Chapter 6 Multiple Choice Questions | Global Strategic Management by Philippe Lasserre

1. If 1 = low risk and 5 = high risk, which country is the most attractive?

Country A: potential return 12% per year; Risks 4 Country B: potential return 11% per year; Risks 3 Country C: potential return 10% per year; Risks 1 Country D: potential return 11% per year; Risks 2

2. What is the ‘Purchasing Power Parity’ in the calculation of local GDP?

A way to calculate GDP by applying the exchange rate of local currencies to US dollars A way to calculate GDP by using the average exchange rate of similar local currencies with US dollars A way to calculate GDP by applying an exchange rate based on the differences in prices and cost of living A way to calculate GDP by applying an exchange rate calculated as an average cost of the same basket of goods across several similar countries

3. Which of these propositions are wrong (choose both that apply)?

‘Middle class’ describes those households that can afford the purchase of branded goods and consumer durables Middle-class people are those living in urban areas In emerging countries the number of middle-class people is growing faster than average GDP growth In the USA or Europe, everyone is middle class Middle-class people are those whose income is above the average income

4. What does ‘quality of demand’ mean?

All customers are looking for low-priced products There is a diverse and sophisticated segmentation in this country Quality is an important buying decision factor in this country There are ‘rich’ people in this country Quality control is imposed by the government in this country

5. Human resources constitute a source of attractiveness in a country when:

Labor costs are low There are no trade unions There is a good quality of education and high productivity related to the cost of labor There is freedom to hire and fire employees

6. A ‘country diamond’ is:

A method used by countries to promote their advantages A method for evaluating the competitiveness of a country An indicator showing that governments are supporting foreign investment A characteristic of a country that is endowed with natural resources

7. In the CAGE model, distances between countries are measured according to (choose all that apply):

Physical distance Political regime similarities Presence of ex-‘colonial’ ties Similarities of religion

8. Which of these are dimensions of political risk (choose both that apply)?

Shareholder exposure Presence of a socialist regime Presence of trade unions Rebellion

9. A ‘Grand Tour approach’ to evaluating countries’ opportunities and risks is:

An approach by which analysts rank countries A statistical method of risk analysis A series of visits to countries by analysts to meet all kinds of relevant people and collect direct information A method through which analysts conduct research on the Internet to collect information

10. Country risk is the prime determinant of the investment decision:

Yes No

Chapter 6: Assessing Countries’ Attractiveness