Q#1: Define three basic legal systems.
Answer:
Three basic legal systems are:
- Common Law
Laws are based on tradition, precedent, and custom (e.g., United States, United Kingdom). - Civil Law
Legal system based on a detailed set of laws that form a code (e.g., Germany, France, Japan). - Theocratic Law
Legal system based on religious precepts (e.g., Iran).
Q#2: China becoming economic power in coming years – explain.
Answer:
China has the largest population in the world and vast economic production resources. It can achieve economies of scale easily. Due to increasing industrial production and exports, China’s economy is growing rapidly. Therefore, China is expected to become one of the largest economies in the world in the coming years.
Q#3: Define New Trade Theory and Heckscher-Ohlin Theory.
Answer:
New Trade Theory:
International trade becomes more beneficial through economies of scale and increased international market expansion.
Heckscher-Ohlin Theory:
A country exports goods in which it has abundant resources and imports goods in which it is less efficient.
Q#4: What is Free Trade Theory of Adam Smith? Define its characteristics.
Answer:
Adam Smith’s Free Trade Theory states that countries should engage in free and fair trade without restrictions.
Characteristics:
- Countries should specialize in goods they produce efficiently
- Trade should be unrestricted
- All countries benefit from exchange of resources
- Promotes economic efficiency and global cooperation
Q#5: Define unspoken language and spoken language with examples.
Answer:
Unspoken Language:
Body language and facial expressions (e.g., smiling, eye contact).
Spoken Language:
Communication through words (e.g., speaking English or Urdu in conversation).
Q#6: Legal liabilities and legal rights – explain with examples. (Marks: 5)
Answer:
Legal Liabilities:
Obligations of a company imposed by law (financial or non-financial).
Example: Paying taxes or compensating customers.
Legal Rights:
Legal permissions given to a firm by law.
Example: Copyright ownership allows a company to legally sell or protect its products in court.
Q#7: Mercantile Theory defined. (Marks: 3)
Answer:
Mercantile theory states that a country’s economic strength increases when exports are greater than imports, leading to a positive trade balance and stronger economy.
Q#8: Why countries shifted from planned to mixed/free market economy after 1980? (Marks: 3)
Answer:
Countries shifted because mixed/free market economies provide:
- More innovation opportunities
- Greater efficiency
- Increased competition
- Better economic growth compared to planned economies
Q#9: What is religion and ethics system? Do they affect economy? (Marks: 3)
Answer:
Religion is a system of beliefs and rituals related to sacred values.
Ethical systems are moral principles guiding behavior.
Yes, they affect the economy because they influence business practices, work ethics, and social behavior.
Q#10: Which political system is most appropriate for entrepreneurship? (Marks: 3)
Answer:
Democracy is the most suitable system for entrepreneurship because it supports:
- Freedom of business
- Innovation
- Equal opportunities
- Market competition
Q#11: Define caste system, class system and social mobility. (Marks: 5)
Answer:
Caste System:
Social ranking based on birth.
Class System:
Social ranking based on income and wealth.
Social Mobility:
The ability to move from one social class to another.
Q#12: Hofstede model criticism (at least 3 points). (Marks: 3)
Answer:
- Based on limited sample size
- Politically influenced interpretation
- Limited cultural dimensions
- May not represent all countries accurately
Q#13: Define Leontief Paradox. (Marks: 3)
Answer:
Leontief Paradox shows that a capital-rich country (like USA) exported labor-intensive goods instead of capital-intensive goods, which contradicted Heckscher-Ohlin theory.
Q#14: What is Hedging? How does it reduce political risk? (Marks: 3)
Answer:
Hedging is a financial strategy used to reduce risk.
Managers use it by investing in multiple countries or currencies to minimize losses caused by political instability.
Q#15: Trends in multinational enterprises since 1960s. (Marks: 3)
Answer:
- Growth of MNCs from developing countries
- Strong emergence of Asian multinational companies
Q#16: Hinduism and its economic implications. (Marks: 5)
Answer:
Hinduism emphasizes spirituality over materialism. This influences business behavior, encouraging ethical conduct and long-term stability over aggressive profit-making.
Q#17: Late movers advantages and disadvantages (scenario). (Marks: 5)
Answer:
Late movers enter an industry after others.
Advantages:
- Learn from competitors
- Avoid early risks
- Use improved technology
Disadvantages:
- Entry barriers
- Less market share
Scenario:
A company entering smartphone industry later can use advanced technology but may struggle against already established brands.
Q#18: First mover advantages and demerits. (Marks: 5)
Answer:
Advantages:
- Strong brand recognition
- Market leadership
- Customer loyalty
Disadvantages:
- High risk
- High initial cost
- Uncertain demand
Q#19: Taoka and Beeman adaptation method. (Marks: 5)
Answer:
They suggested adapting to cultural differences by working in environments where cultural differences are either high or low compared to the home country.
Q#20: Cultural characteristics affecting social ranking. (Marks: 5)
Answer:
Social ranking is affected by:
- Income
- Education
- Family background
- Occupation
- Social status
Q#21: Managing political risk in different cultures. (Marks: 5)
Answer:
Political risk is managed through:
- Hedging strategies
- Diversification
- Insurance policies
- Local partnerships
- Careful country selection