Chapter 10 Flashcards
- Which of the following statements is true of the impact of domestic and international political developments on multinational companies?
A. Multinational companies are well protected from the hazards that originate directly from variation and unpredictability in political and governance systems around the world.
B. The state and its various institutions and agencies protect multinational companies by refraining from making policy shifts in taxation or regulation.
C. As government policies change, it is imperative that multinational companies be willing and able to adjust their strategies and practices to accommodate new perspectives.
D. A majority of geographic areas and regions carry less political risk than they did in the past because governments are more stable.
C. As government policies change, it is imperative that multinational companies be willing and able to adjust their strategies and practices to accommodate new perspectives.
- All of the following actions raise the political risk of doing business in China except _____.
A. interpreting rules and regulations by officials
B. industrial piracy
C. restrictions on foreign exchange transactions
D. concerns on safety and reliability of product quality
D. concerns on safety and reliability of product quality
- Which of the following is not an example of risk factors for a multinational company?
A. Freezing the movement of assets out of the host country
B. Limiting the remittance of profits or capital
C. Devaluing the currency
D. Complying with contractual terms of agreements
D. Complying with contractual terms of agreements
- _____ reviews major political decisions that are likely to affect all business conducted in a particular country.
A. Macro political risk analysis
B. Micro political risk analysis
C. Standard political risk analysis
D. Multidimensional political risk analysis
A. Macro political risk analysis
- China’s decision regarding restrictions on foreign exchange transactions is a _____ political risk because it affects all multinational companies.
A. micro
B. standard
C. macro
D. multidimensional
C. macro
- In recent years, _____ risk analysis has become of increasing concern to multinational companies because of the growing number of countries that are finding their economies in trouble as in Southeast Asia or, even worse, unable to make the transition to a market-driven economy.
A. micro
B. basic
C. macro
D. complex
C. macro
- The economies of China, Russia, India, and Vietnam present _____ political risk for multinational companies.
A. macro
B. micro
C. proactive
D. relative
A. macro
- _____ risk issues often take forms such as industry regulation, taxes on specific types of business activity, and various restrictive local laws.
A. Macro
B. Standard
C. Direct
D. Micro
D. Micro
- China’s government policies regarding investment in the telecommunications industry fall into the _____ political risk category.
A. macro
B. micro
C. integrative
D. relative
B. micro
- Multinational companies can minimize their chances of expropriation by _____.
A. investing in non-Western countries that are poor and relatively unstable
B. acquiring an affiliate that depends on the parent company for key areas of operation
C. encouraging the use of high technology
D. imposing an embargo on the participation of local partners
B. acquiring an affiliate that depends on the parent company for key areas of operation
- According to the 2012 Transparency International Corruption Perceptions Index, which of the following nations is the most corrupt?
A. El Salvador
B. Columbia
C. Lebanon
D. Somalia
D. Somalia
- According to the 2012 Transparency International Corruption Perceptions Index, which of the following nations is the least corrupt?
A. India
B. The United States
C. Spain
D. New Zealand
D. New Zealand
- Laws that require that nations hold a majority interest in the operation are known as _____.
A. commercial laws
B. appropriation laws
C. indigenization laws
D. expropriation laws
C. indigenization laws
- The seizure of businesses by a host country with little, if any, compensation to the owners is referred to as _____.
A. nationalization
B. expropriation
C. dispossession
D. removal
B. expropriation
- Which of the following statements is true about expropriation?
A. Firms at the greatest risk of expropriation are in extractive, agricultural, or infrastructural industries such as utilities and transportation.
B. Small firms are more likely targets of expropriation than large firms because more is to be gained by expropriating small firms.
C. Expropriation is least likely to occur in non-Western countries that are poor, relatively unstable, and suspicious of foreign multinationals.
D. Expropriation of foreign enterprises by developing countries were rare in the old days.
A. Firms at the greatest risk of expropriation are in extractive, agricultural, or infrastructural industries such as utilities and transportation.
- _____ tends to occur once and often has poorly defined objectives, and therefore members are not as committed.
A. Classic terrorism
B. Amateur terrorism
C. Religiously-motivated terrorism
D. Political terrorism
B. Amateur terrorism
- Identify a true statement about classic terrorism.
A. It is carried out by individuals holding very strong core beliefs, regardless of how well defined their objectives are.
B. It tends to occur once and has poorly defined objectives, and therefore members are less committed.
C. It tends to be more chaotic and scattered because the individuals involved are extremely passionate about the cause, despite the lack of unified goals.
D. It entails a specific, well-defined objective pursued by well-trained, professional, underground members
D. It entails a specific, well-defined objective pursued by well-trained, professional, underground members.
- In their attempts to forestall harm in risky venues, multinational companies must thoroughly evaluate the political environment, install modern security systems, compile a crisis handbook, and _____.
A. go on the offensive
B. appeal to the religious leaders in the country
C. establish an effective bargaining position
D. prepare employees for situations that may arise
D. prepare employees for situations that may arise
- Which of the following statements is true of the impact of terrorism within a country on multinational companies in the macro sense?
A. Typically, terrorists target business areas or businesses that have low status or those that have little influence on initiating change.
B. It is extremely difficult to guarantee that companies can fully avoid harm from terrorism, but political risk analysis and preparation may forestall it.
C. Companies are usually proactive and confident about setting up operations even if a country has a high incidence of terrorist attacks against commercial businesses.
D. Most attacks on private businesses are driven by well-trained, professional, underground members who pursue a specific, well-defined objective.
B. It is extremely difficult to guarantee that companies can fully avoid harm from terrorism, but political risk analysis and preparation may forestall it.
- Which of the following is an external economic relations factor that multinational companies may use to evaluate political risk?
A. Per capita income
B. Inflation during the previous two years
C. Traffic system and communication
D. Freedom to set up or engage in partnerships
D. Freedom to set up or engage in partnerships