DEVRY BUSN 427 Final Exam

DEVRY BUSN 427 Final Exam
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TCO 1) Which are factors that move the world toward more globalization?
(TCO 2) What is the difference between communists and social democrats?
(TCO 3) What is probably more important than culture in explaining the differences in
economic growth between countries?
(TCO 3) Which theory deals with competitive advantage for countries?
(TCO 4) FDI tends to flow
(TCO 5) Which of the following is not a member of the Asia-Pacific Economic Cooperative?
(TCO 6) What common good is used in most nations to create an index for measuring
purchase power parity in various nations?
(TCO 8) What are the various types of countertrade available?
(TCO 8) In distribution strategy, what are the four main differences between countries?
(TCO 3) When McDonald’s initially entered China, it was confident that its success in other
parts of the world would facilitate its success in China, but they quickly found out that the
relationships and connections implied by guanxi are an essential to business success in
China. McDonald’s lost an attractive store location near Tiananmen Square to a Hong Kong

developer who, thanks to relationships and connections developed over the years, was able
to persuade city officials to overlook the lease McDonald’s held for the property.
Explain the concept of guanxi. Why is it so important to businesses operating in China?
How did 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
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?
(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?
(TCO 4) For years, Japan has been relatively closed to significant foreign direct investment,
but more recently the government has changed its policy and actually now encourages
inward investment. Wal-Mart, taking advantage of this shift in policy, acquired a large
Japanese retailer in 2002. Wal-Mart’s initial venture into Japan has been challenging and
has forced the company to change its approach to better compete with local retailers and
meet the needs of Japanese consumers.
Why did Japan change its position on inward foreign direct investment? How will Wal-
Mart’s investment benefit Japan?
(TCO 7) Which of the following are true about the International Monetary Fund?
(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?
(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?
(TCO 7) After joining the European Union in 2004, Latvia established a currency board
system that pegged the value of its currency to the euro. This system came under
significant pressure when the effects of the financial crisis that began in the United States in
2008 spilled over into the country. Latvia was eventually forced to ask the International
Monetary Fund and the European Union for assistance in order to get its financial system
and economy back on track. As part of the assistance package, Latvia was required to make
significant changes in its economic policy.
Why did the initial effort by Latvia’s government to stabilize the country’s currency fail?
Was the government attempting to stop a banking crisis or a foreign debt crisis?
(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.
(TCO 8) By 2012, India is expected to export half a million vehicles a year. South Korea’s
Hyundai is leading the charge, exporting over one third of its Indian production. Suzuki and
Nissan have both entered the Indian market more recently. Both companies see the Indian
market as an important component in their future production and marketing strategies.
Why did Hyundai and other global automakers choose India as a production location? What
makes India attractive to auto producers?
(TCO 8) Microsoft is meeting the challenges of expanding into the potentially lucrative
Indian market, a market where currently most people cannot afford a computer nor the
Microsoft programs to run it. Microsoft has changed its highly standardized approach to
markets to develop products specifically designed to meet the needs of the Indian market.
In addition, the company has established local R & D operations that it hopes will generate
new products for the market.
How does Microsoft vary the marketing mix of its existing product offerings to gain traction
with Indian customers? What else has Microsoft done to make headway in India?