IMS 3310 Exam 1 UT Dallas Actual study
with Questions and correct/verified
Answers
International Business - ANSW-Business that is carried out across national borders
Foreign Business - ANSW-The operations of a company outside its home or domestic market
International Company (IC) - ANSW-A company with operations in multiple nations
Environment - ANSW-All the forces influencing the life and development of the firm
Uncontrollable forces - ANSW-The External forces that management has no direct control over
What are the 11 Uncontrollable Forces? - ANSW--competitive
-Distributive
-Economic
-Socioeconomic
-Financial
-Legal
-Physical
-Political
-Sociocultural
-Labor
-Technological
Controllable Forces - ANSW-Internal forces that management administers to adapt to changes in the
uncontrollable forces
1. Human Resources
2. Finance
3. Production
4. Marketing
Domestic Environment - ANSW-All the uncontrollable forces originating in the home country that
surround and influence the life and development of the firm
Foreign Environment - ANSW-All the uncontrollable forces originating outside the home country that
surround and influence the firm
,-values often differ widely
-difficult to asses, especially legal and political forces
-forces interrelated
International Environment - ANSW-Interactions between domestic and foreign environmental forces, as
well as interactions between the foreign environmental forces of two countries
-Decision making is more complex
-Managers in home office overseeing subsidiaries in 10 different nations must consider not only
domestic forces but also the influence of 10 foreign national environments, both individually and
collectively since there may be some interaction
Self Reference Orientation - ANSW-Unconscious references to your own cultural values when judging
behaviors of others in environment
-Time Vs Money
Foreign Direct Investment (FDI) - ANSW-Direct investments in equipment, structures, and organizations
in a foreign country at a level sufficient to obtain significant management control;
Note: does not include mere foreign investment in stocks
Exporting - ANSW-The transportation of any domestic good or service to a destination outside a country
or region
Importing - ANSW-The transportation of any good or service into a country or region, from a foreign
origination point
economic globalization - ANSW-The tendency toward an international integration and interdependency
of good, technology, info, labor, and capital, or the process of making this integration happen
Trade Defecit - ANSW-The amount by which by which the value of imports into a nation exceeds the
value of trade exports
Imports > Exports
Trade Surplus - ANSW-Exports > Imports
Mercantilism - ANSW-An economic philosophy based on the beleif that
1. a nation's wealth depends on accumulated treasure, usually precious metals such as gold or silver
, 2. To increase wealth, government policies should promote exports and discourage imports
Absolute Advantage - ANSW-a nation's ability to produce more of a good or service than another country
for the same or lower cost of inputs
Strategic behavior theory - ANSW-suggests that strategic rivalry between firms in an oligopolistic
industry will result in firms closely following and imitating each other's international investments in
order to keep a competitor from gaining an advantage
Perfect Competition - ANSW-a market situation in which there is a sufficiently large number of well-
informed buyers and sellers of a homogeneous product, such that no individual participant has enough
power to determine the price of the product, resulting in a marketplace that is efficient in production
and allocation of products (aka example of absolute adv)
Comparative Advantage - ANSW-When one nation is less efficient than another nation in the production
of each of two goods, the less efficient nation has a comparative advantage in the production of that
good for which its absolute disadvantage is less
Internalization Theory - ANSW-Theory that to obtain a higher return on its investment, a firm will
transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open
market
Dynamic capability theory - ANSW-Theory that for a firm to successfully invest overseas, it must have not
only ownership of unique knowledge or resources, but also the ability to dynamically create, sustain, and
exploit these capabilities over time
Eclectic Theory of International Production - ANSW-Theory proposing that for a firm to invest in facilities
overseas, it must have three kinds of advantages:
1. Ownership specific
2. Location specific
3. Internalization
Exchange Rate - ANSW-the price of one currency stated in terms of another
Currency Devaluation - ANSW-A reduction in the value of a country's currency relative to other
currencies
How do exchange rates change the direction of trade? - ANSW-1. Traders must know a price in domestic
currency to determine if its better to produce locally or import
2. Countries can regain a competitive position through currency devaluation
Why undervalue currency? - ANSW-1. A weaker exchange rate makes exports more competitive and
increases demand for Chinese exports
with Questions and correct/verified
Answers
International Business - ANSW-Business that is carried out across national borders
Foreign Business - ANSW-The operations of a company outside its home or domestic market
International Company (IC) - ANSW-A company with operations in multiple nations
Environment - ANSW-All the forces influencing the life and development of the firm
Uncontrollable forces - ANSW-The External forces that management has no direct control over
What are the 11 Uncontrollable Forces? - ANSW--competitive
-Distributive
-Economic
-Socioeconomic
-Financial
-Legal
-Physical
-Political
-Sociocultural
-Labor
-Technological
Controllable Forces - ANSW-Internal forces that management administers to adapt to changes in the
uncontrollable forces
1. Human Resources
2. Finance
3. Production
4. Marketing
Domestic Environment - ANSW-All the uncontrollable forces originating in the home country that
surround and influence the life and development of the firm
Foreign Environment - ANSW-All the uncontrollable forces originating outside the home country that
surround and influence the firm
,-values often differ widely
-difficult to asses, especially legal and political forces
-forces interrelated
International Environment - ANSW-Interactions between domestic and foreign environmental forces, as
well as interactions between the foreign environmental forces of two countries
-Decision making is more complex
-Managers in home office overseeing subsidiaries in 10 different nations must consider not only
domestic forces but also the influence of 10 foreign national environments, both individually and
collectively since there may be some interaction
Self Reference Orientation - ANSW-Unconscious references to your own cultural values when judging
behaviors of others in environment
-Time Vs Money
Foreign Direct Investment (FDI) - ANSW-Direct investments in equipment, structures, and organizations
in a foreign country at a level sufficient to obtain significant management control;
Note: does not include mere foreign investment in stocks
Exporting - ANSW-The transportation of any domestic good or service to a destination outside a country
or region
Importing - ANSW-The transportation of any good or service into a country or region, from a foreign
origination point
economic globalization - ANSW-The tendency toward an international integration and interdependency
of good, technology, info, labor, and capital, or the process of making this integration happen
Trade Defecit - ANSW-The amount by which by which the value of imports into a nation exceeds the
value of trade exports
Imports > Exports
Trade Surplus - ANSW-Exports > Imports
Mercantilism - ANSW-An economic philosophy based on the beleif that
1. a nation's wealth depends on accumulated treasure, usually precious metals such as gold or silver
, 2. To increase wealth, government policies should promote exports and discourage imports
Absolute Advantage - ANSW-a nation's ability to produce more of a good or service than another country
for the same or lower cost of inputs
Strategic behavior theory - ANSW-suggests that strategic rivalry between firms in an oligopolistic
industry will result in firms closely following and imitating each other's international investments in
order to keep a competitor from gaining an advantage
Perfect Competition - ANSW-a market situation in which there is a sufficiently large number of well-
informed buyers and sellers of a homogeneous product, such that no individual participant has enough
power to determine the price of the product, resulting in a marketplace that is efficient in production
and allocation of products (aka example of absolute adv)
Comparative Advantage - ANSW-When one nation is less efficient than another nation in the production
of each of two goods, the less efficient nation has a comparative advantage in the production of that
good for which its absolute disadvantage is less
Internalization Theory - ANSW-Theory that to obtain a higher return on its investment, a firm will
transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open
market
Dynamic capability theory - ANSW-Theory that for a firm to successfully invest overseas, it must have not
only ownership of unique knowledge or resources, but also the ability to dynamically create, sustain, and
exploit these capabilities over time
Eclectic Theory of International Production - ANSW-Theory proposing that for a firm to invest in facilities
overseas, it must have three kinds of advantages:
1. Ownership specific
2. Location specific
3. Internalization
Exchange Rate - ANSW-the price of one currency stated in terms of another
Currency Devaluation - ANSW-A reduction in the value of a country's currency relative to other
currencies
How do exchange rates change the direction of trade? - ANSW-1. Traders must know a price in domestic
currency to determine if its better to produce locally or import
2. Countries can regain a competitive position through currency devaluation
Why undervalue currency? - ANSW-1. A weaker exchange rate makes exports more competitive and
increases demand for Chinese exports
