MGMT 425 Ch. 3 UL
Amazon.com was the earliest, major online bookstore, which allowed it to generate brand awareness and have a significant presence in the market. Amazon.com had a head start on later entrants to the online bookstore market. In this example, Amazon.com has ________ advantages.
first-mover
Countries with ________ in which property rights are protected tend to achieve greater economic growth rates than other economies.
free market economies
As economies move toward greater privatization, there is a greater likelihood of facing the phenomenon that Japan faced due to the stock market collapse. Privatization transfers assets _____
from state to private owners
Economic progress can be characterized as
often leading to adoption of a democratic government.
If gross national income per capita adjusted for differences in the cost of living is about $13,000 in China, a developing country, and is about $56,000 in the United States, a developed country, then
on average, Americans can afford more goods and services than their Chinese counterparts.
If the level of economic development in the former West Germany is higher than the level of economic development in the former East Germany, then which of the following is likely to occur?
The population in West German territories will increase.
What is an indicator of economic mismanagement?
The rate of inflation in a country
What two trends have been noted based on the radical change in the political economy of many nations since the late 1980s?
There has been a move toward more free market economies. There has been a wave of democratic revolutions.
What is the assumption of Jeffrey Sachs's argument?
There is a strong correlation between favorable geography and the likelihood that a society may develop a market-based economic system.
Many of the national markets of Eastern Europe, Latin America, Africa, and Asia may still be underdeveloped, but they are potentially enormous. Which of the following is a risk to businesses moving into these regions?
There is no guarantee that democracy will thrive in many of the world's newer democratic states.
Which situation can make measuring economic activity differences difficult?
Unrecorded cash transactions activity
Which factor is a cause of legal risks?
Violation of property rights
Deflation occurs when consumers expect prices to _____.
be lower tomorrow than today
Jeffrey Sachs argued that ______ can have an impact on economic development.
geography
40. According to Huntington, ______ is a conflict that results from the strong ideological boundaries separating civilizations from one another.
global terrorism
A country's economic system and property rights regime are _____ predictors of economic prospects.
good
Countries with free market economies in which property rights are protected tend to have ________ than command economies or economies where property rights are poorly protected.
greater economic growth rates
how to tell who is closing the gap in terms of economic development?
gross domestic product for each territory bloc
The measure of the total annual income received by residents of a nation is called _____.
gross national income
72. Late-mover disadvantages refer to the _____ that a company might incur.
handicaps
10. Mallory's company was the first to introduce fresh-food meal kits in a box that are delivered directly to consumers who put the meal together at home. Since her company was the first to introduce this idea, it is an example of _____.
innovation
The development of new products, new processes, new organizations, new management practices and new strategies is called ______
innovation
A(n) ______ risk is the risk that arises from failure to follow statutory or regulatory obligations and, therefore, one that can impact a trading partner.
legal
When assessing whether or not to invest in a production facility overseas, Hyberson Hydraulics immediately rejected those countries with aging populations because the company needed access to a larger labor pool. What is the company basing this decision on?
demographics
_________ abolishes laws regulating the establishment and operation of private enterprises.
deregulation
While Japan was considered one of the most dynamic economies in the world in the 1970s and 1980s, economic growth has been hindered since then. What is considered the reason for this downturn?
Low birthrates and aging population
______ and ______ are associated with greater economic progress.
Capitalism and market economy
Japan and other market-based economies enjoy economic growth, but also face greater risks due to _____.
Deregulation
______ involves removing or reducing government regulations, typically in the economic sphere.
Deregulation
What is an accurate depiction of Amartya Sen's arguments regarding development?
Development should focus on expanding the capabilities of and opportunities available to people.
"Not free" countries are characterized by some restrictions on political rights and civil liberties, often in the context of corruption, weak rule of law, ethnic strife, or civil war. T/F
False
In calculating GNI data in some countries, the official figures take into account the barter agreements that take place as part of daily business transactions. T/F
False
Over the last 30 years, while democracy has spread, it has been natural for totalitarianism to also spread. T/F
False
The privatization movement started in
Great Britain in the 1980s with the sale of British Telecom.
______ measures the total annual income received by residents of a nation
Gross National Income (GNI)
What is Francis Fukuyama's argument regarding the "new world order?"
He argued that liberal democracy has triumphed and will become the final form of human government.
According to the video, the standard of living in the United States is _____ as compared to that of China.
Higher
While they are listed as the top two states in the Heritage Foundation Index, _____ cannot be classified as politically free.
Hong kong and Singapore
Which of the following is true about planned economies?
In a planned economy, the state owns all means of production.
Which of the following exemplifies privatization?
A country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding.
What statement is accurate with regard to a country's development?
A country's investment in education and subsequent growth rates result in a more productive population.
What is one of the risks associated with a change in the political economy?
A multipolar world, controlled by a number of civilizations, could replace the bipolar world.
If GNI adjusted for cost of living in China is about $13,000 while GNI adjusted for cost of living is about $56,000 in the United States, then?
Americans enjoy a higher standard of living.
Identify the TRUE statement about legal systems in various countries throughout the world.
Institutional weaknesses can subvert contract enforcement.
South Korea was considered an impoverished country in 1960. Yet in 2017, it was the world's fifth largest economy. This demonstrates how international businesses must consider future potential as well as the
Present wealth of the consumers
Many of the world's newer democratic states may struggle and fail especially if they are confronted with
Severe economic setbacks
Which statement characterizes the changes in the political and economic systems of the world?
The battle between the ideologies of collectivism and individualism is less distinct.
The GNI per capita of a country is $5,000, but the PPP per capita is $8,000. What can be inferred from the given data?
The cost of living is lower in that country than the United States.
Given what you know about regional differences in unemployment and the ability of people to now move freely between the former East and West German states, which scenario is most likely?
The gap in the standard of living between the former East and West German states will continue to widen.
What is Hernando de Soto's main concern with regard to property rights?
The inability of property owners to establish legal title to their intellectual property.
Which of the following is true about the economic risks of doing business in a country?
The inflation rate in a country is an indicator of the economic risks of doing business in a country.
Which statement is an accurate depiction of the Human Development Index scale?
To have medium human development, countries have to score between 0.5-0.8.
What is an accurate depiction of the changes in the political systems of nations since the late 1980s?
Totalitarian governments failed and were replaced by democratically elected governments usually supportive of free market capitalism.
What is an accurate depiction of totalitarian states compared to democratic states?
Totalitarian states are detrimental to progress.
Deregulation involves the establishment and operation of private enterprises. T/F
True
GNI per person figures can be misleading because they don't consider differences in the cost of living. T/F
True
It can be more costly to do business in a country where there are laws and regulations with regard to product safety. T/F
True
It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses. T/F
True
Which best explains LEGO's decision to build its presence in India?
Within the next decade, the number of middle-class children in India is expected to surpass 100 million.
According to LEGO's Chief Executive Niels Christiansen, many children and parents in China have never played with LEGO blocks. If companies like LEGO can quickly move to develop a market where competitors have not yet built a presence, companies can
accrue first mover advantages.
An international firm, entering a country's market early, may achieve a significant payback if that country
achieves sustained high economic growth rates
A "shadow economy" would be present in a country where _____.
certain transactions are not recorded
If current growth rates continue, it is anticipated that _____ will become the world's largest economy sometime during the next decade.
china
If growth rates continue as they have in the past, _____ is predicted to surpass the United States and become the world's largest national economy within the next two decades.
china
There are still countries that have a high percentage of industries dominated by state ownership. Which of these countries has 40% of its GDP accounted for by state owned companies?
china
According to Samuel Huntington's thesis, global terrorism is caused by _____.
clash of value systems
In Samuel Huntington's thesis, global terrorism is a product of the
clash of value systems and ideology.
The initial push of deregulation was in response to the
collapse of communism
LEGO's decision to invest in India and China, despite both countries having a lower per capita income and living standard than the company's traditional markets in Western Europe and the United States, is an example of why it is important to _______ when making investment decisions.
consider the size of a market and its future buying power
Huntington's views on the global political system are considered _____.
controversial
Political costs of doing business in a country would include _____.
corruption
With regard to the overall attractiveness of a country as a potential market, it can be said that the
costs and risks associated with doing business in a foreign country are lower in economically advanced and politically stable democratic nations.
The rationale for economic transformation has been consistent throughout the world and is based on the idea that
countries adopting market-based systems had more continuous economic growth than those adopting command economies.
Innovation and entrepreneurial activity help increase economic activity by
creating new products and markets.
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 Japanese government has tried to stimulate the economy by _____.
cutting interest rates to zero
Amartya Sen would agree that
development should address basic health care and education needs.
Inadequately enforced property rights in a nation would tend to _____ entrepreneurial activity
diminish
Economic freedom _____ equate with political freedom.
does not
Gross national income (GNI) per person figures can be misunderstood because they
don't factor in cost of living
First-mover advantages are accrued by those who enter ____ into a market.
early
________ build brand loyalty and gain experience in a country's business practices.
early entrants
When comparing early and late entrants doing business in a country, it can be said that
early entrants build brand loyalty and gain experience in a country's business practices.
A(n) ______ risk is the chance that conditions like fluctuating exchange rates affect an investment.
economic
Gross national income is used as a measure of a nation's _______.
economic activity
In 2019, LEGO will be opening 170 stores around the world, 80 of which will be China. Suppose LEGO is worried that China's trade war with the United States will cause the Chinese economy to falter and that the business environment in China will sour. LEGO is worried about
economic risk
It has been asserted that the nations that invest more in ______ will have higher growth rates because a literate population is a more productive population.
education
What are the three measures of the Human Development Index?
educational attainment average income sufficient to meet basic needs life expectancy at birth
______ are those who first commercialize new products and processes.
entrepreneurs
Democracy is always considered to be the cause of initial economic progress.
false
Economic risks are independent of political risks.
false
Kendrick lives in a country in which his basic freedoms are denied and the political process is tightly controlled. This country is an example of a _____ country in terms of political freedom.
not free
Until now, LEGO has focused its international efforts mainly in markets in developed countries with strong intellectual property laws. If LEGO invests in China where intellectual property laws are not as strong or well enforced, it must account for ________, the likelihood that a trading partner will opportunistically break a contract or expropriate property rights
legal risk
Without a legal system that protects property rights, and the machinery that enforces those rights, there is substantially _____ incentive to engage in economic activity.
less
The major cause of the economic problems that Japan faces is the _____.
low birthrate and more retired people
Huntington's views on the global political system with regards to business suggests that
many countries may be difficult places to do business in.
Due to the economic freedom associated with it, the business environment that provides the strongest base for innovation and entrepreneurial activity is a _____ economy.
market
Which economic system is considered the MOST conducive to innovation and entrepreneurial activity?
market
The Heritage Foundation's index measures the degree of economic freedom in the nations -- in other words, the degree of shift to ______ economic systems.
market based
Emergence of prosperity in the _____ class has helped to push democratic reforms in many nations.
middle
During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments that were typically ________ than their predecessors had been.
more committed to free market capitalism
It can be ______ to do business in a country where local laws and regulations set strict standards with regard to product safety.
more costly
Studies show that the process of privatization fails to perform as expected when
newly privatized firms are protected from foreign competition.
A country in which some restrictions are placed on political rights and civil liberties would be labeled _____.
partly free
______ risk is the possible risk that an investment's returns can suffer as a result of instability or changes in a country's governance.
political
When Hugo Chavez took over power in Venezuela, he railed against American imperialism. Western enterprises doing business in that country were concerned how this would affect their interactions with Venezuela. This demonstrates how ______ can impact the economics of a country.
political change
______ tends to be greater when countries face social unrest and disorder.
political risk
______ is seen as a transfer of ownership of a business, property or enterprise from the public sector to the private sector.
privatization
The long-run monetary benefits of doing business in a country are MOST influenced by the
purchasing power of consumer
The ______ adjustment helps to minimize misleading international comparisons of GNI.
purchasing power parity
United Nations has developed the Human Development Index (HDI) to measure the
quality of human life in different nations.
A country is embracing deregulation when it _____.
removes legal restrictions to the free play of markets
In the case of command economies, deregulation involves
removing price controls.
_____ can result in abrupt changes in government which tend to have negative economic implications.
social unrest
GNI figures are helpful in understanding an economy because they
tell us how poor a country is relative to another.
In 1989 Japan was an economic superpower; it was _____.
the second-largest economy
In order to protect businesses and individuals from the expropriation of their innovative efforts, it is imperative that _____.
there is legal protection of property rights
With regards to the new world order, Samuel Huntington would argue that
there is no universal civilization based on acceptance of Western democratic ideals.
Newly privatized entities often have little incentive to restructure their operations to become more efficient when
they continue to receive subsidies from the state.
Which of the following is a reason for the spread of democracy?
totalitarian regimes failing to deliver economic progress to the majority of their populations
For privatization to work, it must be accompanied by a more general deregulation and opening of the economy.
true
Peruvian development economist Hernando de Soto argued for the importance of business and property rights in relationship to receiving the benefits of capitalism.
true
The economies of China and India are currently growing more rapidly than those of many advanced nations.
true
What is one thing that the fastest-growing economies of China, South Korea, Taiwan, Singapore, and Hong Kong had in common at the start of their economic growth?
undemocratic governments
