GSCM 211 EXAM 1 QUESTIONS WITH VERIFIED
ANSWERS
Globalization - Answers - •Exchange of information, ideas, goods, etc. faster across the
globe
•Increases interactions
•Example: IPhone parts
"Globalization for business typically refers to an extension of the make or buy decision
beyond _____________." - Answers - national borders
globalization PRO - Answers - •Increased awareness of other cultures and countries
•Globalization encourages innovation
•Income of low cost labor in developing countries has increased
•Developing countries have increased access to first-world products
globalization CON - Answers - •Unequal opportunities across the world
•The world's wealth is increasingly concentrated (rich getting richer)
•Globalization strategy is poorly managed (damage of the environment)
comparative advantage - Answers - •A party can produce a good or service more
efficiently than its competitors.
•Producing goods and services at a lower opportunity cost
•Example: Cotton sheets from Egypt
Adam Smith in "The Wealth of Nations" called the concept of comparative advantage
______________ - Answers - "Absolute Advantage"
Mercantilism - Answers - - countries controlling trade so they export more than they
import
Thomas Friedman has said "the world has moved from periods of being round (where
trade barriers are high) to periods of being flat (where barriers to trade are lowered). -
Answers -
Bretton Woods System - Answers - - foundation of the majority of world trade
-financial and commodity interdependence
-US dollar as the main trading currency
-Tariffs reduced or eliminated
Major Trading Blocs - Answers - NAFTA - U.S., Canada, Mexico
European Union - 28 trading partners in Europe
APEC - group of 21 Pacific Rim countries
, ASEAN - trading bloc of 10 countries in Asia
Mercosur - trading bloc in Latin America
CAFTA - Central America
European Union - Answers - The European Union is probably the most famous of these
trading blocs, where non-tariff barriers to trade have been collectively removed by
member nations. The EU now has 27 members and was originally inspired by a small
open borders trading union between Belgium, The Netherlands, and Luxembourg.
African Continental - Answers - Free Trade AgreementThe agreement initially requires
members to remove from 90% of goods, allowing free access to commodities, goods,
and services across the continent, The United Economic Commission for Africa
(UNECA) estimates the agreement will boost intra-African trade by 52% by 2022.
Mercosur - Answers - Mercosur or Mercosul is a sub-regional bloc comprising
Argentina, Brazil, Paraguay, Uruguay, and Venezuela. Its associate countries are Chile,
Bolivia, Colombia, Ecuador, and Peru, Observer countries are New Zealand and
Mexico. Its purpose is to promote free trade and the fluid movement of goods, people,
and currency.
NAFTA has been replaced by USMCA (United States - Mexico - Canada Agreement) -
Answers - Trade pact signed in 1992 that gradually eliminated most tariffs and other
trade barriers on products and services passing between the United States, Canada,
and Mexico. The pact effectively created a free-trade bloc among the three largest
countries of North America. NAFTA went into effect in 1994 and remained in force until
it was replaced in 2020.
RCEP (Regional Comprehensive Economic Partnership) - Answers - The Regional
Comprehensive Economic Partnership is a free trade agreement that will create the
world's largest trading bloc and mark a significant achievement for China as it battles
the U.S. for influence and economic supremacy in the Asia-Pacific region.
benefits of global trade - Answers - •Raise the standard of living for both developed and
developing nations
•Jobs and investment are often exchanged and flow both ways
•Experiencing automation
protectionism - Answers - •Taxing imports to protect a country's domestic industries
from international competition
•Encourage growth within country
•Sometimes protectionism fails
-Example: Harley Davidson
physical operations. - Answers - Do we open a new physical location we built from the
ground up? These are also called Greenfield (new physical location) Developments. Or
ANSWERS
Globalization - Answers - •Exchange of information, ideas, goods, etc. faster across the
globe
•Increases interactions
•Example: IPhone parts
"Globalization for business typically refers to an extension of the make or buy decision
beyond _____________." - Answers - national borders
globalization PRO - Answers - •Increased awareness of other cultures and countries
•Globalization encourages innovation
•Income of low cost labor in developing countries has increased
•Developing countries have increased access to first-world products
globalization CON - Answers - •Unequal opportunities across the world
•The world's wealth is increasingly concentrated (rich getting richer)
•Globalization strategy is poorly managed (damage of the environment)
comparative advantage - Answers - •A party can produce a good or service more
efficiently than its competitors.
•Producing goods and services at a lower opportunity cost
•Example: Cotton sheets from Egypt
Adam Smith in "The Wealth of Nations" called the concept of comparative advantage
______________ - Answers - "Absolute Advantage"
Mercantilism - Answers - - countries controlling trade so they export more than they
import
Thomas Friedman has said "the world has moved from periods of being round (where
trade barriers are high) to periods of being flat (where barriers to trade are lowered). -
Answers -
Bretton Woods System - Answers - - foundation of the majority of world trade
-financial and commodity interdependence
-US dollar as the main trading currency
-Tariffs reduced or eliminated
Major Trading Blocs - Answers - NAFTA - U.S., Canada, Mexico
European Union - 28 trading partners in Europe
APEC - group of 21 Pacific Rim countries
, ASEAN - trading bloc of 10 countries in Asia
Mercosur - trading bloc in Latin America
CAFTA - Central America
European Union - Answers - The European Union is probably the most famous of these
trading blocs, where non-tariff barriers to trade have been collectively removed by
member nations. The EU now has 27 members and was originally inspired by a small
open borders trading union between Belgium, The Netherlands, and Luxembourg.
African Continental - Answers - Free Trade AgreementThe agreement initially requires
members to remove from 90% of goods, allowing free access to commodities, goods,
and services across the continent, The United Economic Commission for Africa
(UNECA) estimates the agreement will boost intra-African trade by 52% by 2022.
Mercosur - Answers - Mercosur or Mercosul is a sub-regional bloc comprising
Argentina, Brazil, Paraguay, Uruguay, and Venezuela. Its associate countries are Chile,
Bolivia, Colombia, Ecuador, and Peru, Observer countries are New Zealand and
Mexico. Its purpose is to promote free trade and the fluid movement of goods, people,
and currency.
NAFTA has been replaced by USMCA (United States - Mexico - Canada Agreement) -
Answers - Trade pact signed in 1992 that gradually eliminated most tariffs and other
trade barriers on products and services passing between the United States, Canada,
and Mexico. The pact effectively created a free-trade bloc among the three largest
countries of North America. NAFTA went into effect in 1994 and remained in force until
it was replaced in 2020.
RCEP (Regional Comprehensive Economic Partnership) - Answers - The Regional
Comprehensive Economic Partnership is a free trade agreement that will create the
world's largest trading bloc and mark a significant achievement for China as it battles
the U.S. for influence and economic supremacy in the Asia-Pacific region.
benefits of global trade - Answers - •Raise the standard of living for both developed and
developing nations
•Jobs and investment are often exchanged and flow both ways
•Experiencing automation
protectionism - Answers - •Taxing imports to protect a country's domestic industries
from international competition
•Encourage growth within country
•Sometimes protectionism fails
-Example: Harley Davidson
physical operations. - Answers - Do we open a new physical location we built from the
ground up? These are also called Greenfield (new physical location) Developments. Or
