MIB Master of International Business 5 — Questions and Answers
Question 1: In international HRM, 'ethnocentric' staffing policy means:
- Hiring only locals for all positions in host countries
- Filling key positions abroad with home-country nationals (Correct answer)
- Recruiting the best talent globally regardless of nationality
- Using regional managers from nearby countries
Correct answer: Filling key positions abroad with home-country nationals
An ethnocentric staffing approach assigns parent-country nationals (PCNs) to senior positions in foreign subsidiaries, prioritizing home-country management practices and control.
Question 2: Porter's Five Forces applied internationally would consider 'threat of new entrants' as lower in markets with:
- Weak intellectual property laws
- Low capital requirements and no regulations
- High tariff barriers and strict local content laws (Correct answer)
- Abundant low-cost labor
Correct answer: High tariff barriers and strict local content laws
High tariff barriers and local content requirements raise entry costs significantly, deterring foreign competitors and reducing the threat of new entrants in that market.
Question 3: Which concept describes the tendency of trade to be inversely related to geographic and cultural distance between countries?
- Gravity Model of Trade (Correct answer)
- Heckscher-Ohlin Model
- Product Life Cycle Theory
- New Trade Theory
Correct answer: Gravity Model of Trade
The Gravity Model predicts that trade volume between two countries increases with their economic size (GDP) and decreases with the distance between them — analogous to Newton's law of gravity.
Question 4: A multinational's 'country risk assessment' would least likely evaluate:
- Political stability and government corruption levels
- Currency volatility and repatriation restrictions
- The educational attainment of the CEO's home-country workforce (Correct answer)
- Legal system effectiveness and contract enforcement
Correct answer: The educational attainment of the CEO's home-country workforce
Country risk focuses on host-country factors like political risk, currency risk, and legal risk — the CEO's home-country workforce education is irrelevant to host-country risk assessment.
Question 5: The 'Uppsala model' of internationalization describes a firm's expansion as:
- Simultaneous entry into all global markets at launch
- Gradual, sequential expansion starting with psychically close markets (Correct answer)
- Acquisition-led entry into the largest available markets
- Technology licensing before any physical presence abroad
Correct answer: Gradual, sequential expansion starting with psychically close markets
The Uppsala model (Johanson & Vahlne, 1977) suggests firms incrementally expand internationally, first entering markets that are culturally and geographically close, then progressively more distant ones.
Question 6: Which document issued by the exporting bank guarantees payment to a seller once specified shipping documents are presented, reducing counterparty risk in international trade?
- Bill of lading
- Letter of credit (Correct answer)
- Promissory note
- Export insurance certificate
Correct answer: Letter of credit
A Letter of Credit (LC) is a bank guarantee that the seller will receive payment upon presenting required documents (e.g., bill of lading, invoice), protecting both buyer and seller in cross-border transactions.
Question 7: 'Glocalization' in international business strategy refers to:
- Moving all operations to global free trade zones
- Adapting globally standardized products and marketing to suit local markets (Correct answer)
- Eliminating local subsidiaries in favor of one global headquarters
- Using global logistics networks exclusively for distribution
Correct answer: Adapting globally standardized products and marketing to suit local markets
Glocalization combines 'global' scale with 'local' adaptation — companies like McDonald's or Coca-Cola maintain global brands but tailor products, flavors, and messaging to local tastes.
MIB Master of International Business 5
In international HRM, 'ethnocentric' staffing policy means: