International Marketing Chapter 6

Identify a true statement regarding Steven Pinker's arguments about warfare, strife, and violence on the planet.

At this point in time, humanity has less to fear regarding violence than in previous eras.

Identify a way in which multinationals can reduce their political vulnerability and risk when doing business in host countries.

By engaging multiple investors and banks in the investment

Identify a way in which feelings of nationalism make themselves evident.

Citizens purchase only items made within their country

Which of the following is a cause of political risk in international marketing?

Contentious trade disputes

Identify the biggest threats to peace and commerce in the twenty-first century.

Terrorism Conflict or war within a nation

Political payoffs

are against the law in the United States, but they are common practice in certain countries

A multinational company can be profitable under any type of government if the government

has a stable foreign trade policy with the company.

Joint ventures _____.

increase positive feelings toward multinational companies

A multinational company can improve relations with the government of a host country by

increasing the host country's exports.

A multinational company can avoid potential political risks by

influencing policies of the host government

Planned domestication means

involving the host country's citizens in all aspects of company functions

Identify a way in which militant nationalism is exhibited.

Confiscation of multinational corporations' assets

Identify the goals of terrorism.

It aims to acquire money through kidnapping high-level employees and demanding ransom. It aims to disrupt daily life and cause widespread terror.

Identify the issue that may affect the stability of a government.

an extremist party gaining power

Political and social activists (PSAs)

can be people who take part in violence and terrorism to bring about change

Countries that display militant nationalism may

discourage foreign investment nationalize industries

For an international business, the best type of sovereign state to do business with is one that

is receptive to foreign investment. has a stable government.

Multinational companies may encounter problems when

labor unions are powerful and supported by the government.

In the context of conditions for investment, some countries may mandate

local content to make up a portion of any product sold within a country.

A feature of planned domestication is that it

reduces political vulnerability

A sovereign state can

regulate trade with foreign entities. regulate who may enter and leave the state. reject applications for citizenship.

Which tactic is designed to control foreign investment?

tax controls

A sovereign state's land is ultimately governed by

the sovereign state itself

Match the countries (in the left column) with its rules of suffrage (in the right column).

Bolivia: 18-year-olds who are married can vote. Peru: Police and military personnel cannot vote. Croatia: 16-year-olds who are employed can vote.

Which of the following is a threat to international marketing?

Cyber attacks

A batch of automobiles produced by the overseas manufacturing unit of a multinational automobile manufacturer was recalled due to defects in engine transmission. Instead of blaming faulty manufacturing, the MNC decided to fix its design and inspection routines and publicly admitted its guilt in the matter. Identify the strategy used by the MNC to avoid political risks in its overseas operations.

Political bargaining

Which of the following is the least recommended approach to avoiding political vulnerability and risk?

Political payoffs

Which of the following products are most likely to be categorized as politically sensitive?

Products that symbolize the company's home country

Identify a country that bars women from voting.

Saudi Arabia

Which of the following helps reduce disruptions to international trade?

Seeking resolutions to trade disputes

Which of the following countries does the United States NOT classify as a Level 4 threat?

South Africa

Refers to the both the powers exerted by a state in relation to other countries and to the supreme powers exercised over its own members.

Sovereignty

Identify a characteristic feature of political and social activists (PSAs).

They are an important political force that should not be dismissed.

Identify a true statement regarding political and social activists (PSAs).

They are not always officially sanctioned by the government.

To understand what the people of a country believe and fear, and why they are prejudiced about certain matters, a marketer should be familiar with not only current events, but also the nation's entire history.

True

Why should a government support foreign investment?

to accelerate the development of its economy

Identify the true statements regarding political risk assessment

It is an attempt to predict political instability. It helps managers identify and assess political events.

Why are trade sanctions considered largely ineffective?

because traders from other major nations ignore them

When multinationals include several investors and banks in financing an investment in a host country, they can be protected from government takeover if the

financing banks have made loans to the host country

Why is it important for foreign companies to understand the standpoints of the major political parties in the country they would like to do business with?

Because political parties in power shape trade policy.

True or false: A sovereign state's laws apply to its citizens only when they are within the state's geographical boundaries.

False

True or false: International companies lose money when doing business with politically radical governments.

False

From an international law perspective, a sovereign state can do which of the following?

Govern its own territory Sign treaties with other states

Identify a true statement regarding the risks of international marketing.

It remains challenging to assess which products and companies are politically vulnerable.

According to Steven Pinker, which of the following reasons explain lower rates of violence on the planet?

Laws and governance An increase in the involvement of women in the government

Identify a strategy that may drastically minimize the political vulnerability of an MNC in situations where a company has an exclusive technology.

Licensing

Which of the following best explains why foreign companies may encounter hostile political environments?

Many believe foreign companies care only about profit and exploit their nation's resources.

Identify a true statement regarding international marketing.

Marketing products that are politically sensitive in a host country should be avoided if possible.

Which of the following statements are true about changes in government in foreign countries?

Multinational corporations are less interested in who is in political power than continuity of operations. Business operations may continue regularly in a country experiencing political upheaval and change.

Identify a reason for instability in international marketing.

Nationalism

The use of import restrictions to encourage the development of domestic industry becomes a problem when

a country cannot supply a consumer demand.

When a country requires that any product marketed in the country must include a certain percentage of local material, it has

a local-content law.

International business problems are often caused by

a state exercising laws beyond its geographical boundaries.

Adhering to the World Trade Organization (WTO) may be construed as hazardous to a state's sovereignty because nations that are a part of the WTO agree to

accept WTO regulations that may be at odds with a state's laws.

Genrapay Inc., a multinational firm, has a branch of operations in a country. Due to rampant militant nationalism, the government seized Genrapay's assets without any form of reimbursement and proceeded to nationalize the firm. This scenario best exemplifies

confiscation

The United States of America is a

constitutional federal republic

Price controls can be used to

control the cost of certain necessary products

Following the collapse of colonialism, _____ was seen as the best solution to all the criticisms of government.

democracy

Identify the main political causes for instability in international markets.

election of a new political party to power antagonism between certain countries

Countries attract international investment in certain high-priority sectors by offering

exemption from exchange controls. tax breaks.

When a nation confiscates property that is legally owned by foreigners, it is engaged in

expropriation.

What is a major liability for international marketers?

failure of the host country's government

What may happen to foreign investors when a host country's currency is devalued?

financial loss

Some people consider _______ to be especially hazardous to national sovereignty.

foreign investment

A sovereign state can do which of the following?

make deals with other sovereign nations determine its geographical borders

What is a good solution for a MNC that is doing business in a host country that insists upon local participation in the company?

planned domestication

What causes a country to exercise exchange control?

too much money leaving the country

Identify a risk related to international marketing.

A country or group of countries may boycott businesses from a specific country.

Which of the following are labor problems that companies can face in foreign countries?

Companies may be required to share profits. Companies may not be allowed to lay off workers.

is the most drastic political risk that foreign investors face.

Confiscation

occurs when host countries use a series of government decrees that mandate local ownership and greater national involvement in a company's management to transfer foreign investments to national control and ownership.

Domestication

Which statement is true regarding price controls?

During periods of inflation, price controls can be used to regulate the cost of living.

Identify an accurate statement about joint ventures.

Establishing joint ventures with a third-country MCN may reduce financial vulnerability in a host country.

How do some underdeveloped countries quickly acquire operating funds?

Severe taxation of profitable foreign businesses

What makes U.S. companies doing business in foreign countries attractive as targets for terrorism?

They are symbols of the political and cultural system that terrorists disagree with.

Which of the following statements is true about political and social activists (PSAs)?

They can be a strong force in marshaling public opinion.

Identify a risk to MNCs that stems from their use of licensing to reduce political vulnerability.

They risk losing money if a licensee discontinues paying the licensing fee.

Why were nationalized businesses historically rarely able to improve a country's economic development?

They were less efficient than private businesses. They could not compete in the global marketplace.

Why do countries domesticate foreign investments or companies?

To increase the amount of profits kept within the country.

Identify the problems related to cyberterrorism

Tracing the crime back to the cyberterrorists and criminals is difficult. Determining the nature of the cyberattack is not easy.

True or false: After a country expropriates a foreign business, the business tends to become nationalized.

True

True or false: Stable governments may drastically change their policies regarding international trade and foreign investment.

True

True or false: Surprising and/or extreme political shifts in government policy deter foreign investment.

True

One of the central aims of economic nationalism is the

protection of economic independence.

A sovereign state has the power to

require its citizens to follow laws. oppose direct foreign investment. regulate its national and international trade.

What strategy do host countries use to encourage foreign companies to buy products made within the host country?

restriction of certain imports

Feelings of nationalism are often exhibited through

strict control over foreign investment

The countries of Vanadia and Bardemia have an agreement to trade various perishable products. Vanadia noticed a decline in the sale of its products in Bardemia. However, perishables from other countries were doing well. Marketers from Vanadia found that the problem stemmed from Bardemians' distrust of Vanadia due to previous military conflict. This scenario exemplifies

targeted fear and animosity