INTERNATIONAL BUSINESS:
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD V3.0
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. In Thomas Friedman’s ‘The World Is Flat’, which of the following is identified as a primary
driver of ‘Globalization 3.0’?
A. The globalization of countries and the use of horsepower.
B. The globalization of individuals and the democratization of technology.
C. The globalization of companies and the expansion of the steam engine.
D. The development of the Bretton Woods institutions and fixed exchange rates.
Answer: B
Conceptual Explanation: Globalization 3.0 is characterized by individuals having the
power to collaborate and compete globally, enabled by software and a fiber-optic network.
2. According to the CAGE Framework developed by Pankaj Ghemawat, which distance
attribute considers colonial ties and common currency?
A. Administrative Distance
B. Cultural Distance
,C. Geographic Distance
D. Economic Distance
Answer: A
Conceptual Explanation: Administrative distance includes historical and political
associations, such as colonial ties, shared currency, and trade agreements.
3. Which trade theory suggests that a country should specialize in the production of goods for
which it has the lowest opportunity cost relative to other nations?
A. Absolute Advantage
B. Mercantilism
C. Heckscher-Ohlin Theory
D. Comparative Advantage
Answer: D
Conceptual Explanation: David Ricardo’s Theory of Comparative Advantage focuses on
relative efficiency and opportunity cost rather than absolute production capabilities.
4. The Heckscher-Ohlin Theory focuses on which factor as the primary determinant of
international trade patterns?
A. Technological innovation cycles
B. Strategic government intervention
C. Factor endowments such as land, labor, and capital
, D. First-mover advantages in capital-intensive industries
Answer: C
Conceptual Explanation: The Heckscher-Ohlin Theory posits that countries export goods
that make intensive use of factors that are locally abundant.
5. In the context of Foreign Direct Investment (FDI), ‘internalization theory’ primarily
explains:
A. Why firms prefer FDI over licensing to protect proprietary knowledge.
B. How firms use domestic resources to expand into neighboring markets.
C. The role of host governments in subsidizing foreign entrants.
D. The shift from manufacturing to service-based investments.
Answer: A
Conceptual Explanation: Internalization theory suggests firms engage in FDI to retain
control over value-adding activities and prevent the leak of intellectual property associated
with licensing.
6. What is the primary characteristic of a ‘Transnational Strategy’ in the Bartlett-Ghoshal
matrix?
A. High pressure for local responsiveness and low pressure for global integration.
B. Low pressure for local responsiveness and high pressure for global integration.
C. Low pressure for both local responsiveness and global integration.
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD V3.0
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. In Thomas Friedman’s ‘The World Is Flat’, which of the following is identified as a primary
driver of ‘Globalization 3.0’?
A. The globalization of countries and the use of horsepower.
B. The globalization of individuals and the democratization of technology.
C. The globalization of companies and the expansion of the steam engine.
D. The development of the Bretton Woods institutions and fixed exchange rates.
Answer: B
Conceptual Explanation: Globalization 3.0 is characterized by individuals having the
power to collaborate and compete globally, enabled by software and a fiber-optic network.
2. According to the CAGE Framework developed by Pankaj Ghemawat, which distance
attribute considers colonial ties and common currency?
A. Administrative Distance
B. Cultural Distance
,C. Geographic Distance
D. Economic Distance
Answer: A
Conceptual Explanation: Administrative distance includes historical and political
associations, such as colonial ties, shared currency, and trade agreements.
3. Which trade theory suggests that a country should specialize in the production of goods for
which it has the lowest opportunity cost relative to other nations?
A. Absolute Advantage
B. Mercantilism
C. Heckscher-Ohlin Theory
D. Comparative Advantage
Answer: D
Conceptual Explanation: David Ricardo’s Theory of Comparative Advantage focuses on
relative efficiency and opportunity cost rather than absolute production capabilities.
4. The Heckscher-Ohlin Theory focuses on which factor as the primary determinant of
international trade patterns?
A. Technological innovation cycles
B. Strategic government intervention
C. Factor endowments such as land, labor, and capital
, D. First-mover advantages in capital-intensive industries
Answer: C
Conceptual Explanation: The Heckscher-Ohlin Theory posits that countries export goods
that make intensive use of factors that are locally abundant.
5. In the context of Foreign Direct Investment (FDI), ‘internalization theory’ primarily
explains:
A. Why firms prefer FDI over licensing to protect proprietary knowledge.
B. How firms use domestic resources to expand into neighboring markets.
C. The role of host governments in subsidizing foreign entrants.
D. The shift from manufacturing to service-based investments.
Answer: A
Conceptual Explanation: Internalization theory suggests firms engage in FDI to retain
control over value-adding activities and prevent the leak of intellectual property associated
with licensing.
6. What is the primary characteristic of a ‘Transnational Strategy’ in the Bartlett-Ghoshal
matrix?
A. High pressure for local responsiveness and low pressure for global integration.
B. Low pressure for local responsiveness and high pressure for global integration.
C. Low pressure for both local responsiveness and global integration.
