According to the market imperfections theory, competition is a common market
imperfection.
All parties ranging from suppliers and employers to consumers who are affected by a
company’s activities are called its stockholders.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Anarchism is the belief that every aspect of people’s lives must be controlled in order
for a nation’s political system to be effective.
Today, due to improved technology, it is fairly easy to persuade an outside supplier to
make significant modifications to a component.
Devaluation lowers the price of a country’s exports in the global market and increases
the price of its imports.
Donna Bader, Globalization opponent
Donna Bader spent her final year at college studying the effect of various economic
factors on the economy of developing nations. Based on the results of her study, she
concluded that globalization does these countries more harm than good.
Multinational corporations (MNCs) have direct investments abroad in multiple
countries.
Supporters and critics of globalization appear to agree that globalization prevents
dislocation in labor markets.
Investor confidence in the value of a currency plays an important role in determining its
exchange rate.
Today’s international monetary system remains in large part a managed float system.
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
A benefit of regional economic integration is that it always expands employment
opportunities in all nations.
Scenario: Jeans Unlimited
Jeans Unlimited produces clothing for young adults. It designs its clothes at its New
York headquarters and produces them at facilities located in two Southeast Asian
countries. The company recently received negative press after one of its facilities was
found using questionable labor practices, such as, employing children and operating in
a manner that damages the environment.
Products marketed in all countries essentially without any changes are known as
continental products.
A push strategy is a promotional strategy designed to pressure channel members to
promote a product to final users.
Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin
America. To that end, Blickinstock is trying to decide whether to purchase an existing
company in a remote region of Argentina or build its own subsidiary. Keith Moon,
Blickinstock’s vice president of global business development, will be making a
presentation to the board outlining the company’s options. Firms from emerging
markets account for a greater share of global mergers and acquisitions than developed
markets.
Scenario: Cleanshot USA in Russia
When Cleanshot USA, a photography products company, decided to enter the
international arena, it chose Russia as its main market. Although Russia has been in
transition for years, Cleanshot managers believe their company has tremendous
opportunities there. Given the lack of available hard currency, Russian businesses often
use goods and services as payment for other products they buy from abroad. This
practice is referred to as ________.
A) letter of credit
B) fiat money
C) barter
D) guanxi
Trade unions claim that by permitting international firms to continually move to nations
with ________, globalization reduces labor’s bargaining power and forces overall labor
standards lower.
A) better factory facilities
B) higher resource accessibility
C) lower labor standards
D) lower labor density
Which of the following was a disadvantage of using gold as a medium of exchange in
international trade?
A) The weight of gold made transporting it expensive.
B) Gold was not in high demand.
C) The gold standard imposed lenient monetary policies on countries that participated
in the system.
D) The gold standard increased the risk in exchange rates as it maintained highly
flexible exchange rates between currencies.
Scenario: Swingset International
Jerome Johnston, the human resource manager at the U.S.-based Swingset
International, is developing an international staffing policy for the company. Jerome
personally believes Swingset should send managers from the United States to manage
each subsidiary. But the CEO of the company, Valerie Vermont, believes subsidiary
operations ought to be managed by individuals from the host country.
The approach recommended by Jerome is called ________.
A) vertical integration
B) ethnocentric staffing
C) horizontal integration
D) geocentric staffing
Which of the following is a potential drawback of regional economic integration?
A) ethnocentricity
B) trade diversion
C) economic nationalism
D) protectionism
________ refers to the unwanted cultural influence in a nation that can cause great
distress and lead governments to block imports it believes to be harmful.
A) Cultural imperialism
B) Cultural protectionism
C) Dumping
D) Capitalism
Advance payment is commonly used for export/import financing when ________.
A) two parties are unfamiliar with each other
B) the buyer has obtained credit for the transaction
C) the transaction is for a relatively high amount
D) the buyer has good credit rating at banks
Which of the following strategies works best for an organization that practices mass
production and mass-marketing?
A) differentiation strategy
B) focus strategy
C) low-cost leadership strategy
D) retrenchment strategy
Which of the following statements is true of embargoes?
A) An embargo may be placed on one or a few goods or may completely ban trade in all
goods.
B) An embargo is the least restrictive nontariff barrier available.
C) An embargo is usually employed for economic reasons.
D) Embargoes are used frequently today because they are easy to implement.
Development that meets the needs of the present without compromising the ability of
future generations to meet their own needs indicates ________.
A) egalitarianism
B) denationalization
C) generalizability
D) sustainability
Which of the following terms refers to a stock market with no central geographic
location?
A) cybermarket
B) foreign exchange market
C) capital market
D) international bond market
Scenario: Stephanie Wong
Stephanie Wong, a Chinese-American, owns a consultancy that advises clients on
strategies for business expansions into China. Wong is to lead a symposium for small
and mid-sized exporters who are planning on expanding their businesses in China.
Therefore, she is preparing answers in advance for questions that symposium
participants would most likely ask. ________ is the layer of corporate social
responsibility in which a business builds social responsibility into its core operations to
create value and build competitive advantage.
A) Risk management
B) Traditional philanthropy
C) Strategic CSR
D) Political polity
The exchange rate between the euro (€) and the dollar is €0.8461/$. Which of the
following is the correct direct quote on the dollar?
A) $2.20/€
B) $1.1819/€
C) $5.50/€
D) $0.8461/€
Over the last ten years, nearly 90% of medical graduates from Konesia have left the
country for higher-paying jobs in the United States. What phenomenon has Konesia
been witnessing?
A) vested outsourcing
B) brain drain
C) redeployment
D) repatriation
The European Free Trade Association was formed in 1960 to focus on trade in
________.
A) consumer goods
B) agricultural goods
C) industrial goods
D) services
The ________ theory states that a country’s export eventually becomes its import.
A) competitive advantage
B) factor proportions
C) international product life cycle
D) new trade
________ is often necessary as a communication strategy when many important
differences exist between the home and target markets.
A) Product invention
B) Product adaptation
C) Dual adaptation
D) Dual extension
Discuss the volume of international trade, and explain the role government and chance
play in the growth of international trade.
Explain the different ways in which products can be differentiated, providing an
example of each.
What is economic transition? Describe the obstacles that countries face during
economic transition.
Describe any five variables commonly included in creating a market-potential analysis
for an emerging market.
Describe the production managers’ decision regarding whether to centralize or
decentralize production facilities, and explain the benefits of vertical integration.