Question 1

Which of the following statements is true of the Maastricht Treaty of Europe?
A) Its purpose was to liberalize trade between countries so that businesses could plan for one market rather than for three separate markets.
B) Its purpose was to transform twelve different economies and currencies into one common economic market with one common currency.
C) Its purpose was to eliminate most product tariffs and prevent the member countries from increasing existing tariffs or introducing new ones.
D) Its purpose was to permit free movement between nations, creating a common infrastructure that includes an interoceanic highway.

Accepted Answer

The Maastricht Treaty, also known as the Treaty on European Union, was signed in 1992 with the aim of creating a single economic and monetary union in Europe. This involved the transformation of twelve different economies and currencies into one common economic market with one common currency, the Euro. The treaty established criteria for countries to meet before joining the common currency and provided for coordination of economic and fiscal policies among member countries.

Question 2

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.
A) Joint ventures
B) Strategic alliances
C) Global new ventures
D) Global new acquisitions

Accepted Answer

Global new ventures are new companies that have a global strategy in place right from the start, with sales, employees, and financing in different countries. Joint ventures and strategic alliances involve partnerships between two or more companies, but they may not necessarily have a global strategy from the beginning. Global new acquisitions refer to companies that have been acquired by a larger multinational corporation and may not necessarily be new companies.

Question 3

Pinkmake Inc. is expanding its global operations into Jartainia in spite of the frequent changes in its government due to the assassination attempts on its prominent leaders. As Pinkmake Inc. expands into Jartainia, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The assassination attempts on prominent leaders in Jartainia have resulted in political uncertainty, which could potentially affect Pinkmake Inc.'s operations and investments in the region.

Question 4

Ritzuo Corp. is going to send its employees to China for a business venture, so it is training all its employees about Chinese culture. The trainees are asked to explore a nearby neighborhood and talk to the residents about Chinese politics, customs, and day-to-day living. In the context of preparing for an international assignment, when would this type of training be given to employees?
A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Accepted Answer

This type of training, where employees explore a nearby neighborhood and talk to residents, is most likely a field simulation, where they are given the opportunity to experience and learn from real-life situations in the context of the country they will be going to. Documentary training involves watching videos or documentaries about the country, while cultural simulations are role-playing exercises that provide experiences of what it’s like to interact with people from the host country. Adaptive screening is a process of determining an employee’s suitability for international assignments based on psychological, emotional, and social criteria.

Question 5

Westburn Inc., a fast food restaurant in the state of Beachden, starts its chain of restaurants in the state of Valcoast. It customizes its menu for the customers in Valcoast. This scenario is an example of__________.
A) global consistency
B) local adaptation
C) licensing
D) franchising

Accepted Answer

Local adaptation refers to customizing a company's products or services to meet the unique needs and preferences of consumers in a particular market or location. In this scenario, Westburn Inc. is adapting its menu to cater to the customers in Valcoast, indicating local adaptation. Global consistency means offering the same products and services in all markets, while licensing refers to granting permission to another party to use a company's intellectual property, and franchising involves giving rights to another party to use a company's business model and brand name.

Question 6

Which of the following is the most important factor in determining the success and failure of an international assignment?
A) The willingness of an expatriate's spouse to leave his or her present job
B) How fluent an expatriate is in foreign languages
C) An expatriate's willingness to go for a preassignment trip
D) How well an expatriate's spouse and family adjust to the foreign culture

Accepted Answer

The most important factor in determining the success and failure of an international assignment is the adjustment of an expatriate's spouse and family to the foreign culture. This is because the wellbeing and support of the spouse and family play a crucial role in the expatriate's adjustment and overall success in the assignment. The willingness of the spouse to leave their present job or the fluency of the expatriate in foreign languages are important but are not the most crucial factors in determining assignment success. A pre-assignment trip can help but is not as important.

Question 7

Which of the following is a disadvantage of exporting?
A) The companies exporting products lose their control over the quality of the products.
B) It makes the exporting company dependent on sales in its home market.
C) Transportation costs can significantly increase the price of an exported product.
D) Exporting tends to dilute the brand's reputation through overexposure.

Accepted Answer

Transportation costs can significantly increase the price of an exported product, making it less competitive in foreign markets.

Question 8

American employees of Ujima Corp. learned that they should avoid using their left hand when giving a gift or handing out money when they were in India for their business assignment. In the context of cross-cultural training, when would the employees of the company have discovered this cultural difference?
A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Accepted Answer

The answer of American employees of Ujima Corp. learned that...

Question 9

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?
A) Political uncertainty
B) Purchasing power
C) Organizational structure
D) Land availability

Accepted Answer

Purchasing power helps companies determine the growth potential of foreign markets as it indicates the ability of consumers in that market to buy goods and services. Political uncertainty, organizational structure, and land availability may also be important factors in assessing foreign market potential, but they do not necessarily directly indicate growth potential.

Question 10

Lakeri Inc. is expanding its global operations into South Fordland in spite of the allegations made against its prominent leaders to have had criminal connections. As Lakeri Inc. expands into South Fordland, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The allegations of criminal connections made against the leaders of Lakeri Inc. could result in political uncertainty as they expand into South Fordland. This could potentially lead to challenges with government regulations, licensing, and contracts, and affect the company's reputation and relationship with stakeholders.

Question 11

Primo Call Inc., a cell phone manufacturing company, has collaborated with Tech Friend Inc., a computer manufacturing company, to start a third company under the name of Primo Tech Inc. This new company will manufacture mobile devices such as tablets, smart watches, and handheld video game consoles. In this context, Primo Tech Inc. is a _____.
A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Accepted Answer

Primo Tech Inc. is a joint venture, which is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task, such as creating a new company.

Question 12

PreFab, a clothing company is selling its goods in the country of Irmana. The clothing is manufactured in PreFab's home country and a tax is levied on it by the government of Irmana. This form of business is an example of _____.
A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Accepted Answer

The situation described is an example of exporting, which involves selling goods produced in one country to customers in another country. Direct foreign investment, licensing, and protectionism all involve different forms of international business activity.

Question 13

A franchise is a collection of networked firms in which the manufacturer or marketer of a product or service licenses the entire business to another person or organization called the _____.
A) licensee
B) franchisor
C) licensor
D) franchisee

Accepted Answer

The franchisee is the person or organization to whom the franchisor licenses the entire business. The options A, B, and C are other parties involved in a franchise, but none of them are the ones receiving the license to operate the business.

Question 14

One of the advantages of a__________is that the founding companies bear only part of the costs and the risks of that business.
A) business acquisition
B) direct foreign investment
C) direct export
D) joint venture

Accepted Answer

In a joint venture, two or more companies collaborate to create a new business, allowing each company to share the costs and risks. This reduces the financial burden on the founding companies and helps them diversify their portfolio without investing a significant amount of money or resources. On the other hand, in business acquisition, a company acquires another company, which may involve a large investment and substantial risks. Direct foreign investment involves establishing a subsidiary or acquiring an existing company in a foreign country, while direct export involves selling goods produced in one country to another country without involving an intermediary. Neither of these options allows for shared costs and risks as joint ventures do.

Question 15

Which of the following is a regional trade agreement between most European countries?
A) The Maastricht Treaty of Europe
B) The Single European Act
C) The EEC and EURATOM treaties
D) The Treaty of Brussels

Accepted Answer

The answer of Which of the following is a regional...

Question 16

Jimland's government has severe restrictions toward the entry of foreign companies into the country. A foreign company interested in Jimland would have to purchase an existing company in order to conduct its business there. Hence, companies can only enter Jimland through a _____.
A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Accepted Answer

The only option that corresponds with the government's restrictions towards foreign companies is direct foreign investment, which requires the purchase of an existing company in Jimland. Strategic alliances and joint ventures involve some form of business collaboration, while direct export does not involve setting up a physical presence in the country.

Question 17

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.
A) Political conflict
B) Political uncertainty
C) Political failure
D) Political corruption

Accepted Answer

Political uncertainty refers to the risk of major changes in political regimes that can be caused by various events such as war, revolution, death of political leaders, social unrest, or other influential events. This uncertainty can lead to destabilization and unpredictability in politics, which can have significant economic and social consequences.

Question 18

Jimpeg, a manufacturer of imaging and optical products based in the U.S., operates under the name of Pixpem and SetJpeg in six different countries. The company operates using different names, but it sells the same products in every country. The revenue generated in the different countries goes back to the parent company. Which of the following methods for conducting global business has Jimpeg used in this scenario?
A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Accepted Answer

Wholly owned affiliates refer to a company's subsidiaries that are wholly owned by the parent company. In this scenario, Jimpeg has established subsidiaries in six different countries and operates under different names, selling the same products. The revenue generated by these subsidiaries goes back to the parent company, indicating that these are wholly owned affiliates.

Question 19

Metzen Corp., a U.S.-based clothing company, plans to open a branch in Japan by sending its American employees there. Before doing so, the company educates its employees about Japan with the help of pictures, audiobooks, and video recordings to present real-world situations. In the context of preparing for an international assignment, when would this type of training be given to employees?
A) During documentary training
B) During cultural simulation
C) During field simulation
D) During adaptive screening

Accepted Answer

This type of training is called cultural simulation, which involves the use of pictures, audiobooks, and video recordings to give employees a realistic idea of what to expect when working in a foreign country. This type of training would typically be given before the employees are sent to Japan, in order to prepare them for the cultural differences they may encounter.

Question 20

Political uncertainty is the risk associated with:
A) policies affecting foreign companies.
B) changes in government policies.
C) social unrest.
D) changes in law.

Accepted Answer

The answer of Political uncertainty is the risk associated with:
A)...

Quiz 8: Global Management

Which of the following statements is true of the Maastricht Treaty of Europe?

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.

Pinkmake Inc. is expanding its global operations into Jartainia in spite of the frequent changes in its government due to the assassination attempts on its prominent leaders. As Pinkmake Inc. expands into Jartainia, it must deal with _____.

Westburn Inc., a fast food restaurant in the state of Beachden, starts its chain of restaurants in the state of Valcoast. It customizes its menu for the customers in Valcoast. This scenario is an example of__________.

Which of the following is the most important factor in determining the success and failure of an international assignment?

Which of the following is a disadvantage of exporting?

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?

Lakeri Inc. is expanding its global operations into South Fordland in spite of the allegations made against its prominent leaders to have had criminal connections. As Lakeri Inc. expands into South Fordland, it must deal with _____.

PreFab, a clothing company is selling its goods in the country of Irmana. The clothing is manufactured in PreFab's home country and a tax is levied on it by the government of Irmana. This form of business is an example of _____.

A franchise is a collection of networked firms in which the manufacturer or marketer of a product or service licenses the entire business to another person or organization called the _____.

One of the advantages of a__________is that the founding companies bear only part of the costs and the risks of that business.

Which of the following is a regional trade agreement between most European countries?

Jimland's government has severe restrictions toward the entry of foreign companies into the country. A foreign company interested in Jimland would have to purchase an existing company in order to conduct its business there. Hence, companies can only enter Jimland through a _____.

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

Political uncertainty is the risk associated with: