Devry BUSN427 Final exam 2014

Page 1

Question 1.1.(TCO 1) For emerging
nations, what is the level of income per capita where greater
environmental protection causes pollutant levels to decline? (Points : 5)

$2,500
$8,000
$15,500
$20,000

Question 2.2.(TCO 2) According to
Francis Fukuyama, the collapse of communism in eastern Europe was
followed by which of the following? (Points
: 5)

The new world order
The end of history
The universalization of
Western democracy
None of the above
All of the above

Question 3.3.(TCO 3) The values and
norms of culture are determined by which of the following? (Points : 5)

Religion
News media
Freedom of travel
Geography

Question 4.4.(TCO 3) Which theory deals
with competitive advantage for countries? (Points
: 5)

Herckscher-Ohlin
Adam Smith’s Wealth of
Nations
Product Life-Cycle Theory
The Leontief Paradox
None of the above

Question 5.5.(TCO 4) In the last 30
years, the world economy has seen (Points
: 5)

a marked increase in both the
flow and stock of FDI.
a slowing of FDI overall.
FDI grow but more slowly than
world trade.
a shift away from free-market
economies.

Question 6.6.(TCO 5) Chile is included
in which of the following regional integrations organizations? (Points : 5)

MERCCOSUR
Andean Community
NAFTA
APEC
None of the above

Question 7.7.(TCO 6) When a firm engages
in hedging it is (Points : 5)

ensuring against a risk in
the foreign exchange.
violating a law on foreign
speculations.
in danger of violating the
Foreign Corrupt Practices Act.
investing in a hedge fund to
maximize its return to shareholders.

Page 2

Question 1. 1. (TCO 8) What are the various types of
countertrade available? (Points : 10)

Question 2. 2. (TCO 8) In distribution strategy, what are
the four main differences between countries? (Points : 10)

Question 3. 3. (TCO 3) Are the concerns of those opposing
Turkey’s admittance to the European Union well-founded? Can Islam, capitalism,
and globalization coexist? (Points : 20)

Question 4. 4. (TCO 3) In 2006, two Chinese journalists reported
that the working conditions at Hongfujin Precision Industries where Apple’s
iPods are produced were substandard. According to the report, not only were
workers at the plant poorly paid, but they were also forced to work overtime.
Apple immediately responded to the allegations and audited the factory in
question. However, managers at the factory filed a defamation lawsuit against
the two journalists. Despite the fact that Apple’s audit did indeed show
substandard working conditions at the factory, Hongfujin did not withdraw the
lawsuit. Eventually the Reporters Without Borders group took up the case for
the two reporters and the lawsuit was dropped.

Should Apple be responsible for ensuring that its suppliers
are safeguarding the basic rights and dignity of its employees? How can Apple
be sure that its suppliers do not employ sweatshop labor? (Points : 20)

Question 5. 5. (TCO 3) Bangladesh, a very poor country, has
been able to grow even during the most recent global recession thanks to its
strong textile industry. Bangladesh, with its low wages, large investments in
textile technology, and strong network of supporting industries is now one of
the world’s lowest cost producers of textiles. The country has been able to
capitalize on these advantages to increase its exports of textiles to $10.7
billion, up from $9.3 billion in 2007.

How has Bangladesh benefitted from free trade and
globalization? What did the end of the quota system mean for the country?
(Points : 20)

Question 6. 6. (TCO 4) Telefonica is a Spanish
telecommunications firm. For decades, Telefonica had operated as a typical
state-owned enterprise, but privatization and deregulation changed that path in
the 1990s. Telefonica began to aggressively pursue expansion opportunities in
Latin America where it quickly became the number one or two player in nearly
every country. Later, Telefonica turned its sights on Europe where its
acquisitions helped transform the company into the second biggest mobile phone
operator in the world.
What changes in political and economic environment allowed
Telefoncia to start expanding globally? Why did Telefonica initially focus on
Latin America? Why was it slower to expand in Europe even though Spain is a
member of the European Union? (Points : 20)

Question 7.7. (TCO 7) Why did the world shift from a gold
standard to fixed exchange rates? (Points : 5)
Gold is
expensive to ship around the world.
A more
convenient means of financing world trade was needed.
The volume of
world trade increased.
All of the
above

Page 3

Question 1. 1. (TCO 5) Under the North American Free Trade
Agreement (NAFTA), Mexican truckers were to have been allowed to drive their
trucks directly into the United States and avoid the costly and time-consuming
border unloading and loading that took place prior to the agreement. However,
fearing job losses in the industry, the U.S. Teamsters Union rigorously opposed
the legislation. Although the group ultimately lost its fight, the United
States still did not give Mexican truckers freedom to deliver their goods,
prompting Mexico to institute retaliatory measures affecting $2.4 billion of
goods exported from the United States.

Why did the United States respond to the concerns of the
Teamsters? Why are those affected by Mexico’s retaliatory tariffs not lobbying
congress for relief? Should the United States protect the Teamsters at the
expense of agricultural exporters in California and Washington? (Points : 20)

Question 2. 2. (TCO 6) In the 1980s, Caterpillar was
negatively affected by a strong dollar and lost significant market share to
Japanese competitor Komatsu. The situation prompted Caterpillar to revise its
global strategy and by the 2000s, the company was in a much better position to
deal with volatile currency values. More recently, a strong dollar has actually
helped boost Caterpillar’s bottom line.

In the 1980s, a stronger dollar hurt Caterpillar’s
competitive position, but in 2008 a stronger dollar did not seem to have the
same effect. What had changed? (Points : 20)

Question 3. 3. (TCO 7) In 2008, oil prices reached new highs
as a result of higher than expected demand, tight supplies, and perceived
geopolitical risks. Because oil is priced in dollars, oil producers have seen
their dollar reserves increase significantly. Now, speculation abounds as to
what will happen to the petrodollars. Some believe that the dollars will go
toward public infrastructure projects, others think that it is more likely that
investments will be made in dollar denominated assets like U.S. bonds, stocks,
and real estate, or in nondollar denominated assets such as European or
Japanese bonds and stocks.

With oil prices at record highs, there is significant speculation
as to what oil producing states will do with the dollars they are earning.
Discuss how a decision to invest in nondollar denominated assets could affect
the value of the U.S. dollar. (Points : 30)

Question 4. 4. (TCO 8) Vellus Products is a small company
that produces personal care products for dogs. Vellus Products initially began
exporting when a Taiwanese business placed an order for its dog shampoo. Since
then, Vellus Products has expanded its export business and today, international
sales account for about half its total sales. Vellus Products now sells in 28
countries around the world.

Can other small companies learn from the experiences of
Vellus Products? Reflect on the tips of Vellus Products’ founder Sharon Doherty
for beginning the export process. (Points : 30)

Question 5. 5. (TCO 8) Boeing made the decision to outsource
much of the production of the 787 in the hopes of significantly reducing the
time to get the product to market. Boeing also anticipated that its outsourcing
strategy would allow it to generate additional sales from the countries that
were partners in the process and reduce its costs and risks. Although Boeing’s
strategy worked for some components, for other parts the strategy was a
disaster. Suppliers were late and some produced poor-quality parts, forcing
Boeing to commit additional resources to the project.

What are the benefits to Boeing of outsourcing so much work
on the 787 to foreign suppliers? What are the potential risks? Do the benefits
outweigh the risks? (Points : 30)

Question 6. 6. (TCO 8) By 2015, Ford hopes to compete in
North America, Europe, and Asia by offering several global models including the
Fiesta, the Fusion, and the Mondeo. The company, which refers to its new
strategy as One Ford, anticipates that its global models will share the same
components and looks and be positioned in a similar way in each market in which
they are sold.

What is behind Ford’s One Ford vision? What is the company
hoping to accomplish with this strategy? (Points : 30)