GMS522 – FINALS EXAM TEST GUIDE
QUESTIONS AND ANSWERS
According to the OECD Convention on Bribery and Corruption it also does not matter
whether the host country is tolerant of corrupt business practices. It is still an offence.
True/False? - Answer-True (1)
The seizure of foreign assets by a government with payment of compensation to owners
is called: - Answer-Expropriation
Which (if any) is a potential effect of bribery and corruption?
a. Bribery and corruption may lead to other morality problems
b. Bribery and corruption can reduce foreign direct investment flows to those countries
viewed as corrupt
c. Bribery and corruption may force companies to alter how they enter foreign markets
e.g. making it necessary to have a local partner - Answer-All of the above (2)
The CEO of Rio Tinto, a global mining company, was interested in opening a mine in
Northern Bolivia. He knew that the country was politically unstable but he was most
worried about being able to repatriate profits earned back to the firm's home country.
Which sub-index of the Profit Opportunity Recommendation index (POR) would be most
helpful to this CEO's decision? - Answer-The R Factor
Business in Muslim countries is conducted under______________ law - Answer-
Shari'ah
According to the Heckscher-Ohlin model what drives international trade? - Answer-
Differences in factor endowments and factor intensities
According to Vernon's Product Life Cycle Theory firms will adopt mass production
techniques and initiate foreign manufacturing in the __________ stage of the cycle. -
Answer-Second
When Taiwan mandates extensive purity tests for imported fruit juices but does not
subject domestically produced juices to the same tests it is using _____________ as a
protectionist measure: - Answer-Product standards
The keiretsu system which involves tightly knit corporate and cultural relationships
between Japanese manufacturers, wholesalers and retailers is a form of: - Answer-
Protectionism
What is the core mission of the WTO? - Answer-To facilitate international trade and
investment
, According to Dunning's OLI Framework a firm's foreign investment decisions are driven
by: - Answer-Ownership, Location and Internalization factors
At what stage in the country selection process does the firm consider its own resources,
capabilities and sources of competitive advantage? - Answer-Secondary screening
Which of the following is considered a proactive motivation to go international? -
Answer-Aggressive management intent on building a global operation
The term ________________ describes institutional arrangements used by firms to
enter foreign markets. - Answer-Mode of entry
According to the Uppsala model a firm's __________________ is the major driver of its
pattern of internationalization. - Answer-Experiential knowledge
With _______________ the firm transacts with an intermediary based in its own home
country. This intermediary in turn takes responsibility for exporting the product to one or
more foreign countries. - Answer-Indirect exporting
Entry modes may be classified by their risk/reward profile. In this context hierarchical
modes represent a sharing of the risks and rewards between two or more firms.
True/False? - Answer-False (6)
Under this type of agreement, one firm permits another to use its intellectual property
(e.g. trademarks, copyrights or patents) in exchange for royalty compensation. What is
this type of agreement called? - Answer-Licensing
Which mode of entry carries the highest risk and the highest potential return? - Answer-
Foreign direct investment
Some firms utilize the same entry mode every time they expand into a new foreign
market. Such firms are said to be following the _________________ rule in the
selection of an entry mode. - Answer-Naïve
Which of the following is a likely negative impact of counterfeit production?
a. Lost goodwill for the manufacturer of the genuine product
b. Lost sales for the manufacturer of the genuine product
c. Conflict between the manufacturer and authorized dealers - Answer-(a) and (b) only
(2)
In determining the optimal level of standardization for a global product which of the
following costs would you consider?
a. Incremental manufacturing costs
b. Cost of lost sales
c. Sunk cost - Answer-(a) and (b) only (3)
QUESTIONS AND ANSWERS
According to the OECD Convention on Bribery and Corruption it also does not matter
whether the host country is tolerant of corrupt business practices. It is still an offence.
True/False? - Answer-True (1)
The seizure of foreign assets by a government with payment of compensation to owners
is called: - Answer-Expropriation
Which (if any) is a potential effect of bribery and corruption?
a. Bribery and corruption may lead to other morality problems
b. Bribery and corruption can reduce foreign direct investment flows to those countries
viewed as corrupt
c. Bribery and corruption may force companies to alter how they enter foreign markets
e.g. making it necessary to have a local partner - Answer-All of the above (2)
The CEO of Rio Tinto, a global mining company, was interested in opening a mine in
Northern Bolivia. He knew that the country was politically unstable but he was most
worried about being able to repatriate profits earned back to the firm's home country.
Which sub-index of the Profit Opportunity Recommendation index (POR) would be most
helpful to this CEO's decision? - Answer-The R Factor
Business in Muslim countries is conducted under______________ law - Answer-
Shari'ah
According to the Heckscher-Ohlin model what drives international trade? - Answer-
Differences in factor endowments and factor intensities
According to Vernon's Product Life Cycle Theory firms will adopt mass production
techniques and initiate foreign manufacturing in the __________ stage of the cycle. -
Answer-Second
When Taiwan mandates extensive purity tests for imported fruit juices but does not
subject domestically produced juices to the same tests it is using _____________ as a
protectionist measure: - Answer-Product standards
The keiretsu system which involves tightly knit corporate and cultural relationships
between Japanese manufacturers, wholesalers and retailers is a form of: - Answer-
Protectionism
What is the core mission of the WTO? - Answer-To facilitate international trade and
investment
, According to Dunning's OLI Framework a firm's foreign investment decisions are driven
by: - Answer-Ownership, Location and Internalization factors
At what stage in the country selection process does the firm consider its own resources,
capabilities and sources of competitive advantage? - Answer-Secondary screening
Which of the following is considered a proactive motivation to go international? -
Answer-Aggressive management intent on building a global operation
The term ________________ describes institutional arrangements used by firms to
enter foreign markets. - Answer-Mode of entry
According to the Uppsala model a firm's __________________ is the major driver of its
pattern of internationalization. - Answer-Experiential knowledge
With _______________ the firm transacts with an intermediary based in its own home
country. This intermediary in turn takes responsibility for exporting the product to one or
more foreign countries. - Answer-Indirect exporting
Entry modes may be classified by their risk/reward profile. In this context hierarchical
modes represent a sharing of the risks and rewards between two or more firms.
True/False? - Answer-False (6)
Under this type of agreement, one firm permits another to use its intellectual property
(e.g. trademarks, copyrights or patents) in exchange for royalty compensation. What is
this type of agreement called? - Answer-Licensing
Which mode of entry carries the highest risk and the highest potential return? - Answer-
Foreign direct investment
Some firms utilize the same entry mode every time they expand into a new foreign
market. Such firms are said to be following the _________________ rule in the
selection of an entry mode. - Answer-Naïve
Which of the following is a likely negative impact of counterfeit production?
a. Lost goodwill for the manufacturer of the genuine product
b. Lost sales for the manufacturer of the genuine product
c. Conflict between the manufacturer and authorized dealers - Answer-(a) and (b) only
(2)
In determining the optimal level of standardization for a global product which of the
following costs would you consider?
a. Incremental manufacturing costs
b. Cost of lost sales
c. Sunk cost - Answer-(a) and (b) only (3)
