IMS 3310 Exam 1 Actual study set with
Questions and correct/verified Answers
pros of globalization - ANSW--better access to goods and services
-potential for increased trade and competition (drive prices down)
-increased foreign capital and technology
-cultural integration
-working to solve unemployment and poverty
-creates jobs
cons of globalization - ANSW-- strain on natural resources
- the rich get richer; the poor get poorer
- unethical issues arise
- outsourcing and the loss of jobs
-multinational corps have increasing influence on political decisions
-incursion of communicable diseases around the globe
what is globalization? - ANSW-the process in which people, ideas, and goods spread throughout the
world, spurring more interaction and integration between the world's cultures, governments, and
economies
What are the drivers of globalization? - ANSW-political: progressive reduction of barriers to trade and
investment and privatization of industries
technological: increased flow of ideas and information. coordinating supply chains worldwide
market: companies establish foreign operations and inc. competition lowers prices
cost: cuts in taxes and cost of goods sold and subsidies for R&D to inc. investment
competitive:
Apple in China - ANSW--more productivity and skilled workers in china
-lack of loyalty for american companies (more profit driven)
-apple's FDI in Foxconn
-chinese gov incentives
-integrated supply chains
-potential market for finished product
Nestle in Brazil - ANSW--expanded for new market opportunity, ability to influence gov, and change
dynamics of agriculture
, -increasing sales jobs
-opportunity for more revenue for nestle
-cheap and widely available food
-loss of dietary diversity
-obesity and health issues
-nestle aggressively focuses on sugary products
Internalization theory - ANSW-by investing in a foreign subsidiary or engaging in FDI rather than
outsourcing or exporting, a firm is able to send knowledge across borders while maintaining this
knowledge within the firm, thereby creating a larger ROI
Monopolistic Advantage Theory - ANSW-explains why firms engage in FDI. FDI gives firms
MONOPOLISTIC advantages not available to local firms. these advantages are found in economies of
scale/scope, superior knowledge, management and marketing practices and advanced technologies not
available to local firm. if these advantages outweigh liabilities (FDI is good)
Eclectic theory of production - ANSW-theory that asks "are we better off engaging in FDI or should we
simply license or outsource?" similar to internalization BUT asks do we have an OWNERSHIP advantage,
LOCATION advantage, and INTERNALIZATION advantage (OLI advantage)
Dubai Case Study - ANSW-strategy: pull people to them through tourism and infrastructure
develop a diversified economy
focus on political stability/religious tolerance
Housing Bubble - ANSW-A rapid increase in the value of houses followed in a sharp decline in their value
dot.com bubble - ANSW-a speculative bubble from 1995-2000 in which the stock market grew super fast
in the area of new information technologies on the world wide web, before crashing in 2000.
subprime lending - ANSW-Mortgages made available to people who could not qualify for regular
conventional, or prime, mortgages. They always entail higher fees and/or rates to make up for a higher
risk of default.
ethnocentrism - ANSW-the belief that your own culture is superior to other cultures
self-reference criterion - ANSW-unconscious reference to your own cultural values when judging
behaviors of others in a new and different environment
-biggest cause of international business blunders
foreign direct investment vs portfolio investment - ANSW-fdi: direct investments in equipment,
structures, and organizations in a foreign country at a level sufficient to obtain significant management
control
Questions and correct/verified Answers
pros of globalization - ANSW--better access to goods and services
-potential for increased trade and competition (drive prices down)
-increased foreign capital and technology
-cultural integration
-working to solve unemployment and poverty
-creates jobs
cons of globalization - ANSW-- strain on natural resources
- the rich get richer; the poor get poorer
- unethical issues arise
- outsourcing and the loss of jobs
-multinational corps have increasing influence on political decisions
-incursion of communicable diseases around the globe
what is globalization? - ANSW-the process in which people, ideas, and goods spread throughout the
world, spurring more interaction and integration between the world's cultures, governments, and
economies
What are the drivers of globalization? - ANSW-political: progressive reduction of barriers to trade and
investment and privatization of industries
technological: increased flow of ideas and information. coordinating supply chains worldwide
market: companies establish foreign operations and inc. competition lowers prices
cost: cuts in taxes and cost of goods sold and subsidies for R&D to inc. investment
competitive:
Apple in China - ANSW--more productivity and skilled workers in china
-lack of loyalty for american companies (more profit driven)
-apple's FDI in Foxconn
-chinese gov incentives
-integrated supply chains
-potential market for finished product
Nestle in Brazil - ANSW--expanded for new market opportunity, ability to influence gov, and change
dynamics of agriculture
, -increasing sales jobs
-opportunity for more revenue for nestle
-cheap and widely available food
-loss of dietary diversity
-obesity and health issues
-nestle aggressively focuses on sugary products
Internalization theory - ANSW-by investing in a foreign subsidiary or engaging in FDI rather than
outsourcing or exporting, a firm is able to send knowledge across borders while maintaining this
knowledge within the firm, thereby creating a larger ROI
Monopolistic Advantage Theory - ANSW-explains why firms engage in FDI. FDI gives firms
MONOPOLISTIC advantages not available to local firms. these advantages are found in economies of
scale/scope, superior knowledge, management and marketing practices and advanced technologies not
available to local firm. if these advantages outweigh liabilities (FDI is good)
Eclectic theory of production - ANSW-theory that asks "are we better off engaging in FDI or should we
simply license or outsource?" similar to internalization BUT asks do we have an OWNERSHIP advantage,
LOCATION advantage, and INTERNALIZATION advantage (OLI advantage)
Dubai Case Study - ANSW-strategy: pull people to them through tourism and infrastructure
develop a diversified economy
focus on political stability/religious tolerance
Housing Bubble - ANSW-A rapid increase in the value of houses followed in a sharp decline in their value
dot.com bubble - ANSW-a speculative bubble from 1995-2000 in which the stock market grew super fast
in the area of new information technologies on the world wide web, before crashing in 2000.
subprime lending - ANSW-Mortgages made available to people who could not qualify for regular
conventional, or prime, mortgages. They always entail higher fees and/or rates to make up for a higher
risk of default.
ethnocentrism - ANSW-the belief that your own culture is superior to other cultures
self-reference criterion - ANSW-unconscious reference to your own cultural values when judging
behaviors of others in a new and different environment
-biggest cause of international business blunders
foreign direct investment vs portfolio investment - ANSW-fdi: direct investments in equipment,
structures, and organizations in a foreign country at a level sufficient to obtain significant management
control
