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IB Set 2

Which of the following is a function of World Bank?
Lending money to governments for development
In a letter of credit transaction, the importer secures the letter of credit ____.
before product shipment
Under a currency board system, ____.
government lacks the ability to set interest rates
Dynamic capabilities describe skills that _____.
become more valuable over time through learning
A(n) ____ distribution channel is one that is difficult for outsiders to access.
_____ are international bonds, normally underwritten by an international syndicate of banks and
placed in countries other than the one in whose currency the bond is denominated
Which of the following is an argument favoring centralization?
It can avoid the duplication of activities.
Bringing managers together in one location for extended periods and rotating them through
different jobs in several countries is a part of
management development programs
According to Levitt, which of the following statements is true?
Technology drives the world toward a converging commonality.
Which of the following statements is NOT true?
The price a firm charges for a good or service is typically more than the
value the customer places on that good or service
The emphasis on local responsiveness in firms pursuing a localization strategy creates strong
pressures for:
decentralizing operating decisions to foreign subsidiaries.
The benefits of making all or part of a product in-house seem to be greatest when the firm
has highly specialized assets
The agreement reached at Bretton Woods established ____.
International Monetary Fund
A firm that operates with matrix-type structures in which both product divisions and geographic
areas have significant influence would use which of the following strategies?
transnational strategy
Which of the following is an argument favoring decentralization?
It permits greater flexibility.
Global learning based on the multidirectional transfer of skills between subsidiaries and the
corporate center is a central feature of a firm pursuing a(n) _____ strategy.
The price a firm charges for a good or service is typically less than the value placed on that
good or service by the customer. This is because:
the customer captures some of that value in the form of a consumer
Which of the following statements is true regarding management development?
Management development facilitates the creation of an informal network
for sharing knowledge within the multinational enterprise
The cost of capital is the ____.
price of borrowing money
In a seminal study, R. L. Tung found that for American multinationals, the biggest impediment to
expatriate success was:
the inability of the spouse to adjust.
Which of the following is a hidden cost associated with basing production in a foreign location?
High employee turnover
The continuing persistence of ____ differences between nations acts as a major brake on any
trend toward global consumer tastes and preferences
cultural and economic
Which of the following is a factor that transforms a low-cost location to a high-cost location?
Appreciation of local currency
_____ is viewed as the most restrictive countertrade arrangement and is primarily used for
one-time-only deals in transactions with trading partners who are not creditworthy or
There is low interdependence, performance ambiguity, and costs of control in firms pursuing
localization strategy.
Which of the following is an advantage of countertrade?
It is an effective way of doing business with developing nations.
When using the Euromarkets, companies ____.
pay less for the loans
A Japanese firm prefers expatriate Japanese managers to head its foreign operations because
these managers have been socialized into the firm while employed in Japan. This indicates that
the firm
follows an ethnocentric staffing policy to maintain a unified corporate
_____ makes it difficult to evaluate the performance of expatriate managers objectively.
Unintentional bias
How has the adoption of just-in-time inventory systems, computer-aided design, and
computer-aided manufacturing impact firms’ associations with suppliers?
It has increased pressures to establish long-term relationships with
Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home
currency because Eurocurrency deposits ____
lack government regulations
A _____ is simply an order written by an exporter instructing an importer, or an importer’s agent,
to pay a specified amount of money at a specified time.
Which of the following is a factor that makes Eurobonds more attractive than most major
domestic bonds?
Favorable tax status
Other things being equal, the rate of new-product development seems to be greater in countries
consumers are affluent.
Which of the following makes being dependent on one location particularly risky?
Floating exchange rates
_____ refers to giving a person in each subunit responsibility for coordinating with another
subunit on a regular basis.
Liaison roles
A firm that is facing both strong cost pressures and strong pressures for local responsiveness
should follow a(n) _____ strategy.
Which of the following statements about retail systems is true?
One factor contributing to greater retail concentration is an increase in
car ownership.
What will happen if a country increases its money supply rapidly under fixed exchange rate
Trade deficit would widen in that country.
Which of the following observations is true of the Bretton Woods agreement?
All countries agreed to fix the value of their currency in terms of gold
under the agreement
What is the long-term goal of international trade secretariats (ITSs)?
To be able to bargain transnationally with multinational firms
Which of the following arguments strengthen the idea of floating exchange rates?
Trade deficits can be corrected through changes in exchange rates.
If a high-tech firm sets up operations in a foreign country to profit from a core competency in
technological know-how, which of the following entry strategies is best?
Wholly owned subsidiaries
Consumers in highly developed countries value ____ as compared to their counterparts in less
developed nations.
product attributes
Which of the following is a drawback of the polycentric approach to staffing?
Host-country nationals have limited opportunities for advancement
beyond senior positions in their subsidiary.
Eurobonds are ____.
normally underwritten by an international syndicate of banks
When a company charges whatever the market will bear, the company is using:
price discrimination.
Management development programs aim to:
build a unifying corporate culture.
A consumer surplus can be best described as:
value for the money.
The main factor that makes the Eurocurrency market attractive to both depositors and
borrowers is that it ____.
lacks government regulation
The World Bank was established at the at Bretton Woods conference to ____.
promote general economic development
Organizational structure means all of the following, EXCEPT:
the manner in which decisions are made and work is performed by
The norms and values systems that are shared among the employees of a company are referred
to as:
organizational culture.
Economies that arise from performing a value creation activity in the optimal place for that
activity are referred to as:
location economies.
_____ denotes a whole range of barter-like agreements and its principle is to trade goods and
services for other goods and services when they cannot be traded for money
_____ separated national equity markets from each other historically.
Substantial regulatory barriers
Through its _____ program, the SBA oversees about 850 volunteers with international trade
experience to provide one-on-one counseling to active and new-to-export businesses.
United States had large and growing trade deficit between 1980 and 1985. Despite this, the
value of U.S. dollar rose during this period. Which of the following is a factor that caused this
United States attracted heavy inflows of capital from foreign investors
during this period.
Managing an alliance successfully requires building interpersonal relationships between the
firms’ managers. This is sometimes referred to as ____.
relational capital
Which of the following is true regarding approaches to labor relations?
Many firms are now using the threat to move production to another
country in their negotiations with unions.
Which of the following statements is true of Web-based EDI systems?
Web-based systems are much easier to install compared to proprietary
An important drawback of a purely domestic capital market is that the ____.
cost of capital tends to be higher than it is in a global market
____ is the direct exchange of goods and/or services between two parties without a cash
transaction and is the simplest arrangement
An arrangement whereby a firm grants the right of intangible property to another entity for a
specified time period in exchange for royalties is a(n) _____ agreement.
When value of U.S. dollars goes down, ____.
foreign borrowers will garner benefits
Which of the following is a disadvantage of licensing?
It does not give a firm the tight control over strategy that is required for
realizing experience curve and location economies.
A firm’s _____ determines where in its hierarchy the decision-making power is concentrated.
vertical differentiation
Responding to pressure for _____ requires that a firm differentiate its product offering and
marketing strategy from country to country
being locally responsive
Which of the following is less likely to add to the pressure for a firm to be locally responsive?
Switching costs for consumers
Which of the following is a nationwide group of international trade attorneys who provide free
initial consultations to miniature businesses on export-related matters?
___ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain amount
of materials back from a country to which a sale is made.
A dirty float refers to a situation in which ____.
a country tries to hold its currency against an important reference
currency without a formal pegged rate
Learning effects:
typically disappear after a while, in spite of the complexity of the task.
Which of the following is a major source of the improvement in the capabilities of a foreign site?
Increasing abundance of advanced factors of production in the nation
where the factory is located
Which of the following statements about franchising is true?
It is a specialized form of licensing.
Which of the following statements about the choice of distribution strategy is true?
The longer a channel, the greater the aggregate markup, and the higher
the price that consumers are charged for the final product.
Which of the following statements about small-scale entry is true?
Small-scale entry is a way to gather information about a foreign market
before deciding whether to enter on a significant scale.
Under a(n) _____ agreement, a firm might license some valuable intangible property to a foreign
partner, but in addition to a royalty payment, the firm might also request that the foreign partner
license some of its valuable know-how to the firm.
The international monetary system refers to the institutional arrangements that govern ____.
exchange rates
Tight cross-functional integration between R&D, production, and marketing can help a company
to ensure that all of the following take place except:
product development projects are driven by internal needs.
Which of the following is a common difficulty that traders face when exporting goods or services
to other countries?
Exporters often face voluminous paperwork and complex formalities.
A(n) _____ tends to be adopted by firms that are reasonably diversified.
worldwide product division structure
A _____ structure encourages fragmentation of the organization into highly autonomous
worldwide area
Which of the following is a problem that arises due to an international division structure?
The heads of foreign subsidiaries are not given as much voice in the
organization as the heads of domestic functions or divisions.
Which of the following arguments is in favor of floating exchange rates?
Governments can restore monetary control by removing the obligation to
maintain exchange rate parity
____ refers to the number of intermediaries between the producer (or manufacturer) and the
Channel length
The set of choices the firm offers to its targeted market is known as the ____.
marketing mix
Which of the following is one of the four elements that constitute a firm’s marketing mix?
Distribution strategy
When an investor purchases a corporate bond, he purchases the right to receive a ____.
specified fixed stream of income from the corporation
The means a firm chooses for delivering the product to the consumer is its ____.
distribution strategy
Japan’s great trading houses are called ____.
sogo shosha
Which of the following will help a company hedge against currency fluctuations?
Dispersing production to different geographic locations
___ is an alternative means of structuring an international sale when conventional means of
payment are difficult, costly, or nonexistent
When companies disperse different stages of the value chain to those locations around the
world where perceived value is maximized or where the costs of value creation are minimized,
companies create
a global web of value creation activities.
For firms selling a product that serves universal needs, and do not face significant competition,
a(n) _____ strategy makes sense.
Under a _____ exchange rate regime, a country will attach the value of its currency to that of a
major currency
Moving down the experience curve:
allows a firm to reduce its cost of creating value.
Which of the following is a major drawback of engaging in countertrade?
Countertrade may involve the exchange of unusable goods.
Which of the following countries has a concentrated retail system?
Which strategy focuses on increasing profitability by customizing the firm’s goods or services so
they provide a good match to tastes and preferences in different national markets?
Localization strategy

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