Global Dimensions Final

If a country encourages its citizens to consume and purchase domestic products, it is a way of protecting domestic_____ and _____

industries and employment

An increase in the value of a currency is referred to as ____ of the currency.

appreciation

A decrease in the value of currency is referred to as ____ of the currency.

depreciation

The impact of exchange rate changes on individual transactions is known as

transaction exposure

The market for exchanging currency of one currency into that of another currency is the ______ _______ market. It is abbrieviated as __.

Foreign exchange (FX)

The rate at which a currency is exchanged for another is known as the?

exchange rate

If $1 US will purchase .92 Euro, which of the following tells how much US currency can be purchased in Euro?

1.00/.92

The short term movement of funds from one currency to another in hopes of profiting from shifts in exchange rates is

currency speculation

The purchase of securities in one market for immediate resale in another to profit from price discrepancies is known as

arbitrage

borrowing in one currency where interest rates are low and using the proceeds to invest in another currency where interest rates are high as

carry trade

Simultaneously buying and selling a given amount of foreign exchange for 2 different dates is

currency swap

list 2 main purposes of currency exchange

a. to facilitate international trade and investment

b. to allow for speculation and hedging against currency risk

the forecast rate for the purchase and sale of currency in the future is known as the

forward rate

The law of One Price

identical products in different markets should cost the same when expressed in the same currency

PPP

Connects interest rates with exchange rates

Money Supply and price inflation

Changes in prices should result in changes in exchange rates.

Fisher Effect

Nominal interest rate equals the sum of the real rate of interest plus the expected rate of inflation over the period for which the money is lent

international fisher effect

if you can predict the future inflation rate, then you can predict the future exchange rate

Investor Psychology

Suggests that investors respond as a herd

Bandwagon effect

Uses scope of economic theory to build models using money supply, inflation, interest rates.

Inefficient Market School

Prices dont reflect all available info, so business should invest in forecasting tool.

Efficient Market School

All info is known, and forward rates are the best predictor of future spot rates.

Fundamental Analysis

Seeks to explain short-term movements in exchange rates by examining humann actions.

Technical Analysis

Price and volume date used to create a model that can be examined historically

When anyone can buy a currency, including foreign investors, the currency is said to be ____ convertable

fully

When only those outside a country can convert the domestic currency, its said to be ______ convertable

partially

When a currency cannot be converted, its said to be

non-convertable

list one advantagr and one disadvantage of dollarization

A. Reduced exchange rate risk

D. loss of monnetary policy control

Country XYZ continually adjusts its currency's exchange rate compared to others based on supply and ddemand. Its operating under a _____ regime.

floating exchange rate

Country QRS has set the value of its currency against three other currencies based on a mutually agreed apon price. its operating under a ____ regime

Pegged exchange rate

Country DEF allows its currency to nominally float, but its government intervenes by buying and selling currency if it thinks the currency isn't valued fairly in the world markets.

managed float

Country GHI and JKL are in a system where some currencies float, others are pegged, and still others are managed. These countries are in a ____ system.

managed float

The country of "tiny" has fixed the value of its currency to that of the country of "huge". tiny is operating under the ____ regime

fixed exchange rate

following the bretton woods agreement, countries agreed to a _____ system, and only the us dollar was exchangeable for _____

fixed exchange rate, gold

the amount of currency needed to purchase 1 oz of gold is

price of gold

A ____ helps control a country's currency through guaranteed convertability at a fixed exchange rate.

currency board

when there is a loss of faith in the banking system

banking crisis

when a government cannot pay its foreign debt obligations

foreign debt crisis

when the firm continues to place orders under credit after having to file for bankruptcy is called

fraudulent conveyance

Cost advantages from performing value creation in the optimal location are known as

location economies

As a firm reduces production costs over the life of a product, it enjoys the benefits of its

experience curve

The cost savings a firm earns from learning by doing are its

learning effects

Reductions in unit costs achieved by producing large volumes of a product reduce the unit costs and raise prifitability for the firm.

economies of scale

list 2 causes for cost pressures

intense competition

globalization of production

list 2 causes for pressure for local responsiveness

differences in consumer tastes and preferences

host government demands

discuss the export process using a letter of credit

involves agreement between exporter and importer, issuance of L/C by importer's bank, verification by exporter's bank, shipment of goods, presentation of documents, and payment upon compliance.

discuss the export process using the documentary collection

it provides a level of security by ensuring they can't obtain the goods without payment

the sale of products produced in one country to residents of another country is

exporting

Design, construction, and startup are handled by a contractor in this entry mode. not long term

turnkey

one company that holds the rights to intangible products grants those rights to another in exchsnge for royalties. no tight control

licensing

this forrm of entry gives the firm more control over marketing even through rights to use are granted to another operator.

franchising

two or more otherwise independent firms establish a purposeful operation

joint venture

When a firm owns 100% of its own stock and enters a market through a greenfield or M&A form of direct investment, the entry is known as...

wholly owned subsidiary

this form of export help mainly handles transportation

freight forwarder

Full service export assistant

export managment company

provides contract services to secure marketing/sales abroad

export trading company

mainly deals with packaging requirements

export packer

handles legal reuirements in exporting

customs broker

works with firms wanting to buy your product; paid by the purchaser

confirming house or buying agent

buys products directly from producer and repackages/labels them

export marketer

distributes another's products as part of a larger group

piggyback marketer

function of an export processing zone

a designated area that offers tax breaks and incentives to encourage export-oriented manufactoring

issued by bank; indicates payment will be made under conditions

letter of credit

issued by exporter; instructs importer to pay

bill of exchange(draft)

issued by common carrier; receipt, contract, and title document

bill of lading

a ___ draft is a promise to pay at a particular time

time draft

a _____ draft may be presented for immediate payment

sight draft

reciprocal buying agreement: firms buys back goods from country of sale

counter purchase

what is the export-import bank?

A US government agency that provides loans, guarentees, amd insurance to support american exports.

production

The process of creating goods and services

supply chain managment

coordinating the flow of materials, info, and, money from suppliera to customers

purchasing

the function of acquiring raw materials, parts, and supplies.

logistics

mange the movement and storage of goods within a supply chain

upstream supply chain

activities involving suppliers and inbound materials

downstream supply chain

activities involving distribution, customers, and delivery of products

minimum efficient scale

the lowest production level at which long run average costs are minimized

mass customization

producing goods tailored to customer needs while achieving economies of scale

flexible machine cells

groups of machines that can be quickly reconfigured to produce different products

just in time inventory

inventory system that minimizes stock by receiving materiels only as needed

total quality management

continuous improvement system focused on customer satisfaction and defect reduction

six sigma

quality method aimed at reducing defects to near zero

ISO 9000

international quality assurance standards companies must meet to be certified

3 factors in production location decisions

country factors(labor, political stabilty, regulations)

3 purposes of lean production

reduce waste

improve efficiency

increase flexibility in manufacturing

produces component parts of finished goods

source

managers have more say; goal is lowering supply chain costs

offshore

supplies a specific country or regional markets

server

serves a location but also responsible for engineering/design

contributor

considered an intelligence gathering unit

outpost

A global distribution center is also known as

logistics hub

hte process of recapturing value from produced products through recycling is known by its term,

reverse logistics

discuss what you learned about market entry strategies for south africa.

they include direct exporting, using local disttributors, forming joint ventures and establishing local presence which its recommended to have an experienced partner

what are the 4 marketing mix P's

product place promotion price

who said the quote "the global corporation operates with resolute consistency"

Theodore Levitt

identifying distinct groups of consumers whose needs differ is called

market segmentation

list 5 ways segmentation can be achieved

demographic

geographic

psychographic

behavorial

benefit

a segment that spans multiple countries

global segment

steps in international marketing research

define the problem

determine the sources of info

collect the data

analyze and interpret the data

report the findings

make decisions based on the finding

3 ways country differences might influence marketing a product

cultural

economic

legal and regulatory

in a ____ retail system, a few retailers supply most of the market

concentrated