MHR 403 FINAL EXAM UW–MADISON 2026/2027 – STUDY GUIDE, PRACTICE
QUESTIONS, EXAM REVIEW & TEST PREP
International Business - ANS ✔✔All Cross-border exchanges of goods, services, or resources between
two or more nations. These exchanges can go beyond the exchange of money for physical goods to
include international transfers of other resources, such as people, intellectual property, and contractual
assets or liabilities
Globalization - ANS ✔✔The shift towards a more interdependent and integrated global economy
Three stages, 1.0, 2.0 and currently 3.0
Globalization 1.0 - ANS ✔✔Nations dominated global expansion
Columbus's discovery of the New World and ran from 1492 to about 1800. Driven by nationalism and
religion, this lengthy stage was characterized by how much industrial power countries could produce and
apply
Globalization 2.0 - ANS ✔✔Driven by the ascension of multinational companies, which pushed global
development
From about 1800 to 2000, was disrupted by the Great depression and both World Wars and was largely
shaped by the emerging power of huge, multinational corporations. Grew with the European mercantile
stock companies as they expanded in search of new markets, cheap labor, and raw materials, and
continued with subsequent advances in sea and rail transportation. Introduction of modern
communications and cheaper shipping costs
Globalization 3.0 - ANS ✔✔Major software advances have allowed an unprecedented number of people
worldwide to work together with unlimited potential
From 2000 onward, with advances in global electronic interconnectivity that allowed individuals to
communicate as never before
Flatworld perspective - ANS ✔✔A metaphor for viewing the world as a level playing field in terms of
commerce, where all competitors have an equal opportunity
Multi-domestic World - ANS ✔✔The world's markets are more different than similar, such that the
playing field differs in respective markets
If world was flat, international business and global strategy would be easy since the same strategy could
be used in every country
CAGE Framework - ANS ✔✔Used to study the possible barriers to cross-border economic activity (Multi-
domestic world)
Evaluate the distance dimensions of Culture Administration Geography and Economics
Country Manager - ANS ✔✔Oversee a company's operations within a country or geographic region
across functional areas. Needs to be sensitive and responsive to the local market
Five Myths of Globalization - ANS ✔✔Myth #1
Populist Nationalism has begun to reverse globalization
, Myth #2
We live in a world of borderless markets (not flatworld)
Myth #3
The U.S. is one of the world's most globalized countries
Myth #4
Emerging markets are globalizations new leaders
Myth #5
Globalization is the main culprit behind rising inequality
Five Hidden ways globalization is changing - ANS ✔✔#1 A smaller share of goods is traded across borders
#2 Services trade is growing 60% faster than goods trade
Services are also undervalued
#3 Labor cost arbitrage has become less important
Only 18% of goods trade today is from low wage to high wage countries, defying common perception
that trade flows are driven by companies searching for low cost labor
May be amplified in the future with automation and AI
#4 R&D and innovation are becoming increasingly important
Advanced economies with highly skilled labor forces, strong innovation ecosystems and robust
intellectual property protection will become more favored
#5 Trade is becoming concentrated within regions
Regional trade is growing as companies prioritize proximity to customers and speed to market
Gross domestic product (GDP) - ANS ✔✔The value of all the goods and services produced by a country in
a single year
Per Capita GDP - ANS ✔✔The value of the GDP divided by the population of the country. This is also
referred to as the nominal per capita GDP
Purchasing Power Parity (PPP) - ANS ✔✔An economic theory that adjusts the exchange rate between
countries to ensure that a good is purchased for the same price in the same currency
GDP Purchasing power parity - ANS ✔✔The value of the GDP adjusted for purchasing power; helps
managers understand how much income local residents have
Developed world - ANS ✔✔Also known as advanced economies, these countries are characterized as
postindustrial with high per capita incomes, competitive industries, transparent legal and regulatory
environments, and well-developed commercial infrastructures
Developing world - ANS ✔✔Countries that rank lower on various classifications including GDP and the
HDI. These countries tend to have economies focused on one or more key industries and tend to have
poor commercial infrastructure. The local business environment tends not to be transparent, and there
is usually a weak competitive industry
Emerging economies - ANS ✔✔Country that is transitioning from a developing economy to a developed
one, from a centrally managed economy to a free-market-oriented economy. Typically focus on
developing a market-oriented economy, regardless of the main political structure
Trade Surplus - ANS ✔✔When the value of exports is greater than the value of imports
QUESTIONS, EXAM REVIEW & TEST PREP
International Business - ANS ✔✔All Cross-border exchanges of goods, services, or resources between
two or more nations. These exchanges can go beyond the exchange of money for physical goods to
include international transfers of other resources, such as people, intellectual property, and contractual
assets or liabilities
Globalization - ANS ✔✔The shift towards a more interdependent and integrated global economy
Three stages, 1.0, 2.0 and currently 3.0
Globalization 1.0 - ANS ✔✔Nations dominated global expansion
Columbus's discovery of the New World and ran from 1492 to about 1800. Driven by nationalism and
religion, this lengthy stage was characterized by how much industrial power countries could produce and
apply
Globalization 2.0 - ANS ✔✔Driven by the ascension of multinational companies, which pushed global
development
From about 1800 to 2000, was disrupted by the Great depression and both World Wars and was largely
shaped by the emerging power of huge, multinational corporations. Grew with the European mercantile
stock companies as they expanded in search of new markets, cheap labor, and raw materials, and
continued with subsequent advances in sea and rail transportation. Introduction of modern
communications and cheaper shipping costs
Globalization 3.0 - ANS ✔✔Major software advances have allowed an unprecedented number of people
worldwide to work together with unlimited potential
From 2000 onward, with advances in global electronic interconnectivity that allowed individuals to
communicate as never before
Flatworld perspective - ANS ✔✔A metaphor for viewing the world as a level playing field in terms of
commerce, where all competitors have an equal opportunity
Multi-domestic World - ANS ✔✔The world's markets are more different than similar, such that the
playing field differs in respective markets
If world was flat, international business and global strategy would be easy since the same strategy could
be used in every country
CAGE Framework - ANS ✔✔Used to study the possible barriers to cross-border economic activity (Multi-
domestic world)
Evaluate the distance dimensions of Culture Administration Geography and Economics
Country Manager - ANS ✔✔Oversee a company's operations within a country or geographic region
across functional areas. Needs to be sensitive and responsive to the local market
Five Myths of Globalization - ANS ✔✔Myth #1
Populist Nationalism has begun to reverse globalization
, Myth #2
We live in a world of borderless markets (not flatworld)
Myth #3
The U.S. is one of the world's most globalized countries
Myth #4
Emerging markets are globalizations new leaders
Myth #5
Globalization is the main culprit behind rising inequality
Five Hidden ways globalization is changing - ANS ✔✔#1 A smaller share of goods is traded across borders
#2 Services trade is growing 60% faster than goods trade
Services are also undervalued
#3 Labor cost arbitrage has become less important
Only 18% of goods trade today is from low wage to high wage countries, defying common perception
that trade flows are driven by companies searching for low cost labor
May be amplified in the future with automation and AI
#4 R&D and innovation are becoming increasingly important
Advanced economies with highly skilled labor forces, strong innovation ecosystems and robust
intellectual property protection will become more favored
#5 Trade is becoming concentrated within regions
Regional trade is growing as companies prioritize proximity to customers and speed to market
Gross domestic product (GDP) - ANS ✔✔The value of all the goods and services produced by a country in
a single year
Per Capita GDP - ANS ✔✔The value of the GDP divided by the population of the country. This is also
referred to as the nominal per capita GDP
Purchasing Power Parity (PPP) - ANS ✔✔An economic theory that adjusts the exchange rate between
countries to ensure that a good is purchased for the same price in the same currency
GDP Purchasing power parity - ANS ✔✔The value of the GDP adjusted for purchasing power; helps
managers understand how much income local residents have
Developed world - ANS ✔✔Also known as advanced economies, these countries are characterized as
postindustrial with high per capita incomes, competitive industries, transparent legal and regulatory
environments, and well-developed commercial infrastructures
Developing world - ANS ✔✔Countries that rank lower on various classifications including GDP and the
HDI. These countries tend to have economies focused on one or more key industries and tend to have
poor commercial infrastructure. The local business environment tends not to be transparent, and there
is usually a weak competitive industry
Emerging economies - ANS ✔✔Country that is transitioning from a developing economy to a developed
one, from a centrally managed economy to a free-market-oriented economy. Typically focus on
developing a market-oriented economy, regardless of the main political structure
Trade Surplus - ANS ✔✔When the value of exports is greater than the value of imports
