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.
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.
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.
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.
23. The world economy at the beginning of the 21st century is an approximately $55 trillion economy
(GDP calculated at official, nominal exchange rates).
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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