BUS200-GMU Final

Floating exchange rate

determined by supply and demand, less predictable than fixed or pegged

Fixed/Pegged exchange rate

value of currency is fixed/pegged to another country's, common in developing countries, usually pegged to USD

balance of trade equilibrium

value of imports always = value of exports when on the gold standard

IMF

created during Bretton Woods.

Goal: maintain order in global financial system, makes loans to countries experiencing crisis

Currency crisis

serious doubt exists as to whether a country's central bank has sufficient foreign exchange reserves to maintain the country's fixed exchange rate.

Ex: Thailand: speculative attacks on their currency caused currency to collapse, spread to rest of SE Asia

Banking crisis

investors sell off assets or withdraw money from savings accounts with the expectation that the value of those assets will drop if they remain at a financial institution.

Ex: Iceland: iceland banks invested in risky derivatives, caused run on banks, govt refused bailout, devalued currency to bring country back

Primary goods

consists of raw or natural materials

secondary goods

the manufacturing and assembly process. It involves converting raw materials into components,

tertiary goods

support production and distribution process

ex: insurance, transport, advertising, warehousing

mercantilism

16th/17th centuries

highest govt involvement

positive sum game

occurs when no one wins at someone else's expense

protectionism

the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports.

tariffs

taxes levied on imports that raise the cost of imports relative to domestic products

what tariffs do

Raise govt revenue

Provide protection to domestic producers

Consumers pay more

Tariffs Reduce efficiency of world market

import quotas

trade restriction

limits quantity of goods that can be imported into a country in a given period of time.

why do govts intervene in trade?

protect jobs

national security

retaliation

protecting consumers

to further foreign policy objectives

to protect human rights

nation state

authoritative institutional framework for governing a defined territory.

Sovereignty has to be recognized by other nation states.

Monopoly over coercive power.

Rule of law

law is supreme over government and individuals

civil law

between individuals, includes companies.

based on codified law, opposite of common law.

Ex: contract law, employment law

Common law

based on case law and precedent

How and why countries and markets are assessed

Levels and growth of disposable income, ease of doing business, quality of infrastructure, political stability and exchange rates. For expansion.

The factors that impact a country's level of prosperity or poverty

Geography (agriculture, level of urbanization)-Strength of legal institutions-Level of infrastructure-Openness to trade-Level of technological advancement

Inter-relations among PESTLE factors for P:

P- Tax policies, Stability of government, Entry mode regulations, Social policies (e.g. social welfare etc.),Trade regulations (e.g. the EU & NAFTA), Trade traffics, Labor regulations, Health & Safety

A stakeholder's role in a company is best described as

One of influencing the company and being influenced by the company

Entrepreneurs value all but which one of the following?

A complex regulatory framework

Which of the following is a for-profit organization?

an organization thats goal is to make a profit for the owners

Which one of the following is a negative aspect of FDI from the perspective of a developed country whose companies outsource manufacturing

The country loses manufacturing jobs

Which of the following is not key for the success of fast fashion

Corporate social responsibility

Which one of the following most accurately characterizes the globalization of markets in consumer products

Adapting products to national markets, based on local preferences

Which one of the following describes the economies of poor developing countries

Focus on primary production, notably agriculture and natural resources

Which one of the following is a 'pull' factor encouraging companies to internationalize?

Large potential markets in emerging economies

Which one of the following comes within the category of economic and social rights

the right to work

Environmental, social and governance (ESG) reporting is mandatory in all but which one of the following countries

the United States

"All sustainability is local." Fulfilling sustainability therefore requires all of the following EXCEPT:

Standardizing and relying on economies of scale to pay for expensive environmentally friendly practices

Which of the following business functions is subject to a system based on Islamic law for application in Islamic contexts

Banking and finance

Organizational culture is exemplified in all but which of the following ways

Application of employment law

GDP is defined as

the value of the total economic activity produced in a country in a single year

what impact does high inequality have on economic growth

it adversely affects the sustainability of growth

How can MNEs promote sustainable growth in the economies where they operate

How can MNEs promote sustainable growth in the economies where they operate

A current account surplus indicates which of the following

a country exports more than it imports

what are the three global ways enter an economy

FDI (foreign direct investment), import/export, production under license

Acquisitions (pros vs cons)

pros are buying the assets without purchasing the liabilities cons possibly buying someone else's issue. they must have failed for a reason

Industrialization

the spread of technology and the transition from agrarian to service societies

developed and developing countries

from agrarian to manufacturing. have not yet reached service industry yet

Ethical relativism

the comparison of ethical standards in two different countries. bribing may be common place in one country, but strictly outlawed in another

push vs pull factors

push: factors that make you want to leave a country pull: factors that pull you towards expanding into another country

Which one of the following descriptions comes closest to justifying China's authoritarian rule?

Directing development from the top benefits all in the end

Which one of the following characterizes a civil law system?

Codified law

Treaties can be any except which one of the following?

Between a country and a large business

All but which one of the following would be classified as an 'innovation'?

A new executive team to run the company

Why has globalization increased financial risks?

Global capital flows can be highly volatile

A country's exporters favor all but which one of the following?

A strong domestic currency