BUS 303 Exam 1: Ace Your International
Business Knowledge!
This guide contains verified questions and answers to help you master the material for your BUS
303 Exam 1. Let's get started!
I. Globalization and International Trade
Transnationality Index (TNI): Measures a company's globalization based on foreign
sales, assets, and employees. TNI = (Foreign Sales % + Foreign Assets % + Foreign
Employees %) / 3.
Starbucks in China: Adapting its "global integration" strategy with "local
responsiveness" by introducing new drinks for Chinese tastes and larger stores.
Dunning's OLI Framework: Explains FDI based on Ownership Advantages, Location
Advantages, and Internationalization Advantages. Corresponds to Export, Licensing, and
FDI.
Reducing Currency Volatility Risks: Global pricing, relocating manufacturing,
invoicing in home currency (shifts risk), payment timing (leads & lags), hedging (cash in
advance).
"Conflict Minerals": Tin, tantalum, tungsten, and gold from the Democratic Republic of
the Congo.
US Legal Obligations (Conflict Minerals): Dodd-Frank Act requires companies to
disclose the origin of conflict minerals in their supply chains.
Industries Monitoring Supplier Safety Standards: Automotive industry relies on
direct suppliers to monitor indirect suppliers.
, Shifting Profit to Low-Tax Countries: Multinational companies use corporate tax
differentials.
Currency Risks in Latin America: Weakening Latin American currencies make loans
more expensive to repay.
World Trade Organization (WTO): Manages the global trade regime through
negotiations, implementation, dispute settlement, capacity building, and outreach.
Global vs. Regional Trade: Most trade is regional (within regions) rather than global
(between regions).
Focal Points of Trade Disputes: Safety and quality standards are increasingly important
compared to tariffs and quotas.
Impact of "Chicken Tax" (US): No light trucks are imported into the U.S.
Government Policies to Increase Exports: Economic growth abroad, weak US
currency, trade agreements, government trade promotion, productive efficiency and
quality.
Ricardo's Theory of Comparative Advantage: Benefits of trade explained by
opportunity cost (what is sacrificed to produce another good). Natural and man-made
comparative advantage.
Reasons for Strong World Trade Growth (Post-WWII): US economic strength,
rebuilding Europe, shift from isolationism, removal of trade barriers.
Supporting a Claim of "Dumping": Prices below cost or home price, material injury to
home market.
Increasingly Important Trade Barriers: Tariffs.
Business Knowledge!
This guide contains verified questions and answers to help you master the material for your BUS
303 Exam 1. Let's get started!
I. Globalization and International Trade
Transnationality Index (TNI): Measures a company's globalization based on foreign
sales, assets, and employees. TNI = (Foreign Sales % + Foreign Assets % + Foreign
Employees %) / 3.
Starbucks in China: Adapting its "global integration" strategy with "local
responsiveness" by introducing new drinks for Chinese tastes and larger stores.
Dunning's OLI Framework: Explains FDI based on Ownership Advantages, Location
Advantages, and Internationalization Advantages. Corresponds to Export, Licensing, and
FDI.
Reducing Currency Volatility Risks: Global pricing, relocating manufacturing,
invoicing in home currency (shifts risk), payment timing (leads & lags), hedging (cash in
advance).
"Conflict Minerals": Tin, tantalum, tungsten, and gold from the Democratic Republic of
the Congo.
US Legal Obligations (Conflict Minerals): Dodd-Frank Act requires companies to
disclose the origin of conflict minerals in their supply chains.
Industries Monitoring Supplier Safety Standards: Automotive industry relies on
direct suppliers to monitor indirect suppliers.
, Shifting Profit to Low-Tax Countries: Multinational companies use corporate tax
differentials.
Currency Risks in Latin America: Weakening Latin American currencies make loans
more expensive to repay.
World Trade Organization (WTO): Manages the global trade regime through
negotiations, implementation, dispute settlement, capacity building, and outreach.
Global vs. Regional Trade: Most trade is regional (within regions) rather than global
(between regions).
Focal Points of Trade Disputes: Safety and quality standards are increasingly important
compared to tariffs and quotas.
Impact of "Chicken Tax" (US): No light trucks are imported into the U.S.
Government Policies to Increase Exports: Economic growth abroad, weak US
currency, trade agreements, government trade promotion, productive efficiency and
quality.
Ricardo's Theory of Comparative Advantage: Benefits of trade explained by
opportunity cost (what is sacrificed to produce another good). Natural and man-made
comparative advantage.
Reasons for Strong World Trade Growth (Post-WWII): US economic strength,
rebuilding Europe, shift from isolationism, removal of trade barriers.
Supporting a Claim of "Dumping": Prices below cost or home price, material injury to
home market.
Increasingly Important Trade Barriers: Tariffs.
