Question 1

Commercial risk services are good indicators of business risk in individual markets but cannot be used for comparisons of risks among different markets

Accepted Answer

Commercial risk services can be used for both assessing business risk in individual markets and for making comparisons of risks among different markets, as they often provide standardized risk ratings and analyses that facilitate cross-market comparisons.

Question 2

Uneven distributions of wealth, xenophobia (dislike of foreigners), the number of ethnic and religious groups, and the number of political parties are all causes of political risk

Accepted Answer

These factors contribute to political risk by creating instability and unpredictability in a country's political environment, which can lead to conflicts, policy changes, or government actions that negatively affect the operational and financial performance of businesses and investments.

Question 3

Uneven distributions of wealth, xenophobia (dislike of foreigners), the number of ethnic and religious groups, and the number of political parties are all causes of economic risk

Accepted Answer

Economic risk is primarily influenced by factors such as economic policies, political stability, government debt, and fiscal deficits rather than the number of ethnic and religious groups, the number of political parties, or xenophobia. While these social and political factors can indirectly affect economic stability, they are not direct causes of economic risk.

Question 4

Where firms depend heavily on contracts and their enforceability, security and political risks need to be assessed

Accepted Answer

The answer of Where firms depend heavily on contracts and...

Question 5

Commercial risk services are good indicators of business risk and excellent assessments of the cultural aspects of doing business

Accepted Answer

Commercial risk services primarily focus on financial, legal, and operational risks associated with doing business, rather than assessing cultural aspects. Cultural assessments typically require specialized expertise beyond the scope of standard commercial risk evaluations.

Question 6

Government over-spending and continuous fiscal deficits are symptoms of good governmental management of the economy

Accepted Answer

Government over-spending and continuous fiscal deficits can lead to unsustainable debt levels and economic instability, indicating poor management of the economy.

Question 7

Having sufficient convertible currencies to pay import bills is an important concern particularly in developing nations

Accepted Answer

Developing nations often face challenges in maintaining adequate reserves of convertible currencies, which are necessary for paying for imports, due to their limited access to foreign exchange markets and reliance on a narrow range of export products.

Question 8

Evaluating financial and foreign currency risks involves looking at national legal frameworks for money transfers, balance of payments situations, currency and gold reserves, and a country's debt situation

Accepted Answer

Evaluating financial and foreign currency risks indeed involves analyzing various factors including national legal frameworks for money transfers, balance of payments situations, currency and gold reserves, and a country's overall debt situation, as these elements can significantly impact the financial stability and currency value of a country.

Question 9

Market screening allows firms to review market risks across a number of markets

Accepted Answer

Market screening is a process used by firms to assess and compare different markets based on various criteria, including market risks, to identify the most promising markets for entry or expansion.

Question 10

A key benefit of well-executed international planning processes is to show what strategies are working in world markets

Accepted Answer

Well-executed international planning processes allow organizations to analyze and understand which strategies are effective in various global markets, helping them to adapt and succeed internationally.

Question 11

Companies usually look at political risk first because of its effects on all other ris

Accepted Answer

Political risk can affect all other risks, such as economic risk, operational risk, and financial risk.

Question 12

In nations with civil strife, ethnic tensions, high crime rates or where kidnapping is prevalent, companies must evaluate personal security risks

Accepted Answer

Companies operating in areas with civil strife, ethnic tensions, high crime rates, or prevalent kidnapping must assess personal security risks to ensure the safety of their employees and operations.

Question 13

In nations with civil strife, ethnic tensions, high crime rates or where kidnapping is prevalent, companies must evaluate legal and political risks

Accepted Answer

The answer of In nations with civil strife, ethnic tensions,...

Question 14

Commercial risk services are best suited to foreign direct investment projects where complete market assessments are required

Accepted Answer

Commercial risk services are designed to assess and mitigate risks associated with market dynamics, regulatory environments, and other factors crucial for foreign direct investment projects, making them well-suited for comprehensive market assessments.

Question 15

Market screening involves just the examination of political risk in individual markets

Accepted Answer

Market screening involves examining multiple factors including political risk, economic conditions, socio-cultural elements, and legal environments, not just political risk.

Question 16

Bureaucratic delays, contract enforceability, attitudes toward foreign investments and the availability of infrastructures (roads, rail, water systems) are all part of economic and foreign currency risk assessment

Accepted Answer

These factors are part of the country risk assessment, which includes economic risk but also encompasses broader considerations such as political stability, legal system efficiency, and infrastructure quality. Economic and foreign currency risk assessment focuses more specifically on economic conditions and currency stability.

Question 17

Commercial risk services are good indicators of business risk in individual markets and allow managers to isolate potential risk areas for further investigation

Accepted Answer

Commercial risk services compile and analyze data on market trends, financial stability, and other factors that can affect business operations, helping managers identify and assess potential risks in specific markets.

Question 18

Very high national inflation rates affect country economies but rarely impact the national political scene

Accepted Answer

High national inflation rates can significantly impact the national political scene, often leading to public dissatisfaction, protests, and can influence election outcomes as citizens demand economic stability and hold political leaders accountable for economic policies.

Question 19

Evaluating financial and foreign currency risks involves looking just at a country's trade balance (exports and imports) to see if they have enough convertible currencies

Accepted Answer

Evaluating financial and foreign currency risks involves a broader analysis including factors such as inflation rates, foreign exchange reserves, political stability, economic policies, and the country's overall economic health, not just its trade balance.

Question 20

Bureaucratic delays, contract enforceability, attitudes toward foreign investments and the availability of infrastructures (roads, rail, water systems) are all part of the operations risk assessment

Accepted Answer

These factors directly impact the operational efficiency and risk profile of investments in a country, influencing the ease of doing business and the potential for unforeseen costs or delays.

Quiz 6: International Strategic Planning and Market Screening