MIB Master of International Business: Global Business Environment 3 — Questions and Answers
Question 1: Which dimension of Hofstede's cultural framework measures the degree to which less powerful members of a society accept unequal power distribution?
- Uncertainty avoidance
- Power distance (Correct answer)
- Individualism-collectivism
- Long-term orientation
Correct answer: Power distance
Power distance reflects how much a society accepts hierarchy and authority differences between individuals.
Question 2: The 'resource curse' phenomenon most often describes countries that:
- Lack natural resources and depend heavily on manufactured exports
- Have abundant natural resources but experience weak economic growth and institutions (Correct answer)
- Attract excessive FDI in extractive industries
- Rely on remittances rather than domestic production
Correct answer: Have abundant natural resources but experience weak economic growth and institutions
Resource-rich countries often suffer from Dutch disease, weak governance, and lower diversification, paradoxically producing poor development outcomes.
Question 3: A firm pursuing a transnational strategy seeks to achieve:
- Full standardization of products globally for cost efficiency
- Simultaneous global efficiency, local responsiveness, and worldwide learning (Correct answer)
- Deep local adaptation in each market independently
- Centralized R&D with decentralized manufacturing only
Correct answer: Simultaneous global efficiency, local responsiveness, and worldwide learning
The transnational strategy integrates global efficiency with local adaptation and cross-border knowledge transfer, the most complex of the four international strategies.
Question 4: Which agreement established the World Trade Organization in 1995?
- The Treaty of Maastricht
- The Bretton Woods Agreement
- The Marrakesh Agreement (Correct answer)
- The Plaza Accord
Correct answer: The Marrakesh Agreement
The Marrakesh Agreement concluded the Uruguay Round of GATT negotiations and formally created the WTO on January 1, 1995.
Question 5: In a country with high 'uncertainty avoidance,' businesses typically observe:
- Preference for flat organizational hierarchies and informal rules
- Extensive formal rules, risk aversion, and resistance to ambiguity (Correct answer)
- High tolerance for entrepreneurial failure and experimentation
- Low bureaucracy and flexible regulatory frameworks
Correct answer: Extensive formal rules, risk aversion, and resistance to ambiguity
High uncertainty-avoidance cultures create elaborate rules and procedures to minimize ambiguity and unpredictability.
Question 6: The Eclectic (OLI) Paradigm developed by Dunning explains FDI based on three advantages. Which is NOT one of them?
- Ownership advantage
- Location advantage
- Internalization advantage
- Labor cost advantage (Correct answer)
Correct answer: Labor cost advantage
Dunning's OLI framework consists of Ownership, Location, and Internalization advantages; labor cost is a component of location but not a standalone paradigm pillar.
Question 7: When a foreign government expropriates a multinational's assets with fair compensation, this is termed:
- Confiscation
- Nationalization (Correct answer)
- Domestication
- Creeping expropriation
Correct answer: Nationalization
Nationalization is the government takeover of private assets, typically with compensation, distinguishing it from confiscation where no payment is made.
MIB Master of International Business: Global Business Environment 3
Which dimension of Hofstede's cultural framework measures the degree to which less powerful members of a society accept unequal power distribution?