International Business Exam 2
If Italy is more efficient at producing fine leather shoes and handbags, then Italy has a(n)
Absolute Advantage
Which terms indicates that the units of resources required to produce a good are assumed to remain fixed no matter where one is on a country's production possibility frontier?
Constant returns to specialization
Most economists would agree that the best interests of international business are found in a nation with a
Free trade policy
_________ was a multilateral agreement established in 1947 whose objective was to liberalize trade by eliminating tariffs, subsidies, import quotas and the like
General Agreement on Tariffs and Trade (GATT)
Paul Krugman characterizes the strategic trade policy as being
A boost to national income at the expense of other countries
One focus of strategic trade policy is to help domestic companies gain...
A first mover advantage
One form of FDI is ______ which involves the establishment of a new operation in a foreign country.
A greenfield investment
According to porter, which factor endowment would be classified as an advanced factor?
Communication Infrastructure
One example of a(n) effect of FDI is when a foreign MNE employs a number of host-country citizens
Direct
______ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value
Dumping
Some countries have a policy that entirely restricts the export of coffee products. This is called a(n)
Export Ban
A country that relies on the pragmatic nationalist view would say that
FDI should be allowed so long as the benefits outweigh the costs.
The economic and strategic advantages that accrue to early entrants into an industry are called
First-mover advantages
The _____ view argues that international production should be distributed among countries according to the theory of comparative advantage and countries should specialize in the production of goods they can make most efficiently
Free Market
Payments used to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official, are called
Grease Payments
High tariff barriers and subsidies in the agricultural industry ultimately lead to
Increased prices for consumers
The ________ Argument was proposed by Alexander Hamilton in 1792 and is by far the oldest economic argument for government intervention.
Infant Industry
What do new trade theorists point to as the reason for gaining a first-mover advantage?
Innovation and luck
How did the smoot-hawley act affect employment?
It had a damaging effect on employment abroad
Which ethical approach typically focuses on the attainment of fair and equitable distribution of economic goods and services?
Justice Theories
Internalization theory is used to explain why a company prefers FDI over ________ as a way to enter a foreign market.
Licensing
An implication of trade barriers for business practice is that they
Limit a firm's ability to serve a country from locations outside of that country
___________ gives employees the integrity to go public to the media and blow the whistle on persistent unethical behavior in a company
Moral Courage
_____ arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.
Multipoint competition
Which approach suggests that nations may benefit from trade even when they do not differ in resource endowments or technology?
New Trade Theory
Which theory stresses that in some cases, countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can support only a limited number of firms?
New Trade Theory
___________ Justifies some limited government intervention to support the development of certain export-oriented industries
New Trade Theory
Subsidies and quotas are examples of _____ barriers a county might impose.
Nontariff
One root cause of unethical behavior in business is
Pressure to meet unrealistic performance goals
A(n) _________ refers to the extra profit that producers make when supply is artificially limited by an import quota
Quota Rent
Which political ideology reflects the idea that a multinational enterprise is an instrument of imperialist domination
Radical view
A firm might justify a preference for licensing over FDI because licensing.
Results in the licensee bearing the costs and risks
Which philosophical approach is typically associated with managers from developed nations, and claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries.
Righteous Moralism
A ________ is an individual or group that has an interest or claim in what a company does and how well it performs
Stakeholders
According to ______, location-specific advantages are of considerable importance in explaining both the rationale for and the direction of FDI
The eclectic paradigm
During the second stage of the ethical decision-making process, managers must determine whether a proposed decision would violate
The fundamental rights of any stakeholders
One of the main benefits that FDI provides to the home country is
The home country's balance of the payments benefits from the inward flow of foreign earnings
In his theory of absolute advantage, Adam Smith advocate that ________ should determine what a country imports and what it exports.
The market mechanism
The basic position of the friedman doctrine says that
The only social responsibility of business is to increase profits, so long as the company stays within the rules of law.
The Heckscher-Ohlin theory is based on the idea that
The pattern of international trade is determined by differences in factor endowments.
The basic message of _________ is that potential world production is greater with unrestricted free trade than it is with restricted trade.
Theory of comparative advantage
Licensing is good option to enter a foreign market when
Tight control of the foreign operation is not required
The stock of FDI refers to the
Total accumulated value of foreign owned-assets at a given time.
A country that imports more goods than it exports experiences a
Trade deficit
The ___________ approach to ethics holds that moral worth of actions or practices is determined by their consequences and is committed to the maximization of good and the minimization of harm.
Utilitarian
Foreign producers agree to _________ imposed by an exporting country because they fear more damaging punitive tariffs or imports quotas might follow if they do not.
Voluntary export restraints
Which organization was created to implement the GATT agreement?
WTO
According to the product life-cycle theory, once a new product becomes widely accepted internationally then production for that product.
Will start to take place in other countries
A situation in which an economic gain by one country results in an economic loss by another is called a
Zero-sum game
Ownership restraint is a method of
restricting inward FDI by host country.