International Business - Exam (Chapters 1 & 2)

comparative advantage

- A person or a country will specialize in doing what they do relatively better. - The difference between these two theories is subtle. Comparative advantage focuses on the relative productivity differences, whereas absolute advantage looks at the absolute productivity. - This theory argued that the cost of any factor or resource was a function of supply and demand. Factors that were in great supply relative to demand would be cheaper; factors in great demand relative to supply would be more expensive. - Comparative advantage occurs when a country cannot produce a product more efficiently than the other country; however, it can produce that product better and more efficiently than it does other goods. - David Ricardo argued in the 1800s that if Country A had the absolute advantage in the production of two products, it didn't necessarily mean that the best course was to produce them both.

Which of the following are given by Thomas Friedman as reasons why he considers the world to be "flat"?

- Corporate nationalities are being blurred with the rise of truly international businesses. -The rise of the internet and other communications technology flattened the world. -It's easy to outsource labor overseas. -Improved transportation and logistics reduced cost of international business. -The fall of the Soviet Union eliminated the major purveyor of Communism and allowed the rise of Capitalism that transcended borders.

The Hecksher-Ohlin Theory

- Factors that were in great supply relative to demand would be cheaper; factors in great demand relative to supply would be more expensive. - Their theory rests on the nature of a country's production factors: land, labor, capital, etc. that helps fund investment in production capabilities. - This theory expects countries would import goods that required resources that were in short supply but higher demand. - An example of this theory can be found in China and India where labor is cheap, thus making the product of labor-intensive goods, like clothing, inexpensive. - This theory argued that the cost of any factor or resource was a function of supply and demand.

Which of the following events were said to be major disrupters for Globalization 2.0, according to your text? Select all that apply.

- World War I - World War II - The Great Depression

According to your text, strategy involves which of the following elements?

- developing tactics - integrated thinking and planning - externally oriented thinking - centralized thinking

Which of the following types of government intervention involves any form of government policy, procedure, or practice used to influence trade

Administrative policies

The Hecksher-Ohlin Theory came from the examination of both absolute and comparative advantage. The author proposed raised questions about some assumptions made in these earlier theories, but he didn't invalidate said theories. Identify the following statement that is not true about this classical, country-based theory.

An example of this theory can be seen in the post WWII-era in the United States where the steady supply of labor was also highly productive. Therefore, it made sense to export labor-intensive products.

The Leontif Paradox came from the result of research by Wassily Leontief when he tested the assumptions of the Hecksher-Ohlin Theory. Which of the following statements is true concerning Leontif's findings?

An example of this theory can be seen in the post WWII-era in the United States where the steady supply of labor was also highly productive. Therefore, it made sense to export labor-intensive products.

Which of the following types of government intervention seeks to protect domestic industries from economic attack by more developed industries of other countries. This applies specifically when these "attacking" companies try to undercut the domestic competition through massive, cheaply priced products.

Anti-dumping rules

The Chinese are eager to share with other countries their version of government combined with market-oriented economics. Which term does your text use to identify the Chinese form of government?

Authoritarian

Which of the following describes an FDI effort that seeks to reuse existing production facility?

Brownfield

According to Chapter One, which of the following is said to be the seminal event for "Globalization 1.0"?

Christopher Columbus' discovery of the New World

Based on the following example, which form of ethical decision making is likely at work. Select the one that best fits according to Chapter One, Section Five. Company X evaluated its plan to develop a new manufacturing plant in the country of Gabon. Given the poverty of the area, company executives resolved to implement micro-lending and education programs as part of its outreach efforts with the aim of improving the lives of those who came in contact with the factory and its workers.

Common Good Approach

Which of the following theories argued that finding a market in which the consumers were most like those in the home market was a way to increase export success?

Country Similarity Theory

Which of the following political systems is most often associated with free-market theory?

Democracy

Based on the following example, which form of ethical decision making is likely at work? Select the one that best fits according to Chapter One, Section Five. Company Y values its commitment to society and has identified three specific traits that will exemplify its actions. The first is a commitment to human rights. The second is a commitment to promoting a clean environment, and the third is a resolution to always be transparent and fair in its business dealings. Company Y officials plan to use these traits when planning for the creation of a new distribution and call center in Nepal.

Fairness or justice approach

Strategic management is the central, integrated, and externally oriented concept of how an organization will achieve its performance objectives.

False

Which of the following theories argues that international corporations must seek to optimize their advantages to overcome barriers like economies, research and development, control of resources, etc.?

Global Strategic Rivalry Theory

Which of the following is not listed as a consideration companies take in deciding where and how to invest overseas?

Market return

Which of the following is a primary way governments discourage FDI efforts that seek to build new facilities?

Ownership restrictions

This theory is best suited to evaluating overseas sales when production of the product is to be done in the target country.

Porter's National Competitive Advantage Theory

This theory looks at things like market resources, local market demand and complementary industries.

Porter's National Competitive Advantage Theory

This theory has not proven to be very reliable in explaining current trade patterns where innovation and manufacturing occur around the world.

Product Life Cycle Theory

Which of the following theories argues that like marketing products in one's home market, the process of exporting products and services follows a similar, three-stage process?

Product Life Cycle Theory

Your text mentions a number of processes, but it focuses on only one strategic management tool. Which of the following analytical tools does it emphasize in Chapter One?

SWOT

Which of the following types of intervention is simply an outright "tax" on trade. These are most commonly applied to imports from other countries.

Tariffs

Which of the following is something governments use commonly to promote FDI?

Tax rates

Intrapreneurship involves a number of factors. Which of the following elements is not provided in Chapter 1 as an attribute of intrapreneurship?

Techniques normally seen in entrepreneurship are used without creating separate companies.

The concept of comparative advantage built on the idea of absolute advantage. The author proposed many advantages of this theory. Identify the following statement that is not true about this classical, country-based theory.

This theory expects countries would import goods that required resources that were in short supply but higher demand.

A stakeholder is a person or organization that is interested in the results produced y another individual or organization.

True

According to your text, the most obvious indications of a company engaging in foreign direct investment is the presence of their offices in a foreign country.

True

In Globalization 1.0, countries drove expansion across the globe.

True

Stakeholder analysis is focused on both identifying and assessing the importance of those individuals and organizations that have a shared interest in the success or failure of a business.

True

Strategic management is the body of knowledge that answers questions about the development and implementation of good strategies and is mainly concerned with the determinants of firm performance.

True

Globalization 2.0 can best be described as a period in which global development was driven by....(select the best answer from below)

companies

Globalization, according to your text, involves a changing international system in which the global economy is more ____________ and more _________________. Which of the word pairs below best completes this statement.

interdependent//integrated

When we discuss the choice of a foreign location because of access to raw material, cheap labor, access to key customers, cheap energy, etc., the term your text would apply is which of the following?

location advantage

According to Chapter One, Friedman says ___________ no longer matters while Ghemawat says _____________ is critical. Yet, both argue the world is more globalized today than it ever has been. Select the answer below that best completes this sentence.

nationality // nationality

Any nonprofit, voluntary citizens' groups that are organized on a local, national, or international level.

nongovernmental organizations (NGOs)

Mercantilism was one of the earliest forms of economic theory that sought to control production in the country to avoid losing capacity. The aim was to secure national security, ensure domestic jobs, and more. There was also a goal of having a trade surplus. Putting this theory into practice had many benefits, but it also had liabilities. It certainly didn't help consumers, because _________________ tended keep prices high by restricting imports. Though this was traditionally the most common economic approach, it hasn't gone away. It's still practiced today by many modern countries.

protectionism

According to your text in Chapter One, "International business encompasses many aspects..." Which of the following is not attributed to international business by the authors of your text?

unique sales opportunities