International business final exam

two types of forecasting techniques that forecast exchange rates

Technical analysis and Fundamental Analysis

Technical Analysis

Forecasting future exchange rates by studying past market data.

Uses Historic charts

Fundamental Analysis

Forecasting method that uses real-world economic indicators like interest rates, inflation, GDP to predict currency value changes.

Uses economic and financial data.

Regional Economic integration

Process where countries in a geographic region cooperate to reduce barriers to international trade of product, people, or capital

Purchasing Power Parity

Relative ability of two countries’ currencies to buy the same basket of goods in the two countries

International Business

A commercial transaction that crosses two or more countries.

Born Global Firm

Company that engages in international business from its inception

International Monetary Fund (IMF)

Agency created to regulate fixed exchange rates and to enforce the rules of the international monetary system.

Free trade area

No tariffs between members, but each sets its own external trade rules against nonmembers.

Political Union

Economic and political integration by which countries coordinate aspects of their economic and political systems.

Common market

Countries remove all barriers to trade and to the movement of labor and capital among themselves and set a common trade policy against nonmembers.

Customs Union

Economic integration where countries remove all barriers to trade among themselves and set a common trade policy against nonmembers.

How can an organization operate more efficiently in an international environment?

Accelerate the use of all aspects of technology, email, video conferencing, etc

What was one of the negative affects of finding lower costs by pursuing a globalization strategy
of an organization

Loss of jobs in more industrialized and developed countries by sending jobs abroad

What is the best and strongest example of an economic union in the world?

European Union

What is the common currency of the European Union?

Euros

What is the Porters diamond theory model answering/ explaining?

Explains the factors that provide a competitive advantage for one national economy or business over another. Countries do not compete companies do.

Code of ethics

Formal statement that conveys ethical values and describes baseline professional conduct expected of individuals.

What are the challenges of defining a corporations code of ethics internationally

Too many variations of ethical standards around the world creates consistency almost impossible.

what is Milton Friedman’s theory?

A corporation should focus only on profitablity

What are the layers of Corporate social responsibility?

Legal, Philanthropic, Economic, and Ethical

Pro of Foreign Direct Investment?

Access to new markets, Resource acquisition, Technological advancement

Con of Foreign Direct Investment?

Political risk, Loss of local jobs, currency exchange risk.

Carbon Footprint

Environmental impact of greenhouse gases measured in units of CO2 emitted by human activity.

How can a firm focus their efforts on environmental interests?

Minimize your pollutants in your manufacturing processes.

Diversity in the workplace means

A firms employees represent a limitless variety of social viewpoints, cultural perspectives and identies.

Equity in the workplace means

A company offers very employee an equal opportunity for work and advancement.

Inclusion in the workplace means

A company welcomes any and every employee, whatever their identity and helps them feel they are an integral part of the organiziation.

When the currency in a nation declines in value, how does this affect the countries imports and
exports?

Exports in world markets decline and the price of imports increases.

If a countries currency valuation is $100 US dollars and the currency changes to be worth now
$150 US dollars the countries currency has done what?

It has Appreciated by 50%

Arbitrage

The practice of buying a good or currency in one market at a lower price and selling it in another market at a higher price for profit.

Big Mac Theory

This theory determines whether currencies are undervalued or overvalued based on the price of a McDonalds Big Mac across countries (law of one price).
EX.If a Big Mac costs $5 in the U.S. but only $2.50 in Mexico, the Mexican Peso might be undervalued.