Chapter 4--Managing in a Global Environment StudyGuide
Chapter 4--Managing in a Global Environment 1. Business has become a unified, global field as trade barriers fall, communication becomes faster and cheaper, and consumer tastes converge. True False 2. The multinational stage of corporate international development transcends any single home country. The ownership, control, and top management tend to be dispersed among several nationalities. True False 3. The global stage of corporate international development is also referred to as the stateless stage. True False 4. When Harbor Trades, a Korean-based company, makes resources including technology, managerial skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby allowing Nano to make products similar to CBA, it is engaging in a countertrade agreement. True False 5. The criterion traditionally used to classify countries as developed or developing is per capita income. True False 6. Large international firms typically are called multinational corporations. True False 7. The term top of the pyramid refers to the more than four billion people who earn the least, as defined by per capita income. True False 8. Fifteen member states of the EU have adopted the rupee, as a single European currency. True False 9. Culture shock refers to a person's ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses. True False 10 There are three components to cultural intelligence: cognitive, emotional, and physical. . True False 11 A tendency to regard their own culture as superior and to downgrade other cultures reflects an attitude . called geocentric. True False 12 An example of global outsourcing is seen when Gap, Inc uses low-cost Caribbean labor to cheaply . produce its clothing, and then finishes off and sells its clothing in the United States. True False 13 With exporting, the corporation transfers its products for sale and its production facilities in foreign . countries. True False 14 Seeking cheaper sources of materials or labor offshore is called offshoring. . True False 15 The least costly and least risky direct investment is called a greenfield venture. . True False 16 Direct investing means that the company is involved in managing the productive assets, which . distinguishes it from other entry strategies that permit less managerial control. True False 17 Countertrade is the barter of products for products rather than the sale of products for currency. . True False 18 To deal with the marketing of products in several countries individually, a company in the international . stage often uses an international division. True False 19 Licensing means engaging in the international division of labor so that work activities can be done in . countries with the cheapest sources of labor and supplies. True False 20 When a company builds a subsidiary from scratch in a foreign country it is called a greenfield venture. . True False 21 One advantage to acquiring a wholly owned foreign affiliate is that the company that acquires it would . then have complete control. True False 22 A form of direct investment is franchising. . True False 23 The goal of the European Union is to create a powerful single market system for Europe’s millions of . consumers. True False 24 The sub-divisions of the international environment are the economic, the sociocultural, and the legal. political environments. True False 25 The basic management functions of planning, organizing, leading, and controlling are the same . whether a company operates domestically or internationally. True False 26 Because of cheap labor, most international business firms are headquartered in the less developed . countries of Asia and South America. True False 27 A multinational corporation typically receives more than 25 percent of its total sales revenues from . operations inside the parent's home country. True False 28 An MNC is managed as an integrated worldwide business system. . True False 29 The primary emphasis of polycentric companies is on their home countries. . True False 30 Geocentric companies are truly world-oriented and favor no specific country. . True False 31 A country's physical facilities that support economic activities make up its infrastructure. . True False 32 The estimated 2010 misery index figures suggest significantly less misery for almost every country as . compared to figures at the beginning of the century. True False 33 Market risk is defined as the risk of loss of assets, earning power, or managerial control due to . politically based events or actions by host governments. True False 34 The countries experiencing political stability face the greatest threat of violence. . True False 35 Unfortunately, many U.S. managers fail to realize that the values and behaviors that typically govern . how business is done in the United States do not translate to the rest of the world. True False 36 Countries that value high power distances normally have cities that are geographically separated and so . have the need to transport electrical energy over large distances. True False 37 The social value of uncertainty avoidance is evident in countries like Japan which support beliefs that . provide stability and conformity among its citizenry. True False 38 Collectivism means a preference for a tightly knit social framework in which individuals look after one . another and organizations protect their members' interests. True False 39 According to the GLOBE Project, a society with a high performance orientation places high emphasis . on performance and rewards people for performance improvements and excellence. True False 40 According to the GLOBE Project, gender differentiation refers to the extent to which a society . maximizes gender role differences. True False 41 Cultural intelligence refers to a person's ability to use reasoning and observation skills to interpret . unfamiliar gestures and situations and devise appropriate behavioral responses. True False 42 Social values greatly influence organizational functioning and management styles. . True False 43 According to the GLOBE Value Dimensions, Japan and Russia both have very high performance . orientation. True False 44 When an organization has a humanistic attitude, it values employees as an end in themselves. . True False 45 A high performance orientation means that a society encourages toughness, assertiveness, and . competitiveness. True False 46 A low-context culture is a culture in which communication is used to enhance personal relationships. . True False 47 A high-context interaction requires more time because a relationship has to be developed, and trust and . friendship must be established. True False 48 Ethnocentrism refers to a natural tendency of people to regard their own culture as superior and to . downgrade or dismiss other cultural values. True False 49 Ethnocentrism refers to a natural tendency of people to regard their own culture as inferior to other . cultures. True False 50 German, Swiss, and North American cultures are among the high-context cultures. . True False 15 In the _____ stage, exports increase, and the company usually adopts a multidomestic approach, 1. probably using an international division to deal with the marketing of products in several countries individually. ________________________________________ 15 MNCs that are oriented toward the markets of individual foreign host countries are considered _____. 2. ________________________________________ 15 MNCs that are truly world-oriented and favor no specific country are considered _____. 3. ________________________________________ 15 In the _____ stage, the company has marketing and production facilities located in many countries and 4. more than one-third of annual sales come from outside the home country. ________________________________________
15 A multinational corporation typically receives at least _____% of its total sales revenues from outside 5. the parent's home country.
15 _____ means engaging in the international division of labor so that manufacturing can be done in 6. countries with the cheapest sources of labor and supplies.
15 _____ is the barter of products for products rather than the sale of products for currency.
15 Whereby a company builds a subsidiary from scratch in a foreign country, is referred to as a(n) _____, 8. and is the most risky type of direct investment.
15 _____ is the management of business operations conducted in more than one country.
16 When it comes to economic development, a currently developing country is also called a(n) _____.
16 _____ is the criterion traditionally used to classify countries as developed or developing.
16 _____ (objects, taboos, holidays) is a sociocultural factor in the international environment.
16 The risk of loss due to actions by host country governments is known as _____.
16 Riots, revolutions, civil disorders, and frequent changes in government that affect the operations of an 4. international company shows _____ in a country.
16 A country's physical facilities that support economic activities make up its _____.
16 Companies need to be cautious of _____ and _____ when going international because they differ from 6. country to country.
16 A nation's _____ includes the shared knowledge, beliefs, and values, as well as the common modes of 7. behavior and ways of thinking, among members of a society.
16 The degree to which people accept inequality in power among institutions, organizations, and people is 8. called _____.
16 _____ refers to a person's ability to use reasoning and observation skills to interpret unfamiliar gestures 9. and situations and devise appropriate behavioral responses.
17 A value characterized by people's intolerance for uncertainty and ambiguity and resulting support for 0. beliefs that promise certainty and conformity refers to _____.
17 A preference for a loosely knit social framework in which individuals are expected to take care of 1. themselves is called _____.
17 A preference for a tightly knit social framework in which individuals look after one another and 2. organizations protect their members' interests refers to _____.
17 _____ stands for preference for achievement, heroism, assertiveness, work centrality (with resultant 3. high stress), and material success.
17 _____ reflects the values of relationships, cooperation, group decision making, and quality of life.
17 In countries where women are often in positions of high status, the Globe Project would describe that 5. culture as high in _____.
17 A country that places emphasis on fairness and values kindness would be described by the Globe 6. Project as high in _____.
17 In a(n) _____, people use communication primarily to exchange facts and information.
17 _____ means that people have a tendency to regard their own culture as superior to other cultures.
17 An alliance begun in 1957 to improve economic and social conditions among its members, 9. it has evolved into the 27-nation _____.
18 The _____ is the single European currency that has replaced 12 national currencies.
18 _____ went into effect in early 1994, effectively creating a megamarket among the U.S., Canada, and 1. Mexico.
18 _____ refers to the frustration and anxiety that result from constantly being subjected to strange and 2. unfamiliar cues about what to do and how to do it.
18 The frustration and anxiety that results from constantly being subjected to strange and unfamiliar cues 3. about what to do and how to do it is called _____.
18 List the four stages of globalization.
18 List three examples of a country's infrastructure.
18 List the three examples of direct investing mentioned in your text.
18 List the three components of cultural intelligence.
18 List the four dimensions of national value systems identified by Hofstede.
18 List five of the countries that make up the European Union (EU).
19 Briefly describe the social characteristic of ethnocentrism and explain how this can have an impact on 0. the success of an international manager.
19 Briefly describe two personal challenges for global managers.
19 What is global outsourcing? Identify a unique variation of global outsourcing.
19 Direct investing means that the company is involved in managing the productive assets in a foreign 3. country. There are three options for direct investing. Name and compare these three options.
19 Identify and briefly explain at least two key factors in economic, sociocultural and political-legal 4. environments that affect an organization.
19 Briefly explain the difference between high power distance and low power distance.
19 Describe GATT and the World Trade Organization.
19 Explain NAFTA.
Chapter 4--Managing in a Global Environment Key
63. B 64. D
97. D 98. A
131. E 132. E 133. A
152. polycentric companies
153. geocentric companies
155. 25 or twenty-five or twenty five
156. Global outsourcing
158. greenfield venture
159. International management
160. less-developed country or less developed country or LDC
161. Per capita income
163. political risk
164. political instability
166. laws; regulations or regulations; laws
168. power distance
169. Cultural intelligence
170. uncertainty avoidance
175. gender differentiation
176. humane orientation
177. low-context culture
179. European Union
182. Culture shock
183. culture shock
184. Domestic, international, multinational, and global/stateless.
185. Transportation facilities such as railroads and airports; energy-producing facilities such as utilities and power plants; and communication facilities such as telephone lines and radio stations.
186. Joint venture, wholly owned foreign affiliate, and greenfield venture.
187. Physical, cognitive, and emotional
188. Power distance, uncertainty avoidance, individualism/collectivism, and masculinity/femininity.
189. Choose any five of the following: Sweden, Finland, Denmark, Ireland, United Kingdom, Luxembourg, Netherlands, Germany, Belgium, France, Portugal, Spain, Austria, Italy, and Greece.
190. Ethnocentrism is a cultural attitude marked by the tendency to regard one's own culture as superior to others. When an international manager has this characteristic, he or she is less likely to be successful, because he or she devalues the culture in which they are trying to do business. When the culture is devalued, relationships can be damaged, trust can be lost, and the willingness to maintain the business relationship can be broken.
191. Managers will be most successful in foreign assignments if they are culturally flexible and if they can easily adapt to new situations. Thus, the two personal challenges that exist for global managers are overcoming ethnocentric tendencies and culture shock. Ethnocentrism is a cultural attitude marked by the tendency to regard one's own culture as superior to others. Culture shock refers to the frustration and stress that result from continually being exposed to new and different situations. Proper training and preparation of incoming global managers is crucial.
192. Global outsourcing is engaging in the international division of labor so that manufacturing can be done in countries with the cheapest sources of labor and supplies.
Netgear, a Santa Clara, California-based company, makes networking equipment that is designed and marketed in the United States, engineered in Taiwan, and manufactured in China, helping the small company take advantage of the efficiencies it can gain in three different countries.
193. The three options are joint ventures, wholly-owned foreign affiliates, and greenfield ventures. With a joint venture, a company shares costs and risks with another firm, typically in the host country. This is often the fastest, cheapest, and least risky way to enter a foreign market. In the second option with a wholly-owned affiliate, the company has full ownership with all of the costs and risks associated with ownership, and enjoys full control of the affiliate. The most costly and risky direct investment is called a greenfield venture. The company builds a subsidiary from scratch in a foreign country. While the risks and costs are high, so is the control and the potential payoff.
194. Please refer to exhibit 4-3 in the text.
195. Power distance is the degree to which people accept inequality in power among institutions, organizations, and people. With high power distance, this inequality is accepted. With low power distance, people expect equality with respect to power.
196. GATT started as a set of rules to ensure nondiscrimination, clear procedures, dispute negotiation, and including lesser developed countries into international trade. GATT and WTO use tariff concessions as a tool to increase trade. Each of the 23 nations that signed GATT agree to limit tariff levels on imports from other members and to the most favored nation clause. GATT sponsored eight rounds of international trade negotiations aimed at reducing trade restrictions. WTO guides and urges nations worldwide toward free trade and open markets.
197. Taking effect in early 1994, the North American Free Trade Agreement (NAFTA) united the U.S., Mexico, and Canada into a multi-trillion dollar market. Over a fifteen-year period, this agreement removes tariffs and trade restrictions on most manufactured and agricultural products. Potential advantages of NAFTA center on its expectations: it is expected to spur growth, increase exports, and create jobs in all three countries. Conversely, many U.S. groups have a number of reservations. These include job loss to Mexico and weakened pollution standards.