Robbins Mgmt12 Tb03

8/19/2019 Robbins Mgmt12 Tb03

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Management, 12e (Robbins/Coulter)Chapter 3 Managing in a Global Environment

1) Americans tend to suffer from parochialism.Answer: TRUE

Page Ref: 75earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ Anal#tic &,ills%h. !$-ecti*e: 1

ifficult#: Eas#%lassification: %onceptual

) (anagers with an ethnocentric attitude do not trust foreign emplo#ees with ,e# decisions ortechnolog#.Answer: TRUE

Page Ref: 75earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding%h. !$-ecti*e: 1


/) (anagers with a pol#centric attitude tend to *iew e*er# foreign operation as difficult and hardto understand.Answer: TRUE

Page Ref: 75earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding%h. !$-ecti*e: 1


0) The pol#centric attitude is a world oriented *iew focusing on using the $est approaches and people from around the glo$e.Answer: 2A &EPage Ref: 75

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding%h. !$-ecti*e: 1


1

%op#right 3 410 Pearson Education "nc.


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5) 6orwa# is a mem$er of the European Union.Answer: 2A &EPage Ref: 7

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement

AA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e: ifficult#: Eas#

%lassification: %onceptual

) 9hen the twel*e original mem$ers formed the European union in 1 the primar#moti*ation was to reassert the region;s economic position against the United &tates and


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) (ercosur is a trading group made up of 14 &outh American countries.Answer: TRUEPage Ref: 7=

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement

AA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e: ifficult#: Eas#

%lassification: %onceptual

14) A transnational organi?ation reflects an ethnocentric attitude.Answer: 2A &EPage Ref: =

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement+ iscuss factors influencing organi?ational structure decisionsAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#

%h. !$-ecti*e: /ifficult#: (oderate%lassification: %onceptual

11) (anagers who want to get into a glo$al mar,et with minimal in*estment start with glo$alsourcing.Answer: TRUEPage Ref: =

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement+ iscuss factors influencing organi?ational structure decisionsAA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e: /


1 ) The process of e>porting in*ol*es ac@uiring products made a$road and selling themdomesticall#.Answer: 2A &EPage Ref: =



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1/) icensing and franchising are similar approaches in*ol*ing one organi?ation gi*ing anotherorgani?ation the right to use its $rand name technolog# or product specifications in return for alump sum pa#ment or a fee usuall# $ased on sales.Answer: TRUEPage Ref: =



10) icensing is primaril# used $# ser*ice organi?ations and franchising is primaril# used $#manufacturing organi?ations.Answer: 2A &EPage Ref: =



15) &trategic alliance is a partnership $etween an organi?ation and a foreign compan# partner or partners in which $oth share resources and ,nowledge in de*eloping new products or $uilding production facilities.Answer: TRUEPage Ref: =/



1 ) !nl# when a countr#;s political legal en*ironment is unsta$le or re*olutionar# is it ofconcern to managers.Answer: 2A &EPage Ref: =0

earning !utcome: escri$e the components of the management en*ironment+ "dentif# thefundamental concepts and issues of international $usiness and managementAA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e: 0


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17) The 8 !'E framewor, for assessing cultures is similar to Bofstede;s framewor, $utmeasures fewer dimensions.Answer: 2A &EPage Ref: =

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and

management+ "dentif# the different t#pes of decisions managers ma,e and discuss how the#ma,e decisionsAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#+Anal#tic &,ills%h. !$-ecti*e: 0


1=) (e>ico is an e>ample of a %ollecti*istic nation.Answer: TRUEPage Ref: =7

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#%h. !$-ecti*e: 0


1 ) The United &tates is an e>ample of a countr# with low power distance.Answer: TRUEPage Ref: =7



4) A high uncertaint# a*oidance societ# is threatened $# am$iguit# and e>periences high le*elsof an>iet#.Answer: TRUEPage Ref: =7



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1) A glo$al mind set refers to attri$utes that allow a leader to $e effecti*e in cross culturalen*ironments.Answer: TRUEPage Ref: 4

earning !utcome: escri$e the roles of managers and the s,ills the# need to succeed within an

organi?ation+ "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding%h. !$-ecti*e: 0


) (onolingualism is one sign that a nation suffers from CCCCCCCC.A) parochialism') ethnocentrism%) pol#centrism

) geocentrismAnswer: APage Ref: 75



/) Parochialism is a tendenc# to CCCCCCCC.A) thin, highl# of the foreign countr# in which the organi?ation is doing $usiness') focus on $est approaches and people from around the glo$e%) *iew the world solel# through one;s own e#es and perspecti*es

) let emplo#ees in the host countr# figure out how $est to do thingsAnswer: %Page Ref: 75



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0) 'ill &anderson a manager in a manufacturing firm in 6ew Dor, has a tendenc# to *iew theworld onl# through his U.&. $ased perspecti*e. 9hat can $e deduced a$out his attitudeA) Be has an elitist attitude.') Be has a pol#centric attitude.%) Be has a parochialistic attitude.

) Be has a geocentric attitude.Answer: %Page Ref: 75

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ Anal#tic &,ills%h. !$-ecti*e: 1

ifficult#: (oderate%lassification: Application

5) An ethnocentric attitude CCCCCCCC.

A) prompts managers to ha*e a glo$al *iew and loo, for the $est approaches and peopleregardless of origin.') is the $elief that the home countr# has the $est wor, approaches and practices%) is the *iew that emplo#ees in the host countr# ,now the $est wor, approaches and practices

) gi*es a manager a much $roader understanding of what it ta,es to manage in a glo$alen*ironmentAnswer: 'Page Ref: 75



) A manager who wishes to $e successful in international $usiness should a*oid aFn) CCCCCCCC attitude.A) multicultural') multiracial%) ethnocentric

) geocentricAnswer: %Page Ref: 75


ifficult#: (oderate%lassification: %onceptual

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7) AFn) CCCCCCCC attitude is characteri?ed $# parochialism.A) geocentric') acculturated%) multilinguistic

) ethnocentric

Answer: Page Ref: 75earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and

managementAA%&': (ulticultural and i*ersit# Understanding%h. !$-ecti*e: 1


=) (anagers with aFn) CCCCCCCC attitude *iew e*er# foreign operation as different and hard tounderstand.

A) geocentric') pol#centric%) ethnocentric

) regiocentricAnswer: 'Page Ref: 75



) AFn) CCCCCCCC attitude is the *iew that emplo#ees in the host countr# ,now the $est practices for running their operations.A) ethnocentric') pol#centric%) geocentric

) regiocentricAnswer: 'Page Ref: 75



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/4) "n toda#;s glo$al en*ironment managers must ha*e aFn) CCCCCCCC attitude in order to $esuccessful.A) ethnocentric') parochial%) $igoted

) geocentricAnswer: Page Ref: 75 7



/1) 9hich of the following countries is a mem$er of the European Union

A) "reland') "celand%) 6orwa#

) &wit?erlandAnswer: APage Ref: 7

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e:


/ ) The CCCCCCCC was formed $# twel*e original mem$ers with the primar# moti*ation ofreasserting the region;s economic position against the United &tates and


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//) The single European Union currenc# is called the CCCCCCCC.A) ,rone') ,rona%) pound

) euro

Answer: Page Ref: 77earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and

managementAA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e:


/0) 9hat is the primar# reason that the intensif#ing economic crisis in Europe threatens toimpact the decisions of glo$al managers in the United &tates and throughout the world

A) The massi*e de$t in 8reece has caused Europe to slide into a new recession.') 6ew measures $# the European %ommission to o*ersee $an,s and to monitor national $udgets ha*e $een met with resistance $# euro ?one mem$ers.%) The euro ?one is a larger economic unit than the United &tates or %hina and is a ma-or sourceof world demand for goods and ser*ices.

) The ina$ilit# to trim $enefits and free up la$or mar,ets pre*ents the region from spurring an#significant growth o*er the ne>t decade.Answer: %Page Ref: 77

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': Anal#tic &,ills+ #namics of the 8lo$al Econom#%h. !$-ecti*e:

ifficult#: ifficult%lassification: Application

/5) The 6orth American 2ree Trade Agreement includes CCCCCCCC.A) (e>ico %anada and the United &tates') %anada (e>ico and %osta Rica%) the United &tates %anada and Bonduras

) %olum$ia (e>ico and the United &atesAnswer: APage Ref: 77



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/ ) 9hich of the following is currentl# under negotiation $# /0 countries in the 9esternBemisphereA) African Union') 2ree Trade Area of the Americas%) (ercosur

) African %ommunit#Answer: 'Page Ref: 7=



/7) The Association of &outheast Asian 6ations is a trading alliance of CCCCCCCC.

A) eight &outheast Asian nations and


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/ ) Bow man# mem$ers does The African Union ha*eA) 7=') 5/%) 0

) 0

Answer: 'Page Ref: 7earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and



04) 6epal $elongs to which of the following regional trade alliancesA) Asia Pacific Economic %ooperation

') &outh Asian Association for Regional %ooperation%) %ommon 9ealth of "ndependent &tates) Association of &outheast Asian 6ations

Answer: 'Page Ref: 7



01) The 9orld Trade !rgani?ation was formed in the #ear CCCCCCCC.A) 1 5') 1 7%) 1 71

) 1 =/Answer: APage Ref: =4



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0 ) The 9orld Trade !rgani?ation e*ol*ed from which of the followingA) (ercosur ') 8eneral Agreement on Tariffs and Trade%) Truman octrine

) (arshall Plan

Answer: 'Page Ref: =4earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and



0/) The 9orld Trade !rgani?ation has CCCCCCCC mem$er countries and CCCCCCCC o$ser*ergo*ernments.

A) 17 + 54') 1==+ 4%) 155+

) 1 1+ 04Answer: %Page Ref: =4



00) The "nternational (onetar# 2und is an organi?ation of CCCCCCCC countries that promotesinternational monetar# cooperation and pro*ides mem$er countries with polic# ad*icetemporar# loans and technical assistance to esta$lish and maintain financial sta$ilit# and tostrengthen economies.A) 1 /') 17%) 1 4

) 1==Answer: Page Ref: =4



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05) The CCCCCCCC is a group of fi*e closel# associated institutions all owned $# its mem$ercountries that pro*ides *ital financial and technical assistance to de*eloping countries aroundthe world.A) "nternational %ham$er of %ommerce') 9orld 'an, 8roup

%) !rgani?ation for Economic %ooperation and e*elopment) 9orld Economic 2orumAnswer: 'Page Ref: =4



0 ) The forerunner of the !rgani?ation for Economic %ooperation and e*elopment was the CCCCCCCC that was formed in 1 07 to administer American and %anadian aid under the (arshallPlan for the reconstruction of Europe after 9orld 9ar "".A) !rgani?ation of European &tates') !rgani?ational %ouncil of Europe%) !rgani?ation for European Economic %ooperation

) !rgani?ation for European "n*estmentAnswer: %Page Ref: =4



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07) The CCCCCCCC is a Paris $ased international economic organi?ation whose mission is to helpits /4 mem$er countries achie*e sustaina$le economic growth and emplo#ment and raise thestandard of li*ing in mem$er countries while maintaining financial sta$ilit# in order to contri$uteto the de*elopment of the world econom#.A) !rgani?ation for European Economic %ooperation

') !rgani?ational %ouncil of Europe%) !rgani?ation of European &tates) !rgani?ation for Economic %ooperation and e*elopment

Answer: Page Ref: =4 =1



0=) According to the te>t which of the following is a t#pical definition of a multinationalcorporationA) "t is a compan# that maintains operations in multiple countries.') "t is a compan# that maintains franchises in multiple countries.%) "t is a compan# that has multiple home $ases and manufacturing plants.

) "t is a compan# that pa#s corporate ta>es in at least two countries.Answer: APage Ref: =1



0 ) The CCCCCCCC decentrali?es its management and other decisions to the local countr#.A) multidomestic corporation') glo$al compan#%) transnational organi?ation

) $orderless organi?ationAnswer: APage Ref: =1



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54) (ultidomestic corporations reflect the CCCCCCCC.A) ethnocentric attitude') pol#centric attitude%) geocentric attitude

) >enopho$ic attitude

Answer: 'Page Ref: =1earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and

management+ iscuss factors influencing organi?ational structure decisionsAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#%h. !$-ecti*e: /


51) 9hich of the following is a multinational corporation that tailors mar,eting strategies to thehost countr#;s uni@ue characteristicsA) $orderless organi?ation') glo$al compan#%) multidomestic corporation

) transnational organi?ationAnswer: %Page Ref: =1

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement+ iscuss factors influencing organi?ational structure decisionsAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#%h. !$-ecti*e: /


5 ) (ultidomestic corporations CCCCCCCC.A) maintain operations in multiple countries $ut do not allow managers in each countr# to ma,etheir own decisions') reflect ethnocentric attitudes%) decentrali?e management and other decisions to the local countr#

) attempt to replicate their domestic successes $# managing foreign operations from the homecountr#Answer: %Page Ref: =1



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5/) 9hich of the following is a feature of a multidomestic corporationA) decisions are ta,en in the home countr#') reflects an ethnocentric attitude%) eliminates artificial geographic $orders

) has a decentrali?ed management

Answer: Page Ref: =1earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and



50) 9hich of the following is the $asic difference $etween multidomestic corporations andglo$al companiesA) (ultidomestic corporations t#picall# do $usiness with more countries than glo$al companies.') (ultidomestic corporations are run $# glo$al companies $ut must $e owned $# a localnational compan#.%) (ultidomestic corporations decentrali?e management to the local countr# while glo$alcompanies centrali?e management in the home countr#.

) (ultidomestic corporations reflect an ethnocentric attitude while glo$al companies reflect a pol#centric attitude.Answer: %Page Ref: =1 =



55) A CCCCCCCC centrali?es its management and other decisions in the home countr#.A) glo$al compan#') multidomestic corporation%) multicultural compan#

) multifaceted corporationAnswer: APage Ref: =



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5 ) A glo$al compan# reflects the CCCCCCCC.A) regiocentric attitude') ethnocentric attitude%) geocentric attitude

) pol#centric attitude

Answer: 'Page Ref: =earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and



57) An organi?ation drops its organi?ational structure $ased on countries and reorgani?es intoindustr# groups. This is an e>ample of the compan# $ecoming aFn) CCCCCCCC.A) ethnocentric compan#') pol#centric organi?ation%) $orderless organi?ation

) glo$al compan#Answer: %Page Ref: =



5=) Transnational organi?ations are also ,nown as CCCCCCCC.A) ethnocentric organi?ations') pol#centric organi?ations%) $orderless organi?ations

) multidomestic organi?ationsAnswer: %Page Ref: =



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5 ) 9hich of the following t#pes of glo$al organi?ations reflects the geocentric attitudeA) multidomestic corporation') transnational organi?ation%) glo$al compan#

) regional organi?ation

Answer: 'Page Ref: =earning !utcome: "dentif# the fundamental concepts and issues of international $usiness and



4) An organi?ation decides to go international. 9hich of the following steps should it ta,e to doso with a minimal in*estmentA) "t should indulge in glo$al sourcing.') "t should indulge in licensing.%) "t should indulge in franchising.

) "t should indulge in forming strategic alliances.Answer: APage Ref: =



1) 9hen an organi?ation ma,es products domesticall# and sells them a$road it indulges in CCCCCCCC.A) importing') e>porting%) licensing

) franchisingAnswer: 'Page Ref: =



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) 9hen an organi?ation ac@uires products made a$road and sells them domesticall# it indulgesin CCCCCCCC.A) glo$al sourcing') licensing%) importing

) franchisingAnswer: %Page Ref: =



/) CCCCCCCC is the practice wherein an organi?ation gi*es another organi?ation the right to useits $rand name technolog# or product specifications in return for a fee usuall# $ased on sales.A) 8lo$al sourcing') E>porting%) &u$sidi?ing

) icensingAnswer: Page Ref: =



0) Adam has $een hired $# an organi?ation that has a partnership with a foreign compan#. 'oththe partners share resources and ,nowledge while de*eloping new products. Adam;s organi?ationhas formed a CCCCCCCC.A) licensing compan#') franchising compan#%) strategic alliance

) foreign su$sidiar#Answer: %Page Ref: =/

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement+ iscuss factors influencing organi?ational structure decisionsAA%&': Anal#tic &,ills+ #namics of the 8lo$al Econom#%h. !$-ecti*e: /


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5) AFn) CCCCCCCC is a specific t#pe of strategic alliance in which the partners form a separateindependent organi?ation for some $usiness purpose.A) e@uit# strategic alliance') -oint *enture%) glo$al *enture

) none@uit# strategic allianceAnswer: 'Page Ref: =/



) porting') glo$al sourcing%) strategic alliances

) licenseesAnswer: %Page Ref: =/



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=) A domestic firm and a foreign firm sharing the cost of de*eloping new products or $uilding production facilities in a foreign countr# constitute a CCCCCCCC.A) franchising agreement') -oint *enture%) foreign su$sidiar#

) $ro,ering agreementAnswer: 'Page Ref: =/



) 9hich of the following arrangements in*ol*es the greatest commitment of resources and poses the greatest amount of ris,A) e>porting') franchising%) foreign su$sidiar#

) glo$al sourcingAnswer: %Page Ref: =/



74) A CCCCCCCC econom# is one in which resources are primaril# owned and controlled $# the pri*ate sector.A) free mar,et') planned%) command

) technocraticAnswer: APage Ref: =0

earning !utcome: escri$e the components of the management en*ironment+ "dentif# thefundamental concepts and issues of international $usiness and managementAA%&': #namics of the 8lo$al Econom#%h. !$-ecti*e: 0


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71) 9h# does the U.&. 2ederal Reser*e;s announcement of a far reaching mortgage $ond $u#ing program raise $usiness concerns o*er the new monetar# polic#A) "t affects the t#pe of economic s#stem that pre*ails in the United &tates.') "t is e>pected to impact the rate of inflation o*er the ne>t #ear.%) Ta> policies are li,el# to change as a result of the new program.

) "t threatens to wea,en the dollar against foreign currencies.Answer: Page Ref: =0 =5

earning !utcome: escri$e the components of the management en*ironment+ "dentif# thefundamental concepts and issues of international $usiness and managementAA%&': Anal#tic &,ills+ #namics of the 8lo$al Econom#%h. !$-ecti*e: 0


7 ) 8eert Bofstede;s research found that countries *aried on CCCCCCCC dimensions of nationalculture.A) ele*en') fi*e%) se*en

) nineAnswer: 'Page Ref: =



7/) The 8lo$al eadership and !rgani?ational 'eha*ior Effecti*eness program identified CCCCCCCC dimensions on which national cultures differ.A) fi*e') se*en%) nine

) ele*enAnswer: %Page Ref: =



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70) 9hich of the following two dimensions of the 8lo$al eadership and !rgani?ational'eha*ior Effecti*eness program fit directl# with Bofstede;s dimensionsA) power distance and uncertaint# a*oidance') power distance and gender differentiation%) uncertaint# a*oidance and in group collecti*ism

) gender differentiation and in group collecti*ismAnswer: APage Ref: =

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#+Anal#tic &,ills%h. !$-ecti*e: 0


75) The 8lo$al eadership and !rgani?ational 'eha*ior Effecti*eness program;s CCCCCCCCdimension is similar to Bofstede;s achie*ement nurturing dimension.A) uncertaint# a*oidance') humane orientation%) asserti*eness

) power distanceAnswer: %Page Ref: =



7 ) 9hich of the following dimensions of the 8lo$al eadership and !rgani?ational 'eha*iorEffecti*eness program is similar to Bofstede;s nurturing dimensionA) in group collecti*ism') humane orientation%) future orientation

) institutional collecti*ismAnswer: 'Page Ref: =



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77) A countr# with CCCCCCCC is comforta$le with ris,s and is tolerant towards different $eha*iorand opinions.A) low uncertaint# a*oidance') short term orientation

%) low power distance) performance orientationAnswer: APage Ref: =7



7=) A countr# that is asserti*e $elie*es in ac@uiring mone# and goods and is competiti*e innature is said to CCCCCCCC.A) $e a collecti*ist') ha*e a high power distance%) $e achie*ement oriented

) ha*e a long term orientationAnswer: %Page Ref: =7



7 ) CCCCCCCC is a measure of the degree to which people rel# on social norms and procedures toalle*iate the unpredicta$ilit# of future e*ents.A) Power distance') Uncertaint# a*oidance%) Achie*ement

) 6urturingAnswer: 'Page Ref: =7



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=4) CCCCCCCC is the e>tent to which a societ# encourages people to $e tough confrontationaland competiti*e rather than modest and tender.A) 2uture orientation') "nstitutional collecti*ism%) Asserti*eness

) Bumane orientationAnswer: %Page Ref: =7



=1) A countr# where people loo, to the future and *alue thrift and persistence is said to CCCCCCCC.A) ha*e an indi*idualistic attitude') ha*e a long term orientation%) $e nurturing

) $e achie*ement orientedAnswer: 'Page Ref: =7 ==



= ) CCCCCCCC is a cultural dimension in which people e>pect others in their group to loo, afterthem and protect them.A) ow uncertaint# a*oidance') Achie*ement%) %ollecti*ism

) Bigh power distanceAnswer: %Page Ref: =7 ==



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=/) %hristopher who is $ased in the United &tates has $een offered a chance to wor, in Thailand.Be finds that in this societ# people are e>pected to loo, after others in their famil# Fororgani?ation) and protect them when the# are in trou$le. This societ# tends to support CCCCCCCC.A) collecti*ism') parochialism

%) indi*idualism) monotheismAnswer: APage Ref: =7 ==



%ultural Training F&cenario)

pand her career opportunities in the international operations of a compan#. &heis 1 #ears old and currentl# attends a uni*ersit#. &he has onl# li*ed in her home countr# and hasne*er tra*eled to an# foreign countr#.

=0) 9hile tal,ing with her ad*isor at the uni*ersit#


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=5) plain during #our tal, that the acron#ms EU 6A2TA and A&EA6 refer to CCCCCCCC.A) regional trade alliances') foreign airlines%) soccer teams in Europe

) new multinational corporationsAnswer: APage Ref: 7


ifficult#: Eas#%lassification: Application

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=7) !ne of the hottest topics of #our tal, will $e the 6orth American 2ree Trade Agreement. !neof the points that #ou will emphasi?e is that CCCCCCCC.A) $etween 1 0 and 447 merchandise trade $etween the United &tates %anada and (e>icoincreased slightl#') a large num$er of people continue to migrate from (e>ico to the United &tates in search of

-o$s and prosperit#%) as of 41 it is the second largest trade $loc in the world in terms of the com$ined grossdomestic product of its mem$ers

) (e>ico is struggling to prosper from the free trade agreementAnswer: %Page Ref: 77


ifficult#: (oderate

%lassification: Application&oftware Entrepreneurial Jenture F&cenario)

Theodore and ploring future opportunitiesdecides to initiate international operations.

==) The international operations of their firm continues to grow. Theodore and


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= ) Theodore and port agreement

') licensing agreement%) franchise agreement) import agreement

Answer: %Page Ref: =



'usiness E>pansion Plan F&cenario)

As $usiness e>pansion director &hana;s goal is to scout for potential locations and pro*ide inputon how her compan# should proceed with its planned e>pansion to Europe. There are man#options which include maintaining the compan#;s head office in the United &tates and sendingo*er compan# representati*es when necessar# or esta$lishing a separate operations facilitiesa$road and hiring locals as managers.

4) "f &hana;s compan# decides to open a completel# new operation in 8erman# tailoring thecompan# to local customs and mar,eting strategies and hiring local managers it would $e thenconsidered a CCCCCCCC.A) transnational corporation') glo$al compan#%) $orderless organi?ation

) multidomestic corporationAnswer: Page Ref: =1



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1) "f &hana;s compan# decides to open another compan# in 2rance $ut centrali?es itsmanagement in the United &tates it would $e considered a CCCCCCCC.A) transnational corporation') glo$al compan#%) $orderless organi?ation

) multidomestic corporationAnswer: 'Page Ref: =



) "f &hana;s compan# dropped its organi?ational structure $ased on countr# and reorgani?ed

into industr# groups it would $est $e considered a CCCCCCCC.A) $orderless organi?ation') foreign su$sidiar#%) glo$al compan#

) multidomestic corporationAnswer: APage Ref: =



/) !ne section of &hana;s compan#;s $usiness plan in*ol*es setting up a foreign su$sidiar#. Thisarrangement in*ol*es CCCCCCCC.A) ma,ing products domesticall# and selling them a$road') &hana;s compan# gi*ing the foreign su$sidiar# the right to use its $rand name%) directl# in*esting in a foreign countr#

) minimum glo$al in*estmentAnswer: %Page Ref: =/



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0) efine parochialism. iscuss wh# parochialism is a pro$lem for U.&. managers and discussreasons wh# it is important to o*ercome parochialism in toda#;s $usiness en*ironment.Answer: Parochialism is t#picall# defined as *iewing the world solel# through one;s own e#esand perspecti*es. People with a parochial attitude do not recogni?e that others ha*e differentwa#s of li*ing and wor,ing. Parochialism is a significant o$stacle for managers wor,ing in a

glo$al $usiness world. "f managers fall into the trap of ignoring others; *alues and customs andrigidl# ,eep on appl#ing an attitude of Hours is $etter than theirsH to foreign cultures the#;ll findit difficult to compete with other organi?ations around the world. Therefore it is important too*ercome parochialism in order to succeed in toda#;s glo$al en*ironment.Page Ref: 75

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ Anal#tic &,ills+ %ommunication A$ilities%h. !$-ecti*e: 1


5) ist and discuss the three attitudes managers might ha*e toward international $usiness.Answer:a. Ethnocentric attitude This is the parochialistic $elief that the $est wor, approaches and

practices are those of the home countr#. (anagers with an ethnocentric attitude $elie*e that people in foreign countries do not ha*e the needed s,ills e>pertise ,nowledge or e>perience toma,e the $est $usiness decisions as people in the home countr# do. The# don;t trust foreignemplo#ees with ,e# decisions.

$. Pol#centric attitude This is the *iew that emplo#ees in the host countr# ,now the $est wor,approaches and practices for running their $usiness. (anagers with a pol#centric attitude *iewe*er# foreign operation as different and hard to understand. Thus these managers are li,el# tolea*e their foreign facilities alone and let foreign emplo#ees figure out how $est to do things.c. 8eocentric attitude This is a world oriented *iew that focuses on using the $est approachesand people from around the glo$e. (anagers with this t#pe of attitude $elie*e that it;s importantto ha*e a glo$al *iew $oth at the organi?ation;s head@uarters in the home countr# and in the*arious foreign wor, facilities. (a-or issues and decisions are *iewed glo$all# $# loo,ing for the

$est approaches and people regardless of origin.Page Ref: 75 7

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) 9rite a short essa# on the European Union. iscuss unification and economic difficultiesencountered $# the regional trade alliance in recent #ears.Answer: The European Union FEU) is an economic and political partnership of 7 democraticEuropean countries. Eight countries F%roatia the former Dugosla* Repu$lic of (acedoniaTur,e# Al$ania 'osnia Bercego*ina "celand (ontenegro and &er$ia) are candidates to -oin

the EU. 'efore $eing allowed to -oin howe*er the countries must meet the criteria whichinclude democrac# rule of law a mar,et econom# and adherence to the EU;s goals of politicaland economic union. 9hen the 1 original mem$ers formed the EU in 1 the primar#moti*ation was to reassert the region;s economic position against the United &tates and


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The euro ?one is a larger economic unit than the United &tates or %hina and is a ma-or source ofworld demand for goods and ser*ices. As the economic crisis in the region intensifies a growingnum$er of companies in the United &tates are warning in*estors that sales are slowing and couldget much worse. Therefore the importance of this regional trading alliance will continue toe*ol*e as EU mem$ers wor, together to resol*e the region;s economic issues and once again

assert their economic power with successful European $usinesses continuing to pla# a crucialrole in the glo$al econom#.Page Ref: 7 77

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7) 9rite a short essa# on the 6orth American 2ree Trade Agreement and other atin AmericanAgreements.Answer: The 6orth American 2ree Trade Agreement F6A2TA) 9hen agreements in ,e# issuesco*ered $# the 6A2TA were reached $# the (e>ican %anadian and U.&. go*ernments in 1a *ast economic $loc was created. As of 41 it is the second largest trade $loc in the world in

terms of com$ined 8 P of its mem$ers. 'etween 1 0 Fwhen 6A2TA went into effect) and447 Fthe most recent #ear for complete statistics) merchandise trade $etween the United &tatesand %anada and (e>ico has more than tripled while trade $etween (e>ico and the United &tateshas more than @uadrupled. Put into num$ers that translates to some M . $illion e>changed on adail# $asis among 6A2TA partners. Eliminating the $arriers to free trade Ftariffs importlicensing re@uirements customs user fees) has strengthened the economic power of all threecountries. 2or instance research into (e>ican migration shows that a mi> of de*elopmentsL e>panding economic and educational opportunities rising $order crime and shrin,ing familiesha*e suppressed the num$er of illegal immigrants coming to the United &tates in search of -o$sand prosperit#. espite earl# criticisms of the trade agreement the 6orth American trading $locremains a powerful force in toda#;s glo$al econom#.

!ther atin American nations ha*e $ecome part of free trade $locs as well. %olom$ia (e>icoand Jene?uela led the wa# when all three signed an economic pact in 1 0 eliminating importduties and tariffs. Another agreement the U.&.LL%entral America 2ree Trade AgreementF%A2TA) promotes trade li$erali?ation $etween the United &tates and fi*e %entral Americancountries: %osta Rica El &al*ador 8uatemala Bonduras and 6icaragua. Bowe*er onl# El&al*ador and %osta Rica ha*e -oined. The other countries ha*e #et to change laws to $e in linewith the agreement. The United &tates also signed a trade deal with %olom$ia that is said to $ethe largest 9ashington has concluded with a atin American countr# since signing 6A2TA.

6egotiators from /0 countries in the 9estern Bemisphere continue wor, on a 2ree Trade Area of the Americas F2TAA) agreement which was to ha*e $een operational no later than 445 amissed targeted deadline. eaders of these nations ha*e #et to reach an# agreement lea*ing thefuture of the 2TAA up in the air. Bowe*er another free trade $loc of 14 &outh Americancountries ,nown as the &outhern %ommon (ar,et or (ercosur alread# e>ists. &ome &outhAmericans see (ercosur as an effecti*e wa# to com$ine resources to $etter compete againstother glo$al economic powers especiall# the EU and 6A2TA. 9ith the future of 2TAA highl#dou$tful this regional alliance could ta,e on new importance.Page Ref: 77 7=



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=) %reate short notes on the 9orld Trade !rgani?ation F9T!) the "nternational (onetar# 2undF"(2) the 9orld 'an, 8roup and the !rgani?ation for Economic %ooperation and

e*elopment F!E% ).Answer: The 9orld Trade !rgani?ation F9T!) is a glo$al organi?ation of 155 countries thatdeals with the rules of trade among nations. 2ormed in 1 5 the 9T! e*ol*ed from the 8eneral

Agreement on Tariffs and Trade F8ATT) a trade agreement in effect since the end of 9orld 9ar"". Toda# the 9T! is the onl# glo$al organi?ation that deals with trade rules among nations. "tsmem$ership consists of 155 mem$er countries and o$ser*er go*ernments Fwhich ha*e aspecific time frame within which the# must appl# to $ecome mem$ers). The goal of the 9T! isto help countries conduct trade through a s#stem of rules. Although critics ha*e staged *ocal

protests against the 9T! claiming that glo$al trade destro#s -o$s and the natural en*ironment itappears to pla# an important role in monitoring promoting and protecting glo$al trade.The "nternational (onetar# 2und F"(2) is an organi?ation of 1== countries that promotesinternational monetar# cooperation and pro*ides mem$er countries with polic# ad*icetemporar# loans and technical assistance to esta$lish and maintain financial sta$ilit# and tostrengthen economies. uring the glo$al financial turmoil of the last few #ears the "(2 has $een

on the forefront of ad*ising countries and go*ernments in getting through the difficulties.The 9orld 'an, 8roup is a group of fi*e closel# associated institutions all owned $# itsmem$er countries that pro*ides *ital financial and technical assistance to de*eloping countriesaround the world. The goal of the 9orld 'an, 8roup is to promote long term economicde*elopment and po*ert# reduction $# pro*iding mem$ers with technical and financial support.The forerunner of the !E% the !rgani?ation for European Economic %ooperation was formedin 1 07 to administer American and %anadian aid under the (arshall Plan for the reconstructionof Europe after 9orld 9ar "". Toda# the !rgani?ation for Economic %ooperation and

e*elopment F!E% ) is a Paris $ased international economic organi?ation whose mission is tohelp its /0 mem$er countries achie*e sustaina$le economic growth and emplo#ment and raisethe standard of li*ing in mem$er countries while maintaining financial sta$ilit# in order tocontri$ute to the de*elopment of the world econom#. 9hen needed the !E% gets in*ol*ed innegotiations with !E% countries so the# can agree on Hrules of the gameH for internationalcooperation. !ne current focus is com$ating small scale $ri$er# in o*erseas commerce. The!E% considers Hfacilitation pa#mentsH to $e corrosi*e particularl# on sustaina$le economicde*elopment and the rule of law. 9ith a long histor# of facilitating economic growth around theglo$e the !E% now shares its e>pertise and accumulated e>periences with more than 74de*eloping and emerging mar,et economies.Page Ref: 7 =1



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) E>plain the differences $etween a multidomestic corporation a glo$al compan# and a $orderless organi?ation. "nclude e>amples of companies for each of the t#pes of organi?ationsdiscussed.Answer:a. A multidomestic corporation is a multinational corporation F(6%) that decentrali?es

management and other decisions to the local countr#. This t#pe of organi?ation doesn;t attempt toreplicate its domestic successes $# managing foreign operations from its home countr#. "nsteadlocal emplo#ees are hired to manage the $usiness and mar,eting strategies are tailored to thatcountr#;s uni@ue characteristics. This t#pe of glo$ali?ation reflects the pol#centric attitude. (an#consumer companies manage their glo$al $usinesses using this approach $ecause the# mustadapt their products and ser*ices to meet the needs of the local mar,ets.2or e>ample &wit?erland $ased 6estle can $e descri$ed as a multidomestic corporation. 9ithoperations in almost e*er# countr# on the glo$e its managers match the compan#;s products toits consumers. "n parts of Europe 6estle sells products that are not a*aila$le in the United &tatesor atin America.

$. A second t#pe of (6% called a glo$al compan# centrali?es its management and other

decisions in the home countr#. These companies treat the world mar,et as an integrated wholeand focus on the need for glo$al efficienc#. Although these companies ma# ha*e considera$leglo$al holdings management decisions with compan# wide implications are made fromhead@uarters in the home countr#. This approach to glo$ali?ation reflects the ethnocentricattitude.&ome e>amples of companies that can $e considered glo$al companies include &on# eutsche'an, A8 and (errill #nch.c. !ther companies are going international $# eliminating structural di*isions that imposeartificial geographical $arriers. This t#pe of (6% is called a transnational or $orderlessorgani?ation and reflects a geocentric attitude. (anagers choose this form of internationalorgani?ation to increase efficienc# and effecti*eness in a competiti*e glo$al mar,etplace.2or e>ample "'( dropped its organi?ational structure $ased on countr# and reorgani?ed intoindustr# groups. &pain;s Telefonica eliminated the geographic di*isions $etween (adridhead@uarters and its widespread phone companies. The compan# will $e organi?ed insteadalong $usiness lines such as "nternet ser*ices cellular phones and media operations.Page Ref: =1 =

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144) escri$e the different approaches that a compan# ma# use when it decides to gointernational.Answer: (anagers who want to get into a glo$al mar,et with minimal in*estment ma# start withglo$al sourcing Falso called glo$al outsourcing). This in*ol*es purchasing materials or la$orfrom around the world where*er it is cheapest. The goal here is to ta,e ad*antage of lower costs

in order to $e more competiti*e.The ne>t step in going international ma# in*ol*e e>porting the organi?ation;s products to othercountriesIthat is ma,ing products domesticall# and selling them a$road. "n addition anorgani?ation might do importing which in*ol*es ac@uiring products made a$road and sellingthem domesticall#. 'oth usuall# entail minimal in*estment and ris, which is wh# man# small

$usinesses often use these approaches to doing $usiness glo$all#.(anagers also might use licensing or franchising which are similar approaches in*ol*ing oneorgani?ation gi*ing another organi?ation the right to use its $rand name technolog# or productspecifications in return for a lump sum pa#ment or a fee usuall# $ased on sales. The onl#difference is that licensing is primaril# used $# manufacturing organi?ations that ma,e or sellanother compan#;s products and franchising is primaril# used $# ser*ice organi?ations that want

to use another compan#;s name and operating methods.9hen an organi?ation has $een doing $usiness internationall# for a while and has gainede>perience in international mar,ets managers ma# decide to ma,e more of a direct foreignin*estment. !ne wa# to increase in*estment is through a strategic alliance which is a partnership

$etween an organi?ation and a foreign compan# partner or partners in which $oth share resourcesand ,nowledge in de*eloping new products or $uilding production facilities.2inall# managers ma# choose to directl# in*est in a foreign countr# $# setting up a foreignsu$sidiar# as a separate and independent facilit# or office. This su$sidiar# can $e managed as amultidomestic organi?ation Flocal control) or as a glo$al organi?ation Fcentrali?ed control). Thisarrangement in*ol*es the greatest commitment of resources and poses the greatest amount ofris,.Page Ref: = =/

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagement+ iscuss factors influencing organi?ational structure decisionsAA%&': #namics of the 8lo$al Econom#+ %ommunication A$ilities%h. !$-ecti*e: /


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141) iscuss four glo$al economic issues and how the# affect management decisions pro*idinge>amples of each.Answer: A glo$al manager must $e aware of economic issues when doing $usiness in othercountries. 2irst it;s important to understand a countr#;s t#pe of economic s#stem.a. T#pe of econom# The two ma-or t#pes of economies are mar,et economies and command

economies. A mar,et econom# is one in which resources are primaril# owned and controlled $#the pri*ate sector. A command econom# is one in which economic decisions are planned $# acentral go*ernment. (anagers need to ,now a$out a countr#;s economic s#stem $ecause it hasthe potential to constrain decisions and actions. !ther economic issues a manager might need tounderstand include currenc# e>change rates inflation rates and di*erse ta> policies. As %hinashifts from a more planned econom# to a more free mar,et changing regulations and policiesaffect the decisions of managers conducting $usiness in that countr#.

$. %urrenc# strength A glo$al firm;s profits can *ar# dramaticall# depending on the strength of its home currenc# and the currencies of the countries in which it operates. An# re*aluation of anation;s currenc# can affect the managers; decisions and the le*el of a compan#;s profits. 2orinstance prior to the o*erall glo$al economic slowdown the rising *alue of the euro against $oth

the dollar and the #en contri$uted to strong profits for 8erman companies.c. "nflation "t means that prices for products and ser*ices are going up. 'ut it also affectsinterest rates e>change rates the cost of li*ing and the general confidence in a countr#;s

political and economic s#stem. (anagers need to monitor inflation trends so that the# can ma,egood decisions and anticipate an# possi$le changes in a countr#;s monetar# policies. "nflationrates from .=K in the 6orthern (ariana "slands to N57.0K in 'elarus impact the purchasing and

pricing decisions of glo$al managers.d. i*erse ta> policies i*erse ta> policies are a ma-or worr# for a glo$al manager. &ome hostcountries are more restricti*e than the organi?ation;s home countr#. !thers are far more lenient.(anagers need e>act information on the *arious ta> rules in countries in which the# operate tominimi?e their $usiness;s o*erall ta> o$ligation. 2or the past se*eral #ears small $usinessin*estment decisions in the United &tates ha*e $een affected $# the uncertaint# surroundingdomestic ta> policies.Page Ref: =0 =5

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14 ) ist and e>plain Bofstede;s fi*e dimensions of national culture.Answer: 8eert Bofstede de*eloped one of the most widel# referenced approaches to helpingmanagers $etter understand differences $etween national cultures. Bis research found thatcountries *ar# on fi*e dimensions of national culture.a. "ndi*idualism *ersus collecti*ism "ndi*idualism refers to a social framewor, where people

loo, after their own interests and those of their immediate famil#. The opposite of this iscollecti*ism that is characteri?ed $# a social framewor, where people e>pect others in the groupthat the# are a part of to loo, after them and to protect them when the# are in trou$le.

$. Power distance A high power distance societ# accepts wide differences in power inorgani?ations. Emplo#ees show a great deal of respect for those in authorit#. !n the other hand alow power distance societ# pla#s down ine@ualities. Emplo#ees in a low power distanceorgani?ation are not afraid to approach their $oss.c. Uncertaint# a*oidance A societ# that is high in uncertaint# a*oidance is threatened witham$iguit# and characteri?ed $# a high le*el of an>iet# among its people. A societ# that is low inuncertaint# a*oidance is comforta$le with ta,ing ris,s and is also tolerant of different $eha*iorand opinions.

d. Achie*ement and nurturing Achie*ement is the degree to which *alues such asasserti*eness the ac@uisition of mone# and material goods and competition pre*ail. 6urturing isan attri$ute that emphasi?es relationships and concern for others.e. ong term and short term orientation People in a long term orientation societ# loo, to thefuture and *alue thrift and persistence. People in short term orientation societies *alue the pastand emphasi?e respect for tradition.Page Ref: = =7

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#+%ommunication A$ilities%h. !$-ecti*e: 0


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14/) iscuss the dimensions of the 8lo$al eadership and !rgani?ational 'eha*iorEffecti*eness F8 !'E) framewor,. escri$e how each dimension compares to Bofstede;s fi*edimensions of national culture.Answer: The 8 !'E research team identified dimensions on which national cultures differ:a. Asserti*eness: The e>tent to which a societ# encourages people to $e tough confrontational

asserti*e and competiti*e *ersus modest and tender. This is essentiall# e@ui*alent to Bofstede;sachie*ement nurturing dimension. $. 2uture orientation: The e>tent to which a societ# encourages and rewards future oriented $eha*iors such as planning in*esting in the future and dela#ing gratification. This is essentiall#e@ui*alent to Bofstede;s long term and short term orientation.c. 8ender differentiation: The e>tent to which a societ# ma>imi?es gender role differences asmeasured $# how much status and decision ma,ing responsi$ilities women ha*e. This dimensionis an additional dimension to Bofstede;s framewor,.d. Uncertaint# a*oidance: &imilar to Bofstede;s description the 8 !'E team defined thisdimension as a societ#;s reliance on social norms and procedures to alle*iate the unpredicta$ilit#of future e*ents.

e. Power distance: As did Bofstede the 8 !'E team defined this as the degree to whichmem$ers of a societ# e>pect power to $e une@uall# shared.f. "ndi*idualism collecti*ism: Again this term was defined as Bofstede did as the degree towhich indi*iduals are encouraged $# societal institutions to $e integrated into groups withinorgani?ations and societ#.g. "n group collecti*ism: This dimension encompasses the e>tent to which mem$ers of a societ#ta,e pride in mem$ership in small groups such as their famil# and circle of close friends and theorgani?ations in which the#;re emplo#ed. This dimension has no e@ui*alent in Bofstede;sframewor,.h. Performance orientation: This refers to the degree to which a societ# encourages and rewardsgroup mem$ers for performance impro*ement and e>cellence. This dimension is similar toBofstede;s achie*ement orientation.i. Bumane orientation: This is defined as the degree to which a societ# encourages and rewardsindi*iduals for $eing fair altruistic generous caring and ,ind to others. This is similar toBofstede;s nurturing dimension.Page Ref: = ==

earning !utcome: "dentif# the fundamental concepts and issues of international $usiness andmanagementAA%&': (ulticultural and i*ersit# Understanding+ #namics of the 8lo$al Econom#+%ommunication A$ilities%h. !$-ecti*e: 0

ifficult#: ifficult%lassification: %onceptual

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