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A comprehensive review of key concepts and theories in international business, covering topics such as internationalization theory, the diamond model, the eclectic paradigm, barriers to international trade, the world trade organization (wto), multinational enterprises (mnes), globalization drivers, international trade agreements, foreign direct investment (fdi), international business strategies, challenges faced by mncs, and global organizations like the imf and world bank. It includes multiple choice, true/false, and fill-in-the-blank questions with answers and rationales, making it a valuable resource for students preparing for their final exam in international business.
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d) To monitor global outsourcing activities Correct Answer : b) To facilitate international trade negotiations Rationale: The WTO aims to provide a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. True/False: A multinational enterprise (MNE) must always adapt its products for each individual market to be successful. Correct Answer : False Rationale: While adaptation can be beneficial, it is not always necessary or feasible for an MNE to completely tailor its products for each market. Sometimes, standardized products can be successful if they meet the needs and preferences of consumers across different markets. Question: Which of the following is NOT a primary driver of globalization? a) Technological advancements b) Political instability c) Reduced trade barriers d) Increased global competition Answer : b) Political instability
Rationale: While political instability can impact global trade, it is not a primary driver of globalization. Technological advancements, reduced trade barriers, and increased global competition are the key factors that drive globalization. Question: Which international trade agreement aims to eliminate tariffs and other trade barriers among its member countries? a) World Trade Organization (WTO) b) North American Free Trade Agreement (NAFTA) c) Association of Southeast Asian Nations (ASEAN) d) European Union (EU) Answer : d) European Union (EU) Rationale: The European Union is a regional trade bloc that has eliminated tariffs and other trade barriers among its member countries, creating a single market for goods, services, capital, and labor. Question: Which of the following is a key advantage of foreign direct investment (FDI)? a) Reduced risk of political instability b) Access to new markets and resources c) Lower labor costs d) Increased control over operations
Rationale: MNCs often face challenges in navigating cultural differences, including language barriers, customs, and values, which can impact their operations and success. Fill-in-the-Blank Question: The _ is a global organization that sets rules for international trade and resolves trade disputes. Answer : World Trade Organization (WTO) Question: The _ theory suggests that countries should specialize in producing goods and services that they can produce most efficiently. Answer : Comparative advantage Question: _ is the process of transferring ownership of a company or its assets to a foreign entity. Answer : Privatization Question: _ is a form of international business where a company grants another company the right to use its intellectual property in exchange for a fee. Answer : Licensing
Question: _ refers to the practice of sourcing goods and services from different locations around the world to reduce costs and improve efficiency. Answer : Global sourcing True/False Question: The International Monetary Fund (IMF) is a global organization that provides loans to developing countries to help them stabilize their economies. Answer : True Rationale: The IMF provides loans and technical assistance to countries facing economic difficulties, aiming to promote global monetary cooperation and financial stability. Question: A joint venture is a form of international business where two or more companies share ownership and control of a new company. Answer : True Rationale: Joint ventures involve the creation of a new entity where two or more companies share ownership and control, allowing them to pool resources and expertise.
Question: Which of the following are examples of non-tariff barriers to trade? a) Quotas b) Subsidies c) Embargoes d) Standards Answer : a) Quotas, c) Embargoes, d) Standards Rationale: Non-tariff barriers include measures other than tariffs that restrict international trade, such as quotas, embargoes, and standards. Question: Which of the following are key factors to consider when choosing an international business strategy? a) Market size and growth potential b) Political and economic stability c) Cultural differences d) Competitive landscape Answer : a) Market size and growth potential, b) Political and economic stability, c) Cultural differences, d) Competitive landscape Rationale: Companies need to carefully consider market size, political and economic stability, cultural differences, and the competitive landscape when choosing an international business strategy.
Question: Which of the following are benefits of international trade? a) Increased economic growth b) Lower prices for consumers c) Greater variety of goods and services d) Improved global cooperation Answer : a) Increased economic growth, b) Lower prices for consumers, c) Greater variety of goods and services Rationale: International trade fosters economic growth, lowers prices for consumers, and provides a wider variety of goods and services. Question: Which of the following are key challenges faced by emerging markets? a) Political instability b) Lack of infrastructure c) Corruption d) Limited access to capital Answer : a) Political instability, b) Lack of infrastructure, c) Corruption, d) Limited access to capital
Rationale: A specific tariff is levied as a fixed fee per physical unit of an imported item.
Rationale: An ethnocentric approach prioritizes the home country's culture and practices over host countries.