Font size
WorksheetsInternational Business p2
Total questions: 100
Worksheet time: 50mins
What is the nature of a WTO ruling?
A recommendation but not an order
A legally binding order
A financial penalty
A trade agreement
Which of the following is NOT a long-standing controversy in the WTO?
Climate change
Agricultural subsidies in developed countries
Tariffs in industries where developing countries may have comparative advantages
IP protection
Which issue has further complicated WTO negotiations in recent years?
Climate change
Agricultural subsidies
Tariffs on textiles
IP protection
What is a Free Trade Area (FTA)?
A group of countries that remove trade barriers among themselves
A single country with no trade barriers
A global organization regulating trade
A bilateral agreement between two countries
Which countries are part of the USMCA (formerly NAFTA) agreement?
USA, Mexico, Canada
USA, Brazil, Argentina
Canada, UK, Australia
Mexico, China, India
What is the main role of the Association of Southeast Asian Nations (ASEAN)?
Underpinning regional economic integration in Southeast Asia
Regulating global trade
Providing financial aid to developing countries
Negotiating climate change agreements
Which multilateral trade agreement was established in 1954 and includes 27 member countries in Europe?
EU (formerly European Community)
USMCA (formerly NAFTA)
ASEAN
Mercosur
Why might agricultural subsidies in developed countries be controversial in the context of WTO negotiations?
They inhibit exports from developing countries
They increase climate change risks
They promote digital economy growth
They encourage state ownership
How do tariffs in certain industries affect developing countries in WTO negotiations?
They may have comparative advantages in those industries
They lose all trade opportunities
They gain exclusive rights to trade
They are exempt from all tariffs
Which countries are covered by the South Asian Free Trade Area (SAFTA)?
India, Pakistan, Bangladesh, Sri Lanka, The Maldives, Nepal, Bhutan
China, Japan, Korea, Australia, New Zealand
Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, UAE
Brazil, Argentina, Paraguay, Uruguay
What is the main purpose of the Gulf Cooperation Council (GCC)?
Political and economic integration
Currency unification
Customs union
Military alliance
Which economic partnership was launched in 2020 and includes 10 ASEAN countries along with China, Korea, Japan, Australia, and New Zealand?
Mercosur
Regional Comprehensive Economic Partnership (RCEP)
ECOWAS
SAFTA
Mercosur is best described as:
A customs union in South America
A currency union in West Africa
A free trade area in South Asia
An economic partnership in the Middle East
What is the common currency of French-speaking countries in West Africa?
CFA franc
Euro
Dollar
Peso
Which of the following is NOT a problem associated with the African Continental FTA (AfCFTA)?
Unequal benefits
Asymmetric shocks
Currency devaluation
Controversial protection rules
What is a key criticism of bilateral trade and investment agreements?
They increase trade diversion
They promote global free trade
They eliminate fragmented rules
They reduce bargaining power of large markets
How do bilateral FTAs affect countries with large markets, according to critics?
They allow these countries to use their bargaining power more effectively
They weaken their economic influence
They create a single currency
They eliminate trade barriers completely
What is the hub and spoke system in international trade?
A system that strengthens countries at the hubs
A system that creates a single global market
A system that eliminates all trade barriers
A system that unifies currency across countries
Why do advocates of bilateral FTAs support them?
They see them as a convenient substitute for global free trade
They believe they increase trade diversion
They think they create fragmented rules
They argue they weaken large markets
What is the primary role of the IMF?
Promoting international monetary cooperation and providing temporary financial assistance to countries with balance of payments problems
Regulating global trade agreements
Monitoring climate change impacts
Enforcing peace treaties between nations
Which of the following is NOT one of the three primary activities of the IMF?
Monitoring the global economy
Providing technical assistance to developing countries
Lending to countries in financial difficulties
Regulating greenhouse gas emissions
Why does IMF conditionality often require countries to undertake reforms?
To encourage belt-tightening and push governments to embark on reforms they might not have otherwise undertaken
To increase greenhouse gas emissions
To promote peace treaties
To regulate international trade
Which countries does the IMF have no power over regarding its loans?
Countries that do not need its loans, even when running major budget deficits or current account deficits, such as the USA and the EU
Developing countries in financial difficulties
Countries that signed the Kyoto Protocol
Nations affected by climate change
What was the main goal of the Kyoto Protocol signed in 1997?
To cut CO2 emissions of developed countries by 6% of 1990 levels by 2012
To regulate international monetary cooperation
To provide technical assistance to developing countries
To monitor the global economy
What is the focus of the Climate Change Agenda mentioned in the document?
The environmental impact of human activity and the warning of the Earth's atmosphere due to greenhouse gas emissions
Promoting international monetary cooperation
Monitoring the global economy
Providing financial assistance to countries in crisis
What is the Intergovernmental Panel on Climate Change (IPCC)?
A global collaboration of climate scientists that updated its alarming forecast in 2021
An organization that provides loans to countries in financial difficulties
A committee regulating international trade
A group monitoring peace treaties
Based on the table of selected multilateral organizations, which organization is responsible for global climate change policy?
Kyoto Agreement, Paris Agreement
World Bank
UN
WTO
How did the financial crisis of 2008 affect debates around the IMF?
It led to renewed debates around the pros and cons of IMF conditionality
It resulted in the signing of the Paris Agreement
It increased greenhouse gas emissions
It ended the need for technical assistance to developing countries
Which of the following is a challenge faced by the World Trade Organization (WTO) in reforming global trade policy?
Conflicting interests of member countries
Lack of international currency
Insufficient export markets
Limited access to technology
What is one advantage of regional economic integration?
It brings together groups of likeminded countries, making negotiation easier
It eliminates all tariffs globally
It guarantees equal export opportunities for all countries
It removes the need for trade agreements
Which institution provides temporary financial assistance to countries with balance of payments problems?
International Monetary Fund (IMF)
World Trade Organization (WTO)
Basel Committee
Kyoto Protocol
Which of the following is a criticism of the Kyoto Protocol and the Paris Agreement?
They are widely criticized for lacking tangible commitments
They provide loans for infrastructure projects
They promote business process outsourcing
They reduce tariffs on manufactured goods
Which of the following is an example of a direct export?
A firm sells directly to overseas customers
A firm uses a foreign distributor to sell abroad
A firm hires consultants based abroad
A firm engages in R&D contracts
In indirect exporting, intermediaries can be based in which locations?
The firm’s home country or the host country
Only the host country
Only the firm’s home country
Any country except the home country
Which of the following is a non-equity internationalization mode for services?
Delivering services to customers abroad
Direct import of goods
Subcontracting of manufacturing
Licensing of technology
Why are regional trade agreements often not very effective for developing countries?
Main export markets are outside the region
They eliminate all tariffs
They provide unlimited financial assistance
They guarantee infrastructure development
Which organization provides loans for projects such as infrastructure in developing countries?
World Bank
IMF
WTO
Basel Committee
What is a common feature of bilateral Free Trade Agreements (FTAs)?
They include a commitment to reduce tariffs and adjust industry regulations
They eliminate all trade barriers globally
They provide direct financial assistance to exporters
They guarantee equal market access for all countries
Which of the following best describes the role of a sales agent?
Receives a commission on sales
Buys the products directly
Manufactures the products
Provides after-sales service
What is the main difference between a distributor and a sales agent?
Distributors buy the products, while sales agents receive a commission on sales
Distributors manufacture products, while sales agents sell them
Distributors provide services, while sales agents provide goods
Distributors only work locally, while sales agents work internationally
Based on the trends shown in the diagram, which type of export saw a significant increase in 2022 compared to previous years?
Commercial services
Goods
Agricultural products
Technology services
Which country had the highest share in world merchandise exports in 2022?
China
United States
Germany
India
Which region consistently had the highest percentage share of merchandise exports from 2018 to 2022?
Europe
Asia (including Oceania)
North America
Africa
Which of the following is NOT a regional integration agreement shown on the map?
NAFTA
GCC
European Union
SAARC
Why are regional integration agreements important for international trade?
They facilitate trade between member countries by reducing barriers
They increase tariffs between member countries
They restrict exports to non-member countries
They eliminate all forms of trade
Which of the following best describes licensing in international business?
The owner of an asset gives a foreign party the right to use the asset in exchange for royalties.
The owner of a business sells the entire business concept to a foreign party.
A company merges with a foreign company to expand operations.
A company provides only advertising support to a foreign party.
What is the main difference between technology licensing and brand licensing?
Technology licensing involves a trademark, while brand licensing involves a technology.
Technology licensing involves a technology, while brand licensing involves a trademark.
Both involve selling the entire business concept.
Both involve only advertising support.
Which of the following is NOT typically included in a franchising arrangement?
Brand name
Store layout
Operation manuals
Ownership of the franchisor’s company
Why is franchising popular in consumer retailing?
It allows for complete ownership transfer.
It provides support such as training and advertising.
It only involves technology transfer.
It does not require any manuals or procedures.
Which company is ranked number one among the top 10 global franchises by system sales?
KFC
McDonald's
Subway
Burger King
According to the OLI paradigm, what is the main focus when considering foreign expansion?
The sequence of inter-related expansion decisions over time
Individual foreign expansion decisions, such as whether to use FDI or a contractual mode
Only the use of franchising for expansion
The transfer of technology assets
How can internationalization be viewed according to process models?
As a single decision made at the start of expansion
As a sequence of inter-related expansion decisions over time
As only technology licensing
As only brand licensing
Which of the following is a support typically provided by a franchisor?
Ownership of the franchisee’s company
Training and advertising
Only technology transfer
Only brand licensing
Which model describes internationalizing firms gradually gaining experiential knowledge and incrementally committing more resources to foreign markets?
Uppsala model
Network internationalization model
Stages models
Transaction cost model
What is experiential knowledge in the context of internationalization?
Knowledge learned by reading textbooks
Knowledge learned by engaging in the activity and context
Knowledge learned from advertisements
Knowledge learned from competitors
According to the stages models, what is the typical sequence of entry modes from low to high commitment?
Licensing → joint ventures → wholly-owned subsidiaries
Sporadic exports → exports through sales agents → sales subsidiary → production subsidiary
Franchising → direct investment → exporting
Joint ventures → sporadic exports → licensing
Which company is given as an example of successively entering countries characterized by greater cultural or institutional distance?
Honda
Ikea
Toyota
Samsung
What does the network internationalization model emphasize in the process of internationalization?
Building production subsidiaries
Network building in foreign countries to reduce the liability of outsidership
Licensing agreements
Sporadic exports
How do firms benefit from committing resources to foreign markets according to the network internationalization model?
They avoid learning from network partners
They create international networks and learn from network partners
They only focus on domestic expansion
They reduce their resource commitment over time
Which statement best describes the difference between the Uppsala model and the network internationalization model in their approach to internationalization?
Uppsala model focuses on gradual experiential learning, while network internationalization model emphasizes network building and learning from partners.
Both models focus only on exports.
Uppsala model emphasizes licensing, while network internationalization model focuses on joint ventures.
Both models ignore the importance of knowledge acquisition.
Which type of business seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries from inception?
Born globals
Domestic firms
Local retailers
Family-owned businesses
Which of the following is NOT a strategic objective of Foreign Direct Investment (FDI)?
Tapping into new markets
Gaining access to natural resources
Enhancing the firm’s efficiency
Reducing employee turnover
What is one way a firm can enhance its efficiency through FDI?
By accessing cheap labor and locating activities close to customers
By increasing advertising in domestic markets
By hiring more local employees
By reducing the number of products offered
According to the material, when is domestic expansion usually preferable to foreign expansion?
When the domestic opportunity is comparable to the foreign one
When the firm has no international experience
When the firm wants to avoid technological innovation
When the firm is focused on local branding only
Which of the following is a reason for preferring domestic expansion over foreign expansion?
Liability of outsidership associated with foreign expansion
Higher import tariffs in domestic markets
Lack of technological know-how
Limited access to natural resources
What should a firm consider when deciding where to expand internationally?
The location that offers the best chance to realize its strategic objectives
The location with the lowest taxes
The location with the most competitors
The location closest to its headquarters
Which of the following is a characteristic of 'global cities'?
Cities with low interconnectedness
Cities with high interconnectedness and cosmopolitanism
Cities with poor infrastructure
Cities with limited producer services
Which strategic goal is associated with seeking strong market demand and customers willing to pay?
Market-seeking
Efficiency-enhancing
Capability-enhancing
Natural resource-seeking
Which of the following is NOT listed as a location disadvantage (LDA)?
Cultural differences
Geographic remoteness
Strong market demand
Poor infrastructure
What is one advantage of being a first-mover in market expansion?
Opportunity to free-ride on first-mover investments
Proprietary, technological leadership
Resolution of technological uncertainty
Difficulty in adapting to market changes
Which of the following is a contractual expansion mode?
FDI-based modes
Direct & indirect exporting
Market-seeking
Capability-enhancing
Why might a company choose a late-mover strategy when expanding internationally?
To establish entry barriers for late entrants
To resolve technological and market uncertainty
To pre-empt scarce resources
To build relationships with key stakeholders
Which of the following FDI-based modes provides the highest degree of equity control and is associated with internal (organic) resource growth?
Wholly owned Greenfield
Partial Acquisition
Newly created Joint Venture
Full Acquisition
What is a key reason for choosing a wholly owned Greenfield or full acquisition in market-oriented FDI?
Need for speed
Reducing local resources
Avoiding replication of capabilities
Decreasing industry supply
Why might replication of existing capabilities be harder in the case of an acquisition?
Because acquisitions often involve mature industries
Because acquisitions may face governmental restrictions
Because existing capabilities may not transfer easily
Because acquisitions always increase industry supply
Which industry stage is characterized by increasing sales over time before reaching maturity?
Introduction
Growth
Maturity
Decline
If an industry is mature or an oligopoly, what is the desirability of increasing industry supply through acquisition?
High
Moderate
Low
Unaffected
Which of the following is NOT typically a consideration when deciding between wholly owned Greenfield and full acquisition?
Need for complementary local resources
Availability of acquisition targets
Governmental restrictions on FAs and incentives for WOGs
Reducing the speed of market entry
Which of the following best describes a newly created JV (Joint Venture)?
A new corporate entity created and jointly owned by two or more parent companies
A company acquired through a conventional acquisition
A subsidiary formed by a single parent company
A merger between two competing firms
What is one purpose of a joint venture between companies such as Sony-Ericsson?
Realizing economies of scale
Reducing dissemination risk
Avoiding governmental restrictions
Increasing risk of expropriation
Which of the following is a risk associated with local market entry?
Need for complementary local resources
Integration of multiple local units
Post-acquisition integration
Not overpaying for assets
What does the term "attack" refer to in the context of competitive dynamics?
An initial set of actions to gain competitive advantage
A defensive response to a competitor’s move
A strategy to avoid direct confrontation
A framework for coordinating subsidiaries
Which framework helps firms decide when to attack and counter-attack each other?
AMC framework
BOS framework
JV framework
WOG framework
What is the main focus of the Blue Ocean Strategy (BOS)?
Avoiding direct confrontation with incumbents
Maximizing dissemination risk
Increasing governmental restrictions
Building a fragmented market share
Haier’s entry into the US white goods market is an example of which strategy?
Blue Ocean Strategy (BOS)
Conventional acquisition
Brownfield acquisition
Staged acquisition
Which term describes a market structure with only a small number of competing firms?
Monopoly
Oligopoly
Perfect competition
Monopsony
What is the main focus of competitive dynamics?
The process of fixing prices
The actions and responses undertaken by competing firms
The creation of new products
The reduction of market barriers
Which of the following best describes competitor analysis?
The process of setting prices above competitors
The process of anticipating a rival’s actions to revise a firm’s plan and prepare for rivals’ responses
The process of merging with competitors
The process of creating new market structures
Collusion refers to:
Firms working independently to increase competition
Collective attempts between competing firms to reduce competition
Firms merging to create a monopoly
Firms competing for market share
What distinguishes tacit collusion from explicit collusion?
Tacit collusion involves direct negotiation, while explicit collusion is indirect
Tacit collusion involves indirect coordination, while explicit collusion involves direct negotiation
Both involve direct negotiation
Both involve indirect coordination
Which entity engages in output- and price-fixing involving multiple competitors?
Monopoly
Cartel
Oligopoly
Duopoly
In game theory, what is a prisoners’ dilemma?
A situation where only one party benefits
A type of game in which the outcome depends on two parties deciding whether to cooperate or defect
A game where all parties always cooperate
A game with no strategic decisions
Based on the table, which industry characteristic increases the possibility of collusion?
Many firms with low concentration
Homogenous products
Low market commonality
No industry price leader
Using strategic thinking, explain why high entry barriers might facilitate collusion among firms in an industry.
High entry barriers prevent new competitors, making it easier for existing firms to coordinate and maintain collusion.
High entry barriers increase competition, making collusion less likely.
High entry barriers have no effect on collusion.
High entry barriers only benefit consumers.
What does the concentration ratio measure in an industry?
The percentage of total industry sales accounted for by the top firms
The average price of products in the industry
The total number of firms in the industry
The annual growth rate of the industry
Which index is calculated as the sum of squared market shares of all players in a market?
Price Index
Herfindahl-Hirschman Index
Consumer Price Index
Market Growth Index
What does a Herfindahl-Hirschman Index (H) below 0.15 (or 1,500) indicate?
High concentration
Moderate concentration
Unconcentrated index
Highly competitive index
What is a price leader in an industry?
A firm that follows the prices set by competitors
A firm that has a dominant market share and sets ‘acceptable’ prices and margins
A firm that only sells at the lowest price
A firm that avoids competition
Which of the following is an example of signalling through entry of new markets?
Filing an anti-dumping complaint
Big 4 brewers in Central and Eastern Europe seeking mutual forbearance
Announcing a price increase in the media
Forming a joint venture
Why might a firm file an anti-dumping complaint with the government?
To increase its own prices
As a signal to competitors that it’s time to negotiate
To avoid paying taxes
To reduce production costs
