International Business Chapter 1 Revision

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Questions and Answers

What term describes the structures and mechanisms MNEs use to facilitate knowledge management?

knowledge governance (correct)

transnational strategy

corporate governance

matrix structures

What action allows MNE subsidiaries to persuade headquarters to expand their responsibilities?

centre of excellence

subsidiary initiative (correct)

worldwide mandate

subsidiary mandate

The ‘not invented here syndrome’ primarily obstructs what aspect of knowledge management?

knowledge retention

knowledge utilization (correct)

knowledge sharing

communication of knowledge

Which strategy do MNEs pursue to combine global integration with local adaptation?

transnational Signup and view all the answers

Tacit organizational knowledge is primarily embedded in which of the following?

organizational structures, cultures and routines Signup and view all the answers

Which of the following statements about international strategies is accurate?

International strategies are typical for MNEs in early stages of their internationalization. Signup and view all the answers

In the context of MNEs, expatriates primarily serve what role within subsidiaries?

knowledge transfer agents Signup and view all the answers

What is full immersion training intended to achieve for expatriates?

local cultural adaptation Signup and view all the answers

What does BPO primarily aim to achieve?

Reduce operating costs Signup and view all the answers

Which analysis method is used to compare a company's resources and capabilities to industry leaders?

Benchmarking Signup and view all the answers

Which of the following is not a consideration in a VRIO analysis?

Is the resource intangible? Signup and view all the answers

Which of the following options represents a system where business operates according to a centralized plan?

Business producing according to an economy-wide central plan Signup and view all the answers

What is an example of a property right?

All of the above answers Signup and view all the answers

What is typically a significant challenge for MNEs regarding corporate social responsibility?

Balancing stakeholder interests Signup and view all the answers

Who is credited as a key intellectual inspiration for the German form of market economy?

Walter Eucken Signup and view all the answers

In the context of business process outsourcing, what is NOT a common misconception?

BPO involves only manufacturing processes Signup and view all the answers

Political risk may involve which potential event?

The nationalization of a company’s assets abroad Signup and view all the answers

Why might demands for socially responsible behavior contradict one another?

Different stakeholders may have conflicting priorities Signup and view all the answers

What distinguishes high-context cultures from low-context cultures?

High-context cultures depend on the surrounding context for understanding Signup and view all the answers

Which factor might NOT pressure MNEs to locate more polluting activities in less developed countries?

Stricter environmental regulations abroad Signup and view all the answers

What are 'standards of engagement' used for by many MNEs?

To guide ethical practices across their operations Signup and view all the answers

Why is understanding cultural dimensions important for businesses operating internationally?

To efficiently manage conflicts related to communication Signup and view all the answers

Which of the following best describes an impact of language differences in international business?

They can lead to misinterpretations and hinder negotiations Signup and view all the answers

What is a common reason why many scholars find studies with WEIRD people non-representative?

They primarily feature individualistic cultures Signup and view all the answers

What does the concept of implicit CSR primarily refer to?

Following social and environmental requirements set by law Signup and view all the answers

Which term describes the situation where countries compete by lowering employment standards to attract foreign investors?

Race to the bottom Signup and view all the answers

What is a critical aspect of Corporate Social Responsibility (CSR)?

It must be a voluntary initiative Signup and view all the answers

Which view suggests that companies have moral obligations that extend beyond maximizing shareholder value?

Normative view Signup and view all the answers

Codes of conduct are primarily used for what purpose?

To ensure that suppliers meet ethical standards Signup and view all the answers

Which of these statements is FALSE regarding corporate engagement in CSR?

CSR practices should rely solely on financial incentives. Signup and view all the answers

What is the common misconception about pollution havens?

They can reduce overall pollution levels effectively. Signup and view all the answers

In the context of CSR, what is the role of political interest groups?

To set unreasonable demands on business practices Signup and view all the answers

Which of the following best describes licensing?

A form of contract that transfers a technology and the rights to use it Signup and view all the answers

What is the primary reason companies form a consortium to bid for a tender?

To compete for a contract offered by a government agency Signup and view all the answers

In a build-operate-transfer contract, which of the following activities is included?

The construction, operation, and future ownership transfer of the bridge Signup and view all the answers

Which of the following activities is NOT considered an international business activity?

A local business providing either domestic or foreign services Signup and view all the answers

Why are big hotels often not owned by the companies whose logo they display?

They are franchise operations or have management contracts with local companies Signup and view all the answers

Which statement is true about the Uppsala model of internationalization?

It suggests companies go through specified stages in their international operations Signup and view all the answers

What is commonly associated with licensing agreements?

Transferring rights to a brand name Signup and view all the answers

Which action is characterized by a build-operate-transfer arrangement?

Ownership transfer of infrastructure after operation Signup and view all the answers

What is the primary reason why firms might prefer to establish a subsidiary rather than licensing technology to a local partner?

To maintain greater control over technology use Signup and view all the answers

What is a significant advantage of internalizing cross-border transactions within an organization?

Reduced information asymmetry Signup and view all the answers

Which type of foreign direct investment (FDI) involves a company moving upstream or downstream in different value chain stages within a host country?

Vertical FDI Signup and view all the answers

What does the expectation of knowledge spillovers signify for governments aiming to attract foreign investors?

It motivates governments to create favorable business environments Signup and view all the answers

Which of the following statements is true regarding foreign portfolio investment (FPI) and foreign direct investment (FDI)?

FPI involves passive investment without control. Signup and view all the answers

What is one potential disadvantage that local firms might face as a result of foreign direct investment in their country?

Increased competition for market share Signup and view all the answers

How can national corporate taxation impact patterns of foreign direct investment?

Tax incentives may encourage firms to invest in specific regions. Signup and view all the answers

What is the phenomenon of 'obsolescing bargain' in the context of multinational enterprises and host governments?

It describes the gradual weakening of initial investment agreements. Signup and view all the answers

Study Notes

Revision Questions - Introduction

This document is revision questions for a course on International Business, 4th edition
Students are not allowed to reproduce or redistribute the document to those not enrolled in the course
Students are not allowed to publish the course materials on sites like Studydrive

Revision Questions - Chapter 1: Globalizing Business

Foreign Direct Investment (FDI): A firm engages in FDI when it invests in a foreign country
International Business: The activity of doing business abroad
Europe: Businesses in Europe need to engage with both European integration and with the global economy outside of Europe
Gross Domestic Product (GDP): A measure of the economic output within a country
Gross National Product (GNP): The total value of goods and services produced by the citizens of a country
Purchasing Power Parity (PPP): A method of comparing the purchasing power of different currencies
International Business: Overarching question focuses on what determines the success and failure of a firm's foreign entry.
Liability of outsidership: Inherent disadvantage that foreign firms experience in a new environment due to lack of familiarity with local contexts and networks.
Globalization: Process leading to greater interdependence and mutual awareness among economies, political & social units in the world.
19th and 20th Century: Two waves of globalization
1900-2010 Globalization: Increased economic interconnectedness
2008/2009 Financial Crisis: Did not signify the end of globalization
Largest Country: (By GDP, population, outward FDI) Not specified
World's Largest Companies: Not specified
Globalization Views: Universalists and Exceptionalists, versus Cosmopolitans
True/False Questions: Correct answers provided for each question

Revision Questions - Chapter 4: Firm Resources

Resources: Assets of a firm
Tangible assets: Observable and quantifiable
Intangible assets: Not observable or quantifiable; e.g. reputation
Reputational resources: Important for a firm's competitiveness
Value chain: The series of activities involved in creating and delivering a product or service
Capabilities: Skills and abilities of a firm
VRIO criteria: Valuable, Rare, Inimitable, and Organized to capture value.
Benchmarking analysis: Comparative analysis of resources and capabilities
Outsourcing: Hiring another company to perform a function
Offshoring: Moving a company's operations to another country
OEM/ODM/OBM: Different manufacturing arrangements
Dynamic capabilities: Processes enabling firms to renew and adapt
True/False Question: Answers provided

Corporate Social Responsibility (CSR): The commitment of a company to behave responsibly as a citizen of the world and focus on the needs of stakeholders to maximize value.
Stakeholders: Groups important to a firm (customers, employees, suppliers)
Pressure on MNEs: Locating polluting activities in less developed countries, employing/paying lower labor costs in other countries, establishment of firm 'standards of engagement'.
MNE Purpose of Standards of Engagement: Not elaborated on
European/North American Debates: Focusing on quite different issues (CSR)

Revision Questions - Chapter 2:Formal Institutions

Institutions: Formal and informal rules, including laws, norms, and cultures.
Transaction costs: Costs associated with economic transactions.
Opportunistic behaviour: Actions aimed at maximizing self-interest at the expense of others.
Institutional transition: Refers to the process of adopting new institutions and norms.
Institutional-based view: Perspectives based on the argument that institutional framework affects firms.
Totalitarian vs. Democratic countries: Ways totalitarian and democracies take decisions.
Political decision-making: Ways democracies take decisions, including proportional vs. first-past-the-post.
Market vs. Command economy: Differences elaborated on
Civil Law and Common Law: Differences elaborated on
Property/Intellectual property rights: How these affect business.
Corporate governance laws: How these affect business.

Revision Questions - Chapter 3: Informal Institutions

Culture: Beliefs, values, and norms of social groups
High vs. Low Context cultures: Distinctions made
Geert Hofstede: Dimensions approach to understanding cultures.
Cultural intelligence: Five levels
Ethical imperialism: Acting according to the ethical norms from your home country.
Clusters: Group of countries that share similar cultures together.
Religion and ethics: How religions and ethics influence business.
Corruption: Varies across countries.
True/False Questions: Provided
Multiple Choice: Options and correct answers given

Revision Questions - Chapter 5: Trading Internally

Mercantilism: Economic theory advocating a favorable balance of trade.
Absolute/Comparative Advantages: Explanations on why countries trade
Product Life Cycle: Explanation on trade patterns
Government Intervention: Role in trade
Michael Porter: Contributing factors (competitiveness)
Tariffs/Non-tariffs: How they affect trade
Economic arguments against free trade: Elaborated on
Political arguments against free trade: Elaborated on

Revision Questions - Chapter 6: Investing Abroad

Foreign Direct Investment (FDI)
Multinational Enterprises (MNEs)
Horizontal/Vertical FDI
FDI Flows/Stock
Ownership advantages
Locational advantages
Internationalization models
True/False Questions: Solutions are given
Multiple Choice Questions: Options and solutions provided

Revision Questions - Chapter 8: European Integration

Regional integration: Types of regional integration
European Union (EU): Objectives, challenges and main stages.
Economic challenges: Early 1990s
European single market/ Schengen agreement: Explained
Eurozone: Described
True/False Questions: Answers given
Multiple Choice Questions: Solutions and options given

Revision Questions - Chapter 9: Global and Multilateral Organizations

Multilateral Organizations: Examples such as GATT, WTO, IMF and World Bank, with descriptions.
Disputes/Conflicts: (Involving e.g. Boeing and Airbus)
WTO Dispute settlement mechanism: Described
Regional agreements and trade
True/False questions: Answers are provided
Multiple Choice questions: Options and answers provided.

Revision Questions - Specific Chapter Questions

Chapter 11 (Starting International Business):
This chapter is about different aspects of starting a global business or venture.
Chapter 12 (Foreign entry strategies):
This chapter is about the different strategies a firm can take when entering a foreign market. Different modes can use include FDI, JV or licensing.
Chapter 13 (Competitive Dynamics):
Techniques utilized includes scenario analysis. Other techniques mentioned in this chapter is pricing strategy
Chapter 14 (Global Growth Strategies): Deals with acquisitions in multinationals companies
Chapter 15 - Organizing and Innovating in the MNE: The key focus here deals with how the structure of an firm is organized by location.
Chapter 16 - People in the MNE: Deals with factors like ethnocentric and geocentric orientations, as well as managerial challenges involved when dealing with foreign employees.

Additional Info

Many of the questions are multiple-choice, and the answers are included in the document.

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Description

This quiz covers key concepts from Chapter 1 of the International Business course, focusing on globalization, foreign direct investment, and economic indicators like GDP and GNP. Test your understanding of how international business operates in different economic contexts. Ideal for students preparing for exams or reviewing core materials.