International business in context Test Bank Docx Chapter 3

Chapter 3

Test Bank

Type: multiple choice question

Title: Chapter 03 Question 01

1) The volume of world trade has grown _______ than world GDP since 1960

Feedback: The volume of world trade has increased faster that world GDP since 1960. World trade as a percentage of world GDP increased from 24% in 1960 to 58% in 2015.

A-head reference: 3.2 The growth of international business

a. At a similar rate

b. slower

c. faster

d. contracted

Type: multiple choice question

Title: Chapter 03 Question 02

2) Protectionism argues the case for _______ to insulate an economy

Feedback: Protectionism argues for selective measure in the import-affected country

A-head reference: 3.3 Explaining the growth of international business

a. Selective measures

b. A total ban on trade

c. Government ownership of trade affected industries

d. Higher taxes in export sectors overseas

Type: multiple choice question

Title: Chapter 03 Question 03

3) A global world economy is one that is _______

Feedback: All that we can say with a high degree of certainty is d., a higher degree of integration and interdependency. Whether there is a loss of political freedom, lower living standards or domination, depends critically on the precise form of globalisation and some of these developments are unlikely.

A-head reference: 3.4 Globalization

a. Likely to be dominated by a hegemonic power

b. Likely to bring a loss of political freedom

c. Likely to mean lower living standard

d. Likely to be more integrated and interdependent

Type: multiple response question

Title: Chapter 03 Question 04

4) World Trade Organization (WTO) include the membership of

Feedback: Raw material location and extraction is an upstream activity in a value chain as it occurs before (or upstream of) any processing activities.

A-head reference: 3.2 The growth of international business

a. China

b. Russia

c. North-Korea

d. France

Type: true-false

Title: Chapter 03 Question 05

5) International business today is predominantly the domain of large, multinational enterprises

a. True

b. False

Feedback: The statement is false as the costs of internationalisation have fallen substantially and there are many mini and micro-multinational enterprises.

A-head reference: 3.4 Globalization

Type: true-false

Title: Chapter 03 Question 06

6) World trade is the only indicator of the growth of IB

a. True

b. False

Feedback: trade is not the only indicator, also FDI flows measure the growth of IB

A-head reference: 3.2 The growth of international business

Type: true-false

Title: Chapter 03 Question 07

7) Convergence of markets is probably more developed in B2B than in B2C industries.

a. True

Feedback: A wide range of intermediate products, including computer chips, software programs, and financial products, have effectively become standardized commodities easily traded across the globe.

A-head reference: 3.5 Business and globalization

b. False

Type: true-false

Title: Chapter 03 Question 08

8) Free trade exists when a government does not restrict what its citizens can buy or sell to another country

a. True

Feedback: Free trade would exist if a government did not intervene, leaving individuals free to decide what they wished to export or import.

A-head reference: 3.3 Explaining the growth of international business

b. False

Type: true-false

Title: Chapter 03 Question 09

9) Vertical FDI means that a firm operates at a different stage of the value chain, either upstream or downstream, in an overseas location.

a. True

Feedback: Vertical investment implies operating at a different stage of a value chain and FDI implies the investment occurs in an overseas location so, in combining the two, the statement is correct.

A-head reference: 3.7 The torturous road to the global factory

b. False

Type: true-false

Title: Chapter 03 Question 10

10) The relative economic decline of the United States reflects the growing economic development and industrialisation of the world economy, as opposed to any absolute decline in the overall health of the U.S. economy

a. True

Feedback: The statement is true as the decline is relative, that is other economies have grown faster than the United States while the US has still experienced positive growth.

A-head reference: 3.7 The torturous road to the global factory

b. False

Type: true-false

Title: Chapter 03 Question 11

11) Competition increases with globalisation

a. True

Feedback: The involvement of new nations and producers has brought a sharp increase in levels of competition that international businesses face.

A-head reference: 3.6 The challenges of globalization

b. False

Type: true-false

Title: Chapter 03 Question 12

12) Intra-firm trade involves trade between affiliates and headquarter

a. True

Feedback: intra-firm trade is trade between the related affiliates or headquarters of an MNE

A-head reference: 3.2 The growth of international business

b. False

Type: true-false

Title: Chapter 03 Question 13

13) Complex management issues are related to large MNEs with long supply chians

a. True

Feedback: The effective management of complex production systems and the long supply chains that are characteristic of global production. These systems demand additional resources and careful coordination if they are to deliver expected cost benefits

A-head reference: 3.6 The challenges of globalization

b. False

Type: true-false

Title: Chapter 03 Question 14

14) Domestic economic reform is likely to impact both inward and outward foreign direct investment (FDI)

a. True

Feedback: It is likely that domestic economic reform will affect both inward and outward FDI. Reform is likely to increase locational advantage, attracting inward FDI. At the same time if reform augments the competitive advantages of domestic firms, greater outward FDI could also occur.

A-head reference: 3.3 Explaining the growth of international business

b. False

Type: true-false

Title: Chapter 03 Question 15

15) Dynamism is a sought after capability in Global factory managers

a. True

b. False

Feedback: Dynamism is an environmental characteristic that results from the continuous changes that occur among the key elements of the business environment—most notably, markets, consumers, competitors, and technology.

A-head reference: 3.7 The torturous road to the global factory

Type: true-false

Title: Chapter 03 Question 16

16) A supply chain includes only organisations directly involved in supplying components needed for manufacture.

a. True

b. False

Feedback: The statement is false as a supply chain can comprise much more than just components for manufacture including services in particular.

A-head reference: 3.6 The challenges of globalization

Type: true-false

Title: Chapter 03 Question 17

17) Containerisation and the efficiency gains it brings, is a major reason for declining international transport costs

a. True

Feedback: The statement is true since containerisation has been one of the major innovations in transport that has substantially reduced international trading costs

A-head reference: 3.3 Explaining the growth of international business

b. False

Type: true-false

Title: Chapter 03 Question 18

18) Trade liberalisation is now so entrenched it cannot be reversed

a. True

b. False

Feedback: The statement is false as trade liberalisation could be reversed if there was sufficient political support. It would be difficult given the importance of institutions such as the WTO which advocate free trade, but still possible.

A-head reference: 3.3 Explaining the growth of international business

Type: true-false

Title: Chapter 03 Question 19

19) Complexity is a characteristic of MNEs operating in today’s market economies

a. True

b. False

Feedback: Complexity is a characteristic of the external environment that results from the interaction of a number of interrelated factors—principally, the extent of environmental uncertainty and dynamism.

A-head reference: 3.7 The torturous road to the global factory

Type: true-false

Title: Chapter 03 Question 20

20) Horizontal FDI or horizontal integration occurs when a company duplicates home country activities at the same stage of the value chain in an overseas location.

a. True

Feedback: The statement is true as horizontal FDI implies overseas investment at the same stage of production. For example, a firm creates an additional product distribution centre in a new overseas market.

A-head reference: 3.7 The torturous road to the global factory

b. False