POST TEST 1 –

INTRODUCTION TO INTERNATIONAL
1. The multinational companies which were producing the
products in their home countries and marketing them in
various foreign countries before 1960s, started locating their
plants and other manufacturing facilities in foreign/host
countries.
FALSE

2. Manufacturers and distributors also look for foreign capital,

technologies and information that they can use at home, to
increase their costs.
FALSE

3. The guiding principles of a firm engaged in (or commencing)

international business activities should incorporate a global
perspective
TRUE

4. The world economy is not only interdependent but also inter-

linked, and any kind of R&D taking place in any part of the
world has its impact on the entire global economy.
TRUE

5. The cultural differences, is one of the most difficult problems

in international marketing. Many domestic markets,
however, are also not free from cultural diversity.
TRUE

6. The decision process that normally starts in the marketing

strategy area is an iterative one.
TRUE
7. International business is all commercial transactions private
and governmental between two or more countries.
TRUE

8. Global companies have invested and are present in many

countries. They market their products through the use of the
same coordinated image/brand in all markets.
TRUE

9. Public companies undertake such transactions for profits;

governments may or may not do the same in their
transactions. These transactions include sales, investments
and transportation.
FALSE

10. International business houses need accurate

information to make an appropriate decision.
TRUE

11. In a very real sense, international business involves the

broadest and most generalised study of the field of business,
adapted to a fairly unique across the border environment.
TRUE

12. Incorporating an international outlook into the firm’s

basic statement of purpose will help focus the attention of
managers (at all levels of the organisation) on the
opportunities (and hazards) outside the domestic economy.
TRUE

13. The distinguishing feature of international business is

that international firms operate in environments that are
highly uncertain and where the rules of the game are often
 ambiguous, contradictory, and subject to rapid change, as
compared to the domestic environment.
TRUE

14. To operate within a company’s external environment, its

managers should have in addition to knowledge of business
operations, a working knowledge of basic social sciences,
political sciences, law, anthropology, sociology, psychology,
economies and geography.
TRUE

15. A Multinational Corporation (MNC) or Multinational

Enterprise (MNE) is a corporation enterprise that manages
production or delivers services in more than one country. It
can also be referred to as an international corporation.
TRUE

16. Transnational companies are much more simple

organizations. They have invested in foreign operations,
have a central corporate facility but give decision-making,
R&D and marketing powers to each individual foreign
market.
FALSE

17. The size of the international business should be large in

order to have impact on the foreign economies. Most of the
multinational companies are significantly large in size.
TRUE

18. Multinational companies have investment in other

countries, but do not have coordinated product offerings in
each country.
TRUE
 19. The political and legal environment of foreign markets
is the same from that of the domestic. The complexity
generally increases as the number of countries in which a
company does business increases.
FALSE

20. The study of international business focuses on the

particular problems and opportunities that emerge because
a firm is operating in one country.
FALSE

POST TEST 2 –
CLASSICAL INTERNATIONAL TRADE T
1. The most serious shortcoming of classical trade theory is
that they ignore the marketing aspect of trade.
TRUE

2. The higher cost of production will increase its

competitiveness enabling the firm to make an easy entry to
the export market.
FALSE

3. The first stage of development, as Rostow sees it, is an age

of mass consumption when there is a shift to consumer
durables in all sectors and when the populace achieves a
high standard of living as evidenced through the ownership
of such sophisticated goods as automobiles, televisions and
appliances.
FALSE
4. Immigration laws in most countries severely limit the
freedom of movement of labour between the countries. As a
result, production cost and product prices are completely
equalised across countries.
TRUE

5. The concept of mercantilism incorporates two fallacies. The

first was the incorrect belief that old or precious metals have
intrinsic value, when actually they cannot be used for either
production or consumption.
TRUE

6. Rostow saw traditional society as a static economy, which he

likened to the pre-1700s attitudes and technology
experienced by the world’s current economically developed
countries.
TRUE

7. More meaningful are relative production costs, which

determine whether trade should take off and what items to
export or import.
FALSE

8. The studies conducted by Leontief revealed that the United

States actually exports labour intensive goods and imports
capital-intensive products.
TRUE

9. According to Ricardo’s Principle of Relative (or Comparative)

Advantage, a country may be better than another countries
in producing many products but should only produce what it
produces the best.
TRUE
10. The concepts of absolute advantage and comparative
advantage were used in a subsequent theory development
by John Stuart Mill who looked at the question of determining
the value of import goods and developed the concept of
terms of trade.
FALSE

11. Adam Smith was the second economist to investigate

formally the rationale behind foreign trade.
TRUE

12. The takeoff stage of growth occurs, according to

Rostow, over a period of twenty to thirty years and is marked
by major transformations that stimulate the economy.
TRUE

13. According to the principle, a country should export a

commodity that can be used at a lower cost than can other
nations.
TRUE

14. Mercantilism became popular in the late eighteenth and

early eighteenth centuries in Western Europe and was based
on the notion that governments (not individuals who were
deemed untrustworthy) should become involved in the
transfer of goods between nations in order to increase the
wealth of each national entity.
FALSE

15. Several studies have investigated the validity of the

classical trade theories. There are several classical trade
theories like the Adam Smith Theory, Classical Economic
 Theory, Theory of Mercantilism, Absolute and Comparative
advantage theories, Factor Notes Endowment Theory, etc.
TRUE

16. One limitation of classical trade theory is that the

factors of production are assumed to remain constant for
each country because of the assumed mobility of such
resources between countries. Labour, as a factor is relatively
immobile.
TRUE

17. Import value is determined according to how much of a

domestic commodity each country must exchange to obtain
an equivalent amount of an imported commodity.
FALSE

18. The Ricardian Model of Comparative Cost is based on

only on production. Manufacturing centres can move from
the developed to the developing countries, which have high
labour cost.
FALSE

19. The aims of the governments were to facilitate and

support all exports while limiting imports, which was
accomplished through the conduct of trader by government
monopolies and intervention in the market through the
subsidization of domestic exporting industries and the
allocation of trading rights.
TRUE

20. The value of the product to be obtained in the

exchange was stated in terms of the amount of products
produced domestically that would be take-off in exchange.
FALSE
POST TEST 3 –
MODERN THEORIES OF INT

1. Increasing returns to scale provide a justification for trade for

reasons other than comparative advantage, since firms will
have the incentive to produce and export in order to lower
costs by attaining greater scale economies; an example of a
industry where this is an important issue is the commercial
airframes industry.
TRUE

2. Production cost tends to be decreasing at this stage because

by this time the innovating firm will normally have improved
the production process.
TRUE

3. Stage 1 depicted as time 0 on the left of the vertical

importing/ exporting axis, representing a regular and highly
familiar product life cycle in operation within its original
market.
FALSE

4. The largest area of weakness in classical theory is that while

we considered all resource units used in production, the only
costs considered by classical economists were those
associated with labour.
TRUE

5. As the world economy is opening up, factors of production

are becoming more mobile.
TRUE
 6. Countries with similar cultures and economic conditions are
often perceived by the exporters as posing more risk and
thus are approached first before proceeding to less familiar
territory.
FALSE

7. In real world, labour is a homogenous factor.

FALSE

8. USA and Japan are highly industrialized; both have similar

demand characteristics viz. computers, software, air-
conditioners, internet, fashion garments etc.
TRUE

9. As per Human Capital Theory, the export or import will

depend on the availability of skilled or unskilled labour.
TRUE

10. Irreversible investments induce an asymmetry between

entry and exit costs, and can therefore lead to “hysteretic”
responses to price or quantity shifts.

TRUE

11. The global product life cycle theory puts forth a

different explanation for the fundamental motivations for
trade between and among nations.
FALSE

12. Innovations are most likely to occur in highly developed

countries because consumers in such countries are affluent
and have relatively unlimited want.
TRUE

13. The national product life cycle theory has been found to
hold primarily for such products as consumer durables,
synthetic fabrics, and electronic equipment, that is, those
products that have long lives in terms of the time span from
innovation to eventual high consumer demand.
 FALSE

14. Worldwide Imitation: This stage means tough times for

the innovating nations because of its continuous decline in
exports.
TRUE

15. It is also found that countries at similar levels of

economic development have similar demand characteristics.
TRUE

16. Firms in both the countries are highly export

competitive because they have already grown big by first
catering to the domestic demand that is why the trade
between the USA and America is so substantial. This theory
explains how an industrialized country grows rapidly in its
economic growth.
FALSE

17. Firms within an oligopoly must be keenly aware of the

actions, market reach, and activities of their competitors.
TRUE

18. A domestic industry can flourish and reach

commercially optimal level of production if the domestic
demand is large enough.
TRUE

19. One limitation of classical trade theory is that the

factors of production are assumed to change for each
country because of the assumed mobility of such resources
between countries
FALSE
20. The final determinant of whether a firm wants to move
abroad is based in a cost benefit analysis.
TRUE

POST TEST 4 –
INTERNATIONAL BUSINESS ENVIRO
1. A technology with important implications for business in
the Internet sometimes referred to as “the information
superhighway.” The Internet is a global web of more than
25,000 computer networks. It provides a quick,
inexpensive means of global communication (i.e. with
strategic alliance partners) and access to information.
TRUE

2. Environmental factors are external effects that cannot be

managed. Because environmental factors cannot be
managed they must be anticipated and analyzed.
TRUE

3. Sub-cultural influences concern differences in values

among different groups within a country that distinguish
them from society as a whole.
TRUE

4. Modems are important for connecting personal computers

to phone lines that help gain access to the Internet. The
technology in the manufacture of modems has advanced
rapidly. Their speed may only be curtailed by the limits of
conventional phone lines. Encyclopedia Britannica Inc. is
using the Internet to revive its business.
TRUE

5. Attitudes and beliefs are but time is not an element of

culture that concerns the international marketer.
FALSE

6. The influences of the religious, family, educational and

social systems of a society on the business system
comprise the cultural dimension of our picture. Because
cultural attitudes vary so much among countries, it is
harder to find general patterns here than for the economic
dimension
TRUE
7. As decreasing numbers of consumers from all over the
world come in contact with the material goods and
lifestyle of people living in other countries and as the
number of middle-class consumers grows in developing
countries, marketers are eager to locate these new
customers and to offer them their products.
FALSE

8. Religions are a major determinant of the moral and ethical

standards that play a large part in the Notes business
process.
TRUE

9. A market allocation system is one that relies on

consumers to allocate resources. Consumers “write” the
economic plan by deciding what will be produced by
whom. The role of the state in a market economy is to
promote competition and ensure consumer protection.
TRUE

10. In understanding, analyzing and predicting consumer

behaviour for marketing management purposes, the role
of culture has always been given a prominent role in
consumer behavior studies, which in turn are expected to
facilitate the effectiveness of marketing management
efforts. In the post-Second World War years, with the
adoption of marketing concepts, marketers started
imparting greater consumer orientation to their marketing
efforts.
TRUE

11. There are three types of economic systems: capitalist,

socialist, and mixed. This classification is based on the
dominant method of resource allocation: market
allocation, command or central plan allocation, and mixed
allocation, respectively.
TRUE
12. Culture is specific to a context. Different countries have
different cultures; hence, consumer behaviour also differs
in different countries.
TRUE

13. Marketers often make the strategic error of assuming

that since domestic consumers like a product, consumers
in other countries would naturally like it.
TRUE

14. The global manager must understand what aspects of a

culture will resist change and how the areas of resistance
differ among cultures, how the process of change takes
place in different cultures and how long it will take to
implement change.
FALSE

15. Host country’s ethic minorities’ needs and wants should

also be analysed by a foreign company.
TRUE

16. When managers make purchase decisions, they seem

to take into consideration the countries of origin of the
brands that they are assessing. Consumers frequently
have specific attitudes or even preferences for products
made in particular countries. This country of origin
influence how consumers rate quality and sometimes,
which brands they will ultimately select.
FALSE

17. The basic pattern of the family relationships in the Latin

American countries is based on equality.
FALSE

18. Region and religion, both are important determinants of

cultural values.
TRUE
 19. Cross-cultural analysis helps marketers determine to
what extent the consumers of two or more nations are
similar or different. The greater the similarity between
consumers, the more feasible it is to use relatively similar
strategies in each country.
TRUE

20. In some cultures, particularly those with high stratified

and hierarchical societies, there is a tendency to avoid
personal responsibility and to work according to precise
instructions received from supervisors that are followed by
the latter.
TRUE

QUIZ 1 –
INTRODUCTION TO INTERNATIONAL BUSI
1. __________ companies’ sales are dependent on (a) the
consumers’ interest in their products or service and (b) the
consumers’ willingness and ability to buy them.
EXPAND SALES

2. The __________ differences, is one of the most difficult

problems in international marketing. Many domestic
markets, however, are also not free from cultural diversity.
CULTURAL

3. A company has entered into an international market for

__________ reasons if it is looking to counter advantages that
a competitor might gain in foreign market.
DEFENSIVE

4. The study of __________ business focuses on the particular

problems and opportunities that emerge because a firm is
operating in more than one country.
INTERNATIONAL

5. __________ Business: The exchange of goods and services

among individuals and businesses in multiple countries.
 INTERNATIONAL

6. __________ explains why countries exchange goods and

services with each other.
ECONOMICS

7. _________ companies have investment in other countries, but

do not have coordinated product offerings in each country
MULTINATIONAL

8. With the growth of international business, the world has not

only become independent but also __________.
INTERLINKED

9. __________ companies have invested and are present in many

countries. They market their products through the use of the
same coordinated image/brand in all markets.
GLOBAL

10. __________ manufacturers and distributors also look for

foreign capital, technologies and information that they can
use at home, to reduce their costs.
ACUIRE RESOURCES

11. __________ explains among others, why countries

exchange goods and services with each other, why capital
and people travel among countries in the course of business
and why one country’s currency has a certain value
compared to another’s.
ECONOMICS

12. __________ includes regulations in both the home and

host countries on issues such as taxation, employment and
foreign exchange transactions.
DOMESTIC LAW

13. The purchasing power is __________ for the world as a

whole as compared to a single country
 HIGHER

14. __________ Environment: The immediate competitive

context in which an organisation or enterprise operates.
COMPETITIVE

15. _________ are responsible for the popularity of FDI.

MULTINATIONAL ENTERPRISES

16. __________ environments of host countries influence the

investment decision of foreign firms.
SOCIO CULTURAL, POLITICAL, AND ECONOMIC

17. __________ companies seek out foreign markets to

minimise swings in sales and profits arising out of business
cycle recessions and expansions which occur differently in
different countries.
MINIMISE RISK

18. __________ companies are much more complex

organizations. They have invested in foreign operations,
have a central corporate facility but give decision-making,
R&D and marketing powers to each individual foreign
market.
TRANSNATIONAL

19. __________ Investment: Investment by a company in a

country other than that in which the company is based.
FOREIGN DIRECT

20. __________ law in the form of legal agreements between

two countries governs how the earnings are taxed by both.
INTERNATIONAL

QUIZ 2 –
CLASSICAL INTERNATIONAL TRADE THEO
1. According to __________, a country may be better than
another countries in producing many products but should
only produce what it produces the best.
RICARDO’S PRINCIPLE OF RELATIVE ADVANTAGE

2. __________: A country has a comparative advantage in the

production of a good or service that it produces at a lower
opportunity cost than its trading partners.
PRINCIPLE OF COMPARATIVE ADVANTAGE

3. According to Hecksher-Ohlin Theory, the range of products

made or grown for export would depend on the relative
availability of __________ in each country.
DIFFERENT FACTORS

4. The __________ is based on only on production. Manufacturing

centres can move from the developed to the developing
countries, which have low labour cost.
RICARDIAN MODEL OF COMPARATIVE COST

5. __________: It refers to the exchange of capital, goods, and

services across international borders or territories.
INTERNATIONAL TRADE

6. According to __________ advantage principle, a country may

be better than other countries in producing many products
but should only produce what it produces the best.
RELATIVE

7. According to his __________ theory, the returns generated by

use of the factors would be the same in all countries.
SAMUELSON’S

8. During Mercantilism, __________ was defined as an

accumulation of previous metals, especially gold.
 WEALTH

9. The most serious shortcoming of __________ is that they

ignore the marketing aspect of trade.
CLASSICAL THEORY TRADE
Classical trade theory ---

10. One limitation of __________ is that the factors of

production are assumed to remain constant for each country
because of the assumed mobility of such resources between
countries. Labour, as a factor is relatively immobile.
CLASSICAL THEORY TRADE

11. __________: The theory claims that leaving individuals to

make free choices in a free market results in the best
allocation of scarce resources within an economy and the
optimal level of satisfaction for individuals.
CLASSICAL ECONOMIC

12. __________: It is an economic theory, which states that

the relative prices for two identical factors of production in
the same market will eventually equal each other because of
competition.
FACTOR PRICE EUALIZATION

13. All nations attempt to correct their trade deficit

positions by increasing exports or reducing imports so that
outflow of goods balances the inflow. This is referred to as
__________.
BALANCE OF TRADE

14. __________: A country has an absolute advantage over it

trading partners if it is able to produce more of a good or
service with the same amount of resources or the same
amount of a good or service with fewer resources.
ABSOLUTE ADVANTAGE
15. The Classical theories do not recognise the importance
of technology and expertise in the areas of __________ and
management.
MARKETING

16. __________: It is a body of economics thought popular

during the mid 16th and late 17th centuries that held that
money was wealth, accumulation of gold and silver was the
key to prosperity, and one nation’s gain was another’s loss.
MERCANTILISM

17. __________: It is a term used to describe a policy regime

which encourages exports, discourages imports, controls
capital movement and centralizes currency decisions in the
hands of a central government.
NEOMERCANTILISM

18. __________: A trade theory which holds that nations will

produce and export products that use large amounts of
production factors that they have in abundance and will
import products requiring a large amount of production
factors that they lack.
FACTOR ENDOWMENT

19. According to Absolute advantage principle, a country

should __________ a commodity that can be used at a lower
cost than can other nations.
EXPORT

20. The Traditional theory assumes that there is __________

competition among trading partners.
PERFECT

QUIZ 3 –
MODERN THEORIES OF INTERNATIONAL T
1. __________: It describes the policy certain countries adopt
in order to affect the outcome of strategic interactions
between firms in an international oligopoly, an industry
dominated by a small number of firms.
STRATEGIC TRADE THEORY

2. Product __________ can result in intra industry trade.

DIFFERENTIATION

3. The __________ puts forth a different explanation for the

fundamental motivations for trade between and among
nations.
INTERNATIONAL PRODUCT LIFE CYCLE

4. __________: It is a measure of a worker’s expertise,

specialisation, wages, and supervisory capacity.
SKILL

5. The Identical Preference theory is too simplistic in that it

deals only with two commodities and two __________
COUNTRIES

6. __________ are considered now more mobile than

previously assumed but their mobility is still considered
restricted.
PRODUCTION FACTORS

7. __________: Real world competition that is less effective in

lowering price levels nearer to the cost levels than the
theoretical perfect competition.
IMPERFECT COMPETITION

8. __________: A state of limited competition, in which a

market is shared by a small number of producers or
sellers.
OLIGOPOLY
9. __________: Reduction in cost per unit resulting from
increased production, realized through operational
efficiencies.
INCREASED RETURNS TO SCALE

10. The __________ concludes that patterns of international

trade and location were predetermined for a broad group
of manufacturers by the relative abundance of skilled and
unskilled labour.
HUMAN CAPITAL THEORY

11. As with __________, models of imperfect competition in

international trade predict an increase in domestic
producer surplus (and a decrease in domestic consumer
surplus) as a result of price or quantity restrictions
CONVENTIONAL TRADE MODELS

12. The __________ puts forth a different explanation for the

fundamental motivations for trade between and among
nations.
INTERNATIONAL PRODUCT LIFE CYCLE THEORY

13. Some economists believe that firms within an oligopoly

enter __________ merely as a competitive response to the
actions of an industry leader and to equalize relative
advantages
FOREIGN MARKETS

14. __________ is an effect of a purchase or use decision by

one set of parties on others who did not have a choice and
whose interests were not taken into account.
EXTERNALITY

15. __________: The value of a country’s total exports minus

the value of its total imports.
NET EXPORTS

16. __________: Able to provide for oneself without the help

of others.
 SELF-SUFFICIENCY

17. As per __________, a domestic industry can flourish and

reach commercially optimal level of production if the
domestic demand is large enough.
IDENTICAL PREFERENCE THEORY

18. __________: A model which suggest that products go

through a cycle whereby high income, mass consumption
countries go through a cycle of exporting, loss of exports
to final importers of products.
INTERNATIONAL PRODUCT LIFE CYCLE THEORY

19. The Identical Preference theory assumes that each

country had as its objective __________
FULL PRODUCTION EFFICIENCY

20. __________ describes the policy certain countries adopt

in order to affect the outcome of strategic interactions
between firms in an international oligopoly, an industry
dominated by a small number of firms.
STRATEGIC TRADE THEORY

QUIZ 4 –
INTERNATIONAL BUSINESS ENVIRONMENT
1. The most important characteristic of the __________ is
the economic dimension. It includes the analysis of the
world economic systems, development status of the
countries, the purchasing power across nations and
income of the population.
INTERNATIONAL MARKET ENVIRONMENT
2. __________ are instruments that connect computers to
the phones that help access the internet.
MODEM

3. __________: In this, the citizens are consulted from time

to time to know their opinions.
PARLIAMENTARY GOVERNMENT

4. As there is a __________, there are various legal

environments: domestic, foreign and international.
MULTIPLICITY OF POLITICAL ENVIRONMENT

5. A __________ is defined as a group of people willing to

buy a particular product.
MARKET

6. __________: Religion is one of the important social

institutions influencing business. A few religions have
spread over large areas in the world.
RELIGION

7. __________ is a system of values and norms that are

shared among a group of people and that when taken
together constitute a design for living.
CULTURE

8. The major challenges facing the __________ today are

coping with change, understanding complexity of the
changing markets, dealing with competition and
performing social responsibilities.
INTERNATIONAL MARKETERS

9. The __________ is an important environmental factor

that should be analysed while formulating business
strategies. The cost of ignoring the customs, traditions,
taboos, tastes and preferences, etc., of people could be
very high.
SOCIO-CULTURAL FABRIC
10. __________: In this, the ruling government dictates
the policies without considering citizens’ opinions.
ABSOLUTIST GOVERNMENT

11. __________: Culture is, the thought and behaviour

patterns that member of a society learns through
language and other forms of symbolic interaction their
customs, habits, beliefs and values, the common
viewpoints, which bind them together as a social entity.
CULTURE

12. __________: It states that the exchange rate

between one currency and another is in equilibrium
when their domestic purchasing powers at that rate of
exchange are equivalent.
PURCHASING POWER PARITY

13. __________: It is the total value of all final goods

and services produced within a nation in a particular
year
GROSS NATIONAL PRODUCT

14. _________ is sometimes referred to as ‘the

information super highway’.
INTERNET

15. Given the rapid pace of __________, it is vital that

firms carefully study different elements in the
technological segment.
TECHNOLOGICAL CHANGE

16. Majority of the MNCs have to face complex

__________ because they must cope with the politics of
more than one nation. In order to analyse the political
scenario of the nations the companies must know the
type of political system that exists in that nation.
POLITICAL ENVIRONMENTAL PROBLEMS
17. __________: Confiscation is the process of a
government’s taking ownership of a property without
compensation.
CONFISCATION

18. __________ influence every aspect of overseas

business of an MNC and successful MNC operations –
whether it is marketing, finance, production, or
personnel – have to be acutely aware of the
predominant attitudes, feelings and opinions in the
local environment.
SOCIETY AND CULTURE

19. Countries where the government decides the

market prices are called __________ economies.
MIXED

20. __________: To make a copy of, usually with the

intent to defraud.
COUNTERFEITING