Answers-for-final

Chapter 11.Which of the following best defines international business?∙Commercial transaction between two parties in two or more countries∙The goal of private businesses is to make profit∙Government organizations may or may not be motivated by profit2.The ongoing social, economic and political process that deepens relationships and naturesbusiness dependencies among nations is called:∙Globalization3.The first assessment to make in an international environment for a business investment is:∙Legal advice∙WTO4.The process of shifting production from a domestic to a foreign location is known as _____.∙Off-shoring/FDI5.Which of the following is not a force behind globalization:Forces behind globalization are:∙Increased expansion and technological improvements in transportation and communications networks∙Liberalization of cross-border trade and resource movement∙Growing consumer demand for foreign products∙Increased global competition∙Changing political and economic environment∙Expanding cross-national treaties and agreements6.The best definition of a company that takes a global approach to foreign markets andproduction is called a ______.∙Multinational Enterprise (MNE)Chapter 27.Culture may be defined as _____.∙The specific learned norms of a society that reflect attitudes, values and beliefs.8.Among the ascribed group memberships is ________.∙Gender∙Family∙Age∙Caste∙And ethnic, racial or national origin9.The term silent language refers to _______.∙Color associations∙Sense of appropriate distance∙Time and status cues∙And body language10.A major problem when cultures collide in international business occurs when ______.∙They follow excessive polycentrism and excessive ethnocentrism∙If the cultures are really different11.Because people belong to different groups based, for example, on nationality ethnicity,religion, gender, work, organization, profession, age, political party and income level, ____.∙ A culture shock is possibleChapter 412.Know economic systems: free enterprise, command economy mixed economy … etc13.Gross national income (GNI), often regarded as a yardstick for the economic activity of acountry, is defined as _____.∙The market value of all final goods and services produced by a country’s domestically owned firms in a given year.14.Per capita GNI is determined by _____ the size of GNI of a nation by its total population.∙Dividing15.Factors to consider in the economic environment include all of the following, except:Factors to consider in the economic environment:∙Unemployment∙Nation’s debt (internal and external)∙Productivity – output divided by input – $ GDP/people working∙Balance of payments – money into country, money out of country – determines export/import deficit∙Inflation – demand rises greater than supply16.The statement that summarizes all economic transactions between countries during a givenperiod of time is the ____.∙Balance of Payments17.A ______ is one in which the state plays a role in directing the investment activities of privateenterprise to reach national goals.∙Mixed economy18.In general, transition toward a free market economy implies all of the following except ____.Transition includes:∙Liberalizing economic activity∙Reforming business activity∙And establishing legal and institutional frameworks19.In general, _____ refers to minimal government involvement in a free market society, wheremarket forces for the most part direct free enterprise.∙The invisible handChapter 620.Under mercantilism, governments sought to influence trade by _____.∙Export more than they import – Colonialism21.A country who can maximize its own economic well being by specializing in the production ofthose goods and services it can produce more efficiently than other countries is known as: ∙Theory of Absolute Advantage22.Free movement of labor, land and capital is known as:∙Factor mobilityChapter 723.Why should managers have an understanding of trade protectionism?∙It can be government restrictions and incentives that are specially designed to help the country’s domestic firms to compete w ith foreign competitors.∙Can impede the flow of imports and encourage the flow of exports∙The policy may have political ramifications24.The infant industry argument for protection holds that _______.∙Government should temporary shield emerging industries from international competition until its firms are able to compete in the world markets.25.An ad valorem tariff assess values when their customs agents levy tariffs. Which of thefollowing best expresses this agreement?∙It is assessed on the percentage of the value of the item26.Which of the following is not considered a non tariff barrier:Non tariff barriers (direct price influences):∙Represent administrative regulations that (in)directly impede int. trade∙Subsidies to help them become more competitive∙Aid and Loans to create or initiate trade of products∙Customs Valuation – how shipped goods are valued at port∙Other direct price influences (proper tariff assessment, special fees through customs) Non tariff barriers (quantity controls)∙Quotas∙“Buy Local” Legislation∙Standard and Labels∙Trade Licensing Requirements∙Foreign Exchange Control∙Specific Permission Requirements∙Administrative Delays∙Reciprocal Requirements∙Restrictions on Services (Essentiality, Standards, Immigration)Chapter 827.Which of the following statements explains why neighboring countries tend to create regionaltrading groups?Why do countries create regional trading groups?∙To reduce and ultimately remove tariff on non tariff barriers∙To create a free flow of products∙To create a free flow of capital∙To create a free flow of labor∙To be more competitive towards other countries28.A(n) ______ results when free mobility of capital and labor are added to a customs union.∙ A common market29.The WTO replaced the most-favored-nation clause of GATT with the concept of ______.∙“Trade without discrimination”30.Know the difference between Common Market and Customs Market!Common Market:An economic bloc which also permits the free trade flow of capital and labor (EU)Free Trade AgreementAn area or economic bloc in which all barriers to trade (tariffs) are abolished amongmembers.Customs Union(Market):Same as free trade area; however common external barriers are levied against non membersChapter 931.Know Indirect/Direct currency conversions!a)Foreign currency*indirect rate(in US Dollars) = US Dollarsb)US Dollars / indirect rate (in US Dollars) = Foreign currency32.Know spot rate, OTC, forward rate, discount rate, offer, etc.!Spot rateThe rate at which the transaction is settledOTC – Over the counterTo trade financial instruments such as stocks directly between two partiesForward rateThe rate quoted for transactions that call for delivery after two business daysDiscount rate (forward discount)When the forward rate is lower than the spot ratePremium rateWhen the forward rate is greater than the spot rateOfferThe rate at which traders sell foreign exchangeBidThe rate at which traders buy foreign exchangeOptionThe right to bur not the obligation to trade a foreign currency at a specific exchange rateFutures contractSpecifies an agreed exchange rate in advance of the exchange of currencyHard currencyA currency that is fully convertible, strong and stable in comparison to othersTransactionsConversion of currency usually takes place at large Interbank or Commercial banking centers in Chicago and San Francisco33.Outright forward transactions involve the exchange of currency beyond three days at a fixedexchange rate, known as the ______.∙forward rate34.When a currency is fully convertible, strong and stable in comparison to other countries’currencies; it is said to be:∙Hard currency35.Know two popular exchanges∙Chicago Mercantile Exchange (CME)∙Philadelphia Stock Exchange (PHLX)∙London∙Singapore∙Hong KongChapter 1336.Know all exporting definitions and various documents used in exporting.a)Request for goodsb)Receipt of order (Letter of credit)c)Export intermediaries (Acquire customs broker and freight forwarders)d)Inland shipping to porte)Overseas – intra – country shippingThe most important partner in exporting are the export management companiesPro forma invoiceinvoice from exporter to importer, outlines selling terms, price and delivery of the goods.Commercial invoiceA bill for the goods from the buyer to the sellerBill of LadingA receipt for goods delivered to the common carrier for transportationConsular InvoiceSometimes required by countries as a means of monitoring invoicesCertificate of OriginIndicates where the product is originated fromShippe r’s export declarationUsed by the exporter’s government to monitor export activitiesExport packing listItemizes the material in each individual package – attached to the outside of it37.A (n) _____ operates on a contractual basis and provides exclusive representation for anexporter’s complete process of goods and services in a well-defined foreign territory.∙Export Management Company38.A critical document used to identify that goods have been delivered to the common carrier isknown as:∙Bill of LadingChapter 1439.The mode in international business known as FDI is more common when the following is notpresent:40.All of the following are important when establishing and managing a collaborativeagreement except ______.Collaborative Arrangement – Advantages∙Gain market share/ enter the market – company wholly owns the operations∙Spread and reduce costs – contracting work out∙Specialization in competencies∙Counter competition – companies band together to rival other competitors∙Securing vertical and horizontal positions∙Gaining knowledge∙Overcome government constraints∙Access to location-specific assets – distribution centers, established sales force∙Minimizing risk – through diversificationArticles/Trade blocs41.Be familiar with the article: “China & India general issues on economic growth”42.Be familiar with the article: “Devaluation of the dollar”43.Know the countries in the following trade blocs: NAFTA, EU, MECURSAR, ASEANNAFTA – North American Free Trade AgreementCanada, Mexico, United StatesEU – European UnionAustria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United KingdomMERCOSUR – South America Southern Common MarketArgentina, Brazil, Paraguay, UruguayASEAN – The Association of Southeast Asian NationsIndonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Burma(Myanmar),Cambodia, Laos and Vietnam.。