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web.groovymark@gmail.com
- December 7, 2024
Question 21
Which type of foreign direct investment (FDI) involves a company acquiring an existing firm in a foreign market?
a) Greenfield investment
b) Horizontal FDI
c) Brownfield investment
d) Vertical FDI
Answer: c) Brownfield investment
Explanation:
Brownfield investment refers to a company acquiring or merging with an existing firm in a foreign market rather than starting new operations from scratch.
Question 22
What is the key focus of antitrust laws in global business?
a) Preventing unfair competition and promoting market fairness
b) Encouraging multinational corporations to enter foreign markets
c) Protecting foreign investors from nationalization
d) Promoting corporate tax breaks for international firms
Answer: a) Preventing unfair competition and promoting market fairness
Explanation:
Antitrust laws are designed to prevent monopolies and ensure competitive markets by regulating corporate behavior and preventing practices that unfairly limit competition.
Question 23
Which pricing strategy involves setting a high price initially and lowering it over time?
a) Penetration pricing
b) Price skimming
c) Competitive pricing
d) Cost-plus pricing
Answer: b) Price skimming
Explanation:
Price skimming involves charging a high price initially to maximize profits from early adopters, and gradually lowering the price to attract more price-sensitive customers as demand increases.
Question 24
What is a characteristic of a transnational strategy?
a) Standardizing products for all markets
b) Focusing solely on domestic production
c) Balancing global efficiency with local responsiveness
d) Limiting international operations to joint ventures
Answer: c) Balancing global efficiency with local responsiveness
Explanation:
A transnational strategy seeks to achieve both global efficiency and local responsiveness by adapting products and services to local markets while maintaining some level of standardization.
Question 25
What is the primary focus of corporate social responsibility (CSR) in international business?
a) Maximizing profits at all costs
b) Adhering to environmental and ethical standards
c) Expanding market share globally
d) Reducing tariffs and trade barriers
Answer: b) Adhering to environmental and ethical standards
Explanation:
Corporate Social Responsibility (CSR) focuses on a company’s accountability for its social, environmental, and ethical impact on society, especially when operating in international markets.
Question 26
Which globalization risk involves the societal expectations and standards of an organization operating in a foreign environment?
a) Political
b) Legal
c) Cultural
d) Economic
Answer: c) Cultural
Explanation:
Cultural risk involves societal expectations, norms, and values that an organization must navigate when operating in a foreign environment. This includes understanding local customs, traditions, and business practices.
Question 27
What is a characteristic of a floating exchange rate system?
a) The currency’s value is fixed to another currency
b) The currency’s value is allowed to fluctuate based on market forces
c) The government sets a maximum and minimum value for the currency
d) The exchange rate is determined by international agreements
Answer: b) The currency's value is allowed to fluctuate based on market forces
Explanation:
In a floating exchange rate system, the value of a currency is determined by supply and demand in the foreign exchange market, without direct government intervention.
Question 28
Which type of political risk affects a specific foreign company or a group of foreign companies in a country?
a) Macro risk
b) Micro risk
c) Cultural risk
d) Economic risk
Answer: b) Micro risk
Explanation:
Micro risk refers to political risk that applies to a specific foreign company or industry within a country, such as changes in local regulations, taxes, or government policies targeting specific businesses.
Question 29
What is the primary purpose of the International Monetary Fund (IMF)?
a) To provide development loans to poor countries
b) To regulate international trade disputes
c) To ensure global financial stability
d) To promote free trade between countries
Answer: c) To ensure global financial stability
Explanation:
The IMF’s main goal is to promote global monetary cooperation and ensure financial stability by offering financial support and policy advice to member countries.
Question 30
What is a key feature of a customs union?
a) Common external tariffs for non-member countries
b) Free movement of labor and capital
c) Shared fiscal and monetary policies
d) Elimination of all trade barriers with non-member countries
Answer: a) Common external tariffs for non-member countries
Explanation:
A customs union eliminates tariffs and trade barriers between member countries while establishing a common external tariff on goods imported from non-member countries.
Question 31
Which economic strategy involves using financial instruments to reduce the impact of adverse price movements?
a) Speculation
b) Hedging
c) Arbitrage
d) Forward trading
Answer: b) Hedging
Explanation:
Hedging is the practice of using financial instruments, such as derivatives, to protect against potential losses from adverse price movements in currencies, commodities, or other assets.
Question 32
What is the primary focus of a transnational strategy in global business?
a) Standardizing products for all markets
b) Offering a uniform product globally
c) Balancing global efficiency with local responsiveness
d) Focusing on domestic operations only
Answer: c) Balancing global efficiency with local responsiveness
Explanation:
A transnational strategy focuses on achieving global efficiencies while also adapting products and services to meet the unique needs of local markets.
Question 33
Which type of pricing strategy involves setting a low price for a new product to attract customers and gain market share quickly?
a) Penetration pricing
b) Price skimming
c) Premium pricing
d) Competitive pricing
Answer: a) Penetration pricing
Explanation:
Penetration pricing is a strategy where a company sets a low price for a new product to quickly attract customers and gain market share, often with the goal of raising prices later.
Question 34
What is the primary benefit of using a geocentric approach to human resource management?
a) It ensures local employees are promoted to leadership roles
b) It reduces costs by focusing on local talent
c) It leverages the best talent from both the home and host countries
d) It centralizes decision-making in the home country
Answer: c) It leverages the best talent from both the home and host countries
Explanation:
A geocentric approach to HR management focuses on selecting the best candidates for positions from both home and host countries, promoting a diverse and talented workforce across borders.
Question 35
What is the role of intellectual property laws in international business?
a) To regulate foreign direct investment
b) To protect inventions, trademarks, and copyrights across borders
c) To ensure compliance with local trade policies
d) To manage global marketing strategies
Answer: b) To protect inventions, trademarks, and copyrights across borders
Explanation:
Intellectual property laws protect the rights of inventors, creators, and companies by ensuring that their inventions, trademarks, and copyrighted works are legally protected in the global marketplace.
Question 36
What is the primary objective of the World Bank?
a) To settle international trade disputes
b) To regulate global financial markets
c) To provide loans for development projects in poor countries
d) To monitor currency exchange rates
Answer: c) To provide loans for development projects in poor countries
Explanation:
The World Bank’s primary mission is to provide financial and technical assistance to developing countries to support projects that reduce poverty and promote economic development.
Question 37
Which type of legal system is based on religious beliefs and guidelines?
a) Civil law
b) Common law
c) Religious law
d) Customary law
Answer: c) Religious law
Explanation:
Religious law systems are based on religious teachings and scriptures. Examples include Islamic law (Sharia) and Jewish law (Halakha).
Question 38
Which economic integration stage removes trade barriers between member countries but does not establish a common external tariff?
a) Free trade area
b) Customs union
c) Common market
d) Economic union
Answer: a) Free trade area
Explanation:
A free trade area eliminates trade barriers between member countries, allowing goods and services to flow freely, but each country maintains its own external trade policies with non-members.
Question 39
What is the key focus of a localization strategy in international business?
a) Standardizing products for all markets
b) Adapting products and services to fit the local market
c) Reducing the cost of production through economies of scale
d) Limiting business operations to the domestic market
Answer: b) Adapting products and services to fit the local market
Explanation:
A localization strategy involves customizing products, services, and business operations to meet the specific needs, preferences, and cultural expectations of local markets.
Question 40
What is the primary role of the Financial Accounting Standards Board (FASB)?
a) To develop and oversee global trade regulations
b) To establish accounting
What is the primary goal of a multinational corporation’s transfer pricing strategy?
a) To reduce the overall tax burden by shifting profits between countries
b) To increase product prices in foreign markets
c) To standardize pricing across all markets
d) To improve relationships with foreign governments standards in the United States
c) To provide loans to developing countries
d) To facilitate foreign direct investment
Answer: a) To reduce the overall tax burden by shifting profits between countries
Explanation:
Transfer pricing is used by multinational corporations to allocate profits and expenses between subsidiaries in different countries, often to take advantage of favorable tax regimes.
