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Q:
Describe the role of the WTO in the liberalization of FDI.
Q:
How can governments restrict the outward flow of FDI?
Q:
What are the benefits of FDI to the home (source) country?
Q:
Briefly describe the benefits of inward FDI for a host country that arise from employment effects and balance-of-payments effects.
Q:
Briefly describe the changes taking place in the attitudes toward FDI in countries across the globe.
Q:
In the context of FDI, describe the political ideologies of the radical view, the free market view, and pragmatic nationalism.
Q:
Describe Dunning's arguments regarding the location-specific advantages.
Q:
Under what circumstances will a firm favor foreign direct investment over exporting as an entry strategy?
Q:
In the context of the internalization theory, explain why licensing may not be an attractive option.
Q:
Despite its advantages, FDI has been described as an "expensive" and "risky" international growth strategy. Other things being equal, why is FDI expensive and risky when compared to licensing and exporting?
Q:
"Firms prefer to acquire existing assets rather than undertake greenfield investments while contemplating FDI." Explain the reasons that support this argument.
Q:
What is meant by the term foreign direct investment?
Q:
Although it normally involves much longer-term commitments, franchising is essentially the service industry version of:
A.exporting.
B.licensing.
C.foreign direct investment.
D.greenfield investment.
E.diversifying.
Q:
Firms for which licensing is not a good option include those in:
A.low-technology industries.
B.global oligopolies.
C.industries characterized by low cost pressures.
D.industries where transportation costs are high.
E.industries which need to have low control over foreign operations.
Q:
Which of the following is NOT an option, due to the fact that many services have to be produced where they are sold?
A.FDI
B.Franchising
C.Greenfield investment
D.Exporting
E.Outsourcing
Q:
Host governments use a range of controls to restrict inward FDI. The two most common are:
A.monetary restraints and prohibition on investing in certain countries.
B.voluntary export restrictions and employment restraints.
C.ownership restraints and performance requirements.
D.tax concessions and government-backed insurance.
E.employment restraints and tax deductions.
Q:
To encourage inward FDI, it is increasingly common for governments to:
A.offer tax concessions to foreign firms that invest in their countries.
B.exclude foreign companies from specific industries.
C.require that local investors own a significant proportion of the equity in a joint venture.
D.impose high custom duties on foreign firms.
E.prohibit MNEs from joining a cartel.
Q:
Which of the following is a home-country policy for limiting outward FDI?
A.Eliminating double taxation of foreign income
B.Manipulating tax rules to encourage the firms to invest at home
C.Withdrawing government-backed insurance programs provided to local investors
D.Reducing interest rates earned on domestic investments
E.Prohibiting organizations from entering into a cartel
Q:
As an incentive to encourage domestic firms to undertake FDI, many countries have:
A.eliminated double taxation of foreign income.
B.started imposing local content requirements.
C.imposed higher import tariffs.
D.abolished the use of custom duties.
E.eliminated subsidies.
Q:
Which of the following is a major type of foreign investment risk that is insurable through government-backed programs?
A.Lack of funds
B.Risk of transaction loss
C.Poor strategic tie-ups
D.Risks of expropriation
E.Losses due to natural calamities
Q:
Offshore production refers to FDI undertaken:
A.to focus on extractive industries, such as oil and gas.
B.to serve the home market.
C.in shipping industries.
D.to decrease the prices of products in the host countries.
E.to capture tax benefits in the host country.
Q:
The most important concerns regarding the costs of FDI for the home country center on the:
A.balance-of-payments and employment effects of outward FDI.
B.technology capture effect and the perceived loss of national sovereignty.
C.reverse-resource transfer effect and the exposure to foreign markets caused by FDI.
D.import of substantial input from abroad and being held to "economic ransom."
E.exposure to foreign markets and the decreased costs of production.
Q:
Which of the following statements is most likely to be true regarding the adverse effects of FDI on the host country?
A.It decreases the level of competition in the host country.
B.It tends to increase the prices of the products.
C.It leads to a high rate of unemployment in the long run.
D.When a foreign subsidiary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments.
E.When a foreign subsidiary sends its profits to its home country, it results in the depletion of gold reserves of the host country.
Q:
Which of the following is most likely to be the effect of FDI in the form of a greenfield investment on the host country?
A.It drives down prices and increases the economic welfare of consumers.
B.It raises unemployment levels.
C.It causes firms to fight for scarce capital investments.
D.It leads to an oligopolistic market and unfair pricing.
E.It leads to decreased productivity, product and process innovations, and lesser economic growth.
Q:
Which of the following is the only way to support a current account deficit in the long run?
A.Borrowing from the IMF
B.Selling assets to foreigners
C.Divesting stock in domestic corporations
D.Purchasing stocks, bonds, and real estate in other countries
E.Issuing negotiable instruments like the bills of exchange
Q:
When a country is importing more goods and services than it is exporting, it is incurring a(n):
A.trade surplus.
B.current account deficit.
C.positive balance of payment.
D.economic recession.
E.net capital inflow.
Q:
A current account deficit is also known as a(n):
A.stock deficit.
B.inventory deficit.
C.external deficit.
D.tariff deficit.
E.trade deficit.
Q:
Which account in the balance of payments records transactions involving the export and import of goods and services?
A.Current
B.Foreign
C.Internal
D.Tariff
E.Savings
Q:
Which of the following are national accounts that track both payments to and receipts from other countries?
A.Equity
B.Dematerialized
C.Balance of trade
D.Asset
E.Balance-of-payments
Q:
Indirect effects of FDI on employment in a host country arise when:
A.a foreign MNE employs a number of host-country citizens.
B.jobs are created because of increased local spending by employees of an MNE.
C.an MNE brings in managers from the home country for its operations in the host country.
D.an MNE recruits people from the host country for research and development.
E.an MNE sends home country employees to host countries for training.
Q:
Direct effects of FDI on employment in the host country arise when a foreign MNE:
A.brings in managers trained in the latest management techniques from the home country.
B.creates jobs because of increased local spending by employees of the MNE.
C.employs a number of host country citizens.
D.causes local suppliers to hire more people.
E.creates jobs in the supporting industries.
Q:
Which of the following statements is most likely to be true regarding the effects of FDI on employment?
A.FDI does not result in job creation.
B.FDI has only indirect effects on employment in the host country.
C.The indirect employment effects of FDI are always smaller than the direct effects.
D.When FDI takes the form of an acquisition of an established enterprise in the host economy as opposed to a greenfield investment, the immediate effect is always an increase in the employment.
E.A beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be created there.
Q:
Foreign managers trained in the latest management techniques can often help to improve the efficiency of operations in the host country, whether those operations are acquired or greenfield developments. This benefit of FDI falls into the category of:
A.employment effects.
B.balance-of-payments effects.
C.effects on competition.
D.resource transfer effects.
E.autonomy effects.
Q:
The main benefits of inward FDI for a host country arise from:
A.the resource-transfer effect, the employment effect, and the balance-of-payments effect.
B.the labor-transfer effect, the technology effect, and the currency-exchange effect.
C.the cultural awareness effect, first-mover advantage effect, and economic development effect.
D.the foreign exchange reserves effect, knowledge flow effect, and the reverse resource transfer effect.
E.the employment effect, the labor-transfer effect, and the technology effect.
Q:
Which of the following is true regarding the pragmatic nationalist view of FDI?
A.One aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.
B.The pragmatic nationalist view states that FDI always has a positive effect on the balance of payments which arises from the outflow of a foreign subsidiary's earnings and from the import of inputs from abroad.
C.According to the pragmatic nationalist view, international production should be distributed among countries based on the theory of comparative advantage.
D.According to the pragmatic nationalist view, FDI should not be allowed to enter into a country because its costs always outweigh its benefits.
E.The pragmatic nationalist view of FDI accepts the Marxist theory, and suggests that FDI by MNEs is an instrument of imperialism.
Q:
The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The U.S. government, therefore, imposed trade sanctions against the two countries. Which of the following political arguments does this exemplify?
A.Retaliation and trade war
B.Furthering foreign policy objectives
C.Strategic trade policy
D.Corporate security
E.Protecting infant industries
Q:
Which of the following is a provision of the Uruguay Round Agreement?
A.A wide range of services were to be excluded from GATT fair trade and market access rules.
B.Tariffs on industrial goods were to be raised by more than one-third, and tariffs were to be scrapped on more than 50 percent on a wide range of services.
C.The International Monetary Fund (IMF) was to be created to implement the GATT agreement.
D.Barriers on trade in textiles were to be significantly reduced over 10 years.
E.Average tariff rates imposed by developed nations on manufactured goods were to be raised by 20 percent of the value, the highest level in modern history.
Q:
Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because:
A.these nations withdrew their membership to the GATT.
B.the member nations had ceased to recognize GATT as a regulatory body for international trade.
C.VERs were not a recognized trade barrier under the GATT constitution.
D.neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action.
E.member nations erected a wall of tariff barriers.
Q:
Which of the following best explains the reason for the rise in protectionist pressures around the world during the 1980s?
A.The strict GATT bureaucracy in Geneva controlling trade regulations
B.The opening up of international markets to cheap products from China
C.The fall of the Soviet Union
D.The persistent trade deficit in the world's largest economy, the United States
E.The economic failure of Japan which hampered the global economy
Q:
One of the reasons why protectionist pressures arose around the world during the 1980s was:
A.the different ways many countries found to get around GATT regulations.
B.the opening up of national markets to cheap products from China.
C.the fall of the Soviet Union.
D.the persistent trade lead taken by the United States.
E.the Japanese failure in industries such as automobiles and semiconductors that strained the world trading system.
Q:
Which of the following statements is true regarding GATT?
A.GATT attempted to liberalize trade restrictions in one go.
B.In its early years, GATT was unsuccessful and hence was superseded by the World Bank.
C.GATT regulations were mostly enforced by the EU nations rather than by a mutual monitoring mechanism.
D.Tariff reductions through negotiations were completed in three rounds.
E.The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993.
Q:
Which of the following multilateral agreements was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like?
A.General Agreement of Tariffs and Trade (GATT)
B.North American Free Trade Agreement (NAFTA)
C.Central American Free Trade Agreement (CAFTA)
D.Free Trade Areas of the Americas (FTAA)
E.North Atlantic Treaty Organization (NATO)
Q:
The Smoot-Hawley Act had a damaging effect on:
A.the balance-of-payment of the United States.
B.cash flow in the domestic economy of the United States.
C.prices of natural resources in the United States.
D.employment abroad.
E.accrued liabilities of the United States.
Q:
The economically damaging effects of the Great Depression were worsened in 1929 by the:
A.First World War.
B.U.S. stock market collapse.
C.spread of communism through Europe.
D.Cold War between the world's superpowers.
E.harvest failure in Great Britain and famine in Ireland.
Q:
Which of the following is an argument against embracing strategic trade policy?
A.It hampers the chances of a country's firms to effectively exploit the first-mover advantages.
B.It is certain to be captured by special-interest groups within the economy, which will distort it to their own ends.
C.It increases the prices of the products for the domestic consumers.
D.It hampers the abilities of the domestic firms to achieve a dominant position in the global industry.
E.It leads to a compromise in national sovereignty.
Q:
According to Krugman, the ideal way for a country to respond, when the foreign competitors of its companies are already being supported by government subsidies, is probably not to engage in retaliatory action, but to:
A.help establish rules that minimize the use of trade-distorting subsidies.
B.adopt the strategic trade policy as a way to establish domestic firms in a dominant position in the global industry.
C.provide a subsidy to a new industry where the foreign competitors have not had the benefit of such strategic trade policies.
D.use a combination of home-market protection and export-promoting subsidies.
E.provide high levels of subsidies to the oldest industry in the country.
Q:
Briefly describe the five cultural dimensions in Hofstede's model.
Q:
What are the three values that are central to the Confucian system of ethics?
Q:
Compare and contrast the principles of Hinduism and Buddhism.
Q:
Elaborate on the caste system supported by Hinduism.
Q:
What are the two different banking methods that Islamic banks have experimented with in order to avoid the payment or receipt of interest?
Q:
Describe Islamic fundamentalism.
Q:
Elaborate on the connection made between Protestant ethics and "the spirit of capitalism."
Q:
What is class-consciousness? What is its impact on businesses?
Q:
How does a caste system differ from a class system?
Q:
What are the various disadvantages faced by societies that emphasize individual performance?
Q:
"There is not a strict one-to-one correspondence between a society and a nation-state." Discuss.
There is not a strict one-to-one correspondence between a society and a nation-state. Nation-states are political creations. They may contain a single culture or several cultures. India, for example, is composed of many distinct cultural groups with their own rich history and traditions. At the other end of the scale are cultures that embrace several nations. Several scholars argue that we can speak of an Islamic society or culture that is shared by the citizens of many different nations in the Middle East, Asia, and Africa. To complicate things further, it is also possible to talk about culture at different levels. It is reasonable to talk about "American society" and "American culture," but there are several societies within America, each with its own culture. The relationship between culture and country is often ambiguous. Even if a country can be characterized as having a single homogenous culture, often that national culture is a mosaic of subcultures.
Q:
What are norms?
Q:
Which of the following best exemplifies ethnocentrism?
A.Sarah believes that her opinions and interests are superior to that of her siblings.
B.Nicole is highly tolerant toward different cultures and is also keen on learning different languages.
C.Bryan's belief in the superiority of his culture has resulted in conflicts with his colleagues from different countries.
D.Emilio is in an ethical dilemma as he has been given the responsibility of deciding whether or not to hire his under-qualified cousin.
E.Galaxy Inc. has been accused of using legal but unethical ways to gain access into the markets of less developed countries.
Q:
Janet believes that the cultural group she belongs to is superior and is hence highly intolerant toward employees from the cultures of other countries. This behavior of Janet is known as:
A.cultural convergence.
B.Confucian dynamism.
C.ethnocentrism.
D.ethnic gloss.
E.class consciousness.
Q:
The distinctive culture of Wengiston has been losing its predominance among the citizens of the country. This is due to the fact that the people of Wengiston are extensively adopting certain universally accepted values and norms. This behavior of the people in Wengiston demonstrates:
A.ethnocentrism.
B.the convergence hypothesis.
C.egocentrism.
D.Confucian dynamism.
E.social mobility.
Q:
Survival values typically stress the importance of:
A.diversity in the society.
B.economic and physical security.
C.self-expression.
D.participation in political processes.
E.capitalism.
Q:
Ceria Republic is a country that has achieved rapid economic growth and prosperity over the last couple of decades as a result of globalization. Hence, the country is most likely to see a cultural shift away from:
A.greater collectivism.
B.greater economic freedom.
C.well-being values.
D.secular rational values.
E.cultural convergence.
Q:
A decade ago the government of Weinsland decided to liberalize the country's economy. As a result, today the country is experiencing rapid economic advancement and societal changes that are favorable for international business. Which of the following changes is most likely to occur in Weinsland?
A.The country will exhibit more need for social and material support structures built on collectives.
B.As the country gets richer, there will be a shift in the society from "traditional" to "secular rational" values.
C.As the country gets richer, there will be a shift in the society from "well-being" to "survival" values.
D.The people in the country will give more importance to collectivism than to individualism.
E.The country, to further facilitate globalization, will commit to authoritarian ideologies.
Q:
Hofstede's fifth dimension of Confucian dynamism captures:
A.how a society deals with the fact that people are unequal in physical and intellectual capabilities.
B.the relationship between an individual and his or her fellows along with the degree to which individual achievement and freedom are emphasized.
C.the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty.
D.attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.
E.the extent to which sex roles are differentiated and values such as achievement and power are emphasized.
Q:
Which of the following is a criticism of Hofstede's four cultural dimensions?
A.Hofstede has ignored the one-to-one correspondence between culture and the nation-state.
B.Most of Hofstede's findings are in direct conflict with standard Western stereotypes.
C.Hofstede assumes that most countries have more than one cultural dimension.
D.Certain social classes were excluded from Hofstede's work sample.
E.Hofstede's informants belonged to several different industries, companies, and countries hence his research lacks standardization.
Q:
Which of Hofstede's dimensions focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities?
A.individualism versus collectivism
B.power distance
C.uncertainty avoidance
D.masculinity versus femininity
E.Confucian dynamism
Q:
Which of the following statements is true of Geert Hofstede's work on cultural dimensions?
A.His power distance dimension looked at the relationship between gender and work roles.
B.His work fails to consider that many countries have more than one culture.
C.According to him, high uncertainty avoidance cultures were less emotionally resistant to change.
D.His findings are inconsistent with standard Western stereotypes about cultural differences.
E.He and his associates argued that Confucianism is not good for economic growth.
Q:
A country characterized with low uncertainty avoidance and low masculinity will:
A.place a premium on job security and career progression for both men and women.
B.support stringent managerial control and competition between men and women.
C.be less resistant to change and less distinguishing between men and women in the same job.
D.have a strong need for rules and exertion of power in the society and gender egalitarianism.
E.oppose risk-taking and gender egalitarianism.
Q:
Which of the following is a characteristic of high uncertainty avoidance cultures?
A.They do not place importance on job security, career patterns, retirement benefits, and so on.
B.They allow a manager to tightly control subordinates' initiatives.
C.They demonstrate less emotional resistance to change.
D.They are characterized by a greater readiness to take risks.
E.They oppose the use of rules and regulations to exercise control over individuals.
Q:
According to Hofstede, in societies where which of the following was emphasized, ties between individuals were tight.
A.individualism
B.collectivism
C.femininity
D.low uncertainty avoidance
E.low power distance
Q:
The natives of the Republic of Coastland are always prepared to take risks and they also demonstrate less emotional resistance to change. Apart from these characteristics, the ties between people are loose, sex roles are less sharply distinguished, and inequalities of power and wealth are discouraged in the country. According to this information, the Republic of Coastland most likely demonstrates:
A.collectivism.
B.masculinity.
C.low uncertainty avoidance.
D.high power distance.
E.class consciousness.
Q:
Which of the following statements is true with regard to Geert Hofstede's cultural dimensions?
A.In societies where collectivism was emphasized, the ties between individuals were loose.
B.Low power distance cultures were found in countries that let inequalities grow over time into inequalities of power and wealth.
C.Members of high uncertainty avoidance cultures had a strong need for rules and regulations.
D.In masculine cultures, little differentiation was made between men and women in the same job.
E.Members of low uncertainty avoidance cultures placed a premium on job security, career patterns, and retirement benefits.
Q:
Who initially isolated four dimensionspower distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininitythat he claimed summarized different cultures?
A.Abraham Maslow
B.B. F. Skinner
C.Geert Hofstede
D.Michael Porter
E.Max Weber
Q:
Managers at the Blue Dragon Inc., an international company with operations in China and the United States, are often heard complaining about the difficulties in achieving synergy and cooperation between the employees of both the countries. On extensive research it was concluded that the cultural differences between these countries, which resulted in different work-related values, caused the lack of cooperation. In order to effectively tackle this problem, Blue Dragon Inc. should:
A.vary its management processes and practices to account for these differences.
B.adopt the host country's management processes and practices in both countries.
C.opt to exit one of the countries to avoid a conflict.
D.provide incentives to the employees based only on their individual performance.
E.adopt the home country's management processes and practices in both countries.
Q:
The recent trend to outsource information technology jobs to countries such as India indicates that:
A.the availability of unskilled labor has increased in these countries.
B.these countries have benefited by moving toward communism.
C.a good education system is a determinant of national competitive advantage.
D.the availability of a pool of unskilled labor has been reduced in Western countries.
E.these countries are taking advantage of their latitudinal location.
Q:
When schools emphasize respect for others, obedience to authority, honesty, neatness, being on time, and use a grading system, they are:
A.teaching children to be noncompetitive.
B.impinging on fundamental freedoms and values.
C.indirectly teaching cultural values and norms.
D.indirectly creating a rigid caste system.
E.unnecessarily deviating from formal education.
Q:
Which of the following statements best defines personal space?
A.It is the amount of distance to be maintained from the audience in order to be audible to them.
B.It is a psychological phase wherein a person has free flowing thoughts.
C.In ergonomics, it is the minimum amount of space required by an average employee in order to work efficiently.
D.It is the comfortable amount of distance between you and someone you are talking with.
E.It is the amount of space a country has per person and is arrived at by dividing the country's total geographical area by its total population.
Q:
Which of the following is an aspect of nonverbal communication?
A.Grammar
B.Punctuation
C.Speech tone
D.Personal space
E.Voice modulation
Q:
Chinese is the mother tongue of the largest number of people, but English is the most widely spoken language in the world. This indicates that:
A.many people speak English as a second language.
B.many native English speakers are learning Chinese.
C.the population of native English speakers exceeds that of China.
D.Chinese will soon overtake English as the most widely spoken language.
E.Chinese is increasingly becoming the language of international business.