CONFIDENTIAL AM/OCT 2007/ADM602

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION
COURSE
COURSE CODE
EXAMINATION
TIME
: INTERNATIONAL BUSINESS ENVIRONMENT
: ADM602
: OCTOBER 2007
: 3 HOURS
INSTRUCTIONS TO CANDIDATES
1. This question paper consists of two (2) parts : PART A (25 Questions)
PART B (5 Questions)
2. Answer ALL questions in PART A and three (3) questions in PART B
i) Answer PART A in the Objective Answer Sheet.
ii) Answer PART B in the Answer Booklet. Start each answer on a new page.
3. Do not bring any material into the examination room unless permission is given by the
invigilator.
4. Please check to make sure that this examination pack consists of:
i) the Question Paper
ii) an Answer Booklet - provided by the Faculty
iii) an Objective Answer Sheet - provided by the Faculty
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
This examination paper consists of 10 printed pages
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PART A
1. Multinational corporations have unique characteristics. In general they:
a
) Have one headquarters, but do business in several countries,
k) Have a large amount of business capital.
c
) Pressure the government to increase the salary of government servants.
d) Move resources, goods, services, and skills across national boundaries without regard
to the country in which their headquarters are located.
e
) Dominate the markets of the world and spread its influences in the host country.
2. All of the following would be environmental factors companies must understand about
countries they plan to operate in except:
a
) Politics.
b) The number of joint venture operations.
c
) Cultural differences.
d) Economic environment.
e
) Technological advancement.
3. Countries can enter global trade in a number of ways, which includes:
a
) Exporting.
b) Licensing.
c
) Joint ventures.
d) Direct investment.
e
) All of the above are correct.
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4. Which of these statements is incorrect?
a) Participation in international business allows firms to achieve economies of scale that
could not be achieved in domestic market.
b) International activities force firms to increase production, which in turn enables the firm
to achieve a rapid learning curve.
c) Participation in international business reduces the number of potential customers and
increases the reliance towards home market.
d
) International business permits firms to hone their competitive skills abroad by meeting
the challenge of foreign products.
e) Participation in international business allows firms to learn and acquire new
management techniques or new technology.
5. Perhaps the most difficult environmental factor for international business managers to
forecast, influence, or integrate into their business plans is:
a
) Global competition.
b) Emerging technology.
c
) Social change.
0 Evolving economic systems.
e
) Demographic change.
6. The basic measure of economic growth which most managers look for when analyzing
a foreign country's potential for investment is the:
a
) Unemployment rate.
b) Consumer price index.
c
) Steady interest rates.
d
) Gross domestic product (GDP).
e
) Good borrowing rates.
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7. Which of the following is not a characteristic of an enabling culture?
a
) Allowing risk taking.
b) Supporting new ideas.
c
) Promoting Continuous Improvement.
d) Learning from mistakes.
e
) Eliminating ambiguity.
8. If Walt Disney signed a contract with a Korean clothing manufacturer to allow the
company to produce and sell children's' clothing with the likeness of Mickey Mouse on
it in return for a royalty payment this would be an example of a:
a
) Licensing agreement.
b) Turnkey operation.
c
) Management contract.
d) Franchising agreement.
e
) Joint venture operations
9. The first step a company should take if it wants to establish an appropriate strategy in
its countries of operation is:
a
) Defining the political aspect of an issue.
k) Assessing the potential political action of other companies and special-interest groups.
c
) Identifying the specific issues facing the firm.
0 Determining the impact of implementing their strategy.
e
) Determining the best way to influence local politics.
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10. Which of the following statements regarding country-by-country attitudes is accurate?
a) Cultures that assume that age and wisdom are correlated usually have a seniority-
based system of advancement.
b) In China and India, there is an extreme degree of female preference which allows
women to be very successful in business and government positions.
c) In societies where the family is the most important group membership, an individual's
acceptance in society depends less on their family's social status or respectability than
on the individual's achievement.
d) The Belgians and the French, more than other nationalities, prefer to work for an
organization rather than to go into business for themselves.
e) In Middle East countries, women have an equal opportunity to reach the top of an
organization's hierarchy.
11. Which of the following is an economic rationale for government intervention in
international trade?
a
) Dealing with friendly countries,
k) Protecting infant industries.
c
) Maintaining spheres of influence.
d) Preserving national identity.
e
) Controlling the activities of foreign firms.
12. If a good was shipped to Iraq via Turkey and Turkey collected a tariff on the goods that
crossed its borders this would be an example of a(n)
a
) Export tariff.
b
) Import tariff.
c
) Export duty.
d
) Transit tariff.
e
) Ad volarem tariff.
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13. Since 2000, declines in employment reflect:
a) A transfer of services away from the industrialized nations toward the emerging
economies.
b) A transfer of services away from the emerging economies toward the industrialized
economies.
c) A transfer of manufacturing away from the industrialized nations toward the emerging
economies.
d) A transfer of manufacturing away from the emerging economies toward the
industrialized economies.
e) A transfer of natural resource allocation away from emerging economies toward
industrialized economies.
14. Which of the following is expected to be a source of economic growth after the
implementation of AFTA within ASEAN countries?
a) The establishment of transaction costs associated with border patrols and customs
procedures.
b) The economies of scale that will be removed when production facilities become more
concentrated.
c
) The gains from more intense competition among ASEAN companies.
d
) The increased exports of agricultural goods from South East Asia to Europe.
e
) The annual meeting of the ASEAN heads' of state.
15. Which of the following statements is false?
a) Many multinational firms emphasize corporate values and culture as forms of corporate
control.
b) Cultural controls require an extensive socialization process to which informal, personal
interaction is central.
c
) The primary instruments of cultural control are the careful selection and training of
corporate personnel and the institution of self-control.
d) Output controls tend to be largely qualitative, whereas, behavioral controls tend to be
largely quantitative.
e) Output controls consist of performance report comparisons and shared norms of
performance.
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16. Control systems should be designed so that:
a
) Local differences are accounted for when comparing performances of subsidiaries.
b
) The benefits gained outweigh the costs of implementing the system.
c
) Only those factors over which the organization has control are evaluated.
d) They are as economical as possible.
e
) All of the above are correct.
17. Many aspects of were seen as exploitative and antithetical to communist
ideology.
a
) Capitalism.
b) Communism.
c
) Socialism.
d) Theology.
e
) Confucianism.
18. When a manager assumes that their methods are best and acceptable to all others, the
manager is showing:
a
) Lack of sensitivity to differences in culture, consumer tastes, or market demand.
b
) Great appreciation for the different environments abroad.
c
) Lack of familiarity with national and international data sources.
d
) Inability to use international data once they are obtained.
e
) An interest in exploring the new parameters of doing international business.
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19. Corporate social responsibility on the part of a business typically extends to, and
includes:
a
) Investors.
b
) Employees.
c
) Consumers.
d) Communities.
e
) All of the above are correct.
20. A remarkable trend in global economies today is the move toward:
a
) Capitalism.
b) Command economies.
c
) Socialism.
d) Mixed economic systems.
e
) Absolute advantage theory.
21 . Which of the statements below does not reflect the meaning of the term "A global
vision"?
a
) Recognizing and reacting to international business opportunities.
b) Expand choices, and improve the standard of living.
c
) Aware of threats from foreign competitors in all markets.
d) Increase involvement in the host country's politics.
e) Effectively using international distribution networks to obtain raw materials and move
finished products to the customer
22. Trade between nations can be measured by looking at:
a
) The changing value of currencies.
b) Balance of trade.
c
) Balance of payments.
d) Exports and imports.
e
) All of the above are correct.
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23. The World Trade Organization (WTO):
a
) Is the oldest trade organization in the world.
b) Has emerged as the most active organization in reducing trade barriers and opening
markets.
c
) Has no interest in settling trade disputes.
d
) Was formed for the benefit of the United States of America.
e
) Is the other name for General Agreements on Tariff and Trade (GATT).
24. Not all of the EU member countries converts to a common currency; the Euro. Those
who did not convert did so because:
a
) They are leaving the EU.
b
) They are forming their own trading block.
c
) They decided to use the U.S. dollars.
d
) They want to preserve the historical heritage of their currency.
e
) They are portraying the stubbornness of deviants.
25. Culture shock:
a
) Is not felt by experienced managers.
b) Can be caused by reentry into one's own culture after a long absence.
c
) Affects individuals in generally similar ways.
d) Is felt only during the initial phases of an overseas assignment.
e
) Is typically met with unparalleled excitement in an expatriate's family.
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PARTB
QUESTION 1
Discuss the advantage and disadvantages of licensing as a method of entering foreign
markets.
(25 marks)
QUESTION 2
To avoid cultural incompetence, managers on foreign assignment must understand the four
dfmensions of culture. Discuss this statement.
(25 marks)
QUESTION 3
Explain why international direct investment may be a good alternative to import/export
activities.
(25 marks)
QUESTION 4
Explain the reasons for the existence of state-owned enterprises.
(25 marks)
QUESTION 5
Discuss the manner in which environmental factors impact conditions for development of
strategy and resource allocation on a global basis.
(25 marks)
END OF QUESTION PAPER
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