84) Some believe that the global financial crisis of 2008–2009 was the result of
A) a lack of free markets.
B) a lack of regulation.
C) political ideologies in opposition to democracy.
D) a strong presence of command economies.
E) a lack of privatization.
85) Recent global changes in political and economic systems show that
A) East European communist ideology is now widespread.
B) a lack of deregulation was the cause for the global financial crisis of 2008–2009.
C) it is guaranteed that democracy will thrive in most of the world’s newer democratic states.
D) the multipolar world dominated by a number of civilizations of the Cold War era has vanished
and is now being replaced by a bipolar world.
E) many undeveloped and impoverished national markets of eastern Europe, Latin America,
Africa, and Asia are potentially enormous for international business.
86) A country with ________ is more likely to attain high and sustained economic growth rates
and is a more attractive location for international business.
A) weak protection of property rights
B) a democratic regime
C) command-based economic policies
D) ideologies that differ from Western ideologies
E) a totalitarian dictatorship
87) There are currently over 1.3 billion people living in India, which makes it a large market when
measuring the number of potential consumers. However, India is still considered a smaller market
in economic terms because of
A) the country’s orientation toward democracy.
B) low birthrates.
C) high living standards.
D) limited purchasing power.
E) a commitment to a free market system
88) In economic terms, the long-run monetary benefits of doing business in a country are based on
the size of the market, the present purchasing power of consumers and the ________ of the
country.
A) gender ratio
B) geographic location
C) natural resources
D) future consumer wealth
E) political history
89) Complexion Care Inc., a U.S.-based skin care firm, was the first in the industry to identify the
growth potential of Thailand and made huge investments in its economy. As a result, the firm was
able to build brand loyalty and gain experience in that country’s business practices. In this
situation, Complexion Care Inc. has benefited from
A) a first-mover advantage.
B) forward integration.
C) unrelated differentiation.
D) deregulation.
E) privatization.
90) Which of these companies is demonstrating a first-mover advantage?
A) Tide-All Inc. has more than 50 percent market share in the telecom industry, because no other
company has invested in this industry before Tide-All Inc.
B) The first 50 people who respond to the tweet sent out by Hal’s Hamburgers receive a $5 coupon
they can use on their next order.
C) The level of satisfaction Simon experienced when dining at the Tasty Cafe was highest the first
time but reduced each time he dined there.
D) Innovative Creations Inc. was the first to exit the declining pager phone manufacturing industry
and as a result, it avoided losing a lot of money.
E) Jenna has been asked to review the mascara she bought from AllWell Beauty. Her feedback will
help the company improve the product.
91) When Galaxy Ventures, a real estate company, entered the low-cost housing business, the
market was already saturated with other players. Thus, the company was forced to exit the market
due to lack of customer loyalty and substantial dividends. Galaxy Ventures was facing
A) first-mover disadvantages.
B) late-mover disadvantages.
C) last-in first-out disadvantages.
D) comparative disadvantages.
E) absolute disadvantages.
92) Both China and India have achieved high growth rates despite relatively weak property rights
regimes and high levels of corruption, because of
A) the shift toward a communist ideology.
B) their high living standards.
C) their large population.
D) their high consumer purchasing power.
E) the shift toward a market-based economic system.
93) When considering the economic prospects of a country, it can be said that
A) the economic system and property rights regime are reasonably good predictors of economic
prospects of a country.
B) countries with command economies tend to achieve greater economic growth rates than free
market economies.
C) countries which do not have property rights protection tend to achieve greater economic growth
rates.
D) countries where property rights are not well respected and where corruption is rampant always
have very low levels of economic growth.
E) the advantages of building brand loyalty and gaining experience in a country’s business
practices is greater for a last-mover than for a first-mover.
94) The cost of doing business is most likely to be the lowest in
A) closed totalitarian states.
B) primitive or undeveloped economies.
C) open democratic societies.
D) countries where local laws and regulations set strict standards with regard to product safety,
safety in the workplace, and environmental pollution.
E) countries that lack well-established laws for regulating business practice.
95) AllSteel Inc. is planning an international expansion. In terms of the costs involved in
conducting business in a country, it will be most economical for the company if it chooses a
country
A) with a closed totalitarian political system.
B) where the company will have to provide its own infrastructure and supporting business.
C) where laws regarding product safety, safety in the workplace, and environmental pollution are
extremely stringent.
D) where politicians are held accountable by the electorate.
E) with no local laws to protect intellectual property.
96) When considering the cost of doing business in another country, what would be considered the
most attractive market or investment site?
A) a country that has adopted a closed totalitarian state
B) a country that has a well-developed body of business contract law
C) a country with a command-based economic system
D) a country with stringent product safety laws and huge liability insurance rates
E) a country which does not provide any protection for property rights
97) When social unrest and disorder in a country cause drastic changes in its business environment
that adversely affect the profit of a business, the business is facing a ________ risk.
A) political
B) demographic
C) ethical
D) technological
E) physiological
98) BrandLine Corp. has decided not to do business in a country after learning that many citizens
are violently protesting recent government embargoes on food resources. BrandLine is concerned
with the ________ risk associated with the country.
A) political
B) economic
C) demographic
D) legal
E) technological
99) Lamboria Republic is facing a high rate of inflation, and the government debt in the country is
also high. As a result, the country’s business environment is beginning to deteriorate, and the
profits of the business enterprises are hurt. According to this information, Lamboria Republic is
facing what type of risk?
A) legal
B) ethical
C) demographic
D) ethnographic
E) economic
100) Jeremy reminded the board members that it is important to understand the inflation rate of a
country before entering into business. Jeremy is concerned with the ________ risks of doing
business.
A) ethical
B) economic
C) technological
D) legal
E) sociological
101) A(n) ________ risk occurs when a trading partner opportunistically breaks a contract or
expropriates property rights.
A) political
B) legal
C) economic
D) sociological
E) cultural
102) Diabetic Daily Inc., based in the United States, hesitates to enter into a joint venture with
Azpak Limited, a Sri Lankan company, due to inadequate protection of intellectual property rights.
Diabetic Daily Inc. is trying to avoid what type of risk?
A) political
B) legal
C) ethical
D) economic
E) ethnographic
103) The risks of doing business are most likely to be the highest in a country that
A) has low inflation rates.
B) supports high living standards.
C) has only one ethnic nationality.
D) protects intellectual property.
E) faces frequent changes in government and government policy.
104) Generally, the costs and risks associated with doing business in a foreign country are
typically lower in
A) less developed countries.
B) economically advanced countries.
C) totalitarian states.
D) countries with high inflation and falling living standards.
E) countries that lack intellectual property rights.
105) Wood Source Corp. is considering doing business in Central America but is concerned that
some governments have been accused of corrupt practices. What aspect of the overall
attractiveness of doing business in Central America does this represent?
A) benefits
B) costs
C) norms
D) risks
E) values
106) Describe Amartya Sen’s conceptions of development.
107) Validate the argument made by economists that innovation and entrepreneurial activity are
the basis for long-term economic growth.
108) Discuss Jeffrey Sachs’s conception of geography, education, and economic development.
109) Briefly describe the three significant changes that have occurred in the political economy of
some of the world’s nation-states since the late 1980s.
110) Explain the broad categories of political freedom established by Freedom House and discuss
how these categories are represented in the world today.
111) Describe how author Francis Fukuyama’s vision of the new world differs from that of the late
influential political scientist Samuel Huntington.
112) Discuss Samuel Huntington’s idea of the new world order. What are its implications for
international business?
113) Discuss the concept of deregulation and its role in a market-based economic system.
114) Describe how the privatization movement began and discuss some of the most dramatic
privatization programs that have taken place.
115) Discuss the significance of legal systems in the context of shifting toward a market-based
economic system.
116) Describe some of the risks associated with the changing political economy.
117) Land and Sea Incorporated would like your opinion about various countries as potential
markets and investment sites. What general information can you share with them about assessing
the overall attractiveness of a potential country as a market?