GMS 522 STUDY EXAMS GUIDE ALL QUESTIONS AND
ANSWERS SURE A+
✔✔Domestication - ✔✔partial ownership of the foreign firms is transferred to the
government along with day-to-day management responsibilities
✔✔Political Risk Index - ✔✔focuses on political risk that stems from sociopolitical
conditions in the country under analysis
✔✔Operations Risk Index - ✔✔assesses the operations climate for foreign businesses
✔✔R Factor - ✔✔is concerned with remittances and repatriation
✔✔General Global Environment - ✔✔global political tensions can undermine business
& consumer confidence & make international sales more challenging for the
multinational firm while a more benign global environment can lead to entirely new
market opportunities for globally oriented firms
✔✔Common law - ✔✔is based on precedents and is practiced in the UK, as well as in a
# of countries with colonial ties such as India, USA, Canada, Pakistan, Australia & Hong
Kong
, ✔✔Code Law - ✔✔relies on a comprehensive set of written statues against which cases
are evaluated and is practiced in countries such as France, Germany and Japan
✔✔Litigation - ✔✔expensive & time-consuming & judgments may be unenforceable
✔✔Alternative dispute resolution - ✔✔mechanisms such as mediation & arbitration
✔✔Rationale for International Trade - ✔✔-no country is completely self-sufficient.
-rely on international trade to provide their consumers with a wider range of products
-trade also allows countries to specialize and achieve greater manufacturing efficiencies
-important source of tax revenue for national governments
✔✔Mercantilism - ✔✔the economy of three components, government policies promoted
exports and severely discouraged imports. International trade was seen as a zero-sum
game.
✔✔Three components of mercantilism - ✔✔-manufacturing sector
-agricultural sector
-foreign colonies controlled by the state
✔✔Theory of absolute advantage - ✔✔-a country should specialize in the production of
those products which it can produce more efficiently than its prospective trading
partners.
-The country should manufacture and export those products and import all those it
wishes to consume
✔✔Theory of Comparative advantage - ✔✔a country needs to examine its relative
efficiencies in the production of various products and concrete on those products
requiring the fewest units of labour.
✔✔Heckscher-Ohlin Model - ✔✔Countries should import those products that use most
intensively their least abundant factor of production, while they will export those
products that use most intensively their most abundant factor of production.
✔✔Vernon's Product Life Cycle - ✔✔Production shifts from developed to developing
countries as the product moves through the three stage of its life cycle.
✔✔The country similarity theory - ✔✔countries will trade most intensely with countries
with similar levels of per capita income and less intensely with countries with dissimilar
levels of per capita income
✔✔The Diamond of National Advantage - ✔✔competitive advantage in international
markets is driven by four factors
ANSWERS SURE A+
✔✔Domestication - ✔✔partial ownership of the foreign firms is transferred to the
government along with day-to-day management responsibilities
✔✔Political Risk Index - ✔✔focuses on political risk that stems from sociopolitical
conditions in the country under analysis
✔✔Operations Risk Index - ✔✔assesses the operations climate for foreign businesses
✔✔R Factor - ✔✔is concerned with remittances and repatriation
✔✔General Global Environment - ✔✔global political tensions can undermine business
& consumer confidence & make international sales more challenging for the
multinational firm while a more benign global environment can lead to entirely new
market opportunities for globally oriented firms
✔✔Common law - ✔✔is based on precedents and is practiced in the UK, as well as in a
# of countries with colonial ties such as India, USA, Canada, Pakistan, Australia & Hong
Kong
, ✔✔Code Law - ✔✔relies on a comprehensive set of written statues against which cases
are evaluated and is practiced in countries such as France, Germany and Japan
✔✔Litigation - ✔✔expensive & time-consuming & judgments may be unenforceable
✔✔Alternative dispute resolution - ✔✔mechanisms such as mediation & arbitration
✔✔Rationale for International Trade - ✔✔-no country is completely self-sufficient.
-rely on international trade to provide their consumers with a wider range of products
-trade also allows countries to specialize and achieve greater manufacturing efficiencies
-important source of tax revenue for national governments
✔✔Mercantilism - ✔✔the economy of three components, government policies promoted
exports and severely discouraged imports. International trade was seen as a zero-sum
game.
✔✔Three components of mercantilism - ✔✔-manufacturing sector
-agricultural sector
-foreign colonies controlled by the state
✔✔Theory of absolute advantage - ✔✔-a country should specialize in the production of
those products which it can produce more efficiently than its prospective trading
partners.
-The country should manufacture and export those products and import all those it
wishes to consume
✔✔Theory of Comparative advantage - ✔✔a country needs to examine its relative
efficiencies in the production of various products and concrete on those products
requiring the fewest units of labour.
✔✔Heckscher-Ohlin Model - ✔✔Countries should import those products that use most
intensively their least abundant factor of production, while they will export those
products that use most intensively their most abundant factor of production.
✔✔Vernon's Product Life Cycle - ✔✔Production shifts from developed to developing
countries as the product moves through the three stage of its life cycle.
✔✔The country similarity theory - ✔✔countries will trade most intensely with countries
with similar levels of per capita income and less intensely with countries with dissimilar
levels of per capita income
✔✔The Diamond of National Advantage - ✔✔competitive advantage in international
markets is driven by four factors
