Exam Review International Business Part 1 PDF

Practice Questions 1.​ What regions can be classified as emerging markets? Regions that can be classified as emerging markets are places like Brazil and India 2.​ If a product costing $100 is imported from Japan, and there is a 20% tariff on the product, what is the cost of the produ...

Practice Questions 1.​ What regions can be classified as emerging markets? Regions that can be classified as emerging markets are places like Brazil and India 2.​ If a product costing $100 is imported from Japan, and there is a 20% tariff on the product, what is the cost of the product with the tariff? The price of a product that’s $100 and receives a 20% tariff is now $120 100 x 0.20 = 20 +100 = 120 3.​ State the advantages and disadvantages of running a franchise. (what is the difference between a franchisor and franchisee?) Advantages of Running a Franchise: -​ People already know the brand, so you don't need to work as hard to get customers. -​ The company that owns the brand gives you training and advice on how to run your business. -​ The business method works because it's been tried before. Disadvantages of Running a Franchise: -​ You have to pay a lot of money to start and keep running the franchise. -​ You have to follow the rules set by the big company, which means less control over what you can do. -​ If the big company has trouble, your business might suffer too. Difference between Franchisor and Franchisee: Franchisor: The big company that lets you use their name and business plan. They get money from you for this. Franchisee: You. You pay to use the company's name and plan to start your own version of their business. 4.​ What is the Bank of Canada responsible for (Hint: ​ ​ Policy) The Bank of Canada is responsible for monetary policy, specifically influencing the supply of money circulating in the economy, using their monetary policy to keep inflation low and stable. They also promote safe, sound and efficient financial systems. 5.​ When is a high degree of cultural awareness needed when conducting international business? What about a low degree? A high degree of cultural awareness is needed when the language, beliefs, habits and attitude are vastly different than Canada’s. On the other hand, low degree of cultural awareness is necessary when those things are more similar. 6.​ What are the characteristics of an underdeveloped country, emerging country, and a developed country? Underdeveloped: High poverty rates, low value dollar, low income, poor conditions Emerging country: decreasing poverty rates, gaining infrastructure, economic growth Developed country: good economy, high GDP, high standards of living, access to healthcare and education 7.​ Distinguish between opportunity cost, absolute advantage, and comparative advantage. Opportunity cost is the cost of the next best alternative foregone when a decision is made. It's what you give up when you choose one option over another. For example, if you decide to spend an hour studying instead of working at a job where you earn $15 per hour, the opportunity cost of studying is $15. ​ Key Point: It's about the value of the best alternative not chosen. Absolute advantage refers to the ability of an individual, company, or country to produce a good or service more efficiently than another. Efficiency here can mean using fewer resources or less time. ​ Example: If Country A can produce 10 widgets in one hour while Country B can only produce 5 widgets in the same time, Country A has an absolute advantage in widget production. ​ Key Point: It's about who can produce more with the same amount of resources. Comparative advantage is a bit more nuanced than absolute advantage. It's about the ability to produce a good at a lower opportunity cost compared to others. Even if one entity doesn't have an absolute advantage in any good, it can still have a comparative advantage if it's less inefficient in producing one good compared to another. ​ Example: Suppose Country A (from the previous example) can produce either 10 widgets or 5 gadgets in an hour, while Country B can produce either 5 widgets or 2 gadgets. Country A has an absolute advantage in both, but: ○​ The opportunity cost for Country A to produce 1 gadget is 2 widgets (10/5). ○​ For Country B, it's 2.5 widgets per gadget (5/2). ​ Here, Country B has a comparative advantage in gadgets because its opportunity cost is lower. Conversely, Country A has a comparative advantage in widgets. ​ Key Point: It's about which good or service has the lowest opportunity cost relative to other goods or services that could be produced. 8.​ What are the characteristics of a common currency? The general concept about common currency is that any individual country does not possess its own currency and both interest rate and exchange rate policies are centralized. Exchange rates are fixed. 9.​ What is the UN responsible for? Maintain International Peace and Security. Protect Human Rights. Deliver Humanitarian Aid. 10.​What is the difference between primary and secondary stakeholders? Give examples. There are two types of stakeholders: primary and secondary. Primary stakeholders are investors in your business, such as your employees, customers, suppliers, and creditors. Secondary stakeholders include consumers (who may or may not purchase from you), government agencies, and unions. 11.​Distinguish between cultural relativism and imperialism. Cultural relativism is the idea that a culture's values and practices should be understood within the context of that culture. Imperialism is the practice of a country using its culture to create and maintain unequal relationships with other cultures. 12.​What types of issues can impede a supply chain? -​ Recalls -​ Natural disasters -​ Cyberattacks -​ Port congestion 13.​Elaborate on the makeup and structure of a centralized marketing approach vs a decentralized approach. Centralized marketing is when a single team handles all marketing for a company, and decentralized marketing is when multiple teams are responsible for marketing in different departments. For example, McDonald’s is centralized and local markets that create and distribute their own marketing materials are decentralized. 14.​Define: licensee, tariff, royalty, duty Tariff: This is a tax that a country puts on goods coming in from other countries. It makes foreign products more expensive, helping local businesses by making their products look cheaper in comparison. Duty: Like a tariff, duty is a tax, mainly on imports. Sometimes, it's used specifically for certain goods to either make money for the government or to protect local producers from cheaper foreign competition. Royalty: This is the payment someone makes when they want to use someone else's creative work, like a song, book, or invention. It's often a small amount of money for each time the product is sold or used, going back to the creator. Licensee: This is the person or company that gets the okay to use something that belongs to someone else, like a brand name or a patented gadget. They agree to pay royalties in return for the right to use, make, or sell that thing. 15.​Explain what it means for a business to achieve economies of scale? Economies of Scale: Reduces costs per unit from large-scale production 16.​What are the different types of logistics that we learned about? Briefly describe each. Business Logistics: Movement and storage of goods along the supply chain Production Logistics: Ensuring timely availability of raw materials for production Forward Logistics: Delivering finished goods to customers Reverse Logistics: Handling returns, recycling, and disposal of goods 17.​What is a tax credit? A tax credit is an amount of money that a taxpayer can subtract from the income taxes that they owe 18.​Describe the four sectors of industry – primary, secondary etc. Primary (involved in extracting natural resources Secondary (concerned with manufacturing and processing) Tertiary (focused on providing services) Quaternary (dealing with knowledge-based activities and information services). 19.​Difference between culture, subculture and counterculture -​ Culture is shared beliefs, values, and practices of a group -​ Subculture is smaller groups within a culture with distinct values or interests (E.g., youth subculture) -​ Counterculture is groups actively opposing mainstream cultural norms (e.g., 1960s hippie movement). 20.​Outline and describe the business cycle. Expansion: Business is growing; more jobs, more spending, economy gets stronger. Peak: The economy reaches its highest point; everything seems good, but growth starts to slow. Contraction: Business slows down; less spending, fewer jobs, economy weakens. Trough: The lowest point; business activity is at its lowest before it starts to recover. Recovery: Business starts to pick up again, leading back to expansion. 21.​Difference between mixed, command, and market economy. -​ Market Economy: Private individuals make decisions, with minimal government interference -​ Centrally Planned Economy: Government makes all the economic decisions and controls production -​ Mixed economy: Combines elements of market and centrally planned economies 22.​What does the Human Development Index measure? The HDI is a summary measure of human development. How is it defined? The HDI is a summary composite measure of a country's average achievements in three basic aspects of human development: health, knowledge and standard of living. 23.​Methods of Distribution in Supply Chain Management. Boxes on Ships, Trains, and Trucks (Containerization): Using big metal boxes that can go on ships, trains, or trucks to move stuff safely and easily. Mixing Transport Ways (Intermodal Shipping): Using more than one way to move things, like ships, trains, trucks, or planes.​ Planes (Air Freight): Very fast but costs a lot, used when you need stuff quickly. Ships (Ocean Freight): Good for moving lots of stuff across oceans but takes longer. Trains: Slow but can carry big loads far for less money. Trucks: Can go door-to-door, good for different types of goods. Delivering to Homes (Home Delivery): Companies like Amazon bring stuff right to your door. Using People to Deliver (Crowd-Sourced Delivery): Services like Uber Eats where regular people can deliver food or packages. 24.​Define: tariff, trade quota, trade embargo, trade limit Trade Quota: A trade quote is a government-imposed limit on the quantity or value of a particular good that can be imported or exported during a specific time period. Quotas are used to protect domestic industries by restricting foreign competition. Trade embargo: a trade embargo is a government imposed ban on trade with a particular country or the exchange of specific goods. Embargoes are usually enacted for political reasons and can include partial or complete restrictions Tariff: A tariff is an import tax imposed on goods, this is so local industries can hopefully help compete, and could be a replacement for income tax in the future. Trade limit: A limit to how much can be traded 25.​Devaluation vs Revaluation of currency - define Devaluation: A country intentionally lowers the value of its currency, making its exports cheaper and more attractive to foreign buyers. This can boost sales abroad but makes imports more expensive. Revaluation: A country increases the value of its currency, which makes imports cheaper for its citizens but can make its exports more expensive, potentially reducing foreign demand. 26.​Definition of Productivity Productivity in business is a measure of how efficiently a company produces goods and services. It compares the amount of output to the amount of inputs used to produce it. 27.​What is vertical integration? What is horizontal integration? Give examples of each. Vertical Integration: Control over the entire supply chain. Horizontal Integration: Expanding by acquiring competitors. 28.​Define Collateral In business, collateral is a valuable asset that a borrower offers to a lender as security for a loan. If the borrower can't repay the loan, the lender can take the collateral. 29.​Monochronic vs Polychronic cultures Polychronic cultures value multitasking, fluid time management, and prioritize relationships over strict schedules (e.g., Latin American cultures). Monochronic cultures prioritize punctuality, structured schedules, and one task at a time (e.g., U.S., Germany) 30.​Types of Trade Barriers Trade barriers are restrictions that limit the flow of goods and services between countries. Some types of trade barriers include: Tariffs: Taxes on imported goods, which make them more expensive than domestic goods. Tariffs can be a percentage of the value of the goods, or a charge per unit. Quotas: Limits on the number or value of goods that can be imported or exported within a certain time period. Embargoes: A political agreement or blockade that prohibits trade between countries. Embargoes are often used to support political or economic goals. Non-tariff barriers: Other restrictions on trade that aren't tariffs, such as regulations that make it difficult for foreign imports to enter a country. 31.​Define: letter of credit, bill of lading Letter of Credit (LC): A bank's guarantee that payment will be made to the seller, provided they meet the terms of the sale. It acts as a financial safeguard in international trade, ensuring the seller gets paid even if the buyer fails to pay. Bill of Lading (B/L): A document issued by a carrier to acknowledge receipt of goods for transport. It details the shipment's contents, destination, and serves as a title document, necessary for claiming the goods at destination and often required to trigger payment through mechanisms like an LC. 32.​Explain what ‘value added’ means: how is it calculated? Value added is the extra worth created at each stage of production or service. It's the increase in value of a product or service from the beginning of the production process to the end. Calculation Basic Formula: Value Added = Output Value - Input Costs Output Value: The total value of goods or services produced. Input Costs: The costs of all materials, services, and labor used in production. 33.​Issues in supply chain management. Same as I said before.