D080 Managing in a Global Business Environment - Set 4 - Part 1

Correct Answer: To ensure accountability and transparency in decision-making

Corporate governance focuses on the structures and processes that ensure accountability, transparency, and fairness in a company’s relationship with its stakeholders, including shareholders, employees, customers, and the public.

Correct Answer: Civil law

Civil law is a legal system based on comprehensive written codes and statutes, where judges apply the law to specific cases rather than interpreting past rulings, as is common in common law systems.

Correct Answer: To promote free trade and settle trade disputes

The WTO is an international organization that promotes free trade by lowering trade barriers and resolving disputes between member nations.

Correct Answer: Macro risk

Macro risk refers to political changes that affect the overall business environment in a country, impacting all foreign and domestic companies operating there.

Correct Answer: Product development

Product development is a strategy where a company focuses on creating new products to sell to its existing customer base, increasing sales within the current market.

Correct Answer: Elimination of internal tariffs and a common external tariff

A customs union eliminates tariffs between member countries and establishes a common external tariff on imports from non-member countries, facilitating easier trade within the union.

Correct Answer: Controlling the supply chain by acquiring suppliers or distributors

Vertical FDI allows a company to control more of its supply chain by investing in foreign companies that supply inputs or distribute its products, improving efficiency and reducing costs.

Correct Answer: Uncertainty avoidance

Uncertainty avoidance measures the extent to which a society feels uncomfortable with uncertainty and ambiguity, and how it deals with unknown situations.

Correct Answer: Gaining access to local knowledge with low financial risk

Licensing allows companies to enter foreign markets by granting a local company the right to produce and sell their products, gaining local knowledge while limiting financial risks.

Correct Answer: Economic stability of the target market

When entering a new global market, companies must consider the economic stability of the target market to ensure that their investments are secure and that the market can sustain demand for their products or services.

Correct Answer: Free movement of goods, services, labor, and capital between member states

A common market allows for the free movement of goods, services, labor, and capital between member states, creating a more integrated and efficient economic environment.

Correct Answer: Patent

A patent protects inventions or industrial processes, giving the patent holder exclusive rights to use, manufacture, and sell the invention for a specific period of time.

Correct Answer: Gross Domestic Product (GDP)

Gross Domestic Product (GDP) measures the total market value of all goods and services produced within a country’s borders in a specific time period, typically one year.

Correct Answer: Elimination of tariffs between member countries

In a free trade area, member countries eliminate tariffs on goods traded between them, allowing for more efficient trade while maintaining their own external tariffs on non-member countries.

Correct Answer: To minimize the financial risk of entering new markets

Joint ventures allow companies to partner with local firms to enter new markets while sharing financial risks, resources, and expertise, making market entry less risky and more manageable.

Correct Answer: Financial assistance given by a government to support a domestic industry

A government subsidy is financial support provided to domestic industries to help reduce production costs and make them more competitive in international markets.

Correct Answer: Individualism versus collectivism

This dimension measures whether a society values individual independence (individualism) or places importance on group cohesion and collective interests (collectivism).

Correct Answer: To ensure global financial stability

The IMF works to promote global financial stability by offering policy advice, financial assistance, and technical expertise to countries facing balance of payment problems.

Correct Answer: Command economy

In a command economy, the government controls all major aspects of production and distribution, and the allocation of resources is determined by a central authority.

Correct Answer: To reduce trade barriers and promote international trade

GATT was established to reduce tariffs and other trade barriers, thereby promoting freer international trade among its member nations.