MIB Master of International Business: Global Business Environment 5

Question 1

Which foreign market entry mode gives a firm the highest degree of control over overseas operations but also carries the greatest resource commitment and risk?

Accepted Answer

Wholly owned subsidiary

Answer

A wholly owned subsidiary provides full managerial control and profit retention but requires the largest capital outlay and exposure to country risk.

Question 2

The principle of 'comparative advantage' implies that global welfare is maximized when each country:

Accepted Answer

Specializes in goods with the lowest opportunity cost relative to other countries

Answer

Comparative advantage shows that specialization and trade based on relative opportunity costs generates gains for all trading partners.

Question 3

A 'greenfield investment' in the context of FDI means:

Accepted Answer

Building new production facilities from scratch in a foreign country

Answer

Greenfield FDI involves constructing new facilities abroad rather than acquiring existing ones, giving the investor full control over design and operations.

Question 4

Which organization serves as the lender of last resort to member countries facing balance-of-payments crises?

Accepted Answer

International Monetary Fund

Answer

The IMF provides short-term financial assistance to member countries with balance-of-payments difficulties, typically with policy conditionality attached.

Question 5

In international business, 'country risk' analysis typically encompasses:

Accepted Answer

Political, economic, financial, and social risks that could affect business operations in a country

Answer

Country risk is a broad assessment covering political instability, economic volatility, regulatory unpredictability, and social factors that affect investment returns.

MIB - Master of International Business Practice Test

MIB - Master of International Business Practice Test

MIB Master of International Business: Global Business Environment 5