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MGCR 382 FINAL EXAM QUESTIONS AND COMPLETE ANSWERS
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MGCR 382 FINAL EXAM QUESTIONSAND COMPLETE ANSWERS
Globalization - Answer - The widening set of interdependent relationships among people
from different parts of the world.
How has geographic distance shrunk? - Answer - Containerization (shipping of
containers)
- Telecommunication advancement
Containerization (shipping of containers) - Answer - Before container shipping, port
costs often accounted for nearly half of total international shipping costs.
Flat World Hypothesis - Answer - World is flattening and shrinking due to the internet
and tech.
- Increase opportunity and intensified global competition.
- Lowers logistics costs due to global value chains.
- aka globalism is good.
Spiky World Hypothesis - Answer - Economic landscape has steep peaks and valleys.
- There is an uneven distribution of innovation.
- Clusters of industry matter.
- Uneven population distribution.
- Impact on inequality varies by time period and how it is measured.
- aka Globalism is bad.
Geographic Distance - Answer - Natural resources are present in some locations and
not others.
- Talent is concentrated in some locations.
- Transportation costs are not uniform even within a country.
- Communications and coordination costs rise with global operations.
Economic Distance - Answer - Differences in consumer incomes, costs, and human and
natural resources.
- Purchasing power varies between and within countries, if big enough can be a
,disadvantage.
- Wages vary between countries, a large difference can be an advantage
Largest firms ranked by market cap - Answer - Tech firms rank high
Largest firms ranked by total sales - Answer - Petroleum firms ranks high
Largest firms ranked by assets - Answer - Financial institutions rank high
5 Myths of Globalization - Answer - Globalization is new
- Globalization is extensive
- Globalization is unavoidable
- Globalization erases geo distance
- Globalization erases econ distance.
3 Ways to Measure Income - Answer - National accounts (GDP)
- Household income surveys
- Satellite nightime luminosity.
- There could be discrepancies between the measures.
What motivates firms to go global? - Answer - Expand sales
- Aquire resources
- Diversify to reduce risks
- To learn (acquiring knowledge)
Is it possible to have a decline in absolute level of poverty along with increased
inequality? - Answer - Yes
Partial Globalization Perspective - Answer - High portion of subsidiaries of top
multinational corporations tend to be located in home country or in home regional
trading block.
- Foreign-born people constitute on average only 3% of the population of the top 50 most
populous countries.
Trends in World Distribution of Income - Answer - Decrease in absolute and relative
amount of people below poverty line.
- There have been regional differences in shift in absolute poverty.
- Increased poverty in sub-Saharan Africa
,- Decline in Asia, ME and SA
4 Income Levels - Answer - Level 1 = $2/day
- Level 2 = $5.50/day (MOST PEOPLE)
- Level 3 = $8/day
- Level 4 = $32/day
International Business - Answer - Consists of all commercial transactions that take
place between two or more countries.
- Involves two or more set of laws, cultures and currency.
Modes of IB Transactions - Answer - Goods and service imports and exports.
- Investments and financial capital flows.
Institutional and Physical Factors of IB - Answer - Geographic influences
- Cultural factors
- Political policies and legal practices
- Economic forces
Competitive Factors of IB - Answer - Competitive product strategy
- Company resources and experience
- Competitors in each market.
7 Forces Driving Globalization - Answer - Increase in and application of technology
- Liberalization of cross-border trade and resource movements
- Development of services that support international business
- Growth of consumer pressures
- Increase in global competition.
- Changes in political situations and government policies.
- Expansion of cross-national cooperation.
Potential Costs of Globalization - Answer - Threats to national sovereignty
- Economic growth and environmental stress
- Growing income and inequality and personal stress.
, Forms of Exporting - Answer - Indirect
- Direct
- Intra-corporate transfers
Advantages of MNC - Answer - Knowledge
- Ability to leverage existing reputation, brand.
- Larger size leads to scale and scope economies.
- Increased bargaining power.
- Lower financing costs due to size and lower credit risk due to different markets.
- Ability to locate less expensive resources.
- Diversify risk
Tax Inversion - Answer - Shifting the place of incorporation to another country which has
low or no corporate income tax.
- Does not undergo a change in majority ownership
Tax-Spinoff - Answer - A division of a previously inverted US company becomes
independent.
Disadvantages of MNC - Answer - New risks
- Host country regulations
- Different legal system
- Operational difficulties
- Cultural differences
- Coordination costs
Why should firms internationalize? - Answer - They are good at something that "travels"
well.
- The industry is global in scope
- Foreign markets are growing faster than home (meh)
- Everyone else is doing it (meh)
- Foreign firms are threatening you in home market (meh)
Why do multinational firms exist? - Answer -
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