D311 Exam 1 UPDATED ACTUAL Questions and CORRECT Answers
1. What are the trade Trade barriers drop for member countries: Trade creation
impacts of free Trade barriers remain higher for nonmember countries (static): Trade diver-
trade agreements? sion
(3) Market size increases (dynamic): Trade creation
2. 1/3 of global trade intra-firm
is trade
3. Over Foreign $1.3 trillion
Direct Investment
per year
4. 2/3 of FDI stock services, manufacturing
now in the sec-
tor, 1/3 in
5. Over trillion in $50
assets of foreign af-
filiates
6. By 2030, econ- Asia's
omy will be larger
than that of the US
and EU combined
7. , , or an- Walmart, Exxon-Mobil, Shell's
nual sales exceed
GDP of 50 least de-
veloping countries
combined
8. What are the 3 mo-
tives for firms ex-
, panding interna- 1. Market motives
tionally? 2. Economic motives
3. Strategic motives
9. How do emerg- 1. Acquiring strategic assets to compensate for their weaknesses
ing market MNE's 2. Seizing market opportunities
(Multinational En- 3. Institutional arbitrage
treprises) differ 4. Seeking resources and commodities
from Western MNE
in motives? (4)
10. Two types of Mar- 1. Offensive motive
ket Motives 2. Defensive motive
11. Offensive Market Seize market opportunities in foreign countries through trade or investment
Motive
12. Defensive Market To protect and hold a firm's market power or position in the face of threats from
Motive domestic rivalry or changes in government policy
13. 5 Strategic Motives 1. Capitalize on distinctive resources or capabilities already developed at home
for Firms Expand- 2. Establish a strong foothold in a critical foreign market
ing Internationally 3. Be the first mover in a target foreign market
4. Benefit from vertical integration involving different countries
5. Follow the company's major customers abroad
14. 3 Economic Mo- 1. Increase return through higher revenues and/or lower costs
tives for Firms Ex- 2. Enable the company to benefit from differences in 1) cost of labor 2)
panding Interna- natural resources/raw materials 3) capital 4) talents (science, innovation, R&D)
tionally 5) differences in policy treatment (tax, tariff, treaties)
3. Diversify geographic and eco-political risks
15.
, What kind of ques- They help understand trade patterns and relationships. Examples: What prod-
tions do interna- ucts should be traded? How much should be traded? With whom should trades
tional trade theo- take place? Should government control trade?
ries answer?
16. How many inter- 4 categories (interventionist, free trade, national trade patterns, export dynam-
national trade the- ics) with 10 theories
ories are there?
17. Interventionist 1. Mercantilism
Theories (2) 2. Neomercantilism
18. Free Trade Theo- 1. Theory of Absolute Advantage
ries (2) 2. Theory of Comparative Advantage
19. Theories to Explain 1. Theory of Country Size
National Trade 2. Theory of Economic Size (how much does a country trade)
Patterns (4) 3. Factor Proportions Theory (what types of products does a country trade)
4. Country-Similarity Theory (with whom do countries trade)
20. Export Dynamic 1. Product Life Cycle (PLC) Theory
Theories (2) 2. Diamond of National Advantage
21. Theory of Produc- Factor Mobility Theory (capital, technology, and people)
tion Factor Move-
ment (1)
22. Mercantilism (in- Was popular from 1500 to 1800 that measured a country's wealth by its holding
terventionist theo- of treasure (usually gold). The government policy was to export more than they
ry) imported, governments would impose restrictions on most imports and they
subsidized products for export
23.
1. What are the trade Trade barriers drop for member countries: Trade creation
impacts of free Trade barriers remain higher for nonmember countries (static): Trade diver-
trade agreements? sion
(3) Market size increases (dynamic): Trade creation
2. 1/3 of global trade intra-firm
is trade
3. Over Foreign $1.3 trillion
Direct Investment
per year
4. 2/3 of FDI stock services, manufacturing
now in the sec-
tor, 1/3 in
5. Over trillion in $50
assets of foreign af-
filiates
6. By 2030, econ- Asia's
omy will be larger
than that of the US
and EU combined
7. , , or an- Walmart, Exxon-Mobil, Shell's
nual sales exceed
GDP of 50 least de-
veloping countries
combined
8. What are the 3 mo-
tives for firms ex-
, panding interna- 1. Market motives
tionally? 2. Economic motives
3. Strategic motives
9. How do emerg- 1. Acquiring strategic assets to compensate for their weaknesses
ing market MNE's 2. Seizing market opportunities
(Multinational En- 3. Institutional arbitrage
treprises) differ 4. Seeking resources and commodities
from Western MNE
in motives? (4)
10. Two types of Mar- 1. Offensive motive
ket Motives 2. Defensive motive
11. Offensive Market Seize market opportunities in foreign countries through trade or investment
Motive
12. Defensive Market To protect and hold a firm's market power or position in the face of threats from
Motive domestic rivalry or changes in government policy
13. 5 Strategic Motives 1. Capitalize on distinctive resources or capabilities already developed at home
for Firms Expand- 2. Establish a strong foothold in a critical foreign market
ing Internationally 3. Be the first mover in a target foreign market
4. Benefit from vertical integration involving different countries
5. Follow the company's major customers abroad
14. 3 Economic Mo- 1. Increase return through higher revenues and/or lower costs
tives for Firms Ex- 2. Enable the company to benefit from differences in 1) cost of labor 2)
panding Interna- natural resources/raw materials 3) capital 4) talents (science, innovation, R&D)
tionally 5) differences in policy treatment (tax, tariff, treaties)
3. Diversify geographic and eco-political risks
15.
, What kind of ques- They help understand trade patterns and relationships. Examples: What prod-
tions do interna- ucts should be traded? How much should be traded? With whom should trades
tional trade theo- take place? Should government control trade?
ries answer?
16. How many inter- 4 categories (interventionist, free trade, national trade patterns, export dynam-
national trade the- ics) with 10 theories
ories are there?
17. Interventionist 1. Mercantilism
Theories (2) 2. Neomercantilism
18. Free Trade Theo- 1. Theory of Absolute Advantage
ries (2) 2. Theory of Comparative Advantage
19. Theories to Explain 1. Theory of Country Size
National Trade 2. Theory of Economic Size (how much does a country trade)
Patterns (4) 3. Factor Proportions Theory (what types of products does a country trade)
4. Country-Similarity Theory (with whom do countries trade)
20. Export Dynamic 1. Product Life Cycle (PLC) Theory
Theories (2) 2. Diamond of National Advantage
21. Theory of Produc- Factor Mobility Theory (capital, technology, and people)
tion Factor Move-
ment (1)
22. Mercantilism (in- Was popular from 1500 to 1800 that measured a country's wealth by its holding
terventionist theo- of treasure (usually gold). The government policy was to export more than they
ry) imported, governments would impose restrictions on most imports and they
subsidized products for export
23.
