D080 Managing in a Global Business Environment - Set 4 - Part 2

Correct Answer: Brownfield investment

Brownfield investment refers to a company acquiring or merging with an existing firm in a foreign market rather than starting new operations from scratch.

Correct Answer: Preventing unfair competition and promoting market fairness

Antitrust laws are designed to prevent monopolies and ensure competitive markets by regulating corporate behavior and preventing practices that unfairly limit competition.

Correct Answer: Price skimming

Price skimming involves charging a high price initially to maximize profits from early adopters, and gradually lowering the price to attract more price-sensitive customers as demand increases.

Correct Answer: Balancing global efficiency with local responsiveness

A transnational strategy seeks to achieve both global efficiency and local responsiveness by adapting products and services to local markets while maintaining some level of standardization.

Correct Answer: Adhering to environmental and ethical standards

Corporate Social Responsibility (CSR) focuses on a companys accountability for its social, environmental, and ethical impact on society, especially when operating in international markets.

Correct Answer: Cultural

Cultural risk involves societal expectations, norms, and values that an organization must navigate when operating in a foreign environment. This includes understanding local customs, traditions, and business practices.

Correct Answer: The currency's value is allowed to fluctuate based on market forces

In a floating exchange rate system, the value of a currency is determined by supply and demand in the foreign exchange market, without direct government intervention.

Correct Answer: Micro risk

Micro risk refers to political risk that applies to a specific foreign company or industry within a country, such as changes in local regulations, taxes, or government policies targeting specific businesses.

Correct Answer: To ensure global financial stability

The IMFs main goal is to promote global monetary cooperation and ensure financial stability by offering financial support and policy advice to member countries.

Correct Answer: Common external tariffs for non-member countries

A customs union eliminates tariffs and trade barriers between member countries while establishing a common external tariff on goods imported from non-member countries.

Correct Answer: Hedging

Hedging is the practice of using financial instruments, such as derivatives, to protect against potential losses from adverse price movements in currencies, commodities, or other assets.

Correct Answer: Balancing global efficiency with local responsiveness

A transnational strategy focuses on achieving global efficiencies while also adapting products and services to meet the unique needs of local markets.

Correct Answer: Penetration pricing

Penetration pricing is a strategy where a company sets a low price for a new product to quickly attract customers and gain market share, often with the goal of raising prices later.

Correct Answer: It leverages the best talent from both the home and host countries

A geocentric approach to HR management focuses on selecting the best candidates for positions from both home and host countries, promoting a diverse and talented workforce across borders.

Correct Answer: To protect inventions, trademarks, and copyrights across borders

Intellectual property laws protect the rights of inventors, creators, and companies by ensuring that their inventions, trademarks, and copyrighted works are legally protected in the global marketplace.

Correct Answer: To provide loans for development projects in poor countries

The World Banks primary mission is to provide financial and technical assistance to developing countries to support projects that reduce poverty and promote economic development.

Correct Answer: Religious law

Religious law systems are based on religious teachings and scriptures. Examples include Islamic law (Sharia) and Jewish law (Halakha).

Correct Answer: Free trade area

A free trade area eliminates trade barriers between member countries, allowing goods and services to flow freely, but each country maintains its own external trade policies with non-members.

Correct Answer: Adapting products and services to fit the local market

A localization strategy involves customizing products, services, and business operations to meet the specific needs, preferences, and cultural expectations of local markets.

Correct Answer: To reduce the overall tax burden by shifting profits between countries

Transfer pricing is used by multinational corporations to allocate profits and expenses between subsidiaries in different countries, often to take advantage of favorable tax regimes.