Mock Midterm (Ch's 1-5) International Business

Student name:__________ TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Some Canadian firms have outsourced jobs to developing countries. ⊚ true ⊚ false 2) Free trade agreements can be tied to tougher environmental and labour laws. ⊚ true ⊚ false 3) In addition to reducing trade barriers, many countries have also been progressively removing restrictions on barriers to foreign direct investment. ⊚ true ⊚ false 4) FDI occurs when a firm invests resources in business activities outside its home country. ⊚ true ⊚ false 5) The advanced nations of the East committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. ⊚ true ⊚ false 6) The closing case shows how Japan's keiretsu system is based on fostering competition within a group. ⊚ true ⊚ false 7) The primacy of the value of group identification discourages managers and workers from moving from company to company. ⊚ true ⊚ false 8) Social strata refer to the extent to which individuals can move out of the strata into which they are born. ⊚ true ⊚ false Version 1 1

9) A system of values and norms that are shared among a group of people and that when taken together constitute a design for living is referred to as culture. ⊚ true ⊚ false 10) The new trade theorists argue that in those industries where the existence of substantial economies of scale imply that the world market will profitable support only a few firms, countries may export certain products simply because they have a firm that was an early entrant into that industry. ⊚ true ⊚ false 11) Trade offers an opportunity for mutual gain even when countries do not differ in their resource endowments or technology. ⊚ true ⊚ false 12) Economies of scale increases the efficiency of resource utilization, but do not affect productivity. ⊚ true ⊚ false 13) New trade theory identifies an important source of comparative advantage. ⊚ true ⊚ false MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 14) Economies of scale increases the efficiency of resource utilization, therefore increasing what? A) costs B) capital C) factor endowments D) productivity E) profitability Version 1 2

19) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following is/are attributes except: A) factor endowments B) customs C) firm strategy, structure, and rivalry D) related and supporting industries E) demand conditions 20) _______, according to Michael Porter, are a nation's position in factors of production such as skilled labour or the infrastructure necessary to compete in a given industry. A) Demand endowments B) Factor endowments C) Factor competencies D) Demand conditions E) National resources 21) Porter argued that in regard to factor endowments, __________ factors are the most significant for competitive advantage in his study dealing with the competitive advantage of nations. A) standard B) basic C) advanced D) complementary E) exclusive 22) Unlike the naturally endowed basic factors, advanced factors are a product of investment by all of the following except A) companies. B) governments. C) demographics. D) individuals. E) none of these answers is correct. Version 1 4

23) In his study dealing with the competitive advantage of nations, Porter argued that in regard to demand conditions, a nation's firms' gain competitive advantage if their domestic consumers are __________ and __________. A) unpretentious; passive B) modest; passive C) exacting; unpretentious D) sophisticated; demanding E) fractious; unsatisfied 24) Privatization refers to: A) the selling of state-owned enterprises to private investors B) the selling of public corporations to private investors C) guarding company secrets from the general public D) transferring political power from the government to private citizens E) reducing regulation of private business 25) _________ is the process of selling state-owned enterprises to private investors. A) Political-economic divestiture B) Privatization C) Downsizing D) Ownership-transfer E) Nationalization 26) The shift to ________ system typically involves deregulation, privatization and a legal system that protects property rights. A) a democratic B) a market-based economic C) privatized D) a state-ownership E) Communist 27) Which of the following involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate? A) privatization B) simplification C) deregulation D) socialism E) competition Version 1 5

33) Which theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments but because in certain industries the world market can support only a limited number of firms? A) Balanced trade B) Heckscher-Olin C) New trade D) Product life-cycle E) National competitive advantage 34) The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products. A) new trade B) absolute advantage C) comparative advantage D) national competitive advantage E) factor endowments 35) Which of the following two theories justify some limited and selective government intervention to support the development of certain export-oriented industries? A) The theory of national competitive advantage and the Heckscher-Ohlin theory B) The theory of absolute advantage and the new trade theory C) The Heckscher-Ohlin theory and theory of comparative advantage D) The theory of mercantilism and the Heckscher-Ohlin theory E) The new trade theory and theory of national competitive advantage 36) __________ is/are a course of action, which international businesses take that does not violate a company's accepted principles. A) Ethical strategy B) Business ethics C) Ethical dilemmas D) Ethical issues E) Ethical relativism Version 1 7

37) Many of the ethical issues and dilemmas in international business are rooted in the fact of differences in all BUT which one of the following? A) political systems B) culture C) monetary values D) economic development E) law 38) In the international business setting, the most common ethical issues involve all EXCEPT which one of the following? A) employment practices B) human rights C) corruption D) border control E) environmental protection 39) The way working conditions are maintained by a business refers to the __________ of that business. A) culture B) human rights C) human code of behaviours D) employment practices E) corporate culture 40) Which one of the following is NOT considered to be a valued human right? A) Freedom of speech B) Freedom condoning political oppression C) Freedom of assembly D) Freedom of movement E) Freedom of religion 41) What was the multinational organization that adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1997? A) WTO B) GATT C) World Bank D) United Nations E) OECD Version 1 8

47) The economy and legal systems of a country are shaped by its what? A) civil system B) political economy C) political system D) judicial economy E) governance structure 48) The trend toward a more integrated and interdependent global economic system that has been in place for many years is commonly referred to as: A) market standardization B) cross-border integration C) globalization D) consumerism E) nationalization 49) Sourcing goods and services from locations around the globe is known as __________. A) melding of markets B) integration of markets C) deregulation D) globalization of production E) globalization of markets 50) Currently, most global markets are markets for what type of product? A) Consumer goods B) Industrial goods C) National products D) Deregulated products E) Local goods Version 1 10

Answer Key Test name: Midterm Mock (Ch's 1-5) 1) TRUE 2) TRUE 3) TRUE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) FALSE 9) TRUE 10) TRUE 11) TRUE 12) FALSE 13) TRUE 14) D 15) C 16) C 17) D 18) E 19) B 20) B 21) C 22) C 23) D 24) A 25) B 26) B 27) C 28) C 29) C 30) B 31) C 32) D 33) C 34) D 35) E 36) A 37) C Version 1 11