MGT520

International Business
Mid Term Subjectives
Define three basic legal systems. (Marks: 3)
ANSWER: PAGE NO.29
Kinds of Legal Systems:
1. Common law. Laws are based on tradition, precedent, and custom (e.g., United States, United
Kingdom).
2. Civil law. The legal system is based on a detailed set of laws that make up a code (e.g.,
Germany, France, Japan).
3. Theocratic law. The legal system is based on religious precepts (e.g., Iran).
China become economy powers in coming year explain?
ANSWER:
China has the largest population in the world. It has most economical production resources and it
can achieve economies of scale very easily. Due to these factors china's export are increasing at
an exponential rate. Which shows that China will be the biggest economy in the world in the
upcoming years.
Define New trade theory and Hekscher-Ohlin theory.
ANSWER
New Trade Theory says that the international trade can be made more beneficial by achieving
economies of scale and expanding international relations.
Hekcsher-Ohlin theory says that a country will expand and focus on the exports of goods or
services in which it excels and vice versa for imports.
What is the free trade theory of Adam smith? Define its characteristics
ANSWER:
Adam smith says that there should be fair and free trade between the countries.
Free trade theory as it appears form its title, says that there should be free trade in between the
countries to get the maximum benefits from each other resources. International trade will be
equally beneficial for all the countries by doing this.
Adam Smith argued that countries differed in their ability to produce goods efficiently, and they
should specialize in the production of the goods they can produce the most efficiently.
Define unspoken language and spoken language with examples (Marks: 3)
ANSWER: PAGE NO.55
Unspoken language is the body language or the language of expressions. Spoken language is the
language of words.

There are two aspects of legal considerations; first is to ensure legal liabilities and second
one is to ensure legal rights. Explain both the aspects with the help of examples? (Marks: 5)
ANSWER:
Aspects of legal consideration:
Legal Liabilities: When a firm is having a binding by law to pay or offer a certain thing to its
customers or other stakeholders. In simple words any legal responsibility (financial or non
financial) of a company will be called as the legal liability.
Legal rights: Legal rights deal with the privilege and the right which is given to a firm by the
law.
For example, if a company has copyrights over its products then their will be a legal permission
for that particular company to sell these copyrights to any other firm. Similarly if somebody
steals these copyrights, it would be the owner's right to go against him in the court to claim his
right.
Mercantile theory was presented in Britain in 16th century define. (Marks: 3)
ANSWER:
Mercantile theory says that more exports than imports guarantees more healthy economy.
After 1980 mostly countries shifted their economies from planed a mixed economy system
to free market economy system. What was the basic reason for it?
ANSWER:
The reason for movement of countries from planed to mixed economy is that the mixed economy
offers more chances for innovation and creation than the planned economy.
What is religion and ethics system and do they affect economy?? (Marks: 3)
ANSWER: PAGE NO.49
Religion can be defined as a system of shared beliefs and rituals that are concerned with the
realm of the sacred.
Ethical systems refer to a set of moral principles, or values, that are used to guide and shape
behavior.
Religion and ethical systems define the way of life which then are transformed into daily
practices. So indirectly religion and ethical systems both affect the business practices of a
society.
Which political system is most appropriate for entrepreneurship? Give reason!!
ANSWER:
Existing political system in this world are the following.
1. Democracy
2. Republic
3. Monarchy

4. Communism
5. Dictatorship
Democracy is best suitable for entrepreneurship. Democracy gives open opportunity for
innovation and acceptance of change.
Define caste system, class system and social mobility
ANSWER:
Caste System: When certain groups of people are identified on the basis of their birth attributes,
it is called as caste system.
For example in India we observe cast system like Brahman, Shooder etc. are the socially
identifiable castes.
Class System: When certain groups of people are identified on the basis of their income
attributes, it is called as class system.
For example in Pakistan we have lower class, middle class and upper class.
Social mobility is the amount of ease through which one can move from one class to other class.
What are HOfsted model criticism and its demerits? At least three points. (Marks: 3)
ANSWER:
Critics say that hofsted model is politically influenced, based on a very small sample and also it
has very less dimensions.
Define The Leontief's paradox:
Leontief's paradox in economics is that the country with the world's highest capital-per worker
has a lower capital/labor ratio in exports than in imports. This econometric find was the result of
Wassily W. Leontief's attempt to test the HeckscherOhlin theory empirically.
What is Hedging? How can a manager reduce political risk by using this technique?
(Marks: 3)
ANSWER: PAGE NO.39
Hedging is an investment technique to reduce political risk.
Since the 1960s, there have been two notable trends in the demographics of the
multinational enterprises, what are these trends? Give some detail. (Marks: 3)
ANSWER:
MNCs are emerging from developing countries and most of them are from Asia.
Write your point of view regarding Hinduism and their religious beliefs implication on
their economy. (Marks: 5)
ANSWER: PAGE NO.49
As a religion Hinduism promotes spirituality over materialism even in the business matters.

Define how late movers obtain advantages or disadvantages. Explain with a SCENARIO.
(Marks: 5)
ANSWER:
Late movers are those firms who enter into a business a little later as compared to the other firms
in the industry. Late movers may find some entry barriers. On the other hand late movers may
find some developed market which is beneficial for them.
What are First mover advantages and demerits if any? (Marks: 5)
ANSWER: PAGE NO.74
Taoka and Beeman suggested which means of adaptation? (5 marks)
ANSWER: PAGE NO.38
Working in a culture where cultural differences are high or lower than the home country.
Define how managers tackle this issue using different tactics with terminologies or factors.
(Marks: 5)
ANSWER: PAGE NO.52
Discuss cultural characteristics that affect a persons social ranking. (Marks: 5)
ANSWER: PAGE NO.45
How in different culture political risk factor is managed in business? (5marks)
ANSWER: PAGE NO.
How many laws with reference to international business are practicing in the world name
them and also name the countries which follow them. (Marks: 3)
ANSWER: PAGE NO.