Understanding Formal Institutions: Politics, Laws, and Economics

Test #2MGMT 370 – International Business

Chapter
2—Understanding Formal Institutions: Politics, Laws, and Economics

1. An
institutional framework is made up of:

a.	Regulatory and cognitive pillars
b.	Formal and informal institutions
c.	The political, economic, and legal systems of countries
d.	None of these answers

2. More than 80 countries practice:

a.	Common law
b.	Civil law
c.	Theocratic law
d.	Social democracy

3. The world’s largest democracy is:

a.	United States
b.	China
c.	India
d.	Western Europe

Chapter
#9 – Growing and Internationalizing the Entrepreneurial Firm

4. Small and medium-sized
enterprises (SMEs) are defined as:

a.	Firms with less than 20 employees
b.	Firms with less than three departments
c.	Firms with less than 200 employees
d.	Firms with less than 500 employees

5. Small and medium-sized enterprises (SMEs)
account for ____ percent of the number of firms worldwide.

a.	50
b.	95
c.	12
d.	80

MGMT
370 – International Business

6. An advocate of globalization of every industry would most
closely believe:

a.	Firms need to enter culturally and institutionally close markets first and then gradually move to use sophisticated strategies in distant markets.
b.	Entrepreneurial firms need to internationalize rapidly in order to take advantage of new opportunities.
c.	New entrepreneurs will most likely “drown” in unfamiliar foreign waters.
d.	Firms have a hard time overcoming substantial inertia because of their domestic orientation.

Chapter 10 – Entering Foreign
Markets

7. What determines the
success or failure of businesses in foreign market entries?

a.	Overwhelming resources and capabilities to offset the liability of foreignness.
b.	Understanding the rules of the game governing competition in foreign countries
c.	Matching efforts in market entry and geographic diversification with strategic goals.
d.	All of these answers

8. From a resource-based view, managers need to:

a.	Develop more trained workers
b.	Develop overwhelming capabilities to offset the liability of foreignness
c.	Enter into more joint venture agreements
d.	Outsource work to the lowest bidder

9. Managers, to succeed, need to:

a.	Match market entries with strategic goals
b.	Develop alliances and acquisitions
c.	Create dynamic and flexible structures.
d.	All of these answers

MGMT 370 – International Business

Chapter
11—Making Alliances and Acquisitions Work

10. What is the main reason why formal
institutions limit alliances and acquisitions in the areas of formal market
entry modes?

a.	Many governments discourage acquisitions in order to establish local-only subsidiaries.
b.	The liability of foreignness is guaranteed to make the alliances or acquisitions fail.
c.	The governments are unable to tax acquisitions by foreign firms.
d.	The institutions do not limit the firms in regards to entry modes.

11. What is the problem behind a majority joint
venture (JV) partner always having both the higher equity and greater
management control?

a.	Formal institutions and legal regulations prohibit it.
b.	Joint ventures only exist when one party brings the equity and the other brings the organization
c.	The local minority party may resent the equity/management dominance.
d.	All of these answers

12. Which is the best strategy for dealing with
conflict between alliance partners?

a.	Ignore conflict so as to not disrupt the relationship.
b.	Address conflict directly, but do not let it get out of hand.
c.	Terminate the alliance.
d.	Alliance partners rarely get into conflicts, so they won’t need a strategy.

Chapter
12—Strategizing, Structuring, and Learning Around the World

13. Which of the following is a leading problem
with the international division organizational structure?

a.	It is not locally responsive.
b.	It tends to be phased out first when a firm faces domestic challenges.
c.	It is too locally responsive
d.	The management team is duplicated, creating organizational confusion.

MGMT 370 – International Business

14. Which of the following best exemplifies how
informal institutions govern MNEs?

a.	The US has few laws limiting US firms from creating subsidiaries overseas, but there is often a vocal backlash from the public over domestic job loss.
b.	MNEs coming into the US have relatively few restrictions, as long as they do not practice illegal dumping or price setting.
c.	MNEs based in the US must advance quickly into foreign markets to beat competitors and take care of opportunities, but these moves are often slowed by legal regulations and entry barriers.
d.	The laws governing MNEs based in the US are always changing.

15. Which of the following best describes the
motive for appointing a host country national as head manager in a MNE
subsidiary?

a.	They are familiar with the intricate workings of the MNE.
b.	They are independent of the local traditions and MNE so act as a neutral leader.
c.	They are familiar with the local informal institutions and market.
d.	Host country nationals are never appointed as head manager.

16. Which of the following is NOT one of the
major management strategies?

a.	Understand and be prepared to change the internal rules of the game governing MNE management.
b.	Understand and carefully control subsidiaries and minimize autonomous and locally dependent teams.
c.	Understand and master the external rules of the game governing MNEs and home/host country environments.
d.	Develop learning and innovation capabilities to leverage multinational presence as an asset.

Chapter
14—Managing Corporate Social Responsibility Globally

17. Starbucks was most hesitant to purchase fair
trade coffee because:

a.	It was sold at too high a price.
b.	It was processed by sweat shops.
c.	It might not meet its quality standards.
d.	It was too hard to find enough producers.

MGMT 370 – International Business

18. What is defined as the ability to meet the
needs of the present without compromising the ability of future generations to
meet their needs?

a.	Capitulation
b.	Global sustainability
c.	Corporate social responsibility
d.	Social activism

19. Home Depot and Lowe’s both being able to
monitor that their lumber suppliers in Latin America are only working out of
renewable forests is an example of valuable capabilities but low ____.

a.	Rarity
b.	Imitability
c.	Organization
d.	Value

Basic Guide to Export (Chapters
3, 6, 8, 9, 12, 13, 17)

20. An example of a
Non-Tariff barrier is:

A.
VAT

B.
Quota

C.
Coup

D.
20% Duty Rate

E.
None of the above

21. The Export
Classification Control Number (ECCN) is used to:

A.
Determine shipping rates

B.
Determine if you need an export/import license

C.
Determine the tariff classifications

D.
Determine VAT Rates

E.
All of the above

22. A ______ is a contract between the owner of
the goods and the freight carrier.

A.
Commercial Invoice

B.
Bill of Lading

C.
Force Majeure

D.
Time Draft

E.
None of the above

MGMT 370 –
International Business

23. Which of the following is not a factor that
affects a company’s marketing decision to utilize an Adaption strategy?

A.
Consumer income and ability to buy

B.
Economies in production, R & D, Marketing

C.
Cultural differences affecting produce and use

D.
Technical standards

E. None of the
above

24: Which of the following Incotermsrefers to the seller’s price quote for
the goods, includingthe charge for delivery of the goods alongside a vessel at
the named port ofexport?

A. FAS

B.
CIF

C.
FOB

1. EXW

25. The Export
Administration Regulations (EAR) provides assistance to exporters on:

A.
How to obtain an export license

B.
How to classify goods under the HTS

C.
How to import products to Cuba

D.
How to use ITAR

E.
All of the above

26. To encourage and
facilitate international trade in more than 75 foreign countries, these
designated areas and similar customs-privileged facilities are now in
operation, usually in or near seaports or airports. Panama has the second
largest.

A.
Advocacy Centers

B.
Foreign Trade Shows

C.
Overseas Private Investment Corporations

D.
Free Trade Zone

E.
None of the above

MGMT 370 – International
Business

27. ________ refers to a broad collection of rights relating to such
matters as works of authorship, which are protected under copyright law;
inventions, which are protected under patent law; marks, which are protected by
trademark law; as well as designs and trade secrets.

A.
Export License

B.
United Aid Initiative

C.
Intellectual Properties

D.
Free Trade Agreements

E. None of the above

28. Under the _______it is
unlawful for a U.S. person or firm (as well as any officer, director, employee,
or agent of a firm or any stockholder acting on behalf of the firm) to offer,
pay, or promise to pay (or to authorize any such payment or promise) money or
anything of value to any foreign official (or foreign political party or
candidate for foreign political office) for the purpose of obtaining or
retaining business.

A.
Antidivision Clause

B.
Foreign Corrupt Practices Act (FCPA)

C.
Antiboycott Regulations

D.
NAFTA

E.
None of the above

29.
In order to qualify to receive duty free status under NAFTA, a company must
show that ____% of it value was derived in the US:

A. 33%

B. 51%

C. 67%

D. 91%

E. 100%

30.
The _______ governs the export and re-export of items for reasons of national
security, non-proliferation, foreign policy, and short supply. Failure to
secure such a license will result in significant fines.

A. C-PAT

B. Department of
Homeland Security

C. EAR

D. FTZ Act

E. FTA’s

MGMT 370 – International
Business

31. _______is a set of United States government regulations
that control theexport andimport of defense-related articles
and services on theUnited States Munitions List (USML)

A.
D-Trade

B.
Free Trade Zones

C.
ITAR

D.
VAT

E.
HTS

32. _____ is
the INCOTERM used to designate thatseller
quotes a price for the goods, including all transportation, and miscellaneous
charges to the point of debarkation from the vessel. (The term is used only for
ocean shipments.)

1. FOB
2. FAS
3. CPT
4. CIF
5. CFR

33.
The term ____ rule is defined as the export control of certain technical
information pertaining to the development, production and use of such
technology by non-US persons.

A.
ITAR

B.
EAR

C. Restricted Screening

D. Deemed

E. Sanctioned Party

34. To decide if a specific export
requires an export license, one needs to use the ______, this is used by the US
Commerce Department to catalog hardware, software, technical information and
other such items.

A. Schedule B

B. ECCN

C. ITAR

D. EAR

E. Control L

MGMT 370 – International
Business

35. A____ is the bill
for the goods from the seller to the buyer; used

by many governments to
determine customs duties.

A.
Bill of Lading

B.
Commercial Invoice

C.
Destination Control
Statement

D.
Consular invoice

E.
Insurance
certification

35. What are some
considerations when choosing a freight forwarder?

A. Company background, financial strength, experience

B. Areas of expertise, foreign market strengths, and services
offered

C. Surface, air and ocean strengths

D. Import services

E. All of the above

37. The Export Management
System (EMS) is a voluntary program to ensure participants:

A. They will be paid

B. The shipment will be sent

C. Regulatory compliance

D. They will be audited.

E. All of the above

38. How do you need to
know if you need an export license?

A. What you are exporting

B. Who you are exporting to

C. What is the end-user?

D. A & B above

E. All of the above

38. Before accepting an
overseas transaction you should check:

A. Entity List

B. Denied persons list

C. Unverified List

D. A & C above

E. All of the above

MGMT 370 –
International Business

40. Which of the following
are The Export Administration Act’s (EAA) penalties for violations of the
Anti-boycott Regulations?

A. Imprisonment of up to five years

B. A fine of up to $50,000 or five times the value of the
exports involved,

whichever is greater.

C. General denial of export privileges

D. B & C above

E. All of the above