International marketing midterm chapter 6

uliet is concerned with the potential for political harassment when her company enters a new international market. To reduce the risk of political harassment, she is most likely to consider using _____ to enter the market. externally produced products a smaller investment base foreign technology joint ventures the threat of sanctions

joint ventures

Relations between governments and MNCs are generally positive if the investment: increases the volume of imports. uses globally produced resources. transfers capital, technology, and/or skills. brings in more number of foreign nationals. decreases the volume of exports.

transfers capital, technology, and/or skills.

Which of the following government forms can be most aptly described as a rule by few? Aristocracy Dictatorship Democracy Monopoly Monarchy

Aristocracy

Which of the following is more likely to be subjected to price control? Leather garments Mobile phone accessories Aspirin and antacids Camcorders and lenses Ceramic tiles

Aspirin and antacids

While expanding the investment base of a company, which of the following can be used as a powerful ally in dealing with threats of government takeovers or harassment? Banks that have lent money to the host government The World Trade Organization The International Labor Organization Regional trade blocs Opposing political parties

Banks that have lent money to the host government

With respect to the political risk that can be faced by a company seeking to invest abroad, which of the following is most severe? Confiscation Expropriation Domestication Exchange controls Local-content laws

Confiscation

Which of the following forms of terrorism is most likely to use the Internet to inflict damage? Germterrorism Bioterrorism Cyberterrorism Ecoterrorism Narcoterrorism

Cyberterrorism

According to ancient Greeks, which of the following refers to a fundamental government form with the rule by many? Aristocracy Dictatorship Democracy Monopoly Monarchy

Democracy

Which of the following is the principle U.S. agency that supports U.S. business abroad? State Department of Entrepreneurship Better Business Bureau Department of Commerce Department of Foreign Relations Department of Defense

Department of Commerce

The government in Chile recently informed Clint Travis' company that his retail grocery chain in Chile would have to be gradually turned over to the people of Chile by the year 2050 as it is a foreign company in Chile. Additionally, starting next year 50 percent of the board of directors of the Chilean operation of the company must be Chileans. Which of the following political risk actions is Mr. Travis' company facing in Chile? Confiscation Expropriation Domestication Patronization Socialization

Domestication

_____ occurs when host countries gradually cause the transfer of foreign investment to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. Confiscation Expropriation Domestication Democratization Socialization

Domestication

If there is a substantial amount of capital leaving a country, which of the following is the country most likely to implement to control the situation? Exchange controls Local-content laws Import restrictions Tax controls Price controls

Exchange controls

Which of the following strategies can be effective in forestalling or minimizing the effect of a total takeover of a multinational corporation's holdings by a foreign government? Confiscation Sole proprietorship Expanding the investment base Advertising Leasing

Expanding the investment base

Which of the following agencies underwrites trade and investments for U.S. firms? Export-Import Bank The Federal Trade Commission The Agency for International Development Social Security Advisory Board The Overseas Private Investment Corporation

Export-Import Bank

Which of the following is true of a sovereign state? It is obligated to be a member of the World Trade Organization. Its political and economic systems are determined by the United Nations Development Programme. It enjoys full legal equality with other states. Its territory is governed by the United Nations. It is bounded by external control.

It enjoys full legal equality with other states.

Which of the following best describes the U.S. government's policy toward multinational corporations that are confronted with situations where bribery is an issue? A bribe may be paid as long as it is not a domestic situation. Bribery is justified if it is a documented traditional practice in a country. A bribe can be paid in a foreign country if it is tied to national security. It is illegal for a U.S. citizen to pay a bribe. The issue revolves around the customs of the country and each issue is decided separately.

It is illegal for a U.S. citizen to pay a bribe.

Which of the following is a strategy that multinational corporations use to minimize political vulnerability and risk? Expropriation Sanctions Buyouts Confiscation Licensing

Licensing

Which of the following strategies is most effective in minimizing political risks for a multinational corporation in situations in which the technology is unique and the risk is high? Trade embargo Licensing Expanding the investment base Planned confiscation Expropriation

Licensing

In Thailand, it is required that any milk product sold in the country by a foreign company must use the milk produced by Thai dairy farmers. Which of the following economic risks is faced by the international producers of milk products in this situation? Exchange controls Local-content laws Export restrictions Tax controls Price controls

Local-content laws

The United States requires that 50 percent of all parts used to construct an automobile in the United States be manufactured in the United States. As a result of this, when Toyota Motor Company built automobile manufacturing plants in Tennessee and Ohio, it faced economic risks associated with _____. exchange controls local-content laws export restrictions tax controls price controls

Local-content laws

With which of the following would the phrase "Buy American" be most closely associated? Socialism Communism Nationalism Abstractionism Polarism

Nationalism

_____ is an intense feeling of state pride and unity, an awakening of a country's people to pride in their country. Nepotism Absolutism Fascism Nationalism Polarism

Nationalism

Which of the following is true of domestication? The ultimate goal of domestication is to force domestic investors to share more of the profits with the government. The risk of domestication appears to have decreased over the last two decades. Domestication has always led to more technologically advanced and competitive businesses. Nowadays, countries often require companies to become domesticated as a condition for investment. Domestication refers to the seizing of a company's assets without payment.

Nowadays, countries often require companies to become domesticated as a condition for investment.

Which of the following is an NGO (nongovernmental organization)? Central Intelligence Agency Peace Corps Millennium Challenge Corporation Oxfam FedEx

Oxfam

Which of the following statements is true of political sanctions? Political sanctions normally control and rectify situations within a nation. Political sanctions are generally unsuccessful. Political sanctions are illegal. The United Nations encourages boycotts as a means of settling disputes. The use of political sanctions is the most effective way to increase world trade.

Political sanctions are generally unsuccessful.

What goal did the G20 nations agree to in the April 2009 agreement that required them to cede some sovereignty? Including all G20 nations in the Security Council Raising oil prices Increasing infrastructure funding Rejecting protectionism Increasing aid to South Africa

Rejecting protectionism

Which of the following instances is most likely a manifestation of nationalism? Membership in bilateral trade treaties Call to buy a global counterpart's products Restrictions on imports Removal of tariffs and quotas Focus on global security

Restrictions on imports

Which of the following countries is the only country to preclude women from voting and appears to be still completely in the dark ages with regards to suffrage? Croatia Iran Bolivia Saudi Arabia Venezuela

Saudi Arabia

_____ refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. Sovereignty Self-governance Ethnocentrism Autocracy Non-interventionism

Sovereignty

Which of the following is the top political issue concerning foreign businesses? Demographic profile of political leaders Government policies on infrastructure Economic awareness of political leaders Stability of prevailing government policies Membership of governments in trade treaties

Stability of prevailing government policies

Which of the following represents a new and powerful tool of PSAs? Political sanctions Monetary barriers and trade embargoes The Internet and cellphones Local-content laws and questionnaires Export controls

The Internet and cellphones

In terms of political risk, which of the following poses the greatest threat to international marketers? Newer environmental regulations approved by global trade bodies Change of economic policies Exchange rate fluctuations affecting margins The possibility of the government actually failing Membership or withdrawal of membership of the government in trade blocs

The possibility of the government actually failing

Why do terrorism experts predict multinational businesses will be targeted by terrorists more frequently? They impose export controls on the underdeveloped nations. They are the major cause for political sanctions against Arab nations. They are less well defended than government targets. They destroy and pollute the environment. They are subterfuge for espionage agents.

They are less well defended than government targets.

Which of the following is one of the main political causes of instability in international markets? Varied taxing conventions Differences in economic philosophies Global focus Environmental awareness Trade disputes

Trade disputes

The ideal political climate for a multinational firm is: a country where international laws do not apply. a country where favors can be purchased easily. a country with a stable and friendly government. a government with absolute power. a government that radically shifts its philosophy.

a country with a stable and friendly government

Stopping or refusing to trade with another nation for political reasons is called: monopolizing. boycotting. confiscation. democratization. expropriation.

boycotting.

The seizing of a company's assets without payment is called: confiscation. expropriation. domestication. exchange controls. local-content laws.

confiscation.

Price controls are used during inflationary periods to: control the cost of living. restrict exports to foreign countries. negotiate trade contracts favoring the host country. encourage imports. collect taxes on foreign investments.

control the cost of living.

When a government seizes an investment of a foreign investor but some reimbursement for the assets is made, the government follows a process called: confiscation. expropriation. domestication. exchange controls. local-content laws

expropriation.

The most effective long-range solution to a situation where a foreign government is demanding local participation in a multinational corporation's business activities in the host country is: joint ventures. licensing. expanding the investment base. planned domestication. political payoffs.

planned domestication.

Taxes must be classified as a(n) _____ risk when used as a risk when used as a means of controlling foreign investments. political social ignorable environmental harmless

political

An attempt to lessen political risks by paying those in power to intervene on behalf of the multinational company is referred to as a _____. subornation protectionism political payoff buyout rake-off

political payoff

Brian is attempting to forecast political instability and help his company's management identify and evaluate political events and their potential influence on current and future international business decisions. Brian is engaged in: political risk assessment. political confiscation. democratization. arbitration. risk expropriation.

political risk assessment.

In North Korea, foreign investors or producers are required to sell products at prices stated by the North Korean government rather than letting market value and demand determine the prices. This implies that there is severe application of _____. exchange controls local-content laws import restrictions tax controls price controls

price controls

In the context of international law, a _____ state is independent and free from all external control. bounded sovereign legal liberal neutral

sovereign

Since the government of Nigeria is strapped for cash, it has decided to tax all foreign investments (such as oil production equipment) by up to 40 percent of the appraised value. The Nigerian government has found that this is the handiest and quickest means of finding operating funds. The economic risk in discussion here is: exchange controls. local-content laws. tax restrictions. tax controls. price controls.

tax controls.

Adherence to the WTO inevitably means: a definite increase in import tariffs worldwide. the loss of national security to a large extent. reduction in world trade by at least 70 percent. the loss of some degree of national sovereignty. complete stoppage of foreign direct investments.

the loss of some degree of national sovereignty.

Meteora Inc. is planning to enter the Kenyan market by establishing a mobile phone manufacturing operation in Kenya. Meteora is most likely to have a positive relationship with Kenyan government through its investment if it: uses locally produced resources. imports phone components from China. establishes an R&D center in California and has all its technology patented there. ensures that its middle and upper management are made of expatriates. bargains for a tax holiday for the next five financial years.

uses locally produced resources.