BUSMHR 2000 EXAM 1 QUESTIONS AND
ANSWERS
• Globalization - Correct Answers -The trend toward increased cultural and economic
connectedness between people, businesses, and organizations throughout the world.
Global Institutions - Correct Answers -(1) -Help manage, regulate, and police the global
marketplace.
-Promote the establishment of multinational treaties to govern the global business
system.
- General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO),
International Monetary Fund (IMF), World Bank, United Nations (UN).
WTO - Correct Answers -The World Trade Organization - an international body that
enforces agreements that reduce barriers to international trade; successor to the GATT
IMF - Correct Answers -International Monetary Fund//a United Nations agency to
promote trade by increasing the exchange stability of the major currencies
EU - Correct Answers -..., an international organization of European countries formed
after World War II to reduce trade barriers and increase cooperation among its
members
GAAT - Correct Answers -..., General Agreement on Tarrifs and Trade. This is a
multilateral (many nations) agreement whose objective is to minimize government
intervention in trade
MFA - Correct Answers -The Multifiber Arrangement- an agreement between exporting
and importing countries to control exports of textiles from developing to developed
countries
covers 2/3rds of global textile trade
International Business - Correct Answers -The business activites necessary for creating,
shipping, and selling goods and services across national borders.
International firm - Correct Answers -Any firm, regardless of size, that is engaged in
international business
MNE - Correct Answers -Multinational Enterprise. a global firm that has corporate units
located in foreign countries.
, Market motives - Correct Answers -the motivation of a company to seize through trade
and/or investment or stand it's ground in the face of competitive international business
Economic Motives - Correct Answers -the motivation to increase return through higher
revenues or lower costs through international raw materials, natural resources, a cheap
labor supply for manufacturing goods
Strategic Motives - Correct Answers -the motivations leading firms overseas to
capitalize on distinctive resources and capabilities developed at home. These can
include technologies and Economies of Scale.
Economies of Scale - Correct Answers -as a company produces larger numbers of a
particular product, the cost of each of these products goes down
International versus Domestic Business - Correct Answers -the variations in business
seen locally versus overseas including environmental dynamics and operational nature
Environmental Dynamics - Correct Answers -Currency, inflation, interest rates,
accounting practices, cultures, social customs, laws, political stability of another country
Operational Nature - Correct Answers -communication, coordination, motivation,
differences in organizational principles and management philosophies, made
increasingly more difficult in an international setting
risk - Correct Answers -the unpredictability of operational and financial outcomes
uncertainty - Correct Answers -the unpredictability of environmental or organizational
conditions that affect firm performance
Mercantilism - Correct Answers -1st theory of international trade- an economic policy
under which nations sought to increase their wealth and power by obtaining large
amounts of gold and silver and by maximizing exports and minimizing imports
Mercantilism as a "zero sum" game - Correct Answers -the value of your currency goes
up, consumers import cheaper goods, and the currency goes back down
Neo-Mercantilism - Correct Answers -countries with large trade surplus - trade poicy
under whic a country relentlessly tries to maximize its trade surplus even at the sacrifice
of its trading partners welfare
Ex. CHINA
Absolute Advantage Theory - Correct Answers -Adam Smith- Laissez-faire Economics-
Market will reach efficient end by itself and government intervention is counter
productive
ANSWERS
• Globalization - Correct Answers -The trend toward increased cultural and economic
connectedness between people, businesses, and organizations throughout the world.
Global Institutions - Correct Answers -(1) -Help manage, regulate, and police the global
marketplace.
-Promote the establishment of multinational treaties to govern the global business
system.
- General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO),
International Monetary Fund (IMF), World Bank, United Nations (UN).
WTO - Correct Answers -The World Trade Organization - an international body that
enforces agreements that reduce barriers to international trade; successor to the GATT
IMF - Correct Answers -International Monetary Fund//a United Nations agency to
promote trade by increasing the exchange stability of the major currencies
EU - Correct Answers -..., an international organization of European countries formed
after World War II to reduce trade barriers and increase cooperation among its
members
GAAT - Correct Answers -..., General Agreement on Tarrifs and Trade. This is a
multilateral (many nations) agreement whose objective is to minimize government
intervention in trade
MFA - Correct Answers -The Multifiber Arrangement- an agreement between exporting
and importing countries to control exports of textiles from developing to developed
countries
covers 2/3rds of global textile trade
International Business - Correct Answers -The business activites necessary for creating,
shipping, and selling goods and services across national borders.
International firm - Correct Answers -Any firm, regardless of size, that is engaged in
international business
MNE - Correct Answers -Multinational Enterprise. a global firm that has corporate units
located in foreign countries.
, Market motives - Correct Answers -the motivation of a company to seize through trade
and/or investment or stand it's ground in the face of competitive international business
Economic Motives - Correct Answers -the motivation to increase return through higher
revenues or lower costs through international raw materials, natural resources, a cheap
labor supply for manufacturing goods
Strategic Motives - Correct Answers -the motivations leading firms overseas to
capitalize on distinctive resources and capabilities developed at home. These can
include technologies and Economies of Scale.
Economies of Scale - Correct Answers -as a company produces larger numbers of a
particular product, the cost of each of these products goes down
International versus Domestic Business - Correct Answers -the variations in business
seen locally versus overseas including environmental dynamics and operational nature
Environmental Dynamics - Correct Answers -Currency, inflation, interest rates,
accounting practices, cultures, social customs, laws, political stability of another country
Operational Nature - Correct Answers -communication, coordination, motivation,
differences in organizational principles and management philosophies, made
increasingly more difficult in an international setting
risk - Correct Answers -the unpredictability of operational and financial outcomes
uncertainty - Correct Answers -the unpredictability of environmental or organizational
conditions that affect firm performance
Mercantilism - Correct Answers -1st theory of international trade- an economic policy
under which nations sought to increase their wealth and power by obtaining large
amounts of gold and silver and by maximizing exports and minimizing imports
Mercantilism as a "zero sum" game - Correct Answers -the value of your currency goes
up, consumers import cheaper goods, and the currency goes back down
Neo-Mercantilism - Correct Answers -countries with large trade surplus - trade poicy
under whic a country relentlessly tries to maximize its trade surplus even at the sacrifice
of its trading partners welfare
Ex. CHINA
Absolute Advantage Theory - Correct Answers -Adam Smith- Laissez-faire Economics-
Market will reach efficient end by itself and government intervention is counter
productive
