1. In today’s world, every manager needs to
2. Business has become a unified, global field
as trade barriers fall, communication becomes faster and cheaper, and consumer
3. The second stage in the process of
globalization is the international stage, where the company usually adopts a
4. 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.
5. With exporting, the corporation transfers its
products for sale and its production facilities in foreign countries.
6. Seeking cheaper sources of materials or labor
offshore is called offshoring.
7. Countertrade is the barter of products for
products rather than the sale of products for currency.
8. An estimated 55 percent of world trade is
9. 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
10. Outsourcing is perhaps the most widespread approach to
international involvement in China and India.
11. Infrastructure management is the management of business operations
conducted in more than one country.
12. The basic management functions of planning, organizing, leading,
and controlling are the same whether a company operates domestically or
13. The sub-divisions of the international environment are the
economic, the sociocultural, and the legal-political environments.
14. Some economic environments of business include resource and
product markets, language, religion, and per capita income.
15. A country’s physical facilities that support economic activities
make up its infrastructure.
16. The criterion traditionally used to classify countries as
developed or developing is per capita income.
17. LDCs are less developed countries and tend to be found in the
Southern Hemisphere including Africa, Asia and South America.
18. Because of cheap labor, most international business firms are
headquartered in the less developed countries of Asia and South America.
19. 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
20. The countries experiencing political stability face the greatest
threat of violence.
21. A company’s political risk includes riots, revolutions, civil
disorders, and frequent changes in government.
22. 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.
23. 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.
24. The social value of uncertainty avoidance is evident in countries
like Japan which support beliefs that provide stability and conformity among
25. In countries with strong masculine social values including Austria
and Japan, both men and women subscribe to the dominant masculine value.
26. Collectivism means a preference for a tightly knit social
framework in which individuals look after one another and organizations protect
their members’ interests.
27. The fifth dimension of Hofstede’s social values is
preliminary-term orientation and extended-term orientation.
28. 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.
29. According to the GLOBE Project, gender differentiation refers to
the extent to which a society maximizes gender role differences.
on Skills box in Chapter 3, the polite way to give your business
card to a Japanese business person is when first meeting, presenting your card
with both hands.
31. According to Spotlight on Skills box in Chapter 3, being on-time
for appointments is very important in Brazil.
32. Social values greatly influence organizational functioning and
33. According to the GLOBE Value Dimensions, Japan and Russia both
have very high performance orientation.
34. A low-context culture is a culture in which communication is used
to enhance personal relationships.
35. Linguistic pluralism occurs in countries like India where more
than one language exist.
36. A high-context interaction requires more time because a
relationship has to be developed, and trust and friendship must be established.
37. German, Swiss, and North American cultures are among the
38. When an organization has an instrumental attitude toward people it
treats employees as a resource to be used.
39. When an organization has a humanistic attitude, it values
employees as an end in themselves.
40. Ethnocentrism refers to a natural tendency of people to regard
their own culture as superior and to downgrade or dismiss other cultural
41. Ethnocentrism refers to a natural tendency of people to regard
their own culture as inferior to other cultures.
42. A tendency to regard their own culture as superior and to downgrade
other cultures reflects an attitude called geocentric.
43. The goal of the European Union is to create a powerful single
market system for Europe’s millions of consumers.
44. An organization developed for the purpose of eliminating tariffs
in trading between Japan and the United States is called The North American
Freedom of Tariffs Administration (NAFTA).
45. Fifteen member states of the EU have adopted the rupee, as a
single European currency.
46. 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.
47. 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.
48. Culture shock refers to the frustration and anxiety that result
from constantly being subjected to strange and unfamiliar cues about what to do
and how to do it.
49. There are three components to cultural intelligence: cognitive,
emotional, and physical.
50. A manager’s reality is that isolation from international forces is
51. Globalization reached its peak in the 1970s, and is decreasing at a
52. 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.
53. The United States has the largest mobile phone market in the
54. Whereas China is strong in software services, India is a rising
power in manufacturing.
55. Brazil is known to have a young, vibrant population and a rapidly
growing middle class that is eager to experience the finer things in life.
56. The estimated 2010 misery index figures suggest significantly less
misery for almost every country as compared to figures at the beginning of the
57. In India, it is not uncommon for social media companies such as
Facebook and Twitter to be required by law to comply with requests to take down
content considered incendiary by government entities.
58. A high performance orientation means that a society encourages
toughness, assertiveness, and competitiveness.
59. High-context cultures include Asian and Arab countries, whereas
low-context cultures tend to be American and Northern European.
60. High cultural intelligence requires that a manager be open and
receptive to new ideas and approaches.
61. In a recent Fortune magazine poll, 68 percent of Americans
say other countries benefit the most from free trade.
62. The term top of the pyramid refers to the more than four
billion people who earn the least, as defined by per capita income.
63. China and India are ranked first and second on the 2009-2010
Global Competitiveness Ranking of World Economic Forum.
Case – Doing Business in Eritrea
Eritrea is in Eastern Africa. Its size is slightly bigger than the
state of Pennsylvania. Eritrea currently hosts a UN peacekeeping operation that
is monitoring a 25 km-wide Temporary Security Zone on the border with Ethiopia.
An international commission, organized to resolve the border dispute, posted
its findings in 2002 but final demarcation is on hold due to Ethiopian
objections. Since gaining its independence from Ethiopia on 24 May 1993,
Eritrea has faced the economic problems of a small, desperately poor country.
Like the economies of many African nations, the economy is largely based on
subsistence agriculture, with 80 percent of the population involved in farming
and herding. In 2004, it took 13.788 nakfa (the Eritrean currency) to get one
U.S. dollar, and its per capita income was equal to 900 U.S. dollars. It has a
total of 306 kilometers of railroad, 874 kilometers of paved roads, and four airports
with paved runways. Its people speak a variety of languages including Afar,
Arabic, Tigre and Kunama, Tigrinya, and other Cushitic languages. The Eritrean
society is generous with whatever resources it has and its people place a high
value on helping others.
1. Refer to the scenario above. Eritrea would be
classified as a(n):
a. risk aversive
nation due to its security zone
b. cultural oasis
given the variety of languages spoken there
c. stable country for
d. LDC because of low
per capita income
e. LDC because its
people are altruistic
2. Refer to the scenario above. Having such
limited roads and railways indicates Eritrea has:
a. a geocentric
b. a high power
d. an inadequate
e. a growth
3. Refer to the scenario above. Within the
legal-political environment, Eritrea would:
a. be multicultural
b. be ethnocentric
c. have an inadequate
d. offer a political
e. have a pluralistic
4. Refer to the scenario above. In terms of the
dimensions that explain cultural differences, Eritrea appears to have a high
a. humane orientation
5. Refer to the scenario above. The variety of
languages spoken within Eritrea’s sociocultural environment means that the
a. is ethnocentric
b. is geocentric
c. is likely to have
high uncertainty avoidance
d. has linguistic
e. is politically
1. ____________________ means engaging in the
international division of labor so that manufacturing can be done in countries
with the cheapest sources of labor and supplies.
2. ____________________ is the barter of
products for products rather than the sale of products for currency.
3. ____________________ is the management of
business operations conducted in more than one country. International
4. When it comes to economic development, a
currently developing country is also called a(n) ____________________.
5. ____________________ is the criterion
traditionally used to classify countries as developed or developing.
6. A country’s physical facilities that support
economic activities make up its ____________________.
7. ___________ (objects, taboos, holidays) is a
sociocultural factor in the international environment.
8. The risk of loss due to actions by host
country governments is known as _____________.
9. Riots, revolutions, civil disorders, and
frequent changes in government that affect the operations of an international
company shows ______________ in a country.
10. Companies need to be cautious of ______________ and ____________
when going international because they differ from country to country.
11. A nation’s _____________ includes the shared knowledge, beliefs,
and values, as well as the common modes of behavior and ways of thinking, among
members of a society.
12. The degree to which people accept inequality in power among institutions,
organizations, and people is called ___________.
13. A value characterized by people’s intolerance for uncertainty and
ambiguity and resulting support for beliefs that promise certainty and
conformity refers to _____________.
14. A preference for a loosely knit social framework in which
individuals are expected to take care of themselves is called ____________.
15. A preference for a tightly knit social framework in which
individuals look after one another and organizations protect their members’
interests refers to _________.
16. ____________________ stands for preference for achievement,
heroism, assertiveness, work centrality (with resultant high stress), and
17. ____________________ reflects the values of relationships,
cooperation, group decision making, and quality of life.
18. In countries where women are often in positions of high status,
the Globe Project would describe that culture as high in ____________.
19. A country that places emphasis on fairness and values kindness
would be described by the Globe Project as high in _____________.
20. In a(n) ___________, people use communication primarily to
exchange facts and information.
21. __________ means that people have a tendency to regard their own
culture as superior to other cultures.
22. An alliance begun in 1957 to improve economic and social
conditions among its members,
it has evolved into the 27-nation __________.
23. The _________ is the single European currency that has replaced 16
24. __________ went into effect in early 1994, effectively creating a
megamarket among the U.S., Canada, and Mexico.
25. _____________ refers to a person’s ability to use reasoning and
observation skills to interpret unfamiliar gestures and situations and devise
appropriate behavioral responses.
26. __________ refers to the frustration and anxiety that result from
constantly being subjected to strange and unfamiliar cues about what to do and
how to do it.
27. The frustration and anxiety that results from constantly being
subjected to strange and unfamiliar cues about what to do and how to do it is
1. List the four stages of globalization.
2. List three examples of a country’s
3. List the four dimensions of national value
systems identified by Hofstede.
4. List five of the countries that make up the
European Union (EU).
5. List the three components of cultural
1. Describe the four stages of globalization
with specific reference to strategic orientation, stage of development,
cultural sensitivity, and manager assumptions.
2. What is global outsourcing? Identify a unique
variation of global outsourcing.
3. Identify and briefly explain at least two key
factors in economic, sociocultural and political-legal environments that affect
4. Briefly explain the difference between high
power distance and low power distance.
5. Describe GATT and the World Trade
6. Explain NAFTA.
7. Briefly describe the social characteristic of
ethnocentrism and explain how this can have an impact on the success of an