1

FEKH21 International Business and Multinational Enterprises - individual

exam

April 2018

This assignment will test your knowledge of the assigned literature for and
content of lectures in the course FEKH21 International Business and
Multinational Enterprises. You have 2 hours at your disposal to answer the
questions.

The exam consists of 30 multiple-choice questions. Please encircle the

alternative you consider the correct answer. Explanations are neither required
nor permitted. Each question is worth 1 point.

This is a closed books exam. You are not permitted to bring any materials into
the exam room with you.

Write your name on each page of the exam.

Good luck!
 2

1. Even with the dominance of large, complex organizations in

international business, one of the trends today is the ________________________.

A. Growth of mini-multinationals
B. Emergence of third-world countries as net lenders of funds
C. Decline of the Internet as a way to lower barriers facing firms
D. Continuing reluctance of Chinese firms to participate in international
business

2. The ______ is primarily responsible for policing the world trading system
and making sure nation-states adhere to the rules laid down in trade
treaties signed by member states.

A. International Development Association

B. World Bank
C. International Court of justice
D. World Trade Organization

3. Technological innovations have facilitated all of the following except:

A. globalization of production.
B. globalization of markets.
C. creation of electronic global marketplaces.
D. creation of homogeneous consumer markets.

4. Totalitarianism is a political system in which one person or political

party exercises absolute control and prohibits other political parties. Four
types are usually recognized:

A. Left wing, theocratic, tribal and right wing.

B. Communist, theocratic, industrial-military and right wing.
C. Communist, secular, tribal and right wing.
D. Communist, theocratic, tribal and right wing.

5. The role of the government in a market economy is to _____________________.

A. Plan the production of goods and services in that country

B. Redistribute income to create equitable access to the market
C. Encourage vigorous free and fair competition between private producers
D. Allocate resources for "the good of society"
 3

6. ____________________ is defined as the likelihood that political forces will

cause drastic changes in a country’s business environment that adversely
affect the profit and goals of a business enterprise.

A. Deregulation
B. Reregulation
C. Political risk
D. Legal risk

7. Managers need to be concerned with legal risks regarding outside

foreign trading partners because:

A. They can be sued for lack of due diligence by their trading partner.
B. They might find it difficult in foreign courts to lodge legal complaints for
recovery and relief against their trading partner.
C. They must hire local attorneys to protect their interests and those of their
trading partners.
D. They can face the likelihood that a trading partner will opportunistically
break a contract or steal property rights.

8. When considering the cost-benefit-risk trade-off in determining the

overall attractiveness of a country as a potential market or investment site
for an international business, _____________________________.

A. Economic risk outweighs all others, including political and legal risks
B. The most favorable is likely to be the politically stable nations that have
free market systems and no upsurge in inflation rates or private sector
debts
C. The most favorable is likely to be politically unstable developing nations
that operate with a mixed or command economy as long as the firm can
create a first-mover advantage
D. The most favorable is likely to be a developed country, regardless of the
possibility of financial bubbles that have led to excessive borrowing, as
they will easily bounce back

9. Folkways include __________________the most visible manifestations of

culture and are the outward expression of deeper values.

A. Rituals and symbols

B. Religion
C. Norms
D. Culture
 4

10. The system of values and norms that are shared among a group of
people and that when taken together constitute a design for living best
defines:

A. society.
B. value systems.
C. principles.
D. culture.

11. Hofstede’s four original cultural dimensions are:

A. Power distance, uncertainty avoidance, religious beliefs, and unspoken

languages.
B. Individualism versus collectivism, class mobility, masculinity versus
femininity, and Confucian dynamism.
C. Class-consciousness, social mobility, ethical systems, and education levels.
D. Masculinity versus femininity, uncertainty avoidance, power distance, and
individualism versus collectivism.

12. A firm that is pursuing a(n) _____ strategy is simultaneously trying to

achieve low costs through location economies, economies of scale, and
learning effects, and trying to differentiate its product offering across
geographic markets.

A. global customization
B. international
C. localization
D. transnational

13. _____________________ refers to the systematic reduction in production costs

over the life of a product based on learning effects and economies of scale.

A. Total Quality Control

B. A sustainable competitive advantage
C. The experience curve
D. Location economy

14. A localization strategy seeks to increase profitability by:

A. Marketing local goods instead of imported ones.

B. Brokering through strategic alliances with local partners.
C. Customizing the firm’s products to match local tastes.
D. Offering discounts and promotions to match local needs.
 5

15. There are three basic decisions that a firm contemplating foreign
expansion must make:

A. Cost, accessibility, timing.

B. Entrance, timing, scale.
C. Location, licensing, distribution.
D. Liability, partnering, competition.

16. Economies of scale arise from all of the following sources, except:

A. Increasing fixed costs by limiting them to small volumes.

B. Serving domestic and international markets from the same production
facilities
C. Serving global markets.
D. Bargaining with suppliers to bring down the cost of key inputs.

17. Which of the following is NOT one of the advantages of a joint venture?

A. It is one of the least risky forms of entry.

B. Firms can benefit from a local partner’s knowledge of the host country.
C. High development costs can be shared with a partner.
D. In some countries, political considerations may make this the only
feasible entry mode.

18. Price discrimination exists wherever:

A. A global pricing strategy is in place.

B. Demand across various countries is inelastic.
C. Consumers are charged differently for the same product in different
countries.
D. A multinational company does business.

19. “Creative destruction” refers to:

A. Peacetime use of technologies originally used in military applications.

B. The replacement of older products with innovations with more
application or value.
C. An unethical approach to competition.
D. Eliminating aesthetic difference among products to achieve
standardization.
 6

20. The marketing and sales functions of a firm can help to create value
through all of the following ways, except:

A. creating goods and services.

B. brand positioning.
C. advertising.
D. communicating consumer needs to R&D.

21. The ___________________ refers to the merging of historically distinct and

separate national markets into one huge global marketplace.

A. World Trade Organization

B. World Wide Web market
C. Globalization of markets
D. Globalization of production

22. Which of the following is not one of the three broad types of economic
systems:

A. Market economy
B. Entrepreneurial economy
C. Command economy
D. Mixed economy

23. Purchasing power parity refers to:

A. Adjusting gross domestic product per capita to reflect differences in the

cost of living for each country.
B. The amount of annual income the average individual makes in each
country.
C. The differences between individuals’ earnings within each country.
D. The total income each country produces.

24. There is low interdependence, performance ambiguity, and costs of

control in firms pursuing a(n):

A. localization strategy.
B. international strategy.
C. transnational strategy.
D. global strategy.
 7

25. Theodore Levitt, a Harvard professor and an expert of globalization,

argued that:

A. Thanks to technological advancements and intensified communication,

travel and transport worldwide, markets across the globe have become
more heterogeneous, which requires multinational companies to fully
adapt to every local international context the they do business in.
B. Development in technology, communication and transportation have
contributed to form one global homogenous market with identical
consumer tastes and preferences, which may be served with standardized
goods and services.
C. There is no such thing as one global market with identical consumer
tastes and preferences, only several international markets, each with their
own unique character.
D. The world is actually less global today, compared to at the end of the 19th
century.

26. What did Z. Bauman mean by the freedom of movement and the self-
constitution of societies in the globalized world?

A. There is a good balance between global citizens and local societies in the
world.
B. All of us have become increasingly global.
C. All of us can decide whether to move where we wish or stay local.
D. There is a divide between the global elites and localized “rest” of the
world.

27. What are, according to Z. Bauman, the specific characteristics of the

consumer in the post-modern consumer society?

A. Consumers are looking for lasting satisfaction from products and services
they consume.
B. Consumers are looking for instant satisfaction from products but not
services.
C. Consumers are collectors of sensations while things (e.g. products) are
secondary.
D. Consumers are collectors of things (e.g. products) while sensations are
secondary.
 8

28. What does Z. Bauman conclude regarding consumers’ need satisfaction

in the post-modern consumer society?

A. Consumers have all of their basic needs satisfied.

B. Consumers have all of their high-level needs satisfied.
C. Consumers are only promised satisfaction but it is never fully delivered to
them.
D. Consumers are never fully satisfied. They desire more and different
sensations all the time.

29. Bauman has written about the freedom of movement: “rather than
homogenizing the human condition, the technological annulment of
temporal/spatial distances tends to polarize it”. What does he mean with
this statement?

A. It allows some people to enjoy the fruits of technological development

while others are unable to use the technology.
B. It allows some people an unprecedented freedom and ability to move and
act from the distance while others cannot do it.
C. It makes the distance between different parts of the world even bigger
and the movement of people even harder than before.
D. It divides the world into tourists and vagabonds.

30. Bauman’s overall view of globalization is:

A. Globalization is a new world order improving lives on a global scale.

B. Globalization is an excellent opportunity for the most resourceful of
people.
C. Globalization is a lost opportunity for the weakest and poorest people.
D. Globalization is a new world disorder. It divides as it unites.