IBUS 310 Midterm
Dell Theory of Conflict Prevention - ANS-No two countries that are part of a major global supply
chain will ever fight a war against each other as long as they are part of the same global supply
chain
Elements of Risk - ANS-threats, vulnerabilities, consequences
composite risk index equation - ANS-impact of event x probability
mercantilism - ANS-government intervenes to maintain a trade surplus (export > import), views
trade as zero sum game (one person's win is another's loss)
absolute advantage - ANS-Adam Smith's invisible hand, a country is more efficient at producing
a product than any other country producing it
comparative advantage - ANS-the ability to produce a good at a lower opportunity cost than
another producer
explained: Ricardo, a country specialize in production of goods it produces most efficiently and
buy goods it's less efficient in producing from other countries, even if means buying goods from
other countries it could produce more efficiently itself
instruments of national trade policy - ANS-tariffs, quotas, subsidies, local content req, anti
dumping policy-use protect home country industry, national security, retaliation/sanctions,
protect consumers, protect human rights
distributive fairness - ANS-equality rule, equity rule (how much contribute), needs based rule
procedural fairness - ANS-process, play by rules
Smoot Hawley Act - ANS-1930: protectionism, high tariffs, volume of trade decreased, anti
immigration, world inequality increase
precautionary principle - ANS-regulatory tool designed to protect the safety of the environment
and consumers, allowing risk managers to take measures to avoid a potential hazard without
waiting until all the necessary scientific knowledge is available
Cultural (CAGE) - ANS-Different languages, ethnicities, religions, values, norms
Administrative (CAGE) - ANS-Differences in corruption, legal rules, political risk and instability,
government policies, colonial ties
, Geographic (CAGE) - ANS-Physical remoteness, lack of a common border, lack of sea or river
access, size of country, weak transportation or communication links, climates
Economic (CAGE) - ANS-Differences in consumer incomes, costs, and human and natural
resources
cycle of globalization - ANS-get to a point of high globalization where people get sick of it and
starts to decrease
purpose of IMF - ANS-maintain order in international monetary system
purpose of World Bank - ANS-promote economic development-International Bank of
Reconstruction and Development (reduce poverty in middle income poor countries),
International Development Association (solely with poorest countries)
purpose of WTO - ANS-set international standards and settle trade disputes
GATT 1947 - ANS-reduce tariffs worldwide, not easy to police, lead to WTO
first law of globalization (law of semiglobalization) - ANS-International interactions, while not
negligible, are significantly less than domestic interactions
second law of globalization (law of distance) - ANS-International interactions are dampened by
distance along cultural, administrative and geographical dimensions and are often affected by
economic distance as well CAGE
race to the bottom - ANS-Countries racing to deregulate so investors find them more attractive
for investment
The World is Flat - ANS-means that global competitive playing field is being leveled, outsource
to lower cost and drive efficiency since its increasingly easier to source work anywhere
Fair Trade Coffee - ANS-Had good intent but was grossly misrepresented/used. It was exploited
and workers/farmers of coffee never received proper payment in exchange for the price mark up
it had, lack of proper regulation, represents distributional dilemma
Bangladesh Workers - ANS-Alliance for bangladesh worker safety, didn't have a legally binding
agreement, no union involvement, firms commit to not conducting business with any bangladesh
company that does not meet approved safety standards
multinational corporation - ANS-A firm that engages in foreign direct investment in at least one
working affiliate (e.g., a factory or branch office) in another country
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