Unit 13: Country Evaluation and Selection - Practice Quiz

DEMGN578 — International Business Environment 60 Questions
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1 What is the main purpose of an opportunity and risk matrix in country evaluation?

Opportunity and risk matrix Easy
A. To design products for domestic customers
B. To calculate employee salaries across countries
C. To prepare financial statements for investors
D. To compare market potential with possible risks

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

Opportunity and risk matrix Easy
A. A country with high opportunity and high risk
B. A country with low opportunity and high risk
C. A country with low opportunity and low risk
D. A country with high opportunity and low risk

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

Opportunity and risk matrix Easy
A. A business risk
B. A market opportunity
C. A sales strategy
D. A product feature

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

Opportunity and risk matrix Easy
A. A market opportunity
B. A political restriction
C. A currency liability
D. A legal dispute

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

Opportunity and risk matrix Easy
A. High opportunity and moderate risk
B. Moderate opportunity and low risk
C. Low opportunity and high risk
D. High opportunity and low risk

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

Opportunity and risk matrix Easy
A. High risk guarantees high profits
B. Potential returns may justify careful entry
C. Market research is unnecessary in that case
D. Business risks are always temporary there

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

Opportunity and risk matrix Easy
A. Market attractiveness and country risk
B. Product quality and package design
C. Factory size and production volume
D. Employee performance and job satisfaction

8 Which of the following is a macroeconomic indicator?

Analysis of macro and micro indicators Easy
A. Brand recognition
B. Store location
C. Gross domestic product
D. Customer loyalty

9 What does a country's inflation rate measure?

Analysis of macro and micro indicators Easy
A. The total number of foreign firms
B. The average size of local companies
C. The general rise in price levels
D. The level of customer satisfaction

10 Which indicator shows the average economic output per person?

Analysis of macro and micro indicators Easy
A. Total population
B. Interest rate
C. Trade balance
D. GDP per capita

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

Analysis of macro and micro indicators Easy
A. Number of local competitors
B. Countrywide unemployment rate
C. Overall GDP growth
D. National inflation rate

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

Analysis of macro and micro indicators Easy
A. It identifies consumer age groups
B. It determines the national language
C. It affects costs and repatriated earnings
D. It measures local brand loyalty

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

Analysis of macro and micro indicators Easy
A. Population
B. Exchange rate
C. Tax rate
D. Interest rate

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

Analysis of macro and micro indicators Easy
A. High customer loyalty
B. Low industry competition
C. Strong patent protection
D. Weak labor-market conditions

15 What is a country-ranking model used for?

Country comparison tools Easy
A. Setting identical prices in every country
B. Designing products for one customer
C. Replacing all managerial judgment
D. Ordering countries by selected criteria

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

Country comparison tools Easy
A. Its collection date
B. Its country of origin
C. Its relative importance
D. Its measurement currency

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

Country comparison tools Easy
A. Weight added to inflation
B. Rating subtracted from GDP
C. Rating divided by population
D. Rating multiplied by weight

18 What does PESTLE analysis help a business examine?

Country comparison tools Easy
A. Daily factory output
B. Internal employee performance
C. External country-level conditions
D. Individual customer complaints

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

Country comparison tools Easy
A. Sales invoice register
B. Product packaging chart
C. Employee appraisal form
D. Country comparison table

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

Country comparison tools Easy
A. To make the comparison consistent
B. To remove all country risks
C. To avoid collecting market data
D. To guarantee equal market profits

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?

Opportunity and risk matrix Medium
A. Country A
B. Country D
C. Country B
D. Country C

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?

Opportunity and risk matrix Medium
A. Export heavily to Country X without safeguards
B. Enter Country X through full ownership
C. Enter Country Y with long-term investment
D. Avoid Country Y because growth is moderate

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?

Opportunity and risk matrix Medium
A. Country Q, with a net score of 45
B. Country P, with a net score of 128
C. Country P, with a net score of 36
D. Country Q, with a net score of 95

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?

Opportunity and risk matrix Medium
A. Increase commitment without changing controls
B. Treat the country as a low-opportunity market
C. Cancel all evaluation of market demand
D. Add safeguards and reconsider entry mode

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?

Opportunity and risk matrix Medium
A. Low opportunity and high risk
B. High opportunity and high risk
C. Low opportunity and low risk
D. High opportunity and low risk

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?

Opportunity and risk matrix Medium
A. Country N, because market mismatch lowers competition
B. Country M, because insurance eliminates all uncertainty
C. Country M, because its main risk is partly manageable
D. Country N, because product adaptation is never required

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?

Opportunity and risk matrix Medium
A. Country R, due to its higher opportunity
B. Country S, due to its lower exposure
C. Country S, due to its larger market
D. Country R, due to its higher risk rating

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?

Analysis of macro and micro indicators Medium
A. Strong demand with increased financial uncertainty
B. Stable costs with lower exchange-rate exposure
C. Falling demand with predictable operating margins
D. Weak demand with improved currency stability

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

Analysis of macro and micro indicators Medium
A. Number of international border crossings
B. Total land area of the country
C. Average rainfall across agricultural regions
D. Disposable income of target urban households

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

Analysis of macro and micro indicators Medium
A. Large populations prevent firms from segmenting customers
B. Retail infrastructure matters only in developed countries
C. Population does not indicate purchasing power or access
D. Population always increases the cost of imported goods

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?

Analysis of macro and micro indicators Medium
A. Local-currency revenue will fall by exactly 10%
B. Sales volume will automatically rise by 10%
C. Home-currency revenue will generally decrease
D. Home-currency revenue will generally increase

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?

Analysis of macro and micro indicators Medium
A. GDP growth directly ensures channel availability
B. Positive macro indicators cannot replace micro analysis
C. Low inflation eliminates market-entry barriers
D. Distributor resistance guarantees low political risk

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

Analysis of macro and micro indicators Medium
A. National population and urbanization rates
B. Central bank reserves and policy rates
C. Supplier defect and on-time delivery rates
D. National exports as a share of GDP

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?

Analysis of macro and micro indicators Medium
A. Country A will always produce higher profits
B. Country B has no tax-related business risk
C. Country A is automatically more attractive
D. Country B may offer greater planning certainty

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?

Country comparison tools Medium
A. 68
B. 70
C. 74
D. 62

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?

Country comparison tools Medium
A. Administrative distance
B. Geographic distance
C. Cultural distance
D. Economic 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?

Country comparison tools Medium
A. Static market mapping
B. Historical average pricing
C. Simple population ranking
D. Scenario analysis

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?

Country comparison tools Medium
A. The ranking is sensitive to criterion weights
B. Political stability is the only valid criterion
C. The original country data must be incorrect
D. Weighted models eliminate managerial judgment

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?

Country comparison tools Medium
A. Environmental
B. Legal
C. Social
D. Technological

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?

Country comparison tools Medium
A. Add all raw values without adjustment
B. Use population as the common replacement measure
C. Standardize the measures and align time periods
D. Remove indicators with relatively low values

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?

Opportunity and risk matrix Hard
A. High opportunity and high risk
B. Low opportunity and high risk
C. Low opportunity and low risk
D. High opportunity and low risk

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?

Opportunity and risk matrix Hard
A. Country B, because risk is excluded from attractiveness
B. Country A, because its opportunity score is higher
C. Country A, because high risk signals high returns
D. Country B, because its net score is 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?

Opportunity and risk matrix Hard
A. The country became categorically unattractive
B. The country became safer but lost all strategic value
C. The matrix proves that investment returns will decline
D. The country's risk-return profile changed materially

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?

Opportunity and risk matrix Hard
A. Country Y, because independent risks eliminate country risk
B. Country Y, because independent risks reduce portfolio concentration
C. Country X, because identical scores imply equal diversification value
D. Country X, because correlated risks are easier to forecast

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?

Opportunity and risk matrix Hard
A. Record it only as an opportunity constraint
B. Ignore it because its probability is low
C. Include its expected impact and tail-risk significance
D. Treat it as certain because the impact is severe

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?

Opportunity and risk matrix Hard
A. Replace the opportunity score with the inflation rate
B. Increase opportunity because specialization improves efficiency
C. Reduce opportunity quality and increase concentration risk
D. Leave the score unchanged because GDP growth is objective

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?

Analysis of macro and micro indicators Hard
A. Country A has higher real growth because inflation is positive
B. Country A necessarily offers stronger real growth
C. Country B has no growth because its currency is stable
D. Country B may offer stronger translated purchasing-power growth

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?

Analysis of macro and micro indicators Hard
A. The market is unattractive because all large countries are inefficient
B. The addressable market may be limited despite demographic scale
C. The market is attractive because population determines demand
D. The market is attractive if nominal GDP growth exceeds inflation

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

Analysis of macro and micro indicators Hard
A. Employment conditions definitely improved
B. The unemployment decline may partly reflect worker exits
C. Consumer demand necessarily expanded
D. Labor productivity necessarily increased

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?

Analysis of macro and micro indicators Hard
A. Country A's wage advantage alone
B. The average wage divided by population
C. Total landed and operating cost per acceptable unit
D. Country B's higher wage level alone

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?

Analysis of macro and micro indicators Hard
A. Use the regional institutional conditions affecting operations
B. Use only national averages for consistency
C. Use the country's corruption rank as a complete proxy
D. Ignore governance because market demand dominates

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?

Analysis of macro and micro indicators Hard
A. Weak infrastructure is irrelevant when taxes are low
B. The tax holiday guarantees superior investment returns
C. The incentive may compensate for, but not remove, structural risks
D. Policy reversals improve flexibility for investors

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?

Analysis of macro and micro indicators Hard
A. Foreign direct investment makes the deficit irrelevant
B. The deficit may be sustainable if investment improves future capacity
C. The deficit automatically proves external insolvency
D. Capital-equipment imports always reduce competitiveness

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?

Country comparison tools Hard
A. Select B because leading on more factors is sufficient
B. Select A because market size is objectively dominant
C. Test weights and thresholds through sensitivity analysis
D. Average the ranks without considering strategic priorities

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?

Country comparison tools Hard
A. Elimination of measurement error
B. Double counting of correlated dimensions
C. Automatic correction for selection bias
D. Underweighting of unrelated variables

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

Country comparison tools Hard
A. Give every indicator its original unit weight
B. Remove all macroeconomic indicators
C. Normalize indicators and align their direction
D. Rank countries only by their largest variable

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?

Country comparison tools Hard
A. Average compliance with the remaining indicators
B. Choose A if its market size offsets compliance concerns
C. Exclude A because it fails a non-compensatory threshold
D. Choose A because the index is comprehensive

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?

Country comparison tools Hard
A. Governance data should always receive zero weight
B. Inflation cannot be compared across countries
C. Older data are always more accurate
D. Mixed vintages can produce a misleading current ranking

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?

Country comparison tools Hard
A. Country A, with expected profit of $7.2 million
B. Both countries, with expected profit of $6.0 million
C. Country B, with expected profit of $6.0 million
D. Country A, with expected profit of $8.0 million

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?

Country comparison tools Hard
A. Political risk should be removed from the model
B. Country Y is objectively superior in every context
C. The original data were necessarily incorrect
D. The ranking is sensitive to the firm's risk preferences