Exam Prep Chapter.1 Political, Legal, Tech Environ

International Management, 10e, (Deresky/Miller)

Chapter 1 Assessing the Environment: Political, Economic, Legal, Technological

1) Which of the following is characterized by networks of international linkages comprising economic, financial, political and social markets that bind countries, institutions, and people in an interdependent economy?

A) communism

B) nationalization

C) socialism

D) globalization

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

2) The pace of globalization has slowed and, in most instances, declined in part because of ________.

A) protectionism

B) fluctuating exchange rates

C) free trade agreements

D) cultural differences

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

3) ________ results from the lessening of trade barriers and the increased flow of goods and services, capital, labor, and technology around the world.

A) Economic integration

B) Nationalization

C) Protectionism

D) Mercantilism

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

4) In which of the following groups of trade blocs does most of today's world trade take place?

A) Middle East, China, and India

B) North America, Africa, and Canada

C) Western Europe, Asia, and the Americas

D) Saudi Arabia, Western Europe, and the Gulf

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

5) The ________ is the simplest and most basic form of regional integration.

A) common market

B) political union

C) customs union

D) free trade area

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

6) Which of the following is an example of a customs union?

A) NAFTA

B) ASEAN

C) MERCOSUR

D) EFTA

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

7) Members of ________ allow free trade between members and agree to adopt common tariffs and non-tariff barriers that are applied to imports from nonmember countries.

A) free trade areas

B) customs unions

C) the USMCA

D) the EFTA

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

8) A formal arrangement between two or more countries to reduce or eliminate tariffs is known as a ________.

A) quota arrangement

B) free trade agreement

C) memorandum of association

D) memorandum of understanding

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

9) Regional economic group is defined as ________.

A) an agreement among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services and factors of production between each other

B) an agreement among companies in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services and factors of production between each other

C) an agreement among countries in a geographic region to increase tariff and nontariff barriers to the free flow of goods, services and factors of production between each other

D) an agreement among countries in a geographic region to increase tariff and nontariff barriers to the free flow of goods, services and factors of production with nonmember countries

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

10) A customs union refers to ________.

A) a group of countries committed to (1) removing all barriers to the free flow of goods and services between each other and (2) the pursuit of a common external trade policy

B) a group of countries committed to (1) removing all barriers to the free flow of goods, services and factors of production between each other and the (2) pursuit of a common external trade policy

C) a group of countries committed to (1) removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies

D) a group of countries committed to (1) removing all barriers to the free flow of goods, services and factors of production between each other; (2) the adoption of a common currency; (3) the harmonization of tax rates; and the (4) pursuit of a common external trade policy

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

11) A common market refers to ________.

A) a group of countries committed to (1) removing all barriers to the free flow of goods and services between each other and (2) the pursuit of a common external trade policy

B) a group of countries committed to (1) removing all barriers to the free flow of goods, services and factors of production between each other and the (2) pursuit of a common external trade policy

C) a group of countries committed to (1) removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies

D) a group of countries committed to (1) removing all barriers to the free flow of goods, services and factors of production between each other; (2) the adoption of a common currency; (3) the harmonization of tax rates; and the (4) pursuit of a common external trade policy

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

12) Nations pursuing regional integration seek to ________.

A) increase the scale of the marketplace for firms inside the economic bloc

B) help firms increase the scale of operations and enhanced productivity

C) attract direct investment from outside the bloc

D) all of these

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

13) Which of the following is a disadvantage of economic integration?

A) trade creation

B) loss of sovereignty

C) increased voting influence of current members

D) easier to get consensus with a large number of member countries

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

14) Which of the following is the most likely reason for the establishment of the European Community?

A) broaden the power of communism within East Germany

B) create strict tariffs for trade and international business

C) commit to the removal of trade barriers between countries

D) establish judicial procedures to handle trade violators

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

15) The European Union consists of how many nations?

A) 12

B) 27

C) 34

D) 46

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

16) The European Union is classified as a(n) ________.

A) international organization

B) regional economic group

C) special interest group

D) competing firm

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

17) Which of the following is responsible for implementing the decisions of the European Parliament and the European Council?

A) the Council of the European Union

B) the European Parliament

C) the European Court of Justice

D) the European Commission

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

18) Which of the following is a true statement about China?

A) The Chinese government's shift from communism to capitalism has led to an increase in FDI.

B) China attracts FDI because the government has eliminated elaborate bureaucracies.

C) The Chinese government manipulates market activities for political purposes.

D) China lacks an educated pool of employees due to slowly developing industrialization.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

19) Which of the following countries is today known as the world's leader for outsourced back-office services and, increasingly, for high-tech services?

A) China

B) Brazil

C) Mexico

D) India

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

20) Which is the fourth largest trading bloc after the EU, USMCA, and ASEAN and established in 1991?

A) SAARC

B) ASEAN

C) USMCA

D) MERCOSUR

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

21) To which of the following free-trade agreements do Mexico, Canada and the United States all belong?

A) USMCA

B) ASEAN

C) CAFTA

D) MERCOSUR

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

22) ________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.

A) Governmental risk

B) Operating risk

C) Transaction risk

D) Political risk

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

23) Which of the following is NOT a way to deal with political risk?

A) use hedging (for example, local financing)

B) create dependency (for example, provide control distribution)

C) emphasize adaptation (for example, development assistance)

D) use diversion (for example, control all management decisions)

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

24) Which of the following best describes nationalization?

A) outsourcing of governmental functions to private entities

B) hiring preferences given to locals rather than expatriates

C) government's gradual and subtle actions against a firm

D) forced sale of an MNC's assets to local buyers

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

25) What occurs when a local government seizes and provides inadequate compensation for the foreign-owned assets of a multinational enterprise?

A) trade barrier

B) nationalization

C) expropriation

D) ethnocentrism

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

26) Expropriation is most likely to occur in a country that has ________.

A) numerous MNCs in operation

B) constant political upheaval and change

C) a capitalistic economic system in place

D) stable economic growth and political consistency

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

27) The government of Jonovia seizes all assets of Refresh, a world-famous, soft-drink brand in Jonovia, and offers compensation to the company. This action by the government of Jonovia is an example of ________.

A) private action

B) repatriation

C) privatization

D) expropriation

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

28) Which of the following is an example of a macropolitical risk event?

A) a terrorist attack

B) forced sale of equity to host-country nationals

C) expropriation of corporate assets without prompt and adequate compensation

D) barriers to repatriation of funds

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

29) Zagreb Inc., a transnational energy company, negotiates a multimillion-dollar contract with the government to provide electricity to Pilladia. The government is voted out of power shortly after. The new government cancels all contracts it has with all oil companies but not contracts with firms in other industries. This is an example of ________.

A) barriers to repatriation

B) protectionism

C) confiscation

D) micropolitical risk

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Analytical thinking

30) Intelligentia is attempting to do business in Bazania, but the Bazanian government purposely delays granting Intelligentia the necessary licenses and permissions required to conduct business in the country. Which of the following best describes this situation?

A) creeping expropriation

B) nationalization

C) barriers to repatriation

D) confiscation

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

31) Micropolitical risk events are those that affect ________.

A) multiple industries and companies

B) several other nations in the same region

C) one industry or company or a few companies

D) domestic industries or companies

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

32) Recently, the level of ________ in Europe, for example, was a great concern around the world, in particular regarding concerns in the eurozone brought about by debt problems in Greece.

A) legal risk events

B) political risk events

C) cultural risk events

D) economic risk events

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

33) Expropriation of corporate assets without prompt and adequate compensation is an example of ________.

A) economic risk

B) political risk

C) legal risk

D) cultural risk

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

34) Country risk is considered similar to ________.

A) political risk

B) commercial risk

C) currency risk

D) cross-cultural risk

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

35) For autonomous international subsidiaries, most of the influence from political risks will be in which of the following areas?

A) financial operations

B) ownership and control

C) marketing and sales operations

D) managerial strategy and policy-making

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

36) For global corporations, the primary influence of political risks is likely to be on the firm's ________.

A) ownership and control

B) hiring and recruiting policies

C) transfers of money or products

D) managerial strategy and policy-making

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

37) An individual from a country with a high degree of political risk would most likely be from ________.

A) Canada

B) Singapore

C) Iraq

D) Malaysia

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

38) An individual from a country with a low degree of political risk would most likely be from ________.

A) Venezuela

B) Canada

C) Zimbabwe

D) Iraq

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

39) Which of the following characterizes country risk?

A) The political and legal systems of adjacent nations greatly influence the country risk of nations that host foreign firms.

B) Country risk will change only after the creation of laws and regulations that affect foreign firms.

C) A nation's country risk level remains fairly constant until the election and installation of a new political leader.

D) Country risk is always present, but its nature and intensity vary over time and from country to country.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

40) ________ includes the initiation of joint ventures with nationals (individuals or those in firms, labor unions, or government) to reduce political risks.

A) Development assistance

B) Equity sharing

C) Localization of the operation

D) Participative management

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

41) Which of the following means of political risk reduction is best suited for firms that decide a high-risk environment is worth the potential returns?

A) avoidance

B) adaptation

C) hedging

D) dependency

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

42) Which of the following strategies is a firm most likely to use, if it initiates a joint venture with a local company in a foreign country, as a way of adapting to risk?

A) equity sharing

B) participative management

C) localization of the operation

D) development assistance

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

43) Which of the following means of adaptation to political risk requires that a firm actively involve nationals in the management of its subsidiary?

A) equity sharing

B) participative management

C) localization of the operation

D) development assistance

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

44) In addition to avoidance and adaptation, two other means of risk reduction available to managers are ________ and ________.

A) qualitative approach; quantitative approach

B) dependency; hedging

C) localization; development assistance

D) equity sharing; participative management

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

45) Which of the following is a form of protectionist policies?

A) patents

B) quotas

C) foreign direct investment

D) bribes

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

46) ________ poses a severe and random political risk to company personnel and assets, and interrupts the conduct of business.

A) Globalization

B) Nationalism

C) Privatization

D) Terrorism

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

47) If a foreign-based firm borrows money from a host country bank as a hedge against being forced out of operation without adequate compensation, the firm is managing political risk with ________.

A) local debt financing

B) position control

C) development assistance

D) adaptation

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

48) Political risk insurance and local debt financing are both forms of ________.

A) input control

B) adaptation

C) equity sharing

D) hedging

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

49) Which of the following is a form of hedging?

A) expatriate control in key positions

B) development assistance

C) local debt financing

D) localization of the operation

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

50) A country's ability or intention to meet its financial obligations determines its ________.

A) technological risk

B) legal risk

C) political risk

D) economic risk

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

51) Past court decisions serve as precedents to the interpretation of the law under ________.

A) civil law

B) common law

C) Sharia law

D) contract law

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

52) ________ is a legal system which is based on a detailed set of written rules and statutes that constitute a legal code.

A) International law

B) Civil law

C) Contract law

D) Common law

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

53) An international agreement which regulates international business by spelling out the rights and obligations of the seller and buyer is known as ________.

A) Agreement to Technical Barriers to Trade

B) International Standards on Accounting and Reporting

C) General Agreement on Tariffs and Trade

D) Contracts for International Sale of Goods

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

54) ________ is based on a comprehensive set of laws organized into a code.

A) Sharia law

B) Civil law

C) Common law

D) Contract law

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

55) The U.S. legal system is largely based on ________.

A) common law

B) social law

C) civil law

D) theocratic law

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

56) Which of the following terms refers to an agreement by the parties concerned to establish a set of rules for governing a business transaction?

A) charter

B) policy

C) contract

D) license

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

57) Under which law system must the details of the promises be written into a contract in order for it to be enforced?

A) common law

B) theocratic law

C) civil law

D) company law

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

58) A ________ is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention.

A) patent

B) trademark

C) watertight

D) copyright

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

59) ________ are words or symbols that distinguish a product and its manufacturer from competitors.

A) Patents

B) Trademarks

C) Watermarks

D) Copyrights

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

60) Tiffany's is an American jewelry store which discovers that several shops in developing countries are selling counterfeited necklaces under their name and label. Which of the following problems are they facing?

A) patent expiration

B) trademark infringement

C) copyright expiration

D) monopolization

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

61) Which of the following is an example of a trademark infringement?

A) manufacturers who sell different versions of their own products in different countries

B) manufacturers who sell counterfeit products under the names and logos of more famous brands

C) a company which exports factory rejects to developing countries

D) a company which sells products at half the price of their competitors

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

62) Which of the following functions does a copyright perform?

A) It protects the trade secrets of an organization, including its business plans.

B) It prevents a company from monopolizing an invention.

C) It distinguishes the product and manufacturers from competitors through distinct words and symbols.

D) It gives creators of original work the freedom to publish or dispose of them as they choose.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

63) Which of the following is an advantage of e-business?

A) lower cost of production

B) easy availability of technology

C) convenience in conducting business worldwide

D) increased availability of information

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Information technology

64) Regional economic groups greatly increase the scale of the marketplace for firms inside the economic bloc.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

65) India's economy grows because of its government, whereas China's economy grows in spite of it.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

66) China is now a hybrid market-driven economy—driven by competition, capital, and entrepreneurship.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

67) Small- and medium-sized enterprises contribute to their national economies by creating new jobs.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

68) The South Asia Association of Regional Cooperation (SAARC), is a free-trade pact among seven South Asian nations.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

69) USMCA is a treaty entered into by Canada, Mexico, and the United States.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

70) In 2018, the United States, Mexico, and Canada reached an agreement called the United States-Mexico-Canada Agreement (USMCA).

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

71) MERCOSUR is an example of an economic union.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

72) The level of integration of a customs union is greater than that of a free trade area.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

73) Nationalization describes government seizure of an entire industry, with or without compensation.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

74) Confiscation occurs when a local government seizes and provides adequate compensation for the foreign-owned assets of an MNC.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

75) Confiscation is the seizure of assets without compensation.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

76) Expropriation occurs when a local government seizes and provides compensation for the foreign-owned assets of an MNC.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

77) Privatization refers to the forced sale of an MNC's assets to local buyers with some compensation to the firm, perhaps leaving a minority ownership with the MNC.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

78) The immediate cause of country risk is a legal or political factor.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

79) Country risk can be potentially present in all nations.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

80) Sustainability—economic, political, social, and environmental—has become a significant worldwide issue.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

81) An event that affects all foreign firms doing business in a country or region is called a micropolitical risk event.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

82) An event that affects one industry or company or only a few companies is called a macropolitical risk event.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

83) Subsidies can help counterbalance harmful consequences that disproportionately affect the poor.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

84) Political risk insurance and local debt financing are forms of dependency.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

85) Under civil law, past court decisions act as precedents to the interpretation of the law and to common custom.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

86) Islamic law is a reflection of the country's culture, religion, and traditions.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

87) Under common law, it is assumed a contract reflects promises that will be enforced without specifying the details in the contract.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

88) A legal contract spells out the rights and obligations of each party and is especially important when relationships go awry. Contract law remains consistent from country to country, and firms must adhere to local standards.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

89) Developing nations have the toughest product liability laws, while developed countries have more relaxed laws.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

90) Countries seldom impose protectionist policies, such as tariffs and nontariff barriers, quotas, and other import and trade restrictions, to give preference to their own companies and industries.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

91) Civil law can be more adversarial than common law because civil law relies more on the need to interpret laws according to tradition, precedent, and usage.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

92) The Internet has had a considerable influence on how companies buy and sell goods.

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Information technology

93) Communication is the process of transmitting information, and information are facts put in to a form to assist in decision making. In a multinational setting communication is not important.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

94) Critical thinking refers to the purpose-driven and goal oriented thinking that helps identify and solve problems, make decisions, and critique actions.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

95) Collaborative learning occurs when individuals work independently on projects, tasks, and problem solving.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

96) Knowledge application and analysis refers to the ability to learn particular concepts and frameworks and then apply them in various situations.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

97) Corporate Social Responsibility (CSR) refers to actions taken by a company that goes beyond that of maximizing profits.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

98) Business ethics are sets of moral principles that shape individual or organizational behavior within organizations.

Difficulty: 1: Easy

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge

99) What is the European Union (EU)? Discuss how the EU affects both Europe and international managers working in Europe.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

100) What is SAARC?

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

101) What is CAFTA-DR?

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-1: To understand the global business environment and how it affects the strategic and operational decisions which managers must make

AACSB: Application of knowledge

102) How does the phenomenon of ethnicity affect the international manager?

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Reflective thinking

103) What is political risk? Give an example of how political risk can affect an MNC.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

104) Describe how the political and legal systems of a host country can both harm and benefit a foreign firm.

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

105) Describe country risk and discuss how political and legal systems contribute to country risk. Explain the differences between political systems and legal systems in your answer.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

106) Identify and describe four means of political risk adaptation.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

107) What is currency translation exposure? Provide an example to illustrate your answer.

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-2: To develop an appreciation for the ways in which political and economic factors and changes influence the opportunities that companies face

AACSB: Application of knowledge

108) What is the difference between common law, Islamic law, and civil law?

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

109) What methods are used by MNCs to protect intellectual property rights?

Difficulty: 2: Moderate

Chapter: 1

Skill: Concept

LO: 1-3: To recognize the role of the legal environment in international business

AACSB: Application of knowledge

110) What is globalization? What is the relationship between globalization and information technology?

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Application of knowledge

111) How does the Internet facilitate both e-commerce and business-to-business transactions?

Difficulty: 3: Challenging

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Information technology

112) What are some of the effects of various forms of technology have on international business?

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Information technology

113) What is the meaning of the appropriateness of technology?

Difficulty: 1: Easy

Chapter: 1

Skill: Concept

LO: 1-4: To review the technological environment around the world and how it affects the international manager's decisions and operations as well as the war for talent around the globe

AACSB: Information technology

114) What are the critical skills that will be needed by an individual involved in international business?

Difficulty: 2: Moderate

Chapter: 1

Skill: Application

LO: 1-5: To explore essential skills for developing your career as a manager in a multinational company

AACSB: Application of knowledge