1. When communists take over a previously noncommunist country: A) the government will take over private business. B) payment for private property is negotiated. C) foreign arbitrators determine fair amounts of payment. D) only the public utility assets are seized. 2. Which among the following is not a characteristic of governments of developing countries? A) They often profess and practice some degree of socialism. B) They typically own and control most of the factors of production. C) They would ideally not seek capital investment. D) They experience shortages of capital, technology and skilled management and labor.
International Business Chapter 5 Political Forces Task 1: Choose the best answer When communists take over a previously noncommunist country: A) the government will take over private business B) payment for private property is negotiated C) foreign arbitrators determine fair amounts of payment D) only the public utility assets are seized Which among the following is not a characteristic of governments of developing countries? A) They often profess and practice some degree of socialism B) They typically own and control most of the factors of production C) They would ideally not seek capital investment D) They experience shortages of capital, technology and skilled management and labor Privatization includes all of the following except: A) ownership transfer from public to private sector B) contracted out services C) state-owned plants leased to private entities D) government agencies completely funding private owned companies Country risk assessment A) is a service provided to business by country governments B) helps companies decide where to conduct business and for which risks to insure C) is the focus of econometricians D) indicates that there is very little regulation of businesses and professions In a number of ways, the political climate of the country in which a business operates is as important as a country's: A) topography B) natural resources C) meteorological climate D) all of the above It is the doctrine that the government should own all the major factors of production A) communist B) socialist C) democratic D) nationalism The government seizure of the property within its borders owned by foreigners, followed by prompt, adequate, and effective compensation paid to the former owners is called: A) nationalization B) expropriation C) confiscation D) privatization Under ideal capitalism, government would be restricted to those functions that the private sector cannot perform such as: A) national defense B) police, fire and other public services C) government-to-government international relations D) all of the above Socialism advocates government ownership or control of the basic means of production, distribution, and exchange As actually practiced, socialism: A) is present only in the European countries B) results in the nationalization of all businesses C) varies considerably from country to country D) is rapidly being replaced by capitalism 10 Government ownership of the factors of production: A) is present only in communist countries B) is present only in socialist countries C) varies widely from country to country D) both "a" and "b" 11 Where government owned companies compete with privately owned companies, the private companies sometimes complain that government owned companies: A) operate under monopolistic conditions B) are able to get interest-free financing C) are always awarded government contracts D) get export assistance 12 The acknowledged leader of the privatization movement was: A) Margaret Thatcher B) Bill Clinton C) Ronald Reagan D) Tony Blair 13 In the previously communist government-controlled economies of Central and Eastern Europe, the change to market economies is referred to as: A) capitalism B) sociocapitalism C) transition D) reconstruction 14 Nationalism is a devotion to: A) one's own nation B) the political and economic interests or aspirations of one's nation C) the cultural and social traditions of one's nation D) all of the above 15 A historic function of government has been the protection of the within its geographic area of control A) economic activity B) culture C) legal structure D) political power For the military and neglected production of Task 2: Decide the statements are true (T) or false (F) consumer goods One reason for the collapse of the USSR was that it concentrated its resources on production of consumer goods and neglected production for the military Politically, in the U.S., the term "conservative," is a person who wishes to minimize government activities An advantage state-owned companies have over privately owned business comes in the form of direct subsidies, payments by the government to their companies Privatization of industrial and commercial companies improves the solvency and stability of the banking sector in those countries Task 3: Answer the questions What is ideology? Why is it important to international business? Why does business fear sudden changes in government policies? Business fears sudden changes in government policies because firms need to plan Firms need to have assumptions on which they can base their planning instead of simply not knowing what will happen For example, imagine that you owned an oil company that wanted to invest in Venezuela When you consider doing this, you would have to understand that you would be putting a lot of money into your investment Now consider the government of that country At any moment, Hugo Chavez might change the laws and either take your equipment or reduce the amount of profit you are allowed to make You would fear this because your ability to business might be radically altered without any warning This is an extreme case, of course But the same thing can happen on a much smaller scale even in countries that are more stable Imagine if you were investing in wind power in the US You would fear what might happen if Republicans come to power and suddenly cut subsidies to wind power Government decisions can have a huge impact on the business environment Firms need to know that their environment will remain stable so they can plan Therefore, they fear sudden changes in policy that will upset their plans and can cause them to lose money ... D) all of the above Socialism advocates government ownership or control of the basic means of production, distribution, and exchange As actually practiced, socialism: A) is present only in the European countries... B) the political and economic interests or aspirations of one's nation C) the cultural and social traditions of one's nation D) all of the above 15 A historic function of government has been the protection of the within its geographic area of control