Global Business Final
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Questions and Answers

Which countries were noted as early New World entrants in the wine industry during the 2000s?

  • Australia and California (correct)
  • China and Spain
  • South Africa and New Zealand
  • Chile and Argentina

What major change occurred in the global wine market's dynamics by 2009?

  • Declining wine exports to Asia
  • Stable production levels in New Zealand
  • Rising domestic consumption in Europe
  • Increased global exports from 11% to 32% of production (correct)

What is brand stretching in the context of alcohol marketing?

  • A focus on traditional branding strategies
  • Extending brand to non-alcoholic products (correct)
  • Minimizing marketing efforts
  • Creating a single product line

What trend was observed in traditional wine consumption in Europe from 1961 to 2009?

<p>Decline of 50%-59% in per capita consumption (D)</p> Signup and view all the answers

Which organization is mentioned as providing institutional support in wine marketing for New Zealand?

<p>Wine Institute of New Zealand (C)</p> Signup and view all the answers

Why might brand dilution occur in alcohol brand extensions?

<p>From failed extensions into unrelated categories (C)</p> Signup and view all the answers

How did China emerge in the global wine market by 2009?

<p>Its consumption rose to 7.6% of global consumption. (C)</p> Signup and view all the answers

What challenges did the New World wine producers face in maintaining leadership?

<p>Insufficient modernization and adaptation (D)</p> Signup and view all the answers

What significant marketing technique involves promoting branded merchandise?

<p>Alcohol-Branded Merchandise (ABM) (B)</p> Signup and view all the answers

What was identified as a risk when alcohol companies diversify their product lines?

<p>Erosion of the core brand's identity (C)</p> Signup and view all the answers

Which country adopted creative branding strategies as a response to alcohol bans?

<p>India (D)</p> Signup and view all the answers

What was the effect of 2008 EU regulatory changes on the wine market?

<p>Focused on reducing structural oversupply (D)</p> Signup and view all the answers

Which factor contributed to the rise of significant marketing techniques in modern alcohol companies?

<p>Growth of social media and product placements (B)</p> Signup and view all the answers

What characterizes fiat money?

<p>It is a government-issued currency not backed by physical commodities. (C)</p> Signup and view all the answers

What was the primary purpose of the Bank of England when it was established?

<p>To raise money for military purposes. (C)</p> Signup and view all the answers

How did Potosi's silver supply affect Spain's global standing?

<p>It increased Spain's wealth and military power. (C)</p> Signup and view all the answers

What was NOT a role of the US Federal Reserve when it was formed?

<p>Control the gold reserves. (A)</p> Signup and view all the answers

What significant change did the Bank of Canada bring after its establishment?

<p>Centralized control over monetary supply. (A)</p> Signup and view all the answers

What did the Currency Snake allow for among member states?

<p>Currencies to fluctuate within 2.25% of each other. (C)</p> Signup and view all the answers

Which policy was NOT proposed in the Delors Report?

<p>The establishment of a single currency immediately. (A)</p> Signup and view all the answers

What was a major economic characteristic of the Bretton Woods system?

<p>Fixed exchange rates between the US dollar and gold. (B)</p> Signup and view all the answers

Which of the following best describes the role of chartered banks in Canada?

<p>They operate under government regulations to take deposits and make loans. (B)</p> Signup and view all the answers

What misconception might one have about the evolution of banks in Canada?

<p>Failure of banks led to stricter regulations in the industry. (D)</p> Signup and view all the answers

What distinguishes Bitcoin and ApplePay in the context of money?

<p>They function based on public trust. (A)</p> Signup and view all the answers

What impact did the financial sanctions have on Russia's economy?

<p>Imports dropped to half their previous levels. (C)</p> Signup and view all the answers

What was a major focus of the Hague Summit of 1969?

<p>Start discussions on European economic stability. (C)</p> Signup and view all the answers

What is a potential response from countries like Russia, China, and India regarding currency dependence?

<p>Development of an alternative currency system. (A)</p> Signup and view all the answers

How did the fall of the Berlin Wall impact Germany's perspective on currency?

<p>It fostered a desire for shared currency. (D)</p> Signup and view all the answers

What role does the U.S. Federal Reserve play in global finance?

<p>It impacts global credit, currency values, and trade through its decisions on interest rates. (D)</p> Signup and view all the answers

How do countries with large foreign reserves generally hold those reserves?

<p>In dollars or euros. (B)</p> Signup and view all the answers

What was highlighted by India's purchase of Russian coal?

<p>A potential shift towards trading using alternative currencies. (A)</p> Signup and view all the answers

What was a main compromise of the Maastricht Treaty of 1992?

<p>Common currency would start in Jan 1999. (C)</p> Signup and view all the answers

Which of the following was NOT part of the convergence criteria outlined in the Maastricht Treaty?

<p>Increased national spending (C)</p> Signup and view all the answers

What was the status of the euro on January 1, 2002?

<p>It became the official currency in 11 countries. (A)</p> Signup and view all the answers

What caused the British and Italian currencies to be excluded from the EMS?

<p>Denmark's disagreement with the Maastricht Treaty. (C)</p> Signup and view all the answers

What notable action was taken by the EU on June 15th involving €20 billion?

<p>Issued bonds through Next Generation EU to boost economies. (A)</p> Signup and view all the answers

What was one of the challenges the euro faced after the 2008 financial crisis?

<p>Investors shifted their preference back to the US dollar. (D)</p> Signup and view all the answers

What impact did US protectionism under Trump and Biden have on the EU?

<p>Stimulated an effort for strategic autonomy. (A)</p> Signup and view all the answers

As of now, how many EU countries utilize the euro among the 27 EU member states?

<p>20 countries (B)</p> Signup and view all the answers

What was the main reason Canadians supported prohibition during WWI?

<p>To conserve food and resources (A)</p> Signup and view all the answers

Which Canadian prime minister did not take action against prohibition despite its unpopularity in Quebec?

<p>Wilfrid Laurier (B)</p> Signup and view all the answers

What was a major outcome of alcohol prohibition after WWI in Canada?

<p>Black market alcohol trade flourished (C)</p> Signup and view all the answers

What significant change occurred in Canada regarding alcohol prohibition in 1927?

<p>Prohibition was officially lifted (A)</p> Signup and view all the answers

What was one criticism faced by the LCBO shortly after its establishment?

<p>It was believed to encourage youth drinking (C)</p> Signup and view all the answers

Which amendment in the United States reversed the prohibition of alcohol?

<p>21st Amendment (D)</p> Signup and view all the answers

What notable change occurred at the LCBO in 1969?

<p>Self-service was allowed (B)</p> Signup and view all the answers

How did the perception of drinking change in Canada after World War I?

<p>It became regarded as a fundamental right (A)</p> Signup and view all the answers

What was a significant factor in the failure of prohibition in both Canada and the US?

<p>The rise of organized crime (A)</p> Signup and view all the answers

Which group faced restrictions concerning working in LCBO stores until 1959?

<p>Women and minorities (C)</p> Signup and view all the answers

What effect does a 15% increase in the dollar's value have on countries with dollar debt?

<p>It increases their debt burden due to higher repayment costs. (D)</p> Signup and view all the answers

Which of the following countries are mentioned as struggling with high inflation and debt?

<p>Sri Lanka and Argentina (A)</p> Signup and view all the answers

Why do countries prefer to borrow in their own currencies?

<p>It helps them avoid risks associated with dollar dependence. (A)</p> Signup and view all the answers

What role does geopolitical support play in the resilience of the U.S. dollar system?

<p>It ensures that the dollar remains stable during crises. (D)</p> Signup and view all the answers

What might cause the Federal Reserve to raise interest rates further?

<p>A sustained strength in the U.S. economy. (D)</p> Signup and view all the answers

What is a potential consequence of a slowdown in the U.S. economy?

<p>Diminished pressures on global markets. (D)</p> Signup and view all the answers

What can be inferred about larger economies in relation to dollar fluctuations?

<p>They have become better at shielding themselves from fluctuations. (A)</p> Signup and view all the answers

What approach have emerging markets taken regarding dollar-based loans?

<p>They are avoiding dollar-based loans to minimize risk. (C)</p> Signup and view all the answers

Flashcards

Canadian WWI alcohol

Soldiers in WWI enjoyed rum, seen as medicinal and morale-boosting.

Laurier Referendum (1898)

A referendum on prohibition in Canada, largely opposed by Quebec despite national prohibition.

Prohibition in PEI

PEI banned alcohol from 1901-1948, supposedly for patriotic reasons and food conservation.

Post-WWI alcohol in Canada

Canadians viewed alcohol as a right after WWI and consumption increased.

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US Prohibition (1920-1933)

The US constitution banned alcohol from 1920 to 1933.

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LCBO (Liquor Control Board of Ontario)

Ontario's liquor agency, created in 1927, operating under government control, with a process for purchase.

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LCBO Passport/Cards

Early LCBO purchase systems that controlled alcohol and limited customers' purchases.

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Alcohol in the Black Market

Prohibition led to illegal alcohol trade during 1920s.

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InBev's Growth

InBev, a major brewing company, expanded globally, merging entities and increasing market share.

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Alcohol Company Growth

Companies like InBev rely on brand recognition and heritage, rather than innovation, to grow their business.

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Dollar's Global Dominance

The US dollar remains the primary global currency for transactions and reserves. US economic decisions affect global finance.

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Sanctions on Russia

Western countries imposed financial restrictions on Russia, hindering its access to global finances and impacting its imports.

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Alternative Currency System

Some nations, like Russia, China, and India, are exploring a new currency system to reduce reliance on the US dollar.

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Global Financial Impact

Restrictions on Russia's finances highlight how economic sanctions can drastically reduce a country's access to essential resources and potentially disrupt the global economy through trade.

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Currency Dependence on US

Many countries hold large foreign reserves in US dollars or Euros, making the US's financial standing important globally.

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Market Dynamics in 2000s Wine

Wine consumption patterns changed, with declines in some European markets and rising demand in the US, Asia, and Northern Europe.

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New World Wine Innovations

Winemakers in Australia and California shifted to branding and premiumization.

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Institutional Support for Wine

Countries like Australia and New Zealand created strong research and marketing systems for the wine industry.

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Terroir and Premiumization in OW

Old World (OW) wine producers used established brands (like AOC) to maintain leadership.

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Decline in Traditional Wine Consumption

France, Italy, and Spain saw major drops in per-capita wine consumption between 1961 and 2009.

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Global Wine Exports

Global exports accounted for a larger portion of wine production in 2009 (32%) than in 1961 (11%).

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Asian Wine Market Growth

Asian demand for wine—particularly in China—increased greatly, significantly impacting global consumption.

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Brand Stretching in Alcohol

Alcohol brands expand into non-alcoholic products to increase their visibility and circumvent advertising restrictions.

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Line Extensions in Alcohol

Variations within existing product categories (e.g., lower-calorie beers).

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Category Extensions in Alcohol

Applying a brand name to a new product category (e.g., alcohol-flavored sauces).

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Post-WWII Branding Growth

Alcohol brands became more important and ingrained in everyday life after the Second World War.

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Modern Alcohol Marketing Techniques

Modern alcohol companies replaced traditional advertising methods with social media, product placement, and sponsorships.

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Alcohol-Branded Merchandise

Goods like T-shirts or mugs with alcohol branding are made to create loyalty and connections with customers.

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Alcohol-Flavored Foods

Alcohol brands produce products such as flavoured sauces or chips to be associated with the brand, expanding the market.

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Maastricht Treaty (1992)

A treaty that agreed on the introduction of a common European currency, the euro, in stages, while ensuring economic convergence criteria for participation

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Convergence criteria

Specific economic conditions required for participating in the eurozone, like stable currency, limited debt, and price stability

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Eurozone introduction

The euro was introduced as a virtual currency with fixed exchange rates in 1999, followed by the actual coins and notes in 2002.

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Euro's current global role

The Euro is used in 20/27 EU countries and holds a significant position in international trade, with approximately 1/3 to 1/2 of its banknotes used outside the Eurozone.

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Euro's setback (2007-2008)

The euro temporarily lost popularity as a global currency due to investor confidence issues following the 2008 financial crisis. Investors preferred the safety of the US dollar.

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Economist vs. Monetarist approaches

Different viewpoints on the best way and speed for introducing a common currency in Europe. Economists favored a gradual approach, while monetarists desired a quicker implementation of the common currency via Stage 3.

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Next Generation EU (NGEU)

A program using EU bonds to boost EU economies, similar to U.S. Treasury bonds in terms of safety.

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Strategic Autonomy

EU's desire to reduce its reliance on the U.S. dollar and gain greater independence in economic decision making. Rethinking reliance on dollar.

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Dollar's Value Increase

The US dollar has risen in value by 15% compared to other currencies due to higher interest rates set by the US Federal Reserve to combat inflation.

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Dollar Debt Burden

Countries with debts denominated in US dollars face increased borrowing costs due to the strengthening dollar, making repayment more expensive.

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Global Interest Rate Hikes

Other countries are raising their interest rates to avoid their own inflation and currency devaluation, influenced by the US Federal Reserve's actions.

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Economic Strain on Weak Economies

Weaker economies like Sri Lanka and Argentina struggle with high inflation and debt due to factors like rising interest rates and stronger dollar values.

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Debt Crises in Low-Income Countries

A significant portion (60%) of low-income countries are at risk of debt crises due to global economic conditions.

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Dollar System Resilience

The US dollar system, while facing stresses, has adapted and shown resilience since the 1990s, with stronger economies better protecting themselves from fluctuations.

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Reduced Dollar Dependence

Countries are increasingly borrowing in their own currencies to lessen reliance on the dollar and mitigate risks during financial crises, particularly in emerging markets.

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US Dollar Dominance

The US dollar's global dominance is supported by a blend of commercial interests (banks, investors) and geopolitical alliances, though it faces pressure.

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Fiat Money

Money issued by a government, not backed by a commodity like gold, but based on a declaration of value.

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Political Impact of Potosi Silver

The large silver deposits in Potosi, South America, significantly increased Spain's wealth, power, and influence, and transitioned the European economy from barter to a cash-based system.

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Bank of England (1694)

First central bank in England, created to finance the military and eventually became a financial institution managing currency and debt.

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US Federal Reserve (1913)

Central bank of the US, formed to regulate banks and stabilize the financial system following numerous crises.

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Federal Reserve's Roles

Maximize employment, stabilize prices, and moderate long-term interest rates.

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Bank of Canada (1935)

Central bank of Canada, created to manage monetary policy (inflation, currency value.)

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Canadian Chartered Banks

Canadian banks that take deposits, make loans, and operate under government supervision.

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BMO (1817)

First Canadian bank, known for pioneering branch banking across Canada, contributing to stability in banking.

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Evolution of Canadian Banks

Canadian banking systems regularly evaluated, stricter policies emerged due to failures, and liberalization of banking regulations followed to encourage increased competition and stability.

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European Monetary System (1978)

System established by European countries to coordinate exchange rates & ensure monetary stability.

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Delors Report (1989)

Proposed a three-stage plan for establishing the Eurozone—coordination, gradual transfer of monetary policy, and establishment of the euro.

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Eurozone Formation (Stage 1)

Coordination of economic policies and capital movement within Europe were essential initial steps to establish currency stability.

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Currency Snake

A system of coordinated exchange rates among European countries during the 1970s.

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Bretton Woods

System of fixed exchange rates (mostly based on USD & Gold)

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Gold Standard

A monetary system where a country's currency is backed by a certain amount of gold.

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Study Notes

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