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<strong>BUSN</strong> <strong>427</strong> <strong>Final</strong> <strong>Exam</strong> (<strong>Devry</strong>)<br />
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(TCO 1) Which are factors that move the world toward more globalization?<br />
(TCO 2) What is the difference between communists and social democrats?<br />
(TCO 3) What is probably more important than culture in explaining the differences in economic<br />
growth between countries?<br />
(TCO 3) Which theory deals with competitive advantage for countries?<br />
(TCO 4) FDI tends to flow<br />
(TCO 5) Which of the following is not a member of the Asia-Pacific Economic Cooperative?<br />
(TCO 6) What common good is used in most nations to create an index for measuring purchase<br />
power parity in various nations?<br />
(TCO 8) What are the various types of countertrade available?<br />
(TCO 8) In distribution strategy, what are the four main differences between countries?<br />
(TCO 3) When McDonald’s initially entered China, it was confident that its success in other<br />
parts of the world would facilitate its success in China, but they quickly found out that the<br />
relationships and connections implied by guanxi are an essential to business success in<br />
China. McDonald’s lost an attractive store location near Tiananmen Square to a Hong Kong<br />
developer who, thanks to relationships and connections developed over the years, was able to<br />
persuade city officials to overlook the lease McDonald’s held for the property.<br />
Explain the concept of guanxi. Why is it so important to businesses operating in China? How did<br />
McDonald’s lack of guanxi raise its costs of doing business in China?
(TCO 3) In 2006, two Chinese journalists reported that the working conditions at Hongfujin<br />
Precision Industries where Apple’s iPods are produced were substandard. According to the<br />
report, not only were workers at the plant poorly paid, but they were also forced to work<br />
overtime. Apple immediately responded to the allegations and audited the factory in question.<br />
However, managers at the factory filed a defamation lawsuit against the two journalists. Despite<br />
the fact that Apple’s audit did indeed show substandard working conditions at the factory,<br />
Hongfujin did not withdraw the lawsuit. Eventually the Reporters Without Borders group took<br />
up the case for the two reporters and the lawsuit was dropped.<br />
Should Apple be responsible for ensuring that its suppliers are safeguarding the basic rights and<br />
dignity of its employees? How can Apple be sure that its suppliers do not employ sweatshop<br />
labor?<br />
(TCO 3) Exports are largely responsible for China’s recent rapid economic growth. The country,<br />
capitalizing on its cheap labor force, has focused on converting raw materials into products that<br />
are exported to developed countries such as the United States. In 2008, China’s trade surplus was<br />
a record $280 billion, and its holdings of foreign exchange reserves were over $1.95 trillion.<br />
Some critics have suggested that China is following a neomercantilist policy.<br />
Are the claims that China is following a neomercantilist policy valid? Why or why not?<br />
(TCO 4) For years, Japan has been relatively closed to significant foreign direct investment, but<br />
more recently the government has changed its policy and actually now encourages inward<br />
investment. Wal-Mart, taking advantage of this shift in policy, acquired a large Japanese retailer<br />
in 2002. Wal-Mart’s initial venture into Japan has been challenging and has forced the company<br />
to change its approach to better compete with local retailers and meet the needs of Japanese<br />
consumers.<br />
Why did Japan change its position on inward foreign direct investment? How will Wal-Mart’s<br />
investment benefit Japan?<br />
(TCO 7) Which of the following are true about the International Monetary Fund?<br />
(TCO 5) Concerning European Union’s progress toward creating a single financial market, the<br />
quest started in 1999 was to have been completed by 2005, however, progress has been slowed<br />
by various factors related to the tradition of each member country operating autonomously. By<br />
2007, significant progress had been made. Some 41 measures designed to create a single market<br />
were in place and others were in the pipeline. The current issue facing the EU revolves around<br />
the enforcement of the rules that have been established as law. Some experts believe that it will<br />
be at least another decade before the benefits of the new rules become apparent. Discussion of<br />
this feature can begin with the following questions.<br />
What are the benefits of creating a single financial market in the European Union for companies?<br />
Does it make sense for consumers?<br />
(TCO 6) In the 1980s, Caterpillar was negatively affected by a strong dollar and lost significant<br />
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<br />
currency values. More recently, a strong dollar has actually helped boost Caterpillar’s bottom<br />
line.<br />
In the 1980s, a stronger dollar hurt Caterpillar’s competitive position, but in 2008 a stronger<br />
dollar did not seem to have the same effect. What had changed?<br />
(TCO 7) After joining the European Union in 2004, Latvia established a currency board system<br />
that pegged the value of its currency to the euro. This system came under significant pressure<br />
when the effects of the financial crisis that began in the United States in 2008 spilled over into<br />
the country. Latvia was eventually forced to ask the International Monetary Fund and the<br />
European Union for assistance in order to get its financial system and economy back on track. As<br />
part of the assistance package, Latvia was required to make significant changes in its economic<br />
policy.<br />
Why did the initial effort by Latvia’s government to stabilize the country’s currency fail? Was<br />
the government attempting to stop a banking crisis or a foreign debt crisis?<br />
(TCO 8) Vellus Products is a small company that produces personal care products for dogs.<br />
Vellus Products initially began exporting when a Taiwanese business placed an order for its dog<br />
shampoo. Since then, Vellus Products has expanded its export business and today, international<br />
sales account for about half its total sales. Vellus Products now sells in 28 countries around the<br />
world.<br />
Can other small companies learn from the experiences of Vellus Products? Reflect on the tips of<br />
Vellus Products’ founder Sharon Doherty for beginning the export process.<br />
(TCO 8) By 2012, India is expected to export half a million vehicles a year. South Korea’s<br />
Hyundai is leading the charge, exporting over one third of its Indian production. Suzuki and<br />
Nissan have both entered the Indian market more recently. Both companies see the Indian market<br />
as an important component in their future production and marketing strategies.<br />
Why did Hyundai and other global automakers choose India as a production location? What<br />
makes India attractive to auto producers?<br />
(TCO 8) Microsoft is meeting the challenges of expanding into the potentially lucrative Indian<br />
market, a market where currently most people cannot afford a computer nor the Microsoft<br />
programs to run it. Microsoft has changed its highly standardized approach to markets to develop<br />
products specifically designed to meet the needs of the Indian market. In addition, the company<br />
has established local R & D operations that it hopes will generate new products for the market.<br />
How does Microsoft vary the marketing mix of its existing product offerings to gain traction<br />
with Indian customers? What else has Microsoft done to make headway in India?