Question 1

Which of the following factors helps a company determine the growth potential of a foreign market?
A)Political uncertainty
B)Purchasing power
C)Type of infrastructure
D)Land availability
E)Policy uncertainty

Accepted Answer

Purchasing power is a key indicator of a market's growth potential as it reflects the ability of consumers to buy goods and services.

Question 2

​Tugstinia is one of only two countries in the world that produces a mineral required in the manufacturing of cellular phones. Several mining companies recently moved their operations out of the region due to a civil war resulting from a change in rulers. This is an example of how can influence global business.
A)​political uncertainty
B)​policy uncertainty
C)​economic risk
D)​infrastructure failure
E)​nationalization

Accepted Answer

Political uncertainty, caused by the civil war resulting from a change in rulers, can cause mining companies to move their operations out of the region, creating risks for global business.

Question 3

What are the two types of political risk that affect companies conducting global business?
A)Political uncertainty and policy uncertainty
B)Policy uncertainty and expropriation potential
C)Cultural strength and political risks
D)Infrastructure dynamism and political uncertainty
E)Nationalism and economic uncertainty

Accepted Answer

The two types of political risk that affect companies conducting global business are political uncertainty (instability and unpredictability in the political environment) and policy uncertainty (uncertainty regarding government policies or regulations). Option B is partially correct, but expropriation potential falls under policy uncertainty. Options C, D, and E are not correct as they do not represent the two types of political risk mentioned in the question.

Question 4

_____ refers to the risk associated with changes in laws and government schemes that directly affect the way foreign companies conduct business.​
A)​Policy uncertainty
B)​Power distance
C)​Political uncertainty
D)​Cultural simulations
E)Purchasing power

Accepted Answer

Policy uncertainty refers to the risk associated with changes in laws and government schemes that directly affect the way foreign companies conduct business.

Question 5

Managing global joint ventures can be difficult because they:
A)​represent a merging of four cultures.
B)​increase the number of tariffs that have to be paid.
C)​can only be used by large companies that already have an international presence.
D)​use local consistency in marketing.
E)​help companies to allow nontariff barriers to entry.

Accepted Answer

Managing global joint ventures can be difficult because they represent a merging of four cultures (the two companies' organizational cultures and the two national cultures). This can lead to communication and coordination challenges, as well as potential conflicts arising from differing values, beliefs, and approaches to business.

Question 6

Which of the following is a common factor of global new ventures?
A)A mechanistic organizational culture
B)The use of local adaptation strategy
C)The development of cultural specific implementation policies
D)The ability to respond quickly and efficiently to any changes in the external environment
E)The development and communication of a company's global vision from inception by the founders.

Accepted Answer

The development and communication of a company's global vision from inception by the founders is a common factor of global new ventures.

Question 7

What are the strategies that can be used to minimize or adapt to the political risk inherent in global business?
A)Protectionist, avoidance, and offensive strategies
B)Creative, cooperative, and defensive strategies
C)Cooperative, customary, and nationalistic strategies
D)Avoidance, protectionist, and guerrilla strategies
E)Control, avoidance, and cooperation strategies

Accepted Answer

Control, avoidance, and cooperation strategies are effective in minimizing or adapting to political risk in global business. Control strategies involve managing or influencing the political environment. Avoidance strategies include limiting exposure in risky markets. Cooperation strategies focus on working with governments and communities to ensure mutual benefits.

Question 8

The primary disadvantage of wholly owned business is the _____.
A)dumping of products
B)countertrading of goods
C)nontariff barriers associated with buying existing businesses
D)difficulty in adjusting to a new culture
E)cost of building new operations

Accepted Answer

The primary disadvantage of wholly owned business is the cost of building new operations. This can be a significant financial burden, as it involves not only the initial investment in building or acquiring facilities, but also ongoing costs for staffing, training, and maintaining operations. Additionally, there may be additional legal and regulatory requirements involved in setting up a wholly owned business, which can further increase costs.

Question 9

A _____ is a strategic alliance in which two existing companies collaborate to form a third, independent company.
A)joint venture
B)franchise
C)wholly owned affiliate
D)global new venture
E)cooperative contract

Accepted Answer

A joint venture is a strategic alliance between two or more companies to form a new entity, with shared ownership and control. In a joint venture, each company contributes expertise, resources, and capital to achieve a common goal. Therefore, option A) is the best choice for this definition.

Question 10

The most important factor in an attractive business climate is the _____.
A)easy access to growing markets
B)presence of established markets
C)high political risks
D)limited infrastructure
E)high competition among companies

Accepted Answer

Easy access to growing markets is crucial for a business's success and growth, as it provides opportunities for expanding customer base and increasing profits. Established markets may not offer as much potential for growth, while high political risks, limited infrastructure, and high competition can hinder business operations and profitability.

Question 11

A cosmetics company that is considering entering the South American market would be especially interested in the discretionary income within that region. In this context, which of the following is a determining factor in its global strategy?
A)Purchasing power
B)Political uncertainty
C)Expropriation potential
D)Infrastructure costs
E)Sociocultural trends

Accepted Answer

Discretionary income is the amount of money people have left over to spend after they have paid for necessary expenses like housing, food, and bills. Thus, purchasing power is a determining factor in the cosmetics company's global strategy as it directly affects whether or not consumers within the South American market will be able to afford the company's products. Political uncertainty, expropriation potential, infrastructure costs, and sociocultural trends may also be important factors to consider, but they are not as directly related to the company's ability to sell its products in the market.

Question 12

Many companies in Dansland retracted their businesses as the government passed a new law requiring the companies to pay double the tax for conducting business in Dansland.​ This is a _____ that the companies doing business in Dansland have faced.
A)​political uncertainty
B)​national culture
C)​power distance
D)​control strategy
E)​policy uncertainty

Accepted Answer

The situation described in the statement shows policy uncertainty as the government passed a new law requiring companies to pay double the tax for conducting business in Dansland. This uncertainty regarding government policies can affect the decision-making of companies and lead them to retract their businesses.

Question 13

Identify a common factor of global new ventures?
A)The bringing of a product or service to several different foreign markets at the same time
B)The use of local adaptation strategy
C)A mechanistic organizational culture
D)The ability to respond quickly and efficiently to any changes in the external environment
E)The development of culturally­specific implementation policies

Accepted Answer

Global new ventures often involve the simultaneous introduction of products or services to multiple foreign markets, leveraging global opportunities and resources.

Question 14

Clive Motor Company solely owns and operates manufacturing plants in Brazil, Chile, Germany and India. Which of the following methods for conducting global business has Clive Motor Company used in this example?
A)Joint venture
B)Strategic alliance
C)Cooperative contract
D)Wholly owned affiliate
E)Strategic franchise

Accepted Answer

Clive Motor Company has established wholly owned affiliates in Brazil, Chile, Germany, and India, indicating that they have taken a direct investment approach in their global business operations.

Question 15

German chip manufacturer, Infineon AG, has joined with Motorola Inc. and Agere Systems Inc. to establish a new company in order to develop and license chip designs for cellphones. These three companies have created a _____.
A)franchise
B)subsidized corporation
C)global new venture
D)joint venture
E)policy uncertainty

Accepted Answer

The three companies have created a joint venture, which is a strategic alliance between two or more companies to pursue a specific business objective. In this case, the objective is to develop and license chip designs for cellphones.

Question 16

Stardust Inc. is expanding its global operations into South Fordland in spite of the terrorist activities in the country. As Stardust Inc. expands into South Fordland, it must deal with _____.
A)political uncertainty
B)economic uncertainty
C)infrastructure regulation
D)nationalistic equity
E)strategy risk

Accepted Answer

The mention of terrorist activities in the country suggests that there is political uncertainty that Stardust Inc. must deal with.

Question 17

State-of-the-art companies with sales, employees, and financing in different countries that are found with an active global strategy are called _____.
A)wholly owned affiliates
B)​global new ventures
C)franchisees
D)strategic alliances
E)subsidized corporations

Accepted Answer

Wholly owned affiliates refers to companies operating in different countries with their own sales, employees and financing, and a clear global strategy.

Question 18

Starshine Inc., a toy manufacturing company, has collaborated with Capsidy Corp., a book publishing company, to come up with a third company, Starcap Inc., which manufactures educational toys and games for preschool children. In this context, Starcap is a(n) _____. ​
A)​franchise
B)​strategic alliance
C)​licensee
D)​joint venture
E)​exporter

Accepted Answer

Starcap Inc. is a joint venture between Starshine Inc. and Capsidy Corp. A joint venture is a business agreement in which two or more companies join forces to undertake a specific project, with each company sharing the risks and rewards of the venture. Therefore, D is the correct answer.

Question 19

_____ is associated with the risk of major changes in governmental regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.
A)Individualism
B)​Power distance
C)​​​Political uncertainty
D)​Short­term orientation
E)​Policy uncertainty

Accepted Answer

Political uncertainty refers to the risk of major changes in governmental regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events. It creates an unpredictable and unstable environment for businesses operating in affected countries, making it difficult for them to plan and make investment decisions.

Question 20

Which of the following is a trend that has allowed companies to skip the phase model when going global?
A)Quick, reliable air travel
B)The globalization of the trend
C)A critical need for resources
D)The complete metamorphosis of marketplaces
E)Cheap labor in developing countries

Accepted Answer

Quick, reliable air travel has made it possible for companies to quickly and easily travel to and from global locations, negating the need for a phased approach to globalization.

Quiz 8: Global Management

Which of the following factors helps a company determine the growth potential of a foreign market?

What are the two types of political risk that affect companies conducting global business?

_____ refers to the risk associated with changes in laws and government schemes that directly affect the way foreign companies conduct business.

Managing global joint ventures can be difficult because they:

Which of the following is a common factor of global new ventures?

What are the strategies that can be used to minimize or adapt to the political risk inherent in global business?

The primary disadvantage of wholly owned business is the _____.

A _____ is a strategic alliance in which two existing companies collaborate to form a third, independent company.

The most important factor in an attractive business climate is the _____.

A cosmetics company that is considering entering the South American market would be especially interested in the discretionary income within that region. In this context, which of the following is a determining factor in its global strategy?

Many companies in Dansland retracted their businesses as the government passed a new law requiring the companies to pay double the tax for conducting business in Dansland. This is a _____ that the companies doing business in Dansland have faced.

Identify a common factor of global new ventures?

Clive Motor Company solely owns and operates manufacturing plants in Brazil, Chile, Germany and India. Which of the following methods for conducting global business has Clive Motor Company used in this example?

German chip manufacturer, Infineon AG, has joined with Motorola Inc. and Agere Systems Inc. to establish a new company in order to develop and license chip designs for cellphones. These three companies have created a _____.

Stardust Inc. is expanding its global operations into South Fordland in spite of the terrorist activities in the country. As Stardust Inc. expands into South Fordland, it must deal with _____.

State-of-the-art companies with sales, employees, and financing in different countries that are found with an active global strategy are called _____.

Starshine Inc., a toy manufacturing company, has collaborated with Capsidy Corp., a book publishing company, to come up with a third company, Starcap Inc., which manufactures educational toys and games for preschool children. In this context, Starcap is a(n) _____.

_____ is associated with the risk of major changes in governmental regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

Which of the following is a trend that has allowed companies to skip the phase model when going global?