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Copyright?2020McGraw-HillEducation.Allrightsreserved.
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InternationalMarketing,18e(Cateora)
Chapter6ThePoliticalEnvironment:ACriticalConcern
1)Sovereigntyisexclusivetothesupremepowersexercisedbyanationoveritsownmembers.
Answer:FALSE
Explanation:Sovereigntyreferstoboththepowersexercisedbyastateinrelationtoothercountriesandthesupremepowersexercisedoveritsownmembers.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
2)Sovereigntymaybethreatenedbyforeigninvestment.
Answer:TRUE
Explanation:Foreigninvestmentcanbeperceivedasathreattosovereigntyandthusbecomearallyingcrybyopposingfactions.
Difficulty:1Easy
Topic:BenefitsandChallengesofForeignDirectInvestment
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
3)AdherencetotheWorldTradeOrganization(WTO)doesnotresultinthelossofnationalsovereignty.
Answer:FALSE
Explanation:AdherencetotheWTOinevitablymeansthelossofsomedegreeofnationalsovereigntybecausethemembernationshavepledgedtoabidebyinternationalcovenantsandarbitrationproceduresthatcanoverridenationallawsandhavefar-reachingramificationsforcitizens.
Difficulty:1Easy
Topic:TheWorldTradingSystem,GATT,andtheWTO
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
4)Foreignbusinessesnolongerneedtobeconcernedaboutthestabilityorinstabilityofprevailinggovernmentpolicies.
Answer:FALSE
Explanation:Thestabilityorinstabilityofprevailinggovernmentpoliciesisatthetopofthelistofpoliticalissuesconcerningforeignbusinesses.Governmentsmightchangeornewpoliticalpartiesmightbeelected,buttheconcernofthemultinationalcorporationisthecontinuityofthesetofrulesorcodesofbehaviorandthecontinuationoftheruleoflaw—regardlessofwhichgovernmentisinpower.
Difficulty:1Easy
Topic:TheWorldTradingSystem,GATT,andtheWTO
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
5)Pressurefromnationalistandself-interestgroupsaffectthestabilityofagovernment.
Answer:TRUE
Explanation:Radicalshiftsingovernmentphilosophywhenanopposingpoliticalpartyascendstopower,pressurefromnationalistandself-interestgroups,weakenedeconomicconditions,biasagainstforeigninvestment,orconflictsamonggovernmentsareallissuesthatcanaffectthestabilityofagovernment.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
6)SaudiArabiabeganpermittingwomentovotein2015.
Answer:TRUE
Explanation:SaudiArabiaprecludedwomenfromvotinguntiltheKingpermitteditin2015.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-02Howdifferentgovernmentaltypes,politicalparties,nationalism,targetedfear/animosity,andtradedisputescanaffecttheenvironmentformarketinginforeigncountries.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
7)Nationalismsupportsforeignbusinessbecauseitimproveslocaleconomies.
Answer:FALSE
Explanation:Nationalismcanbestbedescribedasanintensefeelingofnationalprideandunity,anawakeningofanation'speopletoprideintheircountry.Thispridecantakeananti-foreignbusinessbias,whereminorharassmentandcontrolsofforeigninvestmentaresupported,ifnotapplauded.
Difficulty:1Easy
Topic:TheDebateConcerningGlobalandRegionalEconomicIntegration
LearningObjective:06-02Howdifferentgovernmentaltypes,politicalparties,nationalism,targetedfear/animosity,andtradedisputescanaffecttheenvironmentformarketinginforeigncountries.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
8)Nationalisticfeelingsingeneralbearnorelationtothedomesticeconomy.
Answer:FALSE
Explanation:Generally,themoreacountryfeelsthreatenedbysomeoutsideforceorthedomesticeconomydeclines,themorenationalisticitbecomesinprotectingitselfagainstintrusions.
Difficulty:1Easy
Topic:TheDebateConcerningGlobalandRegionalEconomicIntegration
LearningObjective:06-02Howdifferentgovernmentaltypes,politicalparties,nationalism,targetedfear/animosity,andtradedisputescanaffecttheenvironmentformarketinginforeigncountries.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
9)Propertymaylegallybeseizedbythegovernmentwithorwithoutcompensation.
Answer:TRUE
Explanation:Confiscationistheseizingofacompany'sassetswithoutpayment.Confiscationwasmostprevalentinthe1950sand1960swhenmanyunderdevelopedcountriessawconfiscation,albeitineffective,asameansofeconomicgrowth
Difficulty:1Easy
Topic:DifferentFormsofGovernment
LearningObjective:06-03Thepoliticalrisksofglobalbusinessandthefactorsthataffectstability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
10)Themostseverepoliticalriskofglobalbusinessisthegovernmentactionofdomestication.
Answer:FALSE
Explanation:Themostseverepoliticalriskisconfiscation,thatis,theseizingofacompany'sassetswithoutpayment.Domesticationistheprocessbywhichahostcountrygraduallytransfersforeigninvestmentstonationalcontrolandownership.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
11)Theultimategoalofdomesticationistorequirecompaniestoproducemoreproductstoexportthanwasthecasebeforedomestication.
Answer:FALSE
Explanation:Theultimategoalofdomesticationistoforceforeigninvestorstosharemoreoftheownership,management,andprofitswithnationalsthanwasthecasebeforedomestication.
Difficulty:1Easy
Topic:GovernmentInterventioninForeignDirectInvestment
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
12)Throughexpropriationandnationalization,nationalizedbusinesseshavebecomemoreefficient,technologicallystrong,andcompetitiveinworldmarkets.
Answer:FALSE
Explanation:Expropriationandnationalizationhaveoftenledtonationalizedbusinessesthatwereinefficient,technologicallyweak,andnoncompetitiveinworldmarkets.
Difficulty:1Easy
Topic:NationalizationandPrivatizationofBusiness
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
13)BarringLatinAmerica,therisksofconfiscationandexpropriationhavedecreasedoverthelasttwodecades.
Answer:TRUE
Explanation:Risksofconfiscationandexpropriationappeartohavelessenedoverthelasttwodecades(withexceptionsinLatinAmerica,particularlyVenezuela)becauseexperiencehasshownthatfewofthedesiredbenefitsmaterializeaftergovernmenttakeover.
Difficulty:1Easy
Topic:GovernmentInterventioninForeignDirectInvestment
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
14)Manycountrieshavedomesticationasaconditionforinvestment.
Answer:TRUE
Explanation:Today,countriesoftenrequireprospectiveinvestorstoagreetoshareownership,uselocalcontent,enterintolaborandmanagementagreements,andshareparticipationinexportsalesasaconditionofentry;ineffect,thecompanyhastobecomedomesticatedasaconditionforinvestment.
Difficulty:1Easy
Topic:GovernmentInterventioninForeignDirectInvestment
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
15)Pricecontrolsareonlytargetedatnonessentialproducts.
Answer:FALSE
Explanation:Essentialproductsthatcommandconsiderablepublicinterest,suchaspharmaceuticals,food,gasoline,andcars,areoftensubjectedtopricecontrols.Suchcontrolsappliedduringinflationaryperiodscanbeusedtocontrolthecostofliving.
Difficulty:1Easy
Topic:ElementsThatInfluenceInternationalPricingStrategies
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
16)Politicalsanctionsareusuallyanunsuccessfulmeansofachievingthegoalofforcingacountrytoacceptthedemandsoftheboycottingcountry.
Answer:TRUE
Explanation:Historyindicatesthatsanctionsarealmostalwaysunsuccessfulinreachingdesiredgoals,particularlywhenothermajornations'tradersignorethem
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
17)Politicalandsocialactivistsgenerallyhavenoimpactonthenormalflowoftrade.
Answer:FALSE
Explanation:Althoughnotusuallyofficiallysanctionedbythegovernment,theimpactofpoliticalandsocialactivists(PSAs)caninterruptthenormalflowoftrade.PSAscanrangefromthosewhoseektobringaboutpeacefulchangetothosewhoresorttoviolenceandterrorismtoeffectchange.Whenwellorganized,theactionsofPSAscansucceed.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-04Theimportanceofthepoliticalsystemtointernationalmarketinganditseffectonforeigninvestments.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
18)Nongovernmentalorganizationscanaffectthepolicydecisionsmadebygovernmentsthroughlobbying.
Answer:TRUE
Explanation:Oftenassociatedwithpoliticalactivism,nongovernmentalorganizations(NGOs)areincreasinglyaffectingpolicydecisionsmadebygovernments.Manyareinvolvedinpeacefulprotests,lobbying,andevencollaborationswithgovernmentalorganizations.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-05Theimpactofpoliticalandsocialactivists,violence,andterrorismoninternationalbusiness.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
19)Riskofviolencedoesnottendtobeaconsiderationinassessingthepoliticalvulnerabilityofamultinationalcompany'sactivities.
Answer:FALSE
Explanation:Althoughnotusuallygovernmentinitiated,violenceisanotherrelatedriskformultinationalcompaniestoconsiderinassessingthepoliticalvulnerabilityoftheiractivities.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-05Theimpactofpoliticalandsocialactivists,violence,andterrorismoninternationalbusiness.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
20)Internationalwarfareisfastgainingpopularityamongnations.
Answer:FALSE
Explanation:Internationalwarfareisfastbecomingobsolete.ThenumberofwarshassteadilydeclinedsincetheendoftheColdWar,withsomeexceptions.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-05Theimpactofpoliticalandsocialactivists,violence,andterrorismoninternationalbusiness.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
21)Duetoadvancementsintechnology,itisrelativelyeasytodeterminewhetheracyberattackhasbeenlaunchedbyaroguestate,aterrorist,orahackerasaprank.
Answer:FALSE
Explanation:Oneproblemintracingcyberterroristsandcriminalsisthatitishardtodeterminewhohaslaunchedacyberattack.
Difficulty:1Easy
Topic:Terrorism,TerroristActivities,andCountermeasures
LearningObjective:06-05Theimpactofpoliticalandsocialactivists,violence,andterrorismoninternationalbusiness.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
22)Asculturalandpoliticalscenariosvarysowidelyacrossnations,thereisnowaytogeneralizethetendencyforaparticularproducttobepoliticallysensitive.
Answer:FALSE
Explanation:Althoughtherearenospecificformulastodetermineaproduct'svulnerabilityatanypoint,therearesomegeneralizationsthathelpidentifythetendencyforproductstobepoliticallysensitive.Productsthathaveorareperceivedtohaveaneffectontheenvironment,exchangerates,nationalandeconomicsecurity,andthewelfareofpeopleorthatarepubliclyvisible,subjecttopublicdebate,orassociatedwiththeircountryoforiginaremorelikelytobepoliticallysensitive.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Understand
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
23)Productsthathaveorareperceivedtohaveaneffectontheenvironmentaremorelikelytobepoliticallysensitive.
Answer:TRUE
Explanation:Productsthathaveorareperceivedtohaveaneffectontheenvironment,exchangerates,nationalandeconomicsecurity,andthewelfareofpeopleorthatarepubliclyvisible,subjecttopublicdebate,orassociatedwiththeircountryoforiginaremorelikelytobepoliticallysensitive.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
24)Itiscommonforasinglecompanytodirectlycontroloralterthepoliticalenvironmentofthecountrywithinwhichitoperates.
Answer:FALSE
Explanation:Althoughasinglecompanycannotdirectlycontroloralterthepoliticalenvironmentofthecountrywithinwhichitoperates,aspecificbusinessventurecantakemeasurestolessenitsdegreeofsusceptibilitytopoliticallyinducedrisks.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
25)RelationsbetweengovernmentsandMNCsaregenerallynegative,particularlyiftheinvestmentmadebytheMNCsincreasesexportsorreducesimports.
Answer:FALSE
Explanation:RelationsbetweengovernmentsandMNCsaregenerallypositiveiftheinvestmentmadebytheMNCs(1)improvesthebalanceofpaymentsbyincreasingexportsorreducingimportsthroughimportsubstitution;(2)useslocallyproducedresources;(3)transferscapital,technology,and/orskills;(4)createsjobs;and/or(5)makestaxcontributions.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
26)Licensingisnoteffectiveinsituationswherethetechnologyisuniqueandtheriskishigh.
Answer:FALSE
Explanation:Licensingcanbeeffectiveinsituationsinwhichthetechnologyisuniqueandtheriskishigh.Ofcourse,thereissomeriskassumed,becausethelicenseecanrefusetopaytherequiredfeeswhilecontinuingtousethetechnology.
Difficulty:1Easy
Topic:BasicIssuesinInternationalLicensing
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
27)Planneddomesticationinvolvestakingoveranindustryinaforeigncountry.
Answer:FALSE
Explanation:Planneddomesticationinvolvesgraduallyinvolvinglocalparticipationuntilthereisparticipationwithnationalsinallphasesofcompanyoperations.
Difficulty:1Easy
Topic:GovernmentInterventioninForeignDirectInvestment
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
28)ItisillegalforU.S.citizenstopayabribeunlessitisacommonpracticeinthehostcountry.
Answer:FALSE
Explanation:Briberyposesproblemsforthemarketerathomeandabroad,becauseitisillegalforU.S.citizenstopayabribeevenifitisacommonpracticeinthehostcountry.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-06Howtoassessandreducetheeffectofpoliticalvulnerability.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
29)TheprincipalagencythatsupportsU.S.businessabroadistheGlobalChamberofCommerce(GCC).
Answer:FALSE
Explanation:TheDepartmentofCommerce(DOC)istheprincipalagencythatsupportsU.S.businessabroad.TheInternationalTradeAdministration(ITA)abureauoftheDOC,isdedicatedtohelpingU.S.businesscompeteintheglobalmarketplace.
Difficulty:1Easy
Topic:GovernmentPoliciesAffectingTrade
LearningObjective:06-07Howandwhygovernmentsencourageforeigninvestment.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
30)TheAgencyforInternationalDevelopmentunderwritestradeandinvestmentsforU.S.firms.
Answer:FALSE
Explanation:TheExport-ImportBank(Ex-ImBank)underwritestradeandinvestmentsforU.S.firms.
Difficulty:1Easy
Topic:GovernmentPoliciesAffectingTrade
LearningObjective:06-07Howandwhygovernmentsencourageforeigninvestment.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
31)Inthecontextofinternationallaw,a________governsitsownterritoryandmayenterintoagreementswithothernations.
A)bounded
B)sovereign
C)legal
D)liberal
E)neutral
Answer:B
Explanation:Inthecontextofinternationallaw,asovereignstateisindependentandfreefromallexternalcontrol;enjoysfulllegalequalitywithotherstates;governsitsownterritory;selectsitsownpolitical,economic,andsocialsystems;andhasthepowertoenterintoagreementswithothernations.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
32)Asovereignstateisonethat
A)isobligatedtobeamemberoftheWorldTradeOrganization.
B)hasitspoliticalandeconomicsystemsdeterminedbytheUnitedNationsDevelopmentProgram.
C)enjoysfulllegalequalitywithotherstates.
D)hasitsterritorygovernedbytheUnitedNations.
E)isboundedbyexternalcontrol.
Answer:C
Explanation:Inthecontextofinternationallaw,asovereignstateisindependentandfreefromallexternalcontrol;enjoysfulllegalequalitywithotherstates;governsitsownterritory;selectsitsownpolitical,economic,andsocialsystems;andhasthepowertoenterintoagreementswithothernations.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
33)________referstoboththepowersexercisedbyastateinrelationtoothercountriesandthesupremepowersexercisedoveritsownmembers.
A)Sovereignty
B)Self-governance
C)Federalism
D)Autocracy
E)Nationalism
Answer:A
Explanation:Sovereigntyincludesboththepowersexercisedbyastateinrelationtoothercountriesandthesupremepowersexercisedoveritsownmembers.Astatesetsrequirementsforcitizenship,definesgeographicalboundaries,andcontrolstradeandthemovementofpeopleandgoodsacrossitsborders.Additionally,acitizenissubjecttothestate'slawsevenwhenbeyondnationalborders.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
34)InApril2009,theG20nationsagreedtocedesomesovereigntyand
A)includeallG20nationsintheSecurityCouncil.
B)raiseoilprices.
C)increaseinfrastructurefunding.
D)rejectprotectionism.
E)increaseaidtoSouthAfrica.
Answer:D
Explanation:TheleadersoftheG20nationscededsomesovereigntyintheirhugelyimportantApril2009agreementto"rejectprotectionism"atthenadirofthe2009crash,whenworldtradehaddeclinedmorethan12percent.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
35)AdherencetotheWTOinevitablymeans
A)adefiniteincreaseinimporttariffsworldwide.
B)thelossofnationalsecuritytoalargeextent.
C)reductioninworldtradeofatleast70percent.
D)thelossofsomedegreeofnationalsovereignty.
E)completestoppageofforeigndirectinvestments.
Answer:D
Explanation:AdherencetotheWTOinevitablymeansthelossofsomedegreeofnationalsovereignty,becausethemembernationshavepledgedtoabidebyinternationalcovenantsandarbitrationproceduresthatcanoverridenationallawsandhavefar-reachingramificationsforcitizens.
Difficulty:1Easy
Topic:TheWorldTradingSystem,GATT,andtheWTO
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
36)Foramultinationalfirm,theidealpoliticalclimateisa
A)countrywhereinternationallawsdonotapply.
B)countrywherefavorscanbepurchasedeasily.
C)countrywithastableandfriendlygovernment.
D)governmentwithabsolutepower.
E)governmentthatradicallyshiftsitsphilosophy.
Answer:C
Explanation:Theidealpoliticalclimateforamultinationalfirmisastable,friendlygovernment.Becauseforeignbusinessesarejudgedbystandardsasvariableastherearenations,thestabilityandfriendlinessofthegovernmentineachcountrymustbeassessedasanongoingbusinesspractice.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
37)Whatisthetoppoliticalissueconcerningforeignbusinesses?
A)demographicprofileofpoliticalleaders
B)governmentpoliciesoninfrastructure
C)economicawarenessofpoliticalleaders
D)stabilityofprevailinggovernmentpolicies
E)membershipofgovernmentsintradetreaties
Answer:D
Explanation:Atthetopofthelistofpoliticalissuesconcerningforeignbusinessesisthestabilityorinstabilityofprevailinggovernmentpolicies.Governmentsmightchangeornewpoliticalpartiesmightbeelected,buttheconcernofthemultinationalcorporationisthecontinuityofthesetofrulesorcodesofbehaviorandthecontinuationoftheruleoflaw—regardlessofwhichgovernmentisinpower.
Difficulty:1Easy
Topic:GovernmentPoliciesAffectingTrade
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
38)Whatisoneofthemainpoliticalcausesofinstabilityininternationalmarkets?
A)variedtaxingconventions
B)differencesineconomicphilosophies
C)globalfocus
D)environmentalawareness
E)tradedisputes
Answer:E
Explanation:Therearefivemainpoliticalcausesofinstabilityininternationalmarkets:(1)someformsofgovernmentseemtobeinherentlyunstable,(2)changesinpoliticalpartiesduringelectionscanhavemajoreffectsontradeconditions,(3)nationalism,(4)animositytargetedtowardspecificcountries,and(5)tradedisputesthemselves.
Difficulty:1Easy
Topic:ManagingPoliticalRiskandDifferences
LearningObjective:06-01Whatthesovereigntyofnationsmeansandhowitcanaffectthestabilityofgovernmentpolicies.
Bloom's:Remember
AACSB:AnalyticalThinking
Accessibility:KeyboardNavigation
39)Monarchy,like________,isaformofgovernmentruledbyone.
A)aristocracy
B)dictatorship
C)democracy
D)monopoly
E)oligarchy
Answer:B
Explanation:Circa500BC,theancientGreeksconceivedofandcriticizedthreefundamentalformsofgovernment:rulebyone,rulebyfew,andrulebymany.Thecommontermsfortheseformsinusetodayaremonarchy(ordictatorship),aristocracy(oroligarchy),anddemocracy.
Difficulty:1Easy
Topic:DifferencesinPoliticalSystems
LearningObjective:06-02Howdifferentgovernmentaltypes,politicalparties,nationalism,targetedfear/animosity,andtradedisputescanaffecttheenvironmentformarketinginfo
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