Q&A Hero

Q: Which of the following statements is true about the political risks in a global marketing environment? A) The political risk of low-income countries is lesser than high-income countries. B) The more a country is developed, the greater is the political risk. C) Political risk is a major deterrent for companies that want to invest abroad. D) A country with high political risks attracts more investors.

Q: Rockwall Enterprises is planning to expand the firm by establishing operations outside of the U.S. In which of the following countries would Rockwall most likely be able to establish operations most quickly? A) Japan B) Brazil C) Germany D) Australia

Q: Which of the following strategies is appropriate for companies in industries where buyer preferences do not converge across national borders? A) retrenchment strategy B) global strategy C) multidomestic strategy D) mass customization strategy

Q: Companies often establish largely independent, self-contained units in each of its national markets to implement a ________ strategy. A) retrenchment B) global C) multinational D) blue ocean

Q: Country risk is considered similar to ________. A) political risk B) commercial risk C) currency risk D) cross-cultural risk

Q: ________ occurs if ownership of a property or assets of a company is transferred to the host government. A) Internalization B) Nationalization C) Deportation D) Deracination

Q: Adapting products and their marketing strategies in each of the national markets of a company to suit local preferences is called a ________ strategy. A) multinational B) blue ocean C) global D) retrenchment

Q: Which of the following statements is true of the environmental forces that affect strategy formulation? A) Socialist economic systems normally levy light taxes on business profits. B) Countries that excessively spend on R&D tend to have lower levels of prosperity. C) Approval of the host government is almost always necessary for making direct investments. D) Free-market economies tend to levy high taxes on business profits.

Q: ________ refers to governmental action to dispossess a company or investor. A) Equity dilution B) Deracination C) Expropriation D) Earnings stripping

Q: Which of the following is considered as a support activity in an organization? A) inbound logistics B) marketing and sales C) procurement D) customer service

Q: Countries often use local content regulations to determine the proportion of the product that must be made in the local market versus made outside of the local market in order to ________. A) maximize product safety B) ensure a cultural fit C) favor domestic companies D) relieve production pressures on local companies

Q: According to value-chain analysis, inbound and outbound logistics are considered as ________. A) tertiary activities B) primary activities C) support activities D) core competencies

Q: Local content regulations are primarily intended to ________. A) address cultural differences between local employees and expatriates B) encourage MNEs to increase production activities in a country C) address contract negotiation difficulties D) assess local tax rates on MNEs

Q: Explain the three types of property seizure. Why might property seizure be a risk for a business operating in a totalitarian nation?

Q: Which of the following is considered as a primary activity in an organization? A) infrastructure B) marketing and sales C) procurement D) human resource management

Q: Nationalization describes government seizure of an entire industry, with or without compensation.

Q: ________ is the process of dividing a company's activities into primary and support activities and identifying those that create value for customers. A) Fundamental analysis B) Technical analysis C) Structural analysis D) Value-chain analysis

Q: The immediate cause of country risk is a legal or political factor.

Q: Which of the following is a special ability of a company that competitors find extremely difficult to equal? A) comparative advantage B) absolute advantage C) core competency D) economy of scale

Q: The objectives at the ________ of an organization are typically more precise and contain numerical targets of performance. A) department-level B) business-level C) global-level D) corporate-level

Q: Foreign properties expropriated by a government cannot be reclaimed.

Q: A government can limit the economic activities of a foreign firm that resists its effort to introduce home-country nationals into the company.

Q: Which of the following statements is true of objectives? A) Objectives of individual business units in a company tend to be stated in the most general terms. B) Objectives become more precise at the level of individual departments. C) Objectives at the highest level in an organization tend to be more specific. D) Objectives at the highest level in an organization are more concrete as they contain numerical targets.

Q: Which of the following is the first stage of the strategy-formulation process? A) identification of value-creating activities B) formulation of strategies C) identification of company mission and goals D) identification of core competency

Q: If a foreign company is taken over by the host-country government and some form of compensation is paid, confiscation is said to have occurred.

Q: Which of the following refers to a written statement of why a company exists and what it plans to accomplish? A) memorandum of association B) mission statement C) vision statement D) articles of association

Q: Expropriation is said to have occurred when a foreign national company dispossesses a home-country company through uncompetitive practices.

Q: A ________ is a set of planned actions taken by managers to help a company meet its objectives. A) mission statement B) vision C) strategy D) core competency

Q: Civil conflict, tax discrimination, weak legal systems, and terrorist actions are political risks faced by MNEs operating in foreign countries.

Q: ________ is the process of identifying and selecting an organization's objectives and deciding how the organization will achieve those objectives. A) Stratification B) Planning C) Economic transition D) Value chain analysis

Q: Lobbying is the policy of hiring people to represent a company's views on political matters.

Q: The main purpose of self-managed teams is to help break down barriers between departments.

Q: Among asset seizure approaches, expropriation is more common than confiscation and nationalization.

Q: A global matrix structure is an organizational structure that divides worldwide operations according to a company's product areas.

Q: Expropriation involves the forced transfer of assets from a company to the government without compensation.

Q: A main goal of the global product structure is to bring together geographic and product area managers in joint decision making.

Q: A solid grasp of local values, customs, and traditions can help reduce a company's exposure to political risk.

Q: An international division structure reduces the authority of country managers in an organization's subsidiaries.

Q: CADE Enterprises, a U.S. manufacturer, received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia. Which of the following types of support did CADE most likely receive from OPIC? A) financial capital B) cultural training C) legal guidance D) political risk insurance

Q: An international area structure separates domestic from international business activities by creating a separate international division with its own manager.

Q: Which of the following statements about approaches to political risk management is NOT true? A) Passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards. B) Passive political risk management assumes that it is difficult, if not impossible, to systematically model political risk. C) Active political risk management assumes that positive and negative political events in any country are neither independent nor random events. D) Active political risk management assumes that political events unfold in observable patterns that statistical methods can detect.

Q: Decentralization can help foster participative management practices.

Q: Christopher Electronics plans to expand into foreign markets. Top executives want the firm to focus only on locations where the rule of law prevails. Which of the following should most likely be considered by Christopher? A) wealthier, westernized countries B) developing, non-Western countries C) emerging economies experiencing rapid growth D) countries inclined toward totalitarian-style government

Q: Centralized decision making is beneficial when fast-changing national business environments put a premium on local responsiveness.

Q: ________ has one of the highest levels of macropolitical risk. A) Saudi Arabia B) Chile C) Venezuela D) Afghanistan

Q: A focus strategy works best with mass-marketed products aimed at price-sensitive buyers.

Q: ________ is political risk that affects only a specific firm or firms within a specific industry. A) Inclusive political risk B) Exclusive political risk C) Micropolitical risk D) Macropolitical risk

Q: A differentiation strategy is often implemented when a company wants to exploit economies of scale to have the lowest cost structure.

Q: Political risk that affects all firms in a country is referred to as ________. A) micropolitical risk B) macropolitical risk C) inclusive political risk D) exclusive political risk

Q: A negative aspect of a low-cost leadership strategy is low customer loyalty.

Q: Himark Enterprises has foreign operations in Taiwan, India, and China. The firm pays an annual insurance premium to the Overseas Private Investment Corporation. The firm is most likely protecting itself from ________. A) privatization B) natural disasters C) nationalization D) financial instability

Q: A low-cost leadership strategy typically requires a company to have a large market share.

Q: Expropriation is best defined as the ________. A) transference of ownership of resources from private to public sector with no compensation B) transference of ownership from private to public sector with compensation to private owners for their losses C) conversion of state-owned property to privately owned property D) conversion of state-owned property to privately owned property with no compensation

Q: The purpose of a combination strategy is to mix growth, retrenchment, and stability strategies across a corporation's business units.

Q: ________ 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

Q: The closing of factories with unused capacity is an example of a stability strategy.

Q: Had the government taken over the assets of Global Trading without compensation, and not taken over the assets of any other company, the government's actions would be an example of ________. A) expropriation B) nationalization C) confiscation D) communism

Q: A joint venture is an example of a retrenchment strategy of an organization.

Q: Had the government taken over (with compensation) the assets of Global Trading but not those of any other company, the government's actions would be an example of ________. A) expropriation B) nationalization C) confiscation D) communism

Q: The scope of a corporation's operations refers to the size of its operations.

Q: Global Trading just learned that the government of one country in which it does business has taken over the entire electric utility industry. The government's actions are an example of ________. A) confiscation B) globalization C) expropriation D) nationalization

Q: A growth strategy is designed to increase the scale or scope of a corporation's operations.

Q: Which of the following is a disadvantage of local requirement laws to foreign companies? A) They do not foster local business activity and increase regional and national unemployment. B) They make it necessary for the government to resort to expropriation and confiscation. C) The companies are forced to bring in raw material and workers from their own countries. D) Companies required to hire local personnel might be forced to take on inadequately trained workers.

Q: A global strategy does not allow a company to modify its products except for the most superficial features.

Q: ________ is the forced transfer of assets from a company to the government with compensation. A) Expropriation B) Nationalization C) Confiscation D) Localization

Q: The main benefit of a global strategy is that it allows companies to monitor buyer preferences closely in each local market.

Q: Which of the following terms refers to the forced transfer of assets from a company to the government without compensation? A) expropriation B) nationalism C) nationalization D) confiscation

Q: A multinational strategy is best suited to industries in which price competitiveness is a key success factor.

Q: What is privatization? What role does it play in economic transition?

Q: A multinational strategy entails having a separate strategy for each nation in which a company markets its products.

Q: What is economic transition? Describe the obstacles that countries face during economic transition.

Q: A multinational strategy is most appropriate for companies that do not have foreign direct investments but rather export their products to foreign markets.

Q: Economic transition is the process of moving from ________. A) developed to developing economies B) centrally planned to free-market economies C) developed to emerging economies D) free-market to centrally planned economies

Q: Free-market economies tend to levy high taxes on business profits whereas socialist economic systems normally levy lighter taxes.

Q: Which of the following is a major obstacle to economic transition? A) lack of government support B) environmental degradation C) privatization D) black markets

Q: Support activities assist companies in performing their primary activities.

Q: ________ is the process by which a nation changes its fundamental economic organization and creates new free-market institutions. A) Central planning B) Economic transition C) Industrialization D) Economic liberalism

Q: Does greater economic freedom guarantee a higher standard of living? Provide examples of two specific countries to support your answer.

Q: Customer service is an example of a support activity in the value chain of an organization.

Q: Technology development is an example of a primary activity in the value chain of an organization.