- web.groovymark@gmail.com
- December 7, 2024
Question 01
What is the primary purpose of corporate governance in a global business environment?
a) To maximize profits for shareholders
b) To manage the daily operations of a company
c) To ensure accountability and transparency in decision-making
d) To develop marketing strategies for new products
Answer: c) To ensure accountability and transparency in decision-making
Explanation:
Corporate governance focuses on the structures and processes that ensure accountability, transparency, and fairness in a company’s relationship with its stakeholders, including shareholders, employees, customers, and the public.
Question 02
Which legal system is based on the concept of written codes and statutes?
a) Civil law
b) Common law
c) Religious law
d) Customary law
Answer: a) Civil law
Explanation:
Civil law is a legal system based on comprehensive written codes and statutes, where judges apply the law to specific cases rather than interpreting past rulings, as is common in common law systems.
Question 03
What is the role of the World Trade Organization (WTO) in global business?
a) To provide loans to developing countries
b) To promote free trade and settle trade disputes
c) To regulate foreign direct investment
d) To develop international labor standards
Answer: b) To promote free trade and settle trade disputes
Explanation:
The WTO is an international organization that promotes free trade by lowering trade barriers and resolving disputes between member nations.
Question 04
Which type of political risk involves changes in a country’s policies that affect all foreign companies operating within the country?
a) Legal risk
b) Micro risk
c) Cultural risk
d) Macro risk
Answer: d) Macro risk
Explanation:
Macro risk refers to political changes that affect the overall business environment in a country, impacting all foreign and domestic companies operating there.
Question 05
Which growth strategy focuses on introducing new products to existing markets?
a) Market development
b) Product development
c) Market penetration
d) Diversification
Answer: b) Product development
Explanation:
Product development is a strategy where a company focuses on creating new products to sell to its existing customer base, increasing sales within the current market.
Question 06
What is the key benefit of a customs union?
a) Free movement of labor between member countries
b) Elimination of internal tariffs and a common external tariff
c) Unrestricted capital flow between countries
d) Complete harmonization of all economic policies
Answer: b) Elimination of internal tariffs and a common external tariff
Explanation:
A customs union eliminates tariffs between member countries and establishes a common external tariff on imports from non-member countries, facilitating easier trade within the union.
Question 07
What is the main advantage of a multinational corporation using vertical FDI?
a) Gaining access to a foreign market’s labor force
b) Controlling the supply chain by acquiring suppliers or distributors
c) Expanding its brand into new geographic regions
d) Reducing currency exchange risks
Answer: b) Controlling the supply chain by acquiring suppliers or distributors
Explanation:
Vertical FDI allows a company to control more of its supply chain by investing in foreign companies that supply inputs or distribute its products, improving efficiency and reducing costs.
Question 08
Which of Hofstede’s cultural dimensions refers to how societies deal with uncertainty and ambiguity?
a) Power distance
b) Individualism versus collectivism
c) Masculinity versus femininity
d) Uncertainty avoidance
Answer: d) Uncertainty avoidance
Explanation:
Uncertainty avoidance measures the extent to which a society feels uncomfortable with uncertainty and ambiguity, and how it deals with unknown situations.
Question 09
What is a key benefit of licensing as an international market entry strategy?
a) Full control over operations in the foreign market
b) Ability to retain complete ownership of intellectual property
c) Gaining access to local knowledge with low financial risk
d) High level of direct involvement in the foreign market
Answer: c) Gaining access to local knowledge with low financial risk
Explanation:
Licensing allows companies to enter foreign markets by granting a local company the right to produce and sell their products, gaining local knowledge while limiting financial risks.
Question 10
Which factor is most important when a company is determining its global entry strategy?
a) Government regulations in the home country
b) Economic stability of the target market
c) Domestic market share
d) Proximity to competitors
Answer: b) Economic stability of the target market
Explanation:
When entering a new global market, companies must consider the economic stability of the target market to ensure that their investments are secure and that the market can sustain demand for their products or services.
Question 11
What is the primary benefit of using common market integration?
a) Complete harmonization of fiscal and monetary policies
b) Free movement of goods, services, labor, and capital between member states
c) Elimination of all forms of trade protectionism
d) Establishment of a single currency for all member countries
Answer: b) Free movement of goods, services, labor, and capital between member states
Explanation:
A common market allows for the free movement of goods, services, labor, and capital between member states, creating a more integrated and efficient economic environment.
Question 12
Which type of intellectual property protection applies to an invention or industrial process?
a) Trademark
b) Copyright
c) Patent
d) Trade secret
Answer: c) Patent
Explanation:
A patent protects inventions or industrial processes, giving the patent holder exclusive rights to use, manufacture, and sell the invention for a specific period of time.
Question 13
Which economic indicator measures the total market value of goods and services produced by a country in a year?
a) Gross National Product (GNP)
b) Balance of Payments
c) Gross Domestic Product (GDP)
d) Consumer Price Index (CPI)
Answer: c) Gross Domestic Product (GDP)
Explanation:
Gross Domestic Product (GDP) measures the total market value of all goods and services produced within a country’s borders in a specific time period, typically one year.
Question 14
What is the key feature of a free trade area?
a) Free movement of people between member countries
b) Elimination of tariffs between member countries
c) Common external tariffs on non-member countries
d) Standardized labor laws across member countries
Answer: b) Elimination of tariffs between member countries
Explanation:
In a free trade area, member countries eliminate tariffs on goods traded between them, allowing for more efficient trade while maintaining their own external tariffs on non-member countries.
Question 15
What is the primary objective of international joint ventures?
a) To gain full ownership of foreign operations
b) To minimize the financial risk of entering new markets
c) To compete directly with local companies
d) To outsource production to lower-cost regions
Answer: b) To minimize the financial risk of entering new markets
Explanation:
Joint ventures allow companies to partner with local firms to enter new markets while sharing financial risks, resources, and expertise, making market entry less risky and more manageable.
Question 16
Which of the following describes a government subsidy?
a) An import tax on foreign goods
b) Financial assistance given by a government to support a domestic industry
c) A voluntary limit on exports
d) A restriction on the number of goods that can be imported
Answer: b) Financial assistance given by a government to support a domestic industry
Explanation:
A government subsidy is financial support provided to domestic industries to help reduce production costs and make them more competitive in international markets.
Question 17
Which cultural dimension refers to the extent to which people in a society are integrated into groups?
a) Power distance
b) Masculinity versus femininity
c) Uncertainty avoidance
d) Individualism versus collectivism
Answer: d) Individualism versus collectivism
Explanation:
This dimension measures whether a society values individual independence (individualism) or places importance on group cohesion and collective interests (collectivism).
Question 18
What is the main goal of the International Monetary Fund (IMF)?
a) To eliminate trade barriers
b) To provide loans for development projects
c) To ensure global financial stability
d) To regulate foreign direct investments
Answer: c) To ensure global financial stability
Explanation:
The IMF works to promote global financial stability by offering policy advice, financial assistance, and technical expertise to countries facing balance of payment problems.
Question 19
Which economic system is characterized by government control of the factors of production?
a) Mixed economy
b) Market economy
c) Command economy
d) Traditional economy
Answer: c) Command economy
Explanation:
In a command economy, the government controls all major aspects of production and distribution, and the allocation of resources is determined by a central authority.
Question 20
What is the purpose of the General Agreement on Tariffs and Trade (GATT)?
a) To promote economic cooperation among developing countries
b) To encourage foreign direct investment
c) To regulate international financial transactions
d) To reduce trade barriers and promote international trade
Answer: d) To reduce trade barriers and promote international trade
Explanation:
GATT was established to reduce tariffs and other trade barriers, thereby promoting freer international trade among its member nations.