Question 1

Domestication occurs when the local government requires a gradual transfer of ownership and management to locals.

Accepted Answer

Domestication occurs when the local government requires a gradual transfer of ownership and management to locals. This is usually done over time, through consecutive government decrees aimed at reducing the presence of multinationals in nonessential local sectors.

Question 2

In more developed countries, substantial ethnic conflict still exists, not just between the established ethnicities but also between the new immigrants and long-established nationals.

Accepted Answer

In more developed countries, substantial ethnic conflict still exists, not just between the established ethnicities-as in the case of Belgium, where the Flemish (Dutch) and Wallonians (French) often find themselves in opposition-but also between the new immigrants and long-established nationals.

Question 3

During downturns in the local economy, governments are unlikely to control foreign investment through taxation.

Accepted Answer

During downturns in the local economy, governments are likely to control foreign investment through taxation. Increasing the taxes of international companies can help to cover downturns in the short run. Taxing international firms is often the first step a government takes because taxing its own people is an unpopular decision.

Question 4

The expression of nationalist sentiment in a country where the company is operating could constitute a cause for concern to the international company.

Accepted Answer

Nationalism can lead to decreased sales of international products. It may also lead to more extreme risks such as vandalism, confiscation, and terrorism.

Question 5

Expropriation refers to the seizing of company assets and/or investors's assets without any compensation.

Accepted Answer

Confiscation refers to the seizing of company assets and/or investors's assets without any compensation. Expropriation involves some reimbursement for company assets, usually not at their market value.

Question 6

U. S. companies must abide by international trade laws and host country laws when operating in foreign countries, but do not need to consider home-country laws.

Accepted Answer

U. S. companies must abide by international trade laws, host country laws and home-country laws when operating in foreign countries. Anti-trust regulations and corrupt practices regulations apply to U. S. firms both domestically and internationally.

Question 7

According to the World Bank, countries considered upper middle income have a GNI per capita of US$3,466 to US$10,725.

Accepted Answer

According to the World Bank, countries considered upper middle income countries have a GNI per capita of US$3,466 to US$10,725.

Question 8

Lower middle income countries comprise the transition economies of Central and Eastern Europe: Estonia, Hungary, Latvia, Lithuania, Poland, and the Russian Federation, among others..

Accepted Answer

Upper middle income countries comprise the countries mentioned above - the transition economies of Central and Eastern Europe, the Russian Federation, as well as countries in Latin America, such as Argentina, Chile, and Mexico.

Question 9

Italy has had the same government since World War II resulting in political stability and lowered risk for international firms.

Accepted Answer

Although Italy has offered a low-risk environment for international businesses, it has had a new government for every year since World War II.

Question 10

Political instability can lead to protectionist measures on the part of the host-country government, whereas nationalism and claims to national sovereignty can lead to the failure of the economy.

Accepted Answer

Nationalism and claims to national sovereignty can lead to protectionist measures on the part of the host-country government, whereas political instability can lead to the failure of the economy.

Question 11

Countries with emerging markets present great potential to international firms due to their technological growth.

Accepted Answer

Countries with emerging markets present great potential to international firms. Their attractiveness lies primarily in their rate of economic growth-7 percent per year, for the past decade, compared to 2.3 percent for Western Europe and North America.

Question 12

The U.S. government, through the Overseas Private Investment Corporation (OPIC) offers insurance policies that protect companies against expropriation, nationalization, or confiscation by foreign governments.

Accepted Answer

The U.S. government, through the Overseas Private Investment Corporation (OPIC) offers insurance policies that protect companies against expropriation, nationalization, or confiscation by foreign governments. OPIC insures U.S. investments in emerging markets and developing countries against expropriation and political violence, such as revolution and war.

Question 13

Consumer ethnocentrism is the belief that buying foreign goods will put local companies out of business.

Accepted Answer

Consumer ethnocentrism is the belief that buying foreign goods will put local companies out of business and is, consequently, morally wrong. This poses a special concern for international marketing managers since countries with such beliefs are more likely to erect barriers to international trade.

Question 14

Internal diversity and incongruent interests are elements of political risk within a country.

Accepted Answer

A number of country risk elements should be monitored on a regular basis to keep track of developments that might ultimately affect the international company. One risk element is internal diversity and incongruent interests. An example of this was when Zimbabwe offered land to squatters on white-owned properties.

Question 15

International law regards nationalization as an illegal activity taken by some governments that force domestication.

Accepted Answer

International law regards nationalization as legitimate as long as it is in the public interest and it offers fair compensation to the international company and to its investors.

Question 16

Ethnic diversity creates an opportunity for international marketers through the promotion of trust and cooperation.

Accepted Answer

Ethnic diversity and incongruent interests leads to a history of distrust and conflict in a population, which increases the risk for international marketers.

Question 17

Losses attributed to the violation of intellectual property rights are estimated to be $60 million a year.

Accepted Answer

Losses attributed to the violation of intellectual property rights are estimated to be $60 billion a year.

Question 18

It is unnecessary to include a jurisdictional clause in international contracts since jurisdiction is always established in the country of operation.

Accepted Answer

Jurisdiction may occur in a variety of places if it is not included in the contract. For this reason, it is necessary to include a jurisdictional clause in international contracts.

Question 19

Common law refers to comprehensive written laws that specify what constitutes legal behavior.

Accepted Answer

Code law refers to comprehensive written laws that specify what constitutes legal behavior. Common law is based on prior court rulings.

Question 20

Countries, by permitting international trade and by entering into international agreements, limit their sovereignty.

Accepted Answer

International trade causes countries to compromise and to adhere to international trade laws. When countries perceive that international firms, governments, or organizations have infringed upon their right to self-determination, they can invoke national sovereignty and take actions that erect barriers to trade which acts to withdraw them from international trade.

Quiz 2: An Overview of the International Marketing Environment