Chapter 3

Question 1

3 International Business Operations

Answer 1

• Objectives
• Strategy
• Means

Question 2

External Influences of IB

Answer 2

• Political | Legal principles
• Cultural factors
• Economic forces
• Geographic influences
• Technology

Question 3

Factors of Political and Legal Influence

Answer 3

• Government’s role
• Political ideologies
• Political risk
• Legal foundations
• Basis of rule (rule of law, rule of man)
• Operational | Strategic issues

Question 4

An Effective Political System

Answer 4

integrates the diverse elements of a society. Its test is uniting society in the face of divisive viewpoints.

Question 5

Individualism

Answer 5

champions the primacy of the individual over the group.

Question 6

Collectivism

Answer 6

advocates the primacy of the group over the individual.

Question 7

Political Ideology

Answer 7

encapsulates the doctrine of political behavior and change. It describes the path to convert ideals into outcomes.

Question 8

Democracy

Answer 8

rooted in liberalism and conservatism.

Question 9

Totalitarianism

Answer 9

rooted in fascism and autocracy.

Question 10

Democracy and Individualism

Answer 10

are intrinsically related and mutually reinforcing; individualism legitimates principles of democracy and democracy fortifies standards of individualism.

Question 11

A Totalitarian System

Answer 11

consolidates power in a single agent who then controls political, economic, and social activities.

Question 12

Totalitarianism and Collectivism

Answer 12

are intrinsically related and mutually reinforcing; collectivism legitimates principles of totalitarianism, and totalitarianism supports standards of collectivism.

Question 13

Third Wave of Democratization

Answer 13

• Failure of totalitarian regimes to deliver prosperity
• Improving communication technology
• Economic dividends of political freedom

Question 14

Third Wave of Democratization

Answer 14

refers to the third surge of democratically governed nations in the latter twentieth century.

Question 15

4 Types of Political Systems

Answer 15

• Full democracy
• Flawed democracy
• Hybrid regime
• Authoritarian regime

Question 16

Powering expanding authoritarianism is:

Answer 16

• robust economic performance in single-party states
• gaps between the principles and practices of democracy
• economic insecurities and growing populism
• competing interpretations of the idea of democracy

Question 17

Political Risk

Answer 17

refers to the threat that decisions or events in a country will negatively affect the profitability and sustainability of an investment.

Question 18

Systemic Political Risks

Answer 18

affect the activities of all firms by influencing investment and operating conditions in a nation.

Question 19

Procedural Political Risk

Answer 19

institutes impediments that constrain efficiently running activities.

Question 20

Distributive Political Risks

Answer 20

progressively eliminate the local property rights of foreign companies.

Question 21

Catastrophic Political Risk

Answer 21

devastates the business environment for all companies.

Question 22

The legal system moderates PRACTICAL aspects of business operations

Answer 22

including how managers:
- start a business
- enter and enforce contracts
- hire and fire workers
- close a business

Question 23

The legal system moderates STRATEGIC aspects of business operations

Answer 23

• product origin and local content
• marketplace behaviour
• legal jurisdiction
• product safety and liability
• intellectual property protection