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International Business : The Challenge of Global Competition, 8/e

Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American

Trading and Investing in International Business (includes distributive forces)

Multiple Choice Quiz


1	In 1999, foreign direct investment soared to unprecedented levels because of large American firms responding to such factors as:
		A)	domestic competition.
		B)	higher oil prices.
		C)	liberalization by host governments in regard to foreign investment.
		D)	stable interest rates worldwide.


2	According to the US Department of Commerce, approximately ______ of US exports of goods are by US owned multinational corporations.
		A)	1/3
		B)	1/2
		C)	2/3
		D)	3/4


3	The total dollar value of world exports in 1999 was greater than the gross national product of every nation in the world except:
		A)	Germany
		B)	Japan
		C)	China
		D)	the United States


4	Although there are some differences, the exports of most of the major exporting nations have increased at about the same rate as the world average. However, the European Union and _____________ nations as a whole did surpass the world rate.
		A)	developing
		B)	developed
		C)	industrialized
		D)	undeveloped


5	World exports have quadrupled in less than:
		A)	15 years
		B)	20 years
		C)	25 years
		D)	30 years


6	Which of the following countries sends a larger portion of its exports to developing nations than to developed economies as a whole?
		A)	New Zealand
		B)	the United Kingdom
		C)	Germany
		D)	China


7	The fact that members of trade groups such as the European Union and Latin American Integration Association are increasingly selling to each other is a development that will:
		A)	make them much less dependent on other nations.
		B)	influence international companies' choices of locations for their plants and other operations.
		C)	reduce competition on worldwide basis.
		D)	result in increased prices worldwide.


8	There are a number of advantages in focusing attention on a nation that is already a sizable purchaser of goods coming from the would-be exporter's country. Which of the following is not an advantage?
		A)	The business climate in the important nation is relatively favorable.
		B)	Export and import regulations have been eliminated.
		C)	Satisfactory transportation facilities have already been established.
		D)	Foreign exchange to pay for the exports is available.


9	Historically, foreign direct investment has followed foreign trade because:
		A)	foreign trade is less costly and less risky.
		B)	management can expand the business in large increments.
		C)	the firm has already set up an export department and has hired sales representatives to live in overseas markets.
		D)	the firm has already established its own sales company to import in its own name.


10	Many international firms are dispersing the activities of their production systems to locations close to available resources because:
		A)	the new business environment has no government barriers to trade
		B)	competition has decreased from global firms.
		C)	of new production and communications technologies.
		D)	shipping costs have been drastically reduced.


11	The average annual increase of foreign direct investment in the United States has on average been:
		A)	10%.
		B)	13%.
		C)	16%.
		D)	19%.


12	Of the record investment outlays in the United States by foreign firms, much more has been spent to acquire going companies than to establish new ones. A reason for this is that:
		A)	US corporate restructuring caused management to sell businesses that did not meet management's profit standards.
		B)	US corporate restructuring caused management to sell businesses that were related to the company's main business.
		C)	foreign companies were interested in gaining slow and steady access to the advanced technology in the US.
		D)	management of foreign companies felt that entrance into the US market would be more successful if it acquired unknown brand names.


13	An agreement by a small group of nations to establish free trade among themselves while maintaining trade restrictions with other nations is known as a:
		A)	free trading agreement.
		B)	restrictive trading agreement.
		C)	preferential trading agreement.
		D)	none of the above.


14	Singapore has had _____ times the average annual growth of Japan.
		A)	4
		B)	4.5
		C)	5
		D)	5.5


15	McDonalds has over _____ restaurants in Singapore.
		A)	50
		B)	60
		C)	70
		D)	80


16	A firm looking for a market large enough to support the local production of appliances or machinery would be attracted by the wealth, growth and population size of:
		A)	the United Kingdom.
		B)	Germany.
		C)	France.
		D)	Spain.


17	Suppliers to original equipment manufacturers often follow their large customers overseas. For example, researchers at the University of Michigan found than Japanese imports accounted for ______ of the auto parts for Honda's Marysville, Ohio plant.
		A)	64%
		B)	74%
		C)	84%
		D)	94%


18	Frequently, a firm will go abroad to:
		A)	protect its home market.
		B)	earn greater profits.
		C)	test market a product.
		D)	all of the above.


19	Production facilities in Mexico that temporarily import raw materials, components, or parts duty-free to be manufactured, processed, or assembled with less expensive local labor and then export the finished or semi-finished product are known as:
		A)	in-bond plants
		B)	out-bond plants
		C)	reverse maquila
		D)	matildoras


20	Transnational economic zones spread over large, geographically proximate areas covering three or more countries where differences in factor endowments are exploited to promote external trade and investment are called:
		A)	free trade areas.
		B)	economic trading areas.
		C)	growth triangles.
		D)	supranational triangles.

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