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GMS 200 Exam Questions And Answers Graded A+
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GMS 200 Exam Questions And Answers Graded A+Licensing Agreement - Answer The foreign firms pay a fee for the rights to make or sell
another company's products in a region
Franchise Agreement - Answer an arrangement whereby someone with a good idea for a
business sells the rights to use the business name and sell a product or service to others
in a given territory
Joint Ventures - Answer when two or more companies form an agreement in which they
pool their resources, share risks, and profits, without actually merging companies to go
after particular opportunities. The two companies also jointly operate the new business.
Strategic Alliance - Solution A strategic alliance is an agreement between two companies
that have elected to distribute resources to accomplish a certain, mutually beneficial
endeavor. A strategic alliance is less entangling and less obliging than a joint venture, in
which two companies generally share resources to establish a detached business
organization.
Reasons why companies go global - Solution 1. Acquire new customers
2. Acquire profits through enlarged operations
3. Suppliers access new materials
4. labour costs are lower
5. capital - tap into a larger resource base
6. Risk - diversify assets across many countries
Direct Exporting Advantages - Solution 1. May develop and maintain relationship with
foreign customers
2. Can control product pricing
3. Obtain a more significant share of the profit
,Indirect Exporting Advantages - Solution 1. There is limited knowledge about the foreign
markets
2. Not responsible for coordinating shipping logistics nor collecting payment
3. Risk-free way to start
4. Limited liability for marketing problems -- always someone else to point your middle
finger at
5. Can field test products for export potential
Importing- In a company buys goods outside the country and sells them domestically
Exporting- Answer - Selling domestically produced products in other countries
Ethical issues arising in relation to international operation of MNEs
Answer 1. Corruption-this is depicted when persons practice illegal activities to benefit
from personal businesses
2. Child labour-a situation where more than 215 million children do adults work under
poor conditions.
3. Sweatshops- mean people work under poor working conditions for minimal wages and
extremely long hours
4. Conflict minerals
Brownfield Investment - Answer when investors buy or rent existing facilities)
Greenfield investment - Answer When a firm establishes a new operation in a foreign
country (i.e. builds new facilities
Things to consider when entering a joint venture - Answer 1. Firms are acquainted with
their partners major business
2. Employs good local workforce
, 3. Cares about its customers
4. has possibility of future expansion
5. has a good size local market
6. has a great profit potential
7. has sound financial standing
Foreign Direct Investment - Answer Firm owns major assets in/or undertakes production
abroad through subsidiaries
Common complaints between host countries and MNCs - Answer Host country
complaints:
1. Excessive profits
2. Economic domination
3. Interference with government
4. Hire best local talent
5. Limited tech transfer
6. disrespect for local customs
Common complaints between MNCs and host countries - Answer MNC complaints:
1. Profit limitations
2. Overpriced RUs
3. Exploitative rules
4. Exchange rates
5. Breach of contract
NAFTA - Answer North American Free Trade Agreement; offering unrestricted trade with
US, Mexico, and Canada.
European Union - Answer An international organization of European countries formed
after World War II to eliminate trade barriers and promote economic cooperation among
its member countries.
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