D080 STUDY GUIDE QUESTIONS &
UPDATED CORRECT SOLUTIONS
LATEST VERSION
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? CORRECT ANSWER - Enhanced core business activities
A company is considering using a direct distribution strategy.
What is a disadvantage of this distribution strategy? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - Loss of control
A company is considering using a direct distribution strategy.
What is a disadvantage of this distribution strategy? CORRECT ANSWER - 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? CORRECT ANSWER -
Crowdsourcing
Which type of risk refers to the impact of random change in the value of one currency
with respect to other currencies? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - 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? CORRECT ANSWER - It will create barriers to
entry for other nations.
What was the economic impact of the North American Free Trade Agreement
(NAFTA)? CORRECT ANSWER - 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? CORRECT ANSWER
- 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? CORRECT
ANSWER - Increases
UPDATED CORRECT SOLUTIONS
LATEST VERSION
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? CORRECT ANSWER - Enhanced core business activities
A company is considering using a direct distribution strategy.
What is a disadvantage of this distribution strategy? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - Loss of control
A company is considering using a direct distribution strategy.
What is a disadvantage of this distribution strategy? CORRECT ANSWER - 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? CORRECT ANSWER -
Crowdsourcing
Which type of risk refers to the impact of random change in the value of one currency
with respect to other currencies? CORRECT ANSWER - 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? CORRECT
ANSWER - 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? CORRECT
ANSWER - 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? CORRECT ANSWER - 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? CORRECT ANSWER - It will create barriers to
entry for other nations.
What was the economic impact of the North American Free Trade Agreement
(NAFTA)? CORRECT ANSWER - 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? CORRECT ANSWER
- 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? CORRECT
ANSWER - Increases
