International Business Final Exam Review

What are the BRIC countries?

Brazil, Russia, India, and China, which are projected to take on economic leadership by 2050.

What is the world's most popular mobile operating system?

Android (Alphabet)

What is the exchange rate?

The rate at which one currency is converted into another.

What does globalization refer to?

The shift toward a more integrated and interdependent world economy.

What is Lenovo's brand origin?

Chinese

What does 'USMCA' stand for?

United States-Mexico-Canada Agreement

What is one reason Canadian firms expand internationally?

To achieve economies of scale.

What country does Canada import the most from?

China

Where is BMW's sole global production site for X3, X4, X5, and X6 SUVs located?

Greer, South Carolina

What country does Canada export the most to?

USA

What is a supply chain?

A sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial buyers.

What are the most spoken languages in the world?

Mandarin, English, Spanish, Hindi

What is a specific tariff?

A fixed charge for each unit of a good imported.

What is an ad valorem tariff?

A tariff that is a proportion of the value of the imported goods, expressed as a percentage.

What is a compound tariff?

A tariff that applies both ad valorem and specific charges on the same items.

What is the absolute advantage?

The ability of a country to produce more of a good or service with the same amount of resources than another country.

What is the comparative advantage?

The ability of a country to produce a good at a lower opportunity cost than another country.

What is Foreign Direct Investment (FDI)?

When a firm invests directly in new facilities to produce and/or market in a foreign country.

What is the Heckscher-Ohlin theory?

A theory that suggests a country has a comparative advantage in producing goods that use its abundant resources.

What is the importance of international business for Canadian firms?

It supports more than 1 out of every 6 jobs in Canada.

What is the output per worker per day for Mexicana in radios?

8 radios

What is the output per worker per day for Canadiana in steel?

3 steel units

What is the output per worker per day for Canadiana in radios?

4 radios

What is the exchange rate if it takes 0.6394 Euro to buy CAD1.00?

It takes CAD1.5640 to buy one Euro.

What is the cost of a Japanese stereo priced at 8000 yen if the exchange rate is 100 yen per dollar?

USD80

What is the exchange rate for 1.00 U.K. Pound in Canadian currency if USD1.00 = 0.5544 U.K. Pound?

2.3007 CAD

What happens as the Canadian dollar appreciates against the Mexican peso?

Canadian residents tend to import less Mexican goods and thus demand less pesos.

Greenfield investment

A form of foreign direct investment where a company builds its operations in a foreign country from the ground up.

Acquisition or merging

A form of foreign direct investment where a company purchases or merges with an existing foreign company.

Free Trade

A situation where a government does not impose quotas or duties on imports and exports, allowing goods and services to move freely across borders.

Tariff

A tax imposed on imported goods, raising their cost relative to domestic products to protect local industries.

Non-Tariff barriers

Trade restrictions that do not involve tariffs, such as import quotas and voluntary export restraints.

Subsidies

Government payments to domestic producers to support their competitiveness against foreign imports.

CETA

The Comprehensive Economic and Trade Agreement between Canada and the European Union, setting standards for trade in goods and services.

Foreign Exchange Market

A global marketplace for trading national currencies against one another.

Fixed vs Float regime

Fixed regime maintains a currency's value against another currency, while a floating regime allows the currency value to fluctuate according to the market.

Spot Exchange

The current exchange rate at which a currency can be exchanged for another currency immediately.

Forward exchange rate

An agreed-upon exchange rate for a currency transaction that will occur at a future date.

Currency Swap

An agreement between two parties to exchange currencies and make payments in the respective currencies.

Letter of Credit

A document issued by a bank guaranteeing payment to a seller, provided that certain conditions are met.

Draft

An order made by an exporter to the importer or their agent to pay a specified sum of money at a designated time.

Bill of Lading

A document issued by a carrier that details the type, quantity, and destination of goods being transported.

Countertrade

A type of trade where goods and services are exchanged for other goods and services instead of money.

Cross-cultural literacy

The understanding of how cultural differences can impact business practices across different nations.

Common Law

A legal system based on tradition, precedent, and customs, prevalent in many former British colonies.

Civil Law

A legal system based on written codes and statutes, found in many countries including Germany and France.

Theocratic Law

A legal system based on religious teachings, with Islamic law being the most widely practiced example.

Hofstede's Dimensions

A framework for understanding cultural differences based on dimensions such as power distance, individualism vs collectivism, and uncertainty avoidance.

International business strategy

The plan and decisions that enable a firm to compete effectively in international markets.

Standardization vs Customization

Standardization involves uniform methods for efficiency, while customization tailors products to meet individual customer needs.

Outsourcing

The practice of obtaining goods or services from an external supplier, often to reduce costs.

Ethnocentric approach

A staffing policy where key management positions are filled by nationals from the parent country.

Polycentric approach

A staffing policy that recruits host country nationals to manage subsidiaries in their own country.

Geocentric approach

A staffing policy that seeks the best people for key jobs throughout the organization, regardless of nationality.

Expatriate employee performance evaluation

Challenges arise due to reliance on hard data by home country managers and potential biases from host country perspectives.

Sustainability and Ethics in International Business

Considerations regarding ethical issues such as employee practices, human rights, environmental regulations, and corruption.