Modern Management, 13e (Certo/Certo)

Chapter 5 Managing in the Global Arena

1) International management is the performance of management activities across national
borders.
Answer: TRUE
Page Ref: 103
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 103
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual
3) One form of international management is fighting competition in foreign markets.
Answer: TRUE
Page Ref: 103
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 118
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual

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5) Domestic organizations essentially operate within a single country.

Answer: TRUE
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 105-106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual

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

multinational corporation.
Answer: FALSE
Page Ref: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual
11) The host company is the company investing in international operations.
Answer: FALSE
Page Ref: 107
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual

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13) 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: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual
14) 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: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 109-110
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
17) The European Union is an example of an international market agreement.
Answer: TRUE
Page Ref: 112
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
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18) Managers with an ethnocentric attitude are prone to stereotype foreign management practices
as faulty and unreasonable.
Answer: TRUE
Page Ref: 114-115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
19) A polycentric attitude reflects the belief that multinational corporations should regard homecountry management practices as superior to foreign-country management practices.
Answer: FALSE
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
20) Transnational organizations usually take one particular continent as their business arena.
Answer: FALSE
Page Ref: 118
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 6
Difficulty: Easy
Classification: Conceptual
21) In ascending order, what are the different types of organizations involved in the international
arena?
A) domestic, international, multinational, transnational
B) international, transnational, domestic, multinational
C) multinational, domestic, transnational, global
D) transnational, international, multinational, domestic
E) domestic, multinational, transnational, international
Answer: A
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual

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22) Which of the following categories of organizations generally has the lowest level of
international involvement?
A) global organizations
B) domestic organizations
C) international organizations
D) multinational organizations
E) transnational organizations
Answer: B
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual
23) Which of the following types of organizations has the highest level of international
involvement?
A) regional organizations
B) national organizations
C) transnational organizations
D) ethnocentric organizations
E) domestic organizations
Answer: C
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual
24) ________ organizations essentially operate within a single country.
A) Multinational
B) Transnational
C) Global
D) Domestic
E) International
Answer: D
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual

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25) SNL manufactures and sells customized shoes for people with special needs. The
organization caters mostly to customers within the United States, though it occasionally sends
products to overseas customers. The organization is very eco-friendly, and takes pride in
sourcing all its raw materials locally. According to the information, SNL is a(n) ________.
A) transnational organization
B) global organization
C) multinational organization
D) domestic organization
E) international organization
Answer: D
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
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 United States. Adam & Sons recently became the sole
U.S distributors for Japanese watch manufacturer TLC. Adam & Sons would therefore be
classified as a(n) ________.
A) international organization
B) multinational organization
C) transnational organization
D) global organization
E) domestic organization
Answer: A
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Moderate
Classification: Application

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27) Which of the following describes a company that is primarily based within one country but
has continuing and meaningful transactions in other countries?
A) domestic organization
B) international organization
C) multinational organization
D) transnational organization
E) global organization
Answer: B
Page Ref: 105
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 1
Difficulty: Easy
Classification: Conceptual
28) BLT is a sandwich chain based in Boston. It gained popularity due to word-of-mouth
publicity and it 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?
A) if it begins stocking organic foods produced by local farms
B) if it distributes artisanal chocolate produced by a South African firm
C) if it licenses a fast-food chain in England to use its brand name
D) if it diversifies its product lineup to include different types of foods
E) if it begins selling cheeses imported from France
Answer: C
Page Ref: 105-106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
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) ________.
A) global organization
B) domestic organization
C) international corporation
D) multinational corporation
E) transnational organization
Answer: D
Page Ref: 105-106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual
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30) According to Neil H. Jacoby, which of the following is the first stage of
multinationalization?
A) establishing sales organizations abroad
B) licensing the use of the organization's patents and know-how to foreign firms that make and
sell the organization's product
C) establishing foreign manufacturing facilities
D) multinationalizing the organization's management from top to bottom
E) exporting the organization's product to foreign countries
Answer: E
Page Ref: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual
31) What is the most advanced stage in multinationalization of a company?
A) licensing its brand names to foreign firms
B) establishing foreign manufacturing facilities
C) establishing sales organizations abroad
D) exporting the organization's products to foreign countries
E) multinationalizing ownership of the corporate stock
Answer: E
Page Ref: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Easy
Classification: Conceptual
32) Which of the following is a characteristic of domestic management?
A) widely disparate economic conditions
B) national markets varying greatly in population and area
C) different national sovereignties
D) markets at different stages of the industrial revolution
E) people living in similar value systems
Answer: E
Page Ref: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual

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

A) quasi company
B) parent company
C) subsidiary company
D) holding company
E) host company
Answer: B
Page Ref: 107
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 3
Difficulty: Easy
Classification: Conceptual
34) A country in which an investment is made by a foreign company is termed as a(n) ________.
A) host country
B) parent country
C) home country
D) expatriate country
E) native country
Answer: A
Page Ref: 107
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 3
Difficulty: Easy
Classification: Conceptual
35) ________ are members of an organization who live and work in a country where they do not
have citizenship.
A) Expatriates
B) Host-country nationals
C) Naturalized citizens
D) Repatriates
E) Dual citizens
Answer: A
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual

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36) Joe is a citizen of Sri Lanka who lives and works for a company in Brazil. He is considered
to be a(n) ________.
A) dual citizen
B) expatriate
C) repatriate
D) host-country national
E) home-country national
Answer: B
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Moderate
Classification: Application
37) Citizens of a country who work in a foreign-based organization located in their own country
are known as ________.
A) expatriates
B) host-country nationals
C) third-country nationals
D) repatriates
E) immigrants
Answer: B
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual
38) Gary is a British citizen working for an American company situated in London. He is a(n)
________.
A) host-country national
B) third-country national
C) repatriate
D) expatriate
E) immigrant
Answer: A
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Moderate
Classification: Application

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39) Organization members who are citizens of one country and work in another country for an
organization headquartered in still another country are known as ________.
A) expatriates
B) host-country nationals
C) third-country nationals
D) repatriates
E) naturalized citizens
Answer: C
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual
40) Hugh is an American citizen currently living in Denmark. He works for a company that has
its headquarters in France. He is a ________.
A) third-country national
B) host-country national
C) home-country national
D) dual citizen
E) repatriate
Answer: A
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Moderate
Classification: Application
41) 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?
A) Sandra is Polish and works for a U.K-based company in Venice.
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.
C) Vanessa is English and works in London for a company based in Denmark.
D) Ursula is a Finn but has been in Germany for the last four years, working for a company
headquartered in Japan.
E) Nikolai works for an Irish company in Oslo and is a Norwegian by birth.
Answer: B
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Difficult
Classification: Application
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42) ________ are least expensive to employ for organizations that operate globally.
A) Host-country nationals
B) Expatriates
C) Third-country nationals
D) Repatriates
E) Migrant workers
Answer: A
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual
43) Which of the following is true for employees of multinational organizations?
A) A third-country national works for a foreign organization in its home country.
B) A host-country national will face problems adjusting to the culture of the country in which he
works.
C) Expatriates and third-country nationals have to be relocated and undergo training.
D) A host-country national is an organization member who lives and works in a country where
he or she does not have citizenship.
E) Host-country nationals are usually the most expensive to employ.
Answer: C
Page Ref: 109
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual
44) 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
________.
A) repatriation
B) expatriation
C) immigration
D) polycentrism
E) emigration
Answer: A
Page Ref: 109-110
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Easy
Classification: Conceptual

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45) The ________ function of management involves determining how an organization will
achieve its objectives.
A) planning
B) organizing
C) influencing
D) controlling
E) observing
Answer: A
Page Ref: 110
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
46) When a U.S.-based computer manufacturer sells a shipment of 40 computers to a retailer in
Germany, the computer manufacturer is engaged in the process of ________.
A) importing
B) exporting
C) developing a license agreement
D) direct investing
E) repatriating
Answer: B
Page Ref: 110
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
47) 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) ________.
A) license agreement
B) direct investing agreement
C) venture agreement
D) export agreement
E) import agreement
Answer: A
Page Ref: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application

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48) An American clothing manufacturer has recently purchased a clothing factory in Taiwan.
This action is known as ________.
A) importing
B) exporting
C) licensing
D) direct investing
E) franchising
Answer: D
Page Ref: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
49) In which of the following areas does international planning emphasize reaching
organizational objectives through the purchase of the operating assets of another company in a
foreign country?
A) direct investing
B) joint venture
C) importing
D) exporting
E) license agreements
Answer: A
Page Ref: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
50) 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)
________.
A) international market agreement
B) direct investment
C) joint venture
D) license agreement
E) franchise agreement
Answer: C
Page Ref: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
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51) International plans that include ________ emphasize the attainment of organizational
objectives through partnerships with foreign companies.
A) joint ventures
B) imports
C) exports
D) license agreements
E) direct investing
Answer: A
Page Ref: 111
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
52) An international market agreement is ________.
A) a joint venture between two companies who want to enter markets in the other country
B) an arrangement among a cluster of countries that facilitates a high level of trade among these
countries
C) an international import deal between two countries
D) an agreement between an importer from one country and an exporter from another
E) an agreement between a multinational company and its franchisees in a number of countries
Answer: B
Page Ref: 111-112
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
53) ________ is an international market agreement dedicated to facilitating trade among member
nations.
A) The Asian Union
B) The American Union
C) The European Union
D) The Global Union
E) The Pan-Asian Union
Answer: C
Page Ref: 112
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual

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54) 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 an ________
agreement.
A) international license
B) international market
C) international framework
D) international import
E) international export
Answer: B
Page Ref: 111-112
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
55) Which of the following statements is true about NAFTA?
A) It aims at facilitating trade among the United States, Canada, and Mexico.
B) Its members include Denmark, the United Kingdom, Portugal, the Netherlands, Belgium.
C) It is an international market agreement aimed at facilitating trade among African nations.
D) It works to reduce tariffs and other trade barriers across the Asia-Pacific region.
E) It has 21 members, including Canada, the People's Republic of China, Indonesia, and the
United States.
Answer: A
Page Ref: 113
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
56) APEC was established in 1989 to further the economic growth and prosperity of the
________ community.
A) North American
B) Asia-Pacific
C) Commonwealth
D) European
E) African
Answer: B
Page Ref: 113
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
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57) Which of the following countries is a member of the APEC?

A) Germany
B) Egypt
C) Canada
D) Argentina
E) Brazil
Answer: C
Page Ref: 113
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
58) ________ is the sum of all established relationships among resources within an organization.
A) Organization structure
B) Organization overview
C) Organization mission
D) Organization path
E) Organization purpose
Answer: A
Page Ref: 114
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
59) The organization chart ________.
A) establishes the organization's goals for the year
B) is the graphic illustration of organization structure
C) lists the organizational policies
D) details the organization's plans for achieving its goals
E) is the representation of the organization's financial system
Answer: B
Page Ref: 114
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual

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60) The manager of a multinational corporation in the United States 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) ________.
A) ethnocentric attitude
B) polycentric attitude
C) geocentric attitude
D) xenocentric attitude
E) gynocentric attitude
Answer: A
Page Ref: 114-115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
61) 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)
________.
A) ethnocentric attitude
B) polycentric attitude
C) egocentric attitude
D) geocentric attitude
E) gynocentric attitude
Answer: B
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application

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62) 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.
A) ethnocentric
B) polycentric
C) egocentric
D) geocentric
E) gynocentric
Answer: B
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
63) Managers with a(n) ________ 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.
A) ethnocentric
B) polycentric
C) geocentric
D) xenocentric
E) gynocentric
Answer: C
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Moderate
Classification: Conceptual
64) 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) ________.
A) ethnocentric attitude
B) polycentric attitude
C) egocentric attitude
D) geocentric attitude
E) gynocentric attitude
Answer: D
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
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65) Which of the following statements is true for the various management attitudes?
A) An organization characterized by the geocentric attitude incurs high travel and training
expenses.
B) The ethnocentric attitude reflects the belief that because foreign managers are closer to
foreign organizational units, they understand them better.
C) The ethnocentric attitude is generally thought to be the most appropriate for managers in
multinational corporations.
D) The polycentric attitude often causes resentment toward the home country within the foreign
society.
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: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
66) Which of the following attitudes is generally thought to be the most appropriate for managers
in multinational corporations?
A) geocentric
B) ethnocentric
C) polycentric
D) egocentric
E) regiocentric
Answer: A
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual

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67) ________ is the set of characteristics of a given group of people and their environment and
includes components like norms, values, habits, education and religion.
A) Culture
B) Politics
C) Laws
D) Attitude
E) Ethics
Answer: A
Page Ref: 115
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
68) Countries that highly promote ________ have citizenry that tends to emphasize, expect, and
accept more autocratic than democratic leadership.
A) short-term orientation
B) individualism
C) power distance
D) masculinity
E) collectivism
Answer: C
Page Ref: 116
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Moderate
Classification: Conceptual
69) 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?
A) Germany, which has high power distance and collectivism
B) Denmark, which has low power distance and low uncertainty avoidance
C) Japanese, which culture favors low individualism and high power distance
D) India, which has a long-term orientation and high uncertainty avoidance
E) France, which has low uncertainty avoidance and high power distance
Answer: B
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Conceptual
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70) 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?
A) France has a culture that promotes masculinity.
B) France is a country where short-term orientation is prevalent.
C) France is a country with high power distance.
D) France is a society with low uncertainty avoidance.
E) French society promotes individualism.
Answer: C
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
71) In Jonovia, 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 Jonovia is a
society that has ________.
A) feminine values
B) long-term orientation
C) low power distance
D) high uncertainty avoidance
E) high individualism
Answer: D
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application

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72) Which of the following is true according to Hofstede's method of describing culture?
A) Countries with low power distance tend to emphasize, expect, and accept more autocratic
than democratic leadership.
B) Highly feminine countries place a high worth on factors like competitiveness, assertiveness,
success, and wealth.
C) Power distance is the extent to which a society feels threatened by uncertain or unpredictable
situations.
D) Countries that are high in uncertainty avoidance prefer being in more defined and predictable
situations.
E) Countries with low uncertainty avoidance deemphasize short-run success to achieve long-run
success.
Answer: D
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Conceptual
73) ________ is the degree to which people in a society operate primarily as individuals or
within groups.
A) Uncertainty avoidance
B) Power distance
C) Collectivism
D) Masculinity
E) Feminity
Answer: C
Page Ref: 116
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Conceptual

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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?
A) South Korean society has a long-term orientation.
B) South Korea has high power distance.
C) South Korea is low on uncertainty avoidance.
D) South Korea has strong masculine values.
E) South Korea is a collectivist culture.
Answer: E
Page Ref: 116
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Conceptual
75) 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 ________.
A) emphasizes masculine values
B) has short-term orientations
C) has high power distance
D) is low on uncertainty avoidance
E) emphasizes collectivism
Answer: A
Page Ref: 116
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
76) 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 dayto-day perspective. Pakistan is a good example of a ________.
A) highly individualistic society
B) highly feminine society
C) short-term oriented society
D) low power distance society
E) low uncertainty avoidance society
Answer: C
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Application
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Copyright 2014 Pearson Education, Inc.

77) The management of a company decides to take corrective action in the way they have been
comparing profits generated by organizational units located in different countries and decides to
represent it in terms of different currencies. Which of the following management functions is
being performed here?
A) planning
B) influencing
C) controlling
D) organizing
E) leading
Answer: C
Page Ref: 117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
78) ________ in multinational corporations requires that standards be set, performance be
measured and compared to standards, and corrective action be taken if necessary.
A) Planning
B) Organizing
C) Leading
D) Controlling
E) Influencing
Answer: D
Page Ref: 117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Easy
Classification: Conceptual
79) Transnational organizations are also called ________.
A) global corporations
B) multinational corporations
C) international corporations
D) domestic corporations
E) pan-national corporations
Answer: A
Page Ref: 118
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 6
Difficulty: Easy
Classification: Conceptual
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80) A(n) ________ organization considers national borders to be inconsequential to its

operations, with ownership, control, and management being from many different countries.
A) international
B) regional
C) pan-national
D) transnational
E) domestic
Answer: D
Page Ref: 118
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 6
Difficulty: Easy
Classification: Conceptual
81) The ________ organization transcends any single home country, with ownership, control,
and management being from many different countries.
A) pan-national
B) transnational
C) multinational
D) international
E) domestic
Answer: B
Page Ref: 118
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 6
Difficulty: Easy
Classification: Conceptual

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82) 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?
A) respecting core human rights
B) respecting local traditions
C) determining right from wrong by examining context
D) using ethnocentrism
E) increasing power distance
Answer: C
Page Ref: 119
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 7
Difficulty: Moderate
Classification: Application
83) 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 ________.
A) logistical information
B) cultural application
C) cultural adaptation
D) cultural profiling
E) repatriation
Answer: C
Page Ref: 120
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 7
Difficulty: Easy
Classification: Conceptual

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84) 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 ________.
A) cultural profiling
B) cultural adaptation
C) cultural application
D) logistical information
E) repatriation
Answer: D
Page Ref: 120
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 7
Difficulty: Easy
Classification: Conceptual
85) During ________ training, the expatriates learn about the specific organizational roles that
they are required to perform in the foreign country.
A) application
B) logistical information
C) cultural adaptation
D) cultural profiling
E) repatriation
Answer: A
Page Ref: 120
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
AACSB: Dynamics of the Global Economy
Objective: 7
Difficulty: Easy
Classification: Conceptual

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86) 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: 105-106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Moderate
Classification: Conceptual

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87) 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 patents 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: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 2
Difficulty: Moderate
Classification: Conceptual
88) 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:
a. Reduce or eliminate high transportation costs.
b. Allow participation in the rapid expansion of a market abroad.
c. Provide foreign technical, design, and marketing skills.
d. 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: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 3
Difficulty: Moderate
Classification: Conceptual

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89) 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: 106
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 4
Difficulty: Moderate
Classification: Conceptual

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90) 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:
a. 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.
b. 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.
c. 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.
d. 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.
e. 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 to do a job now, rewarding short-run results, and maintaining a day-to-day
perspective.
Page Ref: 116-117
Learning Outcome: Identify the fundamental concepts and issues of international business and
management
Objective: 5
Difficulty: Moderate
Classification: Conceptual

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Copyright 2014 Pearson Education, Inc.