Robbins Mgmt11 Tb03

Management, 11e (Robbins/Coulter)
Chapter 3 Managing in a Global Environment
1) Americans tend to suffer from parochialism.

Answer: TRUE
Page Ref: 71
Topic: What's Your Global Perspective?
Objective: 1
Difficulty: Easy
Classification: Conceptual
2) Managers with an ethnocentric attitude do not trust foreign employees with key decisions or
technology.
Answer: TRUE
Page Ref: 71
Objective: 1
Difficulty: Easy
3) Managers with a polycentric attitude tend to view every foreign operation as difficult and hard
to understand.
Answer: TRUE
Page Ref: 72
Objective: 1
Difficulty: Easy
4) The polycentric attitude is a world-oriented view focusing on using the best approaches and
people from around the globe.
Answer: FALSE
Page Ref: 72
Objective: 1
Difficulty: Easy
5) When the twelve original members formed the European union in 1992, the primary
motivation was to reassert the region's economic position against the United States and Japan.
Answer: TRUE
Page Ref: 72
Topic: Understanding the Global Environment
Objective: 2
Difficulty: Easy
1
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
6) Norway is a member of the European Union.
Answer: FALSE
Page Ref: 73
Objective: 2
Difficulty: Easy
7) The United States, Canada, and Mexico are parties to the North American Free Trade
Association.
Answer: TRUE
Page Ref: 74
Objective: 2
Difficulty: Easy
8) Mercosur is a trading group made up of ten South American countries.

Answer: TRUE
Page Ref: 75
Objective: 2
Difficulty: Easy
9) A transnational organization reflects an ethnocentric attitude.

Answer: FALSE
Page Ref: 78
Objective: 3
Difficulty: Easy
10) Managers who want to get into a global market with minimal investment start with global
sourcing.
Answer: TRUE
Page Ref: 78
Objective: 3
Difficulty: Easy
2
11) The process of exporting involves acquiring products made abroad and selling them
domestically.
Answer: FALSE
Page Ref: 79
Objective: 3
Difficulty: Easy
12) Licensing and franchising are similar approaches involving one organization giving another
organization the right to use its brand name, technology, or product specifications in return for a
lump sum payment or a fee usually based on sales.
Answer: TRUE
Page Ref: 79
Objective: 3
Difficulty: Easy
13) Licensing is primarily used by service organizations and franchising is primarily used by
manufacturing organizations.
Answer: FALSE
Page Ref: 79
Objective: 3
Difficulty: Easy
14) Strategic alliance is a partnership between an organization and a foreign company partner or
partners in which both share resources and knowledge in developing new products or building
production facilities.
Answer: TRUE
Page Ref: 79
Objective: 3
Difficulty: Easy
15) Only when a country's political/legal environment is unstable or revolutionary is it of

concern to managers.
Answer: FALSE
Page Ref: 80
Topic: Managing in a Global Environment
Objective: 4
Difficulty: Easy
3
16) Mexico is an example of a Collectivistic nation.
Answer: TRUE
Page Ref: 83
Objective: 4
Difficulty: Easy
17) The United States is an example of a country with low power distance.
Answer: TRUE
Page Ref: 83
Objective: 4
Difficulty: Easy
18) A high uncertainty avoidance society is threatened by ambiguity and experiences high levels
of anxiety.
Answer: TRUE
Page Ref: 83
Objective: 4
Difficulty: Easy
19) The GLOBE framework for assessing cultures is similar to Hofstede's framework, but
measures fewer dimensions.
Answer: FALSE
Page Ref: 82-83
Objective: 4
Difficulty: Easy
20) A global mind-set refers to attributes that allow a leader to be effective in cross-cultural
environments.
Answer: TRUE
Page Ref: 85
Objective: 4
Difficulty: Easy
4
21) Monolingualism is one sign that a nation suffers from ________.
A) parochialism
B) ethnocentrism
C) polycentrism
D) geocentrism
Answer: A
Page Ref: 71
Objective: 1
Difficulty: Easy
22) Parochialism is a tendency to ________.

A) think highly of the foreign country in which the organization is doing business
B) focus on best approaches and people from around the globe
C) view the world solely through one's own eyes and perspectives
D) let employees in the host country figure out how best to do things
Answer: C
Page Ref: 71
Objective: 1
Difficulty: Easy
23) Bill Sanderson, a manager in a manufacturing firm in New York has a tendency to view the
world only through his U.S.-based perspective. What can be deduced about his attitude?
A) He has an elitist attitude.
B) He has a polycentric attitude.
C) He has a parochialistic attitude.
D) He has a geocentric attitude.
Answer: C
Page Ref: 71
AACSB: Analytic Skills
Objective: 1
Difficulty: Moderate
Classification: Application
5
24) An ethnocentric attitude ________.
A) prompts managers to have a global view and look for the best approaches and people
regardless of origin.
B) is the belief that the home country has the best work approaches and practices
C) is the view that employees in the host country know the best work approaches and practices
D) gives a manager a much broader understanding of what it takes to manage in a global
environment
Answer: B
Page Ref: 71
Objective: 1
Difficulty: Easy
25) A manager who wishes to be successful in international business should avoid a(n) ________
attitude.
A) multicultural
B) multiracial
C) ethnocentric
D) geocentric
Answer: C
Page Ref: 71
Objective: 1
26) A(n) ________ attitude is characterized by parochialism.

A) geocentric
B) acculturated
C) multilinguistic
D) ethnocentric
Answer: D
Page Ref: 71
Objective: 1
Difficulty: Easy
6
27) Managers with a(n) ________ attitude view every foreign operation as different and hard to
understand.
A) geocentric
B) polycentric
C) ethnocentric
D) regiocentric
Answer: B
Page Ref: 72
Objective: 1
Difficulty: Easy
28) A(n) ________ attitude is the view that employees in the host country know the best
practices for running their operations.
A) ethnocentric
B) polycentric
C) geocentric
D) regiocentric
Answer: B
Page Ref: 72
Objective: 1
Difficulty: Easy
29) In today's global environment, managers must have a(n) ________ attitude in order to be
successful.
A) ethnocentric
B) parochial
C) bigoted
D) geocentric
Answer: D
Page Ref: 72
Objective: 1
Difficulty: Easy
7
30) The ________ was formed by twelve original members with the primary motivation of
reasserting the region's economic position against the United States and Japan.
A) African Union
B) European Union
C) Central America Free Trade Agreement
D) Association of South-East Asian Nations
Answer: B
Page Ref: 72
Objective: 2
Difficulty: Easy
31) The single European Union currency is called the ________.

A) krone
B) krona
C) pound
D) euro
Answer: D
Page Ref: 73
Objective: 2
Difficulty: Easy
32) Which of the following countries is a member of the European Union?

A) Ireland
B) Iceland
C) Norway
D) Switzerland
Answer: A
Page Ref: 73
Objective: 2
Difficulty: Easy
33) The North American Free Trade Agreement includes ________.

A) Mexico, Canada, and the United States
B) Canada, Mexico, and Costa Rica
C) the United States, Canada, and Honduras
D) Columbia, Mexico, and the United Sates
Answer: A
Page Ref: 74
Objective: 2
Difficulty: Easy
8
34) Which of the following is currently under negotiation by 34 countries in the Western
Hemisphere?
A) African Union
B) Free Trade Area of the Americas
C) Mercosur
D) African Community
Answer: B
Page Ref: 74
Objective: 2
35) The Association of Southeast Asian Nations is a trading alliance of ________.

A) eight Southeast Asian nations and Japan
B) eight Southeast Asian nations
C) ten Southeast Asian nations
D) ten Southeast Asian nations and China
Answer: C
Page Ref: 75
Objective: 2
Difficulty: Easy
36) Which of the following is a member of the Association of Southeast Asian Nations?
A) China
B) Japan
C) South Korea
D) Myanmar
Answer: D
Page Ref: 75
Objective: 2
Difficulty: Easy
37) How many members does The African Union have?

A) 78
B) 53
C) 64
D) 49
Answer: B
Page Ref: 76
Objective: 2
Difficulty: Easy
9
38) Nepal belongs to which of the following regional trade alliances?
A) Asia-Pacific Economic Cooperation
B) South Asian Association for Regional Cooperation
C) Common Wealth of Independent States
D) Association of Southeast Asian Nations
Answer: B
Page Ref: 76
Objective: 2
Difficulty: Easy
39) The World Trade Organization was formed in the year ________.
A) 1995
B) 1967
C) 1971
D) 1983
Answer: A
Page Ref: 76
Objective: 2
Difficulty: Easy
40) The World Trade Organization evolved from which of the following?
A) Mercosur
B) General Agreement on Tariffs and Trade
C) Truman Doctrine
D) Marshall Plan
Answer: B
Page Ref: 76
Objective: 2
Difficulty: Easy
41) The World Trade Organization has ________ member countries and ________ observer
governments.
A) 176; 50
B) 188; 60
C) 153; 30
D) 161; 40
Answer: C
Page Ref: 76
Objective: 2
Difficulty: Easy
10
42) The International Monetary Fund is an organization of ________ countries that promotes
international monetary cooperation and provides member countries with policy advice,
temporary loans, and technical assistance to establish and maintain financial stability and to
strengthen economies.
A) 193
B) 172
C) 160
D) 185
Answer: D
Page Ref: 77
Objective: 2
Difficulty: Easy
43) The ________ is a group of five closely associated institutions, all owned by its member
countries, that provides vital financial and technical assistance to developing countries around
the world.
A) International Chamber of Commerce
B) World Bank Group
C) Organization for Economic Cooperation and Development
D) World Economic Forum
Answer: B
Page Ref: 77
Objective: 2
Difficulty: Easy
44) The forerunner of the Organization for Economic Cooperation and Development was the
________ that was formed in 1947 to administer American and Canadian aid under the Marshall
Plan for the reconstruction of Europe after World War II.
A) Organization of European States
B) Organizational Council of Europe
C) Organization for European Economic Cooperation
D) Organization for European Investment
Answer: C
Page Ref: 77
Objective: 2
Difficulty: Easy
11
45) The ________ is a Paris-based international economic organization whose mission is to help
its 30 member countries achieve sustainable economic growth and employment and raise the
standard of living in member countries while maintaining financial stability in order to contribute
to the development of the world economy.
A) Organization for European Economic Cooperation
B) Organizational Council of Europe
C) Organization of European States
D) Organization for Economic Cooperation and Development
Answer: D
Page Ref: 77
Objective: 2
Difficulty: Easy
46) According to the text, which of the following is a typical definition of a multinational
corporation?
A) It is a company that maintains operations in multiple countries.
B) It is a company that maintains franchises in multiple countries.
C) It is a company that has multiple home bases and manufacturing plants.
D) It is a company that pays corporate taxes in at least two countries.
Answer: A
Page Ref: 78
Objective: 3
Difficulty: Easy
47) The ________ decentralizes its management and other decisions to the local country.
A) multidomestic corporation
B) global company
C) transnational organization
D) borderless organization
Answer: A
Page Ref: 78
Objective: 3
Difficulty: Easy
12
48) Multidomestic corporations reflect the ________.
A) ethnocentric attitude
B) polycentric attitude
C) geocentric attitude
D) xenophobic attitude
Answer: B
Page Ref: 78
Objective: 3
Difficulty: Easy
49) Which of the following is a multinational corporation that tailors marketing strategies to the
host country's unique characteristics?
A) borderless organization
B) global company
C) multidomestic corporation
D) transnational organization
Answer: C
Page Ref: 78
Objective: 3
Difficulty: Easy
50) Multidomestic corporations ________.

A) maintain operations in multiple countries, but do not allow managers in each country to make
their own decisions
B) reflect ethnocentric attitudes
C) decentralize management and other decisions to the local country
D) attempt to replicate their domestic successes by managing foreign operations from the home
country
Answer: C
Page Ref: 78
Objective: 3
Difficulty: Easy
13
51) Which of the following is a feature of a multidomestic corporation?
A) decisions are taken in the home country
B) reflects an ethnocentric attitude
C) eliminates artificial geographic borders
D) has a decentralized management
Answer: D
Page Ref: 78
Objective: 3
Difficulty: Easy
52) A ________ centralizes its management and other decisions in the home country.
A) global company
B) multidomestic corporation
C) multicultural company
D) multifaceted corporation
Answer: A
Page Ref: 78
Objective: 3
Difficulty: Easy
53) A global company reflects the ________.

A) regiocentric attitude
B) ethnocentric attitude
C) geocentric attitude
D) polycentric attitude
Answer: B
Page Ref: 78
Objective: 3
Difficulty: Easy
14
54) Which of the following is the basic difference between multidomestic corporations and
global companies?
A) Multidomestic corporations typically do business with more countries than global companies.
B) Multidomestic corporations are run by global companies but must be owned by a local,
national company.
C) Multidomestic corporations decentralize management to the local country, while global
companies centralize management in the home country.
D) Multidomestic corporations reflect an ethnocentric attitude, while global companies reflect a
polycentric attitude.
Answer: C
Page Ref: 78
Objective: 3
Difficulty: Easy
55) An organization drops its organizational structure based on countries and reorganizes into
industry groups. This is an example of the company becoming a(n) ________.
A) ethnocentric company
B) polycentric organization
C) borderless organization
D) global company
Answer: C
Page Ref: 78
Objective: 3
Difficulty: Easy
56) Transnational organizations are also known as ________.

A) ethnocentric organizations
B) polycentric organizations
C) borderless organizations
D) multidomestic organizations
Answer: C
Page Ref: 78
Objective: 3
Difficulty: Easy
15
57) Which of the following types of global organizations reflects the geocentric attitude?
A) multidomestic corporation
B) transnational organization
C) global company
D) regional organization
Answer: B
Page Ref: 78
Objective: 3
Difficulty: Easy
58) An organization decides to go international. Which of the following steps should it take to do
so with a minimal investment?
A) It should indulge in global sourcing.
B) It should indulge in licensing.
C) It should indulge in franchising.
D) It should indulge in forming strategic alliances.
Answer: A
Page Ref: 79
Objective: 3
Difficulty: Easy
59) When an organization makes products domestically and sells them abroad, it indulges in
________.
A) importing
B) exporting
C) licensing
D) franchising
Answer: B
Page Ref: 79
Objective: 3
Difficulty: Easy
60) When an organization acquires products made abroad and sells them domestically, it indulges
in ________.
A) global sourcing
B) licensing
C) importing
D) franchising
Answer: C
Page Ref: 79
Objective: 3
Difficulty: Easy
16
61) ________ is the practice wherein an organization gives another organization the right to use
its brand name, technology, or product specifications in return for a fee usually based on sales.
A) Global sourcing
B) Exporting
C) Subsidizing
D) Licensing
Answer: D
Page Ref: 79
Objective: 3
Difficulty: Easy
62) Adam has been hired by an organization that has a partnership with a foreign company. Both
the partners share resources and knowledge while developing new products. Adam's organization
has formed a ________.
A) licensing company
B) franchising company
C) strategic alliance
D) foreign subsidiary
Answer: C
Page Ref: 79
Objective: 3
63) A(n) ________ is a specific type of strategic alliance in which the partners form a separate,
independent organization for some business purpose.
A) equity strategic alliance
B) joint venture
C) global venture
D) nonequity strategic alliance
Answer: B
Page Ref: 80
Objective: 3
Difficulty: Easy
17
64) Joint ventures are a type of ________.
A) licensee
B) franchisee
C) foreign subsidiary
D) strategic alliance
Answer: D
Page Ref: 80
Objective: 3
Difficulty: Easy
65) A domestic firm and a foreign firm sharing the cost of developing new products or building
production facilities in a foreign country constitute a ________.
A) franchising agreement
B) joint venture
D) brokering agreement
Answer: B
Page Ref: 80
Objective: 3
Difficulty: Easy
66) Which of the following is a method that companies might adopt in order to increase their
direct foreign investment?
A) exporting
B) global sourcing
C) strategic alliances
D) licensees
Answer: C
Page Ref: 79
Objective: 3
Difficulty: Easy
18
67) Which of the following arrangements involves the greatest commitment of resources and
poses the greatest amount of risk?
A) exporting
B) franchising
D) global sourcing
Answer: C
Page Ref: 80
Objective: 3
Difficulty: Easy
68) A ________ economy is one in which resources are primarily owned and controlled by the
private sector.
A) free market
B) planned
C) command
D) technocratic
Answer: A
Page Ref: 81
Objective: 4
Difficulty: Easy
69) Geert Hofstede's research found that countries varied on ________ dimensions of national
culture.
A) eleven
B) five
C) seven
D) nine
Answer: B
Page Ref: 82
Objective: 4
Difficulty: Easy
70) ________ is a cultural dimension in which people expect others in their group to look after
them and protect them.
A) Low uncertainty avoidance
B) Achievment
C) Collectivism
D) High power distance
Answer: C
Page Ref: 83
Objective: 4
Difficulty: Easy
19
71) A country with ________ is comfortable with risks and is tolerant towards different behavior
and opinions.
A) low uncertainty avoidance
B) short-term orientation
C) low power distance
D) performance orientation
Answer: A
Page Ref: 83
Objective: 4
Difficulty: Easy
72) A country that is assertive, believes in acquiring money and goods, and is competitive in
nature is said to ________.
A) be a collectivist
B) have a high power distance
C) be achievement oriented
D) have a long-term orientation
Answer: C
Page Ref: 83
Objective: 4
Difficulty: Easy
73) A country where people look to the future and value thrift and persistence is said to
________.
A) have an individualistic attitude
B) have a long-term orientation
C) be nurturing
D) be achievement oriented
Answer: B
Page Ref: 83
Objective: 4
Difficulty: Easy
20
74) Christopher, who is based in the U.S. has been offered a chance to work in Thailand. He
finds that in this society people are expected to look after others in their family (or organization)
and protect them when they are in trouble. This society tends to support ________.
A) collectivism
B) parochialism
C) individualism
D) monotheism
Answer: A
Page Ref: 83
Objective: 4
75) The Global Leadership and Organizational Behavior Effectiveness program identified
________ dimensions on which national cultures differ.
A) five
B) seven
C) nine
D) eleven
Answer: C
Page Ref: 83
Objective: 4
Difficulty: Easy
76) Which of the following two dimensions of the Global Leadership and Organizational
Behavior Effectiveness program fit directly with Hofstede's dimensions?
A) power distance and uncertainty avoidance
B) power distance and gender differentiation
C) uncertainty avoidance and in-group collectivism
D) gender differentiation and in-group collectivism
Answer: A
Page Ref: 83
Objective: 4
Difficulty: Easy
21
77) The Global Leadership and Organizational Behavior Effectiveness program's ________
dimension is similar to Hofstede's achievement-nurturing dimension.
A) uncertainty avoidance
B) humane orientation
C) assertiveness
D) power distance
Answer: C
Page Ref: 83
Objective: 4
Difficulty: Easy
78) Which of the following dimensions of the Global Leadership and Organizational Behavior
Effectiveness program is similar to Hofstede's nurturing dimension?
A) in-group collectivism
B) humane orientation
C) future orientation
D) institutional collectivism
Answer: B
Page Ref: 83
Objective: 4
Difficulty: Easy
79) ________ is a measure of the degree to which people rely on social norms and procedures to
alleviate the unpredictability of future events.
A) Power distance
B) Uncertainty avoidance
C) Achievement
D) Nurturing
Answer: B
Page Ref: 83
Objective: 4
Difficulty: Easy
80) ________ is the extent to which a society encourages people to be tough, confrontational,
and competitive rather than modest and tender.
A) Future orientation
B) Institutional collectivism
C) Assertiveness
D) Humane orientation
Answer: C
Page Ref: 83
Objective: 4
Difficulty: Easy
22
Cultural Training (Scenario)
Jane wants to expand her career opportunities in the international operations of a company. She
is 19 years old and currently attends a university. She has only lived in her home country and has
never traveled to any foreign country.
81) While talking with her advisor at the university, Jane deduces that she has a(n) ________
attitude, as she has never traveled abroad and only relates well to people from her home country.
A) regiocentric
B) polycentric
C) ethnocentric
D) geocentric
Answer: C
Page Ref: 71
Objective: 1
82) Jane joins an international student association in order to better understand the views of
students from other countries. She is trying to become more ________ in her attitude.
A) parochialistic
B) polycentric
C) ethnocentric
D) geocentric
Answer: D
Page Ref: 72
Objective: 1
23
A Foreign Alliance Talk (Scenario)
As manager of the international department of your company, you have been asked by the local
Chamber of Commerce to deliver a speech on foreign trade. The chamber president even goes so
far as to say "and be sure to include the EU, NAFTA, and all that stuff because we're afraid that
Ross Perot is rightall the good jobs will leave the United States." As you pour over your notes,
you try to choose the best information to present in the allotted half hour.
83) You plan to explain during your talk that the acronyms EU, NAFTA, and ASEAN refer to
________.
A) regional trade alliances
B) foreign airlines
C) soccer teams in Europe
D) new multinational corporations
Answer: A
Page Ref: 72
Objective: 2
Difficulty: Easy
84) One of the hottest topics of your talk will be the North American Free Trade Agreement. One
of the points that you will emphasize is that ________.
A) between 1994 and 2007, merchandise trade between the United States, Canada, and Mexico
has decreased from 6.6 percent to 4.4 percent
B) a large number of people have started migrating from the United States to Mexico in search of
jobs and prosperity
C) as of 2010, it remains the largest trade bloc in the world in terms of combined gross domestic
product of its members
D) the United States, Canada, Mexico, Costa Rica and El Salvador are its members
Answer: C
Page Ref: 74
Objective: 2
24
Business Expansion Plan (Scenario)
As business expansion director, Shana's goal is to scout for potential locations and provide input
on how her company should proceed with its planned expansion to Europe. There are many
options, which include maintaining the company's head office in the United States and sending
over company representatives when necessary or establishing a separate operations facilities
abroad and hiring locals as managers.
85) If Shana's company decides to open another company in France but centralizes its
management in the United States, it would be considered a ________.
A) transnational corporation
B) global company
D) multidomestic corporation
Answer: B
Page Ref: 78
Objective: 3
86) If Shana's company decides to open a completely new operation in Germany, tailoring the
company to local customs and marketing strategies and hiring local managers, it would be then
considered a ________.
A) transnational corporation
B) global company
Answer: D
Page Ref: 78
Objective: 3
25
87) If Shana's company dropped its organizational structure based on country and reorganized
into industry groups, it would best be considered a ________.
A) borderless organization
B) foreign subsidiary
C) global company
Answer: A
Page Ref: 78
Objective: 3
88) One section of Shana's company's business plan involves setting up a foreign subsidiary. This
arrangement involves ________.
A) making products domestically and selling them abroad
B) Shana's company giving the foreign subsidiary the right to use its brand name
C) directly investing in a foreign country
D) minimum global investment
Answer: C
Page Ref: 80
Objective: 3
Software Entrepreneurial Venture (Scenario)
Theodore and James have formed an entrepreneurial venture to develop software for banks and
other financial institutions. Their company is growing, and in exploring future opportunities
decides to initiate international operations.
89) The international operations of their firm continues to grow. Theodore and James have
realized that decentralized management using foreign nationals to run operations in the host
countries works best. Their firm has developed into a ________ organization.
A) transnational
B) multidomestic
C) borderless
D) global
Answer: B
Page Ref: 78
Objective: 3
26
90) Theodore and James decide to enter into an agreement with a firm in Europe allowing them
to use the rights to their software, brand name, and software specifications in return for a lump
sum payment. The firm is a service organization that plans to use the software to assist its
customers. Their agreement is a(n) ________.
A) export agreement
B) licensing agreement
C) franchise agreement
D) import agreement
Answer: C
Page Ref: 79
Objective: 3
Global Management Perspectives
Global firms normally carry three global perspectives or attitudes for work approaches and
practices. These perspectives include ethnocentric, polycentric, and geocentric attitudes.
91) Which of the following statements, if true, would support an ethnocentric attitude for a
global firm?
A) The firm is extremely flexible and responsive to the needs and demands of local markets in
host countries.
B) The firm's hierarchical structure ensures that data flows extensively from the subsidiaries to
the home location reducing the potential for duplication.
C) The firm uses a loose federation of associated business units, each of which is rather
independent in their strategic decisions.
D) The firm has been successful in striking the right balance between centralization and
decentralization of resources.
Answer: B
Page Ref: 71
AACSB: Reflective Thinking Skills
Objective: 1
Difficulty: Difficult
Classification: Critical Thinking
27
92) Which of the following statements, if true, would support a polycentric attitude for a global
firm?
A) The firm has been successful in striking the right balance between centralization and
decentralization of resources.
B) The firm utilizes multiple networks between the home office and the subsidiaries to facilitate
both communication and data sharing.
C) The firm is extremely flexible and responsive to the needs and demands of local markets in
host countries.
D) The firm's hierarchical structure ensures that data flows extensively from the subsidiaries to
the home location reducing the potential for duplication.
Answer: C
Page Ref: 72
AACSB: Reflective Thinking Skills
Objective: 1
Difficulty: Difficult
Classification: Critical Thinking
93) Define parochialism. Discuss why parochialism is a problem for U.S. managers and discuss
reasons why it is important to overcome parochialism in today's business environment.
Answer: Parochialism is typically defined as viewing the world solely through one's own eyes
and perspectives. People with a parochial attitude do not recognize that others have different
ways of living and working. Parochialism is a significant obstacle for managers working in a
global business world. If managers fall into the trap of ignoring others' values and customs and
rigidly keep on applying an attitude of "ours is better than theirs" to foreign cultures, they'll find
it difficult to compete with other organizations around the world. Therefore, it is important to
overcome parochialism in order to succeed in today's global environment.
Page Ref: 71
Objective: 1
28
94) List and discuss the three attitudes managers might have toward international business.
Answer:
a. Ethnocentric attitude - This is the parochialistic belief that the best work approaches and
practices are those of the home country. Managers with an ethnocentric attitude believe that
people in foreign countries do not have the needed skills, expertise, knowledge, or experience to
make the best business decisions as people in the home country do. They don't trust foreign
employees with key decisions.
b. Polycentric attitude - This is the view that employees in the host country know the best work
approaches and practices for running their business. Managers with a polycentric attitude view
every foreign operation as different and hard to understand. Thus, these managers are likely to
leave their foreign facilities alone and let foreign employees figure out how best to do things.
c. Geocentric attitude - This is a world-oriented view that focuses on using the best approaches
and people from around the globe. Managers with this type of attitude believe that it's important
to have a global view both at the organization's headquarters in the home country and in the
various foreign work facilities. Major issues and decisions are viewed globally by looking for the
best approaches and people regardless of origin.
Page Ref: 71-72
Objective: 1
95) Write a short essay on the European Union.

Answer: The European Union (EU) is an economic and political partnership of 27 democratic
European countries. Three countries (Croatia, Macedonia, and Turkey) have applied for
membership. When the 12 original members formed the EU in 1992, the primary motivation was
to reassert the region's economic position against the United States and Japan. Before then, each
European nation had border controls, taxes, and subsidies; nationalistic policies; and protected
industries. These barriers to travel, employment, investment, and trade prevented European
companies from developing economic efficiencies. Now with these barriers removed, the
economic power represented by the EU is considerable. Its current membership covers a
population base of nearly half a billion people and accounts for approximately 31 percent of the
world's total economic output. The euro that is the common European currency is currently in
use in 16 of the 27 member states and all new member countries must adopt the euro. Only
Denmark, the United Kingdom, and Sweden have been allowed to opt out of using the euro. The
euro zone is the world's largest unified economy after the United States and a major source of
world demand for goods and services. Therefore, the importance of this regional trading alliance
will continue to evolve as EU members work together to assert the region's economic power with
successful European businesses continuing to play a crucial role in the global economy.
Page Ref: 72 -73
Objective: 2
29
96) Write a short essay on the North American Free Trade Agreement and other Latin American
Agreements.
Answer: The North American Free Trade Agreement (NAFTA) - When agreements in key issues
covered by the NAFTA were reached by the Mexican, Canadian, and U.S. governments in 1992,
a vast economic bloc was created. As of 2010, it remains the largest trade bloc in the world in
terms of combined gross domestic product of its members. Between 1994 and 2007 merchandise
trade between the United States and Canada and Mexico increased from 4.4 percent to 6.6
percent. Eliminating the barriers to free trade (tariffs, import licensing requirements, customs
user fees) has strengthened the economic power of all three countries, but not equally. Mexico,
especially, has struggled to prosper from free trade. Although Mexico's exports increased
dramatically under NAFTA, large numbers of people still migrate to the United States in search
of jobs and prosperity.
Other Latin American nations have become part of the free trade blocs, as well. Colombia,
Mexico, and Venezuela led the way when all three signed an economic pact in 1994 eliminating
import duties and tariffs. Another agreement, the U.S.––Central America Free Trade Agreement
(CAFTA), promotes trade liberalization between the United States and five Central American
countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. However, only El
Salvador and Costa Rica have joined. The other countries have yet to change laws to be in line
with the agreement.
Negotiators from 34 countries in the Western Hemisphere continue work on a Free Trade Area of
the Americas (FTAA) agreement, which was to have been operational no later than 2005, a
missed targeted deadline. However, another free trade bloc of 10 South American countries
known as the Southern Common Market or Mercosur already exists. Some South Americans see
Mercosur as an effective way to combine resources to better compete against other global
economic powers, especially the EU and NAFTA.
Page Ref: 74-75
Topic: A Manager's Dilemma
Objective: 2
30
97) Create short notes on the World Trade Center (WTO), the International Monetary Fund
(IMF), the World Bank Group, and the Organization for Economic Cooperation and
Development (OECD).
Answer: The World Trade Organization (WTO) is a global organization of 153 countries that
deals with the rules of trade among nations. Formed in 1995, the WTO evolved from the General
Agreement on Tariffs and Trade (GATT), a trade agreement in effect since the end of World War
II. Today, the WTO is the only global organization that deals with trade rules among nations. Its
membership consists of 153 member countries and 30 observer governments (which have a
specific time frame within which they must apply to become members). The goal of the WTO is
to help countries conduct trade through a system of rules.
The International Monetary Fund (IMF) is an organization of 185 countries that promotes
international monetary cooperation and provides member countries with policy advice,
temporary loans, and technical assistance to establish and maintain financial stability and to
strengthen economies.
The World Bank Group is a group of five closely associated institutions, all owned by its
member countries, that provides vital financial and technical assistance to developing countries
around the world. The goal of the World Bank Group is to promote long-term economic
development and poverty reduction by providing members with technical and financial support.
The forerunner of the OECD, the Organization for European Economic Cooperation, was formed
in 1947 to administer American and Canadian aid under the Marshall Plan for the reconstruction
of Europe after World War II. Today, the Organization for Economic Cooperation and
Development (OECD) is a Paris-based international economic organization whose mission is to
help its 30 member countries achieve sustainable economic growth and employment and raise
the standard of living in member countries while maintaining financial stability in order to
contribute to the development of the world economy. When needed, the OECD gets involved in
negotiations with OECD countries so they can agree on "rules of the game" for international
cooperation.
Page Ref: 76-77
Objective: 2
31
98) Explain the differences between a multidomestic corporation, a global company, and a
borderless organization. Include examples of companies for each of the types of organizations
discussed.
Answer:
a. A multidomestic corporation is a multinational corporation (MNC) that decentralizes
management and other decisions to the local country. This type of organization doesn't attempt to
replicate its domestic successes by managing foreign operations from its home country. Instead,
local employees are hired to manage the business and marketing strategies are tailored to that
country's unique characteristics. This type of globalization reflects the polycentric attitude. Many
consumer companies manage their global businesses using this approach because they must
adapt their products and services to meet the needs of the local markets. For example,
Switzerland-based Nestle can be described as a multidomestic corporation. With operations in
almost every country on the globe, its managers match the company's products to its consumers.
In parts of Europe, Nestle sells products that are not available in the United States or Latin
America.
b. A second type of MNC, called a global company centralizes its management and other
decisions in the home country. These companies treat the world market as an integrated whole
and focus on the need for global efficiency. Although these companies may have considerable
global holdings, management decisions with company-wide implications are made from
headquarters in the home country. This approach to globalization reflects the ethnocentric
attitude. Some examples of companies that can be considered global companies include Sony,
Deutsche Bank AG, and Merrill Lynch.
c. Other companies are going international by eliminating structural divisions that impose
artificial geographical barriers. This type of MNC is called a transnational or borderless
organization, and reflects a geocentric attitude. Managers choose this form of international
organization to increase efficiency and effectiveness in a competitive global marketplace. For
example, IBM dropped its organizational structure based on country and reorganized into
industry groups. Spain's Telefonica eliminated the geographic divisions between Madrid
headquarters and its widespread phone companies. The company will be organized, instead,
along business lines such as Internet services, cellular phones, and media operations.
Page Ref: 78
Objective: 3
32
99) Describe the different approaches that a company may use when it decides to go
international.
Answer: Managers who want to get into a global market with minimal investment may start with
global sourcing (also called global outsourcing). This involves purchasing materials or labor
from around the world wherever it is cheapest. The goal here is to take advantage of lower costs
in order to be more competitive.
The next step in going international may involve exporting the organization's products to other
countries—that is, making products domestically and selling them abroad. In addition, an
organization might do importing, which involves acquiring products made abroad and selling
them domestically. Both usually entail minimal investment and risk, which is why many small
businesses often use these approaches to doing business globally.
Managers also might use licensing or franchising, which are similar approaches involving one
organization giving another organization the right to use its brand name, technology, or product
specifications in return for a lump sum payment or a fee usually based on sales. The only
difference is that licensing is primarily used by manufacturing organizations that make or sell
another company's products and franchising is primarily used by service organizations that want
to use another company's name and operating methods.
When an organization has been doing business internationally for a while and has gained
experience in international markets, managers may decide to make more of a direct foreign
investment. One way to increase investment is through a strategic alliance, which is a partnership
between an organization and a foreign company partner or partners in which both share resources
and knowledge in developing new products or building production facilities.
Finally, managers may choose to directly invest in a foreign country by setting up a foreign
subsidiary as a separate and independent facility or office. This subsidiary can be managed as a
multidomestic organization (local control) or as a global organization (centralized control). This
arrangement involves the greatest commitment of resources and poses the greatest amount of
risk.
Page Ref: 78-80
Objective: 3
33
100) Discuss four economic issues that affect management.
Answer: A global manager must be aware of economic issues when doing business in other
countries. First, it's important to understand a country's type of economic system.
a. Type of economy - The two major types of economies are market economies and command
economies. A market economy is one in which resources are primarily owned and controlled by
the private sector. A command economy is one in which economic decisions are planned by a
central government. Managers need to know about a country's economic system because it has
the potential to constrain decisions and actions. Other economic issues a manager might need to
understand include currency exchange rates, inflation rates, and diverse tax policies.
b. Currency strength - A global firm's profits can vary dramatically depending on the strength of
its home currency and the currencies of the countries in which it operates. Any revaluation of a
nation's currency can affect the managers' decisions and the level of a company's profits.
c. Inflation - It means that prices for products and services are going up. But it also affects
interest rates, exchange rates, the cost of living, and the general confidence in a country's
political and economic system. Managers need to monitor inflation trends so that they can make
good decisions and anticipate any possible changes in a country's monetary policies.
d. Diverse tax policies - Diverse tax policies are a major worry for a global manager. Some host
countries are more restrictive than the organization's home country. Others are far more lenient.
Managers need exact information on the various tax rules in countries in which they operate to
minimize their business's overall tax obligation.
Page Ref: 81
Objective: 4
34
101) List and explain Hofstede's five dimensions of national culture.
Answer: Geert Hofstede developed one of the most widely referenced approaches to helping
managers better understand differences between national cultures. His research found that
countries vary on five dimensions of national culture.
a. Individualism versus collectivism - Individualism refers to a social framework where people
look after their own interests and those of their immediate family. The opposite of this is
collectivism, that is characterized by a social framework where people expect others in the group
that they are a part of to look after them and to protect them when they are in trouble.
b. Power distance - A high power distance society accepts wide differences in power in
organizations. Employees show a great deal of respect for those in authority. On the other hand, a
low power distance society plays down inequalities. Employees in a low power distance
organization are not afraid to approach their boss.
c. Uncertainty avoidance - A society that is high in uncertainty avoidance is threatened with
ambiguity and characterized by a high level of anxiety among its people. A society that is low in
uncertainty avoidance is comfortable with taking risks and is also tolerant of different behavior
and opinions.
d. Achievement and nurturing - Achievement is the degree to which values such as assertiveness,
the acquisition of money and material goods, and competition prevail. Nurturing is an attribute
that emphasizes relationships and concern for others.
e. Long-term and short-term orientation - People in a long-term orientation society look to the
future and value thrift and persistence. People in short-term orientation societies value the past
and emphasize respect for tradition.
Page Ref: 83
Objective: 4
35
102) Discuss the dimensions of the Global Leadership and Organizational Behavior
Effectiveness (GLOBE) framework. Describe how each dimension compares to Hofstede's five
dimensions of national culture.
Answer: The GLOBE research team identified 9 dimensions on which national cultures differ:
a. Assertiveness: The extent to which a society encourages people to be tough, confrontational,
assertive, and competitive versus modest and tender. This is essentially equivalent to Hofstede's
achievement-nurturing dimension.
b. Future orientation: The extent to which a society encourages and rewards future-oriented
behaviors such as planning, investing in the future, and delaying gratification. This is essentially
equivalent to Hofstede's long-term and short-term orientation.
c. Gender differentiation: The extent to which a society maximizes gender role differences as
measured by how much status and decision-making responsibilities women have. This dimension
is an additional dimension to Hofstede's framework.
d. Uncertainty avoidance: Similar to Hofstede's description, the GLOBE team defined this
dimension as a society's reliance on social norms and procedures to alleviate the unpredictability
of future events.
e. Power distance: As did Hofstede, the GLOBE team defined this as the degree to which
members of a society expect power to be unequally shared.
f. Individualism/collectivism: Again, this term was defined, as Hofstede did, as the degree to
which individuals are encouraged by societal institutions to be integrated into groups within
organizations and society.
g. In-group collectivism: This dimension encompasses the extent to which members of a society
take pride in membership in small groups, such as their family and circle of close friends, and the
organizations in which they're employed. This dimension has no equivalent in Hofstede's
framework.
h. Performance orientation: This refers to the degree to which a society encourages and rewards
group members for performance improvement and excellence. This dimension is similar to
Hofstede's achievement orientation.
i. Humane orientation: This is defined as the degree to which a society encourages and rewards
individuals for being fair, altruistic, generous, caring, and kind to others. This is similar to
Hofstede's nurturing dimension.
Page Ref: 83-84
Objective: 4
36

Robbins Mgmt11 Tb03

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Robbins Mgmt11 Tb03

Uploaded by

Copyright:

Available Formats

Management, 11e (Robbins/Coulter)

Chapter 3 Managing in a Global Environment

1) Americans tend to suffer from parochialism.

8) Mercosur is a trading group made up of ten South American countries.

9) A transnational organization reflects an ethnocentric attitude.

15) Only when a country's political/legal environment is unstable or revolutionary is it of

22) Parochialism is a tendency to ________.

26) A(n) ________ attitude is characterized by parochialism.

31) The single European Union currency is called the ________.

32) Which of the following countries is a member of the European Union?

33) The North American Free Trade Agreement includes ________.

35) The Association of Southeast Asian Nations is a trading alliance of ________.

37) How many members does The African Union have?

50) Multidomestic corporations ________.

53) A global company reflects the ________.

56) Transnational organizations are also known as ________.

Software Entrepreneurial Venture (Scenario)

Global Management Perspectives

95) Write a short essay on the European Union.

You might also like