Sikkim Manipal University - DDE

Master of Business Administration

MB0053 –International Business management- 4 Credits- 4th semester
(Book ID: B1724)

Marks(140)
Time (2 hrs)

Section A 50 X 1= 50 marks

1. Geographic distance is shrinking because of the

_______________, as the ambitious companies aim for
global leadership.
a. E-commerce
b. Internet
c. Cultural diversity
d. Industries

2. The well-known ______________ Road and Spice

Routes were the epitome of international business.
a. Silk
b. IT
c. Cultural
d. Tourism

3. The tendency of companies to move beyond national

borders gained momentum in 1940s and was expedited
with the establishment of ________________ in 1995.
a. Standards and Trade development facility (STDF)
b. E-business
c. World Trade Organisation
d. Fairtrade Labelling Organisations International (FLO)

4. Companies adopt this strategy when each country’s

market needs to be treated as self contained. What
strategy is it?
a. Product-line
b. National
c. Global companies
d. Multinational

5. What can be defined as any business that crosses the

national borders of a country?
a. Organised
b. Domestic
c. Multicultural
d. International
 6. Any company can dilute its business risk by spreading
its operations to a number of different and
_____________ countries.
a. Underdeveloped
b. Diverse
c. Homogeneous
d. Developing

7. Which country is rich in labour pool will specialise in rendering of information technology
services?

a. India

b. US

c. Thailand

d. Saudi Arabia

8. Who argued that national wealth and prosperity will increase with more and more inflow
of gold and silver?

a. Adam Smith

b. Profounder of mercantilism theory

c. David Ricardo

d. Raymond Vernon

9. Who pointed out the flaws and inconsistencies in mercantilism theory in the year 1752?

a. Heckscher-Ohlin

b. Thomas Mun

c. David Hume

d. Raymond Vernon

10. Which country has absolute cost advantage in cutting and polishing of diamond?

a. England

b. France
c. Switzerland

d. India

11. Which theory is based on the hypotheses that countries trade with each other as they
differ with respect to the availability of the factors of production i.e. land, labour and capital?

a. Product lifecycle theory

b. Heckscher-Ohlin Trade Theory

c. Michael Porter

d. Mercantilism theory

12. In which book/theory, Adam Smith attacked the mercantilism and argued that countries
differ in their ability to produce goods and services efficiently due to variety of reasons.

a. The Heckscher-Ohlin Trade Theory

b. ’Wealth of Nations'

c. 'Principles of Political Economy’

d. Product lifecycle theory

13. One of the factors that determines the degree of urbanisation includes _______________.

a. Ratio of a country's imports and exports to its Gross National Product.

b. Local currency

c. Number of competing firms

d. Nature of goods bought

14. Which demographic aspect are we talking about when we say, 'Firm can do
generalisations after cross comparing its product with similar products in the markets and
devise corrective actions on time'?

a. Branding and strategy

b. Market trending
c. Segment selection

d. Assumption of country culture

15. As per which law, interest payments on financial dealings are forbidden since it is seen as
improper to reward those with excess funds while penalising those who need to borrow. ?

a. Common Law

b. Islamic Law

c. Code Law

d. Domestic Law

16. ______________ refers to the process of settlement of disputes by having independent

referees, who are agreeable to both sides, adjudicate the matter.

a. Arbitration

b. Litigation

c. Adjudication

d. Negotiation

17. Which one out of these arbitration bodies is located in Paris?

a. International Court of Justice

b. International Center for the Settlement of Investment Disputes

c. London Court of Arbitration

d. American Arbitration Association

18. What do you call the power of state over its citizens and land?

a. Nationalisation

b. Litigation

c. Sovereignty

d. Accretion
19. The most important aspect to qualify as a manager for
positions of international responsibility is _________________
skills.
a. Training
b. Communication
c. Controlling
d. Motivation

20. The ability to demonstrate a series of behaviour is called

____________.
a. Skill
b. Management
c. Diversity
d. Creativity

21. From the following, which is the highest Hofstede

dimension for culture in India?
a. Long-Term Orientation
b. Uncertainty Avoidance Index
c. Power Distance Index
d. Masculinity

22. According to Japan's management style:

a. Decisions, once taken at senior levels, are delivered down
the chain.
b. A manager’s personal style is considered to be of
importance.
c. Information flows from the bottom of the company to the
top.
d. Subordinates are not allowed to question the decisions of
superiors.

23. In which of the following countries, while communicating,

the use of body language is very minimal and hence it is
difficult for an untrained observer?
a. Japan
b. India
c. Brazil
d. USA

24. A country with low ____________ ranking shows that the

country has fewer concerns about ambiguity and has high
tolerance for a variety of opinions.
a. Masculinity
b. Individualism
c. Power distance
d. Uncertainty avoidance

25. __________________help the company in accessing

new markets, exploring new marketing channels,
exploring cheaper production facilities in low cost
destinations, accessing new and advanced technology.
a. Foreign Investment
b. Foreign Direct Investment
c. Foreign Portfolio Investment
d. Green Field Investment

26. __________________ is an investment by foreign

investor in the country’s/region’s financial instrument,
such as investment in bond market or stock investing.
Which of them is True?
a. Foreign Investment
b. Foreign Direct Investment
c. Foreign Portfolio Investment
d. Green Field Investment

27. Communist/social model of economic development

has questioned the need of foreign investment for
speeding up the _____________ and country’s overall
economic development.
Which of them is True?
a. Population growth
b. Economic growth
c. Cultural growth
d. Social Growth

28. An investment by a foreign investor in sick industrial

unit which needs complete restructuring known as
_____________.
a. Green field investment
b. Foreign Direct investment
c. Brown field investment
d. Foreign portfolio investment

29. ___________ are negotiable certificates and are

issued by a country’s bank against a certain number of
shares held in its custody.
a. Joint ventures
b. Depository receipts
c. Mergers
d. Acquisition

30. Countries, usually do not allow foreign investment

mainly because of __________.
 a. Competitive Motives
b. Power motives
c. Economic Motives
d. Political Motives

31. _________ is a type of trade bloc which can be considered

as the second stage of economic integration.
a. Custom union
b. Economic union
c. Single market
d. Free trade area

32. Which of the regional trading arrangements is an economic

and political union established in 1993?
a. The European Union (EU)
b. European Free Trade Association (EFTA)
c. North American Free Trade Agreement (NAFTA)
d. Southern Common Market (MERCOSUR)

33. ___________is a trade pact between Argentina, Brazil,

Paraguay and Uruguay.
a. North American Free Trade Agreement (NAFTA)
b. Southern Common Market (MERCOSUR)
c. ASEAN Free Trade Area (AFTA)
d. Asia-Pacific Economic Cooperation (APEC)

34. Which of the following agreement was also known as

Bangkok Agreement ?
a. ASEAN Free Trade Area (AFTA) agreement
b. South Asian Free Trade Area (SAFTA) agreement
c. India-MERCOSUR Preferential Trade Agreement (PTA)
d. Asia-Pacific Trade Agreement (APTA)

35. The objective of _________ agreement is to encourage

economic development gradually through trade expansion
among the developing member countries of ESCAP.
a. Gulf Cooperation Council (GCC)
b. Asia-Pacific Economic Cooperation (APEC)
c. India-MERCOSUR Preferential Trade Agreement (PTA)
d. APTA/ Bangkok agreement

36. The initiative of regional integration

should_____________.
a. Not develop strong public sector institutions and good
governance.
b. Increase social disparities.
c. Reduce the region’s interaction with other regions of the
world.
d. Build environmental programmes at the regional level.
37. The support system institutions for international business include WTO (World Trade
Organisation), ___________________ and International Monetary Fund (IMF).

a. International Labour Code

b. GATT

c. World Bank

d. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

38. What is the main objective of IMF?

a. To promote and ensure international trade in developing countries.

b. To provide a forum for intergovernmental discussions.

c. Provide leveraged loans to developing countries for major projects.

d. To facilitate the expansion and balanced growth of international trade and provide
exchange stability.

39. WTO dispute settlement system helps to:

a. Provide a forum for intergovernmental discussions

b. Preserve the rights and responsibilities of the members

c. Ensure that developing countries secure a better share of growth in world trade

d. Undertake research, data collection and policy analysis for debates of government
representatives and experts.

40. On behalf of the __________________ the General Council administers as the Dispute
Settlement Body to handle the dispute settlement procedures.

a. Most Favoured Nation (MFN)

b. Ministerial Conference

c. General Agreement on Tariffs and Trade (GATT)

d. Governing Body
41. In ILO, 'Recommendations' are issued when the subject is:

a. Resolves trade disputes

b. Providing forum for trade negotiations

c. Ensuring that developing countries secure a better share of growth in world trade

d. Already covered by a convention but needs to be addressed in more detail.

42. The _______________________ of 15th April 1994 was formed to strengthen the world
economy that would lead to better investment, trade, income growth and employment
throughout the world.

a. International Labour Organisation (ILO)

b. Marrakesh Declaration

c. WTO

d. International Labour Code

43. The ____________________ provides links among the capital markets of individual
countries.

a. International capital markets

b. International security markets

c. International money markets

d. Foreign currency markets

44. The principle of _______________ states that all equally positioned tax payers should
contribute in the cost of operating the government according to the equal rules.

a. Taxation

b. Tax equity

c. Tax neutrality

d. Avoidance of double taxation

45. __________________ focuses on the differences in legal rules, particularly variation in
the legal protection of creditors and shareholders affecting investment and reforming
decisions.

a. International monetary systems

b. Cross-border valuation and financing

c. Institutions and finance

d. Multinational financial decision making

46. ______________________ is considered to be the leading financial market in the world.

a. International financial markets

b. International monetary systems

c. Foreign currency derivatives

d. Foreign exchange market

47. In ______________, the value of the currency is fixed by the nations with respect to some
foreign currency but not with respect to gold.

a. International monetary systems

b. Gold-exchange system

c. Gold and gold bullion standards

d. Floating exchange rates

48. In which policy, the manager can increase the amount of liquidity in order to reduce the
risk of business.

a. Working capital policy

b. Liquidity policy

c. Profitability policy

d. Financial policy
49. ____________ is a present requirement of the enterprise that is rising from past
procedures, the closure of which is likely to result in an outflow from the enterprise'
possessions.

a. An asset

b. A liability

c. An equity

d. Revenue

50. Which underlying assumption in IFRS gets stated when we say, 'An entity for the
predictable future'?

a. Accrual basis

b. Going concern

c. Stable measuring unit assumption

d. Units of constant purchasing power

Section B 25X 2= 50 marks

1. Consider the below mentioned statements with respect to joint ventures as a mode of
entering into foreign markets.

1. It is a good means for market entry in those markets where there are no entry barriers like
capital limit requirement.

2. In joint ventures, both the parties are supposed to provide capital and resources in the
agreed proportion.

State True or False:

a. 1-True, 2-True

b. 1-False, 2-False

c. 1-False, 2-True

d. 1-True, 2-False

2. "Consider the following statements with respect to reasons for global sourcing:
1) If political or economic problems occur in any region, the company will be able to
continue its operations without disruption by fulfilling their needs from other global sourcing
location.

2) Companies want to evade their political and business risks by restricting their business
operations at various parts of the world."

State True or False:

a. 1- True, 2- False

b. 1- False, 2- True

c. 1- True, 2- True

d. 1- False, 2- False

3. Consider the below mentioned statements with respect to segmentation.

1. Psychographic segmentation considers factors like age, culture, income, education and
gender.

2. The process of selecting or choosing the potential market segment is known as targeting.

State True or False:

a. 1-False, 2-True

b. 1-True, 2-True

c. 1-True, 2-False

d. 1-False, 2-False

4. Consider the below mentioned statements with respect to International advertising.

1. The purpose of international advertising is to reach and communicate to target audiences in

more than one country.

2. International advertising is not a part of business activity, it is merely a communication

process.

State True or False:

a. 1-False, 2-True

b. 1-True, 2-False
c. 1-True, 2-True

d. 1-False, 2-False

5. Consider the below mentioned statements with respect to branding for international
markets.

1. Brand value can be defined as the branding efforts that build customer confidence and
loyalty by adding unique advantages to the firm’s product or service.

2. In international branding, brand ideas, values and concepts have to vary to make them
familiar to customers.

State True or False:

a. 1-True, 2-False

b. 1-True, 2-True

c. 1-False, 2-True

d. 1-False, 2-False

6. "Consider the following statements with respect to Strategic Management:

1. Strategic management identifies and comprehends the environmental factors to control the
plans accordingly.

2. Most strategic alliances focus on generating greater profits and returns for the business
owners."

State True or False:

a. 1- True, 2- False

b. 1- False, 2- True

c. 1- True, 2- True

d. 1- False, 2- False

7. "Consider the following statements with respect to strategic planning:

1. Strategic planning is an important element in all kinds of organisations and is applied by

governments, non-profit agencies, individuals and businesses.

2. Intermediate planning involves detailing out the functioning of a strategic plan on a daily
basis."
State True or False:

a. 1- True, 2- False

b. 1- False, 2- True

c. 1- True, 2- True

d. 1- False, 2- False

8. "Consider the following statements with respect to strategic planning:

1. Senior-level managers have to be very specific when laying out expectations because the
people following the plan are not involved in the planning process.

2. The benefit of talented employees with prior experience on definite aspects of the project
are not utilised based on the assumption that the management can plan and perform a project
better without the inputs from these employees."

State True or False:

a. 1- True, 2- False

b. 1- False, 2- True

c. 1- True, 2- True

d. 1- False, 2- False

9. "Consider the following statements with respect to strategy formulation:

1. Functional strategy is concerned with the broad’s decisions about the total organisation's
scope and direction.

2. Portfolio strategic activity plans the organisation’s portfolio in line with those businesses,
which needs reconsidering and, if so, how much concentration or diversification the
organisation should have."

State True or False:

a. 1- True, 2- False

b. 1- False, 2- True

c. 1- True, 2- True

d. 1- False, 2- False
10. a) __________is the basic system of ethics followed by a
business in a free market scenario. It covers the entire spectrum
of business including sales, pricing, and competitor issues.
b) ___________consider ideology as an important factor along
with the moral aspects in a capitalist scenario.
a. Market ethics and The protestant ethics
b. Market ethics and Liberty ethics
c. Liberty ethics and Market ethics
d. Liberty ethics and The protestant ethics

11. a) The principle of _________ states that there are basic

moral principles that are valid across all cultural and political
boundaries.
b) __________is defined as the practice of a uniform system of
ethical codes in different countries that are culturally and
socially different.
a. Ethical relativism and Ethical universalism
b. Ethical universalism and Ethical convergence
c. Ethical convergence and Ethical universalism
d. Ethical relativism and Ethical convergence

12. Consider the below mentioned statements with respect to

corporate ethical programmes and social responsibility and
ethics.
1. Organisations that adhere to corporate social strategies are
better equipped to react to global challenges and corporate
responsibilities.
2. As multinational firms face a wide array of ethical challenges
because of increased competition due to globalisation, a formal
corporate ethical programme is important to any organisation.
State True or False:
a. 1-True, 2-False
b. 1-True, 2-True
c. 1-False, 2-True
d. 1-False, 2-False

13. a) _______refers to a set of values and standards that defines

acceptable behaviour passed on to generations.
b)________refers to the rules of conduct, approved by the legal
system of a country or state that guides human behaviour.
a. Religion and Culture
b. Culture and Law
c. Law and Religion
d. Law and Culture

14. ___________ and _____________ are the major factors

that influence organisational structure.
a. Inflation, Unemployment
b. Environment and Inflation
c. Environment and Technology
d. Inflation and Technology

15. Consider the following statements with respect to the

management approaches affecting organisational structure:
1. In ethnocentric management approaches affecting
organisational structure, decision making is controlled by the
head office and most of the managers are from the parent
company.
2. In geocentric management approaches affecting
organisational structure, decisions are largely decentralised
and managers in the subsidiaries are mostly from the host
country.
State True or False:
a. 1- True, 2- True
b. 1- False, 2- False
c. 1- False, 2- True
d. 1- True, 2- False

16. a) In which organisation structure, international operations

are organised by dividing the entire globe into different
geographic regions.
b) Which is the most complex organisational structure and is
suitable where several functional divisions from across the
globe performing related duties are grouped together into an
international product division ?
a. Regional structure and International matrix structure
b. International matrix structure and Regional structure
c. Functional structure and Regional structure
d. Regional structure and Functional structure

17. Consider the following statements with respect to the three

main dimensions of international human resources
management.
1. The countries of operation in an IHRM perspective includes
the host country in which the overseas operation is located,
the home country that houses the headquarters of the
company, and other countries that supply labour and finance.
2. The origin of the workforce of an international business can
be classified into three types: parent country nationals, host
country nationals, and third country nationals.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False
18. 1. ________________ are concerned about the
quality/quantity and delivery of the goods that are not sent
if the payment is made in advance.
2. ___________ transaction involves the shipping and
delivery of goods in advance.
a. Exporters, Open account
b. Importers, Documentary collections
c. Buyers, Documentary collections
d. Buyers, Open account

19. Consider the following statements with respect to

Strategic Management Process:
1. Letter of credit is a document that is issued by the bank
that guarantees payment to a beneficiary.
2. Packing List is the document that is given to the seller
from the buyer.
State True or False:
a. 1- True, 2- True
b. 1- False, 2- False
c. 1- False, 2- True
d. 1- True, 2- False

20. 1. If the document is submitted under the __________,

the insured amount should be in the currency as mentioned
in the credit.
2. The ___________ is signed by the representatives of the
carrying vessel and it contains the details of type, quantity
and destination of the goods.
a. Letter of credit, Packing List
b. Bill of lading, Letter of credit
c. Letter of credit, Bill of lading
d. Packing List, Bill of lading

21. Consider the following statements with respect to

alliances:
1. Forfaiting is the financing technique that is used for
financing the sale of capital goods.
2. A banker's acceptance, is a promised future payment, or
time draft, which is accepted and guaranteed by a bank and
drawn on a deposit at the bank.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False
22. Consider the following statements with respect to
global sourcing:
1) Globalisation of the world economy under the IMF and
World Bank has opened abundant opportunities of cost
cutting, gaining competitive advantage and saving time
for industries worldwide.
2) Global sourcing strategy is aimed at exploiting ‘global
efficiencie’ in all areas of manufacturing, trading and
services.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False

23. Consider the following statements with respect to

global sourcing:
1) In a globalised set up, trade and commerce of skilled
services such as IT enabled services and knowledge
process outsourcing is growing much faster than trade in
merchandise.
2) Brand India is widely recognised in the ‘silicon valley’
but its emergence as a low cost supplier has lead to its
exploitation.
State True or False:
a. 1- True, 2- False.
b. 1- False, 2- True.
c. 1- True, 2- True.
d. 1- False, 2- False.

24. Consider the following statements with respect to

reasons for global sourcing:
1) In times of economic recession, political environment
encourages to outsource as the country's employment
remains unaffected.
2) The global sourcing industry is on a growth run as
there are sound business reasons in global sourcing.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False

25. Consider the following statements with respect to

reasons for global outsourcing:
1) Layoff expenditure in US are far higher than in India,
thus, companies outsource their business operations to
countries like India and China.
2) There is improved performance in developing
countries as bottom of the pyramid offers specialisation
 and dedicated expertise for the work.

State True or False:

a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False

Section c 10X 4= 40 marks

1. 1. What is Comparative Cost Theory? Why is it considered as an improvement on

Absolute cost Advantage Theory?
2. Write a short note on two of the following:
a. Joint ventures
b. Licensing.
c. Wholly owned subsidiary.
d. Direct exporting.

3. Case study (10 *2= 20 marks)

BATA – An International Company

Bata Shoe Company, founded in 1894 in the former Czechoslovakia (presently headquartered
in Lausanne, Switzerland), is one of the world's leading footwear retailers and manufacturers,
with operations across five continents managed by three regional meaningful business units
(MBUs). The MBU approach provides quality resources and support in key areas to the
companies operating in similar markets such as product development, sourcing, or marketing
support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the
market place and seize potential growth opportunities.

Bata’s three MBUs are Bata Europe, Lausanne, Switzerland; Bata Emerging Markets,
Singapore; and Bata Branded Business, Best, Holland.

Bata's strength lies in its worldwide presence. While local companies are self-governing, each
one benefits from its link to the international organisation for back-office systems, product
innovations, and sourcing.

Research and development – Bata operates six Shoe Innovation Centres (SICs). Research is
conducted in applying new technologies, materials, and designs for shoe comfort features.
Each SIC has a product focus – to supply complete packages of services for the
manufacturing and marketing of innovative shoes.

Shoe making expertise – Apart from being one of the world's leading footwear retailers,
Bata is also an expert in making shoes, with over 110 years of experience in manufacturing.
Currently, they operate 33 production facilities across 22 countries.

While most modern day manufacturers outsource to Asia, Bata manufactures predominantly
in their own manufacturing facilities across the world, guaranteeing quality and expertise.

Approximately half their factory outputs are destined for sale through Bata-owned retail
stores, and the balance is manufactured to the specifications of wholesale customers or under
contract to other footwear brands.

Bata innovations in footwear production techniques are being used by other competitors in
the industry even today.

In 2010, Bata served 1 million customers a day; employed more than 50,000 people; operated
more than 5,000 retail stores; and managed retail presence in more than 70 countries.

Discussion Questions

1. Identify the strategy that Bata uses for entry into new markets.

2. What are the factors that help Bata retain its global leadership position?

Source: www.bata.com, Retrieved on 28 June 2012