Chapter 1: Globalization Part 1

In January 2006, a Shanghai court said Coffeebux's decision to use the logo and similar sounding name to Javabucks was _____.

"clearly malicious"

Which of the following expresses one of the reasons why managing an international business is different from managing a purely domestic business? -The range of problems confronted by a manager in a domestic business is wider and the problems more complex that those confronted by a manager in an international business. -International business transactions use the Euro instead of the U.S. dollar.-An international business does not need to contend with government intervention whereas a domestic business must work within the confines of their local government. -An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system.

An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system.

Which statement is a general implication of globalization?

As a result of globalization, a severe crisis in one region of the world can affect the entire globe.

Econometric studies show a hump-shaped relationship between income levels and pollution levels. Which of these statements reflects that relationship?

As an economy grows and income levels rise, initially pollution levels also rise.

The IMF and World Bank were created in 1944 by 44 nations that met to maintain order in the international monetary system and promote economic growth.

Bretton woods institutions: IMF and the World Bank

The North American Free Trade Agreement (NAFTA) was formed in 1994 among

Canada, Mexico, and the United States.

Element changed because of The Changing World Order

China

What country has a Communist Totalitarianism system

China

Which of the following factors contributed to the Great Depression of the 1930s? -Artificial fixing of currency rate by China -Problems in the U.S. subprime mortgage lending market -Countries progressively raised trade barriers against each other -Outsourcing of manufacturing units to developed nations

Countries progressively raised trade barriers against each other

What is an accurate characterization of the role of international business investments in Latin America today?

Debt and inflation are down and foreign investment is welcomed.

Which of the following actions was implemented in the Uruguay Round, finalized in December 1993? -Reduction in the protection for patents, trademarks, and copyrights -Establishment of the World Trade Organization -Extension of the GATT to cover consumer products -Enhancement of trade barriers

Establishment of the World Trade Organization

Clean Chemical Corp. recently moved its operations from Houston, Texas, to Somalia. The decision to move was the result of new federal regulations regarding clean air standards that all chemical corporations are subjected to. A critic of globalization would say this example demonstrates what concern?

Facilities in advanced nations are moving to less developed countries that have lower environmental regulations. C

Cultural differences have no effect on the way an international firm conducts its business around the globe.

False

Globalization resulted in a decrease in non-U.S. firms' investment across national borders.

False

Since the 1960s, a notable trend in the demographics of the multinational enterprise has been the rise of U.S. multinationals.

False

What country has a Social Democracy system

France

A series of treaties that reduced barriers to trade.

GATT: General Agreements on Tariffs and Trade

Finance ministers and central bank governors of major economies coordinate policy on global financial crises.

GTO: Global Transport Organization

According to globalization supporters, what is an advantage of globalization?

Globalization helps create jobs in all countries that participate in the global trading system.

According to globalization opponents, what is a disadvantage of globalization?

Globalization results in companies "exporting jobs" to low-wage nations.

Element changed because of The Changing Nature of Multinational Enterprise

Hisense

The _____ is often seen as the lender of last resort.

International Monetary Fund

What organization is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations?

International Monetary Fund (IMF)

The WTO arbitrates trade disputes between its member states. What is one power of particular interest that the WTO can use?

It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations.

What country has a Right-Wing Totalitarianism system

Italy in the 1930s

Using the information on political economy in your text and the case above, how would you characterize Venezuela's political economy under President Nicolas Maduro?

Pseudo-democracy

What country has a Theocratic Totalitarianism system

Saudi Arabia

What occurs according to Moore's law?

The power of microprocessor technology doubles and its cost of production falls in half every 18 months.

Which of the following statements pertaining to changes in the global economy of the 21st century is true? -Barriers to the free flow of goods, services, and capital have increased. -Volume of global output has been growing more rapidly than cross -border trade and investment.-National economies are becoming more independent. -The world is moving toward an economic system that is more favorable for international business.

The world is moving toward an economic system that is more favorable for international business.

Based on the information on political economy in the text and the case on Venezuela above, which statement best characterizes the situation in Venezuela?

There is probably a high level of corruption within the government.

One of the U.N.'s Millennium Goals was to cut in half the number of people living in extreme poverty by 2015. Which of the following is an accurate statement concerning this goal or its impact?

This goal was reached five years ahead of schedule.

Element changed because of The Changing FDI Picture

Toyota

One concern frequently voiced by those opposed to globalization is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe.

True

The World Bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments.

True

The agricultural reforms discussed in the Doha talks of the WTO, if implemented, would provide the world's poorer nations with access to the markets of the developed world.

True

As much as 70 percent of its work is devoted to establishing higher standards of living, full employment, and conditions of economic and social progress and development.

UN

What country has a Representative Democracy system

United States

What country has seen a relative decline in its share of world output between 1960 and 2018?

United States

Primarily responsible for policing world trading system.

WTO: World Trade Organization

The _____ was created in 1944 by 44 nations that met in Breton Woods, New Hampshire to promote economic development.

World Bank

The organization of 183 countries all of which have signed treaties to protect intellectual property rights is known as the _____.

World Intellectual Property Organization

What country has a Tribal Totalitarianism system

Zimbabwe

Countries that receive loans from the IMF are required to

adopt specific economic policies to attain stabilization.

One suggestion for helping poor countries enjoy the benefits of free trade is for richer nations to reduce barriers to importing products from those nations particularly for textiles and _____ products.

agricultural

Opponents of globalization argue that falling trade barriers

allow firms to move manufacturing activities to countries with lower wage rates.

According to the UN Charter, one of the four purposes of the UN is to

be a center for harmonizing the actions of nations.

Declining Trade Barriers

better ability to export goods Political and social regulations can limit the ability of a company to export goods to a foreign country

declining investment barriers

better ability to optimize location economies With their removal, a company can base production at the optimal location for that activity

When costs must a manger evaluate in international business

bribe payments infrastructure issues resolving contract disputes

Grossman and Krueger's study revealed the relationship between pollution levels and income. Which pollutant was the exception to their study?

carbon dioxide

Which country has seen their share of world output increase the most from 1960 to today?

china

Globalization has enabled organizations to reduce their costs of production by

creating manufacturing units in developing countries.

Economic Trends from the Changing World

deregulation privatization spread of market-based systems

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the

developing nations of the world such as China, India, and Brazil.

A macro factor underlying the trend toward greater globalization is the

dramatic developments in information processing and other technologies.

One result of the Uruguay Round was

enhanced protection for patents, trademarks, and copyrights.

The minimum that a firm has to do to engage in international business is to

export or import products from other countries.

The labor, energy, land, and capital that a company has access to are known as

factors of production.

Workers: argument for/against globalization

for: development of better skills (employees have access to better training and skill development which might result in higher wages) against: loss of jobs due to competition (when entering the global market, competitive forces may equate to a loss of jobs)

Producers: argument for/against globalization

for: more markets to sell in (a global market provides more opportunities to sell products) against: can go bankrupt due to competition (Companies that enter the foreign market possibly face greater competition)

Consumers: argument for/against globalization

for: more products to choose from (companies are able to ship their products anywhere in the world which means there are more products to choose from) against: don't know how products are made (there are no global standardization regulations and products made in another country may not be adequately or safely made)

The Environment: argument for/against globalization

for: tougher laws lead to lower pollution rates (when countries gain more wealth, they are more likely to enact stricter laws for pollution control) against: lack of adequate regulations causes abuse (advanced nations move manufacturing facilities to less developed countries where regulations are not in place)

California-based Urban Health Source has invested resources in business activities in Italy. What type of business activity does this represent?

foreign direct investment

Savvy Skin Care, a U.S.-based beauty products manufacturer, has set up a manufacturing plant in Hong Kong. This is an example of

foreign direct investment.

West Electronic Corporation sources goods and services for its electronics products from different locations around the globe in an attempt to take advantage of differences in the cost and quality of labor and land. This practice is an example of the

globalization of production.

enhanced communication technologies

growth in e-commerce The microprocessor enabled the explosive growth of high-power, low-cost computing

Opponents to globalization believe that when U.S. companies outsource service activities, such as call centers, to a lower-cost foreign supplier, it results in

higher unemployment in wealthy advanced economies such as the United States.

For foreign direct investment (FDI) to occur, a firm should primarily

invest resources in business activities outside its home country.

An international business... -needs to have homogenous practices across countries. -is an MNE. -has an added layer of U.N. regulations. -is any firm that exports or imports.

is any firm that exports or imports.

enhanced transportation technologies

lowered distance between countries Containerization has brought down the cost of shipping goods significantly

During early globalization efforts, outsourcing was typically confined to _____ activities.

manufacturing

When benefits must a manger evaluate in international business

middle-class population growth potential free market economy first-mover advantages

Globalization critics argue that the decline in unskilled wage rates is due to the... -migration of low-wage manufacturing jobs offshore. -privatization of government owned enterprises. -regulation of the global market by WTO. -technology -induced shift towards skilled jobs.

migration of low-wage manufacturing jobs offshore.

Before Hugo Chavez took power in 1999, what type of economic system was in place in in Venezuela?

mixed

How can Venezuela's economic system best be described during Hugo Chavez's years as president?

mixed

Hugo Chavez's move to nationalize troubled firms is consistent with a _____.

mixed economy

Gigantic Games., a U.S.-based company that specializes in strategy-based board games, has production facilities in Poland and Spain. Based on this information, Gigantic Games can be classified as what type of enterprise?

multinational

At the Doha Round of the WTO in late 2001, an agenda was established to..

phase out subsidies to agricultural producers.

Intellectual property rights are intended to _____.

protect original ideas/works

The philosophy behind intellectual property rights is to _____.

reward the creator of an idea

What is acting as a deterrent for foreign firms willing to do business with former communist nations of Eastern Europe and central Asia?

signs of growing unrest and totalitarian tendencies seen in these countries

Political Trends from the Changing World

spread of democracy new world order

One advancement that has lowered the barriers many small firms face when building international sales is

the Internet.

Gerald bought his son, David, a computer two years ago. Recently, he decided to buy his daughter, Julian, a computer of her own. When applying Moore's Law to the two-year gap between the purchase of the computers, it is most likely that

the microprocessor in Julian's computer will be more advanced in terms of power than that of David's.

The stock of foreign direct investment refers to... -the entry of funds into a country when foreigners make purchases in the country's stock and bond markets. -the total cumulative value of foreign investments. -movements of labor, capital, and other factors of production between countries.-total export or import products from other countries.

the total cumulative value of foreign investments.

Why was the World Trade Organization established?

to police the international trading system

When risks must a manger evaluate in international business

unexpected political change economic uncertainty

Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the

wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted. Correct