Principles Of International Business
Exam 1 Questions with Correct
Answers
Drivers of Market Globalization - ANSWER--Worldwide reduction of barriers to trade and investment
-Market liberalization and adoption of free markets
-Industrialization, economic development, and modernization
-Integration of world financial markets
-Advances in technology
Manufacturing and transportation technologies - ANSWER-Revolutionary developments permit
manufacturing that is low-scale and low cost, via computer-aided-design of products (CAD), robotics,
and IT-managed production lines.
In transportation, key advances include fuel-efficient jumbo jets, giant ocean-going freighters, and
containerized shipping.
The cost of international transportation has declined substantially, spurring rapid growth in global
trade.
Collectively, technological advances have greatly reduced the costs of doing business internationally.
Dimensions of Market Globalization - ANSWER-• Integration and interdependence of national
economies
• Rise of regional economic integration blocs
• Growth of global investment and financial flows
• Convergence of buyer lifestyles and preferences
• Globalization of production activities
• Globalization of services
Firm-level consequences of market globalization - ANSWER-• Countless new business opportunities
for internationalizing firms
,• New risks and intense rivalry from foreign competitors
• More demanding buyers who source from suppliers worldwide
• Greater emphasis on proactive internationalization
• Internationalization of firm's value chain
Company Internationalization and the Value Chain - ANSWER-•The most significant implication of
market globalization for companies is that a purely domestic focus is no longer viable in most cases.
•Market globalization compels firms to internationalize their value chain, and access the benefits of
international business.
•Value chain: The sequence of value-adding activities performed by the firm in the process of
developing, producing, and marketing a product or a service.
•Globalization allows the firm to internationalize its value chain, leading to various advantages.
Value Chain - ANSWER-the sequence of value adding activities performed by the firm in the process
of developing, producing, and marketing a product or service
Globalization of Production - ANSWER-Firms source goods and services from locations around the
globe to capitalize on national differences in the cost and quality of factors of production like land,
labor, energy, and capital
Factories of production - ANSWER-the resources-including land, labor and capital- that are needed to
produce goods and services
Societal Consequences of Market Globalization - ANSWER-- contagion
- loss of national sovereignty
- offshoring and the flight of jobs
- effect on the poor
- effect on the natural environment
- effect on national culture
contagion - ANSWER-rapid spread of financial or monetary crisis's from one country to another
Loss of National Sovereignty - ANSWER-MNE activities can interfere with governments' ability to
control their own economies and social-political systems
, Some firms are bigger than the economies of many nations
Some argue that global competition in the context of global free trade makes MNEs less powerful
Offshoring and the Flight of Jobs - ANSWER-Jobs are lost as firms shift production of goods and
services abroad in order to cut costs and obtain other advantages.
Firms benefit, but communities and industries are disrupted.
Effect on the natural environment - ANSWER-Globalization harms the environment by promoting
industrialization and other activities that generate pollution, habitat destruction, and other
environmental harm
Effect on the poor - ANSWER-In poor countries, while globalization usually creates jobs and raises
wages, it also tends to disrupt local job markets
MNEs may pay low wages and many exploit workers or employ child labor
Globalizations benefits are not evenly distributed
The gap between rich nations and poor nations is getting wider
Effect on National culture - ANSWER-Globalization opens the door to foreign firms, global brands,
unfamiliar products, and new values.
Increasingly, consumers buy similar products, modeled according to Western countries, especially
the US.
In this way, traditional norms, values, and behaviors may homogenize over time.
National identity may be lost to 'global' culture.
Supporters of globalization affecting Jobs and Income - ANSWER-Benefits outweigh the costs
Cheaper producers and higher purchasing power
Increase income levels at developing world benefits US
Technological improvements make unskilled labor less valuable
Exam 1 Questions with Correct
Answers
Drivers of Market Globalization - ANSWER--Worldwide reduction of barriers to trade and investment
-Market liberalization and adoption of free markets
-Industrialization, economic development, and modernization
-Integration of world financial markets
-Advances in technology
Manufacturing and transportation technologies - ANSWER-Revolutionary developments permit
manufacturing that is low-scale and low cost, via computer-aided-design of products (CAD), robotics,
and IT-managed production lines.
In transportation, key advances include fuel-efficient jumbo jets, giant ocean-going freighters, and
containerized shipping.
The cost of international transportation has declined substantially, spurring rapid growth in global
trade.
Collectively, technological advances have greatly reduced the costs of doing business internationally.
Dimensions of Market Globalization - ANSWER-• Integration and interdependence of national
economies
• Rise of regional economic integration blocs
• Growth of global investment and financial flows
• Convergence of buyer lifestyles and preferences
• Globalization of production activities
• Globalization of services
Firm-level consequences of market globalization - ANSWER-• Countless new business opportunities
for internationalizing firms
,• New risks and intense rivalry from foreign competitors
• More demanding buyers who source from suppliers worldwide
• Greater emphasis on proactive internationalization
• Internationalization of firm's value chain
Company Internationalization and the Value Chain - ANSWER-•The most significant implication of
market globalization for companies is that a purely domestic focus is no longer viable in most cases.
•Market globalization compels firms to internationalize their value chain, and access the benefits of
international business.
•Value chain: The sequence of value-adding activities performed by the firm in the process of
developing, producing, and marketing a product or a service.
•Globalization allows the firm to internationalize its value chain, leading to various advantages.
Value Chain - ANSWER-the sequence of value adding activities performed by the firm in the process
of developing, producing, and marketing a product or service
Globalization of Production - ANSWER-Firms source goods and services from locations around the
globe to capitalize on national differences in the cost and quality of factors of production like land,
labor, energy, and capital
Factories of production - ANSWER-the resources-including land, labor and capital- that are needed to
produce goods and services
Societal Consequences of Market Globalization - ANSWER-- contagion
- loss of national sovereignty
- offshoring and the flight of jobs
- effect on the poor
- effect on the natural environment
- effect on national culture
contagion - ANSWER-rapid spread of financial or monetary crisis's from one country to another
Loss of National Sovereignty - ANSWER-MNE activities can interfere with governments' ability to
control their own economies and social-political systems
, Some firms are bigger than the economies of many nations
Some argue that global competition in the context of global free trade makes MNEs less powerful
Offshoring and the Flight of Jobs - ANSWER-Jobs are lost as firms shift production of goods and
services abroad in order to cut costs and obtain other advantages.
Firms benefit, but communities and industries are disrupted.
Effect on the natural environment - ANSWER-Globalization harms the environment by promoting
industrialization and other activities that generate pollution, habitat destruction, and other
environmental harm
Effect on the poor - ANSWER-In poor countries, while globalization usually creates jobs and raises
wages, it also tends to disrupt local job markets
MNEs may pay low wages and many exploit workers or employ child labor
Globalizations benefits are not evenly distributed
The gap between rich nations and poor nations is getting wider
Effect on National culture - ANSWER-Globalization opens the door to foreign firms, global brands,
unfamiliar products, and new values.
Increasingly, consumers buy similar products, modeled according to Western countries, especially
the US.
In this way, traditional norms, values, and behaviors may homogenize over time.
National identity may be lost to 'global' culture.
Supporters of globalization affecting Jobs and Income - ANSWER-Benefits outweigh the costs
Cheaper producers and higher purchasing power
Increase income levels at developing world benefits US
Technological improvements make unskilled labor less valuable
