Question 1

Discuss the different sources of political instability and types of political risk faced by international marketers.

Accepted Answer

The answer of Discuss the different sources of political instability...

Question 2

The combination of civic projects and investment activities will help a firm to manage the political risk in an overseas country.

Accepted Answer

Civic projects can create goodwill for the company among local communities and governments, while investment activities can provide economic benefits for the country. Both of these can help reduce political risk, as the company is seen as a positive contributor to the local economy and society.

Question 3

The London Interbank loan LIBOR rate is a guideline for loans between international governments.

Accepted Answer

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate that indicates the rate at which banks can borrow unsecured funding from each other in the London interbank market. It is widely used as a reference rate for a range of financial instruments, but it is not solely for loans between international governments.

Question 4

The legal system operating in Australia is based on:

Accepted Answer

The legal system operating in Australia is based on the common law system, which originated in England and is characterized by legal precedents established through court decisions rather than legislative statutes. Aboriginal law, Islamic law, and code law are not the basis of the legal system operating in Australia. Legislative law, while important, is secondary to the common law system in terms of establishing legal precedent.

Question 5

Explain with examples how a company's own behaviours can assist it in minimizing political risk in a particular foreign market.

Accepted Answer

The answer of Explain with examples how a company's own...

Question 6

Companies use the Delphi technique to determine political risk. The company brings a group of experts together in its offices and asks for their opinions.

Accepted Answer

The Delphi technique involves gathering opinions from a panel of experts through a series of questionnaires to achieve a consensus, and it is typically conducted anonymously rather than by bringing experts together in one location.

Question 7

International law grows out of the agreement of two or more nations and generally:

Accepted Answer

International law aims to harmonize and reconcile the differences between the laws of different nations, thereby minimizing conflicts and promoting cooperation. While it does address political and military issues, its scope is not limited to these areas. Option A and E are too narrow, as international law goes beyond the laws of the country in which an organization operates. Option D is also incorrect, as international law covers a variety of issues, not just military matters.

Question 8

When assessing its exposure to political risk in an overseas market, which of the following factors must a firm pay close attention to?

Accepted Answer

A firm must consider product factors, external factors, and company factors to assess its exposure to political risk, as these elements can influence how political changes impact the firm's operations and profitability in an overseas market.

Question 9

Which of the following courses of action is appropriate in situations where the host country changes its foreign investment policies and regulations?

Accepted Answer

Each option represents a viable strategy depending on the specific circumstances of the policy change and the company's situation. Indigenizing operations, taking pre-emptive actions, withdrawing, or negotiating alternative arrangements are all potential responses to adapt to new foreign investment policies.

Question 10

Firms that set out to be good corporate citizens of the host country:

Accepted Answer

Firms aiming to be good corporate citizens in their host countries often engage in practices that support the local economy and workforce development, such as buying local products and establishing training programs for local employees. Promoting freedom of speech and protesting against governments may not directly relate to corporate citizenship in terms of operational and community support practices.

Question 11

Under common law the interpretation of what the law means on a specific subject is influenced by previous decisions of the courts and by usage and custom.

Accepted Answer

Under common law, the interpretation of law is indeed influenced by previous court decisions and by usage and custom.

Question 12

The three separate systems of codes that typically operate under code law are:

Accepted Answer

The three separate systems of codes that typically operate under code law are civil, commercial and criminal. Commercial code law mainly deals with business and commercial transactions, whereas criminal code law deals with crimes committed by individuals or groups, and civil code law deals with non-criminal disputes between individuals or organizations.

Question 13

Transfer risk is one type of political risk facing a firm operating in an overseas market. This type of risk involves host government interference in the overseas operations of the firm.

Accepted Answer

Transfer risk, a type of political risk, specifically refers to the risk of restrictions on currency exchange that prevent a firm from converting local currency into its home currency or transferring funds out of the host country. It does not directly involve government interference in operations but rather impacts the firm's ability to repatriate profits or capital.

Question 14

Which of the following statements is true for firms wishing to minimise potential political problems?

Accepted Answer

The answer of Which of the following statements is true...

Question 15

Critically evaluate the four methods for determining political risk suggested by Jain (1996).

Accepted Answer

The answer of Critically evaluate the four methods for determining...

Question 16

Expropriation is a process by which a host government places controls and restrictions on a foreign firm, thus reducing the firm's influence on the operation of its business.

Accepted Answer

Expropriation involves the outright seizure of a foreign firm's assets or operations by a host government, not just placing controls and restrictions on the firm's operation.

Question 17

The greater the local ownership of an overseas operation, the less likely it will be subject to political risk.

Accepted Answer

Local ownership of an overseas operation can help to increase the level of integration with the local community and government, which can provide a degree of protection against political risk. When an operation is seen as being locally owned and operated, it is often more likely to be viewed as a legitimate part of the local economy and less likely to be targeted by political leaders or protestors. Additionally, local ownership can provide a better understanding of the local culture and business practices, which can help to navigate any potential political obstacles.

Question 18

A common legal problem in international business is deciding which country's laws will apply in the event of a dispute.

Accepted Answer

This is true as different countries have different laws and regulations governing business activities, and it can be unclear which jurisdiction has authority in the event of a dispute. This is a common issue in international business, and companies need to be careful when drafting contracts or entering agreements to ensure they address this issue appropriately.

Question 19

Generally, international law helps to minimise the extent of differences between national laws.

Accepted Answer

International law sets common standards across nations, thereby reducing friction and conflicts between national laws.

Question 20

Any assessment of a firm's exposure to political risk in an overseas country should cover at least three key factors- product, external, and company.

Accepted Answer

This statement is true. A firm's exposure to political risk in an overseas country should be assessed based on the product they offer, external factors such as the political climate and legal system, and the company's own operations and relationships within the country.

Quiz 2: Avoiding the Pitfalls of the International Political and Legal Environment