MIX REVIEW Flashcards
● One of the drawbacks of regional economic integration where in trading was diverted
away from nations not belonging to a trading bloc and toward member nations
Trade Diversion
● Firms can reduce the problems associated with Acquisitions through
○ Due diligence
Economic integration by which countries remove all barriers to trade and to the
movement of labor and capital among themselves and set a common trade policy
against nonmembers.
○ Common Market
Economic and political integration by which countries coordinate aspects of their
economic and political systems, and have common stance on economic and political
matters to non- members
○ Political Union
One of the benefits of regional economic integration where in companies save a great
deal of money annually from the removal of import tariffs or supplying entire regions from
one or several factories, Savings can then be passed on to consumers in the form of
lower prices
○ Corporate savings
a unique form of FDI—businesses invest in a foreign company to manufacture goods.
They then sell the finished product in a third country
○ Platform FDI
The treaty that formally established the European Union, setting the path for deeper
economic and monetary union and called for banking in a single, common currency after
January 1, 1999.
○ Maastricht Treaty
A business acquires a complementary business in another country relevant to its existing
business
○ Vertical FDI
A company invests in a foreign business that is unrelated to its core business
○ Conglomerate FDI
Implemented to promote trade between the U.S., Canada, and Mexico, however issues
and criticisms regarding labor and environmental issues resulted to creation of USMCA
○ North American Free Trade Agreement
A company establishes the same type of business operation in a foreign country as it
operates in its home country
○ Horizontal FDI
The purchase of physical assets or significant amount of the ownership(stock) of a
company in another country to gain level of management control
○ Foreign Direct Investment
Economic integration by which countries remove barriers to trade and the movement of
labor and capital among members, set a common trade policy against nonmembers, and
coordinate their economic policies
○ Economic Union
● The OLI framework
○ Ownership, Location, Internalization
Form of external expansion where one company acquires one company by the other,
which is quick to execute.
○ Acquisition
An economic and business method for analyzing the attractiveness of making a foreign
direct investment (FDI) which follows the OLI framework
○ Eclectic paradigm
The cornerstone of regional integration in Southeast Asia, focusing on economic,
political, and security cooperation
○ Association of Southeast Asian Nations
One of the benefits of regional economic integration where in it is easier to gain
consensus from fewer members as a member of the group, as a whole, can have more
say when negotiating with other countries in bigger forum
○ Political Cooperation
Economic integration by which countries remove all barriers to trade among themselves,
but country determines its own barriers against nonmembers
○ Free Trade Area
One of the theories why companies engaged in FDI
○ Remove market imperfections
Bond issued outside the country in whose currency it is denominated
○ Eurobond
The analysis that employs charts of past trends in currency prices and other factors to
forecast exchange rates
○ Technical analysis
an exchange rate between two nations’ currencies is equal to the ratio of their price
levels.
○ Purchasing Power Parity
Rate at which one currency is exchanged for another
○ d.) exchange rate
Bond sold outside the borrower’s country and denominated in the currency of the
country in which it is sold.
○ Foreign bond
Market consisting of all the world’s currencies that are banked outside their countries of
origin
○ Eurocurrency market
Market consisting of all bonds sold by issuing companies, governments, or other
organizations outside their own countries
○ International Bond Market
The intentional lowering of a currency’s value by a nation’s government is called
○ Devaluation
Interest rates that the world’s largest banks charge one another for loans
○ c.) interbank interest rates
Market in which currencies are bought and sold and their prices are determined
○ a.) foreign exchange market
The statistical models based on economic indicators to forecast exchange rates between
currenciesThe statistical models based on economic indicators to forecast exchange rates between
currencies
○ Fundamental analysis
● The intentional raising of a currency’s value by a nation’s government is called
○ Revaluation
System that allocates financial resources in the form of debt and equity according to their
most efficient uses.
○ Capital market
Market consisting of all stocks bought and sold outside the issuer’s home country
○ International equity market
Network of individuals, companies, financial institutions, and governments that invest
and borrow across national boundaries
○ International Capital Market
The _______ a nation to fix the value (price) of its currency to an ounce of gold, which
also indirectly linked currencies to each other.
○ a.) Gold standard
● ________states that when price is expressed in a common currency, an identical
product must have an identical price in all countries
○ a.) Law of one price
One of the international strategy that emphasizes responsiveness to local requirements
within each of its markets.
○ b.) Multi-Domestic Strategy
A written statement of why a company exists and what it plans to accomplish, often
guides decisions such as which industries to enter or exit and how to compete in chosen
segments
○ d.) Mission Statement
Strategy in which a company focuses on serving the needs of a narrowly defined market
segment by being the low - cost leader, by differentiating its product, or both.
○ a.) Focus strategy
Process of dividing a company’s activities into primary and support activities and
identifying those that create value for customers.
○ c.) Value Chain Analysis
Strategy designed to increase the scale (size of activities) or scope (kinds of activities) of
a corporation’s operations
○ a.) Growth Strategy
The analysis that can help a company identify areas where it needs to improve and
areas where it has a competitive advantage
○ d.) Company Analysis
The ________ controls currency printing and helps cap inflation.
○ d.) Currency board
Offering the same products using the same marketing strategy in all national markets.
○ c.) Global Strategy
Strategy in which a company designs its products to be perceived as unique by buyers
throughout its industry.
○ b.) Differentiation strategy
Process of identifying and selecting an organization’s objectives and deciding how the
organization will achieve those objectives
○ a.) Planning
The ________ created an international monetary system based on the value of the US
dollar and used the gold standard to link paper currencies to specific values of gold.
○ b.) Bretton Woods Agreement
Special ability of a company that competitors find extremely difficult or impossible to
equal.
○ a.) Core competency
Set of planned actions taken by managers to help a company meet its objectives.
○ b.) Strategy
The value of a currency expressed in terms of gold is called its___________.
○ b.) Par value
