INTERNATIONAL BUSINESS:
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (V5.1)
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. According to Thomas Friedman, the ‘Triple Convergence’ refers to the combination of new
players, a playing field, and which of the following?
A. The emergence of localized production hubs
B. The stabilization of global exchange rates
C. The rise of protectionist trade barriers in emerging markets
D. The development of new business processes and horizontal collaboration
Answer: D
Conceptual Explanation: The Triple Convergence includes the ‘playing field’ (Web-
enabled platform), ‘new players’ (global workforce), and ‘horizontalizing’ business
processes that allow individuals to collaborate globally.
2. In the CAGE Distance Framework, which of the following is most likely to contribute to
‘Administrative Distance’ between two countries?
A. Lack of colonial ties and differing legal systems
,B. Physical distance and time zone differences
C. Differences in consumer income and purchasing power
D. Linguistic diversity and religious differences
Answer: A
Conceptual Explanation: Administrative Distance refers to historical and political
associations, such as colonial ties, membership in trade blocs, and the nature of legal and
institutional frameworks.
3. Under the Heckscher-Ohlin Theory, a country’s comparative advantage is primarily
determined by:
A. The technological superiority of its manufacturing sector
B. Its relative factor endowments, such as land, labor, and capital
C. The stage of the product life cycle the industry is currently in
D. The government’s strategic subsidies for infant industries
Answer: B
Conceptual Explanation: The Heckscher-Ohlin Theory (Factor Proportions Theory)
argues that countries will export goods that make intensive use of factors that are locally
abundant.
, 4. Which component of the Eclectic Paradigm (OLI) explains why a firm would choose FDI over
licensing to maintain control over its proprietary technology?
A. Internalization advantages
B. Location advantages
C. Ownership advantages
D. Externalization advantages
Answer: A
Conceptual Explanation: Internalization advantages occur when it is more efficient for a
firm to operate its own activities rather than contracting with a third party, often to protect
intellectual property.
5. In Hofstede’s cultural dimensions, a society that emphasizes ‘Long-Term Orientation’ is
most likely to value:
A. Immediate gratification and consumption
B. Respect for tradition and social obligations
C. Personal stability and saving face
D. Persistence, thrift, and adapting to changed circumstances
Answer: D
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (V5.1)
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. According to Thomas Friedman, the ‘Triple Convergence’ refers to the combination of new
players, a playing field, and which of the following?
A. The emergence of localized production hubs
B. The stabilization of global exchange rates
C. The rise of protectionist trade barriers in emerging markets
D. The development of new business processes and horizontal collaboration
Answer: D
Conceptual Explanation: The Triple Convergence includes the ‘playing field’ (Web-
enabled platform), ‘new players’ (global workforce), and ‘horizontalizing’ business
processes that allow individuals to collaborate globally.
2. In the CAGE Distance Framework, which of the following is most likely to contribute to
‘Administrative Distance’ between two countries?
A. Lack of colonial ties and differing legal systems
,B. Physical distance and time zone differences
C. Differences in consumer income and purchasing power
D. Linguistic diversity and religious differences
Answer: A
Conceptual Explanation: Administrative Distance refers to historical and political
associations, such as colonial ties, membership in trade blocs, and the nature of legal and
institutional frameworks.
3. Under the Heckscher-Ohlin Theory, a country’s comparative advantage is primarily
determined by:
A. The technological superiority of its manufacturing sector
B. Its relative factor endowments, such as land, labor, and capital
C. The stage of the product life cycle the industry is currently in
D. The government’s strategic subsidies for infant industries
Answer: B
Conceptual Explanation: The Heckscher-Ohlin Theory (Factor Proportions Theory)
argues that countries will export goods that make intensive use of factors that are locally
abundant.
, 4. Which component of the Eclectic Paradigm (OLI) explains why a firm would choose FDI over
licensing to maintain control over its proprietary technology?
A. Internalization advantages
B. Location advantages
C. Ownership advantages
D. Externalization advantages
Answer: A
Conceptual Explanation: Internalization advantages occur when it is more efficient for a
firm to operate its own activities rather than contracting with a third party, often to protect
intellectual property.
5. In Hofstede’s cultural dimensions, a society that emphasizes ‘Long-Term Orientation’ is
most likely to value:
A. Immediate gratification and consumption
B. Respect for tradition and social obligations
C. Personal stability and saving face
D. Persistence, thrift, and adapting to changed circumstances
Answer: D
