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Effective Management 7Th Edition Chuck Williams Test Bank Full Chapter PDF
Effective Management 7Th Edition Chuck Williams Test Bank Full Chapter PDF
1. Global business is defined as the buying and selling of goods and services by people from different countries.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
2. Regional trading is defined as a method of investment in which a company builds a new business or buys an existing
business in a foreign country.
a. True
b. False
ANSWER: False
RATIONALE: Direct foreign investment is a method of investment in which a company builds a new
business or buys an existing business in a foreign country. Regional trading zones are areas
in which tariff and nontariff barriers on trade between countries are reduced and eliminated.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
3. Direct foreign investment is an increasingly important and common method of conducting global business.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
4. A European car manufacturer signing a contract to manufacture cars in a Chinese factory is an example of direct
foreign investment.
a. True
b. False
ANSWER: False
RATIONALE: This is an example of a joint venture.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1a
7-3c
NATIONAL STANDARDS: United States - Level V Synthesis
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
5. Multinational corporations are corporations that own businesses in two or more countries.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level IV Analysis
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
6. The Maastricht Treaty of Europe was designed to create the European Union and make the euro, the one common
currency, for all members.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1d
NATIONAL STANDARDS: United States - Level II Comprehension
United States - Level V Synthesis
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Legal Responsibilities
7. The North American Free Trade Agreement (NAFTA) is a regional trade agreement between Canada and the United
States. No other nations have signed this trade agreement.
a. True
b. False
ANSWER: False
RATIONALE: NAFTA (the North American Free Trade Agreement) is a regional trade agreement between
the United States, Canada, and Mexico.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1d
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Legal Responsibilities
8. In a multinational company, managers at company headquarters may value global consistency as a company policy
because global consistency simplifies decision-making at corporate headquarters.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-2
NATIONAL STANDARDS: United States - Level VI Evaluation
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Leadership Principles | Strategy
9. Multinational companies typically have no difficulty determining the correct balance between global consistency and
local adaptation.
a. True
b. False
ANSWER: False
RATIONALE: Multinational companies struggle to find the correct balance between global consistency and
local adaptation because there are significant risks in inappropriately leaning too far in either
direction.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-2
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
10. Different businesses often need different combinations of global consistency and local adaptation.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
REFERENCES: 7-2
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
11. Historically, companies have generally followed the phase model of globalization.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-3
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
12. The phase model of globalization means that companies made the transition from a domestic company to a global
company in three sequential phases. The three phases are exporting, followed by wholly owned subsidiaries, and finishing
with strategic alliances.
a. True
b. False
ANSWER: False
RATIONALE: The phase model of globalization means that companies made the transition from a domestic
company to a global company in four sequential phases: exporting, followed by cooperative
contracts, moving next to strategic alliances, and finishing with wholly-owned affiliates.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-3
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
13. It appears that all companies follow the phase model of globalization when entering foreign markets.
a. True
b. False
ANSWER: False
RATIONALE: Evidence suggests that some companies do not follow the phase model of globalization.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-3
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
14. The two kinds of cooperative contracts are licensing and franchising.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-3b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Strategy
15. The biggest disadvantage associated with licensing is that the licensor gives up control over the quality of the good or
service sold by the foreign licensee.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-3b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
17. One of the disadvantages of global joint ventures is that, unlike licensing and franchising, they do not help companies
to avoid tariff and nontariff barriers to entry.
a. True
b. False
ANSWER: False
RATIONALE: One of the advantages of global joint ventures is that, like licensing and franchising, they help
companies avoid tariff and nontariff barriers to entry.
POINTS: 1
DIFFICULTY: Difficult
REFERENCES: 7-3c
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Legal Responsibilities | Strategy
18. Global joint ventures can be difficult to manage because they represent a merging of four cultures.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
REFERENCES: 7-3c
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | HRM | Strategy
19. Unlike licensing, franchising, or joint ventures, wholly owned affiliates are 100 percent owned by the parent company.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-3d
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Strategy
20. Global new ventures bring a good or service to market in one foreign market at a time.
a. True
b. False
ANSWER: False
RATIONALE: Rather than going global one country at a time, global new ventures bring a product or service
to market in several foreign markets at the same time.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-3e
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
21. Deciding where to “go global” is just as important as deciding how your company will go global.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-4
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
22. An attractive business climate is defined by one single dimension: Does the business minimize the political risk to the
company?
a. True
b. False
ANSWER: False
RATIONALE: An attractive global business climate has three characteristics: (1) it positions the company for
easy access to growing markets, (2) it is an effective but cost-efficient place to build an office
or manufacturing site, and (3) it minimizes the political risk to the company.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-4
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
23. Two factors that help companies determine the growth potential of foreign markets are the purchasing power of the
consumers and types of foreign competitors already in the market.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-4
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
24. The criteria for choosing an office/manufacturing location are different from the criteria for entering a foreign market.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-4b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
25. When conducting global business, companies should attempt to identify the two types of political risk, which are
political uncertainty and economic uncertainty.
a. True
b. False
ANSWER: False
RATIONALE: When conducting global business, companies should attempt to identify two types of political
risk: political uncertainty and policy uncertainty.
POINTS: 1
DIFFICULTY: Difficult
REFERENCES: 7-4c
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
26. The three strategies used to minimize or to adapt to the political risk inherent to global business are avoidance, control,
and cooperation.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-4c
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Leadership Principles | Strategy
27. The evidence clearly shows that how well an expatriate's spouse and family adjust to the foreign culture is the most
important factor in determining the success or failure of an international assignment.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-6b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | HRM
29. ____ is a method of investment in which a company builds a new business or buys an existing business in a foreign
country.
a. A strategic alliance
b. Direct foreign investment
c. A global new venture
d. A joint venture
e. Direct exporting
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
30. Which of the following countries has the largest direct foreign investment in the United States?
a. Netherlands
b. Germany
c. Japan
d. Canada
e. United Kingdom
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence
31. Nestlé is a company headquartered in Switzerland with manufacturing plants in Columbia, Australia, Canada, Egypt,
Kenya, and more than 90 other nations. Nestlé is an example of a ____.
a. multidomestic global company
b. multinational corporation
c. ethnocentric organization
d. acculturated corporation
e. macro-marketer
ANSWER: b
RATIONALE: A multinational corporation is defined as a corporation that owns businesses in two or more
countries.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1a
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
32. As Malta got ready for its admittance into the European Union (EU), the EU removed all taxes on the importation of
goods manufactured in Malta. In other words, the EU abolished ____ for Malta-manufactured merchandise.
a. import quotas
b. customs classifications
c. import standards
d. tariffs
e. boycotts
ANSWER: d
RATIONALE: Tariffs are defined as a direct tax on imported goods.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence
33. Several Arab countries boycott Coca-Cola products because the soft-drink company maintains product distributors in
Israel. This boycott is an example of ____.
a. geocentrism
b. nationalism
c. nationalization
d. a trade barrier
e. acculturation
ANSWER: d
RATIONALE: Trade barriers are defined as government imposed regulations that increase the cost and
restrict the number of imported goods.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
35. In 2000, the United States imposed a tax on all steel imports in an effort to protect about 5,000 jobs. This tax is an
example of a(n) ____.
a. import duty
b. voluntary import restraint
c. subsidy
d. financial boycott
e. tariff
ANSWER: e
RATIONALE: Tariffs are defined as a direct tax on imported goods.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
36. Protectionism is the use of trade barriers to protect local companies and their workers from ____.
a. international unions
b. foreign competition
c. trademark infringements
d. patent violations
e. all of these
ANSWER: b
RATIONALE: This is the definition of protectionism.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
37. The Japanese government has proclaimed that its snow is different from that found in any other region of the world.
As a result, all snow skis marketed in Japan must be manufactured in Japan. This is an example of a(n) ____.
a. tariff
b. nontariff barrier
c. import boycott
d. industry subsidy
e. industry nationalization
ANSWER: b
RATIONALE: Nontariff barriers are defined as nontax methods of increasing the cost or reducing the
volume of imported goods.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
38. The Japanese government continues to use the high tariffs to make sure local farmers can earn a living. The tariff on
rice is an example of ____.
a. a voluntary government restriction
b. geocentrism
c. protectionism
d. a security quota
e. a bureaucratic subsidy
ANSWER: c
RATIONALE: The aim of the Japanese policy is to shield domestic competitors from foreign competition, an
aim consistent with protectionism.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
39. A ____ is a nontax method of increasing the cost or reducing the volume of imported goods.
a. tariff
b. nontariff barrier
c. trade roadblock
d. risk-aversive boycott
e. subsidy quota
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
40. A(n) ____ is a direct tax on imported goods designed to make it more expensive to buy those goods, instituted in
hopes of reducing the volume of those imported goods in a given country.
a. tariff
b. nontariff barrier
c. trade roadblock
d. boycott quota
e. import subsidy
ANSWER: a
RATIONALE: Tariffs are defined as a direct tax on imported goods.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
41. The Japanese government has proclaimed that its snow is different from that found in any other region of the world
and as a result ensures that all snow skis marketed for sale in Japan must be manufactured in Japan. This is an example of
a(n) ____.
a. tariff
b. government subsidy
c. voluntary export restraint
d. government import standard
e. subsidy
ANSWER: d
RATIONALE: A government import standard is a standard established ostensibly to protect the health and
safety of citizens but, in reality, often used to restrict imports.
POINTS: 1
DIFFICULTY: Difficult
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
42. Russia imposed limits on how much poultry, beef, and pork could be imported into the nation from the European
Union (EU) in retaliation to limits the EU placed on how much grain Russia could export. What type of nontariff barrier
did Russia use to control the amount of poultry, beef, and port it imported from the EU?
a. quotas
b. subsidies
c. boycotts
d. customs classifications
e. duties
ANSWER: a
RATIONALE: A quota is defined as a limit on the number or volume of imported products.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
43. The European Union (EU) bans the importation of hormone-fed U.S. beef and bioengineered corn and soybeans on
safety grounds. This ban is so consumers in the EU will buy domestic beef and products made from domestically
produced corn and soybeans. This ban is an example of ____.
a. a subsidy
b. an involuntary import restraint
c. geocentrism
d. expropriation
e. a government import standard
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
44. ____ are long-term, low-interest loans, cash grants, and tax deductions used to develop and protect companies or
special industries.
a. Quotas
b. Voluntary export restraints
c. Cooperative contracts
d. Subsidies
e. Tariffs
ANSWER: d
RATIONALE: This is the definition of a government subsidy.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence | Strategy
45. To protect its farmers, Japan put limitations on the amount of mushrooms and leeks that could be imported into Japan
from China. This limitation is an example of a(n) ____.
a. tariff
b. voluntary import restraint
c. subsidy
d. agricultural import standard
e. quota
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
REFERENCES: 7-1b
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Diversity
AACSB Analytic
KEYWORDS: Environmental Influence | Ethical Responsibilities
46. The trade agreement that represented the most significant change to the regulations governing global trade during the
1990s was the ____.
a. Maastricht Treaty of Europe
b. North American Free Trade Agreement
c. World Trade Organization
d. Mercosur
e. Asian Free Trade Arrangement
ANSWER: c
RATIONALE: GATT was a comprehensive trading agreement originally signed by 124 countries and
provided the basic framework for the World Trade Organization agreement, which took the
place of GATT in 1995.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1c
NATIONAL STANDARDS: United States - Level II Comprehension
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence
47. The signing of the ____ created a regional trading zone in Europe.
a. Maastricht Treaty
b. Pact for Free Trade Agreement
c. Global Agreement for Transactional Trading (GATT)
d. South-East Asia Pact
e. all of these
ANSWER: a
RATIONALE: The Maastricht Treaty established the European Union (EU) trading zone.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: 7-1c
NATIONAL STANDARDS: United States - Level I Knowledge
TOPICS: AACSB Analytic
KEYWORDS: Environmental Influence
48. As Malta got ready for its admittance into the European Union (EU), all taxes on the importation of goods
manufactured in Malta were eliminated. Malta was preparing to become part of a(n) ____.
a. zone of ethnocentricity
b. regional trading zone
c. neutral trading area
d. international cartel
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Drawn by Captn. Clapperton. Engraved by E. Finden.
ANAY.
TIBBOO COUNTRY.
Published Feb. 1826, by John Murray, London.