Question 1

Operational risks include any change to the "rule of the game" under which the foreign firm operates.

Accepted Answer

Operational risks can include changes in regulations, laws, policies, or other factors that impact how a foreign firm can conduct its business. These changes can alter the "rule of the game" for the firm, and may result in additional costs, decreased market access, or other negative impacts.

Question 2

Competition for FDI in keen, host government efforts are directed at technology transfers and imports.

Accepted Answer

The statement seems to contain a typographical error with "keen" instead of "keenly" or "intense." Additionally, host government efforts are typically directed at attracting FDI for economic growth, which may include technology transfers and imports, but the statement is not clearly articulated.

Question 3

Political behavior is development and use of power in relation to other entities.

Accepted Answer

Political behavior involves the use and manipulation of power in relation to other individuals, groups, or organizations in society.

Question 4

Despite globalization, the MNE remains firmly grounded in its host environment.

Accepted Answer

Despite operating in multiple countries, an MNE is subject to the laws, regulations, and cultural norms of its host environment. Its success is also dependent on favorable political, economic, and social conditions in its host country. Therefore, an MNE cannot fully detach from its host environment.

Question 5

Investment incentives are more likely to be offered when competition among potential sites is intense.

Accepted Answer

The answer of Investment incentives are more likely to be...

Question 6

There is never any special support offered to MNEs willing to invest in troubled areas.

Accepted Answer

The answer of There is never any special support offered...

Question 7

Concerning the topic of FDI, an investment agency's main roles are to solicit potential investors, weigh project feasibility, and to determine, provide, and administer incentives.

Accepted Answer

An investment agency's primary role is to attract potential investors to a specific region or country, assess the viability of investment projects, and provide and manage incentives to encourage investment.

Question 8

The bargaining power of the MNE tends to be less when it offers a differentiated, high-tech product.

Accepted Answer

The bargaining power of a Multinational Enterprise (MNE) tends to be higher when it offers a differentiated, high-tech product because such products often have fewer substitutes and require specialized knowledge, giving the MNE a competitive advantage.

Question 9

When a nation offers an attractive environment that is unmatched by others, its bargaining power is low.

Accepted Answer

When a nation offers an attractive environment, it increases its bargaining power as it becomes more desirable to other nations for trade, investment, and partnership opportunities.

Question 10

Local government objectives of the MNE are protecting national interests, protecting their environment, and protecting the company's interests.

Accepted Answer

The given statement correctly lists the local government objectives of the MNE, which are protecting national interests, protecting their environment, and protecting the company's interests.

Question 11

The key political goal of the MNE in the host country is to obtain legitimacy and acceptance.

Accepted Answer

The answer of The key political goal of the MNE...

Question 12

The most important political challenge of the MNE is the relationship with governments in the host and home countries.

Accepted Answer

The relationship with governments is crucial for MNEs as they must navigate different regulations, policies, and political environments in their host and home countries. MNEs must establish good relationships with various government entities to operate smoothly and avoid any legal or regulatory issues. Failure to do so can lead to legal, financial, or reputational damage to the company.

Question 13

Jurisdictional issues are much more complex in the context of international business then in domestic business.

Accepted Answer

Jurisdictional issues in international business involve multiple countries with different legal systems, which can create complicated legal situations that require careful analysis and interpretation. Domestic business is typically governed by the laws and regulations of a single country, making jurisdictional issues less complex.

Question 14

Political activities in the United States include constituency building, political action committee contribution, advertising, lobbying and coalition building.

Accepted Answer

These are all common political activities in the United States.

Question 15

Political risk is

Accepted Answer

Political risk refers to the probability of disruption or interference with an MNE's operations due to political factors such as government instability, policy changes, or civil unrest. It is not necessarily related to the MNE taking over local politics or directly affecting the lives of citizens.

Question 16

Competition reflects bargaining or control and related conflicts with the government and the MNE, each seeking private gains at the expense of the other's interests.

Accepted Answer

Competition can involve bargaining or control conflicts between the government and MNEs, as each seeks to protect their own interests and potentially gain advantages over the other party.

Question 17

Affinity or animosity between nations reflects how far aligned, or estranged, nations are based on history and political reality, which is an important determinant of international business relations.

Accepted Answer

The answer of Affinity or animosity between nations reflects how...

Question 18

Political processes are viewed by economists as constraints on the block of flow in production factors, intermediary and final goods, that distort supply and demand.

Accepted Answer

The answer of Political processes are viewed by economists as...

Question 19

Political behavior is defined as "the acquisition, development, securing, and use of power in relation to other entities, where power is viewed as the capacity of social actors to overcome the resistance of other actors."

Accepted Answer

This is the correct definition of political behavior.

Question 20

In the early 1970s, the Indian government established ownership rules that led to the exodus of many foreign MNEs.

Accepted Answer

The Indian government did establish ownership rules in the 1970s that required foreign companies to hold no more than 40% ownership in Indian subsidiaries, which led to the exit of many foreign MNEs.

Quiz 7: The Political and Legal Environment