Deck 6: The Political Dimension

Question 1

A democratic political system is based on the belief that citizens should be directly involved in decision making?

Answer 1

True
Explanation: Democracy is based on the widest possible involvement of the citizenry in decision-making, both political and economic.

Question 2

The number of command economies has increased since the demise of communism in the late 1980s.

Answer 2

False
Explanation: The number of command economies has been substantially reduced since the collapse of the Soviet Bloc and the adoption of market reforms by many economies.

Question 3

Privatisation involves the transfer of state property into private ownership True/False

Answer 3

True
Explanation: Privatisation is the transfer of assets into the hands of private citizens and hence involves the transfer of state property to the private sector.

Question 4

A free trade area (such as NAFTA) can be described as a group of countries committed to eliminating all internal barriers to free movement of goods and services but following independent external trade policies True/False.

Question 5

The commonly observed link between political ideology and economic system is that countries that support individual goals are more likely to have a market based economy.

Question 6

In a market economy the types, quantities and prices of goods sold are determined by government planning True/False.

Question 7

Collectivism (or collective ownership) is a system that stresses the primacy of collective goals over individual goals True/False.

Question 8

According to the Varieties of Capitalism approach, because of institutional advantage, radical innovations are more likely to be observed in coordinated market economies

Question 9

In a coordinated market economy, the institutional focus is on encouraging firm cooperation and consistency.

Question 10

Risk insurance and contingency planning are examples of a defensive or reactive approach to political risk management

Question 11

A 'host-plus-one' strategy reduces political risk by encouraging two host country governments to collaborate in political decision making

Question 12

Integrating an affiliate operation within the host country environment is an example of an integrative approach to political risk management

Question 13

Cultural differences between host country officials and MNE management reduce the risk of disagreement in negotiations

Question 14

Since the 1980s globalisation wave has brought greater convergence of business and government commercial interests facilitating the development of the global factory

Question 15

All other things equal, a rise of populism is likely to negatively impact the operations of a global factory

Question 16

The use of externalisation strategies by global factories can help reduce likely levels of political risk and disagreement experienced in a host country

Question 17

The perceived instability of global factory operations means that host country investments in competitive infrastructure are rarely worthwhile.