Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1
Americans tend to suffer from parochialism.

1)

_______

True

False

2
A drawback of the geocentric perspective is that it is inflexible.

2)

_______
Answer:
True

False

3
Managers with an ethnocentric attitude would not trust foreign employees with key decisions or technology.

3)

_______

True

False

4
Managers with a polycentric attitude would view every foreign operation as difficult and hard to understand.

4)

_______

True
False

5
The polycentric attitude is a world-oriented view focusing on using the best approaches and people from around the
globe.

5)

_______
Answer:
True

False

6
The primary motivation for the creation of the EU was to allow Europeans to reassert their position against the industrial
strength of the United States and Japan.

6)

_______

True

False

7
Norway is a member of the European Union.

7)

_______
Answer:
True

False

8
The European Union (EU) and the North American Free Trade Agreement (NAFTA) created regional trading and
cooperative agreements.

8)

_______

True
False

9
The Council of Arab Economic Unity (CAEU) was established by Egypt, Saudi Arabia, Qatar, and Oman in 1972.

9)

_______
Answer:
True

False

1
The three original partners of NAFTA are the United States, Canada, and Mexico.

10)

______

True

False

1
GAFTA refers to the Greater Association of Free Trade for Arabs.

11)

______
Answer:
True

False

1
Yemen is part of the GCC.

12)

______
Answer:
True
False

1
The GCC refers to the Gulf Coordination Committee

13)

______
Answer:
True

False

1
Multinational corporations became commonplace in the mid-1960s.

14)

______

True

False

1
Multinational corporations maintain significant operations in two or more countries simultaneously, but are based in one
home country.

15)

______

True

False

1
The transnational corporation characterizes the ethnocentric attitude toward the management of an organization's global
business.

16)

______
Answer:
True
False

1
Transnational corporations run their businesses from their home country.

17)

______
Answer:
True

False

1
When organizations first go international, they often start with global sourcing.

18)

______

True

False

1
The process of exporting involves acquiring products made abroad and selling them domestically.

19)

______
Answer:
True

False

2
In the early stages of doing business internationally, managers may license or franchise to another firm the right to use
their organization's brand name, technology, or product specifications.

20)

______

True

False
 2
Licensing is commonly used by both manufacturing and services organizations.

21)

______
Answer:
True

False

2
In a strategic alliance, both partners share the risks and rewards of the alliance.

22)

______

True

False

2
The legal-political environment is an important factor of managing in a foreign environment.

23)

______

True

False

2
Only when a country's legal-political environment is unstable or revolutionary is it of concern to managers.

24)

______
Answer:
True

False

2
Research indicates that organizational culture has a stronger impact on employees than does national culture.

25)

______
Answer:
True

False

2
Arab countries rank extremely high on uncertainty avoidance.

26)

______
Answer:
True

False

2
Mexico is an example of a collectivist nation.

27)

______

True

False

2
The United States is an example of a country with smaller power distance.

28)

______

True

False

2
Hofstede found that the Italian culture is well above average on uncertainty avoidance measures of culture.
29)

______

True

False

3
GLOBE stands for Global Leadership and Organizational Behavior Effectiveness.

30)

______

True

False

3
The GLOBE framework for assessing cultures is similar to Hofstede's framework, but measures fewer dimensions.

31)

______
Answer:
True

False

3
An increased level of anxiety among its people characterizes a society with high uncertainty avoidance.

32)

______

True

False

3
One challenge that arises out of the openness of globalization is the threat of terrorism.

33)

______
A

True

False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
3
One reason for parochialism in the United States is that Americans tend to study ________ in school.

34)

______
A)
English and Spanish

B)

only English
C)
English and French

D)

only two languages

B

3
Which of the following describes the use of language in the Arab World?

35)

______
A)
Because of colonization, French is widely spoken in Bahrain.
B)
Besides Arabic, French and English are widely spoken in many Arab countries.
C)
Arabic is the only spoken language in most Arab countries.
D)
Besides Arabic, the Armenian language is the second spoken language in Lebanon.
B

3
Ethnocentric views concentrate on their ________.

36)

______
A)
world orientation
 B)

host country
C)
racial orientation

D)

home country
D

3
Parochialism is ________.

37)

______
A)
a tendency to view the world through a single perspective
B)
a desire to leave one's own culture for a foreign culture
C)
acceptance of diverse points of view
D)
recognition of diverse religious beliefs
A

3
Which of the following is the least favorable attitude for a manager who wishes to be successful in international business?

38)

______
A)
multicentric

B)

multicultural

C)

ethnocentric

D)

polycentric

3
Managers with a(n) ________ attitude view every foreign operation as different and hard to understand.
39)

______
A)
ethnocentric

B)

geocentric

C)

transnational

D)

polycentric
D

4
Successful global management requires an attitude that is best described as ________.

40)

______
A)
parochial

B)

polycentric

C)

geocentric

D)

ethnocentric

4
A(n) ________ attitude is characterized by parochialism.

41)

______
A)
geocentric

B)
polylinguistic

C)

ethnocentric

D)

acculturated
C

4
A(n) ________ attitude is the view that host-country managers know the best practices for running their operations.

42)

______
A)
geocentric

B)

international

C)

polycentric

D)

ethnocentric
C

4
The geocentric attitude is a ________ view.

43)

______
A)
franchise-based

B)

world-oriented
C)
culture-bound

D)

nationalistic
B

4
The ________ was created by the unification of 12 countries in Europe.

44)

______
A)
Western European Alliance

B)

Trans-European Market (TEM)

C)
European Common Market

D)

European Union
D

4
The principle reason for the formation of a regional trading alliance in Europe was to reassert members' economic
positions against the strength of the United States and ________.

45)

______
A)
Russia

B)

Mexico

C)

Japan

D)

Canada
C

4
The European Union covers ________.

46)

______
A)
employment, investment, and trade

B)

nationalistic policies and travel

C)
border controls, taxes, and subsidies

D)

all of the above

D

4
The single EU currency is called the ________.

47)

______
A)
pound

B)

franc

C)

franc-mark

D)

euro
D

4
Which of the following countries is not a member of the European Union?

48)

______
A)
Iceland

B)

Cyprus

C)

Ireland
 D)

Slovenia
A

4
GAFTA refers to ________.

49)

______
A)
The General Arab Free Trade Area
B)
The Greater Arab Free Trade Area
C)
The Gulf Arab Free Trade Area
D)
The Gulf Association for Free Trade Agreement
B

5
The Council of Arab Economic Unity was established in

50)

______
A)
1947

B)

1957

C)

1977

D)

1967

5
CAEU refers to ________.

51)

______
A)
Committee of Arab Economic Unity
 B)

Congress of Arab Economic Union

C)
Congress of Arab Economic Unity

D)

Council of Arab Economic Unity

5
The North American Free Trade Agreement includes ________.

52)

______
A)
Mexico, Canada, and the United States

B)

the United States, Canada, and Honduras

C)
Canada, Mexico, and Brazil

D)

Columbia, Mexico, and the United Sates

5
Among the member countries of the North American Free Trade Agreement, trade has ________ since the treaty was
signed.

53)

______
A)
decreased
B)
decreased initially, but increased steadily
C)
increased in commodities, but decreased in manufactured goods
D)
increased

5
The Gulf Cooperation Council does not include ________.
54)

______
A)
Yemen

B)

Saudi Arabia

C)

The UAE

D)

Kuwait
A

5
The North American Free Trade Agreement eliminated all of the following except ________.

55)

______
A)
the need for import licensing

B)

customs user fees

C)
tariffs on traded commodities

D)

China's role as a U.S. trading partner

D

5
The Association of Southeast Asian Nations includes ________.

56)

______
A)
a membership of 10 Southeast Asian nations
B)
the members of the European Union and India
C)
the members of NAFTA and CAFTA
D)
none of the above

5
Each of the following is a member of ASEAN except ________.

57)

______
A)
Laos

B)

Japan

C)

Singapore

D)

Brunei

5
How many member nations belong to the African Union (AU)?

58)

______
A)
53

B)

67

C)

46

D)

62

5
Nepal belongs to which of the following regional trade alliances?

59)
______
A)
AU

B)

ASEAN

C)

SAARC

D)

EU
C

6
The World Trade Organization evolved from which of the following?

60)

______
A)
GATT

B)

Marshall Plan

C)

UNIDIR

D)

Mercosur

6
The World Trade Organization is centered around which of the following?

61)

______
A)
economic sanctions

B)

peace treaties
 C)
trade agreements

D)

public protests

6
International businesses have been around since about what date?

62)

______
A)
the twentieth century

B)

the seventeenth century

C)
the nineteenth century

D)

the fifteenth century

6
Multinational corporations (MNCs) have only become commonplace since approximately what date?

63)

______
A)
1945

B)

mid-1970s

C)

mid-1960s

D)

mid-1980s

6
Multidomestic corporations are known for ________.

64)

______
A)
ethnocentric attitudes

B)

polycentric attitudes
C)
having their holdings in one country

D)

multicentric attitudes
B

6
Which of the following is an MNC that tailors marketing strategies to the host country's unique characteristics?

65)

______
A)
multidomestic corporation

B)

global company
C)
borderless organization

D)

transnational organization
A

6
Multidomestic corporations ________.

66)

______
A)
follow the tastes, preferences, and values of the home country
B)
utilize decentralization to make decisions in management in local countries
C)
maintain operations in multiple counties, but do not allow managers in each country to make their own decisions
D)
utilize ethnocentric attitudes in financial decisions, but favor polycentric views in human resources issues

6
When an organization drops its structure based on countries and reorganizes according to industries, it is pursuing a
global organizational operation known as ________.

67)

______
A)
multinational organization

B)

polycentrism
C)
borderless organization

D)

ethnocentrism

6
Transnational organizations are also known as ________.

68)

______
A)
borderless organizations

B)

polycentric organizations
C)
multidomestic organization

D)

ethnocentric organizations
A

6
Transnational organizations are focused on ________.

69)

______
A)
reinforcing structural divisions

B)

increasing efficiency
C)
developing INVs

D)

all of the above

B

7
Which of the following is a basic definition of a multinational corporation?

70)

______
A)
a company that has multiple home bases and manufacturing plants
B)
a company that maintains operations in multiple countries
C)
a company that maintains franchises in multiple countries
D)
a company that pays corporate taxes in at least two countries

7
Which of the following is the basic difference between multidomestic corporations and global companies?

71)

______
A)
Multidomestic corporations decentralize management to the local country, while global companies centralize
management in the home country.
B)
Multidomestic corporations pay more in taxes than global companies do.
C)
Multidomestic corporations typically do business with more countries than global companies do.
D)
Multidomestic corporations are run by global companies but must be owned by a local, national company.
A

7
Which of the following is not a feature of a multidomestic corporation?

72)
______
A)
Decision making takes place at the local level.
B)
Marketing strategies are tailored to each country's culture.
C)
Products are manufactured only in the local country.
D)
Nationals are typically hired to run operations in each country.

7
Which of the following types of global organizations reflects the geocentric attitude?

73)

______
A)
regional organization

B)

global company
C)
transnational organization

D)

multidomestic corporation

7
Importing and exporting represent a more significant global investment than which of the following?

74)

______
A)
strategic alliance

B)

licensing
C)
franchising

D)

global sourcing

D
 75)
In an attempt to be more aggressive, a company might export and import more. These steps usually require ________.

75)

______
A)
conducting business in a polycentric manner
B)
the establishment of strategic alliances
C)
minimal investment and minimal risk
D)
abnormal operations for a geocentric organization
C

7
Franchising is primarily used by ________.

76)

______
A)
service organizations

B)

legal organizations
C)
manufacturing organizations

D)

political organizations
A

7
In the later stages of doing business globally, if an organization is ready to make a more direct investment, it might utilize
________.

77)

______
A)
joint ventures

B)

strategic alliances
C)
foreign subsidiaries
 D)

all of the above

7
An international company is most likely to develop foreign subsidiaries ________.

78)

______
A)
before it develops franchising agreements

B)

after it establishes strategic alliances

C)
before it develops licensing agreements

D)

before it begins importing and exporting

7
The process of making products domestically and selling them abroad is known as ________.

79)

______
A)
importing

B)

franchising

C)

joint ventures

D)

exporting

8
Which of the following is usually found in the final stage of an organization's global evolution?

80)
______
A)
cross-culturally training its managers
B)
licensing another firm to use its brand name
C)
establishing strategic alliances with partners
D)
exporting its products to other countries
C

8
Joint ventures are a type of ________.

81)

______
A)
license

B)

foreign subsidiary
C)
strategic alliance

D)

franchise

8
Foreign subsidiaries are usually managed ________.

82)

______
A)
through centralized control only

B)

through local or centralized control

C)
through local control only

D)

none of the above

B
 8
A domestic firm and a foreign firm sharing the cost of developing new products or building production facilities in a
foreign country is called a ________.

83)

______
A)
brokering agreement

B)

joint venture
C)
franchising agreement

D)

foreign subsidiary
B

8
Which of the following would most likely occur last in an organization's global evolution?

84)

______
A)
hiring foreign brokers to represent the organization's product line
B)
sending domestic employees on regular foreign business trips
C)
cross-cultural training of the company's managers
D)
creating a joint venture with suppliers around the globe
D

8
________ present(s) the greatest risk to an organization going international.

85)

______
A)
Joint ventures

B)

Strategic alliances
C)
Foreign subsidiaries
 D)

Licensing

8
Which of the following is not considered to be one of the three major areas of significant challenge for an American
manager working in a foreign country?

86)

______
A)
economic environment

B)

religious environment
C)
legal environment

D)

cultural environment

8
According to an assessment carried out by Aon Corporation, businesses faced the highest level of political risk in
________.

87)

______
A)
Egypt, Russia, and India.

B)

North Korea, South Africa, and Peru.

C)
Iran, Nigeria, and Venezuela

D)

Lebanon, Colombia, and Pakistan

8
From an economic standpoint, a threat to the global manager is ________.
88)

______
A)
marginal revenues exceeding marginal costs
B)
a stable exchange rate between currencies in various countries
C)
widely fluctuating inflation rates in foreign countries
D)
all of the above
C

8
An example of an Arab country that has traditionally been a planned economy but is moving toward being more free
market is ________.

89)

______
A)
Yemen

B)

Lebanon

C)

Egypt

D)

Algeria
D

9
The reason that a nation's cultural differences are the most difficult to gain information about is because ________.

90)

______
A)
"natives" are least capable of explaining the unique characteristics of their own culture
B)
there is little written on the issue
C)
providing this information to foreign organizations reduces a competitive business advantage
D)
people tend to be sensitive about their own culture
A
 91)
According to the textbook, Americans most value ________, Arabs ________, and the Japanese ________.

91)

______
A)
self-reliance, hospitality, friendship
B)
freedom, family security, belonging
C)
privacy, hierarchy, authority
D)
independence, family security, collectiveness
B

9
Which of the following developed a valuable framework to help managers better understand differences between national
cultures?

92)

______
A)
Geert Hofstede

B)

Milton Friedman
C)
Michael Porter

D)

Abraham Maslow
A

9
Organizations in which of the following cultures are likely to have formal rules and little tolerance for unusual ideas and
behaviors?

93)

______
A)
High power distance

B)

High uncertainty avoidance

C)
Low power distance
 D)

Low uncertainty avoidance

9
In a society with a highly ________ culture, strong value is placed on relationships and concern for others.

94)

______
A)
achievement-oriented

B)

uncertainty avoidant
C)
nurturing

D)

collectivist

9
________ is a national culture attribute describing the extent to which societal values are characterized by assertiveness
and materialism.

95)

______
A)
Uncertainty avoidance

B)

Power distance
C)
Achievement orientation

D)

Long-term orientation

9
________ is a national culture attribute that places a high value on future occurrences.
96)

______
A)
Long-term orientation

B)

Leisure orientation
C)
Power distance

D)

Uncertainty avoidance
A

9
Which of the following are most alike in terms of individualism, power distance, and uncertainty avoidance?

97)

______
A)
Australia and England

B)

France and Greece

C)
United States and Arab countries

D)

Singapore and Sweden

A

9
The GLOBE framework assesses how many cultural dimensions?

98)

______
A)
6

B)

C)
12

D)

9
________ is a cultural measure of the degree to which people will tolerate risk and unconventional behavior.

99)

______
A)
Nurturing

B)

Achievement
C)
Uncertainty avoidance

D)

Power distance

1
________ is a cultural dimension in which people expect others in their group to look after them and protect them when
they are in trouble.

100)

_____
A)
Power distance

B)

Uncertainty avoidance
C)
Collectivism

D)

Achievement

1
Which of the following would you find in a country with a high power distance?
101)

_____
A)
There is little respect for those in authority.
B)
Titles, rank, and status carry a lot of weight.
C)
Title carries little power, but status power is high.
D)
Society accepts narrow differences in organizations.
B

1
According to Hofstede, Arabs tend to rank ________.

102)

_____
A)
low on collectivism

B)

low on uncertainty avoidance

C)
high on achievement

D)

high on power distance

D

1
For businesses to have successful global management, which of the following statements provides the best advice?

103)

_____
A)
Try your best to only deal with foreign businesspeople who know your culture.
B)
Managers should continue to push for the use of English only.
C)
Stick to your own customs to avoid embarrassing incidents.
D)
Develop an understanding of multicultural differences.
D

1
Successful ________ management requires enhanced sensitivity to differences in national customs and practices.
104)

_____
A)
polycentric

B)

global

C)

ethnocentric

D)

parochial
B

First Visit Abroad (Scenario)

Bashir is excited about his first European business trip. He is confident about the trip, but is somewhat concerned about
the strange habits and foreign languages he will encounter. "If only they would just speak Arabic like everyone else I
know!" Bashir thinks.

1
Bashir's tendency to view the world only through his Arab-based perspective is an international business problem known
as which of the following?

105)

_____
A)
parochialism

B)

nondiversity
C)
discrimination

D)

monolingualism

1
If Bashir is to become successful as a global manager, he must ________.

106)
_____
A)
compete internationally but remain in his own country
B)
learn about and accept other cultures
C)
attempt to change other cultures to Arab ways
D)
learn to manipulate other business cultures

Cultural Training (Scenario)

Jihan 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 current country and has never traveled to foreign countries.

1
In talking with her advisor at the university, Jihan decides she probably has a(n) ________ attitude, as she has never
traveled abroad and only relates well to people from her home country.

107)

_____
A)
polycentric

B)

ethnocentric
C)
geocentric

D)

culturally focused
B

1
Jihan becomes involved with an international student association to give her experiences that will allow her to understand
the views of students from other countries. She is trying to become more ________ in her attitude.

108)

_____
A)
ethnocentric

B)

parochialistic

C)
geocentric

D)

polycentric

A Foreign Alliance Talk (Scenario)

As manager of the international department for 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, CAEU, GAFTA and all that stuff because we're afraid the economists are right all the good jobs will have to go
elsewhere." As you pour over your notes, you try to choose the best information to present in the allotted half hour.

1
You plan to explain during your talk that the acronyms EU, NAFTA, FTAA, GAFTA and ASEAN refer to ________.

109)

_____
A)
new multinational corporations

B)

soccer teams in Europe

C)
regional trade alliances

D)

foreign airlines
C

1
An important topic in your talk will be GAFTA. You want to explain that a key aim of the GAFTA agreement is to
________.

110)

_____
A)
create one economic bloc against other regional agreement such as those in the European Union
B)
negotiate collectively with China, the US, and other economic powers to improve trade terms for Arab countries.
C)
reach full liberalization of trade among member states.
D)
achieve complete economic integration among member states by the year 2020.
C
 111)
Another hot topic will be NAFTA. One of the points that you emphasize is that ________.

111)

_____
A)
U.S. high-tech companies, such as computer manufacturers, have been hit hard by the NAFTA provisions
B)
the United States has definitely come out the worst of the three nations
C)
Canada is profiting the most in this arrangement
D)
the expansion of NAFTA has benefited North America's competitiveness and economic power
D

Business Expansion Plan (Scenario)

As a business expansion director, Salma's goal is to scout out potential locations and basically provide input on how her
company should proceed with its planned expansion into Europe. There are many options, including maintaining the
businesses head office in Egypt and sending over company representatives when necessary or establishing separate
operations facilities abroad and hiring locals as managers.

1
If Salma's company decides to open another company in France but maintain its management in Egypt, it would be
considered a ________.

112)

_____
A)
regional trade alliance

B)

transnational corporation
C)
global company

D)

multidomestic corporation
C

1
If Salma's company decides to open a completely new operation in the UK, tailoring the company to local customs and
marketing strategies and hiring local managers, they would be considered a ________.

113)

_____
A)
multidomestic corporation

B)

transnational corporation
C)
regional trade alliance

D)

global company
A

1
If Salma's company eliminates country-designated locations and reorganizes based on industry groups, it would best be
considered a ________.

114)

_____
A)
multidomestic corporation

B)

strategic partnership
C)
global business alliance

D)

borderless organization
D

1
One section of Salma's company's business plan involves strategic alliances and joint ventures. This section is most likely
focused on the ________ phase of the company's global business expansion.

115)

_____
A)
final

B)

legal

C)

preliminary
 D)

middle

A Company Expansion (Scenario)

You have been hired by a company to look at the best ways to move the company into the Arab market, but you have to
first determine what kind of company you are dealing with.

1
If the company that has hired you is primarily used by manufacturing organizations, it is a ________.

116)

_____
A)
franchising company

B)

licensing company
C)
strategic alliance

D)

joint venture

1
If the company that has hired you is really a partnership between an organization and a foreign company, in which both
share resources and knowledge in developing new products, then it is a ________.

117)

_____
A)
joint venture

B)

strategic alliance
C)
licensing company

D)

franchising company

B
Software Entrepreneurial Venture (Scenario)

Talal and Jibran have formed an entrepreneurial venture to develop software for banks and other financial institutions.
Their company is growing, but in looking for opportunities in the future, they decide to explore international operations.

1
The international operations in their firm continue to grow. Talal and Jibran have come to see that decentralized
management using foreign nationals to run operations in the host countries works well. Their firm has developed into
a(n) ________ organization.

118)

_____
A)
borderless

B)

multidomestic

C)

franchise

D)

transnational

1
Talal and Jibran d e c i d e
t o a l l o w
a fi r m
i n
E u r o p e
t o u s e
t h e
r i g h t s
t o t h e i r
s o f t w a r e
, i t s
b r a n d
n a m e , a payment. The
-sum n firm is a d
service organization that plans to use the software to assist its customers. This agreement is known as a ________.

119)

_____
A)
licensing agreement

B)
foreign subsidiary
C)
franchise

D)

strategic alliance

A New Assignment (Scenario)

Mariam was given a new assignment to head up the European division of a multinational organization. Before leaving her country to
take up her new assignment she needed training to manage and understand the European division.

1
Mariam found that wealthier nations, such as the United States, tend to ________.

120)

_____
A)
have high uncertainty avoidance

B)

be collectivist
C)
have high power distance

D)

be individualistic
D

1
Mariam also found out that in some countries, such as those in the Arab world, titles, rank, and status carry a lot of
weight. These countries have high ________ .

121)

_____
A)
uncertainty avoidance

B)

nurturing
C)
power distance

D)
collectivist

1
Mariam learned that generally, European cultures did not have high anxiety, nervousness, and stress. This meant they
had low ________.

122)

_____
A)
uncertainty avoidance

B)

future orientation
C)
power distance

D)

achievement orientation

1
European multinational firms commonly use a ________ approach because they are operating in multiple
countries with different institutional environments.
123)

_____
A)
multidomestic approach

B)

global approach
C)
transnational

D)

supply chain
A

1
Mariam needed to learn about each country's values and the attitudes shared by its individuals. This would be learning
about ________.

124)
_____
A)
national culture

B)

diverse culture
C)
global culture

D)

high-context culture
A

1
Mariam also needed to learn about regional trading alliances and the impact on her division. The alliance that had a direct
impact on her division was ________

125)

_____
A)
EU

B)

WTO

C)

SAARC

D)

NAFTA
A

The Overseas Assignment (Scenario)

Khalil has a degree in business administration and has worked for a major corporation for 5 years. He is offered a chance
to work in another country.

1
Through research on the Internet, Khalil finds that in this country's social framework, 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 ________.

126)

_____
A)
monotheism
 B)

individualism

C)

collectivism

D)

parochialism
C

1
This new country's people are favorably influenced by Khalil's job title and the status given by his experience of having
worked in the home office for 5 years. This country has a high ________.

127)

_____
A)
uncertainty avoidance

B)

sense of uncertainty avoidance

C)
interest in attracting foreign executives

D)

power distance
D

1
Through talking to executives in the international division, Khalil realizes that his home country has the highest
individualism, low power distance and uncertainty avoidance, and a strong achievement orientation. He probably lives in
________.

128)

_____
A)
the UK

B)

the United States

C)
Japan
 D)

Saudi Arabia

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
129)
In a short essay, define parochialism. Next, discuss why parochialism is a problem for some managers and discuss
reasons why it is important to overcome parochialism in today's business environment.
Parochialism is the process of 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 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 that are seeking to understand foreign customs and market differences.

130)
In a short essay, list and discuss the three attitudes managers might have toward international business.
a. Ethnocentric attitude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 wouldn't
trust foreign employees with key decisions.
b. Polycentric attitudethe view that managers 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.

131)
In a short essay, describe three regional trade alliances in the Arab world.
(1) The Council of Arab Economic Unity (CAEU): CAEU was established by Egypt, Iraq, Jordan, Kuwait, Libya, Mauritania,
Palestine, Somalia, Sudan, Tunisia, Syria, United Arab Emirates, and Yemen in June 1957. It became effective May 30,
1964, with the ultimate goal of achieving complete economic unity among its member states. The organization aims to
achieve economic integration, promoting an environment of free movement of labor, capital, and services.

(2) The Greater Arab Free Trade Area (GAFTA): GAFTA is a pact made by the Arab League to achieve a complete Arab
economic bloc that can compete internationally. The project was adopted in the Arab League Summit of Amman in 1997,
with 17 Arab League members signing the pact. The agreement aims at reaching full liberalization of trade among
member states and facilitating commercial activities.

(3) The Gulf Cooperation Council (GCC): Created on May 25, 1981, the GCC comprises the Arabian Gulf states of Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, covering 630 million acres (2,500,000 km 2 ). The
agreement was signed on November 11, 1981 in Riyadh. The objectives of the GCC are to "effect coordination,
integration and inter- connection between Member States in all fields, strengthening ties between their peoples,
formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, and
administration, as well as fostering scientific and technical progress in industry, mining, agriculture, water and animal
resources, establishing scientific research centers, setting up joint ventures, and encouraging cooperation of the private
sector."
 132)
In a short essay, explain the differences among a multidomestic corporation, a global company, and a borderless
organization. Include examples of companies for each of the types of organizations discussed.

a. A multidomestic corporation is a multinational corporation 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 typically 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.
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. Another example of a multidomestic is Frito-Lay, a
division of PepsiCo, which markets a Dorito chip in the British market that differs in both taste and texture from the U.S.
and Canadian version. 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.
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 often called a transnational or borderless organization, and reflects a geocentric attitude.
For example, IBM dropped its organizational structure based on country and reorganized into industry groups. And
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. Managers choose this form of international organization to increase efficiency and effectiveness in a
competitive global marketplace.

133)
In a short essay discuss the methods firms can use to enter new global markets.

Firms can enter new foreign markets in the following ways: exporting products to the new market, licensing products to
local firms, acquiring or creating strategic alliances with local firms, or establishing operations within the new market.
Exporting involves manufacturing products in a firm's home country and shipping them to a foreign market. Licensing
arrangements allow a local firm in the new market to manufacture and distribute a foreign firm's products. Strategic
alliances are cooperative arrangements between two firms in which they agree to share resources to accomplish a
mutually desirable goal. Acquisitions of local firms made by foreign firms to enter a new international market are called
cross-border acquisitions. When a company creates a wholly owned subsidiary in a foreign country, it makes a direct
investment to establish a business that it solely owns and controls there.

134)
In a short essay, explain what a 'strategic alliance' is, and how organizations can benefit from using them. Provide an
example to support your answer.
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 investment. One way to do this 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. For example, Honda Motor Company and
General Electric teamed up to produce a new jet engine. A specific type of strategic alliance in which the partners form a
separate, independent organization for some business purpose is called a joint venture . For example, Kalo Holdings
Corporation had great success in Kuwait after it established a joint venture corporation with internationally renowned
construction and de-mining Italian conglomerates, Societe Appalti Bonifichi. These partnerships provide a relatively easy
way for companies to compete globally.
 135)
In a short essay, describe how managers are affected by the global economic environment, highlighting four factors that
affect management and explaining why each is important.

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. The two major types are a free market economy
and a planned economy. A free market economy is one in which resources are primarily owned and controlled by the
private sector. A planned economy is one in which economic decisions are planned by a central government. Actually, no
economy is purely free market or planned. For instance, the United States and United Kingdom are at the free market end
of the spectrum but do have some governmental controls. Why would managers need to know about a country's
economic system? Because it has the potential to constrain decisions. Other economic issues that managers need to
understand include currency exchange rates, inflation rates, and diverse tax policies.
Second, an MNC's profits can vary dramatically, depending on the strength of its home currency and the currencies of the
countries in which it operates. Currency exchange revaluations can affect managers' decisions and the level of a
company's profits.
Third, inflation means that prices for products and services are increasing. But it also affects interest rates, exchange rates,
the cost of living, and the general confidence in a country's political and economic system. Country inflation rates can,
and do, vary widely. Managers need to monitor inflation trends so they can anticipate possible changes in a country's
monetary policies and make good decisions.
Finally, tax policies can be a major economic worry. Some countries' tax laws are more restrictive than those in an MNC's
home country. Others are more lenient. About the only certainty is that they differ from country to country. Managers
need exact information on tax rules in countries in which they operate in order to minimize a business's overall tax
obligation.

136)
In a short essay, list and explain Hofstede's five dimensions of national culture.

a. Individualism versus collectivismindividualism refers to a loosely knit social framework in which people are
supposed to look after their own interests and those of their immediate family. They can do so because of the large
amount of freedom that an individualistic society allows its citizens. The opposite is collectivism, which is characterized
by a tight social framework in which people expect others in groups of which they are a part to look after them and to
protect them when they are in trouble. In exchange, they feel they owe absolute loyalty to the group.
b. Power distanceHofstede used the term power distance as a measure of the extent to which a society accepts the fact
that power in institutions and organizations is distributed unequally. A large power distance society accepts wide
differences in power in organizations. Employees show a great deal of respect for those in authority. Titles, rank, and
status carry a lot of weight. When negotiating in large power distance countries, companies find that it helps to send
representatives with titles at least as impressive as those with whom they are bargaining do. In contrast, a low power
distance society plays down inequalities as much as possible. Superiors still have authority, but employees are not afraid
of or in awe of the boss.
c. Uncertainty avoidanceuncertainty avoidance is a cultural measure of the degree to which people tolerate risk and
unconventional behavior. A society that's high in uncertainty avoidance is characterized by a high level of anxiety among
its people, which manifests itself in nervousness, high stress, and aggressiveness. Because people in these cultures feel
threatened by uncertainty and ambiguity, political and social mechanisms are created to provide security and to reduce
risk. Organizations in these cultures are likely to have formal rules and little tolerance for unusual ideas and behaviors.
d. Achievement and nurturingthe fourth cultural dimension, like individualism and collectivism, is a dichotomy.
Achievement is the degree to which values such as assertiveness, the acquisition of money and material goods, and
competition prevail. Nurturing is a national cultural attribute that emphasizes relationships and concern for others.
e. Long-term and short-term orientationpeople in long-term orientation cultures look to the future and value thrift and
persistence.A short-term orientation values the past and present and emphasizes respect for tradition and fulfilling social
obligations.

137)
In a short essay, discuss the dimensions of the GLOBE framework. Describe how each dimension compares to Hofstede's
five dimensions of national culture.

The GLOBE (Global Leadership and Organizational Behavior Effectiveness) research program, which began in 1993,
continues to investigate cross-cultural leadership behaviors. Using data from over 18,000 middle managers in 62
countries, 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 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/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 has no equivalent in 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: In contrast to focusing on societal institutions, 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.

(1

TRUE
2)
FALSE
3)
TRUE
4)
TRUE
5)
FALSE
6)
TRUE
7)
FALSE
8)
TRUE
9)
FALSE
10)
TRUE
11)
FALSE
12)
FALSE
13)
FALSE
14)
TRUE
15)
TRUE
16)
FALSE
17)
FALSE
18)
TRUE
19)
FALSE
20)
TRUE
21)
FALSE
22)
TRUE
23)
TRUE
24)
FALSE
25)
FALSE
26)
FALSE
27)
TRUE
28)
TRUE
29)
TRUE
30)
TRUE
31)
FALSE
32)
TRUE
33)
TRUE
34)
B
35)
B
36)
D
37)
A
38)
C
39)
D
40)
C
41)
C
42)
C
43)
B
44)
D
45)
C
46)
D
47)
D
48)
A
49)
B
50)
B
51)
D
52)
A
53)
D
54)
A
55)
D
56)
A
57)
B
58)
A
59)
C
60)
A
61)
C
62)
C
63)
C
64)
B
65)
A
66)
B
67)
C
68)
A
69)
B
70)
B
71)
A
72)
C
73)
C
74)
D
75)
C
76)
A
77)
D
78)
B
79)
D
80)
C
81)
C
82)
B
83)
B
84)
D
85)
C
86)
B
87)
C
88)
C
89)
D
90)
A
91)
B
92)
A
93)
B
94)
C
95)
C
96)
A
97)
A
98)
B
99)
C
100)
C
101)
B
102)
D
103)
D
104)
B
105)
A
106)
B
107)
B
108)
C
109)
C
110)
C
111)
D
112)
C
113)
A
114)
D
115)
A
116)
B
117)
B
118)
B
119)
C
120)
D
121)
C
122)
A
123)
A
124)
A
125)
A
126)
C
127)
D
128)
B
129)
Parochialism is the process of 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 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 that are seeking to understand foreign customs and market differences.
130)
a. Ethnocentric attitude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 wouldn't
trust foreign employees with key decisions.
b. Polycentric attitudethe view that managers 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.
131)
(1) The Council of Arab Economic Unity (CAEU): CAEU was established by Egypt, Iraq, Jordan, Kuwait, Libya, Mauritania,
Palestine, Somalia, Sudan, Tunisia, Syria, United Arab Emirates, and Yemen in June 1957. It became effective May 30,
1964, with the ultimate goal of achieving complete economic unity among its member states. The organization aims to
achieve economic integration, promoting an environment of free movement of labor, capital, and services.

(2) The Greater Arab Free Trade Area (GAFTA): GAFTA is a pact made by the Arab League to achieve a complete Arab
economic bloc that can compete internationally. The project was adopted in the Arab League Summit of Amman in 1997,
with 17 Arab League members signing the pact. The agreement aims at reaching full liberalization of trade among
member states and facilitating commercial activities.

(3) The Gulf Cooperation Council (GCC): Created on May 25, 1981, the GCC comprises the Arabian Gulf states of Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, covering 630 million acres (2,500,000 km 2 ). The
agreement was signed on November 11, 1981 in Riyadh. The objectives of the GCC are to "effect coordination,
integration and inter- connection between Member States in all fields, strengthening ties between their peoples,
formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, and
administration, as well as fostering scientific and technical progress in industry, mining, agriculture, water and animal
resources, establishing scientific research centers, setting up joint ventures, and encouraging cooperation of the private
sector."
132)
a. A multidomestic corporation is a multinational corporation 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 typically 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.
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. Another example of a multidomestic is Frito-Lay, a
division of PepsiCo, which markets a Dorito chip in the British market that differs in both taste and texture from the U.S.
and Canadian version. 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.
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 often called a transnational or borderless organization, and reflects a geocentric attitude.
For example, IBM dropped its organizational structure based on country and reorganized into industry groups. And
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. Managers choose this form of international organization to increase efficiency and effectiveness in a
competitive global marketplace.
133)
Firms can enter new foreign markets in the following ways: exporting products to the new market, licensing products to
local firms, acquiring or creating strategic alliances with local firms, or establishing operations within the new market.
Exporting involves manufacturing products in a firm's home country and shipping them to a foreign market. Licensing
arrangements allow a local firm in the new market to manufacture and distribute a foreign firm's products. Strategic
alliances are cooperative arrangements between two firms in which they agree to share resources to accomplish a
mutually desirable goal. Acquisitions of local firms made by foreign firms to enter a new international market are called
cross-border acquisitions. When a company creates a wholly owned subsidiary in a foreign country, it makes a direct
investment to establish a business that it solely owns and controls there.
134)
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 investment. One way to do this 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. For example, Honda Motor Company and
General Electric teamed up to produce a new jet engine. A specific type of strategic alliance in which the partners form a
separate, independent organization for some business purpose is called a joint venture . For example, Kalo Holdings
Corporation had great success in Kuwait after it established a joint venture corporation with internationally renowned
construction and de-mining Italian conglomerates, Societe Appalti Bonifichi. These partnerships provide a relatively easy
way for companies to compete globally.
135)
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. The two major types are a free market economy
and a planned economy. A free market economy is one in which resources are primarily owned and controlled by the
private sector. A planned economy is one in which economic decisions are planned by a central government. Actually, no
economy is purely free market or planned. For instance, the United States and United Kingdom are at the free market end
of the spectrum but do have some governmental controls. Why would managers need to know about a country's
economic system? Because it has the potential to constrain decisions. Other economic issues that managers need to
understand include currency exchange rates, inflation rates, and diverse tax policies.
Second, an MNC's profits can vary dramatically, depending on the strength of its home currency and the currencies of the
countries in which it operates. Currency exchange revaluations can affect managers' decisions and the level of a
company's profits.
Third, inflation means that prices for products and services are increasing. But it also affects interest rates, exchange rates,
the cost of living, and the general confidence in a country's political and economic system. Country inflation rates can,
and do, vary widely. Managers need to monitor inflation trends so they can anticipate possible changes in a country's
monetary policies and make good decisions.
Finally, tax policies can be a major economic worry. Some countries' tax laws are more restrictive than those in an MNC's
home country. Others are more lenient. About the only certainty is that they differ from country to country. Managers
need exact information on tax rules in countries in which they operate in order to minimize a business's overall tax
obligation.
136)
a. Individualism versus collectivismindividualism refers to a loosely knit social framework in which people are
supposed to look after their own interests and those of their immediate family. They can do so because of the large
amount of freedom that an individualistic society allows its citizens. The opposite is collectivism, which is characterized
by a tight social framework in which people expect others in groups of which they are a part to look after them and to
protect them when they are in trouble. In exchange, they feel they owe absolute loyalty to the group.
b. Power distanceHofstede used the term power distance as a measure of the extent to which a society accepts the fact
that power in institutions and organizations is distributed unequally. A large power distance society accepts wide
differences in power in organizations. Employees show a great deal of respect for those in authority. Titles, rank, and
status carry a lot of weight. When negotiating in large power distance countries, companies find that it helps to send
representatives with titles at least as impressive as those with whom they are bargaining do. In contrast, a low power
distance society plays down inequalities as much as possible. Superiors still have authority, but employees are not afraid
of or in awe of the boss.
c. Uncertainty avoidanceuncertainty avoidance is a cultural measure of the degree to which people tolerate risk and
unconventional behavior. A society that's high in uncertainty avoidance is characterized by a high level of anxiety among
its people, which manifests itself in nervousness, high stress, and aggressiveness. Because people in these cultures feel
threatened by uncertainty and ambiguity, political and social mechanisms are created to provide security and to reduce
risk. Organizations in these cultures are likely to have formal rules and little tolerance for unusual ideas and behaviors.
d. Achievement and nurturingthe fourth cultural dimension, like individualism and collectivism, is a dichotomy.
Achievement is the degree to which values such as assertiveness, the acquisition of money and material goods, and
competition prevail. Nurturing is a national cultural attribute that emphasizes relationships and concern for others.
e. Long-term and short-term orientationpeople in long-term orientation cultures look to the future and value thrift and
persistence.A short-term orientation values the past and present and emphasizes respect for tradition and fulfilling social
obligations.
137)
The GLOBE (Global Leadership and Organizational Behavior Effectiveness) research program, which began in 1993,
continues to investigate cross-cultural leadership behaviors. Using data from over 18,000 middle managers in 62
countries, 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 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/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 has no equivalent in 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: In contrast to focusing on societal institutions, 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.