Global Business Environment

Adaptation

Adaptation is any modification of the domestic product for the foreign market.

Civil law

Civil law is based on a comprehensive system of laws that must be interpreted. Countries under civil law have more detailed, prescriptive laws in which the role of the judge is to investigate whether a law has been broken.

Traditional push model

Focuses on the needs of the product to determine how to manage the supply line.

Trademark

Legal protection for word, name, symbol, device

Quantitative performance criteria

Quantitative performance criteria are specific and measurable conditions that a country must meet to complete a review.

Secondary sources

Secondary sources offer explanations and interpretations of information, which is useful for learning about new topics

Subsidiary

The subsidiary is a company owned or controlled by a parent company. It is a form of direct investment.

A car company wants to expand internationally but encounters much international competition to reduce cost while responding to local needs. Which strategy should the company use to meet this goal under these conditions? Communication Web Transnational Export

Transnational. This strategy is one in which a company must be nimble to respond to cost pressures while customizing products to local markets. Transnational strategies have to deal with the problems of standardization (cost) and multidomestic strategies (local responsiveness).

A company wants its expatriates to receive the best training to adapt to the local environment in the host country. What is the goal of this training? Cultural agility Cultural homogeneity

Cultural agility. The goal of choosing the correct training is to provide the expatriate with cultural agility to best integrate into the host nation's culture.

Common law

Common law is based on tradition and precedent. Common law is based on precedence. Any activity that is not clearly illegal may be acceptable. The role of the judge is to hear arguments from both parties and make a judgment. This judgment stands as precedent for future cases.

Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases? Common Theocratic Civil Religious

Common. In common law systems, judges hear arguments from both parties and make a judgment. This judgment stands as precedent for future cases.

Which strategy is used by governments to limit the foreign direct investment in a country? Creating foreign ownership restrictions in the country Creating domestic ownership restrictions in the country

Creating foreign ownership restrictions in the country

What is the purpose of the IASB? Enforcing compliance to IFRS Creating international standards of accounting Enforcing compliance to GAAP

Creating international standards of accounting. The IASB is responsible for creating international standards of accounting.

Which law system can vary from community to community and is found in countries without strong formal justice systems? Customary Common Civil Canon

Customary. This is generally found at the tribal or local level, is based on longstanding local customs, and is often transmitted orally.

What is the result of the existence of multinational businesses? Political integration among countries Economic integration among countries

Economic integration among countries

NAFTA

NAFTA is an agreement signed by the governments of the United States, Canada, and Mexico to create a trade bloc in North America to reduce or eliminate tariffs among the member countries and to thus facilitate trade.

Which agreement was implemented in 1994 and helped form a free-trade zone between Canada, the United States, and Mexico by decreasing tariffs and trade barriers? CARICOM NAFTA USMCA CAFTA-DR

NAFTA.

Non-Governmental Organizations NGOs

NGOs transcend borders to work on issues that affect people worldwide. Any nonprofit, voluntary citizens' groups that are organized on a local, national, or international level.

Which issue was the main purpose of the creation of the European Union? Fiscal policy Natural resources Currency Labor

Natural resources. The driving issue was that one country or region could control natural resources, such as oil or land, in a monopoly to the detriment of other European countries.

European Union

The EU was initially established to prevent any future wars. The EU faces many challenges but has its long history and shared governance to help the EU countries overcome their differences.

Tariffs

Tariffs are taxes imposed on imports. Two kinds of tariffs exist: specific tariffs, which are levied as a fixed charge, and ad valorem tariffs, which are calculated as a percentage of the value. Many governments still charge ad valorem tariffs to regulate imports and raise revenues for their coffers.

ASEAN

The Association of Southeast Asian Nations was created in 1967 by five founding-member countries: Malaysia, Thailand, Indonesia, Singapore, and the Philippines. Since its inception, Myanmar (Burma), Vietnam, Cambodia, Laos, and Brunei have joined the association. ASEAN's primary focus is on economic, social, cultural, and technical cooperation as well as on promoting regional peace and stability.

CARICOM

The Caribbean Community and Common Market was formed in 1973 by countries in the Caribbean with the intent of creating a single market with the free flow of goods, services, labor, and investment. Countries include Antigua & Barbuda, Belize, Commonwealth of Dominica, Grenada, Haiti, Montserrat, Federation of St. Kitts & Nevis, St. Lucia, and St. Vincent & the Grenadines, Bahamas, Barbados, Guyana, Jamaica, Suriname, Trinidad and Tobago.

CAFTA-DR

The Central America Free Trade Agreement (CAFTA-DR) was passed in 2005. Includes USA, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The goal of the agreement is the creation of a free trade area similar to NAFTA.

Mercosur

The Common Market of the South, Mercado Común del Sur or Mercosur, is comprised of Argentina, Brazil, Uruguay. Mercosur suspended Paraguay in 2012 due to a lack of commitment to democracy and has suspended Venezuela indefinitely starting in 2016 due to a lack of commitment and a violation of human rights. Committed to maintenance of peace throughout the southern cone.

Deepwater Horizon Oil Spill

The Deepwater Horizon oil spill (also referred to as the BP oil spill) is an industrial disaster that began on April 20, 2010, in the Gulf of Mexico on the BP-operated Macondo Prospect. Today, it is considered to be the largest oil spill in the history of the petroleum industry, with total discharge estimated at 4.9 million barrels.4

Environmental Protection Agency (EPA)

The EPA is charged with monitoring the environmental practices of industry. They have carried out bilateral programs with many countries, allowing other nations—particularly countries with economies in transition—to benefit from U.S. experience in developing appropriate and successful environmental measures.

The World Bank has two goals:

1. End extreme poverty. The marker for success at meeting this goal will be if less than 3% of people live on less than US$1.90 a day by the year 2030. 2. Improve the income of the lowest 40% of citizens in each country.

Five stages of entering a global market

1. Market entry 2. Product specialization 3. Value chain disaggregation 4. Value chain reengineering 5. Creation of new markets

A group of communities lack internet access due to their remote location. The lack of transportation infrastructure to this remote part of the country means that it is almost impossible to move equipment there to build the digital infrastructure. Which approach is being used by major technology companies to address this challenge? Building cellular towers to provide 5G broadband wireless services Using helium-filled balloons to offer cheaper cell coverage from the stratosphere Providing communication technology to leverage military servers in those locations Creating networks of cloud-based servers to provide improved internet access

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A large multinational corporation is looking to expand its business to different countries across the globe. Fast internet speeds are very important for the company's potential customers to access their product and service offerings. Which country should the company target to offer its products and services? Portugal France South Korea Israel

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Which legislation is aimed at increasing ethical financial transparency in corporate America and affects foreign businesses that want to be listed on a U.S. stock exchange? FCPA SOX NAFTA FTCA

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Which organizational structure is used by global firms and allows employees to share information more readily across assignment boundaries? Divisional Matrix Departmental Teams

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Which economic actor benefits as the U.S. dollar weakens? A foreign investor in the U.S. A foreign firm exporting to the U.S. A U.S. tourist abroad A U.S. investor abroad

A U.S. investor abroad. A U.S. investor abroad invests money in another country by first converting U.S. dollars to a foreign currency, making the investment, then later converting+ it back to U.S. dollars. As the U.S. dollar becomes weaker, the rate of return on the investment is larger as the investor gets more U.S. dollars from converting back from the foreign currency.

A manufacturing company with factories in many countries decides to become more energy efficient by conducting an energy audit. The company hopes this first step of the process will help it determine the pieces of equipment that can be retained and those that must be replaced with newer forms of technology. Which piece of information will be provided by this audit? A baseline that shows current levels of energy being used A strategy that should be followed to become more energy efficient

A baseline that shows current levels of energy being used

Kyoto Protocol

A binding resolution to reduce greenhouse gases. Although the United States initially supported the Kyoto Protocol (1997), the Senate failed to ratify the treaty stating the treaty threatened the U.S. economy and did not require developing nations to lower their emissions at the same rate as developed countries.

Brownfield FDI

A brownfield FDI is when a company or government entity purchases or leases existing production facilities to launch a new production activity. One application is taking an "unclean" business, such as a steel mill or oil refinery, is cleaned up and used for a less polluting purpose, such as commercial office space or a residential area. Usually less expensive and can be implemented faster; however, a company may have to deal with existing employees, outdated equipment, entrenched processes, and cultural differences.

Which condition is part of a contract between international companies that are based in different nations? A choice of law clause A clause against unfair contract terms

A choice of law clause. This specifies the laws and the jurisdiction under which international disputes will be settled. International businesses operating in different countries include such clauses in their contractual agreements to clarify ahead of time how disputes will be settled.

Adam Smith's Absolute Advantage Theory

A country exports the goods it can make more efficiently or more cheaply.

Net FDI inflow

A country's FDI can be both inward and outward. As the terms would suggest, inward FDI refers to investments coming into the country, and outward FDI are investments made by companies from that country into foreign companies in other countries. The difference between inward and outward FDI is called the net FDI inflow, which can be either positive or negative.

Crawling pegs (2/3 pegged floating currencies)

A crawling peg is an exchange rate regime, usually seen as a part of fixed exchange rate regimes, that allows gradual depreciation or appreciation in an exchange rate. The system is designed to peg at a specific value but, at the same time, to "glide" in response to external market uncertainties. In dealing with external pressure to appreciate or depreciate the exchange rate (such as interest rate differentials or changes in foreign exchange reserves), the system can meet frequent but moderate exchange rate changes to ensure that the economic dislocation is minimized.

Which economic integration stage offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers? Free trade area Political union Common market Customs union

A customs union offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers.

Fixed Exchange Rate

A fixed exchange rate can be pegged or fixed against gold, or frequently small countries will peg their currency against a large country with which it does the majority of its trade.

Which economic actor benefits as the U.S. dollar strengthens? A U.S. exporting firm A foreign tourist in the U.S. A U.S. investor abroad A foreign firm exporting to the U.S.

A foreign firm exporting to the U.S. The firm earns U.S. dollars through export sales, then converts it back into their home currency. A stronger U.S. dollar would mean they can buy more of the home currency.

Free Floating Exchange Rate

A free-floating exchange rate fluctuates based on supply and demand. Many country's central banks intervene in a free-floating economy by buying and selling their currency to keep its value within a specific range. This is called a managed float.

Fronting Loans

A fronting loan is a loan made between a parent company and its subsidiary through a financial intermediary such as a bank. The advantage of using fronting loans as a way to lend money, rather than the parent lending the money directly to the subsidiary, is that the parent can gain some tax benefits and bypass local laws that restrict the amount of funds that can be transferred abroad. With a fronting loan, the parent deposits the total amount of the loan in the bank. The bank then lends the money to the subsidiary. For the bank, the loan is risk free because the parent has provided the money to the bank. The bank charges the subsidiary a slightly higher interest rate on the loan than it pays to the parent, thus making a profit.

Licensing

A licensor can provide its products, services, brand, and technology to a licensee via an agreement. This agreement will describe the terms of the strategic alliance, allowing the licensor affordable, low-risk entry to a foreign market, while the licensee can gain access to the competitive advantages and unique assets of another firm. This is potentially a strong win-win arrangement for both parties and is a relatively common practice in international business.

Market economy

A market economy is a decentralized economy in which firms and households determine how resources are allocated based on how best to satisfy their needs. A full market economy is destined to fail because it would have no central or governmental control.

Which level of economic integration presents an alliance of all policies by a common organization? Common market Free trade area Political union Customs union

A political union is defined as when a single nation is formed and a mutual organization confederates all policies.

VCs

A popular term in the Silicon Valley and other technology hubs, VCs accumulate capital from a number of speculative investors and seek strong business opportunities still in the start-up phase. Winning capital from a VC can be quite lucrative, as the amount of capital invested can be high (high enough to justify international operations). However, investors typically take a significant equity interest in the firm as well. VCs would generally be represented by a board that would assess the viability of the business as an investment and determine the terms (ownership by investors) and returns.

Portfolio investment

A portfolio investor purchases shares of stock in a foreign company and therefore owns part of the corporation. Receives dividend payments, participates in all decisions, and sell the stock at any time for a profit or at a loss. Generally, foreign portfolio investors invest to diversify their portfolio.

Subsidy

A subsidy is a form of government payment to a producer. Types of subsidies include tax breaks and low-interest loans, both of which are common. Subsidies can also be cash grants and government-equity participation, which are less common because they require the direct use of government resources.

Machine Learning

AI has been made possible by progress in machine learning algorithms and increased computing power. Machine learning allows computers to learn from experience with previous data and patterns. Increased computing power has increased people's ability to gather and analyze vast amounts of data. These data are used to train AI algorithms.

A company plans on using horizontal integration. Which strategy is being adopted by this company? Growing the company to include two or more stages of production Acquiring companies that supply the same or similar goods and services

Acquiring companies that supply the same or similar goods and services. An example of this when two companies that process consumer foods, Heinz and Kraft, became one company in 2015. This is an accurate reflection of horizontal integration.

A multinational corporation has manufacturing facilities in many Asian countries due to cheaper labor. Which strategy is the corporation using? Acquisition of resources Centralized portfolio management

Acquisition of resources

When expanding internationally to a country with a lower average income, a company made efforts to reduce the price of its product, even though it eliminated some of the benefits the product has in other markets. This allowed for greater sales in the new market. Which strategy is being used by this company? Standardization Global Adaptation

Adaptation. Product adaptation is when a product is changed to be more appealing in a specific market.

Common Market (3/5 Economic Co-ops)

Allows for the creation of economically integrated markets between member countries. Trade barriers are removed, as are any restrictions on the movement of labor, technology, and capital between member countries. Like customs unions, there is a common trade policy for trade with nonmember nations. This means workers no longer need a visa or work permit to work in another member country of a common market. Free movement of labor and capital. Labor may move to the country that offers the highest wages, and investment capital may be transferred to the country that offers the highest return on investment Example is the Common Market for Eastern and Southern Africa (COMESA).

Economic integration

An agreement among nations to reduce or eliminate trade barriers among the nations at a minimum and to have a single political, economic, and trade policy identity at its maximum. Allow nations to have a set of integrated monetary and fiscal policies.

Export Strategy

An export strategy is used when a company is primarily focused on its domestic operations. It does not intend to expand globally but does export some products to take advantage of international opportunities. It does not attempt to customize its products for international markets. It is not interested in either responding to unique conditions in other countries or creating an integrated global strategy.

Foreign Direct Investment (FDI)

An investment is considered a direct investment if the foreign direct investor owns more than 10% of the firm. Firms engage in FDI to be close to natural resources or an affordable labor source, to avoid tariffs, to expand their markets, and to learn more about local markets. Intent of controlling and managing Company A's assets. Economies in which FDIs are in decline usually suffer adverse macroeconomic side effects. FDIs benefit both developing and developed nations by increasing jobs and bringing capital to the most successful companies.

The auto, oil, infrastructure, energy, communications, and transportation industries are good examples of...

Backward vertical FDI: when a firm brings the goods or components back to its home country

Which unethical act is addressed by the U.S. Foreign Corrupt Practices Act of 1977? Nepotism Favoritism Cronyism Bribery

Bribery. The U.S. Foreign Corrupt Practices Act of 1977 outlawed bribery of foreign officials.

Which advantage do intermediaries offer when a manufacturer uses an indirect marketing channel to distribute its products? Broader knowledge about the existing markets Stronger connection to customer base

Broader knowledge about the existing markets. One of the main reasons to use an indirect channel is that the marketing intermediaries to which the producer sells may know more about the markets.

How does the Export-Import Bank of the United States (Ex-Im Bank) help exporters? By securing a profitable trade partner for an export company By offering financing support for a portion of the export value

By offering financing support for a portion of the export value

How does the Sarbanes-Oxley Act (SOX) attempt to increase the public's trust in American companies? By enforcing companies' compliance with a dual listing on the U.S exchange By requiring public companies to have and reveal a code of business conduct and ethics

By requiring public companies to have and reveal a code of business conduct and ethics

A company sells products that many have reported on social media to be culturally insensitive, and sales have decreased significantly since the negative publicity began. How are consumers responding to the publicity? By notifying government agencies By voting with their purchases

By voting with their purchases. Consumers who do not believe the product is made in alignment with their values may not buy the product. Not buying the product is considered voting with one's wallet.

An entity launched the national emissions trading system (ETS). These guidelines are scheduled to be implemented in 2020 to control and gradually reduce carbon emissions. Which entity took this step? North American Commission for Economic Cooperation Federal Trade Commission China's National Development and Reform Commission

China's National Development and Reform Commission.

Which type of law system is based on a code and focuses on how the law is applied to the facts? Theocratic Religious Common Civil

Civil. The civil law system is an inquisitorial system where the judge investigates the facts of the case.

Transnational Strategy

Combines a standardization strategy and a multidomestic strategy. It is used when a company encounters significant cost pressure from international competitors but must also offer products that meet local customer needs. A transnational strategy is very difficult to maintain because the company needs to achieve economies of scale through standardization but also be flexible to respond to local conditions. Ford Motor Company is adopting a transnational strategy.

Heckscher-Ohlin

Competitive advantage comes from differences in natural resources. States that comparative advantage arises from having a relative excess of the factors of production such as labor, land, or capital.

Indirect Distribution

Contains one or more intermediaries between the consumer and the producer. These intermediaries include distributors, wholesalers, agents, brokers, and retailers.

Which core principle of the World Trade Organization supports equality among member nations and helps fight discrimination among them? Free trade Most-favored-nation (MFN) status Controlled tariffs Multilateral trade agreements

Controlled tariffs

Economic Union (4/5 Economic Co-ops)

Countries agree to remove barriers to trade and adopt common economic policies. The members use a common currency, harmonized taxes monetary, and fiscal policy. Example is the Eurozone, countries that adopted the euro as official currency. Strive to have a standard product and labeling standard, eliminate border controls, and establish unified policies for energy, agriculture, and social services. A standard set of laws. competition, mergers, corporate behaviors, and licensing standards.

Multidomestic strategy

Customizes products or processes to the specific conditions in each country. Retailers often use multidomestic strategies because they must meet local customer tastes. 7-Eleven is an example of a company using a multidomestic strategy. It tailors the product selection, payment methods, and marketing to the values and regulations in each country where it operates. For example, in Japan, 7-Eleven allows customers to pay their utility bills at the store.

Customs Unions (2/5 Economic Co-ops)

Customs unions provide for economic cooperation as in a free-trade zone. Barriers to trade are removed between member countries. Its primary difference from the free trade area is that members agree to treat trade with nonmember countries similarly, which means they share a common external tariff. Example is Mercosur, which consists of Argentina, Brazil, Paraguay, Uruguay, and Venezuela.

National Environmental Policy Act (NEPA)

Declared that it would be the policy of the federal government, in cooperation with state and local governments, "to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans. NEPA requires that federal agencies prepare an environmental impact statement in every recommendation or report on proposals for legislation and whenever they undertake a major federal action that significantly affects environmental quality.

What was one of the results of the Uruguay Round of the World Trade Organization negotiations? Increase in world-wide money supply Decrease in tariffs

Decrease in tariffs. The major accomplishment of the Uruguay Round of the World Trade Organization negotiations was a reduction in the number and size of tariffs.

Deep Learning

Deep learning can be used in a factory assembly line or aircraft engine where large amounts of data and images are analyzed to look for anomalies.

Bureaucratic delays

Delays at ports or other country entrances caused by administrative or bureaucratic red tape increase uncertainty and the cost of maintaining inventory.

An international company is concerned that the culture of the host nation avoids communication about bad news. What type of questions can the company ask to get better communication? Culpable Liable Deliverable

Deliverable. When the culture focuses away from yes-and-no questions, then the question should focus on the deliverable itself.

Managers in an international company are arranging jobs so similar tasks are coordinated. Which activity is being completed by this company? Delegation Segmentation Departmentalization Aggregation

Departmentalization. When a company divides its work based on specific tasks or jobs, it is referred to as departmentalization.

Which action is used by companies wishing to avoid working with vendors who use sweatshops? Developing and imposing a company internal code of conduct for vendor labor practices Sending a whistleblower to the job sites to ensure the vendor practices safe working conditions

Developing and imposing a company internal code of conduct for vendor labor practices

Discrepancies VS Irregularities

Discrepancies are best described as accounting errors that are not intentional. Irregularities are the intentional misrepresentation of accounting data with the aim to defraud.

An employee has assumed an expatriate role and is studying textbooks to learn about cultural differences in order to function smoothly in the new setting. Which helpful secondary source training is the expatriate using? Foreign language Cultural simulation Documentary

Documentary. Documentary training uses traditional methods such as textbooks and the classroom environment to focus on educating expatriates about cultures. The expatriate is studying textbooks to learn about cultural differences in order to function smoothly in the new setting.

Dumping

Dumping occurs when a company sells a product below market price, often to win market share and weaken a competitor.

Which agreement was formalized in 1993 to create a political and economic union to help a large group of countries cooperate and coordinate key aspects of their economic policy? ASEAN CAFTA-DR Mercosur EU

EU

Polycentric

Each subsidiary controls its own HR policies and practices. The focus is on each subsidiary as an autonomous business. Leadership roles and key positions are staffed by local professionals who can be immediately effective without the adjustment period needed for by someone new to the culture. This approach is used when the company values efficiency and respects the talents and education of the host country's workforce. The Siemens company embodies the polycentric approach with its attitude about hiring local talent.

Which type of globalization refers to the international movement of goods, capital, and services? Economic Cultural Anti Social

Economic

Embargoes

Embargoes are prohibitions on trade that ban imports or exports and that may apply to certain categories of products or strictly to goods supplied by certain countries.4 Embargos, which are similar to economic sanctions, generally involve a direct military or air blockage. It is a complete prohibition of trade with a specific country, state, or region.

BRICS countries

Emerging countries of Brazil, Russia, India, China, and South Africa. A trading bloc can bolster a nation's economy, provide defense and security, and encourage innovation and entrepreneurialism.

What does business ethics implicitly regulate? Consumer action Employee behavior Consumer preference External stakeholders

Employee behavior. Employers want employees to self-regulate so that when a stimulus appears they will take proper action in the interest of everyone involved, either directly or indirectly.

A company is beginning to operate on a more complex global scale and needs a seamless integration of all the data the business uses. This integration must include data from human resources (HR), employee data, sales information, and development figures. Which type of software solution should be used for this purpose? Desktop publishing Material requirements planning Spreadsheet program Enterprise resource planning

Enterprise resource planning. Enterprise resource planning (ERP) is a type of software solution design to integrate all a company's data. ERP would integrate data from human resources (HR), employee data, sales information, and development figures.

A company has decided that a foreign direct investment should be made during the next quarter to strengthen the organization. Which method should be used for this purpose? Establishing a greenfield venture Licensing Establishing a joint venture with another company Exporting

Establishing a greenfield venture. In a greenfield venture, a company creates a subsidiary in another nation from the beginning. International markets are commonly entered through this means, and subsidiaries are considered foreign direct investment strategies.

A company wants to gain market share but does not want to establish operations in other countries nor tailor its products to the other countries. Which entry strategy should the company use to meet this goal under these conditions? Transnational Multidomestic Joint venture Export

Export. The scenario describes a company that is strictly domestic but wants to earn additional revenue by sending the product overseas. Normally, a company in the other country must import the product for sale.

Ricardo's comparative advantage theory

Extends the theory to show benefits as long as each country exports the product it is comparatively more efficient at or can produce more cheaply and imports the others

Which self-governing group is supported by the U.S. government, various accounting establishments, and privately owned companies to establish accounting standards? FASB GAAP IASB IFRS

FASB. Since 1973, the primary authoritative body in charge of producing GAAP has been the Financial Accounting Standards Board

Licensing and franchising both provide a way ...

Fa person or entity to pay for the right to profit from someone else's idea or business model.

An employee who is scheduled to become an expatriate has successfully passed the survival training stage. What type of training is used by the company after passing this stage? Cultural simulation Workshop Field simulation

Field simulation. When an employee has been through the other stages of training, field simulation training is next.

The Paris Agreement

First legally binding, global climate deal. This agreement proposes concrete steps for keeping long-term global temperature increase at below 2°C. The agreement was formally ratified in October 2016; however, 13 nations have yet to ratify, including some major emitters.

What is an advantage of regional economic integration? Employment shifts preserve member countries' resources. Flexibility on labor movement develops job opportunities.

Flexibility on labor movement develops job opportunities. Economic integration often removes labor movement restrictions, which help increase job opportunities.

Which exchange rate regime allows a currency's value to fluctuate according to the foreign exchange market? Crawling pegs Floating Pegged Fixed

Floating. This regime automatically adjusts to economic circumstances.

Micro Risk Factors

Focused on a particular company or group of companies. A weak balance sheet, questionable accounting practices, or a regular breach of contracts should give rise to concerns.

Company A is located outside the home country of Company B. Company B has acquired Company A with the intent of controlling and managing Company A's assets. Which practice is being used by Company B? Foreign direct investment Portfolio investment

Foreign direct investment

Which economic actors are suppliers of U.S. dollars? Foreign firms exporting to the U.S. Foreign tourists visiting the U.S.

Foreign firms exporting to the U.S. These firms will earn U.S. dollars but will need their own currency to pay the workers based in their country; thus they are suppliers of U.S. dollars and demanders of their home currency.

The International Bank for Reconstruction and Development (IBRD)

Formal name of the World Bank. The IBRD was designed to finance economic development among its member countries.

A company wants to maintain a stable local currency exchange rate when it purchases raw materials in the host country during the year. Which type of hedging contract can the company use for this purpose? Forward Temporal Backward Peg

Forward

Which currency contract establishes a specific rate at the beginning of the contract for delivery at a future date? Swap Futures Forward Option

Forward. In the forward contract, a firm agrees to pay a specific rate at the beginning of the contract for delivery at a future date.

Command economy

Found in a communist country, most of the economic system is controlled by a centralized power. In a planned economy found in a socialist country, the factors of production are used for the common good. In an open economy, a democratic method is used to determine how to use the factors of production.

Which currency contract requires a specific exchange rate and quantity of money on a subsequent date? Swap Forward Option Future

Future. Futures contracts oblige an exchange of a certain amount of currency on a defined date and rate.

Which regulation must the Lewis Foundation address when it expands its organization into the European Union? Children's Online Privacy Protection General Data Protection Personally identifiable information Acceptable User Policy

General Data Protection. The General Data Protection regulation protects user data for those citizens of the European Union countries. The regulation applies to all companies in the world that collect data from EU citizens.

A government is managing a difficult economy that appears to be at a stand-still and a direct-tax rate that is rapidly decreasing. The government decides to use an indirect tax to improve the situation. Which tax did this government use? Corporate income Goods and services International tax treaties Capital gains

Goods and services. Goods and services are indirect taxes many governments worldwide introduce as direct-tax rates continue to decrease.

A global company has warned managers that the country involved in their current business venture typically expects small payments to be made to government officials to expedite decisions and transactions. The company has encouraged managers to avoid this type of unethical practice. Grease payments Trade policies

Grease payments. When a business engages in making small payments to government officials to expedite activities, it is a grease payment.

Horizontal FDI

Horizontal FDI occurs when a company is trying to open a new market—a retailer, for example, that builds a store in a new country to sell to the local market.

How is contract law structured as it applies to global business among nations? Vertical Horizontal

Horizontal. A horizontal business structure means that no nation is in a legally dominant position over another.

Macro Risk Factors

How foreign investment in general is affected in a particular country. By reviewing the government's past use of soft policy instruments (such as blacklisting, indirect control of prices, or strikes in particular industries) and hard policy tools (such as expropriation, confiscation, nationalization, compulsory local shareholding, or other forms of asset seizure), a company can be better prepared for potential future government action. Historically, countries that are politically unstable pose a higher risk.

Information and communications technologies (ICTs)

ICT provide access to information and promote the growth and development of fields such as health, education, knowledge sharing, agriculture, peace promotion, and disaster reduction, putting those who do not have internet access at a significant disadvantage in all of these areas.

Which set of standards establish international accounting regulations and reporting expectations? FASB GAAP IASB IFRS

IFRS. International Financial Reporting Standards (IFRS) is a set of standards by the International Accounting Standards Board (IASB) that establishes international accounting standards and reporting expectations.

What is a benefit of creating a regional economic integration agreement? Improved financial growth Greater import potential

Improved financial growth. Trade agreements create more growth opportunities for countries to trade among themselves as barriers to trade and investment are removed.

What is a potential influence of the existence of multinational corporation (MNC) on international relations? Creates international trade barriers Improves relations between countries where the MNC operates

Improves relations between countries where the MNC operates

Antidumping duties

In international trade, dumping refers to a form of predatory pricing in which exported products are priced below the cost of production or the price charged in the home market. Antidumping duties are usually extra taxes levied on the product to neutralize the predatory pricing and bring the price closer to the "normal value."

Uniform Commercial Code (UCC)

In the United States, two primary sources of law govern contracts: the common law and the Uniform Commercial Code (UCC). The UCC Article 2 has rules governing the obligations of parties, specifically to the offer, acceptance, and performance of sales contracts and so on. But it also imposes some general obligations on the parties. One deals with unfair contract terms, and the other involves rules for merchants.

Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products. What is the effect, if any, on the domestic prices of these products? Increases Stays the same

Increases

A company wishes to make a foreign direct investment in a new country where it can make and test products more easily. While local suppliers would not normally meet the requirements for its products, this new plant will accept them. Which factor affected the company's production location? Growth Innovation Incentive Cost

Innovation. The company is using the foreign direct investment to use local suppliers to make and test the new products. The company is using the location to promote innovation.

An accountant for a transnational company feels pressure from senior management to hide losses from the firm's operational activities. The requested action is legal but certainly does not give an accurate financial picture of the firm's current finances and could influence foreign investment. What type of stimulus is being used in regards to this company's organizational ethics? Technical External Internal

Internal. Since this is from within the company, this type of stimulus of ethical concern would be internal.

Special Drawing Right (SDR)

International reserve asset. Created in 1969 by the IMF in response to the Triffin paradox. Currency equivalency that nations use to pay bills and receive income through the International Monetary Fund. No inherent value, but it makes it easier for governments to pay debts and collect payments. IMF helps maintain liquidity of global funding by providing a straight-forward method for nations to borrow and loan to each other through a mechanism called the special drawing right.

A company owner is considering manufacturing using a global standardization strategy to achieve economies of scale. Why is this strategy effective? It manufactures the same product for all markets. It ensures product safety is maintained.

It manufactures the same product for all markets. Standardizing products globally means that regardless of the place of manufacture, the product can be sold in any market.

A company is expanding internationally through the purchase of other companies and decides to use the multibrand strategy. Why is this strategy appropriate? It eliminates excess inventory from the parent company. It has a purchased company with a recognizable brand in its market.

It has a purchased company with a recognizable brand in its market. A multibrand strategy is a strategy in which a company makes similar products under different brand names. This is often done when acquiring a company in a new market.

How can the corruption perceptions index (CPI) be used to understand international business ethics? It identifies nations in which corruption is frequent. It provides practical tools to build ethical integrity.

It identifies nations in which corruption is frequent. Transparency International's corruption perceptions index (CPI) tracks, rates, and ranks 180 countries based on their levels of corruption and illicit behaviors. Identifying nations in which corruption is frequent is important to understanding international business ethics.

An American salesperson is attempting to do business in a Middle Eastern country. What is one of the major cultural issues the salesperson needs to understand about this part of the world? It is more relationship-based than the United States. Individualistic culture is stronger in the Middle East than in the United States.

It is more relationship-based than the United States.

Which criticism is made about the World Trade Organization (WTO)? It protects developing countries more than developed countries. It protects developed countries more than developing countries.

It protects developed countries more than developing countries.

How does the existence of a multinational corporation (MNC) affect a country's engagement in political conflict? The home country will have a political advantage over the host country. It would make countries less likely to go to war.

It would make countries less likely to go to war. Countries do not like to go to war with a country in which they are doing business. The existence of an MNC could influence the country to not go to war with the home country of the MNC.

A company wishes to expand into a new country with its current products. The company is looking to keep the entry costs low. Which method of entry should the company use to enter the country? Strategic alliance Acquisition Licensing Greenfield venture

Licensing. Licensing provides a low-cost strategy to enter the market. The products are shipped to the host country and sold there with no localization.

Local content requirements

Local content requirements, or domestic content requirements, are rules that mandate how much of a product must be produced domestically to qualify for lowered tariffs or other preferential treatment.

Localization

Localization is a form of adaptation that customizes a product or the marketing of the product with a special location in mind. Sometimes changing the packaging is a critical step in localization.

Which agreement was established in 1988 and now has both political and economic goals to keep peace and stimulates economic growth in South American countries? MERCOSUR CAFTA-DR CARICOM NAFTA

MERCOSUR

An individual is considering entering the global market via a franchise. Which outcome should be expected by the individual if this approach is used? Low access to advertising and product training Majority of financial risk

Majority of financial risk. In opening a new location, the franchisee typically takes most of the financial risk.

A company decides to focus on economies of scale to decrease production costs and increase revenues. Why is this strategy effective? Ordering in large quantities takes advantage of bulk pricing. Ordering in small quantities ensures that shipping costs stay low. Manufacturing in large quantities keeps costs low.

Manufacturing in large quantities keeps costs low. Manufacturing in large quantities means more work can be done efficiently and at a savings. This reduces productions costs and increasing revenues.

Acceptable Use Policy (AUP)

Many organizations that provide technology services to a group of constituents or to the public require their agreement to an acceptable use policy (AUP) before those services can be accessed.

Which convention protects decent working hours for a cruise ship director who travels in international waters? Domestic Workers Convention, 2011 Equal Remuneration Convention Forced Labor Convention Maritime Labor Convention, 2006

Maritime Labor Convention, 2006. The Maritime Labour Convention, sometimes called the "Seafarer's Bill of Rights," protects the rights of seafaring workers and is law for multiple countries. This convention protects decent working hours for a cruise ship director that travels in international waters.

The four drivers of globalization

Market, cost, government, and competition.

Which drawback is involved when regional agreements are created? Regions with higher economic development increase their gap over lower developed regions. Member countries will trade less with nonmember countries.

Member countries will trade less with nonmember countries. When a regional agreement is made between countries, those members will trade more with each other and trade less with nonmember countries.

Modern pull models

Modern pull models, such as just in time (JIT), focus on lean manufacturing that is determined by customer needs. Instead of creating large amounts of products to have ready to offer customers, the pull model only produces the amounts that are being ordered by customers.

A firm in Country A exports products to Country B. The currency in Country B is strong relative to the currency in Country A. What does this mean for the firm? Decreased foreign sales Increased domestic sales Less valuable export sales More valuable export sales

More valuable export sales

Free Trade Area (1/5 Economic Co-ops)

Most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to determine trade policies with nonmember nations independently. No internal tariffs. An example is NAFTA. Requires a transferable professional certificate. Services traded are usually highly skilled professionals such as legal, accounting, technology, and medical services. Must establish of "rules of origin" to identify where a product comes from in the hope of avoiding duty evasion through re-exportation of products.

Which situation describes how Sure Start is applying the absolute advantage theory? Moving production of the batteries used in electric cars to Vietnam where labor is less expensive Establishing a European headquarters in Germany and moving key leaders to that country

Moving production of the batteries used in electric cars to Vietnam where labor is less expensive

Multinational production

Multinational production maximizes the production potential of multiple regions simultaneously to increase efficiency and mitigate production risks.

An aircraft manufacturer uses a supply chain management system in which parts of the aircraft are made in different countries and assembled at the company's headquarters. Which type of supply chain is the company using? Multinational Pull

Multinational. Multinational supply chains seek to use production strengths and low costs of different suppliers around the world. Using a multinational supply chain reduces the risk of a catastrophic event, reducing a company's ability to produce a product.

Which business challenge stems from exporting small amounts of goods through e-commerce companies? Reducing cultural barriers Time commitment with customs officials Getting products to market quickly Obeying legal restrictions

Obeying legal restrictions. Legal restrictions that cannot be avoided are usually in place in the exporting nation. While legal restrictions may be in place to protect the exporter, such restrictions may affect the company's ability to export a product or service or may add to the time or cost of exporting, all of which are challenges.

Greenfield FDIs

Occur when multinational corporations enter into developing countries to build new factories or stores. The name originates from the idea of building a facility on a green field, such as farmland or a forested area. Firms create new long-term jobs in a foreign country by hiring new employees. Countries often offer prospective companies tax breaks, subsidies, and other incentives to set up greenfield investments.

Triffin Paradox

Occurs when there is a conflict of economic interests between the short-term goals of the country and the long-term goals of the international community. It also occurs when a country's currency serves as a global reserve currency. The more U.S. dollars were used as a base reserve currency, the less faith countries had in the ability of the U.S. government to convert those dollars to gold.

Which law allows organizations damaged by an oil spill to ask for compensation and file a civil lawsuit? Clean Water Act Petroleum Sector Refinery Rule Oil Pollution Act Safe Drinking Water Act

Oil Pollution Act. The Oil Pollution Act of 1990 allows organizations damaged by an oil spill to communicate with the company responsible for the spill to ask for compensation and file a civil lawsuit.

FFF Friends, Family, or Fools

One type of investment comes from personal connections. It is known by the somewhat humorous label "Friends, Family, or Fools" (FFF). Unlike VCs and angel investors, this type of funding is usually only for capital. The FFF does not include help beyond monetary input.

Which currency contract allows for a trade of specific amount of money and exchange rate on a defined date to hedge risk in the global environment? Futures Swap Forward Options

Options. Option contracts offer the owner the right to a specified exchange rate for a particular quantity of money on a particular date but do not oblige the owner.

Geocentric

Parent company and subsidiaries work together to create an integrated worldwide HR system that allows for differences but shares resources across the organization. Leadership positions are filled by the best employees worldwide based on a meritocracy rather than on nationality. There is more fluid movement among employees, which creates diversity in the workforce. The bank, HSBC, often use this model, particularly in the financial capitals of the world.

Many governments were required to add a carbon tax to businesses based on the emission levels of their operations. This added tax stemmed from a piece of international legislation that was developed in 2016 to protect the environment. Which international initiative impacted businesses in this manner? Paris Agreement Kyoto Protocol Doha Amendment North American Agreement on Environmental Cooperation

Paris Agreement. This agreement went into force in 2016 and aimed for a decrease in global temperature.

A conglomerate company in the United States wants to conduct business in a foreign country with another major corporation but recently found out that resources are limited if both companies produced the same products at the same speed. How should these companies cooperate to reduce costs? Exporting Acquisition Partnering Licensing

Partnering. Partnering would establish an agreement so both companies will cooperate and use resources effectively.

Which intellectual property right describes a chemical company's filing on their innovative industrial process invention? Patent Trademark

Patent. A patent is filed to protect the right to an innovative invention, which must be a manufactured product, an apparatus, chemical composition, or a manufacturing process.

A multinational company initiates a division to invent new production processes in the making of its products. Which intellectual property right should the company apply for to protect its new processes? Trademark Patent Trade secret Copyright

Patent. A patent should be applied for so another company cannot steal the new process and benefit from it without any cost to the other company.

Pegged floating currencies

Pegged floating currencies are pegged to some band or value, which is either fixed or periodically adjusted. They are a hybrid of fixed and floating regimes.

Which outcome is a result of a company ensuring that shrinkage is reported in accounting? Petty theft being reduced Customer trust decreased

Petty theft being reduced. Discrepancies are unintentional accounting errors due to reasons such as incorrectly entered data and shrinkage. Accounting shrinkage can reduce petty theft, mismanaged inventory, and perishable goods going unrecorded.

Which country characteristic is most important to foreign direct investors according to a study by the World Bank? Political stability and security Macroeconomic stability and favorable exchange rate

Political stability and security. A recent World Bank study showed political stability and security to be the most important country characteristic when choosing a country to invest in.

Primary sources

Primary sources are original sources, undiluted by someone else's interpretation. Examples of primary sources would be firsthand accounts by people who have lived in the culture; raw data about everything from health statistics to business data to weather information; and newspapers, diaries, travel journals, blogs, photographs, and videos.

Which organization formed in 1970 supplements the funding available from commercial banks and other lenders to support U.S. exports? Private Export Funding Corporation (PEFCO) Overseas Private Investment Corporation (OPIC) Japan External Trade Organization (JETRO) Export-Import Bank of the United States (Ex-Im Bank)

Private Export Funding Corporation (PEFCO). This is a private-sector organization formed in 1970. It aims to support the funding of U.S. exports by supplementing the funding available from commercial banks and other lenders.

Managers at an international business are deciding the method by which it will be organized. The business is highly diversified, manufacturing a number of different components and parts for its industrialized customers. Which departmentalization structure should be used by this company? Process Functional Geographic Product

Product. When an organization is built around the products or services it sells, it is using a product departmentalization structure.

A company wishes to expand internationally in countries that have high tariffs on the product the company makes. The company decides to use foreign direct investment because the labor costs are low and the country is politically stable. Which type of production is the company using? Manufacture in the home country then export abroad Global sourcing then using the home country for assembly Production in the host country then local retailing

Production in the host country then local retailing. In countries with high tariffs on a product, for example an automobile, a company will produce the vehicle in the host country and sell that automobile in the host country thus avoiding the tariffs.

A farmers market has many vendors and consumers who all sell and buy the same produce at the same price. Which type of market is represented? Monopoly Pure competition

Pure competition. Since vendors can enter and exit the market freely with no barriers and the products are homogenous, it is a pure competition.

Which model of supply chain management focuses on the product and its production? Push Pull

Push. In this model of supply chain management, all parts of the production process focus on how to produce the product and then move it through the distribution channel to the customer. The marketing process focuses on pushing the product on the consumer.

Which financial accounting consideration does the multinational company face in its operations? Recording transactions in GAAP and IFRS Conducting business with the International Financial Reporting Standards (IFRS) in all nations

Recording transactions in GAAP and IFRS. The multinational company operates in the U.S. and Europe, which means that the company will need to record and report financial accounting information in both GAAP and IFRS.

A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies. What caused the violation of the antitrust laws? Increased profits Reduced competition Service disruptions Technological innovation

Reduced competition. Antitrust laws are enacted to protect consumer's rights to competition in the marketplace. The sole, national company was a monopoly, and no competition occurred.

International Money Fund

Resulted from the Bretton Woods meetings. The initial purpose of the IMF was to regulate currency exchange between nations. This purpose has evolved into providing a means for nations to easily exchange currency, provide oversight, and offer loans to member organizations.

Which act affects the global business landscape by clarifying auditor independence issues, accountability of senior executives, disclosure of insider trading, and intellectual property rights? National Environmental Policy Act Sarbanes-Oxley Act

Sarbanes-Oxley Act. This act clarifies auditor independence issues, puts greater accountability on senior executives, enforces disclosure of insider trading, and prohibits loans to executives.

A large corporation deceived regulators with fake holdings and cheated shareholders out of massive amounts of money. Which unethical practice was used by the corporation? Kickback Bribery Securities fraud

Securities fraud. This company conducted securities fraud by cheating shareholders and creating fake holdings.

A company requires one employee to be responsible for maintaining a machine. Another employee is responsible for maintaining accounting records for that machine. Which internal control has the company implemented? Managing inventory Accounting for shrinkage Reviewing cash flows Segregating duties

Segregating duties. Irregularities are intentional accounting errors with the purpose to defraud, and this action is used as an internal control to prevent irregularities.

Which activity is considered a foreign direct investment (FDI) by a multinational corporation? Providing guidance for franchises in the host country Setting up manufacturing plants in the host country

Setting up manufacturing plants in the host country. FDI is when a company invests in manufacturing or some other major asset in another (host) country.

Country A exports farming equipment to Country B, while Country B exports car manufacturing equipment to Country A. Both countries are highly developed and could develop these industries separately but instead made the decision to export and import these products from each other. Which unique condition caused this practice between the two countries? Skill specialization Foreign direct investment

Skill specialization. One country can gain a particular advantage in manufacturing one type of equipment by the nature of the labor skills and resources. Country A has a comparative advantage in one product and Country B in another.

What makes the enforcement of United Nations Environmental Program regulations difficult? Peacekeeping missions of nations Pure competitive markets World Food Program distributions Sovereign rights of nations

Sovereign rights of nations.The sovereign rights of nations preclude the United Nations from enforcing the regulations. United Nations compliance is normally voluntary and agreements tend to be nonbinding.

Standardization

Standardization is the effort to keep the product the same everywhere and maintain strict quality control to stay true to the brand. Global standardization helps create economies of scale, which increases profits.

Which strategy should a government use to offset the cost of manufacturing domestically? Antitrust laws Tariffs Antidumping laws Subsidies

Subsidies. Subsidies, such as grants or tax breaks, are used to offset domestic manufacturing costs by giving companies funds or tax breaks.

Which currency contracts are two-way agreements to trade currency on different dates? Future Option Swap Forward

Swap contracts are two-way agreements to exchange currency on different dates.

General Data Protection Regulation (GDPR)

The European Union, to help people take control over their data, passed the General Data Protection Regulation (GDPR) in May 2016. The regulation went into effect on May 25, 2018.1 Personal data include a wide range of personal identifiers including name, identification number, location data, or an online identifier. For sensitive data, users are required to opt in explicitly to grant permission

The General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) consists of a set of promises or commitments that countries make to each other regarding their trade policies. The goal of GATT is to make trade freer, and thus, the promises countries make must involve reductions in trade barriers.

Sarbanes-Oxley Act of 2002 (SOX)

The Sarbanes-Oxley Act of 2002 (SOX) was designed to address the investing public's lack of trust in corporate America by addressing financial accountability issues and requiring public companies to adopt and disclose a code of business conduct and ethics. Also provides whistleblower protections. These can apply to any company that is indirectly related to a U.S. corporation. Numerous law cases have arisen where whistleblowers for foreign corporations in foreign lands were targeted.

Sherman Antitrust Act

The Sherman Antitrust Act (1890) was the first American antitrust policy. It dealt with limiting the power of price-controlling cartels. Its scope has since been expanded to include a range of anticompetitive practices.

UN Convention on Contracts for the International Sale of Goods (CISG)

The UN Convention on Contracts for the International Sale of Goods (CISG) applies to contracts for the international sale of commercial goods. It also provides gap-fillers for terms that may not be expressly stated in the contract. However, important differences between the UCC and the CISG exist, particularly with respect to the revocability of an offer, its acceptance, the requirement for a writing to be enforceable, and essential terms.

WIPO (World Intellectual Property Organization)

The WIPO was established by the UN to implement a global policy related to IP. Today, it helps mediate many disputes. Focused on developing a global IP infrastructure, building international respect for IP, and implementing global policy related to IP.

What did the Worst Forms of Child Labor Convention, 1999 define? Rights for domestic workers The age at which a person becomes an adult

The age at which a person becomes an adult. The Worst Forms of Child Labor Convention defines a child as an individual younger than 18 years old.

Which two primary sources of law govern contracts in the United States? The common law and the Uniform Commercial Code The UN Convention on Contracts for the International Sale of Goods and a horizontal structure

The common law and the Uniform Commercial Code. Common law comes from custom and from precedents set by other court decisions. The Uniform Commercial Code provides some a standardized laws and regulations for commercial transactions such as sales.

Ethnocentric

The company uses the same HR policies and practices in its subsidiaries as in the parent company. Leadership roles and key positions are filled by expatriates from the home country. The focus is on top-down decisions from the home office. This approach is used when the company does not trust the abilities or training of the local employees or has a biased view of foreign workers. Historically, the Toyota company of Japan was known for its ethnocentric approach to management, but the company has adapted in recent years to become more polycentric.

Why does a company engage in foreign direct investment? The company wants to find a domestic source of financing for its foreign operations. The company wants to control organizational assets in another country.

The company wants to control organizational assets in another country. Foreign direct investment is when a company acquires a foreign firm or asset with the intent to control and manage it to strengthen its economic and financial market position.

A multinational company plans on setting up a greenfield venture in a foreign country. What is a potential implication for the company? The company will gain a quick entry into a new market. The company will be seen as an insider who would hire locals.

The company will be seen as an insider who would hire locals. As the company purchases plants and materials in the host country, the company would need to hire locals to make the products.

How will the Chinese company recognize that the currency exchange environment is favorable for establishing U.S. operations? The dollar is stronger than Chinese currency. The dollar is weaker than the Chinese currency.

The dollar is stronger than Chinese currency.

What is a disadvantage of regional economic integration? Labor movement restrictions narrow job opportunities. Integrated agreements among a small number of countries create conflicts. The exclusion of external countries reduces global free trade.

The exclusion of external countries reduces global free trade. Regional agreements may create trade barriers with nonmember countries, which lowers global free trade.

Which level of economic integration is formed when trade barriers are removed between member countries but there is no mutual policy on trading with nonmember countries? Free trade area Political union Customs union Common market

The free trade area allows basic economic cooperation so member countries remove barriers to trade among themselves.

What is a potential disadvantage of foreign direct investment from a host government's perspective? The host country's natural resources may be depleted. The demand for the home country's products may decrease.

The host country's natural resources may be depleted.

What is a benefit of foreign direct investment? The inflow of capital benefits global and local economies The outflow of capital benefits global and local economies

The inflow of capital benefits global and local economies.

Crawling bands (1/3 pegged floating currencies)

The market value of a national currency is permitted to fluctuate within a range specified by a band of fluctuation. This band is determined by international agreements or by unilateral decision by a central bank. The bands are adjusted periodically by the country's central bank and in response to economic circumstances and indicators.

Trade bloc

The more similar the nations are the more likely they are to form a successful trade bloc. The goal is to help all participating nations attain a higher living standard by encouraging specialization, lowering prices, providing more choices on goods and services, increasing productivity, and allowing for more efficient use of natural resources.

What is an accurate characterization of the relationships between multinational corporations (MNCs) and the host country governments in which they operate? The relationships are mixed because MNCs can cause, but also solve, problems for the host country. The relationships are positive because MNCs provide jobs and capital to the host country.

The relationships are mixed because MNCs can cause, but also solve, problems for the host country. The relationships between an MNC and the host country can be both good and bad depending on a number of factors including economic development, resource distribution, and employment.

A chief executive officer (CEO) of a Scandinavian company sought to expand operations in Japan through a joint venture. When the CEO asked the Japanese business owner whether she was committed to the venture, the business owner responded with a flat-toned "yes." The outcome the CEO expected did not happen, and the joint venture failed. What was the CEO's misinterpretation in this communication? The response indicated excitement. The response indicated agreement.

The response indicated agreement. In Japan, the word "yes" can mean things other than agreement, including "maybe" or "I understand you."

Direct Distribution

The shortest channel, consists of just the producer and the consumer. Producer markets the product directly to the consumer and the consumer buys directly from the producer, such as when you buy an apple from a local farmer.

Corporate Tax Rates

There has been a sharp decrease in corporate taxes globally in the last decade. Most countries now have a corporate tax rate under 30%. Countries with no corporate tax or very low rates are considered tax havens.

Angel investors

They are similar to VCs but can actually be quite varied in format and motivations. They are more often individuals with capital to spare who have taken an interest in a particular business or product. They may act as advisers or objective investors, they may simply love the product, or they may have investment incentives (most commonly both).

How do antidumping laws protect a domestic market? They prevent international companies from foreign direct investment. They prevent foreign companies from selling goods and services at or below cost.

They prevent foreign companies from selling goods and services at or below cost.

Domestic Workers Convention, 2011

This convention details specific rights and protections for domestic workers working both in their home country and as migrant workers. This includes a written contract that is enforceable in the country of employment, or a written job offer that is available prior to traveling to the country of employment. It also lists clear conditions under which domestic workers are entitled to repatriation at the end of employment, established protections from abusive practices, and cooperation between countries to ensure application of the convention.

Current Rate Method

This is a method of foreign currency translation in which items in the subsidiaries' financial statements are translated into the currency of the parent corporation at the current exchange rate (i.e., the rate on the date when the statements are prepared). In this case, the current value may be different on the day it is translated than on the date when the assets were originally purchased. Although this difference is only a paper gain or loss, it nonetheless affects the valuation of the firm. This method is the most widely used currency translation method.

Temporal Method

This is a method of foreign currency translation that uses exchange rates based on the rate in place when the assets and liabilities were originally acquired or incurred. This method avoids the paper gain or loss problem of the current-rate method. But because subsidiaries purchase assets at different times throughout the year, the multinational firm's balance sheet may not balance if the temporal method is used.3

Pegged with horizontal bands (3/3 pegged floating currencies)

This system is similar to crawling bands, but the currency is allowed to fluctuate within a larger band of greater than 1% of the currency's value.

Which Latin American phrase (in English) typifies how time is viewed, which can make conducting business frustrating to Northern European companies seeking to expand in Latin America? Time is space. Time is money.

Time is space. Latin America views time as being subordinate to relationships and situations. Individuals in Latin America will be late to a meeting if an earlier meeting requires time for relationship development or connections need to be made.

What was the first loan that the World Bank made after the end of World War II? To Germany to rebuild its military To Switzerland for being neutral in the war To France to rebuild its infrastructure

To France to rebuild its infrastructure.

What is the purpose of internal controls? To ensure irregularities of a system's performance To create redundancies in a system to ensure it functions properly

To create redundancies in a system to ensure it functions properly. Internal controls are extra procedures built into a system to help guarantee proper functions and reliability of the collected data. Internal controls should ensure systems run efficiently, effectively, and accurately and that they reduce accounting misstatements.

Why should a company identify corporate tax rates in various countries to make a strategic business decision, such as expanding the company globally? To analyze pricing strategies that will generate consumer interest To determine most profitable location of plants and headquarters

To determine most profitable location of plants and headquarters. A company should identify corporate tax rates to determine the most profitable location of plants and headquarters, which are strategic decisions related to expanding globally. Corporate tax rates affect foreign direct investment and other strategic decisions.

How do Congress and the Department of Agriculture use quotas to their advantage? To track the amount of sales in a specific year to predict production of that item during future years To increase domestic prices to specific levels to make products profitable

To increase domestic prices to specific levels to make products profitable

In 2017, the Federal Trade Commission (FTC) passed a law that required a change in the practices used by influencers who participate in video postings and web site tweets. Why did the FTC take this action? To create forums for industry marketing experts To prevent individuals from misleading consumers

To prevent individuals from misleading consumers. The FTC law required influencers who participate in video postings and web site tweets to stop misleading consumers into believing they were representing a brand without compensation.

A country with a new economy implemented trade protectionism in relation to countries with more developed economies. Why did the country take this action? To restrict international economic trade To protect companies that export products from foreign laws

To restrict international economic trade. Trade protectionism is implemented by creating national policies that restrict international trade to impact the balance between imports and exports, ensuring that exports are encouraged.

What is a reason for companies to engage in foreign direct investments? To take advantage of tax exemptions offered by the host country To increase imports to the home country

To take advantage of tax exemptions offered by the host country

Financial Derivatives

Tools used to limit losses (hedge) or to multiply gains and losses (speculate). Speculation has a bad reputation, but it makes hedging possible because investors can hedge only if they can find a speculator willing to assume the risks that they wish to eschew.3 Swaps, options, and futures are three additional derivative currency instruments used in the forward market.

A fast food company requires franchisees to make the company's specialty products on-site. The company sends the ingredients used to make the fast food in prepackaged bags to prevent each franchisee from deviating from the company's recipe and to prevent them from stealing recipes. Which type of intellectual property is the company attempting to protect? Trade secret Production patent Trademark Copyright

Trade secret. The recipe and its ingredients are prepackaged to prevent intellectual theft by the outsourced company.

Which type of intellectual property law protects a company's brand? Copyright Patent Trademark Trade secret

Trademark. A trademark is any word, phrase, symbol, design, or combination thereof that identifies the source of a company's products or services, and it is protected by law.

Trade Diversion

Trading blocs can both create trade for members inside the trading bloc, but also divert trade. Trade diversion costs money as manufacturers produce goods with higher production costs but lower overall costs. Trade diversion takes away from progress towards free trade as each country produces goods for which it has a competitive advantage.

A multinational corporation would like to maximize profits by moving products to international subsidiaries to gain tax advantages. Which pricing strategy should this corporation use for this purpose? Transfer Promotional Bundle Optional

Transfer pricing involves conducting business among cross-border subsidiaries, often producing the product in the country with the lowest costs and tax rates.

A multinational company moves key production assets to a country with lower tax rates to avoid paying more taxes in the home country. Which type of pricing should be used to reduce taxes during production? Skimming Premium Penetration Transfer

Transfer. Transfer price is the price charge between the transfer of completed or uncompleted goods between subsidiaries of the same company. When subsidiaries are in different countries, goods are often produced in the lowest tax rate country.

Import quotas and voluntary export restraints (VERs)

Two strategies of limiting the number of goods coming into a country. The importing government directs import quotas, while VER is imposed at the discretion of the exporting and importing nations.

Currency Swap Contract

Two-way deals to trade currency on different dates. Currency option contracts that give the holder the right to a certain rate on a certain date but do not oblige the holder, and currency futures contracts that require an exchange of money on a certain date.

Generally Accepted Accounting Principles (GAAP)

U.S.-based set of accounting principles was created to establish rules and regulations for financial accounting?

A multinational company that is considering making a foreign direct investment is concerned that the new country has an indirect tax in addition to corporate taxes. This would reduce the company's profit. Which type of tax is of concern to this company? Flat Value-added Graduated Property

Value-added. Consumption taxes, such as value-added taxes and goods and services taxes, are indirect taxes. They are paid based on the increase in value resulting from the production process.

A government is combating a sluggish economic global environment and decreasing direct-tax rates by increasing indirect taxes. What type of taxation model is being used by this government? International tax treaties Capital gains Value-added Corporate income

Value-added. Value-added taxes are indirect taxes that many worldwide governments introduce in a sluggish economic global environment.

A company is in a geographic area with low literacy levels, and the surrounding population does not understand the benefits of a computer and the internet. Due to this lack of information, the individuals are not able to use the digital technology to its full potential, and this is negatively impacting the company's business plan. Which type of divide must this company manage? Usability Economic Accessibility Empowerment

Usability. If an individual does not know how to fully access the internet and the economic benefits it can bring, then a usability divide occurs.

Standardization strategy

Used when a company treats the whole world as one market with little meaningful variation. The assumption is that one product can meet the needs of people everywhere. Machine tools and equipment or information technologies are universal and need little customization for local conditions. CEMEX, the Mexico-based cement and building materials company, was able to expand globally using a standardization strategy. Apple uses a standardization strategy because its products do not have to be customized for local users.

How does General Data Protection Regulation (GDPR) help protect people's personal data? Users are required to opt in explicitly to grant permission for sensitive data. Users must be notified of data breach within 24 hours of awareness.

Users are required to opt in explicitly to grant permission for sensitive data.

A car manufacturer purchases raw materials from Country A, manufactures the product in Country B, and has a sales force in Country C. Which term reflects this production process that international agreements now enable? Worker productivity Specialization Economies of scale Value chain

Value chain. The value chain is the term for the process that describes how the inputs create the outputs of an organization.

Which type of investor secures funding from a number of speculative financiers and pursues strong global business opportunities still in the start-up phase? Venture capitalists Personal contacts Strategic partnerships Crowdsourcing

Venture capitalists. Venture capitalists provide high amount of capital to early-stage, emerging firms that are deemed to have high growth potential.

Vertical FDI

Vertical FDI is when a company invests internationally to provide input into its core operations—usually in its home country. When a firm brings the goods or components back to its home country (i.e., acting as a supplier), this is referred to as backward vertical FDI. When a firm sells the goods into the local or regional market (i.e., acting as a distributor), this is termed forward vertical FDI.

Which organization aims to develop a global intellectual property infrastructure? WRC WTO WIPO

WIPO. This stands for World Intellectual Property Organization. Its goal is to develop a global IP infrastructure, build international respect for IP, and implement global policy related to IP.

World Trade Organization (WTO)

WTO is a protector of trade rights and serves as a negotiator and settles disputes among nations. evolved from GATT to becoming an organization with 164 members. The actions of the WTO and GATT have resulted in a significant, steady decrease in tariff rates as well as served as a protector for the trade of goods, services, and intellectual property.

Crowdsourcing

Websites such as Kickstarter and Indiegogo are unique and modern formats where potential business ideas can garner capital and support prior to producing a given product or service. This interesting model allows a high number of people to invest a small amount of capital, which cumulatively may be enough to kick-start a venture (international or otherwise). Reimbursements in the form of credits, t-shirts, early access to the product, and other incentives are often used to motivate small investments.

Political Union (5/5 Economic Co-ops)

When a single nation is formed. Unification of all policies by a common organization. Some think that a political union has not yet been achieved. But others cite the United Arab Emirates (UAE) and United States as an example.

Which type of internet access does the 5G network provide? Wireless Analog Digital subscriber line (DSL)

Wireless. The letter "G" stands for generation of mobile data technology. The latest innovation in wireless technology is 5G, which is broadband.

Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices. Which entity can the United States appeal to in order to correct this apparent market manipulation? International Monetary Fund World Trade Organization World Bank European Union

World Trade Organization

A company's chief executive officer (CEO) wants to expand the company into China and is reviewing the Chinese word guanxi, the basis of all business in that country. Which English meaning must the CEO understand in regards to this Chinese concept? All is well that ends well. The die is cast. You owe me one.

You owe me one. Guanxi is based on relationship building, which can be good or bad.

Forward Contract

contract that requires the exchange of an agreed-on amount of a currency on an agreed-on date at a specified exchange rate

What is a free trade zone? A type of real-estate zoning that permits businesses to avoid paying sales tax A geographic region in which a county will reduce restrictions that might prevent or reduce trade

A geographic region in which a county will reduce restrictions that might prevent or reduce trade. A free trade zone is a geographic region that a country has opted to reduce barriers to trade with, such as tariffs, customs, and other restrictions.

Mixed economy

A mixed economy has less government intervention than a command economy. Supply and demand control the economy, and ideally, the government steps in when needed.

Communism

A system in which all property is publicly owned and the government controls global trade

Socialism

A system in which the government controls the means of production and regulates global trade.

Capitalism

A system in which the means of production is controlled by private owners who can choose to participate in global trade.

Mercantilism

A zero-sum theory advocating for each country to maintain a trade surplus. Government should take necessary actions to make that happen. Maintaining a trade surplus results in a zero-sum game in which one country wins at the expense of another.

Absolute VS Comparative Advantage

Absolute advantage is being able to produce a good more efficiently or cheaper than another country. Comparative advantage states that a country should specialize in the production of goods it can produce more efficiently than another and buy the goods it cannot from countries that have a lower relative opportunity cost.

A country produces goods more efficiently than all other countries in the same industry. Which type of advantage does this country have? Competitive Absolute

Absolute. An absolute advantage is a term coined by Adam Smith and refers to the multiple things that a country can do more efficiently than other countries.

Why should the newly-elected leader of Country A be careful when working with the World Bank? Because of the voting power highly-developed countries have on World Bank policies Because the World Bank avoids poverty-related issues in the poorer countries

Because of the voting power highly-developed countries have on World Bank policies. Five highly developed countries combine to have 38% of the voting power for the World Bank.

Which activity of the International Monetary Fund (IMF) impacts policymaking? Offering investment services to countries Being owned and directed by the governments of the member nations

Being owned and directed by the governments of the member nations. The IMF is owned and directed by the governments of the member nations.

In which law system does a judge decide the applicable law for the case as a jury determines the facts? Civil Canon Customary Common

Common. In common law systems, while a jury may determine the facts, a judge decides which law will be applied to the case.

Sure Start is starting a new division for rechargeable batteries in different parts of the world. What was the globalization driver of this decision? Market Cost Competition Government

Competition. Competition drivers are about entering new markets to beat competitors. Sure Start has identified a market that does not have a lot of competition since it is a fairly new market.

A CEO seeks to better use the economies of scale and scope of production to increase the international company's profits. Which type of globalization driver is the CEO seeking to use? Market Government Competition Cost

Cost. Companies seek to put production in low labor-cost countries to lower labor costs and increase the contribution margin. Economies of scale and scope and the exploitation of differences in costs for product development, manufacturing, and sourcing in different parts of the world will assume greater importance as determinants of global strategy.

Countervailing duties

Countervailing duties, or anti-subsidy duties, are extra duties levied on imports to neutralize an export subsidy. If a country discovers that a foreign country subsidizes its exports, and domestic producers are injured as a result, a countervailing duty can be imposed to reduce the export subsidy advantage. In that respect, countervailing duties are similar to antidumping duties in that they both bring an imported product's value closer to the normal value.

Critics of Globalization

Critiques challenge traditional metrics, such as GDP, and look to other measures, such as the Gini coefficient or the Happy Planet Index, pointing to evidence of social disintegration, the spread of diseases, environmental damage, breakdowns in democracy, and increasing poverty in many of the world's nations as unintended consequences of globalization.2

Export subsidies

Export subsidies are production subsidies granted to exported products, usually by a government. With export subsidies, domestic producers can sell their commodities in foreign markets below cost, which makes them more competitive.

General Agreement on Trade in Services (GATS)

General Agreement on Trade in Services (GATS) seeks to reduce the barriers to trade-in services. Following the GATT commitment to nondiscrimination, GATS requires member nations to treat foreign service companies as they would domestic ones. For example, if a country requires banks to maintain 10% of deposits as reserves, then this percentage should be the same for foreign and domestic banks.

Globalization 2.0

Globalization 2.0, from about 1800 to 2000, was disrupted by the Great Depression and both world wars and was largely shaped by the emerging power of huge MNCs. Globalization 2.0 grew with the European mercantile stock companies as they expanded in search of new markets, cheap labor, and raw materials. It continued with subsequent advances in sea and rail transportation. This period saw the introduction of modern communications and cheaper shipping costs.

Globalization 3.0

Globalization 3.0 began around 2000 with advances in global electronic interconnectivity that allowed individuals to communicate in a new way.1 In Globalization 1.0, nations dominated global expansion. Significant software advances have allowed an unprecedented number of people worldwide to work together with unlimited potential.

Globalization

Globalization is international integration arising from the exchange of world views, products, ideas, and other aspects of culture. Technology and transportation have increased the opportunity to trade and to share ideas with partner countries in a new way.

Country A has been criticized by other countries for giving generous tax credits to its corn farmers, which in turn, enables the country's farmers to sell corn on the international markets cheaper than all other countries. Which term is used by other countries to describe this practice? Absolute advantage Government subsidies

Government subsidies. The farmers are getting payment in the form of tax credits. This creates an unfair advantage to the farmers of Country A.

Indicative targets

Indicative targets are quantitative targets used to measure a country's progress in meeting the IMF's requirements.

A CEO is discussing an expansion of production of a company's highly perishable dairy line in a country that can offer low labor costs and good internet connections. The country has no highways, and roads are poorly maintained. Which challenge to international business expansion do the road conditions present? Relational Ethical Infrastructure Legal

Infrastructure.

Which criticism is made about the World Bank? It makes too many loans to countries with strong governments. It does not consider how funding projects will affect the environment.

It does not consider how funding projects will affect the environment.

Which argument is used by critics who wish to discourage movement towards globalization? It decreases awareness of the international community. It decreases the pace of new product development. It increases the wealth of the rich rather than the poor.

It increases the wealth of the rich rather than the poor.

Which type of risk will a company reduce if they offer a warranty to the purchasers of the battery in case of failure? Political Financial Economic Legal

Legal. Offering a warranty protects the company from the legal risk of a product not performing to standard.

Which benefit to the newly-elected leader in Country A stems from using the World Bank to meet a campaign promise? Paying off the trade deficit that the country has with its neighbor Obtaining the funds needed to improve the country's infrastructure

Obtaining the funds needed to improve the country's infrastructure. The World Bank provides funds through low interest or interest-free loans, grants, and credits to help the country develop its infrastructure.

A farmer knows that it takes 100 hours of labor to produce 100 bushels of corn. It only takes 50 hours of labor to produce 100 bushels of soy. Currently, a bushel of corn is selling at three times a bushel of soy. Which type of cost should the farmer use to determine what to plant? Opportunity Absolute advantage

Opportunity. Opportunity will bring in the most revenue. The farmer will probably plant corn since the opportunity cost of not planting corn is greater given the current selling price of corn.

Prior actions

Prior actions are actions that a country agrees to before the IMF's executive board approves financing or completes a review. They are intended to verify that the country has a stable financial foundation before qualifying for a loan.

The CEO of an international company reminds the executive vice presidents that while the company may do good while performing corporate social responsibilities, the business has one ultimate goal since it is engaged in commercial activities with corporate shareholders. Which ultimate goal is the CEO emphasizing to the executive vice presidents? Exporting Stakeholder satisfaction Profitability Cultural exchange

Profitability. Ultimately, a company is engaged in commerce to achieve a profit. Business profit is gauged in financial and economic terms. However, some level of sustained financial and economic profits is needed for a business to achieve other outcomes that are measured as social or environmental performance.

Which type of tariff is put in place to specifically ensure that domestic industries are given an advantage? Export Ad valorem Revenue Protective

Protective. A protective tariff is put into place to reduce the number of imports of a product that is produced domestically and to increase the cost of the imports to make the domestic product's price more appealing to consumers.

Government procurement programs

Public authorities, such as government agencies, are much like private interests in that they must also buy goods and services. Unlike private interests, governments are more likely to buy domestically produced goods and services, rather than the lowest cost commodities. Because government procurement often represents a significant portion of a country's GDP, foreign suppliers are at a disadvantage to domestic ones when it comes to these programs.

What is a benefit of implementing a system of free trade? Increased tariffs would result in more revenue generated for the government. Reduced tariffs would result in lower costs of imported raw materials.

Reduced tariffs would result in lower costs of imported raw materials.

What was the initial purpose of the International Monetary Fund (IMF) in phase one, prior to 1973? Regulated currency exchange between nations Provided a means for nations to easily exchange currency

Regulated currency exchange between nations

Religious law .

Religious law is based on religious guidelines. Religious law is based on religious beliefs. One example is a requirement in Sharia that people following Sharia may not borrow money. To compensate for the inability to take on debt, an asset-based system has been established.

Most-favored-nation (MFN) rule

States that each WTO member must be charged the lowest tariffs that an importer places on any country. For example, if the United States charges Brazil a 5% tariff on imported clothes, and this is the lowest tariff it has placed on any country in the WTO, all other WTO members must also be charged a 5% tariff. Every WTO member gets charged the lowest tariff that an importer charges any other member.

Structural benchmarks

Structural benchmarks are nonquantitative measures such as social safety nets (IMF Conditionality, 2019).

Which term describes a government giving a tax break to a producer to increase their global competitiveness? Dumping Quotas Tariffs Subsidies

Subsidies

International Development Association (IDA)

The IDA is funded by donations from member countries and is used to loan money to the poorest countries in the world.

What is a characteristic of the International Monetary Fund (IMF)? The IMF is a developmental institution and supports developing countries. The IMF is a cooperative institution and provides more effective currency exchange.

The IMF is a cooperative institution and provides more effective currency exchange. The IMF is cooperative institution and is similar to a credit union for all member nations.

Which aspect of the International Monetary Fund (IMF) will assist the newly elected leader in paying the deficit in U.S. dollars, if agreed on by both countries? The IMF has well defined borrowing requirements for all its members. The IMF provides a means for effective currency exchange between countries.

The IMF provides a means for effective currency exchange between countries. The IMF's purpose is to provide a way for countries to easily exchange money, provide financial help to its members, and supervise international economic policies.

The International Monetary Fund

The International Monetary Fund is designed to foster global monetary cooperation, secure financial stability, and facilitate international trade. Its headquarters is located in Washington, DC.

The Kyoto Protocol

The Kyoto Protocol is an agreement aimed at combating global warming among participating countries.

McKinsey Global Institute

The McKinsey Global Institute estimates that the third and fourth stages together have the potential to reduce costs by more than 50 percent in many industries. This allows companies to substantially lower their sticker prices in both old and new markets and to expand demand. Significantly, the value of new revenues generated in this last stage is often greater than the value of cost savings in the other stages.

Which critical distinction should Country A make when choosing between the World Bank and the International Monetary Fund (IMF) to improve the country's highways? The World Bank focuses on development projects. The World Bank provides effective currency exchange between countries.

The World Bank focuses on development projects.

The World Bank

The World Bank has one central purpose: to promote economic and social progress in developing countries by helping raise productivity so their people may live better and fuller lives. Builds sustainable economic growth, invests in people, and builds resilience for shocks and threats. Assist in disasters and provide emergency loans to countries in need.

World Bank AAA Rating

The World Bank has one of the highest AAA ratings because its debt instruments are backed up by member countries. This excellent financial rating means the World Bank can borrow money at a low-interest rate and lend it to countries in need at a low rate or, if the country qualifies, at zero interest.

Which criticism is associated with the World Bank? It makes loans that are too large and cannot be repaid. The developed countries of U.S. and Europe have too much control over its decisions.

The developed countries of U.S. and Europe have too much control over its decisions.

Globalization 1.0

The first stage of global development, what Friedman calls Globalization 1.0, started with Columbus's discovery of the New World and continued from 1492 to about 1800. Driven by nationalism and religion, this lengthy stage was characterized by how much industrial power countries could produce and apply.

What happens to consumer surplus when tariffs and quotas are discontinued? They decrease. They increase.

They increase. When barriers to trade are eliminated, consumer surplus increases, meaning that the price of goods or services will decrease and the quantity consumed will increase.

Paris Agreement (2015)

This agreement set out concrete steps to keep long-term global temperature increase at below 2°C. Other key points include the need to reduce global emissions, international support for developing countries, as well as a requirement that countries submit national climate action plans and publicly report on their implementation and success.

Global Strategic Rivalry Theory

This theory focuses on multinational corporations and their efforts to gain a competitive advantage against other global firms in their industry. Firms will encounter global competition in their industries. To prosper, they must develop competitive advantages. The critical ways that firms can obtain a sustainable competitive advantage are called the barriers to entry for that industry. The barriers to entry refer to the obstacles a new firm may face when trying to enter into an industry or new market.

IMF Conditionality

To help ensure that the IMF loans are used for the intended purpose and repaid, the IMF sets conditions both before and during the loan phase. The conditions put on the loan require the recipient country to have a policy of austerity. This policy, which usually results in a cut in funding for social programs, can have a significant effect on citizens who are living in poverty.

Why should the newly-elected leader of Country A use the World Trade Organization (WTO) to form favorable trade agreements? To receive help building international exchange capacity To obtain funds to build the highway infrastructure

To receive help building international exchange capacity

International Monetary Fund (IMF) identified four fundamental aspects of globalization

Trade and transactions Capital and investment movements Migration and movement of people Dissemination of knowledge **Additionally, global warming, cross-boundary water and air pollution, and overfishing in the ocean are linked with globalization.

Country A exports more goods to Country B than it imports from Country B. Country A receives more monetary gain by using this practice. Which relationship does Country A have with Country B? Mercantilism Trade surplus

Trade surplus. Trade surplus is when a country exports more than it imports from another country. For example, China normally exports more manufactured goods to the United States than it imports from the United States. China has a trade surplus.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Trade-Related Aspects of Intellectual Property Rights (TRIPS). Intellectual property refers to anything that a person or entity creates with the mind. It includes inventions, music, art, and writing, as well as words, phrases, sayings, and graphics—to name a few. The basic premise of intellectual property rights (IPR) law is that the creator of the property has the right to financially benefit from his or her creation.

Traditional economies

Traditional economies are found in rural countries where the primary occupation is farming.

An airplane manufacturer outsources the manufacture of some its parts and subassemblies. They are then returned to the manufacturer's main plant for final assembly. Which term describes the activity of this manufacturer? Vertical integration Industry privatization Value chain Foreign direct investment

Value chain. The value chain is composed of the parts and input necessary to make a product. In this scenario, each part of the plane, when its manufactured and assembled, represents the airplane's value chain.

Helpful analogy for absolute/comparative advantage

William has an absolute advantage in all aspects of camping: He is faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and washing up. So, here is the question: Because William has an absolute productivity advantage in everything, should he do all the work?

What is a common name for the International Bank for Reconstruction and Development? European Central Bank International Monetary Fund World Bank

World Bank.

Which organization was formed after World War II to encourage international commerce? International Monetary Fund World Trade Organization

World Trade Organization

Which strategic network was established to work towards decreasing tariff rates and protecting commerce and intellectual property globally? International Monetary Fund (IMF) World Trade Organization (WTO)

World Trade Organization (WTO)