International Marketing, 18e (Cateora)
Chapter 6 The Political Environment: A Critical Concern
1) Sovereignty is exclusive to the supreme powers exercised by a nation over its own members.
2) Sovereignty may be threatened by foreign investment.
3) Adherence to the World Trade Organization (WTO) does not result in the loss of national
sovereignty.
4) Foreign businesses no longer need to be concerned about the stability or instability of
prevailing government policies.
5) Pressure from nationalist and self-interest groups affect the stability of a government.
6) Saudi Arabia began permitting women to vote in 2015.
7) Nationalism supports foreign business because it improves local economies.
8) Nationalistic feelings in general bear no relation to the domestic economy.
9) Property may legally be seized by the government with or without compensation.
10) The most severe political risk of global business is the government action of domestication.
11) The ultimate goal of domestication is to require companies to produce more products to
export than was the case before domestication.
12) Through expropriation and nationalization, nationalized businesses have become more
efficient, technologically strong, and competitive in world markets.
13) Barring Latin America, the risks of confiscation and expropriation have decreased over the
last two decades.
14) Many countries have domestication as a condition for investment.
15) Price controls are only targeted at nonessential products.
16) Political sanctions are usually an unsuccessful means of achieving the goal of forcing a
country to accept the demands of the boycotting country.
17) Political and social activists generally have no impact on the normal flow of trade.
18) Nongovernmental organizations can affect the policy decisions made by governments
through lobbying.
19) Risk of violence does not tend to be a consideration in assessing the political vulnerability of
a multinational company’s activities.
20) International warfare is fast gaining popularity among nations.
21) Due to advancements in technology, it is relatively easy to determine whether a cyber attack
has been launched by a rogue state, a terrorist, or a hacker as a prank.
22) As cultural and political scenarios vary so widely across nations, there is no way to
generalize the tendency for a particular product to be politically sensitive.
23) Products that have or are perceived to have an effect on the environment are more likely to
be politically sensitive.
24) It is common for a single company to directly control or alter the political environment of the
country within which it operates.
25) Relations between governments and MNCs are generally negative, particularly if the
investment made by the MNCs increases exports or reduces imports.
26) Licensing is not effective in situations where the technology is unique and the risk is high.
27) Planned domestication involves taking over an industry in a foreign country.
28) It is illegal for U.S. citizens to pay a bribe unless it is a common practice in the host country.
29) The principal agency that supports U.S. business abroad is the Global Chamber of
Commerce (GCC).
30) The Agency for International Development underwrites trade and investments for U.S. firms.
31) In the context of international law, a ________ governs its own territory and may enter into
agreements with other nations.
A) bounded
B) sovereign
C) legal
D) liberal
E) neutral
32) A sovereign state is one that
A) is obligated to be a member of the World Trade Organization.
B) has its political and economic systems determined by the United Nations Development
Program.
C) enjoys full legal equality with other states.
D) has its territory governed by the United Nations.
E) is bounded by external control.
33) ________ refers to both the powers exercised by a state in relation to other countries and the
supreme powers exercised over its own members.
A) Sovereignty
B) Self-governance
C) Federalism
D) Autocracy
E) Nationalism
34) In April 2009, the G20 nations agreed to cede some sovereignty and
A) include all G20 nations in the Security Council.
B) raise oil prices.
C) increase infrastructure funding.
D) reject protectionism.
E) increase aid to South Africa.
35) Adherence to the WTO inevitably means
A) a definite increase in import tariffs worldwide.
B) the loss of national security to a large extent.
C) reduction in world trade of at least 70 percent.
D) the loss of some degree of national sovereignty.
E) complete stoppage of foreign direct investments.
36) For a multinational firm, the ideal political climate is a
A) country where international laws do not apply.
B) country where favors can be purchased easily.
C) country with a stable and friendly government.
D) government with absolute power.
E) government that radically shifts its philosophy.
37) What is the top political issue concerning foreign businesses?
A) demographic profile of political leaders
B) government policies on infrastructure
C) economic awareness of political leaders
D) stability of prevailing government policies
E) membership of governments in trade treaties
38) What is one of the main political causes of instability in international markets?
A) varied taxing conventions
B) differences in economic philosophies
C) global focus
D) environmental awareness
E) trade disputes
39) Monarchy, like ________, is a form of government ruled by one.
A) aristocracy
B) dictatorship
C) democracy
D) monopoly
E) oligarchy
40) The ancient Greeks conceived three fundamental forms of government. Which term refers to
a government ruled by one?
A) aristocracy
B) monarchy
C) democracy
D) monopoly
E) oligarchy
41) Which government form can be most accurately described as rule by few?
A) aristocracy
B) dictatorship
C) democracy
D) monopoly
E) monarchy
42) According to ancient Greeks, what fundamental government form represents rule by many?
A) aristocracy
B) dictatorship
C) democracy
D) monopoly
E) monarchy
43) What is a common term for a form of government in use today?
A) protectionism
B) duopoly
C) oligopoly
D) capitalism
E) oligarchy
44) What country recently allowed women the right to vote for the first time?
A) Croatia
B) Iran
C) Bolivia
D) Saudi Arabia
E) Venezuela
45) What event caused a drop in “economic freedom” in the United States, according to the
Heritage Foundation?
A) Hurricane Katrina
B) the war in Iran
C) Obamacare
D) the bombing of the World Trade Towers
E) the economic stimulus of 2008–2009
46) ________ is an intense feeling of state pride and unity, an awakening of a country’s people to
pride in their country.
A) Nepotism
B) Absolutism
C) Fascism
D) Nationalism
E) Polarism
47) Which action is most likely a manifestation of nationalism?
A) membership in bilateral trade treaties
B) a call to buy a global counterpart’s products
C) restrictions on imports
D) removal of tariffs and quotas
E) a focus on global security
48) With which term would the phrase “Buy American” be most closely associated?
A) socialism
B) communism
C) nationalism
D) abstractionism
E) polarism
49) What is true of nationalism?
A) The more a country feels threatened by some outside force the less nationalistic the country
becomes.
B) A call to “buy our country’s products only” is one form of manifestation of national feelings.
C) Nationalist feelings lead to loss of control over foreign investment.
D) The more a country’s domestic economy declines, the less nationalistic it becomes.
E) Nationalistic feelings are not prevalent in economically prosperous countries.
50) With respect to the political risk that can be faced by a company seeking to invest abroad,
which action is most severe?
A) confiscation
B) expropriation
C) domestication
D) exchange controls
E) local-content laws