WGU D080 Managing in a Global Business Environment

A company is considering establishing a subsidiary in a new host country and wishes to prepare its expatriates to adapt to the local environment.

How should this company prepare its expatriates?

Negotiation

Operational training

Repatriation

Cultural Training

Cultural training

What happens to consumer surplus when tariffs and quotas are discontinued?

They increase

Which type of tariff is put in place to specifically ensure that domestic industries are given an advantage?

Protective

What is a benefit of implementing a system of free trade?

Reduced tariffs would result in lower costs of imported raw materials.

How are free trade agreements handled differently than treaties in the United States?

Treaties must be approved by the Senate, whereas a free trade agreement must pass both houses of Congress.

Treaties must be approved by the Senate, whereas a free trade agreement must pass both houses of Congress.

Tariffs

An airplane manufacturer outsources the manufacture of some its parts and sub-assemblies. They are then returned to the manufacturer's main plant for final assembly.

Value chain

Country A exports more goods to Country B than it imports from Country B. Country A receives more monetary gain by using this practice.

Which relationship does Country A have with Country B?

Trade surplus

Country A has been criticized by other countries for giving generous tax credits to its corn farmers, which in turn, enables the country's farmers to sell corn on the international markets cheaper than all other countries.

Which term is used by other countries to describe this practice?

Government subsidies

A farmer knows that it takes 100 hours of labor to produce 100 bushels of corn. It only takes 50 hours of labor to produce 100 bushels of soy. Currently, a bushel of corn is selling at three times a bushel of soy.

Which type of cost should the farmer use to determine what to plant?

Opportunity

A country produces goods more efficiently than all other countries in the same industry.

Which type of advantage does this country have?

Absolute

Country A exports farming equipment to Country B, while Country B exports car manufacturing equipment to Country A. Both countries are highly developed and could develop these industries separately but instead made the decision to export and import these products from each other.

Which unique condition caused this practice between the two countries?

Skill specialization

A company produces the same product over and over, and it has caused the manufacturing cost of the product to become cheaper and more competitive in international markets than similar products in the industry.

Which approach is this company using to achieve this ability?

Economies of scale

A country with a new economy implemented trade protectionism in relation to countries with more developed economies.

Why did the country take this action?

To restrict international economic trade

How do anti dumping laws protect a domestic market?

They prevent foreign companies from selling goods and services at or below cost.

How do Congress and the Department of Agriculture use quotas to their advantage?

To increase domestic prices to specific levels to make products profitable

Which strategy should a government use to offset the cost of manufacturing domestically?

Subsidies

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

Economic

The CEO of an international company reminds the executive vice presidents that while the company may do good while performing corporate social responsibilities, the business has one ultimate goal since it is engaged in commercial activities with corporate shareholders.

Which ultimate goal is the CEO emphasizing to the executive vice presidents?

Profitability

A CEO decides to expand the company's business internationally by purchasing production capability in another country, including the foreign country's buildings and equipment.

Which type of market entry is the CEO using?

Direct investment

A CEO seeks to better use the economies of scale and scope of production to increase the international company's profits.

Which type of globalization driver is the CEO seeking to use?

Cost

A CEO is discussing an expansion of production of a company's highly perishable dairy line in a country that can offer low labor costs and good internet connections. The country has no highways, and roads are poorly maintained.

Which challenge to international business expansion do the road conditions present?

Infrastructure

Which argument is used by critics who wish to discourage movement towards globalization?

It increases the wealth of the rich rather than the poor

Anarchism

Individuals control political activities, and the government has no control over these activities

Totalitarianism

A centralized government creates oppressive policies based on ideas from powerful leadership.

Direct democracy

The government provides a method of voting for the people of a country, not for elected officials.

What is a free trade zone?

A geographic region in which a county will reduce restrictions that might prevent or reduce trade

Which term describes a government giving a tax break to a producer to increase their global competitiveness?

Subsidies

Industrialized

Prevalent formation of new markets with possibility of saturation

Less-developed

Focus on agriculture and raw materials with limited imports

Developing country

Growing population which leads to long-term growth potential.

Which type of economy is decentralized and allows firms and households to participate in global trade with minimum governmental interference?

Market

What type of economy is centered on families or tribes where little to no global trade is practiced?

Traditional

Socialism

a system in which the government owns and operates a country's means of production

Capitalism

A system in which the means of production is controlled by private owners who can choose to participate in global trade.

Communism

A system in which all property is publicly owned and the government controls global trade.

Which type of law system is based on a code and focuses on how the law is applied to the facts?

Civil

Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases?

Common

Which law system can vary from community to community and is found in countries without strong formal justice systems?

Customary

In which law system does a judge decide the applicable law for the case as a jury determines the facts?

Common

Which activity of the International Monetary Fund (IMF) impacts policy making?

Being owned and directed by the governments of the member nations

What is a characteristic of the International Monetary Fund (IMF)?

The IMF is a cooperative institution and provides more effective currency exchange.

What was the initial purpose of the International Monetary Fund (IMF) in phase one, prior to 1973?

Regulated currency exchange between nations

How does the International Monetary Fund (IMF) impact international organizations and governments?

It reduces funding for social programs.

What is a common name for the International Bank for Reconstruction and Development?

World Bank

What was the first loan that the World Bank made after the end of World War II?

To France to rebuild its infrastructure

Which criticism is associated with the World Bank?

The developed countries of U.S. and Europe have too much control over its decisions.

Which criticism is made about the World Bank?

It does not consider how funding projects will affect the environment.

What was one of the results of the Uruguay Round of the World Trade Organization negotiations?

Decrease in tariffs

Which organization was formed after World War II to encourage international commerce?

World Trade Organization

Which criticism is made about the World Trade Organization (WTO)?

It protects developed countries more than developing countries.

Which strategic network was established to work towards decreasing tariff rates and protecting commerce and intellectual property globally?

World Trade Organization (WTO)

Which aspect of the International Monetary Fund (IMF) will assist the newly elected leader in paying the deficit in U.S. dollars, if agreed on by both countries?

The IMF provides a means for effective currency exchange between countries.

Which strategy is used by governments to limit the foreign direct investment in a country?

Creating foreign ownership restrictions in the country

Which activity is considered a foreign direct investment (FDI) by a multinational corporation?

Setting up manufacturing plants in the host country

Company A is located outside the home country of Company B. Company B has acquired Company A with the intent of controlling and managing Company A's assets.

Which practice is being used by Company B?

Foreign direct investment

Why does a company engage in foreign direct investment?

The company wants to control organizational assets in another country.

What is a benefit of foreign direct investment?

The inflow of capital benefits global and local economies

What is a potential disadvantage of foreign direct investment from a host government's perspective?

The host country's natural resources may be depleted.

What is a reason for companies to engage in foreign direct investments?

To take advantage of tax exemptions offered by the host country

Which country characteristic is most important to foreign direct investors according to a study by the World Bank?

Political stability and security

How does the existence of a multinational corporation (MNC) affect a country's engagement in political conflict?

It would make countries less likely to go to war.

What is an accurate characterization of the relationships between multinational corporations (MNCs) and the host country governments in which they operate?

The relationships are mixed because MNCs can cause, but also solve, problems for the host country.

What is a potential influence of the existence of multinational corporation (MNC) on international relations?

Improves relations between countries where the MNC operates

What is the result of the existence of multinational businesses?

Economic integration among countries

Which level of economic integration presents an alliance of all policies by a common organization?

Political union

Which level of economic integration is formed when trade barriers are removed between member countries but there is no mutual policy on trading with nonmember countries?

Free trade area

Which level of economic integration permits the formation of economically integrated exchanges of goods and services between parties from member countries?

Common market

Which economic integration stage offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers?

Customs union

Which drawback is involved when regional agreements are created?

Member countries will trade less with nonmember countries.

What is a benefit of creating a regional economic integration agreement?

Improved financial growth

What is an advantage of regional economic integration?

Flexibility on labor movement develops job opportunities.

What is a disadvantage of regional economic integration?

The exclusion of external countries reduces global free trade.

Which agreement was created in 1981 among Arab states, to expand trade, economic growth, and development and to promote social welfare, peace, and stability?

GCC

Which agreement was formalized in 1993 to create a political and economic union to help a large group of countries cooperate and coordinate key aspects of their economic policy?

EU

Which agreement was implemented in 1994 and helped form a free-trade zone between Canada, the United States, and Mexico by decreasing tariffs and trade barriers?

NAFTA

Which agreement was established in 1988 and now has both political and economic goals to keep peace and stimulates economic growth in South American countries?

MERCOSUR

Which economic actor benefits as the U.S. dollar weakens?

A U.S. investor abroad

Which economic actor benefits as the U.S. dollar strengthens?

A foreign firm exporting to the U.S.

Which exchange rate regime allows a currency's value to fluctuate according to the foreign exchange market?

Floating

Which economic actors are suppliers of U.S. dollars?

Foreign firms exporting to the U.S

How is global business positively affected by intercultural exchange?

It increases worldwide connections that support commodity trading.

How does globalization support tolerance for different people and ideas?

By increasing the access to information

A business has recently started selling in a new global marketplace. Shortly after the company made this global expansion, the new country opted to implement ad valorem tariffs. How will this change affect the company?

It will levy a variable tax based on the value of goods imported.

Which business component does the TRIPS agreement help protect for member nations?

Intellectual property protection for all member nations

A business, operating globally, wants to increase its overall productivity. Which strategy should the business use?

Increase process technology

Which international activity allows a nation, such as Singapore, to create a sustainable economy without the abundance of natural resources?

Foreign direct investment

Countries A, B, and C have a trade agreement. Country C imposes high tariffs on all raw materials imported from Country A, and Country B imposes a lower tax on the same raw materials. These raw materials are unique to Countries B and C and essential to Country A. What is the effect of this set of actions on these countries?

Country A will do more business with Country B.

What is enhanced when creating regional trade agreements?

Economic opportunity

A farmers market has many vendors and consumers who all sell and buy the same produce at the same price.

Which type of market is represented?

Pure competition

A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies.

What caused the violation of the antitrust laws?

Reduced competition

Which issue was the main purpose of the creation of the European Union?

Natural resources

Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices.

Which entity can the United States appeal to in order to correct this apparent market manipulation?

World Trade Organization

Which of these agreements or treaties was to combat increased temperatures of global climate change?

Versailles

Paris

Antarctic

Maastricht

Paris

Which governmental entity was created to provide regulatory authority regarding pollution by industry?

Environmental Protection Agency

Which type of duty is required to take care of the collective environment across the nation?

Shared

Assigned

Customs

Individual

Shared

What makes the enforcement of United Nations Environmental Program regulations difficult?

Sovereign rights of nations

Peacekeeping missions of nations

World Food Program distributions

Pure competitive markets

Sovereign rights of nations

Which action is used by companies wishing to avoid working with vendors who use sweatshops?

Sending a whistle blower to the job sites to ensure the vendor practices safe working conditions

Allowing vendor practices to be flagged by nongovernmental organizations such as the National Labor Committee

Establishing national child labor laws and requiring vendors to comply with them

Developing and imposing a company internal code of conduct for vendor labor practices

developing and imposing a company internal code of conduct for vendor labor practices

A major footwear brand company is contracting the manufacturing of its products to a contractor's manufacturing plant overseas. The footwear company has been accused of turning a blind eye to sweatshop practices at other overseas contract locations before.

How should the footwear company ensure that the contractor will comply with the standards set forth in the code of conduct that explicitly prohibit this practice?

Require that the factories be available for inspections

What did the Worst Forms of Child Labor Convention, 1999 define?

The age at which a person becomes an adult