d) small business unit.

Q 10) The long-term view, or vision, of what the organization wants to become is called
the
a) mission statement
b) purpose statement
c) vision statement
d) marketing plan.
e) strategic vision.

Chapter 6
1 b, 2 b, 3 a, 4 e, 5 b, 6 a, 7 a, 8 e, 9 b, 10 a
 Chapter 7
Issues In Global Marketing
End Chapter Quizzes

Q 1) ) Swiss-based Nestlé takes a global approach to marketing its chocolate products,

it probably finds that which of the following is MOST easily standardized?
a) Product
b) Promotion
c) Distribution
d) Advertising
e) Price

Q 2) The main aim of global marketing is to:

a) find global customers.
b) coordinate the marketing activities within the constraints of the global
environment.
c) satisfy global customers better than competition.
d) achieve all of the above.

Q 3) The work of an international marketer is mainly concerned with:

a) establishing global brands.
b) translating product instructions and advertising messages.
c) transferring a marketing mix to enter a market in another country.
d) adapting a marketing mix to enter a market in another country.

Q 4) Key controllable factors in global marketing are:

a) social and technical changes.
b) government policy and legislation.
c) marketing activities and plans.
d) all of the above.

Q 5) From the point of view of marketing, an organization that enjoys competitive

advantage in an industry has done so by:
a) creating superior value for customers.
b) constantly enlarging its marketing activities.
c) focusing on long-term profit.
d) charging lower prices than competition.

Q 6) Which of the following represents a company's effort to identify and categorize

groups of customers and countries according to common characteristics?
a) Global market segmentation.
b) Global marketing research.
c) Global targeting.
d) Global positioning.
Q 7) The main advantage of a differentiation strategy in international markets lies in
that:
a) imitators cannot reduce margins.
b) consumers in foreign markets pay less for the same product.
c) it enables brand stretching and extension.
d) the focus is taken away from price.

Q 8) The goals of international marketing are to:

a) expand business activities abroad.
b) gain market share and increase profit.
c) create and retain customers in global markets.
d) eliminate competition in international markets.

Q 9) The target audience for an advertising campaign is the

a) information base on which to develop the campaign.
b) location and geographic distribution of persons.
c) group of people toward whom the advertisements are directed.
d) overall goal of the advertising campaign.

Q 10) A marketer that wanted to include detailed explanations in advertisements would

be most likely to use
a) radio
b) television.
c) outdoor displays.
d) magazines.

Chapter 7
1 a, 2 d, 3 d, 4 c, 5 a, 6 a, 7 d, 8 c, 9 c,10 d
 Chapter 8
Global Production and Operational Strategies
End Chapter Quizzes

1. The most important reason for global sourcing is:

a) to procure foreign products
b) the firm's worldwide operation and attitude.
c) to procure advanced technology from foreign sources.
d) to procure lower prices from foreign sources.

2. Six sigma advocates many defects if one million units are produced?
a) 3.4 units
b) 1.7 units
c) 10 units
d) 99 units

3. To lower manufacturing costs, the principal goal of Japanese firms is to:

a) eliminate inventories.
b) reduce the process time.
c) lower labor costs.
d) reduce inventory costs.

4. Managing the entire organization in such a manner that it excels on all dimensions of
product and services is known as:
a) quality circles.
b) quality control circles.
c) total quality management.
d) just-in-time.

5. A radical redesign of business processes to achieve dramatic improvements in critical

measures of performance is referred to as:
a) redesign.
b) delayering.
c) reengineering.
d) TQM.

6. __________ has become a global center for labor intensive industry.

a) China
b) Indonesia
c) Vietnam
d) India

7. Which of the following is an unfavorable factor if a US automobile company plans to

set up a manufacturing facility in China?
a) Presence of ancillary units for supplying auto parts
b) Liberal norms for FDI
 c) Government policies favoring domestic automobile industry
d) Presence of skilled labor

8. __________, the most comprehensive of standards applies to industries involved in

the design, development, manufacturing, installation and servicing of products and
services:
a) ISO 9001
b) ANSI/AQC90
c) ISO 9000.
d) ISO 14000.

9. Backward vertical integration refers to establishing facilities to manufacture:

a) products that are complementary to the firm's main product line.
b) inputs used in the production of the firm's final products.
c) products that are best capable of competing in the global marketplace.
d) outputs from the firm's main source of raw materials.

10. The company should not opt for decentralized manufacturing in which of the
following situations?
a) High Fixed cost
b) Non availability of flexible manufacturing facility
c) Low fixed cost
d) Minimum efficient scale is high

Chapter 8
1 d, 2 a, 3 a, 4 c, 5 c, 6 a, 7 c, 8 a, 9 b, 10 c
 Chapter 9
Global Human Resource Management
End Chapter Quizzes

1. While selecting a good manager for an overseas operations organizations should

look at the following attributes :
a) being bicultural and bilingual.
b) knowing business practices in the home country and in the host country.
c) having a broader skill set than domestic managers.
d) all of the above.

2. An employee who is a citizen of neither the home nor the host country is known as a:
a) third country national.
b) foreign national.
c) nonresident alien.
d) foreign employee.

3. ___________ is related to hiring and promoting employees on the basis of ability

and experience without considering race or citizenship.
a) Discrimination
b) Monocentric
c) Ethnocentric
d) Geocentric

4. A person living outside of his or her country of citizenship is known as:

a) a foreigner.
b) a nonresident alien
c) a resident alien.
d) an expatriate.

5. Before going on the first overseas assignment, you should:

a) arrange with someone fairly high in the company hierarchy to be your mentor.
b) insist that your bosses tell you exactly what the company expects you to
accomplish.
c) Try and learn some basic facts about the culture of the country
d) all of the above.
6. The ability of a company to succeed in another country rests heavily on:
a) Favourbale environment in the host country
b) the managers' abilities to function in that country's culture.
c) adequate financing.
d) all of the above.

7. In selecting executives for foreign operations:

a) don't promote from within.
b) do promote an insider.
c) do assume that language fluency is the most important criterion.
d) do assess the total person.
.
8. Bonuses are paid by firms in recognition that expatriates and their families undergo
some hardships and inconveniences and make sacrifices while living abroad. Bonuses
include:
a) overseas premiums.
b) Overseas medical benefits.
c) Education benefits .
d) all of the above.

9. Employee compensation payments added to base salaries because higher expenses

are encountered when living abroad are known as:
a) bonuses.
b) add-ons.
c) allowances.
d) expatriate compensation

10. To truly understand a culture, it is necessary to:

a) speak the language.
b) Dress like the locals.
c) spend time in the locale.
d) all of the above

Chapter 9
1 d, 2 a, 3 d, 4 d, 5 c, 6 b, 7 d, 8 d, 9 c, 10 a
 Chapter 10
Global Accounting and Financial Management
End Chapter Quizzes

1. Foreign currency exchange risk arises when:

a) business transactions are denominated in foreign currencies.
b) sales are made to customers in a foreign country.
c) goods or services are purchased from suppliers in a foreign country.
d) accounting reports are prepared in a foreign currency.

2. What is transfer pricing?”

a) The cost to convert from one country's standards to another country's accounting
standards.
b) The value of sales made in a foreign country.
c) The method of recording transactions between divisions within the same
company.
d) The taxes paid on sales in a foreign country.

3. The chance that events such as political uncertainty, economic downturn, or natural
disasters will weaken a nation's securities market is called:
a) currency risk.
b) foreign exchange risk.
c) country risk.
d) exposure

4. Which functional areas are included in the study of international Financial

Management ?
a) Investment decisions
b) Accounting Information Systems
c) Taxation
d) Auditing

5.Why is auditing a multinational corporation potentially more difficult than auditing an

entity that has only domestic operations?
a) Cultural differences
b) Multiple sets of accounting standards
c) Different currencies
d) All of the above

6.Which group is primarily responsible for preparing international accounting standards?

a) Financial Accounting Standards Board (FASB)
b) American Accounting Association (AAA)
c) International Federation of Accountants (IFA)
d) International Accounting Standards Board (IASB)
7.Which of the following is an advantage of having a single set of accounting standards
used worldwide?
a) Reduce the accounting costs for multinational corporations.
b) Increase the power of the IASB.
c) Reduce the number of multinational corporations on the NYSE
d) Increase the diversity of accounting methods used by multinational corporations

8.The factor used to convert from one country's currency to another country's currency
is called the:
a) Hedging
b) Capital Budgeting
c) Exchange rate.
d) Transfer price

9. _________________ are set to rules that define how the financial statements will be
prepared.

a) Auditing Standards
b) Accounting Standards
c) Capital Budgeting
d) Transfer pricing

10. Which of the following is not a part of financial decisions making process?
a) Sourcing finance
b) Ensuring optimal capital structure
c) low cost of capital
d) capital budgeting

Chapter 10
1 a, 2 c, 3 c, 4 a, 5 d, 6 d, 7 a, 8 c, 9 a, 10 d
 Chapter 11
Global Strategic Management
End Chapter Quizzes

1. To succeed in today's global market place, a company must:

a) have ample supplies of financing.
b) be able to quickly identify and exploit opportunities whenever they may occur.
c) world-wide sources of cheap raw materials.
d) form strategic alliances with competitors

2. The process of strategic planning provides a formal structure in which managers:

a) analyze the company's external environments.
b) define the company's business and mission.
c) set corporate objectives.
d) all of the above.

3. A firm can evaluate its internal environment by analyzing

a) Its own Strengths
b) Competitor’s Weaknesses
c) Opportunities in the external environment
d) Proposed changes in the international trade laws

4. To find out what an organization's strategy is, you should:

a) Read the mission statement
b) Look at what the organization actually does
c) Read the strategic plan
d) Ask the CEO

5. The key activities in the strategic management process are:

a) Analysis, formulation, review
b) Analysis, implementation, review
c) Analysis, formulation, implementation
d) Formulation, analysis, implementation
6. The statement of an organization's aspirations can be found in the organizations:
a) Mission statement
b) Strategic objectives
c) Actions
d) Vision statement

7. It is generally agreed that the role of strategy is to:

a) Make best use of resources
b) Achieve competitive advantage
c) Make profits for the organization
d) Make the best products and services

8. An organization's external environment consists of the general or macro environment

and:
a) The internal environment
b) The competitive environment
c) The specific environment
d) The micro-environment

9. Strategy formulation takes place at two levels. These are:

a) Conscious and sub-conscious
b) Implicit and explicit
c) Corporate and business
d) Business and operational

10. The PEST analysis consists of:

a) Political, economic, scientific, technological
b) Political, environmental, social, technological
c) Political, economic, social, technical
d) Political, economic, social, technological

Chapter 11
1 b, 2 d, 3 a, 4 a, 5 c, 6 d, 7 b, 8 b, 9 c, 10 d