BUSN 427 Final Exam (NEW)

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BUSN 427 Final Exam (NEW)

1.Question :(TCO 1) Which are factors that move the world toward more globalization?
Student Answer:A. Wide spread use of English as a common language
B. Decline in barriers for capital, services & goods
C. Technology change
D. All of the above
E. Only A & B
None of the above
Question 2.Question :(TCO 2) Which legal system is used in Australia?
Student Answer:Common Law
Civil Law
Theocratic Law
Law of the Bush
Question 3.Question :(TCO 3) Which language is most widely spoken throughout the world?
Student Answer:Chinese
None of the above
Question 4.Question :(TCO 3) Which theory deals with competitive advantage for countries?
Student Answer:Herckscher-Ohlin
Adam Smith’s Wealth of Nations
Product Life-Cycle Theory
The Leontief Paradox
None of the above

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Question 5.Question :(TCO 4) In the last 30 years, the world economy has seen
Student Answer:a marked increase in both the flow and stock of FDI.
a slowing of FDI overall.
FDI grow but more slowly than world trade.
a shift away from free-market economies.
Question 6.Question :(TCO 5) A common currency was created by which law?
Student Answer:The Treaty of Rome
Maastricht Treaty
The Single European Act
Question 7.Question :(TCO 6) When a firm engages in hedging it is
Student Answer:ensuring against a risk in the foreign exchange.
violating a law on foreign speculations.
in danger of violating the Foreign Corrupt Practices Act.
investing in a hedge fund to maximize its return to shareholders.



1.Question :(TCO 8) What are the three staffing policies available to a multinational corporation?
Question 2.Question :(TCO 8) Explain what determines the mix between push and pull strategies and what is emphasized in each.
Question 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.
requires more discussion of caste system and educated, urban middle class Indians.
Question 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.
Question 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?
Question 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.

Telefoncia used acquisitions rather than greenfield ventures as an entry strategy. Why do you think this has been the case? What are the potential risks associated with this entry strategy?

Question 7.Question :(TCO 7) Which of the following are true about the International Monetary Fund?
Student Answer:It is an arm of the World Bank to provide loans.
It was formed to minimize monetary cooperation around the world.
It is a part of the United Nations.
It was created to move from the gold standard to floating rates for the nations.


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?
Question 2.Question :(TCO 6) Volkswagen saw a 95% drop in its fourth quarter profits after an unexpected surge in the value of the euro left the company with losses of $1.5 billion. Traditionally, Volkswagen, which produced its vehicles in Germany and exported them to the United States, hedged some 70% of its foreign exchange exposure. However, in 2003 the company made the unfortunate decision to hedge just 30% of its exposure.

Volkswagen saw its fourth quarter 2003 profits tumble 95% after losing €1.2 billion in currency losses after the euro rose relative to the U.S. dollar. Why was Volkswagen so vulnerable to the change in the value of the euro relative to the U.S. dollar?

Question 3.Question :(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?

Question 4.Question :(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.

Why did Vellus Products choose Taiwan for its first export sales? How important do you think the assistance provided by the Department of Commerce has been for Vellus Products’ future export sales?

Question 5.Question :(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.
Most large automakers have already established or are planning to establish production facilities in India. What challenges do you see for these companies? What strategic changes might be required?
Question 6.Question :(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.
Why does Microsoft’s traditional strategy of one-size-fits-all not work well in emerging markets such as India? What is different about these markets? How do customers differ both in their characteristics and in the way they use technology?

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