Question 1

If Brazil applies tariffs and special treatment for local firms against foreign competition,it is known as:

Accepted Answer

Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and subsidies for domestic businesses. If Brazil applies tariffs and special treatment for local firms against foreign competition, it would be considered a form of protectionism.

Question 2

According to research from Transparency International,which of the following countries ranked #1 as the least corrupt for doing business?

Accepted Answer

According to the research from Transparency International, New Zealand ranked #1 as the least corrupt for doing business.

Question 3

The two main ways of organizing multinational corporations for global operations are global __________ and global __________ structures.

Accepted Answer

The two main ways of organizing multinational corporations for global operations are through area and product structures. Area structure involves dividing the world into different regions and having each region manage their own operations. Product structure involves having different product divisions or departments manage their operations globally. So, option D is the best answer.

Question 4

All of the following are MNC complaints about host countries EXCEPT:

Accepted Answer

Interference with government is not typically a complaint of multinational corporations (MNCs) about host countries; rather, it is often a concern of host countries about MNCs. MNCs usually complain about issues that directly affect their operations and profitability, such as profit limitations, overpriced resources, and exploitative rules.

Question 5

Products For You,Inc.(PFY)is an international company with five presidents in charge of its American,European,African,Asian,and the ROW (rest of the world)operations.PFY is using a global __________ structure.

Accepted Answer

PFY is organized based on geographic regions, which is characteristic of a global area structure.

Question 6

In her book The Travels of a T-Shirt in the Global Economy,economist Pietra Rivoli tracks a t-shirt that she bought while on a vacation to Florida to realize that it was truly 100 percent U.S.originated and made throughout its journey.

Accepted Answer

In her book, Pietra Rivoli tracks a t-shirt that she bought while on a vacation to Florida and discovers that it was not wholly made in the USA but originated from cotton grown in Texas, spun into yarn in Indonesia, woven into fabric in China, and then sewn into a garment in Bangladesh.

Question 7

Which of the following approaches to international business offers the most control but with the greatest risk?

Accepted Answer

Foreign subsidiary offers the most control as the company has full ownership and can make all decisions. However, it also involves the greatest risk as the company is fully responsible for all costs and potential failures in the foreign market.

Question 8

A __________ is a business with extensive foreign operations in more than one country.

Accepted Answer

A multinational corporation is a business with extensive foreign operations in more than one country. This type of corporation has subsidiaries, branches, or affiliates in different countries and operates on a global scale. The other options (A, B, and C) do not necessarily imply foreign operations or operations in multiple countries.

Question 9

The problem of "currency risk" refers to:

Accepted Answer

Currency risk refers to the fluctuations in foreign exchange rates, which can affect the value of investments, assets, or transactions denominated in a foreign currency. This risk arises due to changes in geopolitical, economic, or market conditions that influence the supply and demand for currencies, such as interest rates, inflation, political stability, trade balances, or investor sentiment. Currency risk can affect various parties, such as multinational corporations, investors, exporters, importers, tourists, or governments. To manage currency risk, some strategies include hedging, diversification, exposure limits, or currency swaps. Options and futures contracts can also provide ways to mitigate the impact of currency fluctuations on financial positions.

Question 10

A global institution whose purpose is to promote free trade and open markets around the world is known as the ______________.

Accepted Answer

The World Trade Organization (WTO) is a global institution with a mandate to promote free trade and open markets. It has 164 member countries and serves as a forum for negotiating and implementing trade agreements, as well as resolving disputes between member countries related to trade. The other options listed, while related to trade or commerce, do not have the same global mandate as the WTO.

Question 11

__________ is the full time employment of children for work normally done by adults.

Accepted Answer

Child labor is the full time employment of children for work normally done by adults. The other choices (A, C, and D) are not a suitable fit to the definition.

Question 12

A(n)_____________is a company that employs workers at very low wages,for long hours,and in poor working conditions.

Accepted Answer

The definition provided matches the characteristics of a sweatshop. A subsidiary is a company that is wholly or partly owned by another larger company, a joint venture is a business partnership where two or more parties agree to pool their resources for a specific project, and an MNC (multinational corporation) is a company that operates in multiple countries.

Question 13

ABC,a U.S.based company,operates a subsidiary in Egypt.ABC is facing the possible loss of investment and control over its assets in Egypt due to instability and political changes.ABC is facing which of these?

Accepted Answer

ABC is facing political risk due to the instability and political changes in Egypt that may result in the loss of investment and control over its assets.

Question 14

If Japan receives the most favorable treatment for imports and exports with other countries,Japan is said to have a(n)___________ status.

Accepted Answer

Most favored nation (MFN) status is a trade term that refers to a country that receives the best treatment for imports and exports with other countries. Japan could be included in this category if it receives the most favorable treatment for trade with other nations.

Question 15

A __________ is a local operation completely owned by a foreign company.

Accepted Answer

A foreign subsidiary is a local operation that is completely owned by a foreign company. This means that the foreign company has complete control over the subsidiary's operations and decisions. A foreign partnership is an association between two or more foreign entities, while a franchise and licensee are both types of business arrangements that allow one party to use another party's brand, products or services.

Question 16

The forecasting of political events that may impact foreign investments is called __________.

Accepted Answer

Political-risk analysis involves forecasting potential political events that could impact foreign investments, such as changes in government policies or instability in the country's political climate. Currency analysis focuses specifically on fluctuations in currency values, while analytical and international forecasting are more general terms that may not necessarily relate to political events.

Question 17

When Argentina's president nationalized the oil industry without consideration for the foreign companies operating there,the loss to the foreign countries was considered a __________ risk.

Accepted Answer

The act of nationalizing the oil industry without considering foreign companies operating there is a political risk. Political risk refers to the potential impact on a company's value resulting from political decisions, events, or changes in the political environment in a country, which affect the business operations of the company.

Question 18

When an American business is being mistreated in foreign countries,the U.S.government can help by appealing to which of the following?

Accepted Answer

The World Trade Organization (WTO) is responsible for dealing with the rules of trade between nations. It provides a forum for countries to negotiate and settle trade disputes. If an American business is being mistreated in a foreign country, the U.S. government can file a complaint with the WTO and request a dispute resolution panel to investigate and enforce fair trade practices.

Question 19

______________ managers are those who are aware of international developments and competent in working across cultures.

Accepted Answer

Global managers possess the knowledge and skills required to navigate international business environments and work effectively with individuals of different nationalities and cultures. Senior managers are typically those with high-level positions within a specific organization, whereas national managers focus on managing operations within a single country. Foreign managers refer to individuals from another country who are hired to work in a particular organization or industry.

Question 20

The Foreign Corrupt Practices Act prevents U.S.firms from doing which of the following?

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. firms from engaging in bribery or giving excess commissions in exchange for favors to foreign officials or organizations. The act also requires companies to keep accurate records and have internal controls in place to prevent corrupt practices. The FCPA does not address sweatshops, child labor, or unsustainable development.

Quiz 17: Globalization and International Business