Chapter 5 Managing in the Global Arena
1) International management is the performance of management activities across national
borders.
Answer: True
Rationale:
International management involves managing activities that cross national borders, such as
overseeing operations in multiple countries, dealing with different cultures and regulations, and
coordinating global strategies.
2) Establishing a formal partnership with a foreign company is a form of international
management.
Answer: True
Rationale:
When a company establishes a formal partnership, joint venture, or alliance with a foreign
company, it involves managing the relationship and operations across national borders, which
falls under the purview of international management.
3) One form of international management is fighting competition in foreign markets.
Answer: True
Rationale:
Competing in foreign markets requires strategies and management practices that are specific to
international contexts, such as understanding local market conditions, adapting products to meet
foreign consumer needs, and navigating international regulations.
4) Transnational organizations have the least international involvement of all types of
organizations involved in the international arena.
Answer: False
Rationale:
Transnational organizations have a high level of international involvement, as they operate
globally with integrated operations across different countries, aiming to achieve global efficiency
and local responsiveness simultaneously.
5) Domestic organizations essentially operate within a single country.
Answer: True
Rationale:
Domestic organizations focus their operations, resources, and sales within the borders of a single
country, without significant international involvement.
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
Rationale:
A corporation can be classified as domestic if it is incorporated and operates primarily within
one country, even if it sources some resources internationally or sells products in foreign
markets.
7) An international organization has a lower level of international involvement than a
multinational organization.
Answer: True
Rationale:
An international organization typically engages in activities across national borders, but its scope
and scale of operations are generally more limited compared to a multinational organization,
which has a broader global presence and more integrated operations.
8) A multinational corporation is a company that is primarily based in one country but has
continuing transactions in other countries.
Answer: False
Rationale:
A multinational corporation is a company that has operations and facilities in multiple countries,
with a decentralized management structure that allows each subsidiary to operate somewhat
independently while still being part of the larger multinational entity.
9) A company that merely exports products to a foreign country cannot be considered a
multinational corporation.
Answer: False
Rationale:
A company can be considered a multinational corporation if it has operations in multiple
countries, even if its primary activity is exporting products to foreign markets.
10) A company that exports products to a foreign country and establishes sales organizations
abroad is considered to be a domestic company.
Answer: False
Rationale:
A company that establishes sales organizations abroad and engages in international business
activities, even if it primarily operates within one country, is typically classified as a
multinational corporation rather than a domestic company.
11) The host company is the company investing in international operations.
Answer: False
Rationale:
The host company is actually the company in a foreign country where the international
operations are taking place. It is the recipient of the investment or the location where the
operations are based, not the investing company.
12) Expatriates are organization members who live and work in a country in which they are not
citizens.
Answer: True
Rationale:
Expatriates are individuals who are sent by their company to live and work in a foreign country
for a defined period, typically to manage operations, transfer skills, or oversee a project.
13) 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
Rationale:
Host-country nationals are individuals who are citizens of the country where the organization is
doing business. Since they are already familiar with the local culture, language, and laws, they
do not need to be relocated or undergo extensive training in these areas.
14) 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
Rationale:
Third-country nationals are individuals who are citizens of a country other than the home country
of the organization or the host country where they are working. They are typically employed by a
multinational corporation to work in a country other than their own or the company's home
country.
15) Repatriation is the process of ensuring the adjustment of a worker to a foreign country.
Answer: False
Rationale:
Repatriation is actually the process of re-integrating an expatriate back into their home country
or into another assignment after they have completed their international assignment. It involves
helping the expatriate adjust to the home-country culture and work environment after their
return.
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
Rationale:
A license agreement is a legal agreement between two parties in which one party (the licensor)
grants the other party (the licensee) the right to use its intellectual property, such as trademarks,
patents, or technology, for a specified period and within a specified geographic area.
17) The European Union is an example of an international market agreement.
Answer: True
Rationale:
The European Union (EU) is a political and economic union of 27 European countries that have
agreed to create a single market and adopt common policies in areas such as trade, agriculture,
and competition. It is an example of an international market agreement aimed at promoting
economic integration and cooperation among its member states.
18) Managers with an ethnocentric attitude are prone to stereotype foreign management practices
as faulty and unreasonable.
Answer: True
Rationale:
Ethnocentrism refers to the belief that one's own culture or country is superior to others.
Managers with an ethnocentric attitude may view foreign management practices as inferior or
wrong simply because they are different from their own, leading them to stereotype foreign
practices as faulty or unreasonable.
19) A polycentric attitude reflects the belief that multinational corporations should regard homecountry management practices as superior to foreign-country management practices.
Answer: False
Rationale:
A polycentric attitude is the opposite of an ethnocentric attitude. It reflects the belief that local or
host-country management practices are superior to those of the home country. It suggests that
multinational corporations should adapt their management practices to suit the local context
rather than imposing their home-country practices.
20) Transnational organizations usually take one particular continent as their business arena.
Answer: False
Rationale:
Transnational organizations operate globally, with integrated operations across different
countries and continents. They do not limit themselves to a specific continent but rather seek to
achieve global efficiency and local responsiveness by operating in multiple regions around the
world.
21) In ascending order, what are the different types of organizations involved in the international
arena?
A) domestic, international, multinational, transnational
Answer: A
Rationale:
The correct order from the least international involvement to the highest is domestic,
international, multinational, and transnational. Domestic organizations operate within a single
country, international organizations operate across borders but with limited involvement,
multinational organizations have operations in multiple countries but with limited integration,
and transnational organizations have integrated operations across different countries.
22) Which of the following categories of organizations generally has the lowest level of
international involvement?
A) global organizations
B) domestic organizations
C) international organizations
D) multinational organizations
E) transnational organizations
Answer: B
Rationale:
Domestic organizations operate within a single country and typically have the lowest level of
international involvement compared to global, international, multinational, and transnational
organizations.
23) Which of the following types of organizations has the highest level of international
involvement?
A) regional organizations
B) national organizations
C) transnational organizations
D) ethnocentric organizations
E) domestic organizations
Answer: C
Rationale:
Transnational organizations have the highest level of international involvement as they operate
globally with integrated operations across different countries.
24) ________ organizations essentially operate within a single country.
A) Multinational
B) Transnational
C) Global
D) Domestic
E) International
Answer: D
Rationale:
Domestic organizations operate within a single country and do not have significant international
involvement.
25) SNL manufactures and sells customized shoes for people with special needs. The
organization caters mostly to customers within the United States, though it occasionally sends
products to overseas customers. The organization is very eco-friendly, and takes pride in
sourcing all its raw materials locally. According to the information, SNL is a(n) ________.
A) transnational organization
B) global organization
C) multinational organization
D) domestic organization
E) international organization
Answer: D
Rationale:
SNL is a domestic organization because it primarily operates within the United States and has
limited international involvement.
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 United States. Adam & Sons recently became the sole
U.S distributors for Japanese watch manufacturer TLC. Adam & Sons would therefore be
classified as a(n) ________.
A) international organization
B) multinational organization
C) transnational organization
D) global organization
E) domestic organization
Answer: A
Rationale:
Adam & Sons would be classified as an international organization because, although it primarily
operates within the United States, it now engages in international business activities by
distributing watches from a Japanese manufacturer.
27) Which of the following describes a company that is primarily based within one country but
has continuing and meaningful transactions in other countries?
A) domestic organization
B) international organization
C) multinational organization
D) transnational organization
E) global organization
Answer: B
Rationale:
An international organization is primarily based in one country but has continuing and
meaningful transactions in other countries.
28) BLT is a sandwich chain based in Boston. It gained popularity due to word-of-mouth
publicity and it 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?
A) if it begins stocking organic foods produced by local farms
B) if it distributes artisanal chocolate produced by a South African firm
C) if it licenses a fast-food chain in England to use its brand name
D) if it diversifies its product lineup to include different types of foods
E) if it begins selling cheeses imported from France
Answer: C
Rationale:
Licensing a fast-food chain in England to use its brand name would make BLT a multinational
company because it involves a contractual agreement for the use of its intellectual property in
another country.
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) ________.
A) global organization
B) domestic organization
C) international corporation
D) multinational corporation
E) transnational organization
Answer: D
Rationale:
A multinational corporation is 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.
30) According to Neil H. Jacoby, which of the following is the first stage of
multinationalization?
A) establishing sales organizations abroad
B) licensing the use of the organization's patents and know-how to foreign firms that make and
sell the organization's product
C) establishing foreign manufacturing facilities
D) multinationalizing the organization's management from top to bottom
E) exporting the organization's product to foreign countries
Answer: E
Rationale:
Exporting the organization's product to foreign countries is the first stage of multinationalization
according to Neil H. Jacoby.
31) What is the most advanced stage in multinationalization of a company?
A) licensing its brand names to foreign firms
B) establishing foreign manufacturing facilities
C) establishing sales organizations abroad
D) exporting the organization's products to foreign countries
E) multinationalizing ownership of the corporate stock
Answer: E
Rationale:
Multinationalizing ownership of the corporate stock is the most advanced stage in
multinationalization because it involves significant investment and control over foreign
operations, indicating a high level of commitment and integration in international markets.
32) Which of the following is a characteristic of domestic management?
A) widely disparate economic conditions
B) national markets varying greatly in population and area
C) different national sovereignties
D) markets at different stages of the industrial revolution
E) people living in similar value systems
Answer: E
Rationale:
Domestic management typically involves people living in similar value systems within the same
country, which can simplify management practices compared to managing across different value
systems in international settings.
33) A company investing in international operations is known as the ________.
A) quasi company
B) parent company
C) subsidiary company
D) holding company
E) host company
Answer: B
Rationale:
The parent company is the company that invests in international operations and owns or controls
subsidiaries or other entities in foreign countries.
34) A country in which an investment is made by a foreign company is termed as a(n) ________.
A) host country
B) parent country
C) home country
D) expatriate country
E) native country
Answer: A
Rationale:
The host country is where the investment is made by a foreign company, distinguishing it from
the home country where the company is based.
35) ________ are members of an organization who live and work in a country where they do not
have citizenship.
A) Expatriates
B) Host-country nationals
C) Naturalized citizens
D) Repatriates
E) Dual citizens
Answer: A
Rationale:
Expatriates are individuals who live and work in a country where they are not citizens, often sent
there by their company for a specific assignment or job.
36) Joe is a citizen of Sri Lanka who lives and works for a company in Brazil. He is considered
to be a(n) ________.
A) dual citizen
B) expatriate
C) repatriate
D) host-country national
E) home-country national
Answer: B
Rationale:
Joe is considered an expatriate because he is a citizen of Sri Lanka living and working in Brazil,
where he is not a citizen.
37) Citizens of a country who work in a foreign-based organization located in their own country
are known as ________.
A) expatriates
B) host-country nationals
C) third-country nationals
D) repatriates
E) immigrants
Answer: B
Rationale:
Host-country nationals are citizens of a country who work for a foreign-based organization in
their own country.
38) Gary is a British citizen working for an American company situated in London. He is a(n)
________.
A) host-country national
B) third-country national
C) repatriate
D) expatriate
E) immigrant
Answer: A
Rationale:
Gary is a host-country national because he is a British citizen working in his own country (the
United Kingdom) for an American company.
39) Organization members who are citizens of one country and work in another country for an
organization headquartered in still another country are known as ________.
A) expatriates
B) host-country nationals
C) third-country nationals
D) repatriates
E) naturalized citizens
Answer: C
Rationale:
Third-country nationals are individuals who are citizens of one country and work in another
country for an organization headquartered in a different country.
40) Hugh is an American citizen currently living in Denmark. He works for a company that has
its headquarters in France. He is a ________.
A) third-country national
B) host-country national
C) home-country national
D) dual citizen
E) repatriate
Answer: A
Rationale:
Hugh is a third-country national because he is an American citizen working in Denmark for a
company headquartered in France, making him a national of a third country in this context.
41) 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?
A) Sandra is Polish and works for a U.K-based company in Venice.
B) Winston is a U.K. national but has been sent to Canada by his company to handle the
operations there for the next two years.
C) Vanessa is English and works in London for a company based in Denmark.
D) Ursula is a Finn but has been in Germany for the last four years, working for a company
headquartered in Japan.
E) Nikolai works for an Irish company in Oslo and is a Norwegian by birth.
Answer: B
Rationale:
Zac's situation is similar to Winston's, who is a U.K. national working in Canada for his
company, as both are working in a country different from their nationality.
42) ________ are least expensive to employ for organizations that operate globally.
A) Host-country nationals
B) Expatriates
C) Third-country nationals
D) Repatriates
E) Migrant workers
Answer: A
Rationale:
Host-country nationals are typically the least expensive to employ for organizations that operate
globally because they do not require the same level of relocation and cultural adjustment support
as expatriates or third-country nationals.
43) Which of the following is true for employees of multinational organizations?
A) A third-country national works for a foreign organization in its home country.
B) A host-country national will face problems adjusting to the culture of the country in which he
works.
C) Expatriates and third-country nationals have to be relocated and undergo training.
D) A host-country national is an organization member who lives and works in a country where
he or she does not have citizenship.
E) Host-country nationals are usually the most expensive to employ.
Answer: C
Rationale:
Expatriates and third-country nationals typically have to be relocated to work in a foreign
country and undergo cultural and job-related training, which can be costly for multinational
organizations.
44) 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
________.
A) repatriation
B) expatriation
C) immigration
D) polycentrism
E) emigration
Answer: A
Rationale:
Repatriation is 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.
45) The ________ function of management involves determining how an organization will
achieve its objectives.
A) planning
B) organizing
C) influencing
D) controlling
E) observing
Answer: A
Rationale:
Planning involves determining the objectives of an organization and the strategies and plans to
achieve them.
46) When a U.S.-based computer manufacturer sells a shipment of 40 computers to a retailer in
Germany, the computer manufacturer is engaged in the process of ________.
A) importing
B) exporting
C) developing a license agreement
D) direct investing
E) repatriating
Answer: B
Rationale:
Exporting refers to selling goods or services to customers in another country.
47) 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) ________.
A) license agreement
B) direct investing agreement
C) venture agreement
D) export agreement
E) import agreement
Answer: A
Rationale:
A license agreement allows one company to use another company's intellectual property, such as
a brand name or technology, in exchange for a fee or royalty.
48) An American clothing manufacturer has recently purchased a clothing factory in Taiwan.
This action is known as ________.
A) importing
B) exporting
C) licensing
D) direct investing
E) franchising
Answer: D
Rationale:
Direct investing involves acquiring or establishing facilities or operations in a foreign country,
such as purchasing a factory in Taiwan.
49) In which of the following areas does international planning emphasize reaching
organizational objectives through the purchase of the operating assets of another company in a
foreign country?
A) direct investing
B) joint venture
C) importing
D) exporting
E) license agreements
Answer: A
Rationale:
Direct investing involves acquiring or establishing facilities or operations in a foreign country,
often through purchasing the operating assets of another company.
50) 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)
________.
A) international market agreement
B) direct investment
C) joint venture
D) license agreement
E) franchise agreement
Answer: C
Rationale:
A joint venture is a partnership between two companies from different countries to pursue a
specific business opportunity together.
51) International plans that include ________ emphasize the attainment of organizational
objectives through partnerships with foreign companies.
A) joint ventures
B) imports
C) exports
D) license agreements
E) direct investing
Answer: A
Rationale:
Joint ventures involve partnerships with foreign companies, which allow organizations to access
new markets, share risks and resources, and achieve their objectives through collaboration and
cooperation.
52) An international market agreement is ________.
A) a joint venture between two companies who want to enter markets in the other country
B) an arrangement among a cluster of countries that facilitates a high level of trade among these
countries
C) an international import deal between two countries
D) an agreement between an importer from one country and an exporter from another
E) an agreement between a multinational company and its franchisees in a number of countries
Answer: B
Rationale:
An international market agreement is an arrangement among a cluster of countries that facilitates
a high level of trade among these countries, such as a free trade agreement or a customs union.
53) ________ is an international market agreement dedicated to facilitating trade among member
nations.
A) The Asian Union
B) The American Union
C) The European Union
D) The Global Union
E) The Pan-Asian Union
Answer: C
Rationale:
The European Union is an international market agreement aimed at facilitating trade among its
member nations in Europe.
54) 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 an ________
agreement.
A) international license
B) international market
C) international framework
D) international import
E) international export
Answer: B
Rationale:
The Asian-Pacific Economic Cooperation (APEC) is an international market agreement aimed at
facilitating trade and economic cooperation among its member nations in the Asia-Pacific region.
55) Which of the following statements is true about NAFTA?
A) It aims at facilitating trade among the United States, Canada, and Mexico.
B) Its members include Denmark, the United Kingdom, Portugal, the Netherlands, Belgium.
C) It is an international market agreement aimed at facilitating trade among African nations.
D) It works to reduce tariffs and other trade barriers across the Asia-Pacific region.
E) It has 21 members, including Canada, the People's Republic of China, Indonesia, and the
United States.
Answer: A
Rationale:
NAFTA (North American Free Trade Agreement) is aimed at facilitating trade among the United
States, Canada, and Mexico, promoting economic cooperation and reducing trade barriers
between these countries.
56) APEC was established in 1989 to further the economic growth and prosperity of the
________ community.
A) North American
B) Asia-Pacific
C) Commonwealth
D) European
E) African
Answer: B
Rationale:
APEC (Asia-Pacific Economic Cooperation) was established to further the economic growth and
prosperity of the Asia-Pacific community, promoting economic cooperation and integration
among its member nations.
57) Which of the following countries is a member of the APEC?
A) Germany
B) Egypt
C) Canada
D) Argentina
E) Brazil
Answer: C
Rationale:
Canada is a member of APEC (Asia-Pacific Economic Cooperation), which promotes economic
cooperation and integration among its member nations in the Asia-Pacific region.
58) ________ is the sum of all established relationships among resources within an organization.
A) Organization structure
B) Organization overview
C) Organization mission
D) Organization path
E) Organization purpose
Answer: A
Rationale:
Organization structure refers to the sum of all established relationships among resources within
an organization, including roles, responsibilities, communication channels, and authority.
59) The organization chart ________.
A) establishes the organization's goals for the year
B) is the graphic illustration of organization structure
C) lists the organizational policies
D) details the organization's plans for achieving its goals
E) is the representation of the organization's financial system
Answer: B
Rationale:
The organization chart is a graphic illustration of the organization's structure, showing the
hierarchy of positions, reporting relationships, and communication channels within the
organization.
60) The manager of a multinational corporation in the United States 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) ________.
A) ethnocentric attitude
B) polycentric attitude
C) geocentric attitude
D) xenocentric attitude
E) gynocentric attitude
Answer: A
Rationale:
The manager is said to have an ethnocentric attitude because they believe that their homecountry management practices are superior to those of the host country, New Zealand, and
should be applied there.
61) 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)
________.
A) ethnocentric attitude
B) polycentric attitude
C) egocentric attitude
D) geocentric attitude
E) gynocentric attitude
Answer: B
Rationale:
This scenario reflects a polycentric attitude, where the company believes that local managers are
best suited to understand and manage local operations. This attitude is characterized by a belief
that host country nationals are better equipped to manage local operations than foreigners.
62) 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.
A) ethnocentric
B) polycentric
C) egocentric
D) geocentric
E) gynocentric
Answer: B
Rationale:
The polycentric attitude suggests that managers from foreign subsidiaries understand their local
operations better than those from the headquarters. Therefore, foreign management practices are
considered more insightful than those from the home country.
63) Managers with a(n) ________ 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.
A) ethnocentric
B) polycentric
C) geocentric
D) xenocentric
E) gynocentric
Answer: C
Rationale:
A geocentric attitude emphasizes the overall quality of management recommendations,
regardless of the location of the managers. This approach seeks to integrate the best practices
from around the world.
64) 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) ________.
A) ethnocentric attitude
B) polycentric attitude
C) egocentric attitude
D) geocentric attitude
E) gynocentric attitude
Answer: D
Rationale:
A geocentric attitude involves hiring the best managers from around the world, without regard to
their nationality or location. This approach focuses on global integration and effectiveness.
65) Which of the following statements is true for the various management attitudes?
A) An organization characterized by the geocentric attitude incurs high travel and training
expenses.
B) The ethnocentric attitude reflects the belief that because foreign managers are closer to
foreign organizational units, they understand them better.
C) The ethnocentric attitude is generally thought to be the most appropriate for managers in
multinational corporations.
D) The polycentric attitude often causes resentment toward the home country within the foreign
society.
E) Managers with a geocentric attitude stereotype home-country management practices as sound
and reasonable and foreign management practices as faulty and unreasonable.
Answer: A
Rationale:
An organization with a geocentric attitude incurs high travel and training expenses because it
hires and moves managers globally. This approach aims for a global perspective and integration.
66) Which of the following attitudes is generally thought to be the most appropriate for managers
in multinational corporations?
A) geocentric
B) ethnocentric
C) polycentric
D) egocentric
E) regiocentric
Answer: A
Rationale:
The geocentric attitude is generally considered the most appropriate for managers in
multinational corporations because it seeks to integrate the best practices from around the world,
regardless of the managers' nationalities or locations.
67) ________ is the set of characteristics of a given group of people and their environment and
includes components like norms, values, habits, education, and religion.
A) Culture
B) Politics
C) Laws
D) Attitude
E) Ethics
Answer: A
Rationale:
Culture refers to the set of characteristics of a given group of people and their environment,
including norms, values, habits, education, and religion. It shapes the way people in a society
think, behave, and interact.
68) Countries that highly promote ________ have citizenry that tends to emphasize, expect, and
accept more autocratic than democratic leadership.
A) short-term orientation
B) individualism
C) power distance
D) masculinity
E) collectivism
Answer: C
Rationale:
Power distance is the extent to which less powerful members of a society accept and expect
power to be distributed unequally. In countries with high power distance, people tend to accept
autocratic leadership more readily.
69) 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?
A) Germany, which has high power distance and collectivism
B) Denmark, which has low power distance and low uncertainty avoidance
C) Japan, which culture favors low individualism and high power distance
D) India, which has a long-term orientation and high uncertainty avoidance
E) France, which has low uncertainty avoidance and high power distance
Answer: B
Rationale:
Denmark, with its low power distance and low uncertainty avoidance, aligns with the desired
culture of March Hare Entertainment, which values openness to experimentation and risk-taking.
70) 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?
A) France has a culture that promotes masculinity.
B) France is a country where short-term orientation is prevalent.
C) France is a country with high power distance.
D) France is a society with low uncertainty avoidance.
E) French society promotes individualism.
Answer: C
Rationale:
The fact that employees in France tend to follow their managers without questioning their
authority suggests a high power distance culture, where hierarchy and authority are respected and
accepted without much challenge.
71) In Jonovia, 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 Jonovia is a
society that has ________.
A) feminine values
B) long-term orientation
C) low power distance
D) high uncertainty avoidance
E) high individualism
Answer: D
Rationale:
The preference for being informed about every situation and discomfort with unknown situations
suggest a high uncertainty avoidance culture. In such cultures, there is a desire for clarity,
structure, and information to reduce ambiguity and uncertainty.
72) Which of the following is true according to Hofstede's method of describing culture?
A) Countries with low power distance tend to emphasize, expect, and accept more autocratic
than democratic leadership.
B) Highly feminine countries place a high worth on factors like competitiveness, assertiveness,
success, and wealth.
C) Power distance is the extent to which a society feels threatened by uncertain or unpredictable
situations.
D) Countries that are high in uncertainty avoidance prefer being in more defined and predictable
situations.
E) Countries with low uncertainty avoidance deemphasize short-run success to achieve long-run
success.
Answer: D
Rationale:
According to Hofstede, uncertainty avoidance refers to the extent to which a society feels
threatened by uncertain or unknown situations. Cultures with high uncertainty avoidance prefer
clear rules and structures to reduce ambiguity and uncertainty.
73) ________ is the degree to which people in a society operate primarily as individuals or
within groups.
A) Uncertainty avoidance
B) Power distance
C) Collectivism
D) Masculinity
E) Feminity
Answer: C
Rationale:
Collectivism refers to the degree to which individuals in a society operate as part of a group
rather than as individuals. It reflects the extent to which group goals are prioritized over
individual goals.
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?
A) South Korean society has a long-term orientation.
B) South Korea has high power distance.
C) South Korea is low on uncertainty avoidance.
D) South Korea has strong masculine values.
E) South Korea is a collectivist culture.
Answer: E
Rationale:
The emphasis on teamwork and interpersonal relationships suggests a collectivist culture, where
group harmony and cohesion are valued over individual interests.
75) 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 ________.
A) emphasizes masculine values
B) has short-term orientations
C) has high power distance
D) is low on uncertainty avoidance
E) emphasizes collectivism
Answer: A
Rationale:
The values of competitiveness, assertiveness, success, and wealth align with Hofstede's concept
of masculinity, which emphasizes achievement, ambition, and the accumulation of wealth and
material possessions.
76) Organizations headquartered in Pakistan train their employees 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 ________.
A) highly individualistic society
B) highly feminine society
C) short-term oriented society
D) low power distance society
E) low uncertainty avoidance society
Answer: C
Rationale:
The emphasis on immediate job performance and a day-to-day perspective indicates a short-term
oriented society, where immediate results and practical considerations are prioritized over longterm planning.
77) The management of a company decides to take corrective action in the way they have been
comparing profits generated by organizational units located in different countries and decides to
represent it in terms of different currencies. Which of the following management functions is
being performed here?
A) planning
B) influencing
C) controlling
D) organizing
E) leading
Answer: C
Rationale:
Controlling involves monitoring performance, comparing it with goals, and taking corrective
action as needed. In this case, the management is taking corrective action based on the
comparison of profits, which falls under the controlling function of management.
78) ________ in multinational corporations requires that standards be set, performance be
measured and compared to standards, and corrective action be taken if necessary.
A) Planning
B) Organizing
C) Leading
D) Controlling
E) Influencing
Answer: D
Rationale:
Controlling involves setting standards, measuring performance against those standards, and
taking corrective action as necessary to ensure that goals are achieved. This process is essential
in multinational corporations to monitor and manage performance across diverse locations.
79) Transnational organizations are also called ________.
A) global corporations
B) multinational corporations
C) international corporations
D) domestic corporations
E) pan-national corporations
Answer: A
Rationale:
Transnational organizations, also known as global corporations, operate on a global scale with
operations in multiple countries. They are characterized by integrated global strategies and
operations.
80) A(n) ________ organization considers national borders to be inconsequential to its
operations, with ownership, control, and management being from many different countries.
A) international
B) regional
C) pan-national
D) transnational
E) domestic
Answer: D
Rationale:
A transnational organization operates across national borders with ownership, control, and
management distributed among many different countries. It is characterized by a global
perspective and integration.
81) The ________ organization transcends any single home country, with ownership, control,
and management being from many different countries.
A) pan-national
B) transnational
C) multinational
D) international
E) domestic
Answer: B
Rationale:
A transnational organization operates on a global scale with ownership, control, and management
distributed among many different countries. It transcends any single home country and integrates
operations across borders.
82) 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?
A) respecting core human rights
B) respecting local traditions
C) determining right from wrong by examining context
D) using ethnocentrism
E) increasing power distance
Answer: C
Rationale:
Determining right from wrong by examining context involves considering the specific situation
and cultural context in which a decision is made. In this case, Evelyn should consider the cultural
norms and business practices in Spain regarding gifts and determine if accepting the gift aligns
with ethical standards in that context.
83) 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 ________.
A) logistical information
B) cultural application
C) cultural adaptation
D) cultural profiling
E) repatriation
Answer: C
Rationale:
Cultural adaptation training helps expatriates adjust to a new culture by providing them with
information and strategies to navigate cultural differences and challenges.
84) 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 ________.
A) cultural profiling
B) cultural adaptation
C) cultural application
D) logistical information
E) repatriation
Answer: D
Rationale:
Logistical information training provides expatriates with practical information and skills
necessary for daily life in a foreign country, such as personal safety, emergency contacts, and
basic financial transactions.
85) During ________ training, the expatriates learn about the specific organizational roles that
they are required to perform in the foreign country.
A) application
B) logistical information
C) cultural adaptation
D) cultural profiling
E) repatriation
Answer: A
Rationale:
Application training helps expatriates understand their specific organizational roles and
responsibilities in the foreign country, ensuring they are prepared to fulfill their duties
effectively.
86) 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.
87) 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 patents 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.
88) 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:
a. Reduce or eliminate high transportation costs.
b. Allow participation in the rapid expansion of a market abroad.
c. Provide foreign technical, design, and marketing skills.
d. Earn higher profits.
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.
89) 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.
90) 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:
a. Power Distance - It is the degree to which a society promotes an unequal distribution of
power. Countries that highly promote power distance have citizenry that tends to emphasize,
expect, and accept more autocratic than democratic leadership.
b. Uncertainty Avoidance - It is the extent to which a society feels threatened by uncertain or
unpredictable situations. Countries that are high in uncertainty avoidance prefer being in more
defined and predictable situations.
c. Individualism and Collectivism - It is the degree to which people in a society operate primarily
as individuals or within groups. People operating as individuals tend to focus on meeting their
own needs. People in this situation tend to be self-reliant and succeed by competing with others.
On the other hand, people who operate collectively tend to build relationships among others and
downplay individualism.
d. Masculinity and Femininity - It is the extent to which a culture emphasizes traditional
masculine or feminine values. Traditional masculine values place a high worth on factors like
competitiveness, assertiveness, success, and wealth. Traditional feminine values place a high
worth on factors like caring for and nurturing others and increasing the quality of life.
e. Short-Term and Long-Term Orientation - It is the degree to which a culture deemphasizes
short-run success to achieve long-run success. Cultures that focus more on long-run success
emphasize activities like planning, education, rewarding long-run results, and keeping a future
oriented perspective. Conversely, cultures that focus more on short-run success emphasize
training to enable one to do a job now, rewarding short-run results, and maintaining a day-to-day
perspective.
Test Bank for Modern Management: Concepts and Skills
Samuel C. Certo, S. Trevis Certo
9780133059922, 9780133254105, 9780135983546
