1 THE GLOBAL BUSINESS ENVIRONMENT: MULTIPLE CHOICE QUESTIONS Guidance notes for lecturers This testbank of multiple choice questions is mainly a resource for use in assessment exercises. The use of multiple choice questions can be a mechanical way to test students’ knowledge, often involving a rather limited level of reflection on the issues. I have attempted to make many of these questions more interesting than mere tests of what facts the student remembers. Many of these questions will lend themselves to feedback discussion in the classroom, which students will find helpful in understanding the concepts and issues. The instruction to students specifies that they should choose the ‘best’ answer to each question. Some questions are simple and straightforward, but others are more challenging. Often, more than one choice might seem right, but in each case, there is one best choice. In feedback discussion, it will aid learning to look at individual questions to see why one answer is better than the others. The following is a list of some of the more challenging questions which might lend themselves to deeper discussion: Chapter 1 Questions 4, 5, 6 Chapter 2 Questions 2, 4, 8, 9 Chapter 3 Questions 3, 5, 9-11, 14, 15 Chapter 4 Questions 3, 5, 8, 12 Chapter 5 Questions 5, 6, 8-10 Chapter 6 Questions 5-8, 10 Chapter 7 Questions 7, 8, 13, 14, 17 Chapter 8 Questions 1, 4, 8, 9, 12 Chapter 9 Questions 5-8 Chapter 10 Questions 1, 2, 4, 11 Chapter 11 Questions 4, 6-8, 10 12 Chapter 12 Questions 1, 4, 5, 7, 10, 12 Chapter 13 Questions 1, 3, 4, 6-10 The questions Instruction for students: For each question, there are four possible answers. Choose the one which is the best answer to each question.
Transcript
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THE GLOBAL BUSINESS ENVIRONMENT: MULTIPLE CHOICE QUESTIONS
Guidance notes for lecturersThis testbank of multiple choice questions is mainly a resource for use in assessment exercises. The use of multiple choice questions can be a mechanical way to test students’ knowledge, often involving a rather limited level of reflection on the issues. I have attempted to make many of these questions more interesting than mere tests of what facts the student remembers.
Many of these questions will lend themselves to feedback discussion in the classroom, which students will find helpful in understanding the concepts and issues. The instruction to students specifies that they should choose the ‘best’ answer to each question. Some questions are simple and straightforward, but others are more challenging. Often, more than one choice might seem right, but in each case, there is one best choice. In feedback discussion, it will aid learning to look at individual questions to see why one answer is better than the others.
The following is a list of some of the more challenging questions which might lend themselves to deeper discussion:
The questionsInstruction for students:For each question, there are four possible answers. Choose the one which is the best answer to each question.
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PART 1 BUSINESS IN THE GLOBAL ENVIRONMENT
(Chapter 1)
1. ‘Emerging market’ refers to:a. Any developing countryb. A fast-growing developing country c. Any growing consumer market d. China and India
Answer: b. See p. 8.
2. In the following list of ways by which governments exert control over businesses, which one is out of place?a. Full ownership of a companyb. Partial stake in a public companyc. Privatization of a nationalized company d. Sovereign wealth fund
Answer: c. See pp 18-19.
3. A business, whether national or international, contains the following activities or functions:a. Operations, Human Resource Management, Accountingb. Production, Human Resource Management, Accounting, Marketing, and Research and
Development.c. Production, Human Resources, Finance, Sales and Marketing, Research and Development.d. Operations, Human Resource Management, Accounting, Sales, Research and Development.
Answer: a. See pp 23-4.
4. Over which of the following does the MNE parent company have most control?a. An affiliate companyb. A strategic partnerc. A subsidiary in which it owns 60% of the sharesd. A wholly-owned subsidiary
Answer: d. See p. 17.
5. Which of the following best describes the role of a company’s directors:a. They take day-to-day management decisions.b. They have ultimate responsibility for how the company is run.c. They aim to maximize the wealth of the investors.d. They are the company’s main investors.
Answer: b. See pp. 19-21.
6. To which body within the company is the CEO answerable?a. The board of directorsb. The employeesc. The shareholders’ annual general meetingd. The company’s trade union representatives
Answer: a. See p. 20.
7. Which of the following is the least appropriate in describing the ethnocentric organization?a. The corporate culture is one of confidence in what the firm stands for.b. The staff share corporate values.
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c. The management welcome new ideas from other cultures.d. The organization has a strong sense of identity.
Answer: c. See pp 26-7.
8. The PEST analysis is used to represent:a. Multiple dimensions of the external environment. b. The company's place in the marketplace.c. A country’s political and economic environment. d. The institutions and processes which determine a country’s level of development.
Answer: a. See pp 28-30.
9. Operations as a function within the company concerns:a. Controlling the revenues and outgoings of the businessb. Making tangible products.c. Delivering products to the customerd. The whole process of producing and delivering a product, a service, or the combination of both to a
customer.Answer: d. See p. 24.
10. In marketing, a distinctive group of consumers is known as:a. A selection.b. A class.c. A segment.d. An emerging market.
Answer: c. See p. 8.
11. Elements of HRM as a business function include all but which one of the following? a. Motivating the workforceb. Management of rewards c. Training and developmentd. Overseeing quality management
Answer: d. See page 24.
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(Chapter 2)
1 Why is globalization often perceived as a threat in developed countries?a. Because countries with authoritarian governments are becoming more powerful.b. Because low-skilled jobs in advanced economies are at risk. c. Because emerging markets are importing fewer goods from the developed countries.d. Because MNEs from developed countries are facing stiff competition in emerging markets.
Answer: b. See pp 43-5.
2 Which of the following has been the most influenced by globalization?a. Production networksb. Consumer marketsc. Labour marketsd. National cultures
Answer: a. See pp 42-45.
3 Economic activity can be divided into which three broad types?a. Retail sector, manufacturing sector, service sector.b. Primary production, secondary production and services.c. Agricultural sector, manufacturing sector and retail sector.d. First sector, second sector, third sector.
Answer: b. See p. 45.
4 Which of the following is a push factor which would influence a company to internationalize?a. Difficulty in finding skilled staff in the home countryb. The need to be close to key resourcesc. Low-cost labour in other countriesd. Financial incentives from governments in emerging markets
Answer: a. See p. 49.
5 All but which one of the following is not an FDI investment?a. Acquisition of an existing companyb. A joint venture with a foreign partnerc. Exporting the company’s products to new marketsd. A greenfield project in another country
Answer: c. See pp 50-1.
6 The joint venture is a favoured entry mode because:a. It involves partnership with another firm.b. The local partner has knowledge of local markets. c. The foreign partner lacks the management expertise to carry through the FDI project.d. There is usually a good relationship between the two partner firms.
Answer: b. See page 51.
7 Which of the following is not linked with outsourced production?a. Manufacturing under licenceb. Production in a low-cost countryc. Subcontracted manufacturing for a well-known brandd. Franchising
Answer: d. See p. 52.
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8 Vernon's theory of the international product life cycle explains:a. The stages of globalizationb. The growth in overseas productionc. The importance of the US in the global economyd. The need for innovation in consumer products
Answer: b. See pages 54 and 55. 9 The OLI paradigm is known as the ‘eclectic’ paradigm because:
a.Ownership and internalization advantages were added to the theory later.b. The three variables are unrelated to each other.c.Internalization advantages encompassed location factors.d. The three variables derive from different theories.
Answer: d. See pages 54 to 56. 10 Why is sustainability becoming important for global corporate strategy?
a. Because emerging markets are not likely to carry on growing.b. Because MNEs face possible scarcity of raw materials.c. Because governments in developing countries are encouraging pollutant industries.d. Because consumers in developing countries are concerned about the environment.
Answer: b. See p. 69.
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PART 2: ECONOMIES AND MARKETS
(Chapter 3)
1 Gross national income (GNI) is defined as:a. The total income produced by businesses in the in the country, whether locally owned or
owned by foreignersb. The country’s total industrial outputc. The total income from all the final products and services produced by the national economy,
including income of national residents from their overseas investmentsd. The total income produced by the country’s resident businesses.
Answer: c. See p. 81. 2 Purchasing power parity (PPP) is used in conjunction with GNI and GNP as it more accurately reflects:
a. The relative living standards in different countries.b. The earnings of consumers in different countries.c. The level of development of different countries.d. The personal wealth of individuals in different countries.
Answer: a. See p. 82.
3 Strong economic growth is associated with all but which one of the following:a. Rising standards of livingb. Industrializationc. Sustainable developmentd. Strong capital investment
Answer: c. See p. 83.
4 The short term fluctuations of the business cycle are divided into four phases that are:a. Expansion, Recession, Depression, Developmentb. Maturity, Decline, Depression, Regenerationc. Prosperity, Decline, Depression, Recoveryd. Prosperity, Recession, Depression, Recovery
Answer: d. See pp 83-4.
5 Why is rising inflation a concern for government?a. The country’s exports will become less competitive in global markets.b. Workers will demand higher wages.c. Consumers will go deeper into debt.d. Unemployment will rise.
Answer: a. See pp 84-5. 6 Unemployment is defined as:
a. The section of the population that are on state benefits.b. The section of the population willing to work but unable to find employment.c. The section of the population that are waiting to be employed.d. The section of the population that are without the skills needed by employers.
Answer: b. See pp 86-7.
7 The current account of the balance of payments is made up ofa. Trade in goods and services by a country’s businesses.b. Current sales overseas for either products or services.
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c. The merchandise trade account and service account plus the profits and interest earned from overseas assets.
d. Transactions involving the sale and purchase of assets.Answer: c. See pp 88-9.
8 Fiscal policy concerns which of the following:a. Exchange ratesb. Public spending and taxation policiesc. Interest ratesd. The consumer price index
Answer: b. See pp 89-90. 9 Which of the following is out of place in a planned economy?
a. State control of pricesb. Authoritarian governmentc. Democracyd. State control of production
Answer: c. See pp 94-5.
10 The liberal market economy emphasizes which of the following?a. Strong governmentb. Capitalist free marketsc. High taxesd. Social welfare
Answer: b. See pp 95-6.
11 Which of the following characterizes the social market economy?a. Individualismb. Strong state role in welfare servicesc. A national health service d. High taxes
Answer: b. See pp 99-100.
12 Where a single firm has control of the market it is called:a. A monopolyb. An oligopolyc. An oligarchyd. A monarchy.
Answer: a. See p. 98.
13 An oligopoly is defined as:a. A cartelb. A few large producers who dominate a marketc. A group of consumers who can dictate conditions to the producersd. A sector of the market dominated by game theory
Answer: b. See page 98.
14 The Asian model of capitalism features which of the following?a. Strong state intervention and bureaucratic regulation of businessb. Strong corporate governance mechanismsc. Insider control of companies
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d. Links between business and political leadersAnswer: a. See pp 100-1.
15 Why is China classified as a mixed economy?a. Because it relies on a five-year planb. Because it is decentralizedc. Because it has market elements and state controlsd. Because it is authoritarian
Answer: c. See pp 101-3.
16 The European Union (EU) is committed to which of the following?a. A single marketb. Strong national governments in member statesc. Enlargementd. The social market economic model
Answer: a. See pp 105-7.
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(Chapter 4)
1 David Ricardo (1817) developed the theory of:a. Competitive advantageb. Comparative advantagec. Absolute advantaged. First-mover advantages
Answer: b. See p. 123.
2 Porter’s diamond theory focuses on all but which one of the following?a. Factor conditionsb. Location advantagesc. Firm strategy and structured. Government policies
Answer: b. See pp 125-6.
3 Those in favour of free trade argue that:a. All countries benefit from the lowering of tariff barriers.b. Domestic employment is a priority for trade policies.c. National strategic concerns should dominate trade policies.d. Consumers prefer locally produced goods.
Answer: a. See pp 128-9.
4 All but which one of the following are tools of government trade policy?a. Tariffsb. Non-tariff barriersc. Multilateral agreementsd. Import quotas
Answer: c. See pp 132 -3.
5 In what ways are government subsidies protectionist?a. They keep out importsb. They help domestic producersc. They give domestic producers an advantage in global marketsd. They help create employment
Answer: c. See pp 132-3. 6 Which of the following is not among the GATT principles?
a. Most favoured nationb. Reciprocity in tariff reductionc. Principle of national treatmentd. Principle of safeguarding national interests
Answer: d. See pp 137-9.
7 What is the aim of the WTO’s dispute resolution process?a. To punish countries which trade unfairlyb. To impose anti-dumping penalties c. To resolve trade disputes through impartial panelsd. To resolve trade disputes through judicial procedure
Answer: c. See pages 138-9.
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8 What is the main reason for the collapse of the Doha round of multilateral negotiations?a. Unwillingness of the US to open markets to products from developing countriesb. Differing perspectives of developed and developing countriesc. Disagreement over labour and environmental standardsd. The activities of anti-globalization protesters
Answer: b. See pp 139-40.
9 Which of the following is a free trade area?a. Mercosurb. Ecowasc. Naftad. The EU
Answer: c. See pp 142-3. 10 Which countries are involved in Apec?
a. Asian countries and Australiab. Asian, North American and South American countriesc. Asian countries, North American countries and Australiad. Countries bordering on the Pacific
Answer: d. See pp 142-46.
11 The G8 is made up of:a. China, USA, France , UK, Germany, Italy, Russia and Japan.b. EU, Asean Group, NAFTA, Russia, China, Japan and Canada.c. UK, USA, Russia, Germany, France, Italy, Canada, Japan.d. Japan, China, Italy, France, Germany, Russia, USA, and UK.
Answer: c. See p. 147.
12 Why have bilateral agreements proliferated in recent years?a. Because they benefit countries more that multilateral agreementsb. Because they can be negotiated more quickly than multilateral agreementsc. Because they are preferred by MNEsd. Because countries tend to be of equal bargaining powerAnswer: b. See pages 147-8.
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(Chapter 5)
1 Organisational structures can be divided into the following three broad categories:a. Large, medium, small.b. Structures based on functions, divisions and matrixc. Strict hierarchy, board control, devolved controld. Collective control, co-operative arrangements, shareholder control.
Answer: b. See p. 178.
2 The SWOT analysis aids the company in assessing:a. Internal threats, opportunities, strengths and weaknessesb. Internal strengths as well as external weaknesses and threatsc. External strengths and weaknesses plus internal opportunities and threats.d. Internal strengths and weaknesses as well as external threats and opportunities.
Answer: d. See pp 158-9.
3 Which of the following are not key players in Porter’s five forces model of competitive strategy?a. Potential entrantsb. Governmentsc. Buyersd. Suppliers
Answer: b. See pp 160-1.
4 Resource-based theories of the firm focus on which firm resources?a. Physical resources and intellectual propertyb. Physical, human and organizational resourcesc. Physical and human resourcesd. Human resources and corporate skills
Answer: b. See pp 162-3.
5 Emergent strategy can be defined as:a. A pattern realized which was not expressly intendedb. Deliberate strategyc. A pattern which reflects strategic planningd. Adaptation of the strategic plan in response to the changing environment
Answer: a. See p. 164.
6 How does stakeholder management theory contribute to value creation for the firm?a. By serving customers betterb. By helping managers to focus on divergent stakeholder groupsc. By interacting more with employeesd. By developing better communications with suppliers
Answer: b. See pp 164-5.
7 Nearshoring can be defined as:a. Locating production in a low-cost environmentb. Type of outsourcing which focuses on a location near to major marketsc. Type of offshoring which has tax advantagesd. Type of cost reduction strategy for MNEs
Answer: b. See pp 170-1.
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8 Why would an MNE contemplating FDI prefer an acquisition to a greenfield investment?a. The greenfield investment is a higher risk.b. The acquisition often involves cultural tensions between the acquired company and new owner.c. The acquisition is quicker to get up and running.d. The company has less control over a greenfield investment.
Answer: c. See pp 172-3.
9 Product divisions are preferred in many MNEs’ organizational structures because:a. They allow the firm to produce and market a line worldwide.b. They adapt well to different regional needs.c. They facilitate the building of global markets.d. Most managers are happier focusing on a single product.
Answer: a. See pp 180-1.
10 Fordism was characterized by all but one of the following features. Which one is out of place?a. Vertically integrated systemb. Bureaucracy c. Adaptability to consumer needsd. Poor industrial relations
Answer: c. See p. 183.
11 The concept of kaizen is:a. Another word for just-in-time (JIT) systemsb. The Japanese philosophy of continuous improvementc. A system of manufacturing devised in South Koread. An inter-firm network
Answer: b. See pp 183-4.
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PART 3 SOCIETIES IN THE INTERNATIONAL ENVIRONMENT
(Chapter 6)
1 National culture is based on:a. The nation-stateb. The sense of belonging of a peoplec. The territory of the stated. Language
Answer: b. See pp 198-9.
2 A low-context culture is:a. A culture where much goes unsaid.b. A culture in which body language and ‘reading between the lines’ are importantc. A culture in which communication is clear and directd. A culture where ambiguity is the norm, and directness is avoided.
Answer: c. See page 199.
3 Which of the following religions is polytheistic?a. Christianityb. Islamc. Judaismd. Hinduism
Answer: d. See pp 201-5.
4 Applying Hofstede’s cultural dimensions, which of the following combines high power distance and collectivism?
a. American societyb. Asian societiesc. European societiesd. Scandinavian societies
Answer: b. See pp 207-8.
5 The research of Hofstede and Trompenaars suggests that:a. All societies are tending to become more individualistic.b. Norms in one culture can be transferred to another.c. Globalization is reducing national differences.d. There is no 'one best way' of managing and organizing people.
Answer: d. See pp 209-10.
6 Characteristics of organizational culture include all but which one of the following?a. Common language, terminology and norms of behaviour b. Preference for formal or informal communicationc. Sustainability policiesd. Rulebook of do’s and don’ts for staff
Answer: c. See p. 210. 7 "Pull" factors of migration include:
a. Escape from natural disastersb. Real or imagined job opportunitiesc. Escape from political persecution
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d. Escape from religious persecutionAnswer: b. See pp 212-3.
8 Urbanization is generally associated with:a. Economic declineb. Infrastructure improvementsc. Centralization of governmentd. Industrialization
Answer: d. See pp 214-18.
9 Where is the fastest population growth taking place?a. Developed regionsb. The least-developed countriesc. Developing countriesd. Asia
Answer: b. See pp 218-19.
10 Which of the following is not one of the challenges associated with ageing societies?a. Costs of pensions and healthcareb. Need for managers to accommodate older workersc. Need for governments to raise the legal pension aged. Equal opportunities for all ethnic and religious minorities
Answer: d. See pp 219-20.
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(Chapter 7)
1 The sphere in which citizens pursue their own goals in voluntary associations is known as:a. The public sphereb. Civil societyc. The corporate sphered. The political sphere
Answer: b. See p. 230
2 Which of the following best describes the nation-state?a. Group of people who consider themselves a nationb. Territory in which there is a recognized authority for law-making and law enforcementc. Territory which is home to a given peopled. Group of people who choose their government
Answer: b. See p. 231.
3 The defining feature of sovereignty is:a. Legitimate governmentb. The existence of a monopoly of coercive powerc. The supreme legal authority in the stated. The supreme source of power in the state
Answer: c. See p. 232.
4 Ideology as a source of legitimacy in the state is based upon:a. A system of beliefs that permeate the government.b. National culturec. A system of beliefs which permeate the whole of society.d. Centralized government
Answer: c. See page 233.
5 The rule of law encompasses all but which one of the following?a. Equality of citizens under the lawb. An elected presidentc. Constitutionalismd. Independent judiciary
Answer: b. See pp 233-4.
6 In which of the following environments is political risk likely to be the highest?a. Where the government is authoritarianb. Where there internal or external threats to the governmentc. Where there is a large military establishment.d. Where there are diverse cultural groups
Answer: b. See pp 234 to 237.
7 Which of the following is least likely to be found in an authoritarian state?a. Freedom of the mediab. Electionsc. Presidential governmentd. Strong military establishment
Answer: a. See pp 237-8.
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8 How are democratic elections best defined?a. By elections where there are multiple partiesb. By free and fair electionsc. By universal right to voted. By right of citizens to stand for office
Answer: b. See pp 240-1.
9 Federalism is often seen as advantageous when:a. The country covers a huge geographical areab. The country contains strong local identities.c. There is a big disparity between rich and poor.d. There are many cultural groups in society.
Answer: b. See pp 242-3.
10 Separation of powers refers to which branches of government?a. Legislative, executive and militaryb. Executive, judicial and administrativec. Legislative, executive and judiciald. Executive, administrative and military
Answer: c. See pp 243-4.
11 Why is proportional representation considered advantageous as an electoral system?a. It always produces a clear result.b. It gives representation to a wide range of interests and parties.c. It only works well in a two-party system.d. It only works well in a multi-party system.
Answer: b. See pp 244-5.
12 The referendum allows voters to:a. Vote on particular issuesb. Vote for candidates of their choicec. Vote out the governmentd. Vote out the judges
Answer: a. See pp 245-6.
13 How does the parliamentary system differ from the presidential one?a. The president is always directly elected by the people.b. The prime minister is usually the head of the party winning the most votes in parliamentary
elections.c. The president has more power than the prime minister.d. The prime minister has more power than the president.
Answer: b. (Presidents can be indirectly elected, as in the US) See pp 246-7.
14 Why is a coalition government considered to be unstable?a. The two parties do not always agree.b. The prime minister must always come from the biggest party in the legislature.c. The parties which make up the coalition do not always agree.d. The prime minister receives less respect than one who is elected with a big majority.
Answer: c. (A coalition can be more than two parties.) See p. 248.
15 Which of the following is not likely to be a priority for a leftwing political party?
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a. Social justiceb. Big businessc. Equality of opportunityd. Protection of the environment
Answer: b. See p. 252.
16 Which best describes the United Nations (UN)?a. World governmentb. International law-making bodyc. Group of sovereign statesd. International forum
Answer: c. (UN bodies co-ordinate the making of treaties by sovereign states) See pp 254-5.
17 The European Union (EU) has traditionally subscribed to which of the following principles?a. Federalismb. Pooling of sovereigntyc. Parliamentary sovereigntyd. Executive supremacy
Answer: b. See p. 255.
18 What is ‘co-decision-making’ in the EU?a. Decision-making by the Council and European Parliamentb. Decision-making by the Commission and Councilc. Decision-making by the Council and European Court of Justiced. Decision-making by the Commission and member states
Answer: a. See p. 258.
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(Chapter 8)
1 Which of the following has the most direct impact on business operations?a. International lawb. EU lawc. National legal systemsd. Religious law
Answer: c. See p. 266.
2 Public law concerns:a. Roman lawb. Relations between the citizen and the statec. Relations between citizens and organizationsd. Legislation
Answer: b. See page 267.
3 The 'burden of proof' is:a. Higher for criminal law than civil actionsb. Required to be the same for both criminal and civil cases.c. Lower for criminal cases than civil actions.d. More important in common law systems than in systems based on codified law
Answer: a. See page 268.
4 Legal risk is:a. Greater in developing countries than in developed onesb. Greater where the rule of law is weakc. Greater in liberal market economies than in mixed economiesd. Lower in authoritarian states than in democratic ones
Answer: b. See p. 272.
5 The common law tradition exists in which of the following?a. Germanyb. Francec. Indiad. Japan
Answer: c. See pp 273-6.
6 Sharia law prohibits which of the followinga. Salariesb. Unearned profits, such as interestc. Profitsd. Loans
Answer: b. See pp 276-7.
7 The main instruments of EU law are:a. Regulations and directivesb. National and regional lawc. Legislation devised by the Commission and Council d. Legislation passed by the Parliament and judgments of the European Court of Justice
Answer: a. See pp 277-8.
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8 Arm’s-length contracting differs from relational contracting in what way?a. The parties in an arm’s-length deal are already known to each other.b. The parties in an arm’s-length deal come together for the purpose of making a contract.c. The arm’s-length contract must be in writing.d. The arm’s length contract must be between businesses.
Answer: b. See p. 280.
9 Product liability has grown in importance because:a. Companies have become lax in their quality controls.b. Mass-produced manufactured goods have spread across the globe.c. People are now more aware of their rights.d. Lawyers are keen to obtain more damages for clients.
Answer: b. See pp 280-1.
10 Competition law concerns:a. Breaking up monopoliesb. Protecting small businessesc. Controlling abuse of a dominant market positiond. Punishing price-fixing
Answer: c. See page 283.
11 Arbitration is:a. The settling of a contractual disputeb. An out-of-court settlementc. The submission of a dispute to a named person or organization d. Agreed damages
Answer: c. See pages 285-286.
12 The growth in international law stems from all but which one of the following?a. Concern over the natural environmentb. Concerns over regional conflictsc. Concerns over human rightsd. Concerns over national courts having too much power
Answer: d. See p. 289.
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PART 4 GLOBAL ISSUES AND BUSINESS
(Chapter 9)
1 Which of these countries has seen the biggest recent surge in IPOs?a. The USb. Indiac. Chinad. The UK
Answer: c. See p. 304-5.
2 Who regulates stock markets?a. The IMFb. National regulatorsc. The members themselvesd. Nobody
Answer: b. See p. 306. 3 Bonds are used for:
a. Debt financing by companies and governmentsb. Equity investmentsc. Investments in Western marketsd. Hedging risk
Answer: a. See page 307.
4 Why are derivatives risky?a. They are packaged with high-risk debt.b. Their values fluctuate in accordance with the asset class that they depend on.c. They are handled by hedge funds.d. They suffer from exchange-rate risk.
Answer: b. See pp 308-9.
5 Which of the following was the least significant factor in causing the financial crisis of 2008?a. Crash of US property marketb. The market in mortgage-backed securitiesc. Abundant cheap loansd. The US trade deficit
Answer: d. See pp 308-10. 6 The Bretton Woods agreement was notable for which of the following?
a. The creation of the gold standardb. Exchange rates pegged to the US dollarc. The creation of the WTOd. The abandonment of the gold standard
Answer: b. See pages 316-7.
7 The World Bank was created to fund:a. Debt repayments of developing countriesb. Infrastructure projects in developing countriesc. Development projects and broad development programmes
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d. Loans to developed and developing countriesAnswer: c. See pages 318 to 319. 8 Why has the IMF been criticized for its handling of the Asian financial crisis?
a. Because it proposed required public spending in affected countriesb. Because it was made up of outsiders c. Because it proposed austerity programmes for affected governmentsd. Because it adopted a one-size-fits-all approach to market-oriented reforms in affected
countriesAnswer: d. See pages 319 to320. 9 A hostile takeover occurs when:
a. The acquirer is a rival company of the one it is seeking to acquireb. The acquirer makes an offer which is well below market value of the target companyc. The board of the target company rejects the offer of the acquirer, who then proposes it to the
shareholders d. The acquirer is a private equity group
Answer: c. See pp 322-3.
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(Chapter 10)
1 Innovation involves:a. A broad range of improvements across a firm’s operationsb. Scientific and technical research and new product developmentc. New ways of marketing the firm’s productsd. Making decisions about new corporate strategy.
Answer: a. See p. 335.
2 An invention is:a. Anything that is new that changes the way we view the world or live.b. A product or process that is new and represents a leap forward from existing knowledgec. Any change in the way we live, learn or work d. A type of innovation
Answer: b. See p. 335.
3 Schumpeter’s notion of ‘creative destruction’ covers all but which one of the following?a. New productsb. New ways of doing thingsc. New organizational formsd. New cultural values
Answer: d. See pp 357-8.
4 Innovation is key to product life cycle theory because:a. Most new products are launched in the US.b. Demand for new products initially comes from high-income consumers.c. R&D is expensive, and only rich countries can afford it.d. Products quickly become obsolete.
Answer: b. See pp 338-9.
5 In which of the following are science and technology graduates the highest proportion of graduates?a. The EUb. The USc. China
Answer: c. See pp 340-1. 6 Which of the following countries spends the most on R&D as a percentage of GDP?
a. South Koreab. Swedenc. Chinad. Russia
Answer: b. See p. 342.
7 Intellectual property is defined as:a. Property in technologyb. Rights over products of the human intellect such as patents and copyrightsc. Rights over technology transferd. Patent rights
Answer: b. See p. 345.
8 How does the patent benefit its owner?
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a. It gives exclusive right for a limited period to exploit the invention or license others to use it.b. It gives exclusive right to exploit the invention indefinitely.c. It gives exclusive right to generate profits (royalties) from the invention.d. It gives the inventor exclusive rights over his/her invention.
Answer: a. See pp 346-7.
9 Which country makes the most applications under the Patent Co-operation Treaty (PCT) process?a. The USb. Chinac. Japand. Germany
Answer: c. See p. 347.
10 The post-war period has seen the emergence of 4 main channels of technology transfer, which are:a. Direct sale, renting, leasing or licensing, b. Forming an alliance, partnership, management contract or investment.c. Franchising, capital goods trade or contract manufacture.d. FDI, joint venture and strategic alliances, licensing and trade in capital goods
Answer: d. See pages 351-3.
11 Technological diffusion involves:a. The spread of technology from developed to developing countriesb. The spread of technology, including skills and know-how, from one country to anotherc. Adapting technology to new environmentsd. The import of high-technology products from advanced economies
Answer: b. See p. 354.
12 Which of the world’s regions had the largest number of internet users in 2009?a. Latin Americab. Europec. Asiad. North America
Answer: c. See p. 356.
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(Chapter 11)
1 Environmental issues are the responsibility of:a. Individuals, groups of volunteers, businessesb. Voluntary organizations, local and national governmentsc. Governments, businesses and consumersd. Consumers, businesses, and NGOs.
Answer: c. See p. 364.
2 "Environmental degradation" refers to environmental change caused by:a. Businesses and their actionsb. Human activityc. Actions by governmentd. Factory emissions
Answer: b. See pp 364 and 365.
3 Which of the following is least associated with climate change?a. Increasing greenhouse gas emissionsb. Increasing droughts and floodsc. Falling sea levelsd. Severe storms
Answer: c. See p. 369.
4 What was the main aim of the Kyoto Protocol?a. Bring about reductions in greenhouse gas emissions in the large developing countriesb. Set targets for reductions in greenhouse gas emissions by developed countriesc. Impose penalties on countries which exceed emissions targetsd. Encourage emissions trading schemes in different regions of the world
Answer: b. See p. 372.
5 "Transboundary pollution" refers to pollution cominga. From one city to anotherb. From one country to anotherc. From one continent to another d. Across open seas
Answer: b. See p. 375.
6 Why are emissions from coal-fired power stations a growing concern?a. Because these power stations are generally old and poorly maintainedb. Because these power stations are generally in built-up areasc. Because China and India are increasing their use of coal, causing rising levels of emissionsd. Because these power stations are associated with higher risk of accidents than other types of
power generationAnswer: c. See pp 375-6.
7 Why are nuclear power plants controversial?a. Because only a few companies have the relevant technology to build nuclear power stationsb. Because there is risk from the escape of radiation in the case of an accidentc. Because they are very expensived. Because they have high levels of greenhouse gas emissions
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Answer: b. See pp 376-7. 8 All but one of the following are principles of the Rio Declaration on Environment and Development. Which is the odd one out?
a. Governments should bear the costs of cleaning up all pollution.b. States should eliminate unsustainable patterns of production.c. States have a sovereign right to exploit their resources.d. Peace, development and sustainability are linked.
Answer: a. See pp 178-9.
9 The concept of sustainable development refers to:a. Meeting the needs of future generationsb. Avoiding environmental errors by the current generationc. Meeting the needs of the present generation without compromising the ability of future
generations to do the samed. Relying on renewable fuels
Answer: c. See pp 378-9.
10 Environmental management focuses on which of the following?a. Lobbying governments to limit the environmental regulation of businessb. Aiming to reduce emissions from the company’s operationsc. Aiming to bring operations in developing countries up to the standards in developed onesd. Assessing environmental impacts of all the company’s operations and adopting appropriate
environmental strategies Answer: d. See pp 380-1.
11 What is triple-bottom-line reporting?a. Reporting on social, environmental and stakeholder performance of the companyb. Reporting on financial, social and environmental aspects of the companyc. Reporting on financial, stakeholder and environmental performance of the companyd. Reporting on social, ethical and environmental aspects of the company
Answer: b. See p. 382
12 Sustainable consumption implies:a. Buying "green" products and servicesb. Saving energy and limiting CO2 emissionsc. Making lifestyle decisions in keeping with environmental protectiond. Promoting "green" lobbies and movements.
Answer: c. See pp 385-6.
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(Chapter 12)
1 Ethics focuses on:a. Differences between culturesb. Principles of right and wrongc. Values and norms of behaviour in different culturesd. Universal standards of behaviour
Answer: b. See p. 395.
2 Which of the following is least likely to be held by utilitarianism?a. Individuals behave in a self-interested way.b. The rightness of an action depends on its results.c. Societies should maximize overall prosperity.d. Governments should actively promote social goals.
Answer: d. See p. 396.
3 Ethical business behaviour includes all by one of the following. Which is the odd one out?a. Be truthful in advertising.b. Strive above all to maximize profits.c. Always abide by the law.d. Observe high standards of health and safety despite the cost considerations.
Answer: b. See p. 398.
4 How is the duty to take reasonable care defined?a. The firm must make its operations 100% safe.b. The firm must abide by national regulations.c. The firm must take precautions which a reasonable person would take in the circumstances.d. The firm can take risks if other firms in the industry are doing so.
Answer: c. See p. 399-400.
5 Which of the following is the main focus of a ‘weak’ theory of CSR?a. Adopting a stakeholder approach to managementb. Making charitable donations when the firm feels it can afford themc. Setting up healthcare services in overseas locations where the firm operatesd. Making donations to charities in developing countries
Answer: b. See pp 401-2
6 What is the main contribution of Carroll’s model of CSR? a. It focuses on economic functions of the firm, leaving charity as an added extra.b. It stresses a strong ethical dimension.c. It recognizes the firm’s economic function, but holds that legal, ethical and charitable aspects also
influence corporate strategy.d. It stresses the conflict between making profits and acting ethically.
Answer: c. See p. 402.
7 What is the ‘business case’ for CSR?a. Businesses should make all the money they can in the short term, before environmental
regulations are enacted.b. Businesses will be able to generate profits better in the long term by adopting sustainable policies.c. CSR is fine if the firm can afford it.d. CSR should be implemented if consumers demand it.
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Answer: b. See p. 403.
8 What is the main weakness of voluntary codes of practice on ethical and environmental standards?a. They are just public relations exercises.b. They are often linked to NGOs.c. They are only adopted by a minority of firms.d. Stakeholders cannot be assured that they are carried through in practice.
Answer: d. See p. 404.
9 The ILO Declaration on MNEs and Social Policy contains all but which one of the following?a. The need for training for workersb. The supremacy of international law over national lawc. Freedom of associationd. Elimination of child labour
Answer: b. See p. 405.
10 All but which one of the following corporate governance practices can be criticized on CSR grounds?a. Excessive executive payb. Weak rights of minority shareholdersc. Separating the positions of chairman and CEOd. Poor oversight of executives by the board
Answer: c. (Separation is seen as supporting better accountability.) See pp 407-9.
11 A community interest company (CIC) is:a. A charityb. A company with a social purposec. A company regulated under UK law, which meets requirements for adhering to social purposesd. A social enterprise
Answer: c. See p. 411.
12 Millennium Development Goals (MDGs) include all but which one of the following?a. Promote democratic governmentb. Combat povertyc. Improve educationd. Promote environmental sustainability
Answer: a. See pp 414-5.
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(Chapter 13)Note: As this is a summary chapter, these questions are more like revision questions than those given for other chapters. These questions therefore do not strictly follow the content of this chapter.
1 From the viewpoint of the foreign investor, which of the following is a disadvantage associated with developing countries?
a. Poorly skilled workersb. Weak protection of intellectual propertyc. Small consumer marketsd. Slow economic growth
Answer: b. See pp 428-9.
2 Which of the following regions has the worst problems of poor urban living conditions?a. Latin Americab. South East Asiac. South Asiad. Sub-Saharan Africa
Answer: d. See p. 433.
3 All but which one of the following is a cause of instability in China?a. Environmental pollutionb. Ethnic divisionsc. Diverse political partiesd. Industrial unrest such as labour disputes
Answer: c. See p. 433.
4 In which of the following industries do state-owned companies play a major role?a. Clothing and textilesb. Miningc. Car manufacturingd. Retailing
Answer: b. See pp 430-434.
5 Which of the following risks are particularly associated with financial markets?a. Labour unrestb. Ethnic divisionsc. Climate changed. Currency fluctuations
Answer: d. See p. 435.
6 All but one the following aspects of CSR are particularly relevant for doing business in developing countries. Which is the odd one out?
a. Respect for IP rightsb. Health and safety standards in manufacturingc. Corporate governanced. Human rights
Answer: c. See pp 439-40.
7 For western MNEs, emerging markets present which of the following challenges?a. Stiff competition from local companiesb. Lack of familiarity with western brands
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c. Markets a long distance from where goods are manufacturedd. Few consumers living in urbanized areas
Answer: a. See p. 441.
8 Which of the following demands on government is more likely to be felt in developed countries than in developing ones?
a. Environmental protectionb. Education and trainingc. Food securityd. Healthcare and pensions provision
Answer: d. (Mainly a big issue for developed countries with ageing populations) See pp 442-3.
9 All but which one of the following are factors which could have a negative impact on China’s continued economic growth?
a. Fall in consumer spendingb. Rising costs of energy and raw materials in global marketsc. Lack of R&D expertised. Wage demands by China’s factory workers
Answer: c. See pp 443-5. See also Chapter 10. China is rapidly building R&D expertise.
10 Why is the US seeking to increase exports to China?a. Because it needs to rebalance the huge trade deficit with Chinab. Because not many American firms exportc. Because American consumers are not spending muchd. Because American goods are superior to Chinese ones
