UGC NET COMMERCE AND MANAGEMENT
INTERNATIONAL BUSINESS
Presented by
FEMEENA P A
(SRF in Commerce)
Question 1
What are the drivers of globalization?
a) Population mobility especially of labour
b) Financial flows
c) Exporting
d) Assembly operations
Choose the correct answer from the following
A. (a) and(b)
B. (b) and (d)
C. (a) and (b)
D. (c) and (d)
Answer ( C)
(a) and (b)
a) Population mobility especially of labour
b) Financial flows
Globalisation
It refers to the integration of the economy of the nation with the world
economy.
• Drivers of globalisation
1. Technological drivers
2. Political drivers
3. Market drivers
4. Cost drivers
5. Competitive drivers
Question 2
By having business in different countries, a firm reduces
a) Credit risk
b) Political risk
c) Financial risk
d) Business risk
Answer: b
Political risk
Question 3
Which is the most appropriate mode of entry in international business to
an enterprise with little experience of international markets?
A. Acquisition
B. Strategic Alliance
C. Joint Venture
D. Exporting
Answer : D
Exporting
Modes of entry into International
Business
1. Direct exporting
2. Licensing and franchising
3. Joint ventures
4. Strategic alliance
5. FDI
6. Turnkey contracts
Question 4
Quantitative import restrictions that limit the quantity of a product being
imported is called:
A. Embargo
B. Quota
C. Trade restraint
D. Import tariff
Answer : B
Quota
Explanation:
An embargo is a government order that restricts commerce or exchange with a
specified country, usually as a result of political or economic problems.
In international business, a quota is a government-imposed limit on the number
or value of goods that can be imported or exported over a specific period of time.
Quotas are used to regulate trade between countries and to protect domestic
production.
Restriction on trade refers to legal limitations imposed on trade activities with
specific countries or individuals, such as sanctions, embargoes, and
prohibitions on dealing with entities involved in terrorism, drug trafficking, or
other illicit activities.
An import tariff is a tax on imported goods. It's also known as a customs
duty. Tariffs are imposed by governments to raise revenue and to regulate
foreign trade.
Question 5
In which of the following modes of entry into foreign market are risk and profit
potential is highest?
A. Indirect exporting
B. Direct investment
C. Direct exporting
D. Joint ventures
Answer : B
Direct investment
.
Question 6
Foreign investments can be made through which of the following routes?
i. Foreign Direct Investment(FDI)
ii. Foreign Portfolio Investment(FPI)
iii. Private Equity Investment (PEI)
iv. Foreign Venture Capital Investors(FVCI)
choose the correct answer from the code given below:
A. i,iii,iv
B. i,ii,iii and iv
C. i,ii and iv
D. i and iv
Answer :B
i,ii,iii and iv
Question 7
Indicate the most popular route of privatisation adopted by the Government
of India in recent decades.
A. Spontaneous privatisation
B. Cross holdings
C. Management-Employee buyout
D. Strategic sale
Answer :D
Strategic sale
It involves selling a significant portion of the government’s stake in a PSU, which
is as high as 50% or more, and transferring managerial control.
Routes of privatisation
• Strategic sale: Considered the most popular method, where the
government aims to sell a controlling stake in a PSU to a strategic private
partner.
• Public issue: Selling shares of a PSU directly to the public through the
stock market.
• Partial disinvestment: Selling a smaller portion of government stake in a
PSU to raise capital without relinquishing control.
• Lease with a right to purchase: Leasing out a PSU to a private entity with
the option to buy it later.
Additional information
1. A Management and Employee Buyout is a restructuring initiative that
involves both managerial and non-managerial employees buying out a
firm in order to concentrate ownership into a small group from a widely
dispersed group of shareholders.
2. Spontaneous privatisation occurs when managers acquire residual rights
of control over their firm on their own initiative.
3. Cross-holding is a situation in which a publicly traded corporation owns
stock in another publicly traded company. So, technically, listed
corporations own securities issued by other listed corporations.
Question 8
The theory suggesting that the patterns of international trade are determined by
factor endowment rather than productivity was propounded by which one of
the following?
A. Adam Smith
B. Michael Porter
C. David Ricardo
D. Heckscher and Bertil Ohlin
Answer: D
Heckscher and Bertil Ohlin
Theories of International Trade
1. Mercantilism
2. Absolute advantage
3. Comparative advantage
4. Heckscher –Ohlin Theory
5. Leontief Paradox
6. Modern or Firm based trade theory
7. Country Similarity theory
8. Product Life Cycle theory
Question 9
The Central bank can significantly influence savings, investments and consumer
spending in the economy through which of the following policies?
A. Fiscal policy
B. Monetary policy
C. Industrial policy
D. Foreign Exchange policy
Answer : B
Monetary policy
Question 10
Which one of the following is not a characteristic of capitalism?
A. Individuals and associations behave with the economic motive of
maximising their profit with the least sacrifice or cost.
B. The country’s major means of production are either owned by the
government or their use is controlled by the government.
C. Producers, consumers and employees compete among themselves, as the
resources and opportunities are limited.
D. Price, the invisible hand, plays a dominant role in the flow of the factors of
production and consumption.
Answer: B
The country’s major means of production are either owned by the
government or their use is controlled by the government.
Question 11
When the exporter expects the importer, to make the payment immediately upon
the draft being presented to him is called:
A. Sight draft
B. Usance draft
C. Demand draft
D. Pay note
Answer : A
Sight draft
Additional information
Bills of exchange in international trade
• Sight bill: Payable immediately upon presentation
• Time bill: Payable on a future date
• Usance bill: Payable after a specified period
• Documentary bill: Accompanied by shipping documents
• Clean bill: No accompanying documents
• Trade bill: Used in business transactions for goods sold
• Accommodation bill: Drawn for lending money, not related to goods
sold
Question 12
The basic objective of Export Promotion Council is to promote and develop
the Exports of the:
A. Particular products of country
B. Only attractive projects of the country
C. Only services industry products of the country
D. Overall exports of the country
Answer : D
Overall exports of the country
Question 13
The theory of Comparative advantage is given by?
A. Porter
B. Adam smith
C. Varnoon
D. D. Richardo
Answer : D
D. Richardo
Question 14
Identify a factor that doesn’t play an important role in attracting FDI:
A. Language
B. Laws, rules and regulations
C. Cost of resources
D. Infrastructure-related factors
Answer: A
Language
Question 15
Which among the following institutions is NOT a part of World Bank
group
A. International Development Association (IDA)
B. International Monetary Fund (IMF)
C. International Finance Corporation (IFC)
D. Multilateral Investment Guarantee Agency (MIGA)
Answer :B
International Monetary Fund (IMF)
The World Bank Group is comprised of the International Bank for
Reconstruction and Development (IBRD), the International
Development Association (IDA), the International Finance
Corporation (IFC), the Multilateral Investment Guarantee Agency
(MIGA), and the International Centre for Settlement of Investment
Disputes (ICSID).
Question 16
An attribute that doesn’t contribute to Porter’s Diamond model is?
A. Firm’s strategy
B. Organised Trade Union
C. Factor conditions
D. Demand conditions
Answer :B
Organised Trade Union
Porter's Diamond Model, also known as the Diamond of National
Advantage, is a framework developed by Michael Porter to analyze the
competitive advantage of nations in specific industries. It suggests that a
nation's competitiveness in a particular industry is determined by four
interrelated and interdependent factors: factor conditions, demand
conditions, related and supporting industries, and firm strategy, structure,
and rivalry.
Question 17
Which of these is a characteristic of multinational corporations?
A. At least one-third directors are foreign nationals
B. The company does 40% of its business in foreign markets
C. The overseas markets are larger than the domestic market
D. The affiliates are responsive to a number of important environmental
forces
Answer :C
The overseas markets are larger than the domestic market
Question 18
According to this theory, the holdings of a country’s treasure primarily in
the form of gold constituted its wealth:
A. Gold theory
B. Ricardo theory
C. Mercantilism
D. H.O.theory
Answer : C
Mercantilism
.
Question 19
------ is the application of knowledge which redefines the boundaries of global
business
A. Cultural values
B. Society
C. Technology
D. Economy
Answer : C
Technology
Question 20
Which one of the following is not the basic function of WTO?
A. To facilitate the expansion and balanced growth of international trade
B. To facilitate the implementation, administration and operation of trade
agreements.
C. To settle differences and disputes among its member countries
D. To carry out periodic reviews of the trade policies of its member
countries.
Answer : d
To carry out periodic reviews of the trade policies of its member
countries.
Question 21
A multinational company investing in a completely unrelated business in a
foreign market would be classified as which type of FDI?
A. Horizontal FDI
B. Vertical FDI
C. Conglomerate FDI
D. None of these
Answer : C
Conglomerate FDI
FDI is where an investment is made in a completely different industry. It occurs when a foreign company or
individual invests in a domestic company with the intention of having some control or influence over the business.
Types of FDI:
• Horizontal FDI: A company expands its existing business operations to a foreign country, replicating the same
activities.
• Vertical FDI: A company invests in a foreign entity that is part of its supply chain, either upstream (suppliers)
or downstream (distributors).
• Conglomerate FDI: A company invests in a foreign business in a completely unrelated industry.
• Platform FDI: A company invests in a foreign country to serve as a platform for exporting goods or services to
a third country.
Question 22
------theory states that , lack of resources often helps countries to become
competitive.
A. Competitive theory
B. Porters diamond model
C. Theory of mercantilism
D. Product life cycle theory
Answer : b
Porters diamond model
The Porter Diamond Model is the theory that suggests a lack of resources
can drive innovation and efficiency, ultimately leading to a country
becoming more competitive. This model emphasizes that while resources
are important, a nation's competitive advantage is also shaped by factors
like factor conditions, demand conditions, related and supporting industries,
and firm strategy, structure, and rivalry. The lack of certain resources can
force countries to find innovative ways to overcome these limitations,
leading to a competitive edge.
Question 23
The country that attract the largest FDI inflow is :
A. USA
B. India
C. China
D. Brazil
Answer : A
USA
Question 24
Typically the last step in the internationalisation process is:
A. Licensing
B. Exporting
C. Wholly owned subsidiaries
D. Foreign Direct Investment
Answer : D
Foreign Direct Investment
Question 25
Which of the following is an advantage of turnkey projects?
A. Can earn a return on knowledge asset
B. Will not create a competitor
C. Tight control of operations
D. All the above
Answer : A
Can earn a return on knowledge asset
In international business, a turnkey project is a contract where a firm
agrees to fully design, construct, and equip a facility (like a
manufacturing plant or service center) and then hand it over to the client
in a fully operational state, ready for immediate use, for a fee. Essentially,
the client can "turn the key" and begin operations.
Question 26
Which of these is /are the characteristic of a licensing agreement:
A. The licensor might provide access to some of its patents or trademarks
B. The licensor might provide access to technology
C. It might be used to avoid the risks of foreign involvement
D. All of the above
Answer : D
All of the above
Question 27
Which is the right sequence of stages of internationalisation?
A. Domestic, Transnational, Global, International, Multinational.
B. Domestic, International, Multinational, Global, Transnational
C. Domestic, Multinational, International, Transnational, Global
D. Domestic, International,Transnational,Multinational,Global
Answer : B
Domestic, International, Multinational, Global, Transnational
Question 28
subsidiaries consider regional environment for policy/strategy formulation is
known as:
a) Polycentric approach
b) Regiocentric approach
c) Ethnocentric approach
d) Geocentric approach
Answer : B
Regiocentric approach
The EPRG framework, developed by Howard V. Perlmutter, outlines four strategic orientations that companies can adopt
when expanding internationally: Ethnocentric, Polycentric, Regiocentric, and Geocentric. These orientations differ in how
companies view their home and foreign markets, and how they adapt their strategies accordingly.
Ethnocentric:
This approach assumes that the home country's methods, products, and strategies are superior and should be applied
universally, with little or no adaptation to local markets.
Polycentric:
This orientation views each country as unique and independent. Companies with a polycentric approach develop separate
strategies for each foreign market, often adapting to local needs and preferences.
Regiocentric:
This approach groups countries into regions based on similarities (e.g., cultural, economic, or geographic). Companies adopt
regional strategies that cater to the needs and characteristics of the specific region.
Geocentric:
This orientation sees the entire world as a potential market and seeks to integrate global strategies. Companies with a
geocentric approach strive to develop global products and strategies while also adapting to local needs and preferences,
often seeking the best talent and resources worldwide.
Question 29
Which of the following is not related with Porter’s Diamond Model?
a) Demand condition
b) Related and supporting industries
c) Industry strategy, structure and rivalry
d) Factor conditions
Answer : C
Industry strategy, structure and rivalry
Question: 30
Polycentric approach is also known as :
a) Host country approach
b) Home country approach
c) Global approach
d) Hybrid approach
Answer : A
Host country approach
THANK YOU
