Cumulative Questions from Slide Deck Flashcards
All of the following theories advocated free trade except
Mercantilism
Comparative Advantage
Absolute Advantage
Hecksher-Ohlin
Mercantilism
Which theory suggested that comparative advantage arises
from differences in national factor endowments?
a) mercantilism
b) absolute advantage
c) Heckscher-ohlin
d) comparative advantage
c) Heckscher-ohlin
Which theory suggests that as products mature the optimal production location will change?
a) Mercantilism
b) Comparative Advantage
c) Absolute Advantage
d) Product life-cycle
d) Product life-cycle
Economies of scale and first mover advantages are important to which trade theory?
a) Mercantilism
b) Product life cycle
c) New trade theory
d) Comparative advantage
c) New trade theory
When tariffs are levied as a fixed charge for each unit of a good imported, they are called
a) Specific tariffs
b) Ad valorem tariffs
c) Tariff rate quotas
d) Transit tariffs
a) Specific tariffs
A ________ demands that some specific fraction of a good be produced domestically
a) subsidy
b) quota rent
c) voluntary export requirement
d) local content requirement
d) local content requirement
Which of the following is not a political argument for government intervention?
a) protecting jobs
b) protecting infant industries
c) protecting industries deemed important for national security
d) protecting consumers from “dangerous” products
b) protecting infant industries
What is the most common political reason for trade barriers?
a) To protect infant industries
b) Strategic trade policy
c) To protect jobs
d) To protect industries that are important for national security
c) To protect jobs
Which theory suggests that in cases where there may be important first mover advantages, governments can help firms from their countries attain these advantages?
a) The infant industry argument
b) Strategic trade theory
c) Comparative advantage theory
d) The Leontief paradox
b) Strategic trade theory
All of the following except _____ are key issues on the table at the Doha Round.
a) Anti-dumping policies
b) Protectionism in agriculture
c) Intellectual property rights
d) Infant industry protection
d) Infant industry protection
The sourcing of good and services from around the world to take advantage of national differences in the cost and quality of factors of production is called
a) economies of scale
b) the globalization of production
c) global integration
d) global sourcing
b) the globalization of production
Which organization is responsible for policing the world trading system?
a) the International Monetary Fund
b) the United Nations
c) the World Trade Organization
d) the World Bank
c) the World Trade Organization
Which is not an area where multinational firms are concerned about ethics?
a) Human rights
b) Trade regulations
c) Environmental regulations
d) Corruption
b) Trade regulations
All of the following except ____ contribute to unethical behavior by international managers.
a) Decision-making processes
b) Leadership
c) Personal ethics
d) National culture
d) National culture
According to ________, a company’s home-country standards of ethics are the appropriate ones to follow in foreign countries.
a) the righteous moralist
b) the naïve immoralist
c) the Friedman doctrine
d) cultural relativism
a) the righteous moralist
________ recognize that human beings have fundamental rights and privileges which transcend national boundaries and cultures.
a) Kantian ethics
b) Utilitarian approaches
c) Straw men
d) Rights theories
d) Rights theories
The _____ suggests that everyone is imagined to be ignorant of all his or her particular characteristics.
a) tragedy of the commons
b) veil of ignorance
c) code of ethics
d) the Universal Declaration of Human Rights
b) veil of ignorance
What is a company’s formal statement of ethical priorities called?
a) Mission statement
b) Code of ethics
c) Code of values
d) Organizational culture
b) Code of ethics
Which of the following is not a common pitfall of exporting?
a) a product offering that is customized to the local market
b) a poor understanding of competitive conditions in he foreign market
c) poor market analysis
d) problems securing financing
a) a product offering that is customized to the local market
Which of the following is not a purpose of the bill of lading?
a) It is a contract
b) It is a document of title
c) It is a form of payment
d) It is a receipt
c) It is a form of payment
Countertrade is attractive for all of the following reasons except
a) It may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably
b) It can give a firm a way to finance an export deal when other means are not available
c) It can be a strategic marketing weapon
d) It can give a firm an advantage over firms that are unwilling to engage in countertrade arrangements
a) It may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably
The establishment of a wholly new operation in a foreign country is called
A) an acquisition
B) a merger
C) a greenfield investment
D) a multinational venture
C) a greenfield investment
The amount of FDI undertaken over a given time period is known as
A) the flow of FDI
B) the stock of FDI
C) FDI outflow
D) FDI inflow
A) the flow of FDI
Most FDI is direct toward
a) developed countries
b) emerging economies
c) the United States
d) China
a) developed countries
Advantages that arise from using resource endowments or assets that are tied to a particular location and that a firm finds valuable to combine with its own unique assets are
a) First mover advantages
b) Location advantages
c) Externalities
d) Proprietary advantages
b) Location advantages
Benefits of FDI include all of the following except
a) The resource transfer effect
b) The employment effect
c) The balance of payments effect
d) National sovereignty and autonomy
d) National sovereignty and autonomy
Which of the following is not a cost of outward FDI for host countries?
a) the initial capital outflow required to finance the FDI
b) when FDI is a substitute for direct exports
c) gains from learning valuable skills from foreign markets
d) the effect on employment is FDI is a substitute for domestic production
c) gains from learning valuable skills from foreign markets
What is the rate of return the firm makes on its invested capital?
a) Profit growth
b) Profitability
c) Net return
d) Value created
b) Profitability
Which of the following is not an example of a primary activity?
a) Logistics
b) Marketing and sales
c) Customer service
d) Production
a) Logistics
What is created when different stages of a value chain are dispersed to locations where value added is maximized or where the costs of value creation are minimized?
a) Experience effects
b) Learning effects
c) Economies of scale
d) A global web
d) A global web
Which of the following is not a pressure for local responsiveness?
a) Excess capacity
b) Host government demands
c) Differences in consumer tastes and preferences
d) Differences in distribution channels
a) Excess capacity
Which strategy tries to simultaneously achieve low costs through location economies, economies of scale, and learning effects, and differentiate the product offering across geographic markets to account for local differences?
a) Internationalization
b) Localization
c) Global standardization
d) Transnational
d) Transnational
Which strategy makes sense when pressures are high for local responsiveness, but low for cost reductions?
a) Global standardization strategy
b) International strategy
c) Transnational strategy
d) Localization strategy
d) Localization strategy
Whose theory of comparative advantage suggests that countries should specialize in the production of those goods they produce most efficiently and buy goods that they produce less efficiently from other countries, even if this means buying goods from other countries that they could produce more efficiently at home
Ricardo
If each country specializes in the production of the good in which it has a ______________ _______ and trades for the other, both countries gain
comparative advantage
Who argued argued that comparative advantage: from differences in factor endowments, i.e., the extent to which a country is endowed with resources like land, labor, and capital
Eli Heckscher and Bertil Ohlin
Who theorized the following?
U.S. was relatively abundant in capital, so the U.S. would be an exporter of capital intensive goods and an importer of labor-intensive goods based on H-O.
BUT, he found that U.S. exports were less capital intensive than U.S. imports
Wassily Leontief
Who suggested that as products mature
both the location of sales and production will change, affecting the flow and direction of trade
Raymond Vernon,
In New Trade Theory— the patterns we observe in the world economy may be the result of __________ _________ _______ (the economic an strategic advantages that accrue to early entrants into an industry) and _____ ______ __________
economies of scale , first mover advantages
What are the 3 main implications for international businesses as they relate to Porter’s theory (new trade theories)
location implications: cost and markets
first-mover implications: advantage scale and learning
policy implications: leverage
Porter’s diamond of competitive advantage includes all of the following except
a) Factor endowments
b) Demand conditions
c) First-mover advantages
d) Firm strategy, structure, and rivalry
c) First-mover advantages
Economies of scale and first mover advantages are important to which trade theory?
a. Mercantilism
b. Product life cycle
c. New trade theory
d. Comparative advantage
c. New trade theory
_________ refer to the nature of home demand for the industry’s product or service.
a) Demand conditions
b) Factor endowments
c) Firm strategy, structure, and rivalry
d) Related and supporting industries
a) Demand conditions
What refers to the merging of historically distinct and separate national markets into one marketplace
Globalization of Markets
This refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production
globalization of production
How quickly to derivations in purchasing power parity disappear over time?
15% per year
how long it takes for half of the deviations from purchasing power parity to disappear?
4 years
trade activities between countries occur within what three boundaries
Religious, Cultural practice, and Explicit systems (political, economic, or legal rules)
the system of government in a nation is assessed according to what dimensions?
degree of focus on collectivism v. individualism
degree of focus on democratic v. totalitarian
______ systems tend to be totalitarian
collectivist
systems which place a high value on individualism tend to be
democratic
Which Greek philosopher proposed collectivism?
Plato (427-347 BC)…
Which Greek philosopher proposed individualism?
Aristotle (384-322 BC),
Socialism is split into what two camps?
Communism: planned by central government
Social democrats: socialism is achieved through democratic means, e.g., Sweden
What are the four types of totalitarianism?
Communist: the communist party monopolizes power
Theocratic: power is monopolized by a party, group, or individual that governs according to religious principles
Tribal: a political party that represents the interests of a particular tribe monopolizes power
Right-wing: permits some individual economic freedom, but restricts individual political freedom
What types of political systems are the most important to consider when conducting international business
any type that is PREDICTABLE in nature
What are the three types of economic systems:
market economies
command economies
mixed economies
What type of economy is this?
all productive activities are privately owned and production is determined by S&D
Government is to encourage free and fair competition between private producers/suppliers
Most conducive to innovation
Market economy
What type of economy is this?
all businesses are state-owned, i.e., gov’t, resources allocation for “the good of society”
Government plans the type/quantity of goods and services that a country produces, and set the prices
little incentive to be efficient (cost?)
command economy
What is a legal system?
A system by which rules that regulate behavior along with enforcement and redress
What are the three types of legal systems in the world?
Common law: based on tradition and precedent
Civic law: based on detailed set of codes
Theocratic law: based on religious teachings
What is a document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved?
contract
Under this type of system, contracts tend to be very detailed with all contingencies spelled out
common law
Under this type of system, contracts tend to be much shorter and less specific because many issues are already covered in the code
civil law system
rights over the use a resource and over any income that may be derived from that resource are known as
property rights
Name the types of property rights violations
private action: theft, piracy
public action: officials extort income
The _____________________ makes it illegal for U.S. companies to bribe foreign government officials
Foreign Corrupt Practices Act
involves holding a firm and its officers responsible when a product causes injury, death, or damage
Product liability
What are main instruments of trade policy?
Tariffs
Subsides
Import Quotas
Voluntary Export Restraints
Local Content Requirements
Administrative Polices
Antidumping Policies
What are taxes levied on imports that effectively raise the cost of imported products relative to domestic products
tariffs
What type of tariffs are : levied as a % of the value of the imported good
Ad valorem tariffs
What are the three things that tariffs are supposed to accomplish?
increase government revenues,
provide protection to against foreign competitors
force consumers to pay more for certain imports
What are Government payments to domestic producers
subsidies
What are subsidies supposed to accomplish?
they help them compete against low-cost foreign imports
they help them gain export markets
What does a quota do?
restrict the quantity of some good imported into a country
a hybrid where a lower tariff is applied to imports within the quota than to those over the quota
tariff rate quota
Import quotas and voluntary export restraints protects against foreign competition, but do what?
raise prices
What demands that some specific fraction of good be produced domestically. These benefit domestic producers, but consumers face higher prices.
local content requirements
what is the practice of selling goods in a foreign market at below cost or fair market value, and may be predatory?
dumping
What are the political arguments for intervention in trade?
protecting jobs
protecting industries deemed important for national security
retaliating to unfair foreign competition
protecting consumers from “dangerous” products
furthering the goals of foreign policy, e.g., human rights of individuals in exporting countries
What is the most common political reason for trade barriers?
a) To protect infant industries
b) Strategic trade policy
c) To protect jobs
d) To protect industries that are important for national security
c) To protect jobs
Global Institutions created for trade include what two primary organizations?
the General Agreement on Tariffs and Trade (GATT)
the World Trade Organization (WTO)
What are the Non-trade Global Institutions?
the International Monetary Fund (IMF, 1944, access to hard currencies, liquidity and stability)
the World Bank (1944, for reconstruction)
the United Nations (1945 UN)
What are the primary objectives of the WTO?
improving people’s lives, negotiating trade rules, overseeing WTO agreements, maintaining open trade, settling disputes
What were the WTOs most significant event?
Nov 11, 2001, Doha (agreement took place then), China became part of WTO
What are the two macro factors that underlie the trend towards globalization?
the decline in barriers to the free flow of goods and capital and technology
What Four trends are important to the changing global economy?
the Changing World Output and World Trade Picture
the Changing Foreign Direct Investment Picture
the Changing Nature of the Multinational Enterprise
the Changing World Order
is any business that has productive activities in two or more countries
A multinational enterprise (MNE)
Since what decade has there been a rise in non-U.S. multinationals, and a growth of mini-multinationals
1960s
What are the pros and cons towards the shift toward a more integrated and interdependent global economy
PRO- that increased trade and cross-border investment mean lower prices for goods and services, greater economic growth, higher consumer income, and more jobs
CON- globalization will cause job losses, environmental degradation, and the cultural imperialism of global media and MNEs
Globalization critics point out what?
-trade destroys (manufacturing) jobs in advanced countries
-firms avoid costly labor and environmental regulations by moving production to countries where such -regulations do not exist, or are not enforced
shifting economic power away from national governments toward supranational organizations like the WTO, the EU, and the MNCs
-globalization causes widening gap between rich nations and poor nations
What is driving the trend towards deglobalization?
Uneven distribution benefits of trade (compensation): Inequality
What is the reasoning behind agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production with each other
Regional economic integration
what eliminates all barriers to the trade of goods and services among member countries, but members determine their own trade policies for nonmembers (ex NAFTA)
a free trade area
what eliminates trade barriers AND a common external trade policy Ex (The Andean Pact )
a customs union
what is no trade barriers, a common external trade policy, AND the free movement of the factors of production (ex MERCOSUR)
a common market
What is the free flow of products and factors of production between members, a common external trade policy, a common currency, a harmonized tax rates, and a common monetary and fiscal policy (i.e. the EU)
An economic union
What involves a central political apparatus that coordinates the economic, social, and foreign policy
a political union
What are the five levels of economic integration?
a free trade area, a customs union, a common market, an economic union, a political union
What are the main pros/vs cons of economic integration?
gains- free trade investment, increased dependency (more political clout), incentives for cooperation
cons- national sovereignty may be undermined, more trade may just be diverted vs created.
What are the two trade blocs in Europe?
EU (27 members), and European Free Trade Area (4 members)
What are the five major institutions of the EU?
European Council - resolves policy issues
European Commission- implements aspects of EU law and monitors member states.
Council of the EU- ultimate controlling authority
EU parliament- debates legislation
Court of Justice- supreme appeals court for EU laws.
How did the EU has created the second largest currency zone in the world after that of the U.S. dollar
by adopting the euro
What are euro advantages?
conversion, transparency, liquidity, scale economy, strategic.
What is a continuation of NAFTA to promote/protect free trade between the 3 countries that make up N.A?
USMCA
What are the differences between the USMCA and NAFTA?
-Building labor protections in Mexico
-Reducing protections for pharmas
-Increasing protections for technology firms:
-Incentivizing to keep production in NA (v. EU / Asia)
-Dismantling a controversial arbitration system, Investor-State Dispute System (ISDS), which enabled companies to sue governments
was formed in 1969 using the EU model
had more or less failed by the mid-1980s
was re-launched in 1990, and now operates as a customs union
signed an agreement in 2003 with MERCOSUR to restart negotiations towards the creation of a free trade area
The andean pact
originated in 1988 as a free trade pact between Brazil and Argentina
was expanded in 1990 to include Paraguay and Uruguay
has been making progress on reducing trade barriers between member states
may be diverting trade rather than creating trade, and local firms are investing in industries that are not competitive on a worldwide basis
MERCOSUR
What did CARICOM do?
establish a customs union
What was the Free Trade Of The Americas?
Talks began in April 1998 to establish a Free Trade of The Americas (FTAA) by 2005, it failed, if it DID go through it would have major implications
What agreement did this?
was formed in 1967
to foster freer trade between member countries and to achieve some cooperation in their industrial policies
The Association of Southeast Asian Nations (ASEAN):
What agreement is this?
21 members including the US, Japan, and China
about 2.94 B. people (38% of the world population)
an economic output of 51,820.72 trillion USD annually (61.1% of the global economy)
The Asia-Pacific Economic Cooperation (APEC):
What agreement is a “21st century one”
Currently with 12 participating countries on both sides of the Pacific having:
Combined population of 800 million
GDP of $28 trillion (40% of global GDP)
$9 trillion in merchandise trade; $2 trillion trade of services (30% of world trade)
Trans-Pacific Partnership (TPP)
What agreement is this?
the U.S. withdrew from the agreement soon after the election of president Trump,
Japan: leading role Jan ’18, CPTPP (22 measures favored by the US, but contested by other signatories, were suspended)
UK: new applicant
CN: announced Interest
CPTPP
What trade agreement has a membership fee, originating country had a large trade deficit with EU, wanted to be free of EU regulations, can limit imigration
Brexit
What agreement is this?
Started negotiation in 2012, reached agreement in Nov 2020 by 15 countries
1/3 of world’s pop.
30% of global GDP
RCEP - regional comprehensive economic partnership
NAFTA is an example of a(n)
a) Free trade area
b) Customs union
c) Common market
d) Economic union
a) Free trade area
All barriers to the free flow of goods and services between member countries are removed, and a common policy toward nonmembers is established in a
a) Free trade area
b) Customs union
c) Common market
d) Economic union
b) Customs union
When higher cost suppliers within the free trade area replace lower cost external suppliers
a) The bloc as a whole benefits
b) There is trade creation
c) There is trade diversion
d) External suppliers benefit
c) There is trade diversion
_______ is the ultimate decision making body of the European Union.
a) Council of the European Union
b) European Parliament
c) Court of Justice
d) European Commission
a) Council of the European Union
_______ is responsible for proposing EU legislation.
a) Council of the European Union
b) European Parliament
c) Court of Justice
d) European Commission
d) European Commission
Successful international managers need ____ _____ _______ an understanding (of each other) of how cultural differences across and within nations can affect the way in which business is practiced
cross-cultural literacy -
What is a system of values and norms that are shared among a group of people
culture
What are are the social rules and guidelines that prescribe appropriate behavior in particular situations
norms
a group of people with shared values & norms
society
Values and norms from an evolutionary process of a number of factors including
(History)
religion,
social structure, and
language and
societal culture
A system of shared beliefs and rituals that are concerned with the realm of the sacred
religious system
are a set of moral principles, or values, that are used to guide and shape behavior
ethical systems
what Four religions dominate society
Christianity, Islam, Hinduism, and Buddhism
What religion/philosophy is is also important in influencing behavior and culture in many parts of Asia
Confucianism
world’s largest religion, mostly in Europe and the Americas (because of the Europeans), started the “protestant work ethic,” Max Weber argues that this ethic was a driving force of capitalism
Christianity:
This is the world’s second largest religion- and also - all-embracing way of life that governs one’s being
key economic implication: people do not own property, only act as stewards for God
Fundamentalists: demand rigid commitment to religious beliefs and rituals, blame the West for many social problems
Islam
practiced primarily on the Indian sub-continent
focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denial
as such, there is not the same work ethic or focus on entrepreneurship found in some other religions
Hinduism
has about 350 millions followers,
stresses spiritual growth and the afterlife, rather than
achievement while in this world
Buddhism
an ideology practiced mainly in China
teaches the importance of attaining personal salvation through right action
Confucianism
What are the 3 key teachings of Confucianism?
loyalty,
reciprocal obligations (do unto others), and
honesty
(may lead to a lower of cost of doing business in countries that are influenced by it)
Societies are stratified on a hierarchical basis into what?
social categories, or social strata (distance),
What is the spoken and unspoken means of communication
language
Whare are these? the underlying thoughts and feelings that members of a culture take for granted and believe to be true.
shared assumptions
What are the three aspects of non-observable culture?
shared assumptions, values, and norms
What are the aspects of observable culture?
language and practices (such as taboos and rituals), symbols and socialization
behaviors that are forbidden in the culture.
Taboos
elaborate and formal activities designed to generate strong feelings. Usually they are carried out as special events.
ceremonies
anything visible (tangible) used to represent an abstract shared value or something having special meaning
symbols
a systematic process by which new members are brought into a culture through
role modeling,
teaching,
coaching, and
enforcement by others in the culture.
socialization
Geert Hofstede identified four dimensions of culture
power distance, individualism versus collectivism (already covered), and style
uncertainty avoidance, and
masculinity versus femininity
What is how a society deals with the fact that people are unequal in physical and intellectual capabilities
Power distance
what is the relationship between the individual and his/her fellows
individualism vs collectivism
the extent to which a culture accepts ambiguous situations and tolerating ambiguity (Guidance v. Micro-manage
uncertainty avoidance
what is the relationship between gender and work roles
masculinity vs femininity
what is instant enjoyment v. regulating along social norm
indulgence
a dimension to address Confucian dynamism capturing attitudes toward time
long-term orientation
Who theorized the following? Culture is a living thing, consisting of elements inherited from the past, outside influences, which have been embraced and new elements invented locally
Thierry Verhelst (1994)
What are the differences between the East and West as it relates to dimensions of culture?
Rational (west)
Relationship/Guanxi (East)
a belief in the superiority of one’s own culture
ethnocentric behavior
Abstract ideas about what a group believes to be good, right, and desirable are called
a) norms
b) values
c) folkways
d) mores
b) values
The basic social organization of a society is its
a) culture
b) social strata
c) social structure
d) caste system
c) social structure
The group is the primary unit of social organization in
a) Japan
b) the United States
c) Switzerland
d) Mexico
a) Japan
The most widely spoken language in the world is
a) Chinese
b) Spanish
c) Hindi
d) English
d) English
Which of the following is not characteristic of individualism?
a) individual achievement
b) low managerial mobility
c) low company loyalty
d) entrepreneurial behavior
b) low managerial mobility
Which religion promotes the notion that a moral force in society requires the acceptance of certain responsibilities called dharma?
a) Islam
b) Buddhism
c) Hinduism
d) Confucianism
c) Hinduism
_______ focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities.
a) power distance
b) individualism versus collectivism
c) uncertainty avoidance
d) masculinity versus femininity
a) power distance
) brings in, possibly, questionable practices in business, but questionable practices in international business does not stop there
guanxi
what are two reasons for setting up operations overseas?
market and production
accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization
ethics
a strategy that does not violate accepted principles
ethical strategy
what are three ethical dilemmas
corruption, human rights, environmental
situations in which none of the available alternatives seems ethically acceptable
ethical dilemmas
what is it called when business should take the social consequences of economic actions into account when making business decisions, and should be in favor of decisions that have both good economic and good social consequences
social responsibility
Reasons why managers behave unethically include what?
persona, decision making processes, cultural, leadership, unrealistic performance expectations
What are the four common straw men fallacies?
the friedman doctrine, cultural relativism, the righteous moralist, the naive immoralist
only social responsibility is to increase profits, so long as the company stays within the rules of law
Friedman doctrine
ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate.
cultural relativism
a MNC’s home standards should be followed in host countries
the righteous moralist
if other firms are not following ethical norms in a host nation, expat managers should not either
naive immoralist
What ethical framework involves the following? moral is determined by their consequences
Actions are desirable if they lead to the best possible balance of good consequences over bad consequences
Problems: measuring the benefits, costs, and risks of an action, and “just”?
utilitarian
What ethical framework involves the following:
people should be treated as ends and never purely as means to the ends of others (treating other humans… right)
Kantian
What are these?
human have fundamental rights and privileges… transcend national boundaries and cultures
establish a min. level of morally acceptable behavior, irrespective of the culture
Rights theories
What are these?
the attainment of a just distribution of goods and services
John Rawls (1921 – 2002): all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage
Justice theories
What are the 5 Steps of Ethical Decision Making?
Identify which stakeholders would be affected and how
determine whether a proposed decision would violate the fundamental rights of any stakeholders
establish moral intent (the bus. must resolves to place moral concerns > other concerns when there may be violation(s) of fundamental rights of stakeholders
The company engages in ethical behavior (execute)
The business audits its decisions, reviewing them to make sure that they were consistent with ethical principles
What gives employees the integrity to go public and blow the whistle on persistent unethical behavior in a company, walk away when something is unethical, and to say no to a superior when told to do something wrong?
moral courage
Which is not an area where multinational firms are concerned about ethics?
a) Human rights
b) Trade regulations
c) Environmental regulations
d) Corruption
b) Trade regulations
All of the following except ____ contribute to unethical behavior by international managers.
a) Decision-making processes
b) Leadership
c) Personal ethics
d) National culture
d) National culture
According to ________, a company’s home-country standards of ethics are the appropriate ones to follow in foreign countries.
a) the righteous moralist
b) the naïve immoralist
c) the Friedman doctrine
d) cultural relativism
a) the righteous moralist
________ recognize that human beings have fundamental rights and privileges which transcend national boundaries and cultures.
a) Kantian ethics
b) Utilitarian approaches
c) Straw men
d) Rights theories
d) Rights theories
The _____ suggests that everyone is imagined to be ignorant of all his or her particular characteristics.
a) tragedy of the commons
b) veil of ignorance
c) code of ethics
d) the Universal Declaration of Human Rights
b) veil of ignorance
What is a company’s formal statement of ethical priorities called?
a) Mission statement
b) Code of ethics
c) Code of values
d) Organizational culture
b) Code of ethics
what happens When conventional means of payment are difficult, costly, or nonexistent
countertrade
Which of the following is not a common pitfall of exporting?
a) a product offering that is customized to the local market
b) a poor understanding of competitive conditions in he foreign market
c) poor market analysis
d) problems securing financing
b) a poor understanding of competitive conditions in he foreign market
Which of the following is not a purpose of the bill of lading?
a) It is a contract
b) It is a document of title
c) It is a form of payment
d) It is a receipt
c) It is a form of payment
Countertrade is attractive for all of the following reasons except
a) It may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably
b) It can give a firm a way to finance an export deal when other means are not available
c) It can be a strategic marketing weapon
d) It can give a firm an advantage over firms that are unwilling to engage in countertrade arrangements
b) It can give a firm a way to finance an export deal when other means are not available
when a firm invests directly in facilities to produce and/or market in a foreign country, also an alternative to trade
Foreign direct investment
what type of investments are theses? new operation in a foreign country
greenfield
What can FDI be? (two things)
greenfield investments, acquisitions or mergers with existing firms in host nation
globalization of the world economy is having a _______ __________ on FDI as firms ensures significant presence in many regions of the world
positive impact
What two countries lead in FDI?
USA and China
capital invested in factories, stores, office buildings, etc.
Gross fixed capital formation
Firms prefer to acquire existing assets because
-M&A are quicker to execute
easier and perhaps less risky for a firm to -acquire desired assets than build them from the ground up
-firms believe that they can increase the efficiency of an acquired unit by transferring capital, technology, or management skills
FDI is shifting away from extractive industries and manufacturing, and towards services, due to
developed countries are moving towards services, many services need to be produced where they are consumed (market)
a liberalization of policies governing FDI in services
the rise of Internet-based global telecommunications networks
producing at home, then shipping to the receiving country
exporting
granting a foreign entity the right to produce and sell the product in return for a royalty fee
licensing
what are three drawbacks of licensing?
giving away know-how to a potential foreign competitor
no control over manufacturing, marketing, and strategy
when the firm’s competitive advantage is based on the management, marketing rather than product and manufacturing capabilities
who theorized that FDI flows are a reflection of strategic rivalry between firms in the global marketplace
Knickerbocker
who theorized that firms FDI flow = based on particular stages of the PLC, i.e. invest in
Vernon
The Eclectic paradigm involves what?
location-specific advantages, and externalities -( knowledge spillovers)
What political ideology view is this: MNE is a tool of the capitalist-imperialist home countries for exploiting host countries
Radical view (Marxist)
What political ideology view is this: international production: based on comparative advantage
Free market view
What political ideology viewpoint is this: FDI has benefits and costs
FDI should be allowed only if the benefits outweigh the costs
Pragmatic nationalism
What are FDI host country benefits?
resource transfer effects (capital supply, employment, consumer access to products), Balance of Payment effects (import decrease, export may increase depending on conditions)
Host Country Costs
adverse effects on balance of payments (outflow of capital as subsidairy repatriates earnings), debit if subsidiary imports large # of its inputs from abroad. Perceived loss of national sovereignty (key decision might be made by a foreign parent that has no real commitment to host country)
Home Country Benefits?
Inward flow of foreign earnings. employment effects, skills from foreign markets can subsequently be transferred back to home country
What two things can governments do related to outward FDI?
Encourage outward FDI (with gov backed insurance programs to cover risk), restrict outward FDI (limiting capital outflows, manipulating tax rules or prohibiting FDI)
What two things can governments do related to inward FDI?
Encourage inward FDI (through financial means- taxation, well established infrastructure, stability), restrict inward FDI through use ownership restrains and performance requirements
The amount of FDI undertaken over a given time period is known as
A) the flow of FDI
B) the stock of FDI
C) FDI outflow
D) FDI inflow
the flow of FDI
Benefits of FDI include all of the following except
a) The resource transfer effect
b) The employment effect
c) The balance of payments effect
d) National sovereignty and autonomy
d) National sovereignty and autonomy
Which of the following is not a cost of outward FDI for host countries?
a) the initial capital outflow required to finance the FDI
b) when FDI is a substitute for direct exports
c) gains from learning valuable skills from foreign markets
d) the effect on employment is FDI is a substitute for domestic production
c) gains from learning valuable skills from foreign markets
