Free Master of International Business Questions and Answers — Questions and Answers

Question 1: What Does MNC Stand For?

Multi-National Cooperation
Multi-National Collaboration
Multi-National Corporation (Correct answer)
Multi-National Company

Correct answer: Multi-National Corporation

MNC stands for Multi-National Corporation. This term refers to a company that operates in several countries, not just its home country. MNCs typically have facilities and other assets in at least one country other than their home country, engaging in international business activities.

Question 2: Producing domestically or in just one nation, _______ concentrates on marketing these goods abroad, or the opposite is true.

International
Transnational
Global corporation (Correct answer)
None of the above

Correct answer: Global corporation

A global corporation, in this context, refers to a company that produces goods domestically or in a single nation but focuses on marketing these goods abroad, or vice versa. This business model emphasizes a centralized production or sourcing strategy combined with an international market reach. It contrasts with a transnational corporation, which might have decentralized operations across many countries.

Question 3: Which of the following is not one of the Porter Five Forces?

Suppliers
Buyers
Industry rivalry
Complementary products (Correct answer)

Correct answer: Complementary products

Porter's Five Forces framework analyzes the competitive intensity and attractiveness of an industry. The five forces are: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products or services, and intensity of rivalry among existing competitors. Complementary products are not one of the original five forces, though they can influence industry dynamics.

Question 4: It is stated by ________ in the Theory of Relative Factor Endowments.

Ohlin and hechsher (Correct answer)
c. f w Taussig
Adam smith
David Ricardo

Correct answer: Ohlin and hechsher

The Theory of Relative Factor Endowments, also known as the Heckscher-Ohlin (H-O) model, was developed by Swedish economists Eli Heckscher and Bertil Ohlin. This theory posits that countries will export goods that make intensive use of their relatively abundant and cheap factors of production, and import goods that make intensive use of their relatively scarce and expensive factors. It explains patterns of international trade based on differences in factor endowments.

Question 5: The most popular payment method in international trade is __________, because it gives the exporter the best guarantee that they will be reimbursed for the goods they sell abroad.

drafts
letter of credit (Correct answer)
bill of lading
open account

Correct answer: letter of credit

The letter of credit is considered the most popular and secure payment method in international trade, offering the best guarantee for exporters. It is a commitment by a bank on behalf of the buyer (importer) to pay the seller (exporter) a specified sum of money, provided the exporter presents the required documents by a specified deadline. This significantly reduces the risk of non-payment for the exporter.

Question 6: According to ________, the principle of comparative cost advantage

economist David Ricardo (Correct answer)
Adam smith
Gottfried Haberle
Heckscher Ohlin

Correct answer: economist David Ricardo

The principle of comparative cost advantage, often referred to as the theory of comparative advantage, was developed by the economist David Ricardo. This theory states that countries can benefit from international trade by specializing in the production of goods in which they have a lower opportunity cost, even if another country has an absolute advantage in producing all goods. It forms a cornerstone of international trade theory.

Question 7: _________ provides the Comparative Cost Trade Theory.

Adam smith
Heckscher Ohlin
Gottfried Haberle
David Ricardo (Correct answer)

Correct answer: David Ricardo

The Comparative Cost Trade Theory, also known as the Theory of Comparative Advantage, was famously provided by David Ricardo. This fundamental economic theory explains that countries should specialize in producing goods where they have a lower opportunity cost, leading to mutual gains from trade even if one country is more efficient in producing all goods. It remains a core concept in understanding international trade patterns.

Question 8: One common nickname for proponents of democratic globalization is

Libertarians
Globalists
Pro-globalists (Correct answer)
None of the above

Correct answer: Pro-globalists

Proponents of democratic globalization are accurately referred to as 'Pro-globalists' because this term directly indicates their support for the process of globalization, often with an emphasis on democratic values and institutions. While 'Globalists' is a broader term, 'Pro-globalists' specifically highlights their advocacy for this interconnected world. This distinguishes them from those who might be critical or skeptical of globalization.

Question 9: How much it costs to transport goods has an impact on

global supply chains
pattern of trade
boundaries between tradable and non-tradable goods
All of the above (Correct answer)

Correct answer: All of the above

The cost of transporting goods is a fundamental factor influencing various aspects of international business. It directly impacts the viability and efficiency of global supply chains, as higher costs can make certain routes or sourcing options uneconomical. Furthermore, transport costs shape the pattern of trade by determining which goods are cost-effective to move across borders, and they define the boundaries between tradable and non-tradable goods, as some goods become non-tradable if transport costs exceed their value.

Question 10: Companies with headquarters in one nation but operating in others are known as .

Off-shore
International
Multinational (Correct answer)
Transnational

Correct answer: Multinational

A multinational company (MNC) is precisely defined as an enterprise that has its headquarters in one country but operates and manages facilities (like production plants or service centers) in at least one other country. This operational presence across national borders is the distinguishing characteristic of a multinational corporation. Other terms like 'transnational' often imply a more integrated global structure, but 'multinational' is the foundational term for operating in multiple nations.

Question 11: Toy marketers ________ have achieved global dominance.

China
Japan
California (Correct answer)
UAE

Correct answer: California

California has been a significant hub for the toy industry, with major companies like Mattel (creators of Barbie and Hot Wheels) having their origins and headquarters there. These companies have achieved extensive global reach and market share, contributing to California's reputation as a center for toy innovation and marketing dominance. This makes 'California' a plausible answer in the context of global toy market leadership.

Question 12: A company that owns and operates manufacturing plants in ___________ is known as a multinational.

at least two developed countries and one developing country
one country but relies on multiple markets for the consumption of goods it produces
both developed and developing countries
at least two countries (Correct answer)

Correct answer: at least two countries

A company is classified as a multinational when it owns and operates manufacturing plants or other significant facilities in at least two different countries. This presence in multiple national markets, beyond just exporting or licensing, is the defining characteristic of a multinational corporation. The number and type of countries (developed or developing) can vary, but the minimum requirement is operation in more than one nation.

Question 13: The country where short-term joblessness is most likely to result from international trade is ________ .

Import-competing industries (Correct answer)
industries that sell to only foreign buyers
industries that sell to domestic and foreign buyers.
industries in which there are neither imports nor exports

Correct answer: Import-competing industries

Short-term joblessness due to international trade is most likely to occur in import-competing industries. When a country opens up to trade, domestic industries that produce goods also imported from abroad face increased competition. This can lead to reduced demand for domestically produced goods, causing some firms to downsize, lay off workers, or even shut down, resulting in temporary unemployment for those in affected sectors.

Question 14: NAFTA is pronounced as.

Northern association for trade
Northern Atlantic trade agreement
North American Free Trade Agreement (Correct answer)
North African trade association

Correct answer: North American Free Trade Agreement

NAFTA is an acronym that stands for the North American Free Trade Agreement. This agreement was a landmark pact between Canada, Mexico, and the United States, designed to eliminate most tariffs and trade barriers among the three countries. Knowing the full name is essential for understanding its purpose and scope in international trade.

Question 15: The initials OECD are an acronym for.

Organization for Economic Co-operation and Development (Correct answer)
Organization for Economic Coordination and Development
Organization for Environmental Cooperation and Development.
Organization for Environmental Control and Development

Correct answer: Organization for Economic Co-operation and Development

OECD is an internationally recognized acronym for the Organization for Economic Co-operation and Development. This intergovernmental economic organization works to stimulate economic progress and world trade. Its full name accurately reflects its mission of fostering cooperation and development among member countries.

Question 16: The company's global operations include production, marketing, investment, and operation.

Multinational
Global
Transnational (Correct answer)
International

Correct answer: Transnational

A transnational company (TNC) is characterized by its integrated global operations, encompassing production, marketing, investment, and management across multiple countries without a strong national identity or a single home country. Unlike a traditional multinational, a TNC often decentralizes decision-making and integrates its global activities to leverage local advantages and achieve global efficiency. This structure allows for a more seamless and interconnected global presence.

Free Master of International Business Questions and Answers

What Does MNC Stand For?