GM 170 Test Questions and Answers Graded A+
1. The two primary drivers of change in business environment during the past half century are deregulation and internationalization.
T/F - Answer-F
2. Internationalization represents both an opportunity and a threat to business enterprises.
T/F - ...
GM 170 Test Questions and Answers
Graded A+
1. The two primary drivers of change in business environment during the past half
century are deregulation and internationalization.
T/F - Answer-F
2. Internationalization represents both an opportunity and a threat to business
enterprises.
T/F - Answer-T
3. Internationalization occurs through two main mechanisms: trade and offshoring.
T/F - Answer-F
4. International trade is motivated by the quest to exploit market opportunities in other
countries: foreign direct investment, on the other hand, is motivated by the desire to
exploit resources and capabilities located in other countries.
T/F - Answer-F
5. Sheltered industries are shielded from imports by high barriers to entry.
T/F - Answer-F
6. Service industries such as commercial banking and hotels tend to be "multidomestic"
in their pattern of internationalization.
T/F - Answer-T
7. In general, internationalization of an industry results in more competition and lower
profitability
T/F - Answer-T
8. Internationalization often involves mergers and acquisitions, hence, it tends to reduce
seller concentration within individual national markets.
T/F - Answer-F
9. Internationalization tends to increase competition by increasing investment in new
capacity and increasing the diversity of competitors within each national market.
T/F - Answer-T
10. In an international context, comparative advantage and competitive advantage are
identical concepts.
T/F - Answer-F
,11. Comparative advantage refers to countries' relative efficiencies in producing
different products
T/F - Answer-T
12. The revealed comparative advantage of the US, Canada and Australia in cereals is
a reflection of these countries' large natural endowments of land.
T/F - Answer-T
13. Switzerland's comparative advantage in clocks and watches is likely to reflect the
Swiss emphasis on punctuality rather than Switzerland's resource endowments.
T/F - Answer-T
14. Porter's "national diamond" framework implies that government policies which foster
"national champions" within technology-based industries are likely to be successful in
stimulating national competitiveness in these sectors.
T/F - Answer-F
15. Porter's "national diamond" framework suggests that a significant factor explaining
the dominance by German firms of the world market for luxury and high performance
automobiles is to be found more in the factors of production available in Germany than
in the demand characteristics of German consumers.
T/F - Answer-F
16. For high-tech products such as aircraft and smartphones, the international
fragmentation of the value chain tends to be driven less by cost considerations and
more by the availability of sophisticated technical capabilities.
T/F - Answer-T
17. The benefits from fragmenting a product's value chain across multiple locations
almost always outweigh the costs of coordinating globally dispersed activities.
T/F - Answer-F
18. If the firm's competitive advantage is country-based, the firm can exploit foreign
markets either by exports or by direct investment
T/F - Answer-F
19. In pharmaceuticals (where patent protection tends to be strong), exports or direct
foreign investment will tend to be preferred over licensing as a means of exploiting
overseas markets.
T/F - Answer-F
20. Starbucks entry into India by means of a joint venture with Tata Group in preference
to its usual practice of operating wholly owned subsidiaries outside the US reflects
Starbucks' view that Indian market is highly complex and Starbucks needed the
knowledge and connections possessed by a local partner.
T/F - Answer-T
, 21. Traditionally, European-based multinational companies such as Unilever, Shell, and
Philips have been highly centralized, Japanese multinationals such as Honda, Sony,
and Hitachi have been highly decentralized.
T/F - Answer-T
22. A key difference between Bartlett and Ghoshal's "transnational corporation" and the
conventional US multinational corporation (described by Bartlett and Ghoshal as a
"coordinated federation") is that communication and coordination occurs between
national units rather than exclusively between each national unit and the corporate HQ
T/F - Answer-T
23. In Ghemawat's "Aggregation, Adaptation, Arbitrage" framework, the potential for a
multinational enterprise to exploit arbitrage benefits are likely to be greater in a capital-
intensive industry than in a labor-intensive industry
T/F - Answer-F
24. Designating a national subsidiary as a "center of excellence" for a particular product,
technology, or activity is a way of reconciling differentiation to meet the needs of
national markets with the exploitation of global scale advantages.
T/F - Answer-T
25. Uber's distribution of ice cream in over 38 counties of the world on July 17, 2014,
exemplifies the following feature of international business:
[See p.311]
a. The demand for ice cream is global
b. U.S companies have mastered international expansion more effectively than those
from any other country
c. The pace of transition from being a domestic to a global competitor is much faster in
ecommerce than in traditional business sectors
d. Once a company has built a network, that network can be used to distribute a wider
range of offerings - Answer-c. The pace of transition from being a domestic to a global
competitor is much faster in ecommerce than in traditional business sectors
26. Firms internationalize through two mechanisms:
[See p.313]
a. Exports and imports.
b. Trade in goods (visible trade) and trade in services (invisible trade).
c. Direct and indirect investment.
d. Trade and direct investment. - Answer-d. Trade and direct investment.
27. Global industries are those where:
[See p.313]
a. International trade (imports and exports) are high in relation to industry sales
b. Technology transfers are high
c. Foreign direct investment is high
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