International Business The Challenge of Global Competition 13th Edition Donald Ball – Test Bank

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Chapter 05

Natural Resources and Environmental Sustainability

 

True / False Questions

1. Switzerland exports cheese and chocolate because one of its factor endowments is lots of rich agricultural land.

True    False

 

2. Porter’s diamond can be used to explain the importance of the environment and natural resources.

True    False

 

3. Porter’s diamond model suggests that Switzerland should not be competitively successful.

True    False

 

4. Porter suggests that adverse conditions can motivate innovation, which may lead to the development of a competitive advantage.

True    False

 

5. With globally networked transportation, location does not matter as a basic factor condition.

True    False

 

6. Because Austria sided with the West in the Cold War, it became a favored location for offices of international firms servicing eastern European operations.

True    False

 

7. Geographical proximity is rarely a major reason for trade.

True    False

 

8. Mountains tend to impede trade, whereas flat areas tend to facilitate trade relationships.

True    False

 

9. Mountain barriers found in the area of the Pakistan-Afghanistan border impede travel and separate populations.

True    False

 

10. Switzerland, China, and Colombia are nations that present topographic challenges to marketers because their markets are divided by mountain ranges.

True    False

 

11. Every coast between 20 and 30 degrees of the equator (north or south) is dry.

True    False

 

12. Bodies of water, much like deserts and mountains, also serve as barriers to trade.

True    False

 

13. Climate differences explain differences in human and economic development because the less temperate climates limit mental powers.

True    False

 

14. Nonrenewable energy sources include coal, fossil fuels, and ocean thermal energy conversion.

True    False

 

15. Through 2035, fossil fuels are expected to remain the world’s dominant energy source.

True    False

 

16. China and India combined are using more marketed energy than is the United States, and this trend is projected to increase.

True    False

 

17. Heavy oil is oil weighted down with an extra carbon molecule, and it can be gasified using the Fischer-Tropsch process.

True    False

 

18. Saudi Arabia and Canada have the largest proven oil reserves.

True    False

 

19. The largest portion of proven oil reserves can be categorized as being at the highest level of investment risk.

True    False

 

20. Nuclear power is a leading contributor to the French energy grid.

True    False

 

21. Because it is a high polluter, coal is on the decline as an energy source.

True    False

 

22. Biomass is a category of renewable energy fuels based on their heavy weight.

True    False

 

23. Sustainable approaches in business usually involve trade-offs such as lower profits compensated by reduced marketing costs and improved image/reputation.

True    False

 

24. Limits, interdependence, and equity are characteristics of sustainable business practices.

True    False

 

25. The stakeholder model for environmentally sustainable business has failed because we don’t have an accounting system to measure the present costs of environmental irresponsibility.

True    False

 

26. Compassion has nothing to do with sustainable business. Business is business.

True    False

 

27. Coal and nuclear power are both in decline as energy sources.

True    False

 

28. Stakeholder theory suggests that balancing competing tensions in a business is impossible and that recognizing this early in the process is helpful.

True    False

 

29. Triple-bottom-line accounting is an example of sustainability with economic, social, and environmental accountability.

True    False

 

30. Interface, the manufacturer of Flor, is an example of a petroleum-based business that has developed a sustainable model.

True    False

 

31. Environmental sustainability is about maintaining the environment, and it is both local and global.

True    False

 

32. Environmentally sustainable businesses need to consider the economic and ecological systems in which they function, but not the social.

True    False

 

33. Sustainable business practices have three characteristics: limits, interdependence, and equity.

True    False

 

 

Multiple Choice Questions

34. The relationships among ecological, social, and economic systems in sustainable environments need to be:

A. discreet.

 

B. renewable.

 

C. positive.

 

D. interdependent.

 

35. The stakeholder model requires businesses to think about:

A. the stakeholders’ interest in profitability.

 

B. the network of tensions caused by competing demands.

 

C. strategy in light of sustainability.

 

D. the frequency of social issues faced by the stakeholders.

 

36. Stakeholder theory pushes managers to be clear about how they want to do business, so it encourages:

A. recognition of and transparency with values and underlying principles.

 

B. discussion of profit center margins.

 

C. strategy development from the top down.

 

D. B and C.

 

37. Interface, the producer of Flor carpeting, has a solid record in sustainable business practice and:

A. makes impressive contributions to sustainable development in developing economies.

 

B. is committed to triple-bottom-line accounting.

 

C. spins its products from petroleum.

 

D. sources its raw materials from recycled plastic bottles.

 

38. Patagonia recognizes that doing business following the traditional approach, focusing on quarterly earnings, is not complete because this does not focus on:

A. the negative impact of the business.

 

B. the cost of environmental sustainability.

 

C. consumer needs for green merchandise.

 

D. triple-bottom-line (3BL) accounting.

 

39. Chouinard, the founder of Patagonia, observed that:

A. triple-bottom-line accounting is the way to build sustainability.

 

B. compassion is the first step in sustainability.

 

C. our approach to fossil fuel consumption is clearly unsustainable.

 

D. no business can be done on a dead planet.

 

40. Physical barriers that have led to the development of separate languages in the same country are known as:

A. political and cultural patterns.

 

B. topographical barriers.

 

C. linguistic tariffs.

 

D. differentiating borders.

 

41. With factor conditions, Porter’s diamond model distinguishes between basic factors, those a country inherits, and

A. imported factors, those it brings in from abroad.

 

B. demand conditions, the aggregate demand in the economy.

 

C. climate conditions, the basic influence on business options in the specific location.

 

D. advanced factors, those a country can mold: labor and infrastructure.

 

42. Swiss exports are concentrated, high-density products that minimize the need for importing bulky materials because:

A. mountain ranges increase transport costs into and out of Switzerland and limit local resources.

 

B. the Swiss love of chocolate and watches influenced the export patterns.

 

C. high-density exports encounter lower tariffs.

 

D. B and C.

 

43. Geographical proximity contributes to:

A. knowledge of the country by its neighbors.

 

B. lower freight costs.

 

C. the likelihood of trade relationships.

 

D. all of the above.

 

44. Topography, including mountains, deserts, plains, and bodies of water, greatly influences:

A. political relationships.

 

B. the physical distribution of products and services.

 

C. the local approach to education and health services.

 

D. local attitudes toward industrially developed economies.

 

45. Nations whose mountains divide them into smaller regional areas include:

A. the United States, Mexico, and Canada.

 

B. Switzerland, Afghanistan, China, and Colombia.

 

C. Luxembourg, France, and Romania.

 

D. Estonia, Latvia, and Lithuania.

 

46. One example of the effect of topography is:

A. isolated language groups, which require special marketing adjustments.

 

B. regional metals markets.

 

C. a unified China.

 

D. equal distribution of populations.

 

47. A good example of the relationship between water supply and population concentration is:

A. eastern Europe

 

B. China

 

C. Australia

 

D. Japan

 

48. In more dense populations, international managers can expect:

A. increased political discord.

 

B. markets that respond well to word-of-mouth promotion.

 

C. contrasting topographical features.

 

D. lower marketing and distribution costs.

 

49. Densely populated areas coincide with:

A. rivers, lakes, and seacoasts.

 

B. inland waterways.

 

C. rich mineral reserves and rare earth deposits.

 

D. low levels of environmental awareness.

 

50. Climate influences:

A. intelligence and energy levels, per the North-South divide.

 

B. what people can do, physically and economically.

 

C. levels of emotional well-being.

 

D. adjustment and motivation.

 

51. World Bank studies have shown that underdevelopment is often due to:

A. factors such as parasites and viruses that are a part of tropical climates and expand unchecked because of the lack of winter temperatures.

 

B. mental slowness in people of the climates around the equator.

 

C. socialist political regimes.

 

D. lack of government investment in education.

 

52. Petroleum, a relatively cheap nonrenewable energy source, is:

A. in abundant supply but is not environmentally clean.

 

B. being increasingly depleted and is expected to run out in another 50 years, but in the meantime, improved retrieval techniques are being developed.

 

C. clean, cheap, and available, but most of the reserves are located in countries whose leadership is critical of the industrialized world.

 

D. expected to run out in another 10 years and needs to be replaced with renewable energy sources quickly.

 

53. The top four countries in proven reserves are:

A. China, Japan, Singapore, and Malaysia.

 

B. Kuwait, Saudi Arabia, the United States, and Mexico.

 

C. Qatar, Libya, Nigeria, and Venezuela.

 

D. Saudi Arabia, Canada, Iran, and Iraq.

 

54. Heavy oil is:

A. a group of unconventional oil sources such as oil sands, shale, coal, and natural gas, all of which via processing can yield oil.

 

B. a rich oil found in deposits in Saudi Arabia and Kuwait whose molecular weight is heavier than normal oil.

 

C. oil extracted from biomass that is reprocessed.

 

55. As an energy source, nuclear power:

A. is growing significantly, especially in developing countries.

 

B. has been growing as the price of oil climbs and cleaner energy sources (nonpolluting) are sought.

 

C. has been exploited by France, which has one of the lowest greenhouse gas emissions in the industrialized world.

 

D. all of the above.

 

56. Coal pollutes heavily:

A. so its use has declined markedly in the past 15 years.

 

B. yet its consumption has increased and is projected to continue on this trend, especially in China and India.

 

C. and contributes to greenhouse gas emissions, especially in China, India, and the United States.

 

D. B and C.

 

57. Renewable energy sources:

A. will replace fossil fuels, due to price, depletion, or carbon emissions.

 

B. are growing at greater rates than the nonrenewables in the United States and Europe.

 

C. A and B.

 

D. are all available everywhere.

 

58. The area with the greatest capacities in renewables as of 2010 is:

A. the United States.

 

B. European Union.

 

C. India.

 

D. Japan.

 

59. Nonfuel minerals:

A. include chrome, manganese, platinum, and arsenic, all necessary for modern living.

 

B. are mostly sourced through imports in the United States.

 

C. frequently originate in China.

 

D. all of the above.

 

60. Environmental sustainability is both local and global because:

A. environmental conditions do not recognize national borders.

 

B. governments are not prepared to address environmental issues beyond the UN.

 

C. business has become global, so sustainability must follow the trend.

 

D. all of the above.

 

61. The three characteristics of evolving sustainable business practices are:

A. local, global, and improving quality of life.

 

B. environmental sustainability, quality-of-life sustainability, and triple-bottom-line accounting.

 

C. limits, interdependence, and equity.

 

D. none of the above.

 

62. Sam Palmisano, CEO of IBM, has described a new way of doing business that goes to equity of distribution by observing that:

A. profit sharing will need to increase.

 

B. stakeholder theory provides a way forward, combining local and global.

 

C. IBM would end its colonial company model and move on to an integrated model with high levels of trust among stakeholders.

 

D. A and B.

 

63. Stakeholder theory is an understanding of how business works that:

A. takes into account culture and environmentalism.

 

B. rejects the importance of the bottom line.

 

C. emphasizes planning.

 

D. takes into account all identifiable interest holders.

 

64. A way to measure a company’s success in sustainable business practices is:

A. to examine the return on investment.

 

B. triple-bottom-line accounting.

 

C. to monitor the company in a social context.

 

D. to review the marketing materials.

 

65. A specific example of a sustainable business is Patagonia, as evidenced in its:

A. Footprint Chronicles program that addresses the trade-offs global sourcing creates and evaluates the impact of sourcing decisions.

 

B. ecosystem model of sustainability that relies on the synergies between financial, environmental, and social elements.

 

C. product lines and credit policies.

 

D. A and B.

 

66. Porter’s diamond is a model that offers an explanation of:

A. differing levels of success among the national players in world markets.

 

B. endowment factor differentials.

 

C. the impact of climate on development.

 

D. macro-level FDI.

 

67. Proximity is a factor in explaining:

A. a nation’s political system.

 

B. the number of a nation’s political and trade relationships.

 

C. language patterns.

 

D. demand conditions.

 

68. Climate is probably the most important element of the physical forces, as it sets the limits on:

A. annual rainfall, and thus water supply.

 

B. population growth patterns.

 

C. what people can do physically and economically.

 

D. expected FDI.

 

69. The main transportation artery of Europe is the:

A. Venice canal system.

 

B. Danube-Dresden waterway.

 

C. Lake Constantine system.

 

D. Rhine waterway.

 

70. Bodies of water that provide inexpensive access to interior markets are known as:

A. inland waterways

 

B. seaway outlets.

 

C. river systems.

 

D. inland oceans.

 

71. Every continent has inland waterways that provide inexpensive access to interior markets except:

A. Russia.

 

B. North Africa.

 

C. Australia.

 

D. North America.

 

72. The North-South divide uses climatic differences to explain:

A. population differences.

 

B. trade patterns.

 

C. differences in human development.

 

D. cultural differences.

 

73. Studies conducted by the World Bank indicate that tropical climates allow for:

A. the unimpeded reproduction and growth of weeds, viruses, birds, insects, and parasites.

 

B. lack of the need to provide heat and shelter that is present in northern climates.

 

C. unparalleled trade.

 

D. cultivation of citrus and four crops per year.

 

74. Natural resources are:

A. anything that is alive in the natural world.

 

B. anything provided by nature on which people depend.

 

C. any raw material that becomes a component in a manufactured good.

 

D. anything that is used for food or fuel.

 

75. The marketed energy use has been dominated since 1980 by:

A. renewable energy sources.

 

B. nuclear energy and coal.

 

C. nonrenewable energy sources.

 

D. solar and wind power.

 

76. The International Energy Agency 2010 report observes that an energy revolution underway may well lead to:

A. a 27 percent drop in oil usage.

 

B. North America becoming the center of alternative energy research.

 

C. Africa and the Middle East increasingly relying on fossil fuels.

 

D. Europe relying increasingly on nuclear.

 

77. Unconventional sources of petroleum such as oil sands and shale are often grouped together and referred to as:

A. nonrenewable hopes.

 

B. new sources.

 

C. peak sources.

 

D. heavy oil.

 

78. This material, when heated to 500°C, will yield 25 liters or more per ton of input:

A. shale.

 

B. biomass.

 

C. natural gas.

 

D. light petroleum.

 

79. The largest portion of the world’s proven oil reserves is located in:

A. low-risk areas.

 

B. high-risk areas.

 

C. climate-challenging areas.

 

D. developed nations’ oil fields.

 

80. This government commercialized the German Fischer-Tropsch process in order to obtain oil from coal through a catalyzed chemical reaction:

A. Israel.

 

B. the Sudan.

 

C. South Africa.

 

D. Germany.

 

81. Instead of declining, this nonrenewable energy source, because of its lack of pollution and the rising price of oil, has seen significant growth:

A. wind power.

 

B. nuclear power.

 

C. geothermal power.

 

D. petroleum.

 

82. Although it pollutes heavily, this energy source is on the rise everywhere, especially in China:

A. natural gas.

 

B. coal.

 

C. nuclear.

 

D. diesel.

 

83. This is the only industrialized country that has not ratified the Kyoto Protocol, a UN convention on climate change:

A. China.

 

B. France.

 

C. Russia.

 

D. the United States.

 

84. This is the cleanest of the nonrenewable fuel sources, and it has become a substitute for oil as oil prices increase:

A. natural gas.

 

B. diesel.

 

C. nuclear.

 

D. kerosene.

 

85. Wind power is sourced:

A. on land only.

 

B. on land and sea.

 

C. where altitudes permit.

 

D. in the Swiss Alps.

 

86. According to the text, the fastest-growing renewable energy source is:

A. solar PV.

 

B. nuclear power.

 

C. wind power.

 

D. biomass.

 

87. This group of resources, which includes chrome and manganese, is used in many technology applications, and the United States imports many of these resources 100 percent:

A. rare earths.

 

B. nonfuel minerals.

 

C. rare minerals.

 

D. mineral gems.

 

88. China’s vast and mountainous terrain leads to:

A. many languages and dialects.

 

B. political unity, as in Switzerland.

 

C. economic disparities.

 

D. population disparities.

 

89. Deserts and tropical forests seem opposites, but they have this trait in common:

A. they are good vacation spots, and thus an economic stimulator.

 

B. they have small populations on their edges.

 

C. they separate markets, increasing transportation costs.

 

D. they are hospitable to insects.

 

90. Porter in his diamond model distinguishes two types of factor conditions:

A. positive and negative factors.

 

B. contributing and disaggregating factors.

 

C. advanced and basic factors.

 

D. foreign and domestic factors.

 

91. Rare earths are a group of elements used in:

A. jewelry.

 

B. technology applications.

 

C. farming.

 

D. solar applications.

 

92. Which country controls the export market of rare earths?

A. Brazil

 

B. Russia

 

C. the United States

 

D. China

 

93. Why are rare earths a concern in industrialized economies?

A. Although they are relatively common, they do not occur in concentrated form often.

 

B. They are very rare.

 

C. They are used in the smelting process.

 

D. They are not a concern, except for political reasons.

 

94. Europe follows the precautionary principle approach to environmental health and safety. This means:

A. everyone takes precautions and is always on the watch for environmental issues.

 

B. once a product is thought to be harmful, it is investigated immediately.

 

C. manufacturers of new products need to prove the product is safe.

 

D. consumers regularly review product safety regulations.

 

95. Sustainable business models:

A. incorporate a more socialist political approach to the marketplace.

 

B. have as a goal to ensure that the marketplace exists for future generations.

 

C. regard environmentalism as more important than profit.

 

D. A and C.

 

 

Essay Questions

96. Select a country and show a relationship between its physical forces and its economy.

 

 

 

 

97. Why do international managers need to know anything about a nation’s topographic features?

 

 

 

 

98. Explain the concept of sustainability as applied to business, using examples.

 

 

 

 

99. Why do nations care about having outlets to the ocean? Are landlocked nations at a disadvantage?

 

 

 

 

100. How does the notion of sustainable business compare to Milton Friedman’s assertion that the focus of business should be only on the bottom line?

 

 

 

 

 

Chapter 05 Natural Resources and Environmental Sustainability Answer Key

 

True / False Questions

1. Switzerland exports cheese and chocolate because one of its factor endowments is lots of rich agricultural land.

FALSE

Cheese and chocolates can be manufactured from dairy with low-volume imports and large amounts of value added.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

2. Porter’s diamond can be used to explain the importance of the environment and natural resources.

TRUE

Porter’s diamond illustrates the variables affecting competitive advantage, and one of them is factor conditions (including geography and natural resources).
Refer To: Figure 5.1, Variables affecting competitive advantage: Porter’s diamond

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Geography
 

 

3. Porter’s diamond model suggests that Switzerland should not be competitively successful.

FALSE

Porter’s diamond, especially with factor conditions differentiated into basic and advanced, explains Switzerland’s success as an exporting country.

 

AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Geography
 

 

4. Porter suggests that adverse conditions can motivate innovation, which may lead to the development of a competitive advantage.

TRUE

This is the case, and Switzerland is a good example.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Geography
 

 

5. With globally networked transportation, location does not matter as a basic factor condition.

FALSE

Learning location is a basic factor condition and helps to explain many of a country’s political and trade relationships.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

6. Because Austria sided with the West in the Cold War, it became a favored location for offices of international firms servicing eastern European operations.

FALSE

Austria was neutral in the Cold War, and this led to its role as a bridge between East and West.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

7. Geographical proximity is rarely a major reason for trade.

FALSE

To the contrary, geographical proximity often explains trade relationships.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

8. Mountains tend to impede trade, whereas flat areas tend to facilitate trade relationships.

TRUE

Topography contributes to differences in economies, and mountains and flatlands are a part of that.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

9. Mountain barriers found in the area of the Pakistan-Afghanistan border impede travel and separate populations.

TRUE

These barriers include the Hindu Kush, and they provide barriers between the two countries, as well as refuge, incidentally.
<<AU: Pls reword the second hilite to avoid “barriers… provide barriers”>>

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

10. Switzerland, China, and Colombia are nations that present topographic challenges to marketers because their markets are divided by mountain ranges.

TRUE

In addition, Spain and Afghanistan are in a similar situation.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

11. Every coast between 20 and 30 degrees of the equator (north or south) is dry.

TRUE

This is directly from the text.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

12. Bodies of water, much like deserts and mountains, also serve as barriers to trade.

FALSE

Bodies of water facilitate trade; they bring people closer.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

13. Climate differences explain differences in human and economic development because the less temperate climates limit mental powers.

FALSE

This explanation is known as the North-South divide, and its ethnocentric reasoning is problematic. The text explains that factors such as the Industrial Revolution, amplified by feedback loops, are the cause of developmental differences. See Jared Diamond’s Guns, Germs and Steel.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

14. Nonrenewable energy sources include coal, fossil fuels, and ocean thermal energy conversion.

FALSE

Thermal is renewable.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

15. Through 2035, fossil fuels are expected to remain the world’s dominant energy source.

TRUE

This is an accurate statement.
Refer To: Figure 5.13, Marketed energy use by fuel type

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

16. China and India combined are using more marketed energy than is the United States, and this trend is projected to increase.

TRUE

Figure 5.14 illustrates this relationship, which is mentioned in the text.
Refer To: Figure 5.14, Marketed energy use by region

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

17. Heavy oil is oil weighted down with an extra carbon molecule, and it can be gasified using the Fischer-Tropsch process.

FALSE

Heavy oil includes oil sands, and oil-bearing shale, natural gas, and coal.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

18. Saudi Arabia and Canada have the largest proven oil reserves.

TRUE

This statement is factual.
Refer To: Table 5.1, World oil reserves by country

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

19. The largest portion of proven oil reserves can be categorized as being at the highest level of investment risk.

TRUE

This is interesting from a business perspective. The text points out that, increasingly, oil reserves are controlled by governments that limit the access of the major oil companies.
Refer To: Figure 5.15, Worldwide proven oil reserves by investment risk

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

20. Nuclear power is a leading contributor to the French energy grid.

TRUE

France has invested heavily in nuclear and produces 75 percent of its electricity by nuclear power generation.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nuclear Power
 

 

21. Because it is a high polluter, coal is on the decline as an energy source.

FALSE

Just the opposite. Coal consumption is projected to increase 49 percent through 2030. The United States has the largest coal reserves, and presently they are projected to last for 134 years at current consumption rates.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Coal
 

 

22. Biomass is a category of renewable energy fuels based on their heavy weight.

FALSE

Biomass is a category of fuels based on photosynthesis, using the sun’s energy to create chemical energy via plants. Weight is not a part of the issue.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Renewable Energy
 

 

23. Sustainable approaches in business usually involve trade-offs such as lower profits compensated by reduced marketing costs and improved image/reputation.

FALSE

Sustainable approaches usually involve ecological, social, and economic aspects, but the notion of the mentioned trade-offs is not a part of the analysis.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-07 Explain the major characteristics of sustainable business.
Topic Area: Environmental Sustainability
 

 

24. Limits, interdependence, and equity are characteristics of sustainable business practices.

TRUE

Sustainability in business involves recognizing that there are limits to environmental resources; that the economic, social, and ecological systems are interdependent; and that for the interdependence to work, there has to be greater equity in distribution than there is now in many areas.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-07 Explain the major characteristics of sustainable business.
Topic Area: Sustainable Business
 

 

25. The stakeholder model for environmentally sustainable business has failed because we don’t have an accounting system to measure the present costs of environmental irresponsibility.

FALSE

The stakeholder model has not failed. It is regarded as a helpful model because it forces businesses to address the underlying values and principles of their business.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Model
 

 

26. Compassion has nothing to do with sustainable business. Business is business.

FALSE

Merton’s quote links compassion and sustainability through interdependence.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Model
 

 

27. Coal and nuclear power are both in decline as energy sources.

FALSE

Both of these sources of energy are projected to increase.
Refer To: Figure 5.17, Coal consumption in selected world regions, 1980-2030
Refer To: Figure 5.18, Renewable power capacities, developing world, EU, and top six countries

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nonrenewable Energy
 

 

28. Stakeholder theory suggests that balancing competing tensions in a business is impossible and that recognizing this early in the process is helpful.

FALSE

Stakeholder theory assumes that balancing these competing tensions among stakeholders is possible and desirable.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Model
 

 

29. Triple-bottom-line accounting is an example of sustainability with economic, social, and environmental accountability.

TRUE

Triple-bottom-line reporting is an example of sustainability’s three aspects: economic, social, and environmental.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Model
 

 

30. Interface, the manufacturer of Flor, is an example of a petroleum-based business that has developed a sustainable model.

TRUE

Interface has developed a business model that accepts responsibility for sustainability.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Model
 

 

31. Environmental sustainability is about maintaining the environment, and it is both local and global.

TRUE

The environment involves systems that are local and global at the same time. France does not produce many greenhouse gas emissions, but it is affected by emissions produced by other industrial countries.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmental Sustainability
 

 

32. Environmentally sustainable businesses need to consider the economic and ecological systems in which they function, but not the social.

FALSE

These are the interconnected systems in which businesses operate.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmental Sustainability
 

 

33. Sustainable business practices have three characteristics: limits, interdependence, and equity.

TRUE

These three characteristics are at the core of sustainable business practices.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmental Sustainability
 

 

Multiple Choice Questions

34. The relationships among ecological, social, and economic systems in sustainable environments need to be:

A. discreet.

 

B. renewable.

 

C. positive.

 

D. interdependent.

These characteristics are at the core of sustainable business practice.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmentally Sustainable Business
 

 

35. The stakeholder model requires businesses to think about:

A. the stakeholders’ interest in profitability.

 

B. the network of tensions caused by competing demands.

 

C. strategy in light of sustainability.

 

D. the frequency of social issues faced by the stakeholders.

Stakeholder theory differs from the input-process-output model because it looks at these tensions, both internal and external.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Theory
 

 

36. Stakeholder theory pushes managers to be clear about how they want to do business, so it encourages:

A. recognition of and transparency with values and underlying principles.

 

B. discussion of profit center margins.

 

C. strategy development from the top down.

 

D. B and C.

Stakeholder theory forces businesses to recognize their underlying values, including what kind of relationships they want to create with their stakeholders.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmental Sustainability
 

 

37. Interface, the producer of Flor carpeting, has a solid record in sustainable business practice and:

A. makes impressive contributions to sustainable development in developing economies.

 

B. is committed to triple-bottom-line accounting.

 

C. spins its products from petroleum.

 

D. sources its raw materials from recycled plastic bottles.

Interface has a remarkable environmental record, especially since its major input is petroleum.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Sustainable Business
 

 

38. Patagonia recognizes that doing business following the traditional approach, focusing on quarterly earnings, is not complete because this does not focus on:

A. the negative impact of the business.

 

B. the cost of environmental sustainability.

 

C. consumer needs for green merchandise.

 

D. triple-bottom-line (3BL) accounting.

Patagonia recognizes that GAAP accounting does not include negative externalities that the business has impacted or contributed to, such as environmental degradation and social ills.

 

AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Theory
 

 

39. Chouinard, the founder of Patagonia, observed that:

A. triple-bottom-line accounting is the way to build sustainability.

 

B. compassion is the first step in sustainability.

 

C. our approach to fossil fuel consumption is clearly unsustainable.

 

D. no business can be done on a dead planet.

“A company that is taking the long view must accept that it has an obligation to minimize its impact on the natural environment.”

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Theory
 

 

40. Physical barriers that have led to the development of separate languages in the same country are known as:

A. political and cultural patterns.

 

B. topographical barriers.

 

C. linguistic tariffs.

 

D. differentiating borders.

Examples of this are present in Afghanistan, Switzerland, China, and Colombia (dialects).

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

41. With factor conditions, Porter’s diamond model distinguishes between basic factors, those a country inherits, and

A. imported factors, those it brings in from abroad.

 

B. demand conditions, the aggregate demand in the economy.

 

C. climate conditions, the basic influence on business options in the specific location.

 

D. advanced factors, those a country can mold: labor and infrastructure.

Factor conditions are divided into basic and advanced.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Porter’s Diamond
 

 

42. Swiss exports are concentrated, high-density products that minimize the need for importing bulky materials because:

A. mountain ranges increase transport costs into and out of Switzerland and limit local resources.

 

B. the Swiss love of chocolate and watches influenced the export patterns.

 

C. high-density exports encounter lower tariffs.

 

D. B and C.

The existence of mountain ranges influences the Swiss export patterns.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

43. Geographical proximity contributes to:

A. knowledge of the country by its neighbors.

 

B. lower freight costs.

 

C. the likelihood of trade relationships.

 

D. all of the above.

All of these characteristics are present with geographical proximity.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

44. Topography, including mountains, deserts, plains, and bodies of water, greatly influences:

A. political relationships.

 

B. the physical distribution of products and services.

 

C. the local approach to education and health services.

 

D. local attitudes toward industrially developed economies.

This is directly from the text: Topography influences distribution.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

45. Nations whose mountains divide them into smaller regional areas include:

A. the United States, Mexico, and Canada.

 

B. Switzerland, Afghanistan, China, and Colombia.

 

C. Luxembourg, France, and Romania.

 

D. Estonia, Latvia, and Lithuania.

In addition to Switzerland, Afghanistan, China, and Colombia, the text mentions Spain.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

46. One example of the effect of topography is:

A. isolated language groups, which require special marketing adjustments.

 

B. regional metals markets.

 

C. a unified China.

 

D. equal distribution of populations.

Spain is given as an extended example; the same issues are found in China, Switzerland, and Afghanistan.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

47. A good example of the relationship between water supply and population concentration is:

A. eastern Europe

 

B. China

 

C. Australia

 

D. Japan

This is mentioned directly in the text.
Refer To: Figure 5.8, Land use map of Australia

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

48. In more dense populations, international managers can expect:

A. increased political discord.

 

B. markets that respond well to word-of-mouth promotion.

 

C. contrasting topographical features.

 

D. lower marketing and distribution costs.

Population centers are closer, communication systems are better, and the labor market is richer.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

49. Densely populated areas coincide with:

A. rivers, lakes, and seacoasts.

 

B. inland waterways.

 

C. rich mineral reserves and rare earth deposits.

 

D. low levels of environmental awareness.

This is directly from the text and supported by Figure 5.9.
Refer To: Figure 5.9, World population map

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Bodies of Water
 

 

50. Climate influences:

A. intelligence and energy levels, per the North-South divide.

 

B. what people can do, physically and economically.

 

C. levels of emotional well-being.

 

D. adjustment and motivation.

Climate sets the limits on what people can do.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

51. World Bank studies have shown that underdevelopment is often due to:

A. factors such as parasites and viruses that are a part of tropical climates and expand unchecked because of the lack of winter temperatures.

 

B. mental slowness in people of the climates around the equator.

 

C. socialist political regimes.

 

D. lack of government investment in education.

Continuous heat and no cold winter temperatures offer an ideal environment for parasites, viruses, weeds, and insects, all of which contribute to factors responsible for underdevelopment.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

52. Petroleum, a relatively cheap nonrenewable energy source, is:

A. in abundant supply but is not environmentally clean.

 

B. being increasingly depleted and is expected to run out in another 50 years, but in the meantime, improved retrieval techniques are being developed.

 

C. clean, cheap, and available, but most of the reserves are located in countries whose leadership is critical of the industrialized world.

 

D. expected to run out in another 10 years and needs to be replaced with renewable energy sources quickly.

The text describes petroleum reserves as expected to run out in 50 years and then lists mediating issues: automated equipment, refined extraction techniques, and more land open to exploration.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

53. The top four countries in proven reserves are:

A. China, Japan, Singapore, and Malaysia.

 

B. Kuwait, Saudi Arabia, the United States, and Mexico.

 

C. Qatar, Libya, Nigeria, and Venezuela.

 

D. Saudi Arabia, Canada, Iran, and Iraq.

This material is directly from Table 5.1, its first four entries.
<<AU: add “oil” before hilite?>>
Refer To: Table 5.1 World oil reserves by country

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

54. Heavy oil is:

A. a group of unconventional oil sources such as oil sands, shale, coal, and natural gas, all of which via processing can yield oil.

 

B. a rich oil found in deposits in Saudi Arabia and Kuwait whose molecular weight is heavier than normal oil.

 

C. oil extracted from biomass that is reprocessed.

Heavy oil is oil that is obtained from unconventional sources and usually through additional processing involving heating and pressure treatments. It does not flow easily and cannot be obtained from wells, as can conventional oil.
<<AU: Pls add a fourth answer choice here.>>

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

55. As an energy source, nuclear power:

A. is growing significantly, especially in developing countries.

 

B. has been growing as the price of oil climbs and cleaner energy sources (nonpolluting) are sought.

 

C. has been exploited by France, which has one of the lowest greenhouse gas emissions in the industrialized world.

 

D. all of the above.

Although nuclear power as an energy source was expected to decline because of safety and security issues, especially after the Japanese nuclear disaster in 2011, it has grown substantially, especially in the developing world and in France.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

56. Coal pollutes heavily:

A. so its use has declined markedly in the past 15 years.

 

B. yet its consumption has increased and is projected to continue on this trend, especially in China and India.

 

C. and contributes to greenhouse gas emissions, especially in China, India, and the United States.

 

D. B and C.

Although coal does pollute heavily, its use is increasing, as illustrated in Figure 5.17.
Refer To: Figure 5.17, Coal consumption in selected world regions

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

57.
(p. 139)
Renewable energy sources:

A. will replace fossil fuels, due to price, depletion, or carbon emissions.

 

B. are growing at greater rates than the nonrenewables in the United States and Europe.

 

C. A and B.

 

D. are all available everywhere.

They will eventually replace fossil fuels, and their growth rates are greater than nonrenewables in the United States and Europe. They are not all available everywhere, but some applications are available everywhere.
Refer To: Figure 5.19, Share of global electricity from renewable energy

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Renewable Energy
 

 

58. The area with the greatest capacities in renewables as of 2010 is:

A. the United States.

 

B. European Union.

 

C. India.

 

D. Japan.

Europe has made the greatest investment in renewables, as Figure 5.18 shows. European new investment in renewables in 2008 was about 66 percent greater than U.S. investment.
Refer To: Figure 5.18, Renewable power capacities, developing world, EU, and top six countries

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Renewable Energy
 

 

59. Nonfuel minerals:

A. include chrome, manganese, platinum, and arsenic, all necessary for modern living.

 

B. are mostly sourced through imports in the United States.

 

C. frequently originate in China.

 

D. all of the above.

All of these statements are accurate. China actually controls many of the nonfuel mineral markets, including the rare earth minerals.
Refer To: Table 5.2 U.S. minerals ranked by net import reliance, 2010

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Nonfuel Minerals
 

 

60. Environmental sustainability is both local and global because:

A. environmental conditions do not recognize national borders.

 

B. governments are not prepared to address environmental issues beyond the UN.

 

C. business has become global, so sustainability must follow the trend.

 

D. all of the above.

The text example of France illustrates this point. Here’s a national-level example: New England is a low polluter, yet suffers from acid rain caused by Midwest carbon emissions.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmental Sustainability
 

 

61. The three characteristics of evolving sustainable business practices are:

A. local, global, and improving quality of life.

 

B. environmental sustainability, quality-of-life sustainability, and triple-bottom-line accounting.

 

C. limits, interdependence, and equity.

 

D. none of the above.

Limits involve a recognition that resources are exhaustible; interdependence describes the relationships among ecological, social, and economic systems; and equity in distribution suggests that for interdependence to work, there can’t be vast differences in the distribution of gains.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmentally Sustainable Business
 

 

62. Sam Palmisano, CEO of IBM, has described a new way of doing business that goes to equity of distribution by observing that:

A. profit sharing will need to increase.

 

B. stakeholder theory provides a way forward, combining local and global.

 

C. IBM would end its colonial company model and move on to an integrated model with high levels of trust among stakeholders.

 

D. A and B.

This is taken from a quote in the text, a recognition of the need for substantive change from one of the major leaders of a global business.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmentally Sustainable Business
 

 

63. Stakeholder theory is an understanding of how business works that:

A. takes into account culture and environmentalism.

 

B. rejects the importance of the bottom line.

 

C. emphasizes planning.

 

D. takes into account all identifiable interest holders.

This is the basic description of stakeholder theory used in the text.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-08 Discuss the utility of the stakeholder model for sustainable business.
Topic Area: Stakeholder Theory
 

 

64. A way to measure a company’s success in sustainable business practices is:

A. to examine the return on investment.

 

B. triple-bottom-line accounting.

 

C. to monitor the company in a social context.

 

D. to review the marketing materials.

Triple-bottom-line accounting measures a company’s social and environmental performance, as well as the traditional economic performance.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Environmentally Sustainable Business
 

 

65. A specific example of a sustainable business is Patagonia, as evidenced in its:

A. Footprint Chronicles program that addresses the trade-offs global sourcing creates and evaluates the impact of sourcing decisions.

 

B. ecosystem model of sustainability that relies on the synergies between financial, environmental, and social elements.

 

C. product lines and credit policies.

 

D. A and B.

Patagonia is described as an environmentally sustainable business in the text.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-07 Explain the major characteristics of sustainable business.
Topic Area: Environmentally Sustainable Business
 

 

66. Porter’s diamond is a model that offers an explanation of:

A. differing levels of success among the national players in world markets.

 

B. endowment factor differentials.

 

C. the impact of climate on development.

 

D. macro-level FDI.

Porter’s diamond helps to explain differences in competitive advantage.
Refer To: Figure 5.1, Variables affecting competitive advantage: Porter’s diamond

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Porter’s Diamond
 

 

67. Proximity is a factor in explaining:

A. a nation’s political system.

 

B. the number of a nation’s political and trade relationships.

 

C. language patterns.

 

D. demand conditions.

Proximity leads to better knowledge of the neighbor and lower transportation costs.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

68. Climate is probably the most important element of the physical forces, as it sets the limits on:

A. annual rainfall, and thus water supply.

 

B. population growth patterns.

 

C. what people can do physically and economically.

 

D. expected FDI.

Climate establishes limits for what humans can do, physically and economically.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

69. The main transportation artery of Europe is the:

A. Venice canal system.

 

B. Danube-Dresden waterway.

 

C. Lake Constantine system.

 

D. Rhine waterway.

Unlike other waterways, whose importance has diminished relative to roads and railroads, the Rhine waterway’s importance is increasing. It is the world’s most important inland waterway system.
Refer To: Figure 5.10, map of the Rhine-Danube Canal

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 Summarize the importance to business of inland waterways and outlets to the sea.
Topic Area: Bodies of Water
 

 

70. Bodies of water that provide inexpensive access to interior markets are known as:

A. inland waterways

 

B. seaway outlets.

 

C. river systems.

 

D. inland oceans.

Inland waterways such as major rivers and lake systems are significant in every continent except Australia.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 Summarize the importance to business of inland waterways and outlets to the sea.
Topic Area: Bodies of Water
 

 

71. Every continent has inland waterways that provide inexpensive access to interior markets except:

A. Russia.

 

B. North Africa.

 

C. Australia.

 

D. North America.

Australia, with its inland plain and desert topography, has no inland waterways.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-03 Summarize the importance to business of inland waterways and outlets to the sea.
Topic Area: Bodies of Water
 

 

72. The North-South divide uses climatic differences to explain:

A. population differences.

 

B. trade patterns.

 

C. differences in human development.

 

D. cultural differences.

The North-South divide suggests incorrectly that warmer climates limit human energy and mental powers.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

73. Studies conducted by the World Bank indicate that tropical climates allow for:

A. the unimpeded reproduction and growth of weeds, viruses, birds, insects, and parasites.

 

B. lack of the need to provide heat and shelter that is present in northern climates.

 

C. unparalleled trade.

 

D. cultivation of citrus and four crops per year.

Weeds, birds, insects, viruses, and parasites result in destroyed crops, dead cattle, and people infected with debilitating diseases.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Climate
 

 

74. Natural resources are:

A. anything that is alive in the natural world.

 

B. anything provided by nature on which people depend.

 

C. any raw material that becomes a component in a manufactured good.

 

D. anything that is used for food or fuel.

Refer to the margin definition: anything supplied by nature on which people depend.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Natural Resources
 

 

75. The marketed energy use has been dominated since 1980 by:

A. renewable energy sources.

 

B. nuclear energy and coal.

 

C. nonrenewable energy sources.

 

D. solar and wind power.

Nonrenewable energy sources dominate marketed energy sources.
Refer To: Figure 5.13, World marketed energy use by fuel type

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

76. The International Energy Agency 2010 report observes that an energy revolution underway may well lead to:

A. a 27 percent drop in oil usage.

 

B. North America becoming the center of alternative energy research.

 

C. Africa and the Middle East increasingly relying on fossil fuels.

 

D. Europe relying increasingly on nuclear.

The revolution is slow but underway, according to the IEA.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

77. Unconventional sources of petroleum such as oil sands and shale are often grouped together and referred to as:

A. nonrenewable hopes.

 

B. new sources.

 

C. peak sources.

 

D. heavy oil.

These unconventional sources of oil become reasonable alternatives for sourcing oil as its price increases.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

78. This material, when heated to 500°C, will yield 25 liters or more per ton of input:

A. shale.

 

B. biomass.

 

C. natural gas.

 

D. light petroleum.

Oil-bearing shale is not yet economical, but it will become so as the price of oil increases. The largest known source is in the U.S. states of Utah, Wyoming, and Colorado.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

79. The largest portion of the world’s proven oil reserves is located in:

A. low-risk areas.

 

B. high-risk areas.

 

C. climate-challenging areas.

 

D. developed nations’ oil fields.

Most of the proven oil reserves are located in high-investment-risk areas.
Refer To: Table 5.1, World oil reserves by country
Refer To: Figure 5.15, Worldwide proven oil reserves by investment risk

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

80. This government commercialized the German Fischer-Tropsch process in order to obtain oil from coal through a catalyzed chemical reaction:

A. Israel.

 

B. the Sudan.

 

C. South Africa.

 

D. Germany.

This process is successfully employed in Nigeria, China, Germany, India, and other places by Sasol.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

81. Instead of declining, this nonrenewable energy source, because of its lack of pollution and the rising price of oil, has seen significant growth:

A. wind power.

 

B. nuclear power.

 

C. geothermal power.

 

D. petroleum.

Nuclear power generation has seen growth, largely because of its cleanliness. There are security and storage issues, but developing countries and France have invested heavily in its continued development. The Japanese disaster may well have an impact on this trend.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Nuclear Power
 

 

82. Although it pollutes heavily, this energy source is on the rise everywhere, especially in China:

A. natural gas.

 

B. coal.

 

C. nuclear.

 

D. diesel.

Coal use was expected to decline, but, especially in developing countries, its use has increased and is expected to continue doing so. The United States has generous coal reserves, and its use is increasing there, as well.
Refer To: Figure 5.17, Coal consumption in selected world regions

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Coal
 

 

83. This is the only industrialized country that has not ratified the Kyoto Protocol, a UN convention on climate change:

A. China.

 

B. France.

 

C. Russia.

 

D. the United States.

Greenhouse gases generated by coal contribute to global warming. The U.S. concern appears to be one of sovereignty, giving up the nation’s power to the UN.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Coal
 

 

84. This is the cleanest of the nonrenewable fuel sources, and it has become a substitute for oil as oil prices increase:

A. natural gas.

 

B. diesel.

 

C. nuclear.

 

D. kerosene.

Natural gas is cleaner than oil, it burns with fewer emissions, and its consumption is expected to increase 47 percent through 2030.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Energy
 

 

85. Wind power is sourced:

A. on land only.

 

B. on land and sea.

 

C. where altitudes permit.

 

D. in the Swiss Alps.

Wind power can be sourced on land or at sea.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Renewable Energy
 

 

86.
(p. 139)
According to the text, the fastest-growing renewable energy source is:

A. solar PV.

 

B. nuclear power.

 

C. wind power.

 

D. biomass.

Solar is the fastest-growing renewable energy source.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-04 Outline the nonrenewable and renewable energy options available and their broad business implications.
Topic Area: Renewable Energy
 

 

87. This group of resources, which includes chrome and manganese, is used in many technology applications, and the United States imports many of these resources 100 percent:

A. rare earths.

 

B. nonfuel minerals.

 

C. rare minerals.

 

D. mineral gems.

The United States imports many of these nonfuel minerals. Recently China has threatened export controls on its exports of rare earths and other nonfuel minerals.
Refer To: Table 5.4, U.S. minerals ranked by net import reliance

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Energy
 

 

88. China’s vast and mountainous terrain leads to:

A. many languages and dialects.

 

B. political unity, as in Switzerland.

 

C. economic disparities.

 

D. population disparities.

Mountainous areas of China have led to many different languages with many dialects. See Figure 5.6.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

89. Deserts and tropical forests seem opposites, but they have this trait in common:

A. they are good vacation spots, and thus an economic stimulator.

 

B. they have small populations on their edges.

 

C. they separate markets, increasing transportation costs.

 

D. they are hospitable to insects.

Both deserts and tropical forests separate markets.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

90. Porter in his diamond model distinguishes two types of factor conditions:

A. positive and negative factors.

 

B. contributing and disaggregating factors.

 

C. advanced and basic factors.

 

D. foreign and domestic factors.

Porter makes this distinction to make the point that factor conditions can be modified.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-02 Apply Porter’s diamond model to a discussion of geographical features.
Topic Area: Geography
 

 

91. Rare earths are a group of elements used in:

A. jewelry.

 

B. technology applications.

 

C. farming.

 

D. solar applications.

There are 17 rare-earth elements that are used for technology applications.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Minerals
 

 

92. Which country controls the export market of rare earths?

A. Brazil

 

B. Russia

 

C. the United States

 

D. China

China controls this export market, which may be a liability for the United States.

 

AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Minerals
 

 

93. Why are rare earths a concern in industrialized economies?

A. Although they are relatively common, they do not occur in concentrated form often.

 

B. They are very rare.

 

C. They are used in the smelting process.

 

D. They are not a concern, except for political reasons.

Rare earths are not uncommon; they are not often found in concentrations that makes their mining commercially viable.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Minerals
 

 

94. Europe follows the precautionary principle approach to environmental health and safety. This means:

A. everyone takes precautions and is always on the watch for environmental issues.

 

B. once a product is thought to be harmful, it is investigated immediately.

 

C. manufacturers of new products need to prove the product is safe.

 

D. consumers regularly review product safety regulations.

In Europe, the onus of proof is on the manufacturer.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-06 Describe the concept of environmental sustainability and its potential influence on business.
Topic Area: Sustainability
 

 

95. Sustainable business models:

A. incorporate a more socialist political approach to the marketplace.

 

B. have as a goal to ensure that the marketplace exists for future generations.

 

C. regard environmentalism as more important than profit.

 

D. A and C.

Sustainability is all about ensuring that businesses continue to prosper for future generations.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-07 Explain the major characteristics of sustainable business.
Topic Area: Sustainability
 

 

Essay Questions

96. Select a country and show a relationship between its physical forces and its economy.

Answers will vary. Switzerland is the model for this question, as treated in the text. The United States might be used to show the relationship between its coasts and its innovation centers, the coastal areas being more open to innovative thinking because they receive external stimuli.

Feedback: This question gives students an opportunity to apply concepts from the text to another environment. Critical thinking is significant here. The chapter’s example of Switzerland might serve students as a model.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

97. Why do international managers need to know anything about a nation’s topographic features?

Topography greatly influences many aspects of business, especially in the marketing area. Mountains, plains, deserts, and bodies of water either hinder or aid distribution. In addition, altitude, temperature, and humidity differences can require product adaptation.

Feedback: Students will be able to apply the topography-related issues presented in the text to marketing environments. Critical thinking and reasoning skills are significant here.

 

AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Topography
 

 

98. Explain the concept of sustainability as applied to business, using examples.

Sustainability in business suggests that the business recognize limits, interdependence, and equity. Limits in the environmental impact of the business would need to be recognized. The interdependence describes the relationships among social, economic, and ecological systems. Equity suggests that distribution of the gains created by the business needs to be more equitable in order to sustain the interdependence. Examples could be drawn from Interface, Patagonia, or any other business.

Feedback: The basic ideas for this topic are at the final part of the chapter.

 

AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-05 Describe the issues related to nonfuel minerals that concern international business.
Topic Area: Environmentally Sustainable Business
 

 

99. Why do nations care about having outlets to the ocean? Are landlocked nations at a disadvantage?

Outlets to the ocean are critical for trade and for access to water. Landlocked nations are at a disadvantage, yet one that can be overcome, as Switzerland illustrates. Many of the poorest nations are landlocked.

Feedback: Switzerland is a counterexample, so this question is an opportunity to explore Porter’s notion that weak factor conditions spur innovation; the better essays may touch on this. Thinking about the connection between trade and geography is central here.

 

AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Describe how geographical features of a country or region create contextual differences that contribute to economic; cultural; political; and social conditions important to international business.
Topic Area: Geography
 

 

100. How does the notion of sustainable business compare to Milton Friedman’s assertion that the focus of business should be only on the bottom line?

Friedman’s assertion is that business needs to focus first and only on the bottom line and observe the law. This approach is in some respects antithetical to sustainability, which asks businesses not to narrowly focus but, rather, to take a wide, broad perspective, that of stakeholder theory.

Feedback: This question asks students to move from the traditional model to a stakeholder model and then make comparisons about the two ways of understanding the role of business.

 

AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-03 Summarize the importance to business of inland waterways and outlets to the sea.
Topic Area: Environmentally Sustainable Business
 

 

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