1. A multinational enterprise is a firm that engages in foreign direct

Chapter 1

• A multinational enterprise is a firm that engages in foreign direct

investment by directly investing in, controlling, and managing value -added activities in other countries.

*a. True

• False

• The term “emerging markets” refers to all markets other than the develop ed

markets.

*a. True

• False

• Gross domestic product (GDP) is the sum of value added by resident firms,

households, and governments operating in an economy.

*a. True

• False

• Majority of the global GDP is contributed by the emerging marke ts.

• True

*b. False

• Purchasing power parity (PPP) is a conversion that determines the

equivalent amount of goods and services different currencies can purchase.

*a. True

• False

• Purchasing power parity (PPP) is calculated as the sum of value added

by resident firms, households, and governments operating in an economy.

• True

*b. False

• Emerging markets contribute about 30% of global GDP without adjusting

for purchasing power parity (PPP).

*a. True

• False

• More than half the GDP produced by emerging markets comes from outside

the BRIC countries.

(Global Business 4e Mike Peng) (Test Bank, Correct Answer are marked with*) 1 / 4

• True

*b. False

• On the global economic pyramid, the Triad refers to developed economies

consisting of North A merica, Western Europe, and Japan.

*a. True

• False

• All the countries of the BRIC belong to the top tier of the global economic

pyramid.

• True

*b. False

• The second tier of the global economic pyramid is made up of countries

with a per capita annual income of more than $20,000.

• True

*b. False

• The emerging markets of the world are placed at the top of the global

economic pyramid.

• True

*b. False

• The global economic pyramid does not represent countries that have a

per capita annual income of less than $2,000.

• True

*b. False

• The term "base of the pyramid" represents economies where individuals

make less than $2,000 a year.

*a. True

• False

• Reverse innovations are innovations that are adopted first in the

Triad-based multinationals and then diffused around the world.

• True

*b. False

• Reverse innovation is an example of bottom up innovation. 2 / 4

*a. True

• False

• The Group of 20 includes the European Union (EU) —a regional bloc.

*a. True

• False

• Globalization has driven up the salaries of low -level jobs.

• True

*b. False

• An international premium is a significant pay raise awarded to expatriate

employees working abroad.

*a. True

• False

• New York has more Fortune Global 500 company headquarters than any other

city.

• True

*b. False

• Overall, the focus on firm performance around the globe defines the field

of global business more than anything else.

*a. True

• False

• An institution-based view suggests that the success and failure of firms

are enabled and constrained by busine ss norms of the host nation.

*a. True

• False

• Formal institutions include laws, regulations, and rules.

*a. True

• False

• The institution-based view places emphasis on the external factors that

could affect a firm.

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*a. True

• False

• Focusing on a firm’s internal resources and capabilities is the main

emphasis of the resource -based view.

*a. True

• False

• Liability of foreignn ess is the inherent disadvantage experienced by

foreign firms in host countries because of their non -native status.

*a. True

• False

• Most opponents of globalization view globalization as a long -run

historical evolution since trade began.

• True

*b. False

• According to the pendulum view of globalization, globalization is a

relatively new phenomenon triggered by the information revolution of early 1990s.

• True

*b. False

• Scenario planning is a technique to prepare and plan exclusively for

high risk scenarios.

• True

*b. False

• Standardization of markets would lead to a state of semiglobalization.

• True

*b. False

• Semiglobalization is primarily caused by the practice of total

isolation.

• True

*b. False

• The current state of globalization around the world is that of
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