BUSN 427 Final Exam Answers

BUSN 427 Final Exam Answers
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BUSN 427 Final Exam Answers
1. Question : (TCO 1) What organization was protested in Seattle in 1999?
2. Question : (TCO 2) According to Francis Fukuyama, the collapse of
communism in eastern Europe was followed by which of the following?
3. Question : (TCO 3) Which language is most widely spoken throughout the
world?
4. Question : (TCO 3) Which theory deals with competitive advantage for
countries?
5. Question : (TCO 4) In the last 30 years, the world economy has seen
6. Question : (TCO 5) Chile is included in which of the following regional
integrations organizations?
7. Question : (TCO 6) When a firm engages in hedging it is
1. Question : (TCO 8) What are the three staffing policies available to a
multinational corporation?
2. Question : (TCO 8) In distribution strategy, what are the four main differences
between countries?
3. Question : (TCO 3) India’s caste system has been around for many years.
Explain why its influence has diminished among educated urban middle class
Indians.
4. Question : (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. The allegations against Hongfujin Precision Industries were
made by two Chinese reporters. Discuss the implications of this for other Chinese
companies.

5. Question : (TCO 3) Exports are largely responsible for China’s recent rapid
economic growth. The country, capitalizing on its cheap labor force, has focused
on converting raw materials into products that are exported to developed countries
such as the United States. In 2008, China’s trade surplus was a record $280 billion,
and its holdings of foreign exchange reserves were over $1.95 trillion. Some critics
have suggested that China is following a neomercantilist policy. Are the claims
that China is following a neomercantilist policy valid? Why or why not?
6. Question : (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?
7. Question : (TCO 7) Why did the world shift from a gold standard to fixed
exchange rates?
1. Question : (TCO 5) Concerning European Union’s progress toward creating a
single financial market, the quest started in 1999 was to have been completed by
2005, however, progress has been slowed by various factors related to the tradition
of each member country operating autonomously. By 2007, significant progress
had been made. Some 41 measures designed to create a single market were in place
and others were in the pipeline. The current issue facing the EU revolves around
the enforcement of the rules that have been established as law. Some experts
believe that it will be at least another decade before the benefits of the new rules
become apparent. Discussion of this feature can begin with the following
questions. What are the benefits of creating a single financial market in the
European Union for companies? Does it make sense for consumers?
2. Question : (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?
3. Question : (TCO 7) In May 2001, the IMF agreed to lend $8 billion to Turkey to
help stabilize its economy and halt a sharp slide in the value of its currency.
Although initially the Turkish government resisted IMF mandates on economic

policy, in 2003 the government passed an austerity budget. By 2005, significant
progress had been made and today, the country appears to be on track for recovery,
with lower inflation rates, an increase in privatization, and a budget surplus. What
led to Turkey’s financial crisis? What goals did the IMF establish as part of the
loan agreement?
4. Question : (TCO 8) MD International is an export intermediary for U.S. medical
equipment manufacturers. The company has been able to capitalize on falling trade
barriers, as well as expand healthcare programs in the Latin American region. MD
International currently represents more than 30 companies and sells to some 600
regional distributors. How does an intermediary such as MD International create
value for the manufacturers who use it to sell medical equipment in foreign
markets? Why do they want to use MD International rather than export directly
themselves?
5. Question : (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?
6. Question : (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?