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GLOBAL 2nd Edition by Mike Peng - Test Bank
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,Chapter 1—Globalizing BusinessTRUE/FALSE
1. A multinational enterprise is a firm that engages in foreign direct investment by directly investing in,
controlling, and managing value-added activities in other countries.
ANS: T PTS: 1 DIF: Moderate REF: pp. 4-5
OBJ: 1.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
2. The terms international business (IB) and global business are synonymous.
ANS: F PTS: 1 DIF: Easy REF: p. 5
OBJ: 1.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy
3. The term international business always refers to business activities conducted abroad.
ANS: F PTS: 1 DIF: Difficult REF: p. 5
OBJ: 1.1 NAT: AACSB: Tier 1 Communication | Tier 2 Environmental Influences
4. Global business includes both international (cross-border) activities as well as domestic business
activities.
ANS: T PTS: 1 DIF: Moderate REF: p. 5
OBJ: 1.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Environmental Influences
5. Emerging markets contribute about 25% of global GDP when adjusted for purchasing power parity,
PPP.
ANS: F PTS: 1 DIF: Moderate REF: pp. 5-6
OBJ: 1.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
6. The term "base of the pyramid" represents economies in which individuals make less than $2,000 a
year.
ANS: T PTS: 1 DIF: Easy REF: p. 6
OBJ: 1.1 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Environmental Influences
7. The greatest number of opportunities for global businesses is opened at the "top of the pyramid,"
where individuals have the greatest purchasing power.
ANS: F PTS: 1 DIF: Moderate REF: p. 6
OBJ: 1.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
8. Most top managers of large firms lack significant global competence.
ANS: F PTS: 1 DIF: Easy REF: p. 7
OBJ: 1.2 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy
9. Expatriate managers make ideal candidates for top management positions.
ANS: T PTS: 1 DIF: Easy REF: p. 7
, OBJ: 1.2 NAT: 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.
ANS: F PTS: 1 DIF: Easy REF: p. 7
OBJ: 1.2 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
11. International premium is a significant pay raise awarded to expatriate employees working abroad.
ANS: T PTS: 1 DIF: Easy REF: p. 7
OBJ: 1.2 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
12. Expatriate employees face fewer and lower-ranked employment opportunities upon return to the US.
ANS: F PTS: 1 DIF: Easy REF: p. 7
OBJ: 1.2 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Environmental Influences
13. Approximately 80 million people worldwide are employed by foreign-owned firms.
ANS: T PTS: 1 DIF: Difficult REF: p. 7
OBJ: 1.2 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
14. The institution- and resource-based views are two core perspectives answering the fundamental
question: "What determines the success and failure of firms around the globe?"
ANS: T PTS: 1 DIF: Moderate REF: pp. 8-9
OBJ: 1.3 NAT: AACSB: Tier 1 Communication | Tier 2 Strategy
15. Formal rules refer to government regulations regarding foreign and domestic firms. In most modern
emerging environments, formal rules ensure equal playing field for all companies, regardless of origin.
ANS: T PTS: 1 DIF: Moderate REF: p. 9
OBJ: 1.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Environmental Influences
16. Due to informal rules such as culture and ethics, some developed economies have a hard time fostering
entrepreneurship.
ANS: T PTS: 1 DIF: Difficult REF: p. 9
OBJ: 1.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Environmental Influences
17. Possessing intimate knowledge about the formal and informal rules governing competition in various
countries is sufficient to succeed globally.
ANS: F PTS: 1 DIF: Moderate REF: p. 10
OBJ: 1.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy
18. Firms that are able to succeed in difficult, harsh, even hostile foreign environments, established by
unfavorable formal and informal rules, possess unique firm-specific resources and capabilities not
shared by competitors.
ANS: T PTS: 1 DIF: Moderate REF: p. 10
OBJ: 1.3 NAT: 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.
ANS: T PTS: 1 DIF: Easy REF: p. 10
OBJ: 1.3 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
20. Most opponents of globalization view globalization as a long-run historical evolution since the dawn
of human history.
ANS: F PTS: 1 DIF: Easy REF: p. 10
OBJ: 1.4 NAT: AACSB: Tier 1 Communication | Tier 2 Environmental Influences
21. Globalization is a relatively new phenomenon triggered by the information revolution of the late
1980s.
ANS: F PTS: 1 DIF: Moderate REF: pp. 10-11
OBJ: 1.4 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Information Technology
22. According to the pendulum view, globalization has been perceived both positively and negatively
throughout history.
ANS: T PTS: 1 DIF: Difficult REF: p. 11
OBJ: 1.4 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Strategy
23. The world economy at the beginning of the 21st century is an approximately $55 trillion economy
(GDP calculated at official, nominal exchange rates).
ANS: T PTS: 1 DIF: Moderate REF: p. 13
OBJ: 1.5 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
24. Executives, policymakers, and scholars have carefully evaluated the social, political, and
environmental costs associated with globalization.
ANS: F PTS: 1 DIF: Difficult REF: p. 15
OBJ: 1.5 NAT: AACSB: Tier 1 Communication | Tier 2 Environmental Influences
25. Many proponents of globalization are nongovernmental organizations (NGOs).
ANS: F PTS: 1 DIF: Difficult REF: p. 15
OBJ: 1.5 NAT: AACSB: Tier 1 Communication | Tier 2 Strategy
MULTIPLE CHOICE
1. The firm that engages in foreign direct investment is a:
a. Global firm
b. Multinational enterprise
c. International enterprise
d. Foreign direct investor
ANS: B PTS: 1 DIF: Moderate REF: p. 4
OBJ: 1.1 NAT: AACSB: Tier 1 Communication | Tier 2 Environmental Influences
2. Which of the following definitions of the international/global business represents the author's view?
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