D080 STUDY GUIDE

A company would like to obtain the benefits of outsourcing and focus solely on marketing activities and research and development. Which advantage is this company hoping to achieve?

Enhanced core business activities

A company is considering using a direct distribution strategy.

What is a disadvantage of this distribution strategy?

Required to arrange for transportation

A car manufacturing company manufacturers tires in Countries A, B, and C. Country A has significant political turmoil that has resulted in a lengthy labor strike. Countries B and C have ramped up production resulting in sustained tire production for the company.

Which practice has the company used to optimize its production efficiency?

Multinational production

A company in the United States is considering a joint venture with a French supplier and needs to learn about the accounting standards used in France. How should the U.S. company approach this situation?

Study the International Financial Reporting Standards (IFRS) online

A multinational company moves key production assets to a country with lower tax rates to avoid paying more taxes in the home country.

Which type of pricing should be used to reduce taxes during production?

Transfer

A German company is considering outsourcing the manufacturing process to Japan. Some of the executive board directors are concerned that the Japanese company may not follow the exact production processes the German company normally uses. Which risk represents this concern?

Loss of control

A company is considering using a direct distribution strategy.

What is a disadvantage of this distribution strategy?

Required to arrange for transportation

Which source of funding uses technology platforms to invite consumers to invest small amounts in support of a business idea or venture?

Crowdsourcing

Which type of risk refers to the impact of random change in the value of one currency with respect to other currencies?

Currency risk

Which term defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm?

Hedging

A company has achieved a monetary advantage by using a fronting loan with a subsidiary in a country with a low corporate income tax rate. Which type of tax situation in this country allows the company to achieve this monetary advantage?

A company has achieved a monetary advantage by using a fronting loan with a subsidiary in a country with a low corporate income tax rate. Which type of tax situation in this country allows the company to achieve this monetary advantage?

Two countries agree to open their borders to international business transactions with one another without tariffs.

How does this affect global business?

It leads to developing free trade policies with strategic partners.

A country uses its established technology infrastructure to produce a good. What is the impact of this infrastructure on trade?

It will create barriers to entry for other nations.

What was the economic impact of the North American Free Trade Agreement (NAFTA)?

The shift of jobs away from low comparative advantage industries

A company that is located in Country A would like to sell products in Country B. The government of Country B is pushing for a tariff-based international trade agreement on the product. What is the reasoning behind Country B's decision?

Country B seeks to protect its economy and give it the opportunity for long-term expansion.

Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products.

What is the effect, if any, on the domestic prices of these products?

Increases

Two countries decide to open up trade with each other. What is likely to happen when trade opens up?

Jobs will increase in comparative advantage industries.

What is a purpose of a country implementing trade protectionism?

To protect an infant industry

Which negative outcome on political systems comes from globalization?

Creation of isolationist policies

Which factor results in a higher rate of globalization?

Reduced trade barriers

What are the four factors in Ghemawat's CAGE analysis?

Culture, administration, geography, economy

What is a major drawback to the home country when companies outsource manufacturing jobs to countries with lower worker wages?

Loss of manufacturing jobs

A country has a characteristic traditional economic system with poor infrastructure and limited economic opportunity. What is the impact of this system on the process of globalization?

The globalization process is at a disadvantage as the country has a lower standard of living.

What is a characteristic of a market economy?

Firms seek to maximize profits.

Which impact does Islamic law directly have on businesses?

It forbids charging interest.

Country A and Country B are trying to mend their relationship. A company from Country A would like to invest in a company in Country B. Which action by Country B will help these two countries meet their goal?

Provide tax exemptions

Which level of regional economic integration is a key feature of a Customs Union?

Unified trading policies with non-members

What is a drawback of creating regional trade agreements?

They shift employment opportunities.

The United States-Mexico- Canada Agreement (USMCA), a modification of the North American Free Trade Agreement (NAFTA), broadened the scope of free-trade between member nations and tightened restrictions in the region. Which regulation was established by this new agreement?

Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023.

A U.S. capital investment firm is researching new markets to enter to diversify its portfolio. The director of foreign investments presented a pitch to the board of directors encouraging entry into the Costa Rican telecommunications market by investing in local companies in the region through acquisition. Which alliance supports this director's suggestion?

Central America Free Trade Agreement

A firm based in Country A manufactures its products in Country B and pays the manufacturing employees in the currency in which they are located. Which currency situation will result in the maximum profit for the firm?

The currency in Country A is strong relative to the currency in Country B.

Which drawback is associated with regional economic integration?

Increased exclusive internal trade

Which institution helps to maintain availability of global financing to solve trade deficit issues?

International Monetary Fund

What is the current focus of the World Bank?

Improving quality of life

For which concern has the World Trade Organization been criticized?

Influence of free trade policies on labor rights

How is the Special Drawing Right of the International Monetary Fund (IMF) valued?

It is based on the value of the five most significant members' currencies.

Which form of funding requires a low cost of capital and does not require time to mature?

Loans

A manufacturing company in the United States acquired a small national supplier based in California. Which accounting method should the company use to record the acquisition?

Generally accepted accounting principles

How do banks and investors use financial statements?

To decide whether to grant access to money

A company wants to reduce the effects of currency fluctuations with its host country subsidiaries for the coming year. Which action should the company take?

Use a forward contract

A multinational company uses transfer pricing to reduce its tax burden in the subsidiaries' countries. Which effect does this action have on subsidiaries?

Lowered profit

What is an example of a micro risk for multinational companies?

Government nationalization of assets

A computer technology company has several factories in three countries. The headquarters introduces steps in the manufacturing process so that waste decreases dramatically.Which supply chain practice is this company using to optimize production efficiency?

Lean manufacturing

A company is evaluating where it will locate its next facility to minimize its distribution shipping costs.

Which factor must the company consider as part of this decision?

Value-to-weight ratio

A multinational company sources the components for its products from multiple countries around the globe and assembles the final finished product locally in the country of sale. However the consumers in the local country do not prefer locally made goods.

Which phenomenon is the company experiencing?

Country-of-origin effect

What is an advantage of using intermediaries in an indirect distribution channel?

It r educes up-front costs with the use of an existing channel.

A new start-up company wants to connect directly with its consumers. How many layers of intermediaries should the company consider

0

A company's distribution channel consists of a producer, a distributor, a retailer, and a consumer. What is a distribution channel with this structure called?

Indirect

A community has the skills and ability to access computers and the internet but does not value that form of technology. A company is trying to change the situation in order to facilitate increased online transactions. Which stage of the digital divide is the company hoping to correct?

Empowerment

A global company wants to share and store business information online 24/7 for employees so they can access the items when they are not physically in the office. Which tool should the company use for this purpose?

Cloud-based file share

A manufacturing facility would like to consider the use of artificial intelligence deep learning. Which practice illustrates the use of this approach?

Machines become familiar with common defects in products.

A company is interested in working with the technology that will allow consumers to privately and securely store personal information such as social security and credit card numbers, making it accessible around the world. Which piece of technology is of interest to this company?

Blockchain

An international business experienced significant changes due to advances in global technology such as autonomous cars, 3D printing, biometrics, nanotechnology, and quantum computing. Which era caused this impact on the business?

Fourth Industrial Revolution

An international company works with many economic sectors and notices that one sector in particular is slower to adopt artificial intelligence, which limits their opportunities on a global scale. Which economic sector shows this slower pace?

Education

A company is exploring a new peer-to-peer network technology that allows businesses to operate internationally with significantly less risk of data breaches. Which technology is this company exploring?

Blockchain

Which effect does a command economy have on the process of globalization?

The government is less flexible, so the globalization process is challenged.

A company is conducting a legal risk analysis for a country that has a civil law system. Which statement accurately characterizes this legal system?

It is based on a detailed set of laws that form a code.

Which fact should a company opening its operations in the U.S. state of Louisiana note?

The state has a mixed law system.

What is true regarding free trade?

Free trade leads to specialization of each country and increases production efficiency.

Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products.

What is the effect, if any, on the domestic prices of these products?

Increases

How do governments help companies offset the cost of manufacturing domestically?

Subsidies

What would a mercantilist value the most?

A trade surplus

A multinational corporation has manufacturing facilities in many Asian countries due to cheaper labor. Which strategy is the corporation using?

Acquisition of resources

A firm in Country A exports products to Country B. The currency in Country B is strong relative to the currency in Country A. What does this mean for the firm?

More valuable export sales

An international company has employees with complementary skill sets work together toward a mutual goal.

What is the organizational structure of this company?

Teams

Which departmentalization is based on the primary roles performed within an organizational unit, such as marketing, finance, production, and sales?

Functional

A business has decided to engage in foreign direct investment (FDI).

Which reason should influence the business to take this step?

To take advantage of lower costs in the host country

A chief executive officer (CEO) wants to grow the company by investing in foreign countries. The CEO is considering multiple entry strategies to accomplish this objective but has concerns about growth in foreign markets, especially the costs, risks, and entry time. The CEO would like to eliminate any entry strategies that take a long time, as well as any that contain high cost and risk. Which strategy should this CEO eliminate?

Greenfield venture

A company desires to scale its international business by taking over established organizations in the intended markets.

Which strategy will allow this process to occur quickly?

Acquisition

Brazil is one of the world's lowest-cost producers of ethanol and soybeans. Japanese corporations have heavily invested in Brazil to lease large tracts of land to grow soybeans for export to Japan, where the soybeans are used to derive products such as soy sauce and chicken feed.

Why do these Japanese companies invest in Brazil?

To minimize factor input costs

How is global business marketing affected by cultural dimensions?

Through consumer preferences

A few employees in a company are newly assigned to work in China to plan effective social media campaigns. What should the employees know about media in China?

Sites are controlled by Chinese companies.

What is the strategic importance of ethnocentrism in international business?

Places one's own culture as the most important cultural factor

What is globalization?

when international integration arises from the interchange of world views, products, ideas, and other aspects of culture.

Which type of globalization refers to the international movement of goods, capital, and services?

Economic

Members of a work team are from many different countries. They share their thoughts on developing a strategy to market a product in several different countries.

What is the term for the international integration of the team members' exchange of worldviews and ideas to develop the strategy?

Globalization