D080 STUDY GUIDE

D080 STUDY GUIDE A company would like to obtain the benefits of outsourcing and focus solely on marketing activities and research and development. Which advantage is this company hoping to achieve? Enhanced core business activities A company is considering using a direct distribution strategy. What is a disadvantage of this distribution strategy? Required to arrange for transportation A car manufacturing company manufacturers tires in Countries A, B, and C. Country A has significant political turmoil that has resulted in a lengthy labor strike. Countries B and C have ramped up production resulting in sustained tire production for the company. Which practice has the company used to optimize its production efficiency? Multinational production A company in the United States is considering a joint venture with a French supplier and needs to learn about the accounting standards used in France. How should the U.S. company approach this situation? Study the International Financial Reporting Standards (IFRS) online A multinational company moves key production assets to a country with lower tax rates to avoid paying more taxes in the home country. Which type of pricing should be used to reduce taxes during production? Transfer A German company is considering outsourcing the manufacturing process to Japan. Some of the executive board directors are concerned that the Japanese company may not follow the exact production processes the German company normally uses. Which risk represents this concern? Loss of control A company is considering using a direct distribution strategy. What is a disadvantage of this distribution strategy? Required to arrange for transportation Which source of funding uses technology platforms to invite consumers to invest small amounts in support of a business idea or venture? Crowdsourcing Which type of risk refers to the impact of random change in the value of one currency with respect to other currencies? Currency risk Which term defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm? Hedging A company has achieved a monetary advantage by using a fronting loan with a subsidiary in a country with a low corporate income tax rate. Which type of tax situation in this country allows the company to achieve this monetary advantage? A company has achieved a monetary advantage by using a fronting loan with a subsidiary in a country with a low corporate income tax rate. Which type of tax situation in this country allows the company to achieve this monetary advantage? Two countries agree to open their borders to international business transactions with one another without tariffs. How does this affect global business? It leads to developing free trade policies with strategic partners. A country uses its established technology infrastructure to produce a good. What is the impact of this infrastructure on trade? It will create barriers to entry for other nations. What was the economic impact of the North American Free Trade Agreement (NAFTA)? The shift of jobs away from low comparative advantage industries A company that is located in Country A would like to sell products in Country B. The government of Country B is pushing for a tariff-based international trade agreement on the product. What is the reasoning behind Country B's decision? Country B seeks to protect its economy and give it the opportunity for long-term expansion. Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products. What is the effect, if any, on the domestic prices of these products? Increases Two countries decide to open up trade with each other. What is likely to happen when trade opens up? Jobs will increase in comparative advantage industries. What is a purpose of a country implementing trade protectionism? To protect an infant industry Which negative outcome on political systems comes from globalization? Creation of isolationist policies Which factor results in a higher rate of globalization? Reduced trade barriers What are the four factors in Ghemawat's CAGE analysis? Culture, administration, geography, economy What is a major drawback to the home country when companies outsource manufacturing jobs to countries with lower worker wages? Loss of manufacturing jobs A country has a characteristic traditional economic system with poor infrastructure and limited economic opportunity. What is the impact of this system on the process of globalization? The globalization process is at a disadvantage as the country has a lower standard of living. What is a characteristic of a market economy? Firms seek to maximize profits. Which impact does Islamic law directly have on businesses? It forbids charging interest. Country A and Country B are trying to mend their relationship. A company from Country A would like to invest in a company in Country B. Which action by Country B will help these two countries meet their goal? Provide tax exemptions Which level of regional economic integration is a key feature of a Customs Union? Unified trading policies with non-members What is a drawback of creating regional trade agreements? They shift employment opportunities. The United States-Mexico- Canada Agreement (USMCA), a modification of the North American Free Trade Agreement (NAFTA), broadened the scope of free-trade between member nations and tightened restrictions in the region. Which regulation was established by this new agreement? Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023. A U.S. capital investment firm is researching new markets to enter to diversify its portfolio. The director of foreign investments presented a pitch to the board of directors encouraging entry into the Costa Rican telecommunications market by investing in local companies in the region through acquisition. Which alliance supports this director's suggestion? Central America Free Trade Agreement A firm based in Country A manufactures its products in Country B and pays the manufacturing employees in the currency in which they are located. Which currency situation will result in the maximum profit for the firm? The currency in Country A is strong relative to the currency in Country B.