Global Econ - Chapter 6

Aristocracy

- A government in which power is in the hands of a hereditary ruling class or nobility - Rule by few

Monarchy

- A government ruled by a king or queen - Rule by one

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

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

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

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

Identify the problems related to cyberterrorism.

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

Identify the goals of terrorism.

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

In the context of international law, which of the following can be done by a sovereign state?

- It can sign treaties with other states. - It can govern its own territory.

Identify the true statements regarding political risk assessment.

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

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 the ways in which foreign investors can lessen their susceptibility to politically induced risks in a host country.

- Offer jobs to the host country's citizens. - Boost exports from the host country. - Donate funds to the host country's charitable organizations.

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

- Terrorism - Conflict or war within a nation

Which of the following is the best type of sovereign state to do business with?

- The one that has a stable government - The one that is receptive to foreign investment

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.

Identify the main political causes for instability in international markets.

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

Countries that display militant nationalism may _____.

- discourage foreign investment - nationalize industries

Democracy

- government by the people - rule by many

A sovereign state can do which of the following?

- make deals with other sovereign nations - determine its geographical borders

A sovereign state can

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

A sovereign state has the power to

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

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

- tax breaks. - exemption from exchange controls.

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

Citizens purchase only items made within their country

Cuba

Communist state

Identify a way in which militant nationalism is exhibited.

Confiscation of multinational corporations' assets

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

Contentious trade disputes

Afghanistan

Islamic Republic

Identify a true statement regarding the risks of international marketing.

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

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.

Identify a reason for instability in international marketing.

Nationalism

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.

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.

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.

expropriation

When the government of a country seizes an investment but makes some reimbursement for the assets

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.

Economic Nationalism

an emphasis on domestic control and protection of economic independence

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

an extremist party gaining power

Nationalism

an intense feeling of national pride and unity, a kindling of national pride in the people of a country.

Political payoffs _____.

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

Why are trade sanctions considered largely ineffective?

because traders from other major nations ignore them

Political and social activists (PSAs) _____.

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

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 seizing of a company's assets without compensation is known as

confiscation

The United States of America is a _____.

constitutional federal republic

United Kingdom

constitutional monarchy

Price controls can be used to _____.

control the cost of certain necessary products

Multinationals can reduce their political vulnerability by _____.

creating joint ventures with the host country or a third country

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

democracy

___ 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

When the government of a country seizes an investment but makes some reimbursement for the assets, it is engaged in _____.

expropriation

What is a major liability for international marketers?

failure of the host country's government

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

True or false: Nationalism refers to one country's hostility toward and fear of another specific country.

false

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

financial loss

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

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

foreign investment

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

has a stable foreign trade policy with the company.

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

Multinational companies may encounter problems when

labor unions are powerful and supported by the government.

a local-content law

law requiring that products sold in a particular country be at least partly made there

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.

___ can best be defined as an intense feeling of national pride and unity, a kindling of national pride in the people of a country.

nationalism

Domestication

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.

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

Sovereignty

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

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

restriction of certain imports

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

sovereignty

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

Which tactic is designed to control foreign investment?

tax controls

A sovereign state's land is ultimately governed by

the sovereign state itself.

One of the central aims of economic nationalism is the

protection of economic independence.

Croatia

16-year-olds who are employed can vote.

Bolivia

18-year-olds who are married can vote.

Identify a risk related to international marketing.

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

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

Which of the following is a threat to international marketing?

Cyber attacks

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.

Peru

Police and military personnel cannot vote

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

Which of the following countries precluded women from voting until the king permitted women to vote in 2015?

Saudi Arabia

Which of the following helps reduce disruptions to international trade?

Seeking resolutions to trade disputes

How do some underdeveloped countries quickly acquire operating funds?

Severe taxation of profitable foreign businesses

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

South Africa

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.

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.

Why do countries domesticate foreign investments or companies?

To increase the amount of profits kept within the country.

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

true

What is one way that multinational companies can maintain a good working relationship with a host country's government?

Use local content.

Why should a government support foreign investment?

to accelerate the development of its economy

What causes a country to exercise exchange control?

too much money leaving the country

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

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

true

True or false: One government may both encourage and discourage international marketing.

true

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

true