Unit 13: Country Evaluation and Selection - Practice Quiz

1 What is the main purpose of an opportunity and risk matrix in country evaluation?

2 Which country would generally be most attractive in an opportunity and risk matrix?

3 In a country evaluation matrix, political instability is usually classified as what?

4 A rapidly growing middle class in a country usually represents what for an international business?

5 Which combination in an opportunity and risk matrix usually requires the most caution?

6 Why might a firm still consider a country with high opportunity and high risk?

7 What do the two dimensions of an opportunity and risk matrix normally measure?

8 Which of the following is a macroeconomic indicator?

9 What does a country's inflation rate measure?

10 Which indicator shows the average economic output per person?

11 Which of the following is a micro-level indicator for evaluating a foreign market?

12 Why do firms examine exchange-rate stability before selecting a country?

13 Which indicator is most directly related to the size of a potential consumer market?

14 What can a high unemployment rate indicate about a country?

15 What is a country-ranking model used for?

16 In a weighted scoring model, what does a criterion's weight represent?

17 How is a weighted score commonly calculated for one criterion?

18 What does PESTLE analysis help a business examine?

19 Which tool presents comparable country indicators in rows and columns?

20 Why should a firm use the same criteria when comparing several countries?

21 A company evaluates four countries using an opportunity-risk matrix. Country A has high market potential and low risk, Country B has high potential and high risk, Country C has low potential and low risk, and Country D has low potential and high risk. Which country should normally receive the highest priority for market entry?

22 Country X offers rapid demand growth but has unstable regulations. Country Y has moderate demand growth and highly predictable regulations. A risk-averse company should most likely choose which approach?

23 A firm's country score is calculated as opportunity minus risk. Country P has an opportunity score of 82 and a risk score of 46, while Country Q has an opportunity score of 70 and a risk score of 25. Which country has the higher net score?

24 A country moves from the high-opportunity, low-risk quadrant to the high-opportunity, high-risk quadrant after an election. What is the most appropriate managerial response?

25 A pharmaceutical company finds a country with high healthcare demand but weak intellectual property protection. In an opportunity-risk matrix, how should these conditions be represented?

26 A firm is comparing two high-opportunity countries. Country M has political risk that can be reduced through political-risk insurance. Country N has persistent product-market mismatch. Which country is generally more suitable for further evaluation?

27 Country R has an opportunity rating of 8 and a risk rating of 7, while Country S has an opportunity rating of 6 and a risk rating of 3, both on a 10-point scale. If the firm prioritizes stability over maximum growth, which country is the better choice?

28 A country's GDP is growing rapidly, but inflation is rising and its currency is depreciating. What does this combination most strongly suggest to a foreign investor?

29 Which indicator would be most useful for estimating the immediate sales potential of premium household appliances in a country?

30 A country has a large population but low income per person and limited retail infrastructure. Why might population alone overstate its market attractiveness?

31 An exporter earns revenue in a foreign currency. That currency depreciates by 10% against the exporter's home currency, while local sales volume remains unchanged. What is the most likely effect?

32 A country has favorable GDP growth and low inflation, but interviews reveal that local distributors refuse to carry the firm's product. What does this show?

33 A manufacturer wants to assess the reliability of local suppliers before establishing a factory. Which measure is most relevant?

34 Country A has a corporate tax rate of 18% but frequent tax-rule changes. Country B has a corporate tax rate of 23% with stable enforcement. Which conclusion is most reasonable?

35 A firm uses a weighted scoring model with two criteria: market potential has a weight of 60%, and stability has a weight of 40%. A country scores 80 on market potential and 50 on stability. What is its weighted score?

36 A retailer uses the CAGE framework to compare its home country with a target country. Different consumer languages and shopping customs mainly represent which type of distance?

37 Two countries receive similar overall scores in a country-ranking model, but one depends heavily on a single volatile commodity. Which tool would best reveal how the rankings could change after a commodity-price shock?

38 A company changes the weight assigned to political stability from 20% to 40%, causing Country B to replace Country A as the preferred market. What does this result demonstrate?

39 A firm's PESTLE comparison finds similar economic conditions in two countries, but one has stricter data-privacy laws. Under which PESTLE dimension should this difference primarily be recorded?

40 A company compares countries using data collected in different years and measured on different scales. What should it do before calculating a composite ranking?

41 A country has high market growth, moderate regulatory predictability, strong digital infrastructure, and severe currency volatility. In an opportunity-risk matrix, which classification is most defensible?

42 A firm's country-screening model assigns opportunity and risk scores from 1 to 5. Country A scores 4.8 for opportunity and 4.2 for risk, while Country B scores 3.9 for opportunity and 1.8 for risk. If the firm is risk-neutral and evaluates net attractiveness as opportunity minus risk, which country ranks higher?

43 A country moves from the high-opportunity/high-risk quadrant to the medium-opportunity/medium-risk quadrant after a new trade agreement. Which interpretation is most accurate?

44 Two countries have identical opportunity and risk scores, but Country X has risks that are highly correlated with the firm's existing operations, while Country Y has largely independent risks. Which country is preferable for portfolio diversification?

45 A country has excellent demand prospects, but its government may impose sudden restrictions on foreign ownership. The restriction is unlikely but would cause severe losses. How should this risk be treated in the matrix?

46 A country scores highly on opportunity because of rapid GDP growth, but most growth comes from one unstable commodity sector. What is the strongest adjustment to the opportunity-risk assessment?

47 Country A reports 8% nominal GDP growth, 6% inflation, and a 5% currency depreciation against the firm's home currency. Country B reports 5% nominal GDP growth, 2% inflation, and a stable currency. Which conclusion is most defensible for a home-currency investor?

48 A market has a large population, but its target segment is small, low-income, and concentrated in remote areas with weak distribution infrastructure. Which screening conclusion is most appropriate?

49 A country's unemployment rate falls while labor-force participation also declines sharply. What is the most cautious interpretation?

50 Country A has lower average wages than Country B, but its labor turnover, defect rates, logistics delays, and training costs are much higher. Which comparison is most relevant to a manufacturer?

51 A country has strong rule-of-law scores nationally, but the firm's target region has unreliable courts and frequent informal payments. Which analytical principle should guide the decision?

52 A government offers tax holidays to attract foreign investors, but the country has weak infrastructure and frequent policy reversals. Which inference is most sound?

53 A country's current-account deficit is widening because of imported capital equipment for productivity-enhancing investment, while foreign direct investment is rising. What is the best interpretation?

54 A weighted country scorecard uses market size, risk, infrastructure, and labor quality. Country A leads on market size, while Country B leads on every other factor. What should the analyst do before selecting a country?

55 Country A ranks first on every individual indicator, but all indicators measure closely related aspects of institutional quality. What problem may affect the composite score?

56 An analyst compares countries using raw GDP, inflation, and literacy rates in a simple additive index. Which methodological correction is most necessary?

57 A country-ranking index places Country A above Country B, but Country A fails the firm's minimum requirement for data privacy compliance. Which decision rule should prevail?

58 A country comparison uses data from different years: current inflation, three-year-old logistics performance, and five-year-old governance data. What is the principal concern?

59 A firm evaluates two countries using expected profit. Country A has a 70% chance of earning $12 million and a 30% chance of losing $4 million. Country B has a certain profit of $6 million. Ignoring risk preferences, which country has the higher expected profit?

60 A country scorecard changes from ranking Country X first to ranking Country Y first when the weight on political risk increases from 20% to 30%. What does this result indicate?