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International Business > Test 2 > Flashcards

Test 2 Flashcards

1
Q

What did China do with regards to precious metals?

A

implement export quotas; claimed to be concerned about environmental impact, but resulted in higher prices for domestic Chinese manufactures; sued by WTO

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2
Q

Free Trade

A

a situation in which a government does not attempt to restrict what its citizens can buy from or sell to another country

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3
Q

Instruments of Trade Policy (7)

A
  1. Tariffs
  2. Subsidies
  3. Import Quotas
  4. Voluntary export restraints
  5. Local content requirements
  6. Antidumping Policies
  7. Administrative Policies
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4
Q

Who benefited on the tariffs placed on Chinese tires? Who was hurt?

A

Domestic and foreign tire producers excluding China benefited. Domestic consumers were badly hurt.

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5
Q

How efficient are government subsidies generally?

A

Not very; they tend to promote excess capacity and inefficient companies

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6
Q

Tariff Rate Quota

A

lower tariff rate is applied to imports within the quota than those over the quota

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7
Q

The recent U.S. farm bill passed will:

A

cut food stamps, decrease support to farmers, restructure insurance

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8
Q

Local Content Requirement

A

A requirement that some specific fraction of a good be produced domestically

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9
Q

Political Arguments for governmental trade intervention: (6)

A
  1. preserving jobs
  2. protecting industries deemed important for national security
  3. retaliating against unfair foreign competition
  4. protecting consumers from “dangerous” products
  5. furthering the goals of foreign policy
  6. advancing the human rights of individuals in exporting countries
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10
Q

Economic Arguments for governmental trade intervention: (2)

A
  1. Infant Industry

2. Strategic Trade policy

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11
Q

Trade barrier implications for managers: (3)

A
  1. Plant location decisions
  2. export decisions
  3. suppliers
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12
Q

“Greek TV” Case

A

bar owner circumvented high local Premier League rate, brought on lawsuit. lawsuit overturned, segmentation in Europe declared illegal

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13
Q

The total number of regional trade agreements currently in force is:

A

more than 500

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14
Q

Levels of Economic Integration: (5)

A
  1. Free Trade Area (NAFTA, EFTA)
  2. Customs Union (common external trade policy)
  3. Common Market (factors of production move freely)
  4. Economic Union (common currency, tax rates; EU)
  5. Political Union (central political/federal body; US, Euro Parliament)
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15
Q

What are 90% of regional trade agreements?

A

Free Trade Areas

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16
Q

Political Pros/Cons for Economic Integration (2 each)

A
  1. Reduce potential for violent conflict
  2. Gain more political weight
    - ——————————————————-
  3. Threats to national sovereignty
  4. job losses
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17
Q

Trade Diversion

A

Trade diverted due to regional economic
integration; occurs when low-cost foreign suppliers outside a free trade area are replaced by higher-cost foreign suppliers in a free trade area (switching importing textiles from Brazil to importing from Mexico at higher cost)

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18
Q

The EU is the result of two political factors:

A

(1) the devastation of western Europe during two world wars, and the desire for a lasting peace
(2) the European nations’ desire to hold their own on the world’s political and economic stage

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19
Q

Five European Political Institutions

A
  1. European Commission
  2. The Council of the European Union
  3. The European Parliament
  4. The Court of Justice
  5. Central European Bank (ECB)
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20
Q

European Commission

A

proposes and implements legislation; monitors compliance with EU regulations; 28 commissioners appointed

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21
Q

Council of the European Union

A

approves legislations proposed by commission; 28 members varying by topic; votes proportional to country’s population

22
Q

European Parliament

A

754 members; debates legislation proposed by commission; can veto some laws; 2009 treaty of Lisbon made EP more powerful

23
Q

Court of Justice

A

one justice from each country; act as independent judges; supreme EU law body

24
Q

Central European Bank

A

manages monetary policy to ensure price stability; determining interest rates

25
Q

NAFTA provisions include: (3)

A
  1. Abolition of 99% of tariffs
  2. Intellectual Property Rights
  3. Environmental Standards
26
Q

Mexican Trucking Case:

A

US unions wanted trucking jobs, feared loss to Mexican workers.

27
Q

Opportunities from regional integration: (2)

A
  1. More accessible previously protected markets

2. Reduces cost and bureaucracy

28
Q

Threats from regional integration: (2)

A
  1. increased competition in group and out (“trade fortress”)

2. M&A may be restricted

29
Q

How did Ford change its international strategy?

A

standardized design and car manufacturing across the globe to make use of economies of scale and cut overall costs

30
Q

What two things will increase the overall value of a firm?

A

higher Profitability and higher profit growth

31
Q

Efficiency Frontier

A

shows all of the different positions that a firm can adopt with regard to adding value to the product (V ) and low cost (C)

32
Q

Two ways to increase profitability:

A
  1. reduce costs

2. add value and raise prices

33
Q

Two ways to increase profit growth:

A
  1. sell more in existing markets

2. enter new markets

34
Q

What two business aspects support strategy?

A
  1. Operations Strategy

2. Organizational Structure

35
Q

Core Competence

A

Firm skills that competitors cannot easily match or imitate

36
Q

Low pressure for Cost Reductions; Low pressure for Local Responsiveness

A

International Strategy

37
Q

Low pressure for Cost Reductions; High pressure for Local Responsiveness

A

Localization Strategy

38
Q

High pressure for Cost Reductions; Low pressure for Local Responsiveness

A

Global-Standardization Strategy

39
Q

High pressure for Cost Reductions; High pressure for Local Responsiveness

A

Transnational Strategy

40
Q

Advantages of Strategic alliances (4)

A
  1. foreign entry
  2. shared fixed costs
  3. share skills/assets
  4. set industry standards
41
Q

Disadvantage of Strategic alliances

A

hollowing out of technology or core competence

42
Q

Pressures for Cost Reductions (4)

A
  1. Low product differentiation
  2. Competitors based in low-cost locations
  3. Excess industry capacity
  4. Low switching costs for consumers
43
Q

Pressures for Local Responsiveness (5)

A
  1. National differences in consumer tastes
  2. Different Infrastructures
  3. Different Technical Standards
  4. Different distribution channels
  5. Different host-government demands
44
Q

Factors affecting entry modes (5)

A
  1. Transportation costs
  2. Trade barriers
  3. Political Risks
  4. Economic Risks
  5. Company Strategy
45
Q

Six modes of entry

A
  1. Exporting
  2. Turnkey Projects
  3. Licensing
  4. Franchising
  5. Joint Ventures
  6. Wholly owned subsidiaries
46
Q

Activities of Human Resource Management (6)

A
  1. determining human resource strategy
  2. staffing
  3. performance evaluation
  4. management development
  5. compensation
  6. labor relations
47
Q

Ethnocentric Staffing Approach

A

all key management positions are filled by parent-country nationals

48
Q

Polycentric Staffing Approach

A

requires host-country nationals to be recruited to manage subsidiaries, while parent-country nationals occupy key positions at corporate headquarters

49
Q

Geocentric Staffing Approach

A

seeks the best people for key jobs throughout the organization, regardless of nationality

50
Q

Four Characteristics of Expat Managers

A
  1. Self-Orientaiton
  2. Others orientation
  3. Perceptual Ability
  4. Cultural toughness
51
Q

Types of training for expat managers (3)

A
  1. Cultural
  2. Language
  3. Practical

International Business (2 decks)

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