INTRODUCTION TO INTERNATIONAL BUSINESS

Multiple choice Questions

Prepared by R. Viswanathan
1. Internationalization of businesses has accompanied all but one of the following :
(a)
(b)

(d)
(e)

relaxation of Political controls

relaxation of Economic controls
relaxation of immigration controls
relaxation of trade controls
relaxation of sense of cultural heterogeneity

2. Which one of the following does not qualify as an international business :

(a) A company exporting handlooms to Europe
(b) A company appending its products to another companys exports.
An insurance company with business abroad
(d) A franchisee of a foreign company regularly remitting royalties abroad
(e) A diamond house in Surat importing diamond from South Africa for processing them for sale
to exporters.
3. Rise of Globalization is promoted by all but one of the following factors :
a. Asserion of national identity
b. Growth of New political mindset
c. Growth if global media
d. technological advances
e .rise of new international institutions
4. Critics contend that globalization :
a. promotes sense of national identity
b. promotes national growth
c. promotes collaboration between nations
d. promotes economic inequality within nations
e. promotes political turmoil in nations.
5. Companies tend to go international for all but one of the following reasons
(a) ward off competitors possible moves
(b) learning about alien business conditions for future exploitation
exploit market opportunities
(d) strategic, promotional and goodwill opportunities
(e) overcoming trade barriers
6. Free trade, according to its critics, undermines:
(a) national business laws
(b) national cultural identity

(c) national defence

(d) national economic priorities
(e) national political freedoms
7. Free trade, it is also contended, is actually not so free because of all but one of the following :
(a)
(b)
(c)
(d)
(e)

political clout of some nations

economic clout of some nations
media power of some nations
trade laws of some nations
attractions of regional cooperation

8. World exports, as per 2009 data, is close to :

(a)
(b)
(c)
(d)
(e)

US $ 6 trillion
US $ 9 trillion
US $ 10 trillion
US $ 14 trillion
US $ 20 trillion

9. Which of the following is a situation in which trade is advantageous?

(a) Two countries produce the same goods for the same cost
(b) Two countries produce different goods for different costs
Two countries are isolated
(d) Two countries have the same markets
(e)Cant say : depends on many more factors
10. When one producer can create a given amount of output with fewer inputs, what exists?
(a) Comparative advantage
(b) Comparative disadvantage
(c) Absolute advantage
(d) Absolute disadvantage
(e) Competitive advantage
11. When one producer has a lower opportunity cost of production than another producer for a given item,
what exists?
(a)
(b)
(c)
(d)
(e)

Absolute disadvantage
Absolute advantage
Comparative disadvantage
Comparative advantage
Competitive advantage

12. Mechanic A can change a tyre in 1 hour and change a sparkplug in 2 hours. Mechanic B can change a
tyre in 0.5 hours and change a sparkplug in 0.25 hours. Who has the comparative advantage in changing
sparkplugs?
(a) Mechanic A
(b) Mechanic B
Neither
(d) Mechanic A if focus is on sparkplugs
(e) Mechanic B if focus is on tyres.
13. Farmer A can raise 10 bullocks and 20 goats in a year. Farmer B can raise 20 bullocks and 50 goats in a
year. Who has the comparative advantage for raising goats ?
(a) Need more information
(b) Both A and B
Farmer A
(d)Farmer B
(e)Question unanswerable
14. If there are two producers and two products, which of the following cannot happen?
(a)A producer has an absolute advantage on one product
(b) A producer has the comparative advantage on both products
A producer has the comparative advantage on one product
(d) A producer has an absolute advantage on both products
(e) and (d)
15. Comparative advantage is a term linked with:
a. Heckscher
b. Porter
c. Ricardo
d. Smith
e. Vernon
16. If a country A is worse than country B in production of both goods of trade, A is better off;
a. avoiding trade with B
b. trading with judicious combination of both goods
c. focus on trading in that good in which it is more efficient in production than B
d. focus on trading in that good in which it is less efficient in production than B
e. focus on trading in that good in which it is less inefficient in production than B
17. Which of the following below is only tantamount to service export
(a) export of products
(b)insurance companies foreign operations
foreign deputation of personnel
(d)portfolio investment abroad

(e) gains on international arbitraging activities

18. Which of the following is a service export for India
(a)
(b)

(d)
(e)

a Japanese tourist's visit to India

an Indian tourist's visit to Indonesia
the purchase in the U.K. of Indian shoes
an Indian's travel abroad on a U.S. airline
a U.S. consignment to India booked on an Indian vessel

19. Which one of the following is not services export:

(a) design services for projects abroad
(b) insurance business abroad
back-office operations for foreign companies
(d) teaching and coaching services
(e) export facilitation services
20. The top exporting nation, as per 2010 estimates, is ------, which accounts for ---- approximately
---------- % of all worlds exports.
(a)
(b)

(d)
(e)

China - 9 %
China - 13 %
Germany - 12 %
Germany - 9 %
U.S.A. - 8 %

21. Protectionism is tantamount to :

a. encouraging exports
b. discouraging imports
c. encouraging imports
d. a and b
e. a and c
22 . Which one of the following is a quantitative method of import restriction.
a. Administrative requirements
b. Countervailing duties
c. Phytosanitary conditions
d. Quotas
e. Tariffs
23. Dumping is countered by:
a. Ad valorem tariffs
b. Countervailing duties
c. EVRs
d. Quotas
e. Specific tariffs
24 .WTO is superior to GATT in that:

a.
b.
c.
d.
e.

It has more members

It is more efficient
It has less discretion
It has enforcement powers
It focusses on fewer commercial issues

25. In foreign exchange transactions, the bid rate is:

(a)
(b)

(d)
(e)

the rate at which the trader buys foreign exchange.

the rate at which buyer buys foreign exchange
the rate at which the trader sells foreign exchange
difference between the rate at which the foreign exchange trader buys and sells foreign currency.
(b) and (c)

26. Pegged exchange rate is one

(a) that is fixed in value
(b) that is locked onto the value of another currency
(c) that changes in value due to market forces.
(d) that is locked on to the value of basket of currencies
(e) (b) and (d)
27. If exchange rate of Indian rupee changes from Rs 45 to a dollar to Rs 45.20, rupee should be trading in
the forward market at :
(a)
(b)
(c)
(d)
(e)

discount
par
premium
none of the above
cant say with available information.

28. A kg of Colombian coffee sells for US $ 0.90/ in New York when the exchange rate is 2500 Colombian
pesos to one U.S. dolla . If the exchange rate changes to 3000 Colombian pesos to a US dollar, what
would be the cost of one kg of IColombian coffee in New York ?
a. US $ 0.75
b. US $ 0.90
c. US $ 1.00
d. US $ 1.08
e. US $ 1.25
29.. If an Indian company imports from a U.S. company and the import is denominated in U.S. dollars,
(a) the U.S. company would experience a gain if the rupee strengthens against the dollar.
(b) the Indian company would not result in a gain or a loss because the sale is denominated
in dollars, not rupees
the Indian company would experience a gain if the rupee strengthens against the dollar.
(d) imports result in translation exposures but not transaction exposures
(e) the Indian company would lose if rupee gains in value over the dollar

30. Business persons like which of the following most :

a. Fixed exchange rates
b. Floating exchange rates
c. Pegged exchange rates
d. Currency board arrangements
e. (b) or (c)

31. The Chinese currency is :

a. Yang
b. Yemen
c. Yen
d. Yon
e. Yuan
32. As Indian exports boom, one of the following might happen
(a) the Indian rupee would depreciate in value
(b) imports would boom too
inflation would rage in India
(d) the Indian rupee would appreciate in value
(e) any but

33. One objective of Regional Trade Agreements is :

a. Trade diversion
b. Trade creation
c. Trade Integration
d. Smuggling suppression
e. Countertrading
34. Members of which of the following allow free movement of products, people and investment among
themselves
a. Free trade area
b. Customs Union
c. Common Market
d. Economic Union
e. (c) and (d)

35. A U.S. company used to import cheap products from Thailand. However, the reduction in tariffs between
the U.S. and Mexico due to the passage of NAFTA now makes it cheaper to buy the same goods from
Mexican suppliers. This is an example of:
(a)
(b)
(c)
(d)
(e)

free trade
regional trade
regional cooperation
trade creation
trade diversion

36. One country below is not a member of ASEAN :

(f)
(g)
(h)
(i)
(j)

Malaysia
Singapore
Phillipines
China
Indonesia

37. Most likely combination of political and economic systems to be found in a country is :
(a) democratic and command
(b) authoritarian and command
democratic and capitalistic
(d) a and c
(e) b and c
38. Expropriation is :
a. Ownersip risk
b. Transfer risk
c. Operational risk
d. Financial risk
e. Not a risk at all
39. In Hofstedes model of cultures of nations, power distance pertains to
a. inequality of wealth
b. inequality of opportunity
c. inequality of status and position
d. inequality of educational levels
e. inequality on account of gender

40. Which was of the following modes of entry enables a company to overcome trade barriers to a foreign
market
(a)
(b)
(c)
(d)
(e)

Joint venture
Wholly-owned subsidiary
Indirect exporting
(a) or (b) but not (c)
(a) or (c) but not (b)

41. A company which wants to keep tight control of its operations, including technology, will consider only
one of the following modes of entry:
(a)Joint venture
(b) Wholly-owned subsidiary
(c) Licensing
(d) Indirect exporting
(e) Marketing subsidiary
42. BMW, the famous German car maker, is extremely zealous of its image of quality of manufacture.
How would it most likely enter a new market :

(a) Joint venture

(b) Wholly-owned subsidiary
Marketing franchise
(d) Exporting
(e) Wholly-owned marketing subsidiary
43 FDI is superior to Portfolio Investment in that it has the quality of
(a) Amount
commitment
growth
(d)returns
(e) volatility of returns
44. Tariff barriers can make one of the following uneconomic :
(a) Contract manufacturing
(b) Exporting
Franchising
(d) Licensing
(f) Joint Venture
45 Launching new products in other countries in a phased manner is called :
a. Trade approach
b. Sprinkler approach
c. Waterfall approach
d. Product adaptation approach
e. Phased Introduction approach
46. In international business standardization vis--vis adaptation debate is most relevant to
a. product policy
b. pricing policy
c. distribution policy
d. product and advertising policies
e. product and pricing policies
47. Which of the following is a cartel
(a) O.A.S.
(b) O.I.C
O.N.G.C.
(d) O.P.E.C.
(e) None of the above
48. A company which decides on a standardized approach to marketing strategy all across the world shows a
managerial orientation which is :
(a) transnational
(b) geocentric
(c) polycentric
(d) ethnocentric

(e) universal
49. Open political system rules out a concomitant
(a) capitalistic economy
(b) command economy
laissez faire economy
(d) mixed economy
(e) socialistic economy

50. Which one of the following is unrelated to economic environment of a country

(a) rate of inflation
(b) rate of population growth
(c) rate of unemployment
(d) rate of change in child mortality
(e) rate of growth of I.T. penetration
51. An economic system in which priority is given to individual goals than societal ones is
(a) command
(b) Capitalistic
mixed
(d) socialistic
(e) any but (b)
52. Which of the following is an example of off-shoring
(a) An Indian manufacturer uses components made in China.
(b) An Indian company contracts another Indian company to do work for it.
An Indian company has some of its products manufactured by its subsidiary in India
(d) An Indian company has some of its products manufactured by its subsidiary in Srilanka.
(e) A cruise line takes passengers among ports in several South-east Asian countries
53. Which of the following can be covered by a patent
(a)
(b)

(d)
(e)

Macdonalds s golden arches

Screen play of a movie
Design of a mechanical contraption
A musical score
None of the above

54. Of the five : Macdonalds golden arches, Nikes Just do it tagline

Pumas lunging leopard, Merril Lynchs raging bull and a rare picture of Mahatma Gandhi, which one ( or
more than one) qualifies as a trade mark :
(a)
(b)
(c)
(d)
(e)

All except Gandhi

All except Gandhi and Nikes tagline
Only Gandhi
Only Nikes tagline
Only Pumas lunging leopard and Merril Lynchs raging bull

55. A primary reason for adopting a _____ strategy is that in some cases, cultural, legal-political, and
economic conditions may dictate different practices for different countries.
Differentiation
Optimization
Low cost
Expansion
Penetration
56. One of the following is an advantage of a globally standardized advertising programme
(a) no need for language dubbing.
(b) possible rapid entry into different countries.

possible use of different brand names in different countries

(d) using the same ad agency for all countries.
(e) economy
57. Pull promotion strategy is likely be better than a push promotion strategy where
(a)
(b)

(d)
(e)

Self-service sales are predominant

Advertising is restricted
The price of the product is high relative to incomes
The literacy rate is very low.
and (d)

58. In which of the following cultures are workers most likely to prefer to work for their existing
organizations for a long time, rather than seeking advancement opportunities elsewhere?
(a) high power distance cultures
(b) high context cultures
high collectivist cultures
(d) high uncertainty avoidance cultures
(e) high apirational cultures
59. In a low context culture, there is a tendency for people to
(a) engage in a lot of preliminary communications before discussing business
(b) expect explicit and detailed instructions
give much value to body language
(d) (a) and (b)
(e) (b) and (c)
60. Expatriates are
(a) people working outside their home country
(b) locals from the country of the foreign subsidiary
either third-country nationals or locals
(d) naturalized citizen
(e) any loyal and willing worker

61. A company following home countrys HRM practices across all its world operations is exhibiting one of
the following orientations :
a. Geocentric
b. regiocentric
c. ethnocentric
d. polycentric
e. universal
62. FOB, as an international commercial term, stands for:
a. Ferry on board
b. First on board
c. Freight on board
d. Free on board
e. Forced on board
63. Presumption underlying a companys standard pricing strategy all over the world is :
(a)
(b)
(c)
(d)
(e)

that consumers are alike everywhere

markets are alike everywhere
price, for certain kinds of goods, means little anywhere
innovative and imaginative promotion takes care of pricing predicaments
any of the preceding

64. Which of the following is not considered an incentive for exports:

a. ASIDE
b. Brand rates
c. Deemed exports
d. Duty drawback
e. Input-output norms
65. Which one of the following was not a drawback of Indias import substitution strategy in the past.
(a)
(b)
(c)
(d)
(e)

it laid little store by efficiency

it put a premium on production of heavy engineering goods
it focused too much on BoP
it discouraged innovation
it generated pro-industry momentum

66. As of figures available for 2008, the number 1 destination of Indias merchandise exports is :
(a) U.S.A.
(b) European Union
(c) China
(d) Saudi Arabia
(e) U.A.E.
67. A company following home countrys HRM practices across all its world operations is exhibiting one of
the following orientations :
f. Geocentric

g.
h.
i.
j.

regiocentric
ethnocentric
polycentric
universal

68. A company raised 10 million dollars in the U.S.A. at 6% for a project in India. Because th interest rate
in India was 11 %. At that time one US dollar was equivalent to Rs 45. Shortly thereafter the rupee
underwent 6 % devaluation. What, consequently, was the real cost of capital for that company ?
(a)
(b)
(c)
(d)
(e)

5.4 %
6%
12.0 %
12.4%
12. 7%

69. Global brand name for a companys product requires fulfillment of all but one of the following
Conditions
(a)
(b)
(c)
(d)
(e)

standardixed product strategy

standardized distribution strategy
standardized pricing strategy
standardized advertising theme
standardized quality standard

70. A payment practice in which a buyer is accorded credit period for payment is :
(a)
(b)
(c)
(d)
(e)

Letter of credit ( Irrevocable)

Sight draft
Usance draft
Bill of exchange
(b) and (c)

71. A new machine has been launched with a new logo and a slogan and a particular style of description of
the machine. The machine, the slogan and style of description are all protected by IPRs. They respectively
are
b.
c.
d.
e.
f.

Patent copyright trademark

Patent Trademark Copyright
Copyright trademark patent
Copyright Patent Trademark
Trademark patent copyright

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