An important task for any firm trying to decide whether it should internationali

Question

An important task for any firm trying to decide whether it should internationalize or not is to assess which countries have country risk and which do not

a. true

b. false

Social democracy in Europe has resulted in_____________

a. regulations have forced foreign firms to invest elsewhere

b.politically conscious foreign firms have begun investing in European socialist nations

c.low income tax rates have encourages an influx of FDI

d.political stability has decreased the country risk of socialist nations

Explanation / Answer

1.Answer – (a) True

Internationalisation of firm’s business refers to increasing the involvement of business with any other country.

When firms make their investment in foreign countries they have to consider various factors like –

Economic factors,

Political Factors,

Legal Factors,

Environmental factors, etc

So, Country risk is a kind of political risk that has to be considered before internationalisation of business. Country risk is imposed by Government of specific country on its financial instruments and if firms do not evaluate such kind of risk then there can be loss in investment made by them. As economic and political environment is dynamic and it keeps on changing so it becomes necessary for the firms to analyse all types of risk before investing outside.

2.Answer – (a) regulations have forced foreign firms to invest elsewhere

Social democracy refers to adapting socialism by democratic ways.

In social democracy, government regulates the public sector. Social democracy in Europe aimed at reducing inequality, support to public services, etc. However, in social democracy even if people have their right to choose the kind of services there is existing role of government also which did not turn out well for foreign firms.

Government regulations imposed on foreign firms was not acceptable by them which forced them to invest in other countries.

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