BUSA 4000 Final Exam Questions and Answers Solved Correctly
Foreign Direct Investment (FDI) - Answers Strategy in which the firm establishes a physical presence
abroad by acquiring productive assets such as capital, technology, labor, land, plant, and equipment.
International Collaborative Venture - Answers A cross-border business alliance in which partnering firms
pool their resources and share costs and risks of a venture.
joint venture - Answers a form of collaboration between two or more firms to create a new, jointly
owned enterprise
Examples of FDI - Answers Volkswagen spent $1 billion to build a factory in Poland to manufacture
delivery vans.
Examples of FDI - Answers The British pharmaceutical firm GlaxoSmithKline purchased the global
Vaccines division of Switzerland's Novartis for $5.25 billion.
Examples of FDI - Answers Denmark's Lego Group spent more than 100 million euros to build a toy
factory in China
Examples of FDI - Answers Japan's Toshiba formed a joint venture with the U.S. firm United Technologies
to establish R&D centers in Europe and India to support joint innovation in the heating and air
conditioning industry
Vertical Integration - Answers The firm owns, or seeks to own, multiple stages of a value chain for
producing, selling, and delivering a product. E.g., Toyota owns some Toyota car dealerships around the
world. Ford once owned steel mills that produced steel used to make Ford cars
Horizontal Integration - Answers Arrangement whereby the firm owns, or seeks to own, the activities
involved in a single state of its value chain. E.g., Microsoft acquired a Montreal-based firm that makes
software used to create movie animation.
Organizing Framework - Answers Corporate Governance -> Ethics, Corporate Social Responsibility,
Sustainability
The Pyramid of Ethical Behavior - Answers 1. corporate social responsibility
2. ethical behavior
3. complying with laws and regulations
Ethics - Answers are moral principles and values that govern the behavior of people, firms, and
governments, regarding right and wrong
corruption - Answers the practice of obtaining power, personal gain, or influence through illegitimate
means, usually at others' expense. The abuse of power to achieve illegitimate personal gain.
, A major or severe concern in the global activities of a large proportion of MNE's.
Bribery - Answers refers to offering, giving, receiving, or soliciting anything of value to influence the
actions of a government official or a corporate manager.
is common and may take the form of grease payments, small inducements intended to expedite
decisions and transactions or gain favors.
The U.S Federal Corrupt Practices Act of 1977
Improper Ethical Behavior May Result When: - Answers •Top management sets goals and incentives
aimed at promoting good outcomes (e.g., profits) that instead encourage bad behaviors.
•Employees overlook unethical behavior in others because of peer pressure or self-interest.
•Managers tolerate lower ethical standards in value-chain activities performed by suppliers or third-
party firms.
•Unethical practices are allowed to accumulate in the firm slowly over time.
The Value of Ethical Behavior - Answers •Ethical behavior is simply the right thing to do.
•Often prescribed within laws and regulations.
•Demanded by customers, governments, and the news media. Unethical firms risk attracting unwanted
attention.
•Ethical behavior is good business, leading to enhanced corporate image and selling prospects. The firm
with a strong reputation is advantaged in hiring and motivating employees, partnering, and dealing with
foreign governments.
ethical standards - Answers vary from country to country
Relativism - Answers belief that ethical truths are not absolute but differ from group to group; according
to this perspective, a good rule is, "When in Rome, do as the Romans do."
Normativism - Answers The belief that ethical behavioral standards are universal, and firms and
individuals should seek to uphold them around the world.
Corporate Social Responsibility (CSR) - Answers Operating a business to meet or exceed the ethical,
legal, commercial, and public expectations of customers, shareholders, employees, and communities.
Foreign Direct Investment (FDI) - Answers Strategy in which the firm establishes a physical presence
abroad by acquiring productive assets such as capital, technology, labor, land, plant, and equipment.
International Collaborative Venture - Answers A cross-border business alliance in which partnering firms
pool their resources and share costs and risks of a venture.
joint venture - Answers a form of collaboration between two or more firms to create a new, jointly
owned enterprise
Examples of FDI - Answers Volkswagen spent $1 billion to build a factory in Poland to manufacture
delivery vans.
Examples of FDI - Answers The British pharmaceutical firm GlaxoSmithKline purchased the global
Vaccines division of Switzerland's Novartis for $5.25 billion.
Examples of FDI - Answers Denmark's Lego Group spent more than 100 million euros to build a toy
factory in China
Examples of FDI - Answers Japan's Toshiba formed a joint venture with the U.S. firm United Technologies
to establish R&D centers in Europe and India to support joint innovation in the heating and air
conditioning industry
Vertical Integration - Answers The firm owns, or seeks to own, multiple stages of a value chain for
producing, selling, and delivering a product. E.g., Toyota owns some Toyota car dealerships around the
world. Ford once owned steel mills that produced steel used to make Ford cars
Horizontal Integration - Answers Arrangement whereby the firm owns, or seeks to own, the activities
involved in a single state of its value chain. E.g., Microsoft acquired a Montreal-based firm that makes
software used to create movie animation.
Organizing Framework - Answers Corporate Governance -> Ethics, Corporate Social Responsibility,
Sustainability
The Pyramid of Ethical Behavior - Answers 1. corporate social responsibility
2. ethical behavior
3. complying with laws and regulations
Ethics - Answers are moral principles and values that govern the behavior of people, firms, and
governments, regarding right and wrong
corruption - Answers the practice of obtaining power, personal gain, or influence through illegitimate
means, usually at others' expense. The abuse of power to achieve illegitimate personal gain.
, A major or severe concern in the global activities of a large proportion of MNE's.
Bribery - Answers refers to offering, giving, receiving, or soliciting anything of value to influence the
actions of a government official or a corporate manager.
is common and may take the form of grease payments, small inducements intended to expedite
decisions and transactions or gain favors.
The U.S Federal Corrupt Practices Act of 1977
Improper Ethical Behavior May Result When: - Answers •Top management sets goals and incentives
aimed at promoting good outcomes (e.g., profits) that instead encourage bad behaviors.
•Employees overlook unethical behavior in others because of peer pressure or self-interest.
•Managers tolerate lower ethical standards in value-chain activities performed by suppliers or third-
party firms.
•Unethical practices are allowed to accumulate in the firm slowly over time.
The Value of Ethical Behavior - Answers •Ethical behavior is simply the right thing to do.
•Often prescribed within laws and regulations.
•Demanded by customers, governments, and the news media. Unethical firms risk attracting unwanted
attention.
•Ethical behavior is good business, leading to enhanced corporate image and selling prospects. The firm
with a strong reputation is advantaged in hiring and motivating employees, partnering, and dealing with
foreign governments.
ethical standards - Answers vary from country to country
Relativism - Answers belief that ethical truths are not absolute but differ from group to group; according
to this perspective, a good rule is, "When in Rome, do as the Romans do."
Normativism - Answers The belief that ethical behavioral standards are universal, and firms and
individuals should seek to uphold them around the world.
Corporate Social Responsibility (CSR) - Answers Operating a business to meet or exceed the ethical,
legal, commercial, and public expectations of customers, shareholders, employees, and communities.
