International business quizlet
All countries were to fix the value of their currency in terms of gold but were not required to exchange their currencies for gold, according to the 1944 ________.
Bretton Woods agreement
_____ draw(s) on economic theory to construct sophisticated econometric models for predicting exchange rate movements.
Fundamental analysis
In January 1976, the ______ revised the International Monetary Fund's Articles of Agreement to reflect the new reality of floating exchange rates
Jamaica agreement
The foreign exchange trading center in _____ has the highest percentage of activity.
London
What was the result of President Lyndon B. Johnson's attempt to finance his welfare programs?
a rise in price inflation
One reason for failure of the purchasing power parity (ppp) theory to predict exchange rate accurately is because it
assumes away transportation costs and trade barriers
What is a support activity in the operations of a firm?
creation and maintenance of information systems
A(n) ______ is used to move out of one currency and into another for a limited period without incurring foreign exchange risk.
currency swap
According to Michael Porter, what are two basic strategies for creating value and attaining a competitive advantage in an industry?
differentiation and low-cost
First-mover disadvantages refer to
disadvantages associated with entering a foreign market before other international businesses
The ______ shows all of the different positions that a firm can adopt with regard to value creation and low cost assuming that its internal operations are configured adequately to support a particular position.
efficiency frontier
A(n) _____ has no impediments to free flow of goods and services, such as trade barriers
efficient market
The liability associated with foreign expansion is greater for foreign firms that
enter a national market early
The ________ refers to systematic reductions in production costs that have been observed to occur over the life of a product
experience curve
How is a currency classified If only nonresidents may convert it into a foreign currency without any limitations?
externally convertible
Sun Energy is the first hydro-based energy plant in Australia, and it has captured a large portion of the market. It has created a strong brand name that everyone associates with energy efficiency and cost savings. In this market, Sun Energy is demonstrating
first-mover advantage
According to Christopher Bartlett and Sumantra Ghoshal, how can local companies differentiate themselves from foreign multinationals?
focusing on market niches
A country's currency is referred to as ______ when its government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it.
freely convertible
What was abandoned per the Jamaica agreement of 1976?
gold as a reserve asset
In terms of the gold standard, the amount of currency needed to purchase one ounce of gold was referred to as the
gold par value
In the 1930s, countries were devaluing their currencies at will in order to boost exports, thus shattering confidence in the
gold standard system
A country that _____ presents a favorable benefit-cost-risk trade-off scenario for foreign expansion
has a free market system
Firms that pursue a(n) _____ strategy take products first produced for their domestic market and sell them across various markets with only minimal local customization
international
The institutional arrangements that govern exchange rates are called the
international monetary system
The two phenomena that help explain the experience curve are
learning effects and economies of scale
processes are defined as the
manner in which decisions are made and work is performed within the organization
Under the Plaza Accord of 1985, the Group of Five major industrial countries concluded that it would be desirable if
most major currencies appreciated via the US dollar
The text points out two things that can affect the value an international business creates in a foreign market: the sustainability of its product offering and the
nature of indigenous competition
What is an example of an intangible property?
patent
Supple SkinCare Inc. is spending significant money educating customers on the value of its mineral-based skincare line as it moves into several new international markets. The money to educate customers is a form of
pioneering costs
The value creation activities of a firm are categorized as
primary activities and support activities
The rate of return that a firm makes on its invested capital is referred to as
profitability
The _____ states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between the two countries.
purchasing power parity (ppp) theory
One reason why a relatively poor country may be an attractive target for inward investment is the potential for
rapid economic growth
The initial focus for the World Bank was to help
reconstruct the war-torn economies of Europe
According to purchasing power parity (ppp) theory, the price of a "basket of goods" should be
roughly equivalent in each country in relatively efficient markets.
A cooperative agreement between potential or actual competitors is called a(n)
strategic alliance
The international Development Association of the World Bank only provides loans to
the poorest nations
An international business can command higher prices for a particular product in a foreign market when
the product offers greater value to customers in the foreign market.
______ refers to the extent to which the reported consolidated results and balance sheets of a corporation are affected by fluctuations in foreign exchange values
transaction exposure
