Chapter 1
True/False
1. Terms International Business (IB) and the term global business are synonymous.
Answer: False; Learning Objective: 1; Level: Easy; p. 4
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
2. Multinational enterprise is a firm that engages in foreign direct investment by directly
investing in, controlling, and managing value-added activities in other countries.
Answer: True; Learning Objective: 1; Level: Moderate; p.4
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
3. The term International Business should always refer to business activities conducted
abroad.
Answer: False; Learning Objective: 1; Level: Difficult; p.5
AACSB: Tier 1 Communications; Tier 2 Environmental Influence
4. Global business includes both international (cross-border) activities as well as domestic
business activities.
Answer: True; Learning Objective: 1; Level: Moderate; p. 4
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
5. Emerging markets contribute about 25% of global GDP when adjusted for purchasing
power parity, PPP.
Answer: False; Learning Objective: 1; Level: Moderate; p. 6
AACSB: Tier 1 Analytic; Tier 2 Environmental Influence
,6. The term “base of the pyramid” represents economies where individuals make less than
$2,000 a year.
Answer: True; Learning Objective: 1; Level: Easy; p.6
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
7. The greatest number of opportunities for the global businesses is opened at the “top of
the pyramid,” where individuals have the greatest purchasing power.
Answer: False; Learning Objective: 1; Level: Moderate; P.66
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
8. Most top managers of large firms lack significant global competence.
Answer: False; Learning Objective: 1; Level: Easy; p. 8
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
9. Expatriate managers make ideal candidates for top management positions.
Answer: True; Learning Objective: 2; Level: Easy; p. 8
AACSB: Tier 1 Reflective Thinking; Tier 2 Motivation Concepts
10. Expatriate managers are usually paid salaries coinciding with the salaries paid to
foreign local managers of similar rank.
Answer: False; Learning Objective:2; Level: Easy; p. 8
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
11. International premium is a significant pay raise awarded to expatriate employees
working abroad.
Answer: True; Learning Objective:2; Level: Easy; p.8
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
,12. Expatriate employees face fewer and lower-ranked employment opportunities upon
return to the US.
Answer: False; Learning Objective: 2; Level: Easy; p.8
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
13. Approximately 80 million people worldwide are employed by foreign-owned firms.
Answer: True; Learning Objective: 2; Level: Difficult; p.8
AACSB: Tier 1 Analytic; Tier 2 Environmental Influence
14. Both, institution- and resource-based views are two core perspectives answering the
fundamental question: “What determines the success and failure of firms around the
globe?”
Answer: True; Learning Objective: 3; Level: Moderate; p.9
AACSB: Tier 1 Communications; Tier 2 Strategy
15. Possessing intimate knowledge about the formal and informal rules governing
competition in various countries is sufficient to succeed globally.
Answer: False; Learning Objective: 3; Level: Moderate; p.10
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
16. Formal rules refer to government regulations regarding foreign and domestic firms. In
most emerging environments of today, formal rules ensure equal playing field for all
companies, regardless of origin.
Answer: True; Learning Objective: 3; Level: Moderate; p.10
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
17. Due to following informal rules such as culture and ethics, some developed economies
have a hard time fostering entrepreneurship.
Answer: True; Learning Objective: 3; Level: Difficult; p.10
, AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
18. Firms that are able to succeed in the difficult, harsh, even hostile foreign environments,
established by unfavorable formal and informal rules, possess unique firm-specific
resources and capabilities not shared by competitors.
Answer: True; Learning Objective: 3; Level: Moderate; p.11
AACSB: Tier 1 Communication; Tier 2 Strategy
19. Liability of foreignness is the inherent disadvantage experienced by foreign firms in
host counties because of their non-native status.
Answer: True; Learning Objective: 3; Level: Easy; p.11
AACSB: Tier 1 Analytic; Tier 2 Environnemental Influence
20. Most globalization opponents view globalization as a long-run historical evolution since
the dawn of human history.
Answer: False; Learning Objective: 4; Level: Easy; p.12
AACSB: Tier 1 Communication; Tier 2 Environmental Influence
21. Globalization is a relatively new phenomenon triggered by information revolution of
late 1980s and early 1990s.
Answer: False; Learning Objective: 4; Level: Moderate; p. 12
AACSB: Tier 1 Reflective Thinking; Tier 2 Information Technology
22. According to the pendulum view, the globalization is a positive phenomenon and
perceived both positively and negatively throughout the history.
Answer: False; Learning Objective: 4; Level: Difficult; p.12
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
True/False
1. Terms International Business (IB) and the term global business are synonymous.
Answer: False; Learning Objective: 1; Level: Easy; p. 4
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
2. Multinational enterprise is a firm that engages in foreign direct investment by directly
investing in, controlling, and managing value-added activities in other countries.
Answer: True; Learning Objective: 1; Level: Moderate; p.4
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
3. The term International Business should always refer to business activities conducted
abroad.
Answer: False; Learning Objective: 1; Level: Difficult; p.5
AACSB: Tier 1 Communications; Tier 2 Environmental Influence
4. Global business includes both international (cross-border) activities as well as domestic
business activities.
Answer: True; Learning Objective: 1; Level: Moderate; p. 4
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
5. Emerging markets contribute about 25% of global GDP when adjusted for purchasing
power parity, PPP.
Answer: False; Learning Objective: 1; Level: Moderate; p. 6
AACSB: Tier 1 Analytic; Tier 2 Environmental Influence
,6. The term “base of the pyramid” represents economies where individuals make less than
$2,000 a year.
Answer: True; Learning Objective: 1; Level: Easy; p.6
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
7. The greatest number of opportunities for the global businesses is opened at the “top of
the pyramid,” where individuals have the greatest purchasing power.
Answer: False; Learning Objective: 1; Level: Moderate; P.66
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
8. Most top managers of large firms lack significant global competence.
Answer: False; Learning Objective: 1; Level: Easy; p. 8
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
9. Expatriate managers make ideal candidates for top management positions.
Answer: True; Learning Objective: 2; Level: Easy; p. 8
AACSB: Tier 1 Reflective Thinking; Tier 2 Motivation Concepts
10. Expatriate managers are usually paid salaries coinciding with the salaries paid to
foreign local managers of similar rank.
Answer: False; Learning Objective:2; Level: Easy; p. 8
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
11. International premium is a significant pay raise awarded to expatriate employees
working abroad.
Answer: True; Learning Objective:2; Level: Easy; p.8
AACSB: Tier 1 Analytic; Tier 2 Creation of Value
,12. Expatriate employees face fewer and lower-ranked employment opportunities upon
return to the US.
Answer: False; Learning Objective: 2; Level: Easy; p.8
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
13. Approximately 80 million people worldwide are employed by foreign-owned firms.
Answer: True; Learning Objective: 2; Level: Difficult; p.8
AACSB: Tier 1 Analytic; Tier 2 Environmental Influence
14. Both, institution- and resource-based views are two core perspectives answering the
fundamental question: “What determines the success and failure of firms around the
globe?”
Answer: True; Learning Objective: 3; Level: Moderate; p.9
AACSB: Tier 1 Communications; Tier 2 Strategy
15. Possessing intimate knowledge about the formal and informal rules governing
competition in various countries is sufficient to succeed globally.
Answer: False; Learning Objective: 3; Level: Moderate; p.10
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
16. Formal rules refer to government regulations regarding foreign and domestic firms. In
most emerging environments of today, formal rules ensure equal playing field for all
companies, regardless of origin.
Answer: True; Learning Objective: 3; Level: Moderate; p.10
AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
17. Due to following informal rules such as culture and ethics, some developed economies
have a hard time fostering entrepreneurship.
Answer: True; Learning Objective: 3; Level: Difficult; p.10
, AACSB: Tier 1 Reflective Thinking; Tier 2 Environmental Influence
18. Firms that are able to succeed in the difficult, harsh, even hostile foreign environments,
established by unfavorable formal and informal rules, possess unique firm-specific
resources and capabilities not shared by competitors.
Answer: True; Learning Objective: 3; Level: Moderate; p.11
AACSB: Tier 1 Communication; Tier 2 Strategy
19. Liability of foreignness is the inherent disadvantage experienced by foreign firms in
host counties because of their non-native status.
Answer: True; Learning Objective: 3; Level: Easy; p.11
AACSB: Tier 1 Analytic; Tier 2 Environnemental Influence
20. Most globalization opponents view globalization as a long-run historical evolution since
the dawn of human history.
Answer: False; Learning Objective: 4; Level: Easy; p.12
AACSB: Tier 1 Communication; Tier 2 Environmental Influence
21. Globalization is a relatively new phenomenon triggered by information revolution of
late 1980s and early 1990s.
Answer: False; Learning Objective: 4; Level: Moderate; p. 12
AACSB: Tier 1 Reflective Thinking; Tier 2 Information Technology
22. According to the pendulum view, the globalization is a positive phenomenon and
perceived both positively and negatively throughout the history.
Answer: False; Learning Objective: 4; Level: Difficult; p.12
AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy
