Multiple Choice questions Flashcards
MAY/ JUNE 2014 - Q1
Which of the following is NOT ONE of the ideological pillars on which the essential features of
communism were located?
1 . The abolition of all rights of inheritance
2. State ownership of factories and agriculture, and the full utilization of state resources
3. The establishment of private property and confiscation of all public property that would
then become private property
4. Free education for all children in public schools and the abolition of child labour
- incorrect
Must read:
The ABOLITION of private property and confiscation of all public property that would
then become private property
Pg8
MAY/ JUNE 2014 - Q2
Which of the following best describes the demand conditions of Porter’s diamond of national
competitive advantage?
1. A nation’s position with regard to production factors that enable the firm has to compete in a given industry
2. The degree of healthy competition the firm must face in its local market
3. The presence/absence of supplier and related Industries that are locally and globally competitive
4. Conditions in the home industry that either hinder or aid the firm’s ability to create, organise and manage the nature of domestic and international rivalry
Porter’s diamond of national
competitive advantage
Answer = 2
**Demand conditions:
The degree of healthy competition the firm must face in its local market
Notes:
**Factor conditions:
A nation’s position with regard to production factors that enable the firm has to compete in a given industry (ie skilled labour)
**Related and supporting industries:
The presence/absence of supplier and related Industries that are locally and globally competitive
**Firm strategy, structure and rivalry
Conditions in the home industry that either hinder or aid the firm’s ability to create, organise and manage the nature of domestic and international rivalry. (industries need rivalry with closely aligned management practices and strategies)
(page 21)
MAY/ JUNE 2014 - Q3
Allowing some individual economic freedom but restricting political participation is the
characteristic of which of the following:
1. Tribal totalitarianism
2. Right-wing totalitarianism
3. Communist totalitarianism
4. Economic totalitarianism
2: Right-wing totalitarianism
Allowing some individual economic freedom but restricting political participation
Pg 34 Notes:
*Tribal totalitarianism
Political party represents the interests of a particular tribe
*Communist totalitarianism
Collectivism - advocated that socialism can only be achieved through totalitarian dictatorship.
*Theocratic totalitarianism
political power is monopolised by a party that governs according to religious principles
MAY/ JUNE 2014 - Q4
What is the aim of economic union as a stage of economic integration?
1 To liberalise movement of regional production factors
2. To establish a common tariff and other trade policies towards a non-member countries
3. To abolish tariffs and non-tariff barriers between member nations
4. To harmonise the fundamental economic policies that affect among member nations
Answer = 4: Economic union
To harmonise the fundamental economic policies that affect among member nation
(Notes) Pg58
For stages of economic integration:
1st stage -Free trade areas (FTA), - regional economic grouping of countries within which tariffs and non-tariff barriers are generally abolished between members.
2nd stage; Customs union. Not only eliminates tariffs, but also establish a common tariff and other trade policies towards a non-member countries.
Also pool the tariffs and share the revenue.
3rd stage: Common Market: To liberalise movement of regional production factors
4th Stage:Economic union
To harmonise the fundamental economic policies that affect among member nations (SADC)
MAY/ JUNE 2014 - Q5
The success of regional trade blocs and trade agreements depends on the following principles, EXCEPT:
- Managerial and labour union capabilities are necessary
- Members should be geographically close and have easy access to each other
- Natural resources need to be available
- An entrepreneurial culture is important
Answer = 1
Notes (pg 89)
The success of regional trade blocs and trade agreements depends on the following principles:
**Members should be geographically close and have easy access to each other
**Geographic mobility - good transport network
**Natural resources need to be available
**Diverse labour capabilities and manufacturing skills
**An entrepreneurial culture is important
**Trading arrangements governed by agreements
**Internal free within the regional trade bloc and tariff and/ or non tariff trade barriers against third party countries
MAY/ JUNE 2014 - Q6
The following are the determinants of economic freedom as deemed by Index of Economic
Freedom, EXCEPT:
1. The rule of law, efficiency in the judiciary, and the ability to enforce contracts
2. The fiscal burden of government, which encompasses income tax rates
3. Labour market regulations, such as established work weeks and mandatory separation pay
4. Formal market activities excluding corruption , piracy and smuggling
Answer = 4
Pg.99 Notes
The following are the determinants of economic freedom as deemed by Index of Economic Freedom
**Corruption in the judiciary, customs service and government bureaucracy
**No tariff barriers to trade, such as import bans and quotas, as well as strict labelling and licensing requirements
**The fiscal burden of government, which encompasses income tax rates, corporate tax rates and trends in government expenditure
**The rule of law, efficiency in the judiciary, and the ability to enforce contracts
**Regulatory burdens on business, including health, safety and environmental.
**Restrictions on banks regarding financial services, such as selling securities and insurance.
3. Labour market regulations, such as established work weeks and mandatory separation pay.
4. INFORMAL market activities including corruption , piracy and smuggling, piracy and underground provision of labour and other services
MAY/ JUNE 2014 - Q7
Culture is rooted in history and passed on from one generation to the next, implying that culture is bound to evolve and change over time. Which of the following implies that culture is relative?
1 . Culture is not specific to individuals.
2. Cultures are different from one another to a greater or a lesser extend without any specific culture being superior or inferior, right or wrong
3. Culture is learned behaviour and is based on human capacity to change
4. Culture is trans generational when transmitted from one generation to another, and intergenerational when transmitted from one member of society to another
Answer = 2
Notes page132
**Culture is learned: Culture is acquired through learning and experience. It is not inherited or biologically based. Culture is trans generational when transmitted from one generation to another, and intergenerational when transmitted from one member of society to another.
**Culture is Shared: It is not specific to single individuals
**Culture is relative: Cultures are different from one another to a greater or a lesser extend without any specific culture being superior or inferior, right or wrong.
**Culture is interrelated: The components or elements are interrelated. A change in one element will invariably bring about change in another
**Culture is adaptive: Culture is learned behaviour and is based on human capacity to change.
**Culture is symbolic: It is based on the human capacity to symbolise or use one thing to represent another in behavioural patterns that are understood by everyone
**Culture is pervasive: affects almost everything people do, see, feel, achieve.
MAY/ JUNE 2014 - Q8
Religion generally Influences the social and business environments. What values of Hindu society are important for international management?
1 . Religious values, beliefs and traditions relating to work ethic, religious holidays and dietary habits that may affect the effective operation of international firms
2. Honesty and trust that could result in companies readily committing resources in terms of collaborative arrangements and alliances
3. Profits earned in fair business are justified, but may not result from exploitation or deceit.
4. Individuals with relatively greater political and economic freedom help in creation of entrepreneurial free market capitalism and entrepreneurial initiative
Answer 1
Notes pg 142:
**Restrictive nature of caste system could affect the roles and advancement opportunities of individuals. This could also affect productivity, efficiency and organisational culture. HR policies would have to be adapted.
**Religious values, beliefs and traditions relating to work ethic, religious holidays and dietary habits that may affect the effective operation of international firms
MAY/ JUNE 2014 - Q9
According to Aregbeshola et.al (2011), ONE of the benefits of pnvatisation is:
- Narrowing and levelling capital markets
- Attracting local production and foreign investment
- Improving enterprise efficiency and performance
- Assuming the mode of unrealistic perfect competition
Answer 3
Benefits of privatisation:
- improving enterprise efficiency and performance
- developing a competitive industry which services customers well
- accessing the capita, know-how and markets that permit growth
- achieving effective corporate governance
- broadening and deepening capital markets
- securing the best prices possible for sale
MAY/ JUNE 2014 - Q10 Which ONE of the PESTEL model factors suggests that companies need to focus on when contemplating an international move? 1 . Legal factors 2. Economic factors 3. Political factors 4. Macro-environmental factors
Answer 4
Pg 42
The PESTEL model assists companies to focus on different macro-economic factors that they need to consider when contemplating an international move?
MAY/ JUNE 2014 - Q11
The decline of the currency has no effect on the local deposit and purchasing power in the local market, why does it have the negative effect on the ownership shares in terms of translation exposure?
- The currency value of the parent MNEs in the consolidated balance sheet would decrease
- The unprofitable translation exposure can turn into a profitable exposure
- The perceived solvency and debt-to-equity ratio would provide for more opportunity for borrowing in future
- The perceived negative effect on the company’s earnings as a result of translation could lead to an increase in it’s share price in stock markets
Answer =1 pg312
Due to translation exposure, the total value of parent MNE’s equity in the consolidated balance sheet would be reduced.
The perceived solvency affect and debt capacity and perceived negative effect on the earnings could lead to:
high debt to equity ratio AND decrease in share price in stock markets. This can affect the MNE’s ability too raise, and cost of raising funds
MAY/ JUNE 2014 - Q12
Which of the following best describes the use of balance of payments (BOP} to a manager in a global business?
- The BOP identifies the increased risk of borrowing Investment capital from the capital market of specific countries
- An increase in BOP indicates that a country’s currency will depreciates in the future
- The BOP warns international firm of policy changes in a foreign country that could affect the business climate
- A decrease in BOP suggests that the country’s foreign reserve is dwindling thereby requiring foreign aid
answer = 3 (pg 118)
BOP statistics helps to identify attractive markets.
BOP statistics server to warn international companies of policy changes that affect a country’s business climate and possibly also the profitability of a company’s involvement in that country
BOP statistics can signal increasing risk in lending
BOP statistics can signal reductions in a countries foreign exchange reserves which could lead to currency depreciation in the future.
BOP reflects the relative costs of domestic production and global competitiveness of the manufacturing sector as a whole.
(sale of goods = credit, debit entry records sale of goods)
MAY/ JUNE 2014 - Q12
The Eclectic Paradigm or the Ownership-Location-internalisation (OLI) framework of John
Dunning compares the rationale for adopting various entry modes by multinational enterprises. Using that framework, which ONE of the following entry modes should be adopted by a firm that is concerned with absolute control over resources and technology?
1 Foreign Direct Investment
2 Franchising
3. Licensing
4. Exporting
pg205
MAY/ JUNE 2014 - Q13
?
MAY/ JUNE 2014 - Q14
?
