MNB 4670: Exam 1A Name: ______________________________ Student ID:_______________ Instructions:The total points you can get from this exam is 100. TRUE/FALSE (1 point
each) 1. MNEs can avoid investing in risky countries True False 2. MNEs from developing countries can have advantages over MNEs from developed countries when investing
to corrupt countries True False 3. Dispersion of Value chain framework suggests that MNEs consider differences in cost and quality only, when allocating different
activities True False 4. Silicon Valley is an example to externalities related to foreign direct investment decisions of MNEs True False 5. Regional Trade Blocs are
against the idea of protectionism in trade True False 6. Terrorism and Cyber-Attacks have direct and in-direct effects on MNEs and International Business True False 7.
In emerging countries, low level of Intellectual Property (IP) protection fosters knowledge transfers from MNEs to local firms, while higher IP protection can help
knowledge spillovers from MNEs to the local firms True False 8. Uncertainties in an investment decision are perceived as sources of potential revenue for managers in
MNEs True False 9. Size of a country’s economy is inversely proportional to GNI per capita in that country True False 10. In countries with autocratic regimes, MNEs
can manage political risk effectively by focusing more on their relationships with the government True False 11. A company has to be the size of a multinational giant
to facilitate, and benefit from, the globalization of markets. True False 12. The globalization of markets and production and the resulting growth of world trade,
foreign direct investment, and imports all imply that firms are finding it easier to protect themselves from the attack of foreign competitors. True False 13. It is
possible that economic growth in developed nations has offset the fall in the share of national income enjoyed by unskilled workers, raising their living standards.
True False 14. The term political economy is used to stress the fact that the political, economic, and legal systems of a country are independent of each other. True
False 15. The purchasing power parity for different countries is adjusted (up or down) depending upon whether the cost of living is lower or higher than in the United
States. True False 16. In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers that they should produce more. True False
17. Contracts drafted under a civil law framework tend to be very detailed with all contingencies spelled out. True False 18. Increasing Intellectual property laws
always stimulate innovation and emerging country-catch up. True False MULTIPLE CHOICEQUESTIONS (1 point each) 19. _____ isolated four dimensions—power distance,
uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity—that he claimed summarized different cultures. A. Dunning B. Vernon C.
Hofstede D. Michael Porter E. Max Weber 20 . Which is/are examples of stereotypes? I. Ikea’s “Fartfull” couch in the U.S II. The French are arrogant.” III. “The
Chinese eat anything that moves.” IV. “Americans are very liberal.” A. All of the above B. II and III only C. II,III, IV only D. I,IV only E. I, II and III only
21.Which of the following statements is not true about global institutions? A. They can be considered as polices of global market place B. They promote the
establishment of multinational treaties C. They always work for the advantage of countries D. MNEs can dispute international business cases through them E. Their
agenda is often influenced by MNEs, NGOs, and developed countries 22. _____ refers to a condition where people tend to perceive themselves in terms of their class
background, and this shapes their relationships with members of other classes. A. Social mobility B. Class consciousness C. Cross-culture literacy D. Social awareness
E. Class representativeness 23. Which of the following is/are visible barriers to trade? V. Local Production requirements VI. Custom duties for foreign firms VII.
Government Subsidies VIII. Lax enforcement of Intellectual Property Laws a. All of the above b. II and III only c. 1,III, IV only d. I,IV only e. I, II and III only
24. Which one of below is/are requirements of an effective legal system? I. The people in the society must clearly understand and have knowledge of what the society
prescribes as legal behavior II. The legislators must have agreed that the laws deserve to be obeyed III. An effective system for punishing illegal behavior must be in
place A. All of the above B. II and III only C. 1 only D. I,III only E. I and II 25. Which of the following is not true about the aftermath of 2008 Financial Crisis?
A. MNEs were affected as much as the local firms B. An increase in regulation was observed in the countries affected by the crisis C. It became harder to get banking
loans for individuals and firms D. There was an increase in disputes that were taken to arbitrage courts E. US domestic firms responded by investing abroad 26. A
________ demands that some specific fraction of a good be produced domestically A) Subsidy B) quota rent C) voluntary export requirement D) local content requirement
27. Which of the following is not a political argument forgovernment intervention? A) Protecting jobs B) protecting infant industries C) protecting industries deemed
important for national security D) protecting consumers from “dangerous” products 28. Which of the following statements is true about culture? A. Culture is static as
it does not evolve. B. Multinational enterprises can themselves be engines of cultural change. C. The cost of doing business in a country or region is always
independent of its culture. D. It is not possible for a country to support multiple cultures. E. The values and norms of a culture emerge fully formed. 29. Which is
not true about failure of multinational service firms such as Walmart in the host countries? A. Standardization of services while going abroad can have positive
effects such as control and economies of scale B. Adaptation of services at the host countries can help MNEs to tap into local knowledge C. A successful strategy in
one location can easily be transferred to operations at other locations D. Managers’ ethnocentric behavior was influential in some of these failures E. Cultural
Sensitivity is more important for the success of multinational service firms than multinational manufacturing firms 30. China, deliberately keeping its currency value
low against the U.S. dollar in order to sell more goods to the United States, and thus accumulate a trade surplus and foreign exchange reserves, is viewed by critics
as following a: A. Zero-sum game. B. Neo-mercantilist policy. C. Positive-sum game. D. Free trade policy. 31. The United Republic emphasizes individual performance and
achievements in every sphere of society. Which of the following statements is true about the society of this country? A. The country suffers from a low degree of
dynamism and innovation. B. The country has a low degree of managerial mobility. C. There is a low degree of entrepreneurial activity in the country. D. The employees
in this country will lack loyalty and commitment to a company. E. Managers in such a country have highly developed company-specific skills but they lack general
skills. 32. Which of the following statements is true about political systems? A. The political system of a country is independent of its economic and legal systems.
B. The political system of a country is of no importance to international business. C. It is not possible to have democratic societies that emphasize a mix of
collectivism and individualism. D. it is possible to have totalitarian societies that are not collectivist. E. The societal culture of a country does not influence its
political system. 33. Which of the following best illustrates the globalization of production? a. Daily Diamonds Inc. buys diamonds from South Africa and exports them
to India for the cutting process. b. Evan Swan, a U.S. based fashion designer, is planning to open a flagship store in China to serve the Asian market. c. Uncle Crab,
a UK fast food chain, has been serving customers worldwide through its franchises. d. Silver Unicorn Inc. uses sales personnel from the respective host country to sell
its products and services. 34. Which of the following is/are non-visible barriers to trade? IX. Ease of Doing Business for foreign firms X. Custom duties for foreign
firms XI. Government Subsidies XII. Lax enforcement of Intellectual Property Laws a. All of the above b. I only c. 1,III, IV only d. I,IV only 35. Which of the
following is most likely to be the best suited product for a global market? A. Microprocessors B. Fast food like hamburgers C. Clothes and accessories D. Bank and
other personal services E. Household furnishings 36. The _____ refers to the sourcing of goods and services from locations around the globe to take advantage of
national differences in the cost and quality of factors such as labor, energy, land, and capital. A. globalization of markets B. augmentation of products C.
amplification of value chain D. Dispersion of value chain E. capitalization of markets 37. The _____ is the less controversial sister institution of the IMF which was
created along with the IMF in 1944. A. G-20 B. International Court of Justice C. League of Nations D. World Trade Organization E. World Bank 38. Gerald gifted his son,
David, a computer two years ago. Recently, he decided to gift his daughter, Julian, a computer of her own. In the context of the two year gap between the purchase of
both the computers and Moore’s law, it is most likely that: A. Gerald paid a higher price for Julian’s computer. B. David’s computer will have a microprocessor with
better power than that of Julian’s. C. both David’s and Julian’s computers would cost Gerald the same price. D. the microprocessor in Julian’s computer will be more
advanced in terms of power than that of David’s. E. the power of the microprocessors, in both David and Julian’s computers, would be the same. 39. Which of the
following countries has seen a relative decline in its share of world output between 1960 and 2010? A. The United States B. Thailand C. Japan D. China E. South Korea
40. Which of the following statements is true about the changing foreign direct investment picture of the global economy? A. Throughout the 1990s, the amount of
investment directed at both developed and developing nations decreased dramatically. B. There has been a fall in the share of FDI stock accounted for by developing
nations reflecting a declining trend for firms from these countries to invest outside their borders. C. Among developing nations, the lowest recipient of foreign
direct investment has been China. D. The share of FDI stock accounted for by U.S. firms has been drastically increasing from 1980s. E. The sustained flow of foreign
investment into developing nations is an important stimulus for economic growth in those countries. 41. After the collapse of communism in Dehran, successful business
owners often had to pay “protection money” to the mafia or face violent retribution. In the context of property rights, the behavior of the mafia is an example of: A.
active violation. B. public action. C. private action. D. boundary spanning. E. industrial espionage. 42. When Shop Smart opened its first super market in China it was
unable to generate any sales. After conducting a research, it was understood that the local sales personnel found it difficult to communicate with the American store
managers. In addition, Chinese consumers found it difficult to shop in the American way. Shop Smart’s failure in China can be attributed to the lack of: A. cross-
cultural literacy. B. class consciousness. C. a first-mover advantage. D. Confucian dynamism. E. ethnocentrism. 43. The risks of doing business are most likely to be
the highest in a country that: A. has low inflation rates. B. supports high living standards. C. has only one ethnic nationality. D. protects intellectual property. E.
faces frequent changes in government and government policy. 44. Jack, the CEO of Silver Touch Inc., raised his eyebrow in surprise at a new employee’s valid suggestion
to improve the sales turnover. He made a thumbs-up gesture as a sign of approval for the implementation of the employee’s suggestion. Jack is typically using: A.
spoken communication. B. nonverbal communication. C. explicit communication. D. oral communication. E. grapevine communication. 45. Managers at the Blue Dragon Inc.,
an international company with operations in China and the United States, are often heard complaining about the difficulties in achieving synergy and cooperation
between the employees of both the countries. On extensive research it was concluded that the cultural differences between these countries, which resulted in different
work-related values, caused the lack of cooperation. In order to effectively tackle this problem, Blue Dragon Inc. should: A. vary its management process and practices
to account for these differences. B. adopt the host countries management processes and practices in both countries. C. opt to exit one of the countries to avoid a
conflict. D. provide incentives to the employees based only on their individual performance. E. adopt the home countries management processes and practices in both
countries. Short Paragraph Question 1. List and explain 2 market research approaches that managers use to reduce uncertainty in their strategy development for
international markets? (10 points) 2. List indices/rankings that MNEs can use in their investment decisions. List which ones are more relevant vs. less relevant to the
mini-team presentations. (15 points) 3. List firm activities that falls under International Business description. Can Facebook considered a MNE company? Why? (10
points) 4. List the dimensions that make up the International Environment for the International Business. Indicate what factors these each individual dimensions
contain. List the indices you can capture these dimensions. (20 points) 1. Dimension: Factors: 2. Dimension: Factors: 3. Dimension: Factors: 4. Dimension: Factors: 5.
Dimension: Factors:
