Modern Management Concepts and Skills 12th Edition by Samuel C. Certo – Test Bank

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Modern Management, 12e (Certo)

Chapter 5   Managing in the Global Arena

 

1) International management is the performance of management activities across national borders.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

2) Establishing a formal partnership with a foreign company is a form of international management.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

3) One form of international management is fighting competition in foreign markets.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

4) Transnational organizations have the least international involvement of all types of organizations involved in the international arena.

Answer:  FALSE

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

5) Domestic organizations essentially operate within a single country.

Answer:  TRUE

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

6) In order to be classified as a domestic corporation, a corporation must acquire all resources and sell all products within one country.

Answer:  FALSE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

7) An international organization has a lower level of international involvement than a multinational organization.

Answer:  TRUE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

8) A multinational corporation is a company that is primarily based in one country but has continuing transactions in other countries.

Answer:  FALSE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

9) A company that merely exports products to a foreign country cannot be considered a multinational corporation.

Answer:  FALSE

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

10) A company that exports products to a foreign country and establishes sales organizations abroad is considered to be a domestic company.

Answer:  FALSE

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

11) The host company is the company investing in international operations.

Answer:  FALSE

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

12) Expatriates are organization members who live and work in a country in which they are not citizens.

Answer:  TRUE

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

13) Third-country nationals are organization members who are citizens of the country in which the facility of a foreign-born organization is located.

Answer:  FALSE

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

14) Host-country nationals do not need to be relocated or undergo training in the culture, language, or tax laws of the country where the organization is doing business.

Answer:  TRUE

Page Ref: 117

AACSB:  Dynamics of the Global Economy

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

15) Repatriation is the process of ensuring the adjustment of a worker to a foreign country.

Answer:  FALSE

Page Ref: 118

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

16) A license agreement is a right granted by one company to another to use its brand name and technology in the manufacture or sale of goods and services.

Answer:  TRUE

Page Ref: 119

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

17) The European Union is an example of an international market agreement.

Answer:  TRUE

Page Ref: 121

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

18) A polycentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices.

Answer:  FALSE

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

19) Managers with an ethnocentric attitude are prone to stereotype foreign management practices as faulty and unreasonable.

Answer:  TRUE

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

20) Transnational organizations usually take one particular continent as their business arena.

Answer:  FALSE

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

21) The different types of organizations in ascending order of the extent of involvement in the international arena are ________.

  1. A) domestic, international, multinational, transnational
  2. B) international, transnational, domestic, multinational
  3. C) multinational, domestic, transnational, global
  4. D) transnational, international, multinational, domestic
  5. E) domestic, multinational, transnational, international

Answer:  A

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

22) Which of the following categories of organizations generally has the lowest level of international involvement?

  1. A) global organizations
  2. B) domestic organizations
  3. C) international organizations
  4. D) multinational organizations
  5. E) transnational organizations

Answer:  B

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

23) Which of the following types of organizations has the highest level of international involvement?

  1. A) international organizations
  2. B) multinational organizations
  3. C) transnational organizations
  4. D) ethnocentric organizations
  5. E) domestic organizations

Answer:  C

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

24) ________ organizations essentially operate within a single country.

  1. A) Multinational
  2. B) Transnational
  3. C) Global
  4. D) Domestic
  5. E) International

Answer:  D

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

25) SNL manufactures and sells customized shoes for people with special needs. The company caters mostly to customers within the U.S., though it occasionally sends products to overseas customers. The company is very eco-friendly, and takes pride in sourcing all its raw materials locally. According to the information, SNL is a(n) ________ company.

  1. A) transnational
  2. B) global
  3. C) multinational
  4. D) domestic
  5. E) international

Answer:  D

Page Ref: 112

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

26) Adam & Sons is a fifty-year-old watch company based in Alabama. The  major bulk of its sales has always taken place within the U.S. Adam & Sons recently became the sole U.S. distributors for Japanese watch manufacturer TLC. Adam & Sons would therefore be classified as a(n) ________.

  1. A) international organization
  2. B) multinational organization
  3. C) transnational organization
  4. D) global organization
  5. E) domestic organization

Answer:  A

Page Ref: 113

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

 

 

27) Which of the following describes a company that is primarily based within one country but has continuing and meaningful transactions in other countries?

  1. A) domestic organization
  2. B) international organization
  3. C) multinational organization
  4. D) transnational organization
  5. E) global organization

Answer:  B

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

28) BLT is a sandwich chain based in Boston. Word-of-mouth popularity opened up the market and the company is now opening branches in New Jersey and Connecticut as well. The company sources all its raw materials locally and makes it a point to use sustainable practices. Which of the following actions would make BLT a multinational company?

  1. A) It begins stocking organic foods produced by local farms.
  2. B) It distributes artisanal chocolate produced by a South African firm.
  3. C) It licenses a fast-food chain in England to use its brand name.
  4. D) It diversifies its product lineup to include different types of foods.
  5. E) It begins selling cheeses imported from France.

Answer:  C

Page Ref: 113

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

29) An organization that has significant operations in more than one country, disregards national boundaries, and is guided by a common strategy from a corporation center is a(n) ________.

  1. A) global organization
  2. B) domestic organization
  3. C) international corporation
  4. D) multinational corporation
  5. E) transnational organization

Answer:  D

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

30) Which of the following is the simplest stage of multinationalization?

  1. A) establishing sales organizations abroad
  2. B) licensing the use of the organization’s pattern and know-how to foreign firms that make and sell the organization’s product
  3. C) establishing foreign manufacturing facilities
  4. D) multinationalizing the organization’s management from top to bottom
  5. E) exporting the organization’s product to foreign countries

Answer:  E

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

31) What is the most advanced stage in multinationalization of a company?

  1. A) licensing its brand names to foreign firms
  2. B) establishing foreign manufacturing facilities
  3. C) establishing sales organizations abroad
  4. D) exporting the organization’s products to foreign countries
  5. E) multinationalizing ownership of the corporate stock

Answer:  E

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

32) EasyWear Apparels is based in the U.S. and recently established a manufacturing unit in Montreal and a manufacturing unit and retail outlet in Leeds in the U.K. Which of the following scenarios mirrors EasyWear’s situation?

  1. A) An automobile company headquartered in Austria starts production for its German market in Berlin.
  2. B) A cell phone producer based in Finland starts selling its products in India.
  3. C) Dell Computers has established sales organizations in major cities all over the world.
  4. D) Fiona, an Italian shoe manufacturer, allows a firm in Kuala Lumpur the use of its patterns.
  5. E) McDonald’s has a standing contract with Coca Cola to sell its beverages in all its outlets.

Answer:  A

Page Ref: 114

AACSB:  Reflective Thinking Skills

Objective:  2

Difficulty:  Difficult

Classification:  Critical thinking

 

 

33) Which of the following is a characteristic of domestic management?

  1. A) widely disparate economic conditions
  2. B) national markets varying greatly in population and area
  3. C) different national sovereignties
  4. D) markets at different stages of the industrial revolution
  5. E) people living in similar value systems

Answer:  E

Page Ref: 114

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

34) Apparel company RED Lion Ltd. has a strong presence along the West Coast in the U.S., and is looking to expand its market overseas. The company began through the export route, exporting apparel to firms in the U.K., but now wants to establish manufacturing units abroad. Which of the following would weaken the company’s decision to expand abroad?

  1. A) Establishing manufacturing abroad would reduce RED Lion’s shipping costs.
  2. B) There is increasing economic uncertainty in the U.S. market.
  3. C) The preferences of customers in both countries are similar.
  4. D) The economic systems in the two countries are very different.
  5. E) A competitor in the U.S. market recently went out of business.

Answer:  D

Page Ref: 116

AACSB:  Reflective Thinking Skills

Objective:  3

Difficulty:  Easy

Classification:  Critical thinking

35) A company investing in international operations is known as the ________.

  1. A) quasi corporation
  2. B) parent company
  3. C) subsidiary company
  4. D) holding company
  5. E) host company

Answer:  B

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

 

36) A country in which an investment is made by a foreign company is termed as a(n) ________.

  1. A) host country
  2. B) parent country
  3. C) home country
  4. D) expatriate country
  5. E) subordinate country

Answer:  A

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

37) ________ are members of an organization who live and work in a country where they do not have citizenship.

  1. A) Expatriates
  2. B) Host-country nationals
  3. C) Naturalized citizens
  4. D) Repatriates
  5. E) Dual citizens

Answer:  A

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

38) Joe is a citizen of Sri Lanka who lives and works for a company in Brazil. He is considered to be a(n) ________.

  1. A) dual citizen
  2. B) expatriate
  3. C) repatriate
  4. D) host-country national
  5. E) third-country national

Answer:  B

Page Ref: 116

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

39) Citizens of a country who work in a foreign-based organization located in their own country are known as ________.

  1. A) expatriates
  2. B) host-country nationals
  3. C) third-country nationals
  4. D) repatriates
  5. E) immigrants

Answer:  B

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

40) Gary is an English national working for an American company situated in London. He is a(n) ________.

  1. A) host-country national
  2. B) third-country national
  3. C) repatriate
  4. D) expatriate
  5. E) immigrant

Answer:  A

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

41) Organization members who are citizens of one country and work in another country for an organization headquartered in still another country are known as ________.

  1. A) expatriates
  2. B) host-country nationals
  3. C) third-country nationals
  4. D) repatriates
  5. E) naturalized citizens

Answer:  C

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

42) Hugh is an American citizen currently living in Denmark. He works for a company that has its headquarters in France. He is a(n) ________.

  1. A) third-country national
  2. B) host-country national
  3. C) home-country national
  4. D) dual citizen
  5. E) repatriate

Answer:  A

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

43) Zac, an American citizen, has worked for a company in Berlin for the last five years. Which of the following scenarios mirrors the situation Zac is in?

  1. A) Sandra is Polish and works for a U.K.-based company in Venice.
  2. B) Winston is a U.K. national but has been sent to Canada by his company to handle the operations there for the next two years.
  3. C) Vanessa is English and works in London for a company based in Denmark.
  4. D) Ursula is a Finn but has been in Germany for the last four years, working for a company headquartered in Japan.
  5. E) Nikolai works for an Irish company in Oslo and is a Norwegian by birth.

Answer:  B

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Difficult

Classification:  Application

 

44) Organizations that operate globally find that ________ are the least expensive to employ.

  1. A) host-country nationals
  2. B) expatriates
  3. C) third-country nationals
  4. D) repatriates
  5. E) migrant workers

Answer:  A

Page Ref: 117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

45) Which of the following is true for employees of multinational organizations?

  1. A) A third-country national works for a foreign organization in its home country.
  2. B) A host-country national will face problems adjusting to the culture of the country in which he works.
  3. C) Expatriates and third-country nationals have to be relocated and undergo training.
  4. D) A host-country national is an organization member who lives and works in a country where he or she does not have citizenship.
  5. E) Host-country nationals are usually the most expensive to employ.

Answer:  C

Page Ref: 117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

46) The process of bringing individuals who have been working abroad back to their home country and reintegrating them into the organization’s home-country operations is called ________.

  1. A) repatriation
  2. B) expatriation
  3. C) immigration
  4. D) polycentrism
  5. E) emigration

Answer:  A

Page Ref: 118

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

47) The ________ function of management involves determining how an organization will achieve its objectives.

  1. A) planning
  2. B) organizing
  3. C) influencing
  4. D) controlling
  5. E) observing

Answer:  A

Page Ref: 119

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

48) When a United States computer manufacturer sells a shipment of 40 computers to a retailer in Germany, the computer manufacturer is engaged in the process of ________.

  1. A) importing
  2. B) exporting
  3. C) developing a license agreement
  4. D) direct investing
  5. E) repatriating

Answer:  B

Page Ref: 119

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

49) If a company in the United States allows a company in England to use its brand name for a fee, the company is said to have entered into a(n) ________.

  1. A) license agreement
  2. B) direct investing agreement
  3. C) venture agreement
  4. D) export agreement
  5. E) import agreement

Answer:  A

Page Ref: 119

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

50) An American clothing manufacturer has recently purchased a clothing factory in Taiwan. This action is known as ________.

  1. A) importing
  2. B) exporting
  3. C) licensing
  4. D) direct investing
  5. E) franchising

Answer:  D

Page Ref: 120

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

51) International planning in the area of ________ emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.

  1. A) direct investing
  2. B) joint venture
  3. C) importing
  4. D) exporting
  5. E) license agreements

Answer:  A

Page Ref: 119-120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

52) A partnership formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking is known as a(n) ________.

  1. A) international market agreement
  2. B) direct investment
  3. C) joint venture
  4. D) license agreement
  5. E) franchise agreement

Answer:  C

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

53) International plans that include ________ emphasize the attainment of organizational objectives through partnerships with foreign companies.

  1. A) joint ventures
  2. B) imports
  3. C) exports
  4. D) license agreements
  5. E) direct investing

Answer:  A

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

54) An international market agreement is ________.

  1. A) a joint venture between two companies who want to enter markets in the other country
  2. B) an arrangement among a cluster of countries that facilitates a high level of trade among these countries
  3. C) an international import deal between two countries
  4. D) an agreement between an importer from one country and an exporter from another
  5. E) an agreement between a multinational company and its franchisees in a number of countries

Answer:  B

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

55) The European Union is a(n) ________ established dedicated to facilitating trade among member nations.

  1. A) international joint venture
  2. B) license agreement
  3. C) international market agreement
  4. D) transnational organization
  5. E) polycentric organization

Answer:  C

Page Ref: 121

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

56) Canada, the People’s Republic of China, Indonesia, and the United States are all members of the Asian-Pacific Economic Cooperation. This agreement is an example of a(n) ________ agreement.

  1. A) international license
  2. B) international market
  3. C) international framework
  4. D) international import
  5. E) international export

Answer:  B

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

57) Which of the following statements is true about NAFTA?

  1. A) It aims at facilitating trade among the United States, Canada, and Mexico.
  2. B) It’s members include Denmark, the United Kingdom, Portugal, the Netherlands, Belgium.
  3. C) It is an international market agreement aimed at facilitating trade among African nations.
  4. D) It works to reduce tariffs and other trade barriers across the Asia-Pacific region.
  5. E) It has 21 members, including Canada, the People’s Republic of China, Indonesia, and the U.S.

Answer:  A

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

58) APEC was established in 1989 to further the economic growth and prosperity of the ________ community.

  1. A) North American
  2. B) Asia-Pacific
  3. C) Commonwealth
  4. D) European
  5. E) African

Answer:  B

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

59) Which of the following countries is a member of the APEC?

  1. A) Germany
  2. B) Egypt
  3. C) Australia
  4. D) Argentina
  5. E) Brazil

Answer:  C

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

60) Organization ________ is the sum of all established relationships among resources within an organization.

  1. A) structure
  2. B) overview
  3. C) mission
  4. D) path
  5. E) purpose

Answer:  A

Page Ref: 123

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

61) The organization chart ________ .

  1. A) establishes the organization’s goals for the year
  2. B) is the graphic illustration of organization structure
  3. C) lists departments in order of productivity
  4. D) details the organization’s plans for achieving its goals
  5. E) is the representation of the organization’s financial system

Answer:  B

Page Ref: 123

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

62) The manager of a multinational corporation in the U.S. thinks that following U.S. management practices is best for its operations in New Zealand because U.S. management practices are better than the management practices prevalent in New Zealand. This manager is said to have a(n) ________ attitude.

  1. A) ethnocentric
  2. B) polycentric
  3. C) geocentric
  4. D) xenocentric
  5. E) gynocentric

Answer:  A

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

63) Managers with a ________ attitude believe that the overall quality of management recommendations, rather than the location of managers, should determine the acceptability of management practices used to guide multinational corporations.

  1. A) ethnocentric
  2. B) polycentric
  3. C) geocentric
  4. D) xenocentric
  5. E) gynocentric

Answer:  C

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

64) A Canada-based shoe manufacturing company in Malaysia has hired a Malaysian manager to manage it, because the company’s CEO believes that the manager will understand the situation and manage the plant better than any foreign manager. This company is said to have a(n) ________ attitude.

  1. A) ethnocentric
  2. B) polycentric
  3. C) egocentric
  4. D) geocentric
  5. E) gynocentric

Answer:  B

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

65) The ________ attitude reflects the belief that because foreign managers are closer to foreign organizational units, they understand them better, and therefore foreign management practices are more insightful than home-country management practices.

  1. A) ethnocentric
  2. B) polycentric
  3. C) egocentric
  4. D) geocentric
  5. E) gynocentric

Answer:  B

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

66) A Belgium-based multinational company hires the best managers for its operations, regardless of the location of those managers. This company is said to have a(n) ________.

  1. A) ethnocentric attitude
  2. B) polycentric attitude
  3. C) egocentric attitude
  4. D) geocentric attitude
  5. E) gynocentric attitude

Answer:  D

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

67) Which of the following statements is true for the various management attitudes?

  1. A) An organization characterized by the geocentric attitude incurs high travel and training expenses.
  2. B) The ethnocentric attitude reflects the belief that because foreign managers are closer to foreign organizational units, they understand them better.
  3. C) The ethnocentric attitude is generally thought to be the most appropriate for managers in multinational corporations.
  4. D) The polycentric attitude often causes resentment toward the home country within the foreign

society.

  1. E) Managers with a geocentric attitude stereotype home-country management practices as sound and reasonable and foreign management practices as faulty and unreasonable.

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

68) Which of the following attitudes is generally thought to be the most appropriate for mangers in multinational corporations?

  1. A) geocentric
  2. B) ethnocentric
  3. C) polycentric
  4. D) egocentric
  5. E) regiocentric

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

69) ________ is the set of characteristics of a given group of people and their environment and includes components like norms, values, habits, education and religion.

  1. A) Culture
  2. B) Politics
  3. C) Laws
  4. D) Morals
  5. E) Ethics

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

70) March Hare Entertainment is a media company in London that specializes in bizarre and sometimes shocking campaigns. The firm is looking to expand into other countries, but will require a culture that is very similar to its home culture: open to experimentation and risk and not authoritarian. Which of the following countries is the best option for March Hare?

  1. A) Germany has high power distance and collectivism.
  2. B) Denmark has low power distance and low uncertainty avoidance.
  3. C) Japanese culture favors low individualism and high power distance.
  4. D) India has a long-term orientation and high uncertainty avoidance.
  5. E) France has low uncertainty avoidance and high power distance.

Answer:  B

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

71) France is a country where employees tend to follow whatever their managers say. They do not question the authority of their managers. Which of the following statements can be deduced from this information?

  1. A) France has a culture that promotes masculinity.
  2. B) France is a country where short-term orientation is prevalent.
  3. C) France is a country with high power distance.
  4. D) France is a society with low uncertainty avoidance.
  5. E) French society promotes individualism.

Answer:  C

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

72) Countries that highly promote ________ have citizenry that tends to emphasize, expect, and accept more autocratic than democratic leadership.

  1. A) short-term orientation
  2. B) individualism
  3. C) power distance
  4. D) masculinity
  5. E) collectivism

Answer:  C

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

73) In Greece, employees do not like to be in a situation they know nothing about. They like to be informed about every situation they are likely to face. It can be deduced that Greece is a society that has ________.

  1. A) feminine values
  2. B) long-term orientation
  3. C) low power distance
  4. D) high uncertainty avoidance
  5. E) high individualism

Answer:  D

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Application

74) In South Korean society, business success is pursued through people who work as a team. Managers believe that good interpersonal relationships among the members of a team are a must for success. What can be deduced from this?

  1. A) South Korean society has a long-term orientation.
  2. B) South Korea has high power distance.
  3. C) South Korea is low on uncertainty avoidance.
  4. D) South Korea has strong masculine values.
  5. E) South Korea is a collectivist culture.

Answer:  E

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

75) Countries that are high in ________ prefer being in more defined and predictable situations.

  1. A) individualism
  2. B) masculinity
  3. C) collectivism
  4. D) power distance
  5. E) uncertainty avoidance

Answer:  E

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

76) Japan has a society that values competitiveness and assertiveness over nurturing others and improving their quality of life. The people believe that success and wealth are very important. Japan is said to have a society that ________.

  1. A) emphasizes masculine values
  2. B) has short-term orientations
  3. C) has high power distance
  4. D) is low on uncertainty avoidance
  5. E) emphasizes collectivism

Answer:  A

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Application

77) Organizations headquartered in Pakistan train their employees in order to enable them to tackle the job that has to be performed immediately. The managers also prefer maintaining a day-to-day perspective. Pakistan is a good example of a ________ society.

  1. A) highly individualistic
  2. B) highly feminine
  3. C) short-term oriented
  4. D) low power distance
  5. E) low uncertainty avoidance

Answer:  C

Page Ref: 126

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

78) Which of the following is true according to Hofstede’s method of describing culture?

  1. A) Countries with low power distance tend to emphasize, expect, and accept more autocratic than democratic leadership.
  2. B) Highly feminine countries place a high worth on factors like competitiveness, assertiveness, success, and wealth.
  3. C) Power distance is the extent to which a society feels threatened by uncertain or unpredictable situations.
  4. D) Countries that are high in uncertainty avoidance prefer being in more defined and predictable situations.
  5. E) Countries with low uncertainty avoidance deemphasize short-run success to achieve long-run success.

Answer:  D

Page Ref: 125-126

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

79) The management of a company decides on a way to compare profits generated by organizational units located in different countries and expressed in terms of different currencies. What management function has been performed?

  1. A) planning
  2. B) influencing
  3. C) controlling
  4. D) organizing
  5. E) leading

Answer:  C

Page Ref: 126

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

80) ________ in multinational corporations requires that standards be set, performance be measured and compared to standards, and corrective action be taken if necessary.

  1. A) Planning
  2. B) Organizing
  3. C) Leading
  4. D) Controlling
  5. E) Influencing

Answer:  D

Page Ref: 126

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

81) A(n) ________ organization considers national borders to be inconsequential to its operations, with ownership, control, and management being from many different countries.

  1. A) international
  2. B) multinational
  3. C) pan-national
  4. D) transnational
  5. E) domestic

Answer:  D

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

82) Transnational organizations are also called ________.

  1. A) global corporations
  2. B) multinational corporations
  3. C) international corporations
  4. D) domestic corporations
  5. E) pan-national corporations

Answer:  A

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

83) The ________ organization transcends any single home country, with ownership, control, and management being from many different countries.

  1. A) pan-national
  2. B) transnational
  3. C) multinational
  4. D) international
  5. E) domestic

Answer:  B

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

84) Evelyn has worked for the Boston branch of Clarity Systems for the past ten years. She is being transferred to head the Madrid office of her company. Since the transfer was a hurried one, there was no time to train Evelyn in the specifics of doing business in Spanish culture. As soon as she arrived in Madrid, Evelyn had to conduct negotiations for the renewal of several supplier contracts. One of the suppliers gave her an expensive watch, saying that it was a custom of the country to give business associates gifts. Evelyn is unsure whether she should accept the gift as it seems like a bribe.  Which of the following ethical guidelines will help Evelyn determine whether or not to accept the gift?

  1. A) respecting core human rights
  2. B) respecting local traditions
  3. C) determining right from wrong by examining context
  4. D) using ethnocentrism
  5. E) increasing power distance

Answer:  C

Page Ref: 128

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

85) When a company provides an expatriate with information on how to survive the difficulties of adjusting to a new culture, the company is providing training in ________.

  1. A) logistic information
  2. B) cultural application
  3. C) cultural adaptation
  4. D) cultural profiling
  5. E) repatriation

Answer:  C

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

86) When a company provides an expatriate with basic information about life in a foreign country, such as personal safety, who to call in an emergency, and how to write a check, the company is providing training in ________.

  1. A) cultural profiling
  2. B) cultural adaptation
  3. C) cultural application
  4. D) logistical information
  5. E) repatriation

Answer:  D

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

87) During ________ training, the expatriates learn about the specific organizational roles that they are required to perform in the foreign country.

  1. A) application
  2. B) logistical information
  3. C) cultural adaptation
  4. D) cultural profiling
  5. E) repatriation

Answer:  A

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

88) Define the different categories of organizations by extent of international involvement.

Answer:  A number of different categories have evolved to describe the extent to which organizations are involved in the international arena. These categories are domestic organizations, international organizations, multinational organizations, and transnational or global organizations. This categorization format actually describes a continuum of international involvement, with domestic organizations representing the least and transnational organizations the most international involvement.

Domestic organizations are organizations that essentially operate within a single country. These organizations normally not only acquire necessary resources within a single country but also sell their goods or services within that same country.

International organizations are organizations that are based primarily within a single country but have continuing, meaningful international transactions in other countries. These organizations are more extensively involved in the international arena than are domestic organizations, but less so than either multinational or transnational organizations.

The multinational organization, commonly called the multinational corporation (MNC), represents the third level of international involvement. It is a company that has significant operations in more than one country.

A transnational organization, also called a global organization, takes the entire world as its business arena. It transcends any single home country, with ownership, control, and management being from many different countries.

Page Ref: 112-113, 127

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

89) What are the six stages of multinationalization? What activities does a company perform at each stage?

Answer:  Usually, a company goes through the following six phases of multinationalization:

Stage 1 – It exports its products to foreign countries.

Stage 2 – It establishes sales organizations abroad.

Stage 3 – It licenses use of its patterns and know-how to foreign firms that make and sell its products.

Stage 4 – It establishes foreign manufacturing facilities.

Stage 5 – It multinationalizes its management from top to bottom.

Stage 6 – It multinationalizes ownership of the corporate stock.

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

90) Why do managers make foreign investments? What are the risks involved in this?

Answer:  Normally, managers who make foreign investments expect that such investments will accomplish the following:

  1. Reduce or eliminate high transportation costs.
  2. Allow participation in the rapid expansion of a market abroad.
  3. Provide foreign technical, design, and marketing skills.
  4. Earn higher profits.

Unfortunately, many managers decide to internationalize their companies without having an accurate understanding of the risks involved in making such a decision. For example, political complications involving the parent company (the company investing in the international operations) and various factions within the host country (the country in which the investment is made) could prevent the parent company from realizing the desirable outcomes.

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

 

91) Discuss the three types of organizational members found in multinational corporations.

Answer:  Workers in multinationals can be categorized as expatriates, host-country nationals, and third-country nationals.

Expatriates are organization members who live and work in a country where they do not have citizenship.

Host-country nationals are organization members who are citizens of the country in which the facility of the foreign-based organization is located.

Third-country nationals are organization members who are citizens of one country and who work in another country for an organization headquartered in still another country.

Organizations that operate globally may employ all three types of organization members.

Both expatriates and third-country nationals require relocation and training in the culture, language, tax laws, and basic lifestyle of the culture in the host country.

Page Ref: 116-117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

92) STL began as a manufacturer and retailer of customized apparel and accessories. Customers could choose their specifications online, and STL would produce and deliver the products to customers’ homes. Initially, its market was limited to the U.S., but the company has begun to receive enquiries from overseas customers from many other countries. However, STL does not have the financial resources or the confidence to set up operations in other countries. Which methods could the CEO use to meet this overseas demand, taking into account the company’s weaknesses?

Answer:  Student answers may vary.

As the company is receiving orders from customers from many countries, it would be difficult and expensive to set up bases in all those countries. The CEO could export the goods to the other countries as and when required. This would require minimal investment.

License agreements could also be a possibility, if STL could find another company willing to produce and market products using its brand name. STL could also enter into a joint venture with another company to produce and market its products in another country. However, both these methods would limit STL’s reach, as these arrangements would be limited to a few countries.

Page Ref: 119

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

93) Explain the four components of international plans for multinational corporations.

Answer:  The four commonly included components of international plans are imports/exports, license agreements, joint ventures, and direct investing.

Importing is the buying of goods or services from another country. Exporting is selling goods or services to another country. Organizations of all sizes import and export.

License agreements are rights granted by one company to another company to use its brand name, technology, etc., in the manufacture or sale of goods and services. The company to which the license is extended pays some fee for the privilege.

Direct investing uses the assets of one company to purchase the operating assets of another company. International planning in this area emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.

Joint ventures are partnerships formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking. International planning components that include joint ventures emphasize the attainment of organizational objectives through partnerships with foreign companies.

Page Ref: 119-120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

94) Explain the three basic managerial attitudes toward the operation of multinational corporations. What are their advantages and disadvantages?

Answer:  The three basic managerial attitudes toward the operation of multinational corporations include: ethnocentric, polycentric, and geocentric.

The ethnocentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices. Managers with this attitude are prone to stereotype home-country management practices as sound and reasonable and foreign management practices as faulty and unreasonable. It has the advantage of keeping the organization simple, but it generally causes organizational problems because it prevents the organization from receiving feedback from its foreign operations. In some cases, it even causes resentment toward the home country within the foreign society.

The polycentric attitude reflects the belief that because foreign managers are closer to foreign organizational units, they probably understand them better, and therefore foreign management practices should generally be viewed as more insightful than home-country management practices. It permits the tailoring of foreign organizational segments to their cultures, which can be an advantage. Unfortunately, this attitude can lead to the substantial disadvantage of creating numerous foreign organizational segments that are individually run and rather unique, which makes them difficult to control.

The geocentric attitude reflects the belief that the overall quality of management recommendations, rather than the location of mangers, should determine the acceptability of management practices used to guide multinational corporations. It is considered most appropriate for long-term organizational success. It is generally thought to be the most appropriate for managers in multinational corporations.This attitude promotes collaboration between foreign and home-country management and encourages the development of managerial skills regardless of the organizational segment or country in which managers operate.

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

95) What can managers in multinational corporations do to influence employees?

Answer:  To successfully influence employees, managers in multinational corporations should:

  1. Acquire a working knowledge of the languages used in countries that house foreign operations – Multinational managers attempting to operate without such knowledge are prone to making costly mistakes.
  2. Understand the attitudes of people in countries that house foreign operations – An understanding of these attitudes can help managers design business practices that are suitable for unique foreign situations.
  3. Understand the needs that motivate people in countries housing foreign operations – For managers in multinational corporations to be successful at motivating employees in different countries, they must present these individuals with the opportunity to satisfy personal needs while being productive within the organization. In designing motivation strategies, multinational managers must understand that employees in different countries often have quite different personal needs.

Page Ref: 125

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

 

96) According to Hofstede, what are the five basic dimensions  of culture?

Answer:  According to Hofstede’s research, national cultural values vary on five basic dimensions:

  1. Power Distance – It is the degree to which a society promotes an unequal distribution of power. Countries that highly promote power distance have citizenry that tends to emphasize, expect, and accept more autocratic than democratic leadership.
  2. Uncertainty Avoidance – It is the extent to which a society feels threatened by uncertain or unpredictable situations. Countries that are high in uncertainty avoidance prefer being in more defined and predictable situations.
  3. Individualism and Collectivism – It is the degree to which people in a society operate primarily as individuals or within groups. People operating as individuals tend to focus on meeting their own needs. People in this situation tend to be self-reliant and succeed by competing with others. On the other hand, people who operate collectively tend to build relationships among others and downplay individualism.
  4. Masculinity and Femininity – It is the extent to which a culture emphasizes traditional masculine or feminine values. Traditional masculine values place a high worth on factors like competitiveness, assertiveness, success, and wealth.Traditional feminine values place a high worth on factors like caring for and nurturing others and increasing the quality of life.
  5. Short-Term and Long-Term Orientation – It is the degree to which a culture deemphasizes short-run success to achieve long-run success. Cultures that focus more on long-run success emphasize activities like planning, education, rewarding long-run results, and keeping a future oriented perspective. Conversely, cultures that focus more on short-run success emphasize training to enable one do a job now, rewarding short-run results, and maintaining a day-to-day perspective.

Page Ref: 125-126

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

97) What can managers do to ensure that management action taken across national borders is ethical?

Answer:  Managers can ensure that management action taken across national borders is ethical by:

  1. Respecting core human rights – This guideline underscores the notion that all people deserve an opportunity to achieve economic advancement and an improved standard of living. In addition, all people have the right to be treated with respect.
  2. Respecting local traditions – This guideline suggests that managers hold the customs of foreign countries in which they conduct business in high regard.
  3. Determining right from wrong by examining context – This guideline suggests that managers should evaluate the specifics of the international situation confronting them in determining whether a particular management activity is ethical. Although some activities are wrong no matter where they take place, some that are unethical in one setting may be acceptable in another.

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Moderate

Classification:  Conceptual

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