Management 13th Edition Schermerhorn Test Bank 1

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Management 13th Edition

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Ch05: Global Management and Cultural Diversity
True/False
1. The growing interdependence among elements of the global economy is known as

diversification.
Answer: False
Learning Objective: 5.1
Difficulty: Easy
AACSB: Diverse and multicultural work environments
Bloom’s Taxonomy: Knowledge
Copyright © 2015 John Wiley & Sons, Inc. 5-1

2. In World 3.0, local needs and priorities are largely ignored compared to the economic gains
from global integration.
Answer: False
Difficulty: Easy
3. Cultural awareness is an important characteristic of a truly global manager.
Answer: True
Difficulty: Easy
4. Sigma Inc. conducts for-profit transactions of goods and services across national
boundaries. Sigma Inc. is an example of an international business.
Answer: True
Difficulty: Moderate
5. A common first step into international business is global sourcing.
Answer: True
Difficulty: Easy

6. Most manufacturers today shy away from using global sourcing owing to the growing
concerns over issues related to quality.
Answer: False
Difficulty: Easy
7. In exporting, local products are sold to foreign customers.
Answer: True
Difficulty: Easy
8. Franchising refers to acquiring products from abroad and selling them in domestic markets.
Answer: False
Difficulty: Easy
9. China’s foreign direct investment in the U.S. has led to the creation of many jobs in China.
This is an example of insourcing.
Answer: True

Bloom’s Taxonomy: Comprehension
10. A foreign subsidiary is a foreign operation completely owned and controlled by a local
firm.
Answer: False
Difficulty: Easy
11. A foreign subsidiary represents the lowest level of involvement in international operations.
Answer: False
Difficulty: Easy
12. Tariffs are basically taxes that governments impose on imports.
Answer: True
Difficulty: Easy
13. The goal of most tariffs is to protect local firms from foreign competition.
Answer: True
Difficulty: Easy


14. NAFTA was formed by the United Kingdom, France, and Germany.
Answer: False
Difficulty: Easy
15. Executives of transnationals view the entire world as their domain for acquiring resources.
Answer: True
Difficulty: Easy
16. Extraction of excessive profits by global corporations is a potential host-country cost.
Answer: True
Difficulty: Easy
17. Long hours of work and poor working conditions are prevalent in sweatshops.
Answer: True
Difficulty: Easy


18. Nigel is very proud of his British culture and tends to view other cultures as potentially
inferior to his own. This is an example of ethnocentrism.
Answer: True
AACSB: Application of knowledge
Bloom’s Taxonomy: Application
19. Knowledge about foreign cultures is known as cultural intelligence.
Answer: True
Difficulty: Easy
20. In low-context cultures, what is actually said or written may convey only part, and
sometimes a very small part, of the real message.
Answer: False
Difficulty: Easy
21. Most communication in low-context cultures takes place via the written or spoken word.
Answer: True


Difficulty: Easy
22. Members of monochronic cultures are more flexible in their views of time than those of
polychronic cultures.
Answer: False
Difficulty: Easy
23. Members of polychronic cultures do not approve of coming late or bringing an uninvited
guest.
Answer: False
24. Proxemics is the study of how people use space to communicate.
Answer: True
Difficulty: Easy
25. Tight cultures are characterized by clear and rigid social norms.

Answer: True
Difficulty: Easy
26. In a tight culture, deviations from norms tend to be tolerated.
Answer: False
Difficulty: Easy
27. The ecological fallacy refers to the belief that a generalized cultural value, such as
individualism, does not apply equally to all members of that culture.
Answer: False
Difficulty: Easy
28. People in high-power-distance cultures tend to be tolerant of power and are prone to follow
orders.
Answer: True
Difficulty: Easy

29. People in high uncertainty-avoidance cultures prefer structure in their lives.
Answer: True
Difficulty: Easy
30. Intercultural competencies are skills that help an individual to function successfully in
cross-cultural situations.
Answer: True
Difficulty: Easy
Multiple Choice
31. Which of the following is an effect of globalization?

A. Reducing cooperation among nations in the global economy
B. Weakening economic integration across countries
C. Reducing interdependence among the components in the global economy
D. Increasing the importance of nation states
E. Creating a borderless world where economic integration becomes extreme
Answer: E
Difficulty: Easy
AACSB: Analytical thinking

32. _____ involves managing business and organizations with interests in more than one
country.
A. Global management
B. Territorial management
C. Reshoring
D. Insourcing
E. Economic development
Answer: A
Difficulty: Easy
33. Which of the following is a common reason for doing international business?
A. Reducing imports
B. Accessing lower-cost labor
C. Boosting domestic demand
D. Establishing market monopoly
E. Promoting ethnocentrism
Answer: B
Difficulty: Easy
34. Ronald is planning to expand his family business internationally and is currently in the
process of purchasing materials, manufacturing components, and locating business services
around the world. Which of the following best describes his actions?
A. Global sourcing
B. Insourcing
C. Licensing
D. Franchising
E. Outsourcing

Answer: A
Difficulty: Hard
35. Sasha, a wealthy industrialist, owns several coffee plantations in Brazil. Encouraged by the
rising sales figures in the domestic market, Sasha decides to sell her local brand of coffee in
markets around the world. Which of the following terms is applicable to this business
strategy?
A. Importing
B. Insourcing
C. Franchising
D. Exporting
E. Licensing
Answer: D
Difficulty: Hard
36. The growth of export industries _____ the exporting country.

A. reduces imports in
B. provides low-cost labor in
C. creates local jobs in
D. increases financial resources for
E. leads to an excess supply of products in
Answer: C
Difficulty: Easy

37. When Veriol Inc., a pharmaceuticals company, bought the rights of manufacturing and
selling Nocturne Pharma’s vitamin supplement, Vita Plus, in Mexico, Veriol Inc. engaged
in _____.
A. exporting
B. global sourcing
C. franchising
D. insourcing
E. licensing
Answer: E
Difficulty: Hard
38. In _____, the foreign firm buys the rights to use another’s name and operating methods in
its home country.
A. insourcing
B. franchising
C. global sourcing
D. exporting
E. offshoring
Answer: B
Difficulty: Easy
39. Which of the following terms is used to describe local job creation that results from foreign
direct investment?
A. Restructuring
B. Franchising
C. Offshoring
D. Insourcing
E. Horizontal integration

Answer: D
Difficulty: Easy
40. When Miriam Inc., a handbag manufacturer headquartered in the U.S., decided to invest in
Japan, it tied up with a Japanese fashion house in order to pool resources, share risks, and
operate the new business together. This is an example of _____.
A. a joint venture
B. a foreign subsidiary
C. a greenfield venture
D. diversification
E. product development
Answer: A
Difficulty: Hard
41. A(n) _____ is a local operation completely owned and controlled by a foreign firm.
A. franchise
B. sweatshop
C. foreign subsidiary
D. global strategic alliance
E. export house
Answer: C
Difficulty: Easy

42. Cases presented before the World Trade Organization for resolution are likely to involve
disputes regarding _____.
A. cultural appropriateness
B. restructures
C. cultural distance
D. ecological fallacy
E. tariffs
Answer: E
Difficulty: Easy
43. _____ are taxes governments levy on imports from abroad.

A. Excise duties
B. Tariffs
C. Pay-offs
D. Corporate taxes
E. Subsidies
Answer: B
Difficulty: Easy
44. The goal of most tariffs is to:

A. improve present working conditions.
B. protect transnational corporations from political risks.
C. diversify the existing jobs.
D. protect local firms from foreign competition.
E. create jobs for foreign workers.
Answer: D


Difficulty: Easy
45. Which of the following countries is part of NAFTA?

A. Canada
B. United Kingdom
C. Germany
D. Spain
E. France
Answer: A
Difficulty: Easy
46. Arguments against NAFTA blame the organization for:

A. lower productivity of U.S. manufacturers.
B. lower cross-border trade.
C. substantial job losses to Mexico.
D. substantial job losses to the U.S.
E. deterioration of the Mexican business environment.
Answer: C
Difficulty: Easy
47. Which of the following is true with regard to the European Union (EU)?
A. There is an absence of common consensus between the member states of EU with regard to
political integration.

B. All the member states of the EU have adopted the Euro as the common currency.
C. The common currency of the EU is a weak competitor of the U.S. dollar.
D. The EU members are supposed to give one another most favored nation status.
E. The EU is a regional economic and political alliance of global importance.
Answer: E
Difficulty: Easy
48. A _____ is an MNE that operates worldwide on a borderless basis.

A. franchise
B. transnational corporation
C. foreign subsidiary
D. greenfield venture
E. limited liability company
Answer: B
Difficulty: Easy
49. Which of the following is one of the potential host-country benefits?

A. Smaller tax base
B. Interference with the governments
C. Economic domination
D. Introduction of new industries
E. Exploitation of natural resources
Answer: D

50. Home-country criticisms of global firms include complaints about:

A. interference with the local government.
B. hiring the most talented local personnel at a high cost.
C. failure to transfer advanced technologies.
D. sending scarce investments capital abroad.
E. poor working conditions for employees.
Answer: D
Difficulty: Easy
51. _____ involves illegal practices to further one’s business interests.

A. Corruption
B. Ethnocentrism
C. Polycentrism
D. Proxemics
E. Ecological fallacy
Answer: A
Difficulty: Easy
52. The Foreign Corrupt Practices Act (FCPA) makes it illegal for:
A. countries who are not members of the EU to invest in the U.S.
B. U.S. firms to invest overseas in businesses.
C. foreign firms to offer nonmonetary gifts to U.S. officials.
D. foreign firms to offer bribes to U.S. firms.
E. U.S. firms and their representatives to offer bribes overseas.

Answer: E
Difficulty: Easy
53. Which of the following is an example of child labor?

A. A 13-year-old boy accompanying his mother to the carpet factory where she works
B. A 10-year-old boy working in a chemical factory
C. A 10-year-old girl helping her younger brother with schoolwork
D. A 13-year-old boy earning $10 for helping his father pick strawberries
E. A 19-year-old girl working as a salesgirl in the local supermarket
Answer: B
54. What are sweatshops?

A. Local business operations that expand internationally through foreign direct investment
B. Arbitrating firms that settle labor disputes between employees and employers
C. Business operations that employ workers at low wages for long hours in poor working
conditions
D. Foreign firms that hire talented local personnel for training others in the host country
E. Foreign firms that are engaged in rampant corruption and bribery to gain easy access to the
local resource pool
Answer: C

55. Which of the following is a characteristic of a sweatshop?

A. Poor working conditions
B. High wages
C. Low power distance
D. High degree of foreign investment
E. Strong ethics
Answer: A
Difficulty: Easy
56. Which of the following is an example of a sweatshop?

A. Bane & Packhard, an American law firm, opened its branch in Taiwan as part of its
business expansion strategy.
B. Rosenberg Inc., a pharmaceuticals company, bought the rights to manufacture and sell a
fertility drug in Greenland from Kremline Pharmaceuticals.
C. Patron Wave, an electronic device manufacturing company, housed its employees in poor
conditions and also overworked them.
D. Big Sell, a supermarket, sourced its canned fishes from Asia at a far lower price than most
of its local competitors.
E. Mammoth InfoTech refused to increase the annual wages of its employees citing poor
financial results in the last quarter.
Answer: C
57. Why are some scarce minerals known as conflict minerals?

A. They bring in greater foreign investments.
B. They are found in abundance.
C. The money from their sales is used to fund armed violence.
D. The source of these minerals is easy to trace back.

E. They are available for a cheap price.
Answer: C
58. _____ is a shared set of beliefs, values, and patterns of behavior common to a group of
people.
A. Culture
B. Meme
C. Folklore
D. Conduct
E. Morality
Answer: A
Difficulty: Easy
59. Which of the following is true about culture?

A. Culture is a set of legal codes.
B. Culture is an irrelevant factor in international business.
C. Culture is not common to a group of people.
D. Culture remains static over time.
E. Cultural miscues can be costly in international business.
Answer: E
Difficulty: Easy

60. An American executive goes to Yemen to finalize a business deal. He hands over his
documents to his Yemeni host with his left hand, which Muslims in Yemen consider
unclean. Moreover, he refuses to accept the dry fruits that he is offered, a behavior that
deeply offends his host. As a result, the American loses the business deal to his Australian
counterpart who was better versed in Yemeni ways. The lack of understanding of _____ is
most likely to have resulted in the loss of business for the American executive.
A. the business trends in Yemen
B. Yemeni dress code
C. the business laws in Yemen
D. Yemeni culture
E. the banking system in Yemeni
Answer: D
Difficulty: Hard
61. _____ is the confusion and discomfort a person experiences when in an unfamiliar culture.
A. Cultural appropriation
B. Culture shock
C. Cultural assimilation
D. Cultural relativism
E. Culture phobia
Answer: B
Difficulty: Easy
62. Culture shock is:

A. an extreme amount of hatred and rejection of foreign cultures.
B. an individual’s failure to comply with the codes of his or her culture.
C. an assumption that one’s own culture is superior to that of others.

D. an assumption that one’s own culture is inferior to that of others.

E. a certain level of discomfort a person experiences when in an unfamiliar culture.
Answer: E
63. Ilda Bach, an elderly German woman, decides to visit her friend living in Indonesia after
many decades. Having never visited the country before, she feels confused, anxious,
uncomfortable, and in need of information and advice during her stay. She is most likely
experiencing _____.
A. claustrophobia
B. culture shock
C. cognitive dissonance
D. acculturation
E. boredom
Answer: B
Difficulty: Hard
64. _____ is the tendency to consider one’s culture superior to that of others.
A. Regiocentrism
B. Isolationism
C. Geocentrism
D. Ethnocentrism
E. Polycentrism
Answer: D
Difficulty: Easy

65. Which of the following is a trait of ethnocentrism?

A. Showing no concern for the cultures of others
B. Being eager to adopt the elements of foreign cultures
C. Showing a preference for foreign cultural values to one’s own
D. Respecting ethnic minorities and their culture
E. Failing to comply with the cultural values of one’s own group
Answer: A
66. John, an American national, was sent to India as part of a cultural exchange program from
his university. On his arrival in India, he did not respond to his host who greeted him by
joining his hands. He also declined the tea that was offered, emphasizing a cultural
preference for coffee. He felt that his ways and culture were far superior to the ones in the
host country. In this scenario, John displayed _____.
A. polycentrism
B. idealism
C. ethnocentrism
D. feudalism
E. collectivism
Answer: C
Difficulty: Hard
67. _____ is the ability to accept and adapt to new cultures.

A. Cultural imperialism

B. Cultural intelligence
C. Ethnocentrism
D. Cultural myopia
E. Cultural appropriation
Answer: B
Difficulty: Easy
68. People with cultural intelligence:

A. are flexible in dealing with cultural differences.
B. are uncomfortable with cultural differences.
C. view one’s culture as superior to that of others.
D. view one’s culture as inferior to that of others.
E. are eager to adopt the values of foreign cultures.
Answer: A
69. Someone high in cultural intelligence views cultural differences as _____.

A. threats
B. ethical dilemmas
C. learning opportunities
D. moral dilemmas
E. barriers to learning
Answer: C
Difficulty: Easy

70. The capacities to listen, observe, and learn are the building blocks of cultural intelligence.
These skills and competencies can be developed by better understanding what the
anthropologist Edward T. Hall calls the “_____” languages of culture.
A. graphic
B. silent
C. transformative
D. spectacular
E. vocal
Answer: B
Difficulty: Easy
71. _____ cultures emphasize communication via spoken or written words.

A. High-context
B. Popular
C. High femininity
D. Low-context
E. Monochronic
Answer: D
Difficulty: Easy
72. People who tend to say or write what they mean and mean what they say belong to _____
cultures.
A. high-context
B. popular
C. low-context

D. mass
E. global
Answer: C
Difficulty: Easy
73. In _____ cultures, what is actually said or written may convey only part, and sometimes a
very small part, of the real message.
A. low-context
B. monochronic
C. polychronic
D. popular
E. high-context
Answer: E
Difficulty: Easy
74. Which of the following is true with regard to people in high-context cultures?
A. They rely on situational cues as well as on spoken or written words.
B. The main part of the real message is conveyed by what is actually said.
C. Body language is ignored in the communication process.
D. They emphasize the importance of doing one thing at a time.
E. They focus on using time to accomplish many different things at once.
Answer: A
Difficulty: Easy

75. Cultures where it is possible to begin making business deals only after social relationships
are established are referred to as _____ cultures.
A. ethnocentric
B. high-context
C. xenocentric
D. polychronic
E. popular
Answer: B
Difficulty: Easy
76. Monochronic cultures focus on _____.

A. gestures
B. written language
C. social context
D. time
E. space
Answer: D
Difficulty: Easy
77. In _____ cultures, people tend to do one thing at a time.

A. ethnocentric
B. xenocentric
C. monochronic
D. popular
E. high-context

Answer: C
Difficulty: Easy
78. Most businesspeople in the United States schedule meetings with specific people and focus
on a specific agenda for an allotted time. This is characteristic of a(n) _____ culture.
A. polychronic
B. low-context
C. ethnocentric
D. high-context
E. monochronic
Answer: E
Difficulty: Easy
79. In _____ cultures, time is used to accomplish many different things at once.
A. polychronic
B. ethnocentric
C. low-context
D. high-context
E. monochronic
Answer: A
Difficulty: Easy
80. Which of the following is true about members of polychronic cultures?

A. They are known to be punctual without exception.

B. They do only one thing at a time.
C. They are flexible in their views of time.
D. They regard time as the primary focus of business.
E. They have a pre-determined sequence of agenda.
Answer: C
Difficulty: Easy
81. Oskar Gassner, a German businessman, decided to meet one of his clients in the latter’s
office in Abu Dhabi. He was frustrated to find that after an initial warm greeting, his client
continued to deal with the continuous stream of visitors flowing in and out of his office.
Gassner concluded that he was not being given the dedicated attention he deserved. This is
because Gassner closely identifies his working style with the _____ cultural values.
A. low-context
B. monochronic
C. high-context
D. xenocentric
E. polychronic
Answer: B
Difficulty: Hard
82. _____ is the study of how people use space to communicate.

A. Proxemics
B. Kinesics
C. Haptics
D. Chronemics
E. Vocalics

Answer: A
Difficulty: Easy
AACSB: Written and oral communication
83. Which of the following is true about proxemics?

A. It studies the importance of time in the context of business.
B. It emphasizes the importance of gestures in the communication process.
C. It emphasizes verbal communication.
D. It focuses on the use of space in communication.
E. It focuses on the comparative analysis of the cultural traits of different groups.
Answer: D
Difficulty: Easy
AACSB: Written and oral communication
84. Ray is currently writing his doctoral thesis, which is a comparative study on the use and
treatment of physical space in communication between people across cultures. His thesis is
a study on _____.
A. haptics
B. kinesics
C. vocalics
D. chronemics
E. proxemics
Answer: E
Difficulty: Hard

85. Which of the following describes cultural tightness-looseness?

A. The ability to accept and adapt to new cultures
B. The strength of social norms and tolerance for deviations
C. The confusion and discomfort a person experiences when in an unfamiliar culture
D. The tendency to consider one’s culture superior to others
E. The tendency to rely on nonverbal and situational cues
Answer: B
Difficulty: Easy
86. Which of the following is one of the focuses of cultural tightness-looseness?

A. The tolerance that exists for any deviations from norms
B. The superiority of home country values over a foreign culture
C. The first interaction with a new culture and the anxieties associated with it
D. The time when a new culture becomes the subject of one’s criticism
E. The ability to interpret the real message from what is being said
Answer: A
Difficulty: Easy
87. In a _____ culture, people guide their behavior according to expectations set by prevailing
social norms.
A. low-context
B. loose
C. monochronic
D. polychronic
E. tight
Answer: E

Difficulty: Easy
88. Which of the following countries has a tight culture?

A. Netherlands
B. United States
C. Malaysia
D. Australia
E. New Zealand
Answer: C
Difficulty: Easy
89. The goal set by tight cultures is to:

A. fit in.
B. stand out.
C. remain complacent.
D. attract attention.
E. disregard the social norms.
Answer: A
Difficulty: Easy
90. In a loose culture, _____.

A. people adhere to the social norms
B. people are expected to fit in
C. people are discouraged to speak out

D. deviations from norms are tolerated

E. conformity to social norms is uniform and absolute
Answer: D
Difficulty: Easy
91. Which of the following countries has a loose culture?

A. South Korea
B. Australia
C. Japan
D. Malaysia
E. Singapore
Answer: B
Difficulty: Easy
92. Which of the following is true about loose cultures?

A. A high degree of conformity to social norms is present.
B. Tolerance for deviation is absent.
C. The goal is to fit into the societal expectations.
D. Social norms are narrow and unambiguous.
E. Non-criminal deviations from norms tend to be tolerated.
Answer: E
Difficulty: Easy

93. A mix of cultural tightness and looseness in a cross-cultural team may result in _____.
A. synchronized performance
B. consistent productivity
C. soft or unstated conflict
D. mitigation of conflict
E. uniform and high inclination to volunteer
Answer: C
Difficulty: Easy
94. In a cross-cultural team, a member from the loose culture may show an inclination for
which of the following?
A. Looking toward formal authority for direction
B. Criticizing others
C. Being slow to volunteer
D. Being slow to display emotion
E. Always being on time
Answer: B
Difficulty: Easy
95. Which of the following is a cultural dimension identified by Geert Hofstede?

A. Social orientation
C. Social context
D. Uncertainty avoidance
E. Socialization
Answer: D


Difficulty: Easy
96. The _____ assumes that a generalized cultural value applies equally well to all members of
the culture.
A. ecological fallacy
B. naturalist theory
C. etymological theory
D. definist culture
E. existential process
Answer: A
Difficulty: Easy
97. Kiera, a resident of Ukraine, decides to travel to the United States for a vacation. Her
impression about Americans, who she thinks are strongly individualistic without exception,
derives from Stephan. Stephan was once Kiera’s tenant and the only American she has ever
met. Stephan is in the danger of falling prey to the _____.
A. regression fallacy
B. ethical dilemma
C. Samaritan’s dilemma
D. existential fallacy
E. ecological fallacy
Answer: E
Difficulty: Hard

98. _____ is the degree to which a society accepts unequal distribution of power.
A. Masculinity–femininity
B. Proxemics
C. Power distance
D. Individualism–collectivism
E. Power tactics
Answer: C
Difficulty: Easy
99. Which of the following is true about people in high-power-distance cultures?

A. They do not accept differences in rank.
B. They tend to be tolerant of power.
C. They display a narrow perception of the mind.
D. They display egalitarian relationships.
E. They have no respect for the elderly.
Answer: B
Difficulty: Easy
100. The extensive use of words like “I” and “me” in conversations and meetings reflect a
cultural tendency toward _____.
A. collectivism
B. nationalism
C. masculinity
D. individualism
E. socialism
Answer: D


Difficulty: Easy
101. _____ had the highest individualism score of any country in Hofstede’s data.
A. The United States
B. The United Kingdom
C. Canada
D. Australia
E. China
Answer: A
Difficulty: Easy
102. _____ is the degree to which a society tolerates risk and change.
A. Culture shock
B. Cultural assimilation
C. Imperialism
D. Power distance
E. Uncertainty avoidance
Answer: E
Difficulty: Easy
103. In high uncertainty-avoidance cultures, one would expect to find a preference for _____.
A. openness to change
B. innovation

C. predictability
D. openness to risk
E. ambiguity
Answer: C
Difficulty: Easy
104. Members of low uncertainty-avoidance cultures display:

A. apathy toward innovation.
B. affinity for rules.
C. preference for structure.
D. openness to change.
E. rigidity toward change.
Answer: D
Difficulty: Easy
105. Vincent Melville, a successful artist, lives and works in Paris. He does not travel much.
Like many of his peers, he too has declined multiple offers to teach in famous schools of
art outside Paris. He does not prefer change and likes predictability, order, and structure in
his life. Vincent Melville displays traits of being a member of a _____ culture.
A. low uncertainty-avoidance
B. short-term oriented
C. long-term oriented
D. xenocentric
E. high uncertainty-avoidance
Answer: E
Difficulty: Hard


106. Which of the following defines masculinity–femininity?

A. It is the degree to which a society values assertiveness and materialism versus feelings,
relationships, and quality of life.
B. It is the ratio of men and women in the workforce at a given point of time.
C. It is the degree to which a society values the role of men and women as the propagators of
its culture.
D. It refers to the core differences of gender that are mirrored in the interaction between a man
and a woman.
E. It refers to the importance of men versus women in a society.
Answer: A
Difficulty: Easy
107. _____ has the highest masculinity score in Hofstede’s research.

A. Malaysia
B. Japan
C. India
D. France
E. Germany
Answer: B
Difficulty: Easy
108. Which of the following expressions points toward a high masculine score?
A. Men tend to be physically stronger than women.

B. Women tend to have very fixed ideas about what men are like.
C. Women tend to be more patient than men.
D. Men tend to have a greater tolerance for risk than women do.
E. Men tend to have a rigid notion about what women are like.
Answer: E
109. _____ is the degree to which a society emphasizes short-term or long-term goals.
A. Uncertainty avoidance
B. Power distance
C. Time orientation
D. Time preference
E. Individualism-collectivism
Answer: C
Difficulty: Easy
110. Which of the following pillars of management advocates that a person to be inquisitive and
curious about cultural differences?
A. Relationship management
B. Perception management
C. Finance management
D. Self-management
E. Crisis management
Answer: B
Difficulty: Easy

111. Which of the following is a characteristic of intercultural competencies?

A. It refers to acting competent when working in another culture.
B. It does not tolerate cultural diversity.
C. It involves being judgmental about a cultural norm.
D. It refers to the superiority of one culture to another.
E. It does not require a person to be open-minded about a culture.
Answer: A
Difficulty: Easy
112. Foot-O, a local footwear company, has made a payment to the German footwear giant
Buirick GmbH to use the foreign company’s excellent method of shoe making. Which of
the following is this an example of?
A. Franchising
B. Insourcing
C. Joint venture
D. Foreign subsidiary
E. Licensing agreement
Answer: E
Difficulty: Hard
113. Derrick decides to shut down his steel business in Kenya and shift the production to his
home country, the United States. The rising labor problems and political disruptions in the
host country had led him to make this decision. This method of shifting of business to a
native location is called _____.

A. joint venture
B. foreign subsidiary
C. outsourcing
D. franchising
E. reshoring
Answer: E
Difficulty: Hard
114. Matata, a Japanese firm that manufactures automobile parts, was running at a loss in its
offshore outlet in Mexico due to the governmental and civil disruptions in the country.
Thus, it withdrew its business outlets from Mexico. At this opportunity, another Japanese
firm, Lui Corporation, entered into business in Mexico. With this decision, Lui Corporation
has made itself liable to _____.
A. a licensing agreement
B. a regional economic alliance
C. political risk
D. insourcing
E. joint venture
Answer: C
Difficulty: Hard
115. Mobike, a major motorcycle manufacturer sells its motorcycles in more than 20 countries
across the globe. According to this information, Mobike is an example of a _____.
A. foreign subsidiary
B. joint venture
C. transnational corporation
D. franchise
E. greenfield venture

Answer: C
116. One of the new employees at Colleen’s firm is from Asia. She looks lost most of the time
and is not interacting well with others in the office. Which of the following terms best
describes her situation?
A. Ethnocentrism
B. Self-concordance
C. Proxemics
D. Culture shock
E. Ethical dilemma
Answer: D
Difficulty: Hard
117. Todd was send to North Korea on a project by his company. He is accompanied by his
wife, Sarah. While Todd makes an effort to understand and adapt to the culture and ways of
the Koreans, Sarah feels out of place. What does Todd’s behavior reflect?
A. Culture shock
C. Ethnocentrism
D. Monochronic cultural identity
E. Low-context cultural ideals
Answer: B
Difficulty: Hard

118. Juan went to Japan on a company assignment. He often got confused because his hosts did
not articulate their expectations and goals clearly. He would ask a lot of questions and
would find himself talking a lot. Later, he learnt that he had to consider their gestures to get
the complete picture. Which of the following terms best describes the culture of Juan’s
hosts?
A. High-context culture
B. Ethnocentrism
C. Polychronic culture
D. Monochronic culture
E. Tight culture
Answer: A
Difficulty: Hard
119. Dom visited one of the Middle East countries to discuss strategic alliance with a client. He
noticed that his hosts wouldn’t mind doing a lot of other things simultaneously during the
meeting. Dom was baffled by the amount of interruptions that took place while interacting
with his client. Which of the following terms best describes the culture of Dom’s client?
A. Ethnocentrism
B. Polychronic culture
C. Tight culture
D. Low-context culture
E. Transitional culture
Answer: B
Difficulty: Hard

120. Veronica has been recruited as a human resource manager in a firm based in China. She
soon realizes that the work culture at her new office is entirely different from that of her
previous firm, which was based in the U.S. In her new office, she could not question an
order passed by a higher authority. What kind of a culture is Veronica facing in her new
office?
A. Individualistic culture
B. Loose culture
C. Polychronic culture
D. High-power-distance culture
E. Low-context culture
Answer: D
Difficulty: Hard
121. Patrick, who was posted as a manager in a firm in India, was able to quickly adjust to the
host country’s culture and work ethics. His self-confidence and flexible nature allowed him
to accept and adapt to the cultural differences well. Which trait of Patrick is displayed in
the given scenario?
A. Ethnocentrism
B. Intercultural competency
C. Xenocentrism
D. Uncertainty avoidance
E. Egocentrism
Answer: B
Difficulty: Hard
Essay

122. Name and briefly define some common market-entry strategies that help companies go
global.
Answer: Some common market-entry strategies that help companies go global are global sourcing;
exporting and importing; and licensing and franchising.
A common first step into international business is global sourcing—the process of purchasing
materials, manufacturing components, or locating business services around the world.
A second form of international business involves exporting—selling locally made products in
foreign markets. The flipside of exporting is importing—buying foreign-made products and
selling them in domestic markets.
Another form of international business is the licensing agreement where foreign firms pay a fee
for rights to make or sell another company’s products in a specified region. Franchising is a
form of licensing in which a foreign firm buys the rights to use another’s name and operating
methods in its home country.
123. Define culture. Explain the importance of cultural intelligence.
Answer: Culture is a shared set of beliefs, values, and patterns of behavior common to a group of
people. People with cultural intelligence, or the ability to accept and adapt to new cultures,
are flexible in dealing with cultural differences and willing to learn from what is
unfamiliar. They use that learning to self-regulate and modify their behaviors to act with
sensitivity toward another culture’s ways. In other words, someone high in cultural
intelligence views cultural differences not as threats but as learning opportunities.
124. Distinguish between tight and loose cultures. Provide examples.

Answer: In a tight culture, such as ones found in Malaysia, Korea, or Japan, people guide their
behavior according to expectations set by very clear social norms. They try to conform to
these norms, understanding that any deviation will be noticed and discouraged and not be
tolerated. The goal is to fit in and not stand out. On the other hand, in a loose culture, such
as Hungary, Brazil, or Australia, people show general or mixed concern for social norms,
and these norms may be broad and ambiguous. Conformity is mixed; deviations from
norms tend to be tolerated unless they reach criminal territory or the extremes of morality.
125. What do you mean by intercultural competencies? What are the different pillars of
intercultural competencies?
Answer: Intercultural competencies are skills and personal characteristics that help us be
successful in cross-cultural situations. The three pillars of intercultural competency are
perception management, relationship management, and self-management. In perception
management, a person must be inquisitive and curious about cultural differences. Being
flexible and nonjudgmental are important when interpreting and dealing with situations in
which differences are present. In relationship management, a person must be genuinely
interested in others, be sensitive to one’s own emotions and feelings, and be able to make
personal adjustments while engaging in cross-cultural interactions. In self-management, a
person must have a strong sense of personal identity and understand his or her own
emotions and values. One must also stay self-confident even in situations that call for
personal adaptations because of cultural differences.

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Ch05: Global Management and Cultural Diversity

1. The growing interdependence among elements of the global economy is known as

Copyright © 2015 John Wiley & Sons, Inc. 5-1

3. Cultural awareness is an important characteristic of a truly global manager.

5. A common first step into international business is global sourcing.

Copyright © 2015 John Wiley & Sons, Inc. 5-2

7. In exporting, local products are sold to foreign customers.

Copyright © 2015 John Wiley & Sons, Inc. 5-3

Bloom’s Taxonomy: Comprehension

12. Tariffs are basically taxes that governments impose on imports.

Copyright © 2015 John Wiley & Sons, Inc. 5-4

AACSB: Diverse and multicultural work environments

16. Extraction of excessive profits by global corporations is a potential host-country cost.

Copyright © 2015 John Wiley & Sons, Inc. 5-5

AACSB: Diverse and multicultural work environments

19. Knowledge about foreign cultures is known as cultural intelligence.

Copyright © 2015 John Wiley & Sons, Inc. 5-6

Learning Objective: 5.3

24. Proxemics is the study of how people use space to communicate.

Copyright © 2015 John Wiley & Sons, Inc. 5-7

26. In a tight culture, deviations from norms tend to be tolerated.

Copyright © 2015 John Wiley & Sons, Inc. 5-8

29. People in high uncertainty-avoidance cultures prefer structure in their lives.

31. Which of the following is an effect of globalization?

Copyright © 2015 John Wiley & Sons, Inc. 5-9

Copyright © 2015 John Wiley & Sons, Inc. 5-10

36. The growth of export industries _____ the exporting country.

Copyright © 2015 John Wiley & Sons, Inc. 5-11

Copyright © 2015 John Wiley & Sons, Inc. 5-12

Copyright © 2015 John Wiley & Sons, Inc. 5-13

43. _____ are taxes governments levy on imports from abroad.

44. The goal of most tariffs is to:

Copyright © 2015 John Wiley & Sons, Inc. 5-14

Learning Objective: 5.1

45. Which of the following countries is part of NAFTA?

46. Arguments against NAFTA blame the organization for:

Copyright © 2015 John Wiley & Sons, Inc. 5-15

48. A _____ is an MNE that operates worldwide on a borderless basis.

49. Which of the following is one of the potential host-country benefits?

Copyright © 2015 John Wiley & Sons, Inc. 5-16

50. Home-country criticisms of global firms include complaints about:

51. _____ involves illegal practices to further one’s business interests.

Copyright © 2015 John Wiley & Sons, Inc. 5-17

53. Which of the following is an example of child labor?

54. What are sweatshops?

Copyright © 2015 John Wiley & Sons, Inc. 5-18

55. Which of the following is a characteristic of a sweatshop?

56. Which of the following is an example of a sweatshop?

57. Why are some scarce minerals known as conflict minerals?

Copyright © 2015 John Wiley & Sons, Inc. 5-19

E. They are available for a cheap price.

59. Which of the following is true about culture?

Copyright © 2015 John Wiley & Sons, Inc. 5-20

62. Culture shock is:

Copyright © 2015 John Wiley & Sons, Inc. 5-21

D. an assumption that one’s own culture is inferior to that of others.

Copyright © 2015 John Wiley & Sons, Inc. 5-22

Bloom’s Taxonomy: Knowledge

65. Which of the following is a trait of ethnocentrism?