Question 1

Labor cost advantages gained by moving into a country with low wages may be short-lived because tax increases cancel out the low-wage advantages.

Accepted Answer

Tax increases may offset some of the labor cost advantages gained initially by moving into a country with low wages, but it is not necessarily true that they cancel out all of the advantages. Furthermore, the duration of the labor cost advantages and the impact of tax increases depend on various factors such as the specific industry, the tax system, and the overall economic conditions of the country.

Question 2

Sales potential is probably the most important variable in determining international location decisions because consumer demand exceeds supply.

Accepted Answer

Sales potential is a crucial factor in international location decisions, but it's not solely determined by the balance of consumer demand and supply. Other factors such as production costs, logistics, legal environment, and political stability also play significant roles.

Question 3

Which of the following is true about projected demographic changes up to the year 2050 that could affect future production and sales locations?
A)The share of the working population should rise in developed countries and fall in developing countries.
B)The growth in per capita GDP should be higher in today's developing economies than in today's developed economies.
C)The percentage of the world population living in today's developed countries is expected to increase.
D)The population should fall in sub-Saharan Africa.

Accepted Answer

According to demographic projections, the share of the working population is expected to decline globally, but the decline will be more significant in developed countries than in developing ones. The percentage of the world population living in developed countries is also expected to remain roughly the same. However, it is projected that per capita GDP growth will be higher in today's developing economies than in developed economies, which could have an impact on future production and sales locations. There is no evidence to support the claim that the population will fall in sub-Saharan Africa.

Question 4

An advantage of locating operations where there are many competitors is that the cluster of competing firms attracts multiple suppliers and specialized personnel.

Accepted Answer

When there are many competitors in a certain location, it creates a cluster of expertise, which attracts multiple suppliers and specialized personnel. This cluster effect provides advantages to all firms located in the vicinity, as it creates a network of support and collaboration that can lead to increased efficiency and reduced costs. Therefore, locating operations where there are many competitors can be a smart business decision.

Question 5

In assessing political risk, the observation of past patterns is problematic because situations may change for better or worse.

Accepted Answer

Past patterns may not always be indicative of future outcomes, as circumstances can shift, policies may change, and events can occur that alter the political landscape. It's important to take a dynamic approach to assessing political risk, staying informed about current events, and continuously monitoring the situation.

Question 6

Although capital intensity is growing in most industries, labor compensation remains a significant cost for most companies.

Accepted Answer

While there is a trend towards greater investment in technology and capital, labor compensation expenses still represent a significant cost for many companies.

Question 7

When income inequality is high in a specific country, the per capita GDP figures are more meaningful.

Accepted Answer

Per capita GDP figures can be misleading in countries with high income inequality because they average the country's total income over its entire population, not accounting for how income is distributed among that population.

Question 8

Companies are usually willing to accept a lower rate of return on their investments in countries where they can more easily sell those investments and convert the proceeds at a favorable rate.

Accepted Answer

Companies prefer investing in countries where they can easily sell their investments and convert the proceeds at a favorable rate. Even if the rate of return is lower, the ease of converting the currency and avoiding risks associated with currency fluctuations makes it a more attractive investment opportunity.

Question 9

Which of the following BEST explains why Burger King has developed such a strong presence in many of the small countries of Latin America and the Caribbean?
A)These business environments allowed Burger King to take advantage of economies of scale.
B)These countries are close to a Burger King's headquarters.
C)These countries offered greater mobility of funds than countries in the European Union.
D)Unlike the BRIC countries, these business environments did not require escalation of commitment.

Accepted Answer

The answer of Which of the following BEST explains why...

Question 10

When comparing economic and demographic variables among countries, one should consider that consumers in developing countries do not necessarily follow the same historical patterns as those in more developed countries.

Accepted Answer

Developing countries often have unique economic and demographic characteristics, which may not align with patterns seen in more developed countries. Therefore, it is important to consider these differences when comparing variables across countries.

Question 11

We now have technology to allow people to communicate globally without traveling as much.Leading researchers on urbanization and planning suggest that the most likely consequence of this is ________.
A)a decrease in international airline travel
B)a decreased need for immigration restrictions
C)a smaller number of retirees living in urban areas
D)a greater number of self-motivated workers e-mailing and teleconferencing with colleagues

Accepted Answer

The ability to communicate globally without traveling reduces the need for physical presence, leading to an increase in remote work practices such as e-mailing and teleconferencing with colleagues. This does not directly imply a decrease in international travel, changes in immigration restrictions, or the living preferences of retirees.

Question 12

A company can best benefit from a first-mover advantage by moving into a small country before entering a much larger country.

Accepted Answer

A first-mover advantage refers to the advantage gained by being the first to enter a new market, to introduce a new product or service or to adopt a new technology. While it can be beneficial for a company to be a first-mover in a particular market, it may not necessarily be dependent on the size of the country. Sometimes, it may be more advantageous for a company to enter a larger market first, especially if the market is less competitive or if there is a higher demand for a particular product or service. Therefore, the answer is false.

Question 13

Demographers project that the share (percentage of population)of what we now consider the working-age population in developed countries will decrease up to the year 2050.Which of the following is the most likely result of this trend?
A)an increase in foreign exchange among trading blocs
B)an increase in FDI provided by developed economies
C)a higher percentage in per capita GDP in today's developing economies than in today's developed economies
D)a higher percentage in per capita GDP in today's developed economies than in today's developing economies

Accepted Answer

As the working-age population decreases in developed countries, their economic growth may slow down, potentially allowing developing economies with younger populations to grow faster and increase their per capita GDP at a higher rate.

Question 14

Carrefour has been more successful than Walmart in Europe, whereas Walmart has been more successful than Carrefour in the United States.What is the most likely reason for these results?
A)first-mover advantages
B)nationalistic preferences of consumers
C)lack of knowing how to adapt products
D)increased exporting fees and transportation costs

Accepted Answer

The answer of Carrefour has been more successful than Walmart...

Question 15

Governments that conduct takeovers of foreign companies rarely make formal declarations of their intent to take over in advance of the action.

Accepted Answer

The answer of Governments that conduct takeovers of foreign companies...

Question 16

Unlike grids, matrices do not require managers to determine weights for factors that indicate risk.

Accepted Answer

Both grids and matrices can be used in risk management and decision-making processes, and both may require managers to determine weights for factors that indicate risk, depending on the specific methodology being used.

Question 17

Losses to companies from natural disasters are much less risky than losses from operating in violent areas.

Accepted Answer

Operating in violent areas poses a greater risk to companies in terms of loss of life, property damage, and disruption of operations. Natural disasters, while still posing a significant threat, are often covered by insurance and can be anticipated to a certain extent, allowing companies to prepare and mitigate potential losses.

Question 18

When choosing international operating locations, companies should outsource the preparation of grids or matrices to experts rather than preparing them with their own personnel.

Accepted Answer

Companies can prepare grids or matrices for choosing international operating locations with their own personnel, especially if they have a strong understanding of their business needs and the factors important for their operations. Outsourcing to experts can be helpful but is not a necessity, as internal teams can also possess or develop the expertise needed for such analyses.

Question 19

U.S.companies generally put earlier and more emphasis on countries in which they perceive it is easier to operate.

Accepted Answer

This is generally true. U.S. companies tend to prioritize countries where they perceive it is easier to do business, such as those with stable political and economic environments, established legal systems, and lower levels of corruption. This allows them to invest and operate more effectively and efficiently, with less risk of encountering major barriers or challenges.

Question 20

In developed countries, the percentage of the working-age population (using today's standards)is expected to rise by 2050.

Accepted Answer

In developed countries, the percentage of the working-age population is expected to decrease by 2050 due to aging populations and declining birth rates.

Quiz 13: Country Evaluation and Selection