Modern Management Concepts and Skills 12th Edition by Samuel C. Certo -Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below Modern Management, 12e (Certo) Chapter 5 Managing in the Global Arena 1) International management is the performance of management activities across national borders. Answer: …
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Modern Management Concepts and Skills 12th Edition by Samuel C. Certo -Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
Modern Management, 12e (Certo)
Chapter 5 Managing in the Global Arena
1) International management is the performance of management activities across national borders.
Answer: TRUE
Page Ref: 110
AACSB: Dynamics of the Global Economy
Objective: 1
Difficulty: Easy
Classification: Conceptual
2) Establishing a formal partnership with a foreign company is a form of international management.
Answer: TRUE
Page Ref: 110
AACSB: Dynamics of the Global Economy
Objective: 1
Difficulty: Easy
Classification: Conceptual
3) One form of international management is fighting competition in foreign markets.
Answer: TRUE
Page Ref: 110
AACSB: Dynamics of the Global Economy
Objective: 1
Difficulty: Easy
Classification: Conceptual
4) Transnational organizations have the least international involvement of all types of organizations involved in the international arena.
Answer: FALSE
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
5) Domestic organizations essentially operate within a single country.
Answer: TRUE
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
6) In order to be classified as a domestic corporation, a corporation must acquire all resources and sell all products within one country.
Answer: FALSE
Page Ref: 113
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
7) An international organization has a lower level of international involvement than a multinational organization.
Answer: TRUE
Page Ref: 113
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
8) A multinational corporation is a company that is primarily based in one country but has continuing transactions in other countries.
Answer: FALSE
Page Ref: 113
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
9) A company that merely exports products to a foreign country cannot be considered a multinational corporation.
Answer: FALSE
Page Ref: 114
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
10) A company that exports products to a foreign country and establishes sales organizations abroad is considered to be a domestic company.
Answer: FALSE
Page Ref: 114
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
11) The host company is the company investing in international operations.
Answer: FALSE
Page Ref: 116
AACSB: Dynamics of the Global Economy
Objective: 3
Difficulty: Easy
Classification: Conceptual
12) Expatriates are organization members who live and work in a country in which they are not citizens.
Answer: TRUE
Page Ref: 116
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
13) Third-country nationals are organization members who are citizens of the country in which the facility of a foreign-born organization is located.
Answer: FALSE
Page Ref: 116
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
14) Host-country nationals do not need to be relocated or undergo training in the culture, language, or tax laws of the country where the organization is doing business.
Answer: TRUE
Page Ref: 117
AACSB: Dynamics of the Global Economy
Objective: 4
Difficulty: Easy
Classification: Conceptual
15) Repatriation is the process of ensuring the adjustment of a worker to a foreign country.
Answer: FALSE
Page Ref: 118
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
16) A license agreement is a right granted by one company to another to use its brand name and technology in the manufacture or sale of goods and services.
Answer: TRUE
Page Ref: 119
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
17) The European Union is an example of an international market agreement.
Answer: TRUE
Page Ref: 121
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
18) A polycentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices.
Answer: FALSE
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
19) Managers with an ethnocentric attitude are prone to stereotype foreign management practices as faulty and unreasonable.
Answer: TRUE
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
20) Transnational organizations usually take one particular continent as their business arena.
Answer: FALSE
Page Ref: 127
AACSB: Dynamics of the Global Economy
Objective: 6
Difficulty: Easy
Classification: Conceptual
21) The different types of organizations in ascending order of the extent of involvement in the international arena are ________.
Answer: A
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
22) Which of the following categories of organizations generally has the lowest level of international involvement?
Answer: B
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
23) Which of the following types of organizations has the highest level of international involvement?
Answer: C
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
24) ________ organizations essentially operate within a single country.
Answer: D
Page Ref: 112
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
25) SNL manufactures and sells customized shoes for people with special needs. The company caters mostly to customers within the U.S., though it occasionally sends products to overseas customers. The company is very eco-friendly, and takes pride in sourcing all its raw materials locally. According to the information, SNL is a(n) ________ company.
Answer: D
Page Ref: 112
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application
26) Adam & Sons is a fifty-year-old watch company based in Alabama. The major bulk of its sales has always taken place within the U.S. Adam & Sons recently became the sole U.S. distributors for Japanese watch manufacturer TLC. Adam & Sons would therefore be classified as a(n) ________.
Answer: A
Page Ref: 113
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application
27) Which of the following describes a company that is primarily based within one country but has continuing and meaningful transactions in other countries?
Answer: B
Page Ref: 113
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
28) BLT is a sandwich chain based in Boston. Word-of-mouth popularity opened up the market and the company is now opening branches in New Jersey and Connecticut as well. The company sources all its raw materials locally and makes it a point to use sustainable practices. Which of the following actions would make BLT a multinational company?
Answer: C
Page Ref: 113
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application
29) An organization that has significant operations in more than one country, disregards national boundaries, and is guided by a common strategy from a corporation center is a(n) ________.
Answer: D
Page Ref: 113
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
30) Which of the following is the simplest stage of multinationalization?
Answer: E
Page Ref: 114
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
31) What is the most advanced stage in multinationalization of a company?
Answer: E
Page Ref: 114
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Easy
Classification: Conceptual
32) EasyWear Apparels is based in the U.S. and recently established a manufacturing unit in Montreal and a manufacturing unit and retail outlet in Leeds in the U.K. Which of the following scenarios mirrors EasyWear’s situation?
Answer: A
Page Ref: 114
AACSB: Reflective Thinking Skills
Objective: 2
Difficulty: Difficult
Classification: Critical thinking
33) Which of the following is a characteristic of domestic management?
Answer: E
Page Ref: 114
Objective: 2
Difficulty: Easy
Classification: Conceptual
34) Apparel company RED Lion Ltd. has a strong presence along the West Coast in the U.S., and is looking to expand its market overseas. The company began through the export route, exporting apparel to firms in the U.K., but now wants to establish manufacturing units abroad. Which of the following would weaken the company’s decision to expand abroad?
Answer: D
Page Ref: 116
AACSB: Reflective Thinking Skills
Objective: 3
Difficulty: Easy
Classification: Critical thinking
35) A company investing in international operations is known as the ________.
Answer: B
Page Ref: 116
AACSB: Dynamics of the Global Economy
Objective: 3
Difficulty: Easy
Classification: Conceptual
36) A country in which an investment is made by a foreign company is termed as a(n) ________.
Answer: A
Page Ref: 116
AACSB: Dynamics of the Global Economy
Objective: 3
Difficulty: Easy
Classification: Conceptual
37) ________ are members of an organization who live and work in a country where they do not have citizenship.
Answer: A
Page Ref: 116
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
38) Joe is a citizen of Sri Lanka who lives and works for a company in Brazil. He is considered to be a(n) ________.
Answer: B
Page Ref: 116
Objective: 4
Difficulty: Moderate
Classification: Application
39) Citizens of a country who work in a foreign-based organization located in their own country are known as ________.
Answer: B
Page Ref: 116
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
40) Gary is an English national working for an American company situated in London. He is a(n) ________.
Answer: A
Page Ref: 116
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application
41) Organization members who are citizens of one country and work in another country for an organization headquartered in still another country are known as ________.
Answer: C
Page Ref: 116
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
42) Hugh is an American citizen currently living in Denmark. He works for a company that has its headquarters in France. He is a(n) ________.
Answer: A
Page Ref: 116
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application
43) Zac, an American citizen, has worked for a company in Berlin for the last five years. Which of the following scenarios mirrors the situation Zac is in?
Answer: B
Page Ref: 116
AACSB: Analytic Skills
Objective: 4
Difficulty: Difficult
Classification: Application
44) Organizations that operate globally find that ________ are the least expensive to employ.
Answer: A
Page Ref: 117
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
45) Which of the following is true for employees of multinational organizations?
Answer: C
Page Ref: 117
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
46) The process of bringing individuals who have been working abroad back to their home country and reintegrating them into the organization’s home-country operations is called ________.
Answer: A
Page Ref: 118
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Easy
Classification: Conceptual
47) The ________ function of management involves determining how an organization will achieve its objectives.
Answer: A
Page Ref: 119
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
48) When a United States computer manufacturer sells a shipment of 40 computers to a retailer in Germany, the computer manufacturer is engaged in the process of ________.
Answer: B
Page Ref: 119
Objective: 5
Difficulty: Moderate
Classification: Application
49) If a company in the United States allows a company in England to use its brand name for a fee, the company is said to have entered into a(n) ________.
Answer: A
Page Ref: 119
Objective: 5
Difficulty: Moderate
Classification: Application
50) An American clothing manufacturer has recently purchased a clothing factory in Taiwan. This action is known as ________.
Answer: D
Page Ref: 120
Objective: 5
Difficulty: Moderate
Classification: Application
51) International planning in the area of ________ emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.
Answer: A
Page Ref: 119-120
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
52) A partnership formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking is known as a(n) ________.
Answer: C
Page Ref: 120
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
53) International plans that include ________ emphasize the attainment of organizational objectives through partnerships with foreign companies.
Answer: A
Page Ref: 120
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
54) An international market agreement is ________.
Answer: B
Page Ref: 120
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
55) The European Union is a(n) ________ established dedicated to facilitating trade among member nations.
Answer: C
Page Ref: 121
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
56) Canada, the People’s Republic of China, Indonesia, and the United States are all members of the Asian-Pacific Economic Cooperation. This agreement is an example of a(n) ________ agreement.
Answer: B
Page Ref: 122
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
57) Which of the following statements is true about NAFTA?
Answer: A
Page Ref: 122
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
58) APEC was established in 1989 to further the economic growth and prosperity of the ________ community.
Answer: B
Page Ref: 122
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
59) Which of the following countries is a member of the APEC?
Answer: C
Page Ref: 122
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
60) Organization ________ is the sum of all established relationships among resources within an organization.
Answer: A
Page Ref: 123
Objective: 5
Difficulty: Easy
Classification: Conceptual
61) The organization chart ________ .
Answer: B
Page Ref: 123
Objective: 5
Difficulty: Easy
Classification: Conceptual
62) The manager of a multinational corporation in the U.S. thinks that following U.S. management practices is best for its operations in New Zealand because U.S. management practices are better than the management practices prevalent in New Zealand. This manager is said to have a(n) ________ attitude.
Answer: A
Page Ref: 124
Objective: 5
Difficulty: Moderate
Classification: Application
63) Managers with a ________ attitude believe that the overall quality of management recommendations, rather than the location of managers, should determine the acceptability of management practices used to guide multinational corporations.
Answer: C
Page Ref: 124
Objective: 5
Difficulty: Moderate
Classification: Application
64) A Canada-based shoe manufacturing company in Malaysia has hired a Malaysian manager to manage it, because the company’s CEO believes that the manager will understand the situation and manage the plant better than any foreign manager. This company is said to have a(n) ________ attitude.
Answer: B
Page Ref: 124
Objective: 5
Difficulty: Moderate
Classification: Application
65) The ________ attitude reflects the belief that because foreign managers are closer to foreign organizational units, they understand them better, and therefore foreign management practices are more insightful than home-country management practices.
Answer: B
Page Ref: 124
Objective: 5
Difficulty: Moderate
Classification: Application
66) A Belgium-based multinational company hires the best managers for its operations, regardless of the location of those managers. This company is said to have a(n) ________.
Answer: D
Page Ref: 124
Objective: 5
Difficulty: Moderate
Classification: Application
67) Which of the following statements is true for the various management attitudes?
society.
Answer: A
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
68) Which of the following attitudes is generally thought to be the most appropriate for mangers in multinational corporations?
Answer: A
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
69) ________ is the set of characteristics of a given group of people and their environment and includes components like norms, values, habits, education and religion.
Answer: A
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Easy
Classification: Conceptual
70) March Hare Entertainment is a media company in London that specializes in bizarre and sometimes shocking campaigns. The firm is looking to expand into other countries, but will require a culture that is very similar to its home culture: open to experimentation and risk and not authoritarian. Which of the following countries is the best option for March Hare?
Answer: B
Page Ref: 125
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application
71) France is a country where employees tend to follow whatever their managers say. They do not question the authority of their managers. Which of the following statements can be deduced from this information?
Answer: C
Page Ref: 125
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application
72) Countries that highly promote ________ have citizenry that tends to emphasize, expect, and accept more autocratic than democratic leadership.
Answer: C
Page Ref: 125
Objective: 5
Difficulty: Moderate
Classification: Conceptual
73) In Greece, employees do not like to be in a situation they know nothing about. They like to be informed about every situation they are likely to face. It can be deduced that Greece is a society that has ________.
Answer: D
Page Ref: 125
Objective: 5
Difficulty: Moderate
Classification: Application
74) In South Korean society, business success is pursued through people who work as a team. Managers believe that good interpersonal relationships among the members of a team are a must for success. What can be deduced from this?
Answer: E
Page Ref: 125
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application
75) Countries that are high in ________ prefer being in more defined and predictable situations.
Answer: E
Page Ref: 125
Objective: 5
Difficulty: Moderate
Classification: Conceptual
76) Japan has a society that values competitiveness and assertiveness over nurturing others and improving their quality of life. The people believe that success and wealth are very important. Japan is said to have a society that ________.
Answer: A
Page Ref: 125
Objective: 5
Difficulty: Moderate
Classification: Application
77) Organizations headquartered in Pakistan train their employees in order to enable them to tackle the job that has to be performed immediately. The managers also prefer maintaining a day-to-day perspective. Pakistan is a good example of a ________ society.
Answer: C
Page Ref: 126
Objective: 5
Difficulty: Moderate
Classification: Application
78) Which of the following is true according to Hofstede’s method of describing culture?
Answer: D
Page Ref: 125-126
Objective: 5
Difficulty: Moderate
Classification: Conceptual
79) The management of a company decides on a way to compare profits generated by organizational units located in different countries and expressed in terms of different currencies. What management function has been performed?
Answer: C
Page Ref: 126
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
80) ________ in multinational corporations requires that standards be set, performance be measured and compared to standards, and corrective action be taken if necessary.
Answer: D
Page Ref: 126
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
81) A(n) ________ organization considers national borders to be inconsequential to its operations, with ownership, control, and management being from many different countries.
Answer: D
Page Ref: 127
AACSB: Dynamics of the Global Economy
Objective: 6
Difficulty: Easy
Classification: Conceptual
82) Transnational organizations are also called ________.
Answer: A
Page Ref: 127
AACSB: Dynamics of the Global Economy
Objective: 6
Difficulty: Easy
Classification: Conceptual
83) The ________ organization transcends any single home country, with ownership, control, and management being from many different countries.
Answer: B
Page Ref: 127
AACSB: Dynamics of the Global Economy
Objective: 6
Difficulty: Easy
Classification: Conceptual
84) Evelyn has worked for the Boston branch of Clarity Systems for the past ten years. She is being transferred to head the Madrid office of her company. Since the transfer was a hurried one, there was no time to train Evelyn in the specifics of doing business in Spanish culture. As soon as she arrived in Madrid, Evelyn had to conduct negotiations for the renewal of several supplier contracts. One of the suppliers gave her an expensive watch, saying that it was a custom of the country to give business associates gifts. Evelyn is unsure whether she should accept the gift as it seems like a bribe. Which of the following ethical guidelines will help Evelyn determine whether or not to accept the gift?
Answer: C
Page Ref: 128
AACSB: Analytic Skills
Objective: 7
Difficulty: Moderate
Classification: Application
85) When a company provides an expatriate with information on how to survive the difficulties of adjusting to a new culture, the company is providing training in ________.
Answer: C
Page Ref: 128
AACSB: Multicultural and Diversity Understanding
Objective: 7
Difficulty: Easy
Classification: Conceptual
86) When a company provides an expatriate with basic information about life in a foreign country, such as personal safety, who to call in an emergency, and how to write a check, the company is providing training in ________.
Answer: D
Page Ref: 128
AACSB: Multicultural and Diversity Understanding
Objective: 7
Difficulty: Easy
Classification: Conceptual
87) During ________ training, the expatriates learn about the specific organizational roles that they are required to perform in the foreign country.
Answer: A
Page Ref: 128
AACSB: Multicultural and Diversity Understanding
Objective: 7
Difficulty: Easy
Classification: Conceptual
88) Define the different categories of organizations by extent of international involvement.
Answer: A number of different categories have evolved to describe the extent to which organizations are involved in the international arena. These categories are domestic organizations, international organizations, multinational organizations, and transnational or global organizations. This categorization format actually describes a continuum of international involvement, with domestic organizations representing the least and transnational organizations the most international involvement.
Domestic organizations are organizations that essentially operate within a single country. These organizations normally not only acquire necessary resources within a single country but also sell their goods or services within that same country.
International organizations are organizations that are based primarily within a single country but have continuing, meaningful international transactions in other countries. These organizations are more extensively involved in the international arena than are domestic organizations, but less so than either multinational or transnational organizations.
The multinational organization, commonly called the multinational corporation (MNC), represents the third level of international involvement. It is a company that has significant operations in more than one country.
A transnational organization, also called a global organization, takes the entire world as its business arena. It transcends any single home country, with ownership, control, and management being from many different countries.
Page Ref: 112-113, 127
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Moderate
Classification: Conceptual
89) What are the six stages of multinationalization? What activities does a company perform at each stage?
Answer: Usually, a company goes through the following six phases of multinationalization:
Stage 1 – It exports its products to foreign countries.
Stage 2 – It establishes sales organizations abroad.
Stage 3 – It licenses use of its patterns and know-how to foreign firms that make and sell its products.
Stage 4 – It establishes foreign manufacturing facilities.
Stage 5 – It multinationalizes its management from top to bottom.
Stage 6 – It multinationalizes ownership of the corporate stock.
Page Ref: 114
AACSB: Dynamics of the Global Economy
Objective: 2
Difficulty: Moderate
Classification: Conceptual
90) Why do managers make foreign investments? What are the risks involved in this?
Answer: Normally, managers who make foreign investments expect that such investments will accomplish the following:
Unfortunately, many managers decide to internationalize their companies without having an accurate understanding of the risks involved in making such a decision. For example, political complications involving the parent company (the company investing in the international operations) and various factions within the host country (the country in which the investment is made) could prevent the parent company from realizing the desirable outcomes.
Page Ref: 116
AACSB: Dynamics of the Global Economy
Objective: 3
Difficulty: Moderate
Classification: Conceptual
91) Discuss the three types of organizational members found in multinational corporations.
Answer: Workers in multinationals can be categorized as expatriates, host-country nationals, and third-country nationals.
Expatriates are organization members who live and work in a country where they do not have citizenship.
Host-country nationals are organization members who are citizens of the country in which the facility of the foreign-based organization is located.
Third-country nationals are organization members who are citizens of one country and who work in another country for an organization headquartered in still another country.
Organizations that operate globally may employ all three types of organization members.
Both expatriates and third-country nationals require relocation and training in the culture, language, tax laws, and basic lifestyle of the culture in the host country.
Page Ref: 116-117
AACSB: Multicultural and Diversity Understanding
Objective: 4
Difficulty: Moderate
Classification: Conceptual
92) STL began as a manufacturer and retailer of customized apparel and accessories. Customers could choose their specifications online, and STL would produce and deliver the products to customers’ homes. Initially, its market was limited to the U.S., but the company has begun to receive enquiries from overseas customers from many other countries. However, STL does not have the financial resources or the confidence to set up operations in other countries. Which methods could the CEO use to meet this overseas demand, taking into account the company’s weaknesses?
Answer: Student answers may vary.
As the company is receiving orders from customers from many countries, it would be difficult and expensive to set up bases in all those countries. The CEO could export the goods to the other countries as and when required. This would require minimal investment.
License agreements could also be a possibility, if STL could find another company willing to produce and market products using its brand name. STL could also enter into a joint venture with another company to produce and market its products in another country. However, both these methods would limit STL’s reach, as these arrangements would be limited to a few countries.
Page Ref: 119
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application
93) Explain the four components of international plans for multinational corporations.
Answer: The four commonly included components of international plans are imports/exports, license agreements, joint ventures, and direct investing.
Importing is the buying of goods or services from another country. Exporting is selling goods or services to another country. Organizations of all sizes import and export.
License agreements are rights granted by one company to another company to use its brand name, technology, etc., in the manufacture or sale of goods and services. The company to which the license is extended pays some fee for the privilege.
Direct investing uses the assets of one company to purchase the operating assets of another company. International planning in this area emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.
Joint ventures are partnerships formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking. International planning components that include joint ventures emphasize the attainment of organizational objectives through partnerships with foreign companies.
Page Ref: 119-120
AACSB: Dynamics of the Global Economy
Objective: 5
Difficulty: Easy
Classification: Conceptual
94) Explain the three basic managerial attitudes toward the operation of multinational corporations. What are their advantages and disadvantages?
Answer: The three basic managerial attitudes toward the operation of multinational corporations include: ethnocentric, polycentric, and geocentric.
The ethnocentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices. Managers with this attitude are prone to stereotype home-country management practices as sound and reasonable and foreign management practices as faulty and unreasonable. It has the advantage of keeping the organization simple, but it generally causes organizational problems because it prevents the organization from receiving feedback from its foreign operations. In some cases, it even causes resentment toward the home country within the foreign society.
The polycentric attitude reflects the belief that because foreign managers are closer to foreign organizational units, they probably understand them better, and therefore foreign management practices should generally be viewed as more insightful than home-country management practices. It permits the tailoring of foreign organizational segments to their cultures, which can be an advantage. Unfortunately, this attitude can lead to the substantial disadvantage of creating numerous foreign organizational segments that are individually run and rather unique, which makes them difficult to control.
The geocentric attitude reflects the belief that the overall quality of management recommendations, rather than the location of mangers, should determine the acceptability of management practices used to guide multinational corporations. It is considered most appropriate for long-term organizational success. It is generally thought to be the most appropriate for managers in multinational corporations.This attitude promotes collaboration between foreign and home-country management and encourages the development of managerial skills regardless of the organizational segment or country in which managers operate.
Page Ref: 124
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Moderate
Classification: Conceptual
95) What can managers in multinational corporations do to influence employees?
Answer: To successfully influence employees, managers in multinational corporations should:
Page Ref: 125
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Moderate
Classification: Conceptual
96) According to Hofstede, what are the five basic dimensions of culture?
Answer: According to Hofstede’s research, national cultural values vary on five basic dimensions:
Page Ref: 125-126
AACSB: Multicultural and Diversity Understanding
Objective: 5
Difficulty: Moderate
Classification: Conceptual
97) What can managers do to ensure that management action taken across national borders is ethical?
Answer: Managers can ensure that management action taken across national borders is ethical by:
Page Ref: 128
AACSB: Multicultural and Diversity Understanding
Objective: 7
Difficulty: Moderate
Classification: Conceptual
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
