Question 1

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.
A) Political conflict
B) Political uncertainty
C) Political failure
D) Political corruption

Accepted Answer

Political uncertainty is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events. This uncertainty can make it difficult for businesses to make decisions and operate effectively, leading to economic instability.

Question 2

Benkemel Corp., an industrial chemicals manufacturer in Noemern, has entered a foreign market. It now plans to establish a chemical manufacturing plant in that country. Which of the following is a qualitative factor that Benkemel should consider while choosing the new manufacturing plant location?
A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Accepted Answer

Qualitative factors are subjective and typically include factors that cannot be directly quantified. Of the given options, company strategy is a qualitative factor as it is dependent on the specific goals and objectives of Benkemel Corp. when entering the foreign market. Tariff and nontariff barriers, transportation costs, and exchange rates are quantitative factors that are typically more objective and can be directly measured.

Question 3

Unlike political uncertainty, policy uncertainty:
A) deals with the risk of changes in governments that can result from war, revolution, social unrest, or other influential events.
B) can be minimized by using an avoidance strategy.
C) deals with the risk associated with changes in laws and government rules that directly affect the way foreign companies conduct business.
D) can be minimized by using control and cooperation.

Accepted Answer

Policy uncertainty refers to the risk associated with changes in laws and government rules that directly affect the way foreign companies conduct business. Unlike political uncertainty which deals with the risk of changes in governments that can result from war, revolution, social unrest, or other influential events, policy uncertainty can be minimized by understanding and complying with the laws and rules of the foreign country. Control and cooperation may also help to minimize policy uncertainty. Avoidance strategy may not be a viable option in certain cases as foreign companies need to adapt to the laws and regulations of the country they operate in.

Question 4

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?
A) Political uncertainty
B) Purchasing power
C) Organizational structure
D) Land availability

Accepted Answer

Purchasing power is a key factor in determining the growth potential of foreign markets, as it indicates the potential demand for products or services within a market. Political uncertainty, organizational structure, and land availability may also impact market growth potential, but to a lesser extent.

Question 5

Worthen, an information technology firm based in the U.S., was created with the goal of standardizing its services in all the developing nations of the world. Rather than strategizing for one country at a time, Worthen's plan is to focus on all the nations at the same time. Worthen is an example of a _____.
A) licensee
B) strategic alliance
C) global new venture
D) franchise

Accepted Answer

Worthen is a global new venture because it is a newly created company that aims to standardize its services in multiple developing nations simultaneously. This is different from a franchise, where a company licenses its name and business model to independent operators in different locations. A strategic alliance involves two or more companies working together to achieve a common goal, and a licensee is a company that has been granted permission to use another company's intellectual property.

Question 6

Emeremen Corp., an automobile manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that should be considered by Emeremen Corp. while choosing a new office location?
A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Accepted Answer

Qualitative factors are non-measurable factors that are subjective in nature. Company strategy is a qualitative factor that Emeremen Corp. should consider while choosing a new office location. The company's strategy should align with the new location. For example, if the company plans to focus on exporting high-end luxury cars, it may choose a location that has a high-income demographic. Therefore, option A is the correct answer. The other options, such as tariff and nontariff barriers, transportation costs, and exchange rates, are quantitative factors that can be measured and analyzed.

Question 7

In the context of political risks, unlike cooperation, an avoidance strategy:
A) can limit the risk associated with foreign ownership of a business.
B) involves the use of joint ventures and collaborative contracts.
C) does not minimize the political uncertainty of doing business in a country.
D) is used when the political risks associated with a country are too great.

Accepted Answer

An avoidance strategy involves avoiding doing business in a country altogether when the political risks associated with that country are deemed too great. This may involve not investing in the country, not exporting to the country, or withdrawing from the country if already in operation there. It does not involve cooperation such as joint ventures or collaborative contracts, and it does not necessarily limit the risk associated with foreign ownership of a business as simply not being present in the country may not protect against risks such as expropriation. The political uncertainty of doing business in the country is not minimized through an avoidance strategy, but rather accepted as too great to pursue operations there.

Question 8

The government of Bicana recently passed a law requiring every foreign country operating in Bicana to pay 50% of its earnings in taxes. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of _____ faced by companies that want to conduct business in Bicana.
A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Accepted Answer

The scenario describes a situation where the government changed its policy by passing a law that requires foreign companies to pay 50% of their earnings in taxes. This policy uncertainty creates uncertainty for companies about the future regulations and how this policy change will impact their business operations in the country. The companies faced with this type of uncertainty may choose to shut down their ventures as a result.

Question 9

The government of Diarmina recently passed a law that requires foreign companies to partner with Diarminian companies if they want to conduct their business in the country. Many investors and companies started to pull their funds and business out of the country because of this. This scenario exemplifies _____.
A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Accepted Answer

The scenario exemplifies policy uncertainty because companies and investors are uncertain about the government's policies regarding foreign businesses in the country. The new law requiring foreign companies to partner with local companies creates uncertainty about the business environment in Diarmina. This type of policy can discourage foreign investment, which can have negative economic consequences for the country.

Question 10

WindWing Inc., an airline company with great success in the domestic market, started WingDream Ventures with the goal of bringing its airline services to all the major countries in the world. WingDream is an example of a _____.
A) licensee
B) strategic alliance
C) global new venture
D) franchise

Accepted Answer

WingDream Ventures is a new venture that aims to expand the airline services of WindWing Inc. globally, making it a global new venture. A licensee refers to a company or individual who is given the right to use a company's patented technology or trademark. A strategic alliance is a partnership between two or more companies to achieve a common goal. A franchise is a type of business model where a franchisee is given the right to use a company's trademark, business model, and products in exchange for a fee.

Question 11

Political uncertainty is the risk associated with:
A) policies affecting foreign companies.
B) changes in government policies.
C) social unrest.
D) changes in law.

Accepted Answer

The answer of Political uncertainty is the risk associated with:
A)...

Question 12

BlazeTrack Cars is a U.S.-based automaker. It is planning to introduce a new premium car in Ireland, Norway, Sweden, and Switzerland. The company is not sure if its car will be successful in these diverse markets, and it is concerned about its growth. It can afford to launch the product in only three countries. To choose these three countries, which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?
A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Accepted Answer

Purchasing power is a key parameter to consider as it indicates the ability of consumers in a market to buy premium products, which directly affects the growth potential for BlazeTrack Cars.

Question 13

Flywater Inc. is refusing to expand its global operations into North Marland due to the civil wars that frequently occur in the country. This threat of civil wars in the country is an example of _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The threat of civil wars in North Marland is a prime example of political uncertainty. Political uncertainty refers to the risk associated with unpredictable events, changes or disruptions in the political environment of a country or region.

Question 14

Crimson Corp., an electronics manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that Crimson Corp. should consider while choosing the new office location?
A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Accepted Answer

Qualitative factors are those that cannot be measured and can only be evaluated subjectively. Company strategy is a qualitative factor because it relates to the goals and objectives of the company and how the new office location aligns with those goals. Tariff and nontariff barriers, transportation costs, and exchange rates are all quantitative factors that can be measured objectively.

Question 15

MekTech is a U.S.-based electronics company. It is planning to introduce a new home theatre system in a foreign country. It has identified Mexico and Canada to be the easiest foreign markets to enter; however, it only wants to launch the system in one country. Which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?
A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Accepted Answer

The company should consider purchasing power as it is an important indicator of the potential sales revenue and profitability. It gives an idea of the average income of the population and their capability to afford the new home theatre system. Political uncertainty and expropriation potential are more relevant in assessing the risks of doing business in a foreign market rather than its growth potential, while sociocultural differences may affect the product's acceptance by the target market but do not necessarily indicate the market's growth potential.

Question 16

Jepmem Inc. is expanding its global operations into North Pidlin, even though the country has a high global terrorism index. As Jepmem Inc. expands into North Pidlin, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The high global terrorism index in North Pidlin indicates a volatile political environment with potential risks related to security, instability and political unrest. This can lead to political uncertainty for Jepmem Inc. as it expands into North Pidlin.

Question 17

Pinkmake Inc. is expanding its global operations into Jartainia in spite of the frequent changes in its government due to the assassination attempts on its prominent leaders. As Pinkmake Inc. expands into Jartainia, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The frequent changes in government due to assassination attempts indicate political uncertainty, which Pinkmake Inc. will have to deal with as it expands into Jartainia.

Question 18

Lakeri Inc. is expanding its global operations into South Fordland in spite of the allegations made against its prominent leaders to have had criminal connections. As Lakeri Inc. expands into South Fordland, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The mention of "allegations made against its prominent leaders to have had criminal connections" suggests that there may be political instability or uncertainty in South Fordland. Therefore, Lakeri Inc. must deal with political uncertainty as it expands into the region. The other options (purchase uncertainty, policy uncertainty, pandemic uncertainty) are not directly related to the information given in the scenario.

Question 19

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.
A) Joint ventures
B) Strategic alliances
C) Global new ventures
D) Global new acquisitions

Accepted Answer

Global new ventures are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries. Joint ventures and strategic alliances involve partnerships between existing companies, while global new acquisitions refer to the acquisition of a company that already has operations in different countries, rather than starting a new venture from scratch.

Question 20

Dustind Inc. is expanding its global operations into Arcland in spite of the constant threat of war between Arcland and its neighboring countries over petroleum reserves. As Dustind Inc. expands its operations into Arcland, it must deal with _____.
A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Accepted Answer

The constant threat of war between Arcland and its neighboring countries indicates political uncertainty, which Dustind Inc. must deal with as it expands its operations in the region. Purchase uncertainty refers to uncertainty related to the purchase of goods or services, policy uncertainty refers to uncertainty related to government policies and regulations, and pandemic uncertainty refers to uncertainty related to the ongoing COVID-19 pandemic. None of these are specifically mentioned in the scenario as challenges faced by Dustind Inc. in expanding into Arcland.

Quiz 8: Global Management

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

Benkemel Corp., an industrial chemicals manufacturer in Noemern, has entered a foreign market. It now plans to establish a chemical manufacturing plant in that country. Which of the following is a qualitative factor that Benkemel should consider while choosing the new manufacturing plant location?

Unlike political uncertainty, policy uncertainty:

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?

Emeremen Corp., an automobile manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that should be considered by Emeremen Corp. while choosing a new office location?

In the context of political risks, unlike cooperation, an avoidance strategy:

WindWing Inc., an airline company with great success in the domestic market, started WingDream Ventures with the goal of bringing its airline services to all the major countries in the world. WingDream is an example of a _____.

Political uncertainty is the risk associated with:

Flywater Inc. is refusing to expand its global operations into North Marland due to the civil wars that frequently occur in the country. This threat of civil wars in the country is an example of _____.

Crimson Corp., an electronics manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that Crimson Corp. should consider while choosing the new office location?

Jepmem Inc. is expanding its global operations into North Pidlin, even though the country has a high global terrorism index. As Jepmem Inc. expands into North Pidlin, it must deal with _____.

Pinkmake Inc. is expanding its global operations into Jartainia in spite of the frequent changes in its government due to the assassination attempts on its prominent leaders. As Pinkmake Inc. expands into Jartainia, it must deal with _____.

Lakeri Inc. is expanding its global operations into South Fordland in spite of the allegations made against its prominent leaders to have had criminal connections. As Lakeri Inc. expands into South Fordland, it must deal with _____.

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.

Dustind Inc. is expanding its global operations into Arcland in spite of the constant threat of war between Arcland and its neighboring countries over petroleum reserves. As Dustind Inc. expands its operations into Arcland, it must deal with _____.