77) Juliet is concerned with the potential for political harassment when her company enters a
new international market. To reduce the risk of political harassment, she is most likely to
consider using ________ to enter the market.
A) externally produced products
B) a smaller investment base
C) foreign technology
D) a joint venture
E) the threat of sanctions
78) What strategy is used by multinational corporations to minimize political vulnerability and
risk?
A) expropriation
B) sanctions
C) buyouts
D) confiscation
E) licensing
79) Which strategy can be effective in forestalling or minimizing the effect of a total takeover of
a multinational corporation’s holdings by a foreign government?
A) confiscation
B) sole proprietorship
C) expanding the investment base
D) advertising
E) leasing
80) Which strategy to minimize political vulnerability and risk has the advantage of engaging the
power of several investors and banks in the host country whenever any kind of government
takeover or harassment is threatened?
A) joint ventures
B) licensing
C) expanding the investment base
D) sole proprietorship
E) political bargaining
81) Which strategy is most effective in minimizing political risks for a multinational corporation
in situations in which the technology is unique and the risk is high?
A) trade embargo
B) licensing
C) expanding the investment base
D) planned confiscation
E) expropriation
82) The most effective long-range solution to a situation where a foreign government is
demanding local participation in a multinational corporation’s business activities in the host
country is
A) joint ventures.
B) licensing.
C) expanding the investment base.
D) planned domestication.
E) political payoffs.
83) While expanding the investment base of a company, what can be used as a powerful ally in
dealing with threats of government takeovers or harassment?
A) banks that have lent money to the host government
B) the World Trade Organization
C) the International Labor Organization
D) regional trade blocs
E) opposing political parties
84) An attempt to lessen political risks by paying those in power to intervene on behalf of the
multinational company is referred to as a
A) subornation.
B) protectionism.
C) political payoff.
D) buyout.
E) rake-off.
85) What is the U.S. government’s policy toward multinational corporations that are confronted
with situations where bribery is an issue?
A) A bribe may be paid as long as it is not a domestic situation.
B) Bribery is justified if it is a documented traditional practice in a country.
C) A bribe can be paid in a foreign country if it is tied to national security.
D) It is illegal for a U.S. citizen to pay a bribe.
E) The issue revolves around the customs of the country and each issue is decided separately.
86) What principle U.S. agency supports U.S. businesses abroad?
A) State Department of Entrepreneurship
B) Better Business Bureau
C) Department of Commerce
D) Department of Foreign Relations
E) Department of Defense
87) Within the same country, some foreign businesses may fall prey to politically induced
harassment, while others may be placed under a government umbrella of protection and
preferential treatment. What factor explains this difference?
A) the level of domestication achieved
B) the differences in level of technology between the two countries
C) the cultural differences between the host nation and the business’s home country
D) the import tariffs set by the host country
E) the evaluation of a company’s contribution to the nation’s interest
88) What is the most important reason for a country to encourage foreign investment?
A) to improve the global image of a country
B) to accelerate the development of an economy
C) to evade political tensions between countries
D) to minimize negative political fallouts within the domestic economy
E) to improve ties between the investing country and the host country
89) Which agency underwrites trade and investments for U.S. firms?
A) Export-Import Bank
B) the Federal Trade Commission
C) the Agency for International Development
D) Social Security Advisory Board
E) the Overseas Private Investment Corporation
90) Waldo’s company was expanding into some underdeveloped countries, and needed to acquire
risk insurance to cover potential fallout from political unrest that was occurring in those
countries. What organization might be able to provide this for Waldo?
A) Commodity Futures Trading Commission (CFTC)
B) the Federal Trade Commission (FTC)
C) the Small Business Administration (SBA)
D) the United States International Trade Commission (USITC)
E) the Overseas Private Investment Corporation
91) You live in a nation that is considered to be a sovereign state. What does this mean?
92) Discuss stability of governments and list the main political causes of instability in
international markets.
93) Describe the concept of nationalism and list some of the ways it manifests, particularly in
today’s political environment.
94) Discuss the terms confiscation, expropriation, and domestication. Choose one of these
concepts and describe a situation in which it might occur.
95) List and briefly discuss the various economic risks that international companies must face
when they seek to market abroad.
96) Briefly discuss the role of PSAs and NGOs.
97) Discuss the threats posed by cyberterrorism or cyberattacks. Give an example of a recent
occurrence of these.
98) What are the conditions under which relations between governments and MNCs are
generally positive?
99) Ranzan Inc. has invested in a country showing signs that it will use domestication in the near
future to force foreign investors to share more of the profits with the government. Cite and
describe a strategy to deal with this potential of domestication that Ranzan could follow to
ensure that its business remains profitable.
100) Compare and contrast the government agencies that are involved in promoting foreign
investment and international business.