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IB300 Test#2

The reasons a government may nationalize a firm include:
To extract more money from the firm; To increase a firm’s profitability; To preserve jobs
Nationalization and privatization are:
Opposing trends
Government protection of economic activities is:
a historical function of government
Government stability is a characteristic of a government that:
maintains predictability in fiscal, monetary, and political policies
International business can be a powerful political force, in part because:
About half of the world’s 100 largest economic units are firms.
The national defense argument for trade restrictions has been used in the United States to argue for restriction on imports of:
An argument against the protection of an infant industry is that:
There can be high costs from subsidizing infant industries.
An argument against using trade restrictions to punish an offending nation is that:
Sanctions seldom achieve their goal of forcing change in the offending country.
An argument against the protection of an infant industry is that:
There can be high costs from subsidizing infant industries.
Arguments for trade restrictions include:
national defense, infant industry, and job protection; punishment of offending nations; fair competition and retaliation
Social dumping occurs when an exporting country:
creates unfair competition based on lower costs, which undermines social support systems to the worker.
The existence of the rule of law in a foreign market suggests that:
foreign investors can assume their interests will be protected
Laws governing transactions of individuals and companies that cross international borders are:
private international law
The main source(s) of international law is(are):
bilateral and multilateral treaties, along with customary law
Extraterritoriality is:
a nation’s attempt to enforce its law beyond its borders
The Alien Tort Statute allows foreigners to:
file claims in U.S. courts for violation of international law that may have occurred beyond U.S. borders
Where litigation in international disputes should occur is:
often complex, so contracts should include choice-of-law and choice-of-form classes
Arbitration is often preferred because it is:
None of the above: Arbitration is seen as a desirable alternative to the U.S. court-system by non-U.S. companies. In particular, discovery, jury trials, and punitive tort awards are seen as problematic.
Incoterms attempt to standardize shipping agreements, and they include:
descriptions of portside processes
Usually, it is reasonable to assume that foreign law:
will differ from U.S. law, and must be understood
Historically, gold has been used as a way for people to store value because of its:
purity and scarcity
Bretton Woods led to an exchange rate agreement known as the Bretton Woods System, or:
The Gold Exchange Standard
Financial forces such as inflation and taxation are considered uncontrollable because:
They are external forces beyond the influence of the firm, around which a manager can manage.
The forward currency market:
allows purchasers to lock in purchases of currencies at known rates
Market forces that set the relative prices of currencies are:
influenced by many forces, including forces external to business, such as world events.
Arbitrage functions to:
exploit price differences between markets, so as to profit with no risk
Purchasing power parity is a way to compare:
the purchasing power of several currencies.
Exchange rate forecasting is:
important, because exchange rates influence all aspects of business.
The three main approaches to exchange rate forecasting are:
the efficient market approach, the random walk hypothesis, and the pragmatic approach
The lowest corporate tax rates are found in:
Switzerland, Ireland, Singapore, and Russia
A vehicle currency is a currency:
used for international trade or investment
Monetary and fiscal policies:
influence interest rates and taxation, and so many influence exchange rates
The law of one price is that:
in an efficient market, like goods will have like prices
The Economist’s Big Mac index (May 2010) suggests that against the dollar, the Chinese yuan is:
quite undervalued, since the Chinese Big Mac is almost 50 percent less expensive than the U.S. dollar Big Mac
In general, with regard to exchange controls, developed countries:
rarely use them
The three major taxes governments use to generate revenue are:
VAT, income tax, and withholding tax
To fully understand why, how, and where they intend to do business, now and over time, managers must have:
a clear understanding of the company’s mission; a vision for how they intend to achieve the company’s mission; and understanding of how their company plans to compete with other companies
International strategy:
needs to be consistent among he various functions, products, and regional units of the company; needs to be consistent with the demands of the international competitive environment; is concerned with the way firms make fundamental choices about developing and deploying scarce resources internationally; has a goal of achieving and maintaining competitive advantage
According to the text, the firm’s ultimate manager of strategic planning is the:
firm’s chief executive officer
According to the text, the strategic planning process provides a formal structure in which managers will:
analyze the company’s external and internal environments; define the company’s business and mission
In analyzing the corporate controllable variables, management must address the question:
Who are the company’s target customers?
An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations and intended to determine where and to what extent value is added to the final product or service is known as:
value chain analysis
Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulae, and therefore difficult to transmit to others is known as:
A broad statement that defines the organization’s purpose and scope is known as a:
mission statement
Action plans to enable organizations to reach their objectives are known as:
competitive strategies
When there is strong pressure for a company to adapt its products or services for local markets, it should tend to use a:
multidomestic strategy
When a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets, it should tend to use a:
global strategy
Historically, more aspects of ______________ have been standardized and coordinated worldwide by companies than has been the case for other value chain activities such as ____________________.
manufacturing; marketing
have an objective of envisioning possible futures that might lie outside their traditional frame of reference.
Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm are know as:
contingency plans

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