BGEN 360-700 International Business Chapter 3

An international firm, entering a country's market early, may achieve a significant payback if that country

Achieves sustained high economic growth rates

With the collapse of communism in Eastern Europe, many countries didn't have a legal structure in place to protect property rights because

All property had previously been held by the state

Based on market potential, _____ has the ability to have a larger market than the United States, the European :Union, and Japan combined

China

What two countries are identified in the text as being currently underdeveloped and having the greatest market potential for business?

China and India

Which of these situations relates to Sach's view on a country's economic development?

Country A has the benefit of nutrient-rich soil which provides a competitive advantage for the country's tobacco industry

What is one of the steps that pave the way for a shift toward a market-based economic system?

Creation of a legal system to safeguard property rights

The Simpson Group decided against doing business with a country in Central America because the country exercises tight control over prices and output, prohibits private enterprises from operating in most sectors of the economy, and severely restricts foreign direct investment and international trade. In other words, this country is against the practice of

Deregulation

What economic tactic was used when former communist countries removed price controls and allowed prices to be set as the result of supply and demand?

Deregulation

_____ involves removing legal restrictions, typically in the economic sphere

Deregulation

When comparing early and late entrants into a market, it can be said that

Early entrants build brand loyalty and gain experience in a country's business practices

A(n) _____ is the chance that conditions like a change in exchange rates will affect an investment

Economic

One reason for the spread of democracy across the globe is the

Failure of totalitarian regimes to provide economic progress to the majority of their citizens

Economic risks are independent of political risks

False

Market-based economic systems have failed to produce the same high level of economic performance that command and mixed economies have

False

_____ are the benefits earned by early entrants into a market

First-mover advantages

Jeffrey Sachs argued that the _____ of a nation can have an impact on economic development

Geography

When analyzing the process of innovation, it can be said that it

Goes hand-in-hand with entrepreneurship

The total annual income received by residents of a single nation is reflected in which official measure?

Gross national income

_____ measures the total annual income received by residents of a country

Gross national income

How does Samuel Huntington's argument about the new would order differ from the view of Fukuyama?

Huntington believed the world would be split into different civilizations with their own ideology

As defined in the text, _____ includes a company's new products, new processes, new organization, new management practices, and new strategies

Innovation

In many European nations, the title to agricultural property is not known because there are no official records indicating who has title. This detracts from the incentive to engage in economic activity. What is causing this lack of incentive?

Insufficient legal system

When assessing the legal factors that determine the cost of doing business in a country, it's important to know that

It can be more costly to do business in a country where local laws and regulations set strict standards with regard to product safety

Problems that confront businesses that enter a market after other businesses are already in place are called

Late-mover disadvantages

It is _____ for the government to expropriate profits from innovation through excessive taxation

Legal

Francis Fukuyama's argument regarding the new world order was that

Liberal democracy has triumphed and will become the final form of human government

The Human Development Index is based on

Life expectancy at birth

Which of the following factors help determine the Human Development Index of a country?

Life expectancy at birth, educational attainment, average incomes

Which economic system is MOST conducive to innovation and entrepreneurial activity?

Market economies

Innovators and entrepreneurs flourish most in a _____ because _____

Market economy; it grants existing businesses and entrepreneurs the freedom to improve their operations through innovation

Property rights are only truly secure when a _____ exists

Mature democratic state

Harper Electronics Corp. was forced to pay off the government representative of the foreign country before Harper Electronics was allowed to do business there. Which type of factor affected the company's cost of doing business?

Political

Joaquin is worried about his company locating a manufacturing facility in Indonesia because of the unstable government which could devastate their business. Which type of risk is affecting Joaquin's decision?

Political

The likelihood that political forces will cause drastic changes in a country's business environment and adversely affect the potential for a company to make a profit is called a _____ risk

Political

The government of a foreign nation had controlled the oil and gas industry for many years but recently transferred the business into the hands of several small businesses. These companies are now motivated to increase productivity and enter new markets to achieve greater profits. What tactic did this nation use to help it move toward a market-based economic system?

Privatization

_____ is one of the steps necessary for a country to shift toward a market-based economic system

Privatization

_____ is seen as a transfer of ownership of a business, property, or enterprise from the public sector to the private sector

Privatization

Economist Hernando de Soto believes that the benefits of capitalism will not be achieved until

Property rights are better protected

Anastasia asked her assistant to determine the gross national income of six different countries by evaluating the GNI against the cost of living in the United States. What measure is Anastasia asking her assistant to use?

Purchasing power parity

To foster innovation in the business environment, it is important that strong legal protection of property rights is in place. Inadequately enforced property rights can lead to an increase in the

Risk of expropriation of profits

The base for the adjustment of purchasing power parity is the cost of living in

The United States

In many nations, which social class has benefited from economic advances and seen the emergence of prosperity?

The middle class

The spread of democracy among countries is most likely to lead to

The promotion of greater competition

Which trend has been seen in the political systems of nations since the late 1980s?

There is more emphasis on the free market economy approach and less on centrally planned and mixed economic models

One change in the political systems of nations since the late 1980s is that

Totalitarian governments failed and were replaced by democratically elected governments usually supportive of free market capitalism

The Heritage Foundation index of economic freedom is based on 10 indicators. Which of the following are included in that index?

Trade policy, foreign investment regulations, labor freedom, taxation rules

In the past 40 years, China, South Korea, Taiwan, Singapore, and Hong Kong had the fastest-growing economies. These nations also had _____ in place

Undemocratic governments