D080 QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS

Sure Start is starting a new division for rechargeable batteries in different parts of the world. What was the globalization driver of this decision? ✔✔Competition drivers are about entering new markets to beat competi ...

Sure Start is starting a new division for rechargeable batteries in different parts of the world. What was the globalization driver of this decision? ✔✔Competition drivers are about entering new markets to beat competitors. Sure Start has identified a market that does not have a lot of competition since it is a fairly new market. Which type of globalization is represented by Sure Start expanding into South America, Europe, and Asia? ✔✔Economic globalization is the globalization of production, sales, and finance activities in international markets around the world. Which antiglobalization argument could lead to Sure Start continuing to maintain its current factories instead of moving them to Asia? ✔✔Labor in Asia can be cheaper than in NC, and critics argue that outsourcing manufacturing could lead to job loss in the home country. Which action should the U.S. government take to encourage Sure Start to keep electric battery production in the country? ✔✔Imposing tariffs on batteries made in Vietnam will make them more expensive.Which economic system facilitates the global expansion of Sure Start? ✔✔The law of supply and demand applies to the market economy, and the goods are privately owned. Government interference is minimum. Which type of risk will a company reduce if they offer a warranty to the purchasers of the battery in case of failure? ✔✔Offering a warranty protects the company from the legal risk of a product not performing to standard. Which aspect of the International Monetary Fund (IMF) will assist the newly elected leader in paying the deficit in U.S. dollars, if agreed on by both countries? ✔✔The IMF's purpose is to provide a way for countries to easily exchange money, provide financial help to its members, and supervise international economic policies. Which critical distinction should Country A make when choosing between the World Bank and the International Monetary Fund (IMF) to improve the country's highways? ✔✔The World Bank is directly associated with this type of development project. Which benefit to the newly-elected leader in Country A stems from using the World Bank to meet a campaign promise? ✔✔The World Bank provides funds through low interest or interestfree loans, grants, and credits to help the country develop its infrastructure.Why should the newly-elected leader of Country A be careful when working with the World Bank to eliminate the nation's trade deficit? ✔✔Because of the voting power highly-developed countries have on World Bank policies Why should the newly-elected leader of Country A use the World Trade Organization (WTO) to form favorable trade agreements? ✔✔To receive help building international exchange capacity. One of the functions of the WTO is to help developing countries build trade and international exchange capacity so they can have a presence in the international markets. Which situation describes how Sure Start is applying the absolute advantage theory? Adding an office in the South American market to help manage the business throughout the continent Expanding into Europe and Asia to supply batteries to electric car manufacturers in those markets Moving production of the batteries used in electric cars to Vietnam where labor is less expensive Establishing a European headquarters in Germany and moving key leaders to that country ✔✔The absolute advantage theory states that a country that can produce a product cheaper or faster than another country should focus on that advantage. Moving production of the batteriesused in electric cars from the United States to Vietnam where labor is less expensive applies the absolute advantage theory. Which benefit will Sure Start gain from opening the factory in Vietnam? They will achieve economies of scale in the production of rechargeable batteries. It will allow them to move to the production of electric cars in the near future. The U.S. government will give them subsidies for producing in Vietnam. The move will allow them to be fully integrated in production of rechargeable batteries. ✔✔Because the factory in Vietnam will only produce rechargeable batteries, the company will be able to benefit from minimized production costs associated with lower labor and dedicated manufacturing operations as they scale up to mass production. Which action of Sure Start represents the application of the global strategic rivalry theory? Launching a new research division to focus on a rechargeable battery for use in electric cars Adding an office in the South American market to help manage the business throughout the continent Maintaining production with no investment in batteries for use in traditional vehicles Expanding into Europe and Asia to supply batteries to electric car manufacturers in those markets ✔✔Global strategic rivalry theory is about how multinational companies need to gain acompetitive advantage against other multinational companies in their industry through activities such as research and development. What will be the effect of the German trade policy on Sure Start's rechargeable batteries in the first year? Sales to German automakers will increase. Sure Start's profit for rechargeable batteries sold in Germany would increase. If the German automakers meet the requirement, there will be no impact. Sure Start will increase prices to German automakers. ✔✔As long as German automakers meet the requirement that 75% of parts are produced domestically, there would be no impact to Sure Start's rechargeable battery imports. If the German automakers are unable to meet the requirement, the automakers will pay tariffs. What impact will the German Transportation Agency's decision to halt imports of rechargeable batteries have on Sure Start in that country? It could decrease the cost of sales in Germany. It could decrease competitive intensity. It could prevent future sales and operations. It could restrict U.S. automobile imports. ✔✔The agency is deciding if it should halt imports of rechargeable batteries until the exact cause is determined. This could affect Sure Start's ability toestablish manufacturing in the country. If the batteries are the cause of the fires, this could prevent Sure Start from selling in Germany. What is one option for the Chinese company to make a foreign direct investment (FDI)? ✔✔Create a joint venture with a furniture company in Indonesia. A joint venture with a foreign company is an option for making a foreign direct investment. What is a benefit for making a foreign direct investment (FDI)? ✔✔The country chosen by the Chinese company will increase jobs for local people. A benefit of foreign direct investment is an increase in jobs for the country where the investment is made. Which advantage will the company gain over other Chinese furniture companies if it becomes a multinational business through foreign direct investment? ✔✔It will be able to avoid the tariffs that host countries have placed on furniture imports. Because the U.S. has placed tariffs on furniture produced in China, moving production to another country that has lower tariffs or that is tariff free will benefit the company.Which stage of regional economic integration is represented by the North American Free Trade Agreement (NAFTA) that benefits the U.S. furniture company's production of covers in Mexico? ✔✔Trade bloc. NAFTA is an example of a trade bloc in which members reduce or remove all trade barriers between themselves, but can have trade barriers with nonmembers. What is a drawback of the U.S. furniture company having its cut and sew operation in Mexico? ✔✔The U.S. company may forgo trade with another company producing covers for less because they are not part of NAFTA. This drawback can lead to doing business with more expensive producers. Which economic benefit will result in the company's decision to move operations to the U.S. or Mexico? ✔✔Eliminating tariffs and duties. If the Chinese company moved its operations to the U.S. or Mexico, it would result in the elimination of tariffs and duties due to the NAFTA regional integration and trading agreement that reduces trade barriers between those nations.How will the Chinese company recognize that the currency exchange environment is favorable for establishing U.S. operations? ✔✔The dollar is stronger than Chinese currency. A stronger U.S. dollar would mean that the Chinese company would receive more of its own currency in the exchange market, which would indicate that the market for the Chinese furniture in the U.S. would be more profitable and more favorable. What effect does a command economy have on the process of globalization? ✔✔The government is less flexible, so the globalization process is stopped. A command economy results in a less flexible economy, so the globalization is halted. There is no market force to drive globalization forward. A company is conducting a legal risk analysis for a country that has a civil law system. Which statement accurately characterizes this legal system? ✔✔It is based on a detailed set of laws that form a code. The civil legal system is based on a set of laws that form a code and it is based on how the law is applied to the facts.Which fact should a company opening its operations in the U.S. state of Louisiana note? ✔✔The state has a mixed law system. The state of Louisiana follows a mix of both the civil and common law system, whereas the U.S. on the whole follows a common law system. Which core principle of the World Trade Organization supports equality among member nations and helps fight discrimination among them? ✔✔Most-favored-nation (MFN) status This principle states that countries must trade without discrimination for other countries. A car manufacturer purchases raw materials from Country A, manufactures the product in Country B, and has a sales force in Country C. Which term reflects this production process that international agreements now enable? ✔✔Value chain The value chain is the term for the process that describes how the inputs create the outputs of an organization.Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products. What is the effect, if any, on the domestic prices of these products? ✔✔Increases Restriction can serve to increase the domestic prices of the same products. How do governments help companies offset the cost of manufacturing domestically? ✔✔Subsidies Subsidies are monies given to industry to keep prices competitive on a global level. A business invests in an assembly plant located near a port in a foreign country. The business will import parts and raw materials for final assembly as a finished product, then export these products for international sales. The business receives tax incentives. What is the name for the geographic area where these products are assembled? ✔✔Export processing zones (EPZs)Export processing zones are distinct geographic areas usually located near a port, where parts are imported for final assembly into a finished product that is then exported back out of the country. Based on local governmental regulations, such investments usually are provided a tax incentive. A multinational corporation has manufacturing facilities in many Asian countries due to cheaper labor. Which strategy is the corporation using? ✔✔Acquisition of resources Resource acquisition will offer more capital, access to raw materials, and technology. A firm in Country A exports products to Country B. The currency in Country B is strong relative to the currency in Country A. What does this mean for the firm? ✔✔More valuable export sales When the currency from the point of sale in Country B is converted into the currency of Country A, it will buy more of that currency. Which organizational structure is used by global firms and allows employees to share information more readily across assignment boundaries? ✔✔Matrix A multinational corporation (MNC) headquartered in Belgium makes and sells dark chocolate truffles in its own branded retail stores in Paris, Geneva, and London.What is a result of using this international business strategy? ✔✔Product design efficiencies The MNC headquartered in Belgium makes and sells one product in its own branded retail stores. The MNC will be able to achieve product design efficiencies because it is only selling one product and can create economies of scale. A company is thinking about including online shopping to improve its ability to reach global markets. It is closely examining the challenges associated with using these web strategies before adopting the new process. Which challenge is associated with this change? ✔✔Communication barriers with global audiences Reaching more people in global markets will cause challenges in communication with diverse global audiences, especially if the local language and images must change with each country. A company desires to scale its international business by taking over established organizations in the intended markets. Which strategy will allow this process to occur quickly? ✔✔Acquisition The chief executive officer (CEO) of a company wants to expand into the global market and has considered the costs and benefits of a variety of business strategies that would enable this goal, including direct foreign investment. After careful analysis, the CEO recommends licensing localdistributors as the best option for the company to achieve this expansion. What is an advantage of using this approach? ✔✔Lower financial risk A company is reviewing the advantages and disadvantages of using mass production and packaging for products in large quantities. Which outcome will result if this approach is used? ✔✔Reduce marketing costs while leveraging power and scope A few employees in a company are newly assigned to work in China to plan effective social media campaigns. What should the employees know about media in China? ✔✔Sites are controlled by Chinese companies. A major global technology company headquartered in France assigns a promising plant manager from its India operations to head a manufacturing plant in the United States. What is an advantage for the company of this workforce management approach? ✔✔Increases cooperation and coordination across the company Which national cultural dimension in global business refers to how a culture ranks on values of assertiveness and materialism? ✔✔MasculinityWhich national cultural dimension in global business refers to the degree of freedom that societal standards give to people in satisfying their needs? ✔✔Indulgence An international company has employees with complementary skill sets work together toward a mutual goal. What is the organizational structure of this company? ✔✔Teams Which departmentalization is based on the primary roles performed within an organizational unit, such as marketing, finance, production, and sales? ✔✔Functional A business has decided to engage in foreign direct investment (FDI). Which reason should influence the business to take this step? ✔✔To take advantage of lower costs in the host country A chief executive officer (CEO) wants to grow the company by investing in foreign countries. The CEO is considering multiple entry strategies to accomplish this objective but has concerns about growth in foreign markets, especially the costs, risks, and entry time. The CEO decides to eliminate any entry strategy that fails to control these factors. Which strategy should the CEO eliminate? ✔✔Greenfield ventureA company desires to scale its international business by taking over established organizations in the intended markets. Which strategy will allow this process to occur quickly? ✔✔Acquisition A company looks to capture foreign markets in mature economies where the total goods and services provided in a one-year period is high. Which type of information is the company including in its strategy prior to entering the foreign markets? ✔✔Gross domestic product How is global business marketing affected by cultural dimensions? ✔✔Through consumer preferences A few employees in a company are newly assigned to work in China to plan effective social media campaigns. What should the employees know about media in China? ✔✔Sites are controlled by Chinese companies. What is the strategic importance of ethnocentrism in international business? ✔✔Places one's own culture as the most important cultural factor A major global technology company headquartered in France assigns a promising plant manager from its India operations to head a manufacturing plant in the United States. What