BAPA 5131 Chapters 5 & 6

Which of the following is characteristic of an effective legal system? A) universal emphasis on religious law over common and civil law B) a stable and rigid framework of rules and norms across nations C) political involvement in business transactions D) systematically enforced laws and regulations

systematically enforced laws and regulations

comparitive advantage

the ability to produce a good at a lower opportunity cost than another producer

transparency

the degree to which companies regularly reveal substantial information about their financial condition and accounting practices

command economy

An economic system in which the government controls a country's economy.

mixed economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

market economy

Economic decisions are made by individuals or the open market.

free trade

international trade free of government interference

Rule of Law

principle that the law applies to everyone, even those who govern

Which of the following is true with regard to competitive advantage? A) Competitive advantages are typically derived from deliberate national policies. B) A competitive advantage is also known as a country-specific advantage. C) Competitive advantage includes inherited resources, such as arable land. D) A competitive advantage is difficult for competitors to imitate.

A competitive advantage is difficult for competitors to imitate.

industrial cluster

A concentration of businesses, suppliers, and supporting firms in the same industry at a particular location, characterized by a critical mass of human talent, capital, or other factor endowments.

Which of the following legal systems is based on legal precedents and past practices set by the nation's courts through interpretation of statutes, legislation, and past rulings? civil common religious socialist

Common

Which of the following is the LEAST adversarial method of resolving a contractual dispute? conciliation trial litigation arbitration

Conciliation

According to Porter's competitive advantage of nations, ________ refer to the nature of home-market demand for specific products and services.

Demand Conditions

Earth-Rite Organic Foods Inc. is an MNE based in Sweden with subsidiaries located in numerous countries around the world. Earth-Rite has annual sales of $10 billion and employs more than 90,000 individuals worldwide. Earth-Rite currently dominates the organic food industry, but competitors are beginning to catch up because of a growing demand for organic produce. Earth-Rite is considering a collaborative venture with a small chain of organic grocery stores located in Brazil, a country where Earth-Rite has no stores. Which of the following benefits would Earth-Rite most likely accrue if it entered into a joint venture with the Brazilian grocery store chain? A) Earth Rite would be able to completely eliminate the risk of proprietary knowledge infringement abroad. B) Earth Rite would be able to eliminate competition in the foreign markets. C) Earth Rite would have access to the foreign partners' know-how. D Earth Rite would experience high employee turnover in the home country.

Earth Rite would have access to the foreign partners' know-how.

Which of the following statements is true of country risk? It is always present. Its nature remains constant over time and across nations. It is present only in poor nations. Its intensity seldom varies over time and across nations.

It is always present

The eclectic paradigm specifies three conditions that determine whether a company will internationalize via FDI. Which of the following refer(s) to one of those conditions? A) location-specific advantages B) FDI stock C) availability of variable capital in the home country D) entrepreneurial orientation of national enterprises

Location specific advantages

Super Sports, a large sporting goods chain based in Australia, wants to open a store in Norway. With stores around the world, Super Sports executives realize that legal systems vary from country to country. Having never opened a store in Norway, the Super Sports legal team is investigating Norwegian laws to determine how they would impact the corporation and its ability to do business in Norway. Which of the following supports a decision in favor of Super Sports opening a store in Norway? A) The opening of warehouse-style stores requires the approval of local retailers. B) MNEs may transfer profits back to the home country without restriction. C) Product injury cases generally rule in favor of plaintiffs regardless of evidence. D) Advertising and marketing of particular products are banned under local distribution laws.

MNEs may transfer profits back to the home country without restriction.

A ________ is one or more resources or capabilities a company possesses that few other firms have.

Monopolistic advantage

Which of the following is true about networks? A) In a network, continued interaction among partners leads to competition and rivalry that bring down productivity. B) Networks represent the economically beneficial short-term relationships the firm undertakes with other business entities. C) Networks are neither formal organizations with clearly defined hierarchical structures nor impersonal, decentralized markets. D) In networks, buyers and sellers share no linkages and rarely interact with each other.

Networks are neither formal organizations with clearly defined hierarchical structures nor impersonal, decentralized markets.

Which of the following countries is considered a mixed economy? Russia Vietnam China Norway

Norway

What has been the impact of social democracy on international business relations in some European countries? A) Politically conscious foreign firms have begun investing in socialist nations. B) Low income tax rates have encouraged an influx of FDI. C) Regulations have forced foreign firms to invest elsewhere. D) Political stability has decreased the country risk of socialist nations.

Regulations have forced foreign firms to invest elsewhere.

The final assignment for Daniel Parilla's international business class involves taking an in-depth look at one of the six classical perspectives that explain the rationale for international trade. Daniel plans to present an argument in favor of mercantilism. Daniel will be attempting to convince his classmates that mercantilism leads to national prosperity. Daniel's peers will be given the opportunity to counter his argument. Which of the following, if true, weakens Daniel's proposition? Restricting imports reduces the choice of products consumers can buy. Mercantilism tends to benefit firms that import. Mercantilism helps curb inflation. Running a trade surplus is beneficial for nations.

Restricting imports reduces the choice of products consumers can buy.

Extraterritoriality

Right of foreigners to be protected by the laws of their own nation.

Which of the following statements is true about managing country risk? A) Home-country employees are the best source for anticipating country risk in host-countries. B) Scanning allows a firm to assess the potential country risk. C) Firms can reduce country risk by entering markets in collaboration with a foreign partner.

Scanning allows a firm to assess the potential country risk

Which of the following is an example of a location-specific advantage? A) skilled labor B) proprietary knowledge C) the ability to reduce buyer uncertainty D) managerial skills

Skilled labor

Absoute Advantage

The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.

Which of the following is true about the determinants of national competitive advantage? A) Vigorous competitive rivalry among firms lowers national innovativeness. B) The presence of strong competitors in a nation adversely affects national competitive advantage. C) Demand conditions describe the nation's position in factors of production, such as labor, natural resources, capital, technology, entrepreneurship, and know-how. D) The presence of demanding customers pressures firms to innovate faster and produce better products.

The presence of demanding customers pressures firms to innovate faster and produce better products.

Which of the following is true about the first stage of evolution in the international product life cycle theory? A) The product's inventors mass-produce it and seek to export it. B) The knowledge about how to produce the product is widespread. C)The competition intensifies at this stage and export orders begin to come from lower-income countries. D) The product enjoys a temporary monopoly at this stage.

The product enjoys a temporary monopoly at this stage.

Which of the following is true about absolute advantage principle? A) This approach explains the process by which firms acquire and retain one or more value-chain activities inside the firm. B) According to this approach, enhanced product specialization adversely affects communal welfare. C) This is the only approach that can be used to explain why nations attempt to run a trade surplus. D) This approach allows the nation to consume more than it otherwise could, generally at lower cost.

This approach allows the nation to consume more than it otherwise could, generally at lower cost.

A ________ government seeks to control not only all economic and political matters but also the attitudes, values, and beliefs of the citizenry.

Totalitarian

World Conference (Scenario)At a world conference to be conducted in Tokyo, representatives from nearly every country in the world will gather to discuss issues related to international trade. Representative A is from a totalitarian state. Representative B is from a socialist nation. Representative C hails from a democratic society. Which of the following countries would Representative A most likely be from? Zimbabwe Australia Sweden Denmark

Zimbabwe

national industrial policy

a proactive economic development plan a government initiates to build or strengthen a particular industry

competitive advantage

a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition

legal system

a system for interpreting and enforcing laws

Common law can best be described as a system ________.

based on legal precedents set by the nation's courts

A(n) ________ is a voluntary refusal to engage in commercial dealings with a nation or a company.

boycott

In recent years, business executives and scholars have used ________ to refer to the advantages possessed by nations and individual firms in international trade and investment.

competitive advantages

________ are the people and organizations that support the political system and receive government resources.

constituents

The leaders of Kazmia, a small nation in the southern hemisphere, have called a meeting to discuss ways to encourage foreign firms to invest in Kazmia. The country was once a leader in diamond mining and exports; however, the diamond mines have been depleted. Meanwhile, the standard of living in Kazmia has plummeted to its lowest levels, and young people are fleeing the country. Government leaders must devise a plan to reinvigorate the once prosperous nation. In the context of national industrial policy, which of the following actions by the government of Kazmia would be the most beneficial for the long-term economic security of the country? A) devoting resources to improve national infrastructure B) increasing the rate of taxation C) discouraging entrepreneurial ventures undertaken by small firms D) discouraging foreign trade

devoting resources to improve national infrastructure

Which of the following is a comparative advantage? the distinct capabilities of an organization close relationships with suppliers superior strategies of an organization entrepreneurial orientation

entrepreneurial orientation

Which of the following refers to a collaborative venture which results in a new legal entity? non-equity-based strategic alliances not-for-profit organizations sole proprietorships equity-based joint ventures

equity-based joint ventures

Which of the following explains the expansion of born global firms despite the scarcity of financial, human, and tangible resources? A) a concerted effort by developing nations for running a trade surplus B) globalization has made doing international business easier than ever before C) product shortages and supply crunch resulting from import restrictions D) rising inflation in developing economy

globalization has made doing international business easier than ever before

Which of the following is an element of socialism often found in democratic societies? A) government subsidies for foreign firms B) government sponsored businesses C) government control of information technology D) government intervention in the affairs of individuals and firms

government intervention in the affairs of individuals and firms

Scanning

identifying early signals of environmental changes and trends in a potential country

Mercantilism

increase their wealth and power by obtaining large amounts of gold and silver and by selling more goods than they bought

________ is an explanation of the process by which firms acquire and retain one or more value-chain activities inside the firm, minimizing the disadvantages of dealing with external partners and allowing for greater control over foreign operations.

internationalization theory

comparative advantage principle

it may be beneficial for two countries to trade with each other as long as one is relatively more efficient at producing a product needed by the other

________ theory suggests that firms using FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

monopolistic

Maxdime Inc. is an international automobile manufacturer that has decided to work on low-cost fuel efficient motorbikes. Foray Inc., a domestic automobile company based in China, is willing to partner temporarily with the R&D team of Maxdime to design and launch motorbikes specially for the Chinese market. This is an example of ________.

non-equity-based strategic alliance

country risk

potentially adverse effects on company operations and profitability caused by developments in the political, legal, and economic environment in a foreign country

The leaders of Kazmia, a small nation in the southern hemisphere, have called a meeting to discuss ways to encourage foreign firms to invest in Kazmia. The country was once a leader in diamond mining and exports; however, the diamond mines have been depleted. Meanwhile, the standard of living in Kazmia has plummeted to its lowest levels, and young people are fleeing the country. Government leaders must devise a plan to reinvigorate the once prosperous nation. According to Porter, Kazmia can attain economic prosperity by systematically cultivating new and superior factor endowments through ________. devaluation of the national currency the consolidation of national human rights institutions proactive national industrial policy redevelopment of the country's depleted diamond mines

proactive national industrial policy

Which of the following refers to an important monopolistic advantage for firms? proprietary technology unskilled labor imitable skills favorable climate

proprietary technology

Which of the following legal systems is largely practiced in the Middle East? common socialist civil religious

religious

A(n) ________ is a type of trade penalty imposed on one or more countries by one or more other countries. confiscation subsidy expropriation sanction

sanction

Arbitration

settling a dispute by agreeing to accept the decision of an impartial outsider

The Organisation for Economic Co-operation and Development (OECD) is classified as a(n) ________. competing firm regional trade organization international organization special interest group

special interest group

Which of the following is an example of an ownership-specific advantage? A) inexpensive capital B) the physical assets owned by a firm C) low-cost labor D) natural resources of the region where the firm operates

the physical assets owned by a firm

Internalization Theory

the process by which firms acquire and retain one or more value-chain activities inside the firm

The three major types of current political systems are ________.

totalitarianism, socialism, and democracy