International Business & Trade Reviewer PDF

**[REVIEWER IN MGT 304 -- INTERNATIONAL BUSINESS & TRADE]** **Diversifying firm operations across countries:** - Diversification in multiple countries may affect a firm's exposure to various risks and uncertainties depending on market conditions. **Absolute advantage and labor productivity:...

**[REVIEWER IN MGT 304 -- INTERNATIONAL BUSINESS & TRADE]** **Diversifying firm operations across countries:** - Diversification in multiple countries may affect a firm's exposure to various risks and uncertainties depending on market conditions. **Absolute advantage and labor productivity:** - Absolute advantage refers to a country's ability to produce a good with greater efficiency and lower cost compared to another country. **Closed economy and trade:** - A closed economy is one that does not engage in international trade, restricting economic activity to within its own borders. **Contribution of a Filipino working abroad:** - A worker employed abroad contributes to the GDP of the country where they are employed rather than their home country. **Dollar remittances and GNP:** - Remittances sent from abroad to a home country add to the home country\'s Gross National Product (GNP) by being classified as external income. **Salary of a Filipino engineer working abroad:** - The income earned by a Filipino engineer working for a foreign company contributes to the GDP of the country where the work is performed. **Impact of Purchasing Power Parity (PPP) on GDP:** - Using PPP exchange rates in GDP comparisons tends to raise the GDP of poorer countries and lower the GDP of richer countries, due to adjustments in cost of living. **WTO and developing countries:** - While the WTO promotes trade liberalization, the benefits to developing nations have often been limited, as developed countries may capture the bulk of trade gains. **Trade liberalization and developing nations:** - Trade liberalization can introduce competitive pressures that may disadvantage developing economies, potentially threatening local industries. **Developed nations and economies:** - Developed nations typically have large economies, characterized by industrialization, high per capita income, and advanced technological infrastructure. **Developed vs. advanced economies:** - Not all developed economies are categorized as advanced economies, as some may lack the technological and infrastructural sophistication of advanced nations. **Role of international trade:** - International trade establishes global regulations to ensure the smooth, predictable, and free flow of trade between nations. **IMF as the world's central bank:** - The International Monetary Fund (IMF) serves to stabilize global financial systems but is not considered the central bank for the world. **IMF focus on microeconomic stability:** - The IMF primarily focuses on macroeconomic stability, addressing issues such as exchange rates, national debt, and financial crises rather than individual market stability. **World Bank\'s focus on development:** - The World Bank provides long-term financial aid to foster economic development and reduce poverty, primarily in developing countries. **Mercantilism as a protectionist theory:** - Mercantilism promotes national economic policies aimed at accumulating wealth by maximizing exports and minimizing imports through protectionist measures. **Absolute advantage theory:** - This theory explains that a nation has an absolute advantage when it can produce a good more efficiently than its trading partners. **Country Similarity Theory:** - Countries with similar economic conditions, such as income levels and consumer preferences, are more likely to engage in trade with each other according to this theory. **Role of UNCITRAL:** - The United Nations Commission on International Trade Law (UNCITRAL) works to harmonize international trade laws to promote smoother and more predictable global trade. **Global strategic rivalry theory:** - This theory focuses on how multinational corporations use competitive advantages to outperform rivals in international markets, aiming to capture market share and achieve dominance. - **Product specialization:** Countries produce goods they are best at, improving efficiency and trade benefits. - **Resource insufficiency:** Nations trade to acquire resources they lack domestically. - **Opportunities to earn more profits:** Trade enables access to larger markets and potential profits. - **Technology:** Advanced technology drives countries to trade and share innovations globally. **Impact of International Trade on Domestic Markets:** - **Reduction in prices:** Increased competition can lower the costs of goods and services. - **Increase competition:** International trade intensifies competition among domestic producers, improving quality. **Global Strategy:** - **Single strategy for global subsidiaries:** A unified approach to managing all company branches worldwide, optimizing efficiency. **Misconception about Globalization:** - **Unequal opportunities:** Globalization does not spread benefits evenly among nations; wealthier nations often gain more. **Stakeholder Analysis Components:** - **Power and interest:** Focuses on the influence (power) and stake (interest) stakeholders have in the business. **Managing Supportive Stakeholders:** - **Involved:** Supportive stakeholders should actively participate in decision-making to ensure alignment with business goals. **Ethics in Business:** - **Business shares ethics with politics and private life:** Ethics are common across various sectors, including business, government, and private life. **Corporate Social Responsibility (CSR):** - **Economic, social, and environmental responsibilities:** CSR extends beyond profit-making to include societal and environmental welfare. **Specialization in International Trade:** - **Maximized world output:** Specialization leads to higher efficiency, resulting in increased global production. **Domestic Operations:** - **Domestic company:** A business operating strictly within its national borders without international transactions. **Taxes on Imports:** - **Tariffs:** A tax imposed on imported goods to protect domestic industries or generate revenue. **Trade Restrictions:** - **Import quotas:** A limit on the quantity of goods a country can import, used to protect domestic industries. **Economies of Scale:** - **Reduced cost per unit:** As production increases, the average cost of producing each unit decreases. **Factor Abundance Theory:** - **Heckscher-Ohlin theory:** This trade theory focuses on a country's abundance of factors of production (land, labor, capital) and how it influences trade. **Zero-Sum Game:** - **Mercantilism:** A belief that trade benefits one country at the expense of another, where the total economic pie remains fixed. **Foreign Direct Investment (FDI) Boosts:** - **Employment:** FDI increases job opportunities in the host country through investment in new businesses and industries. **Non-Mercantilist Policy:** - **Encouraging free trade:** Unlike mercantilist policies, free trade promotes open markets and reduced trade barriers between nations. **Functions of the WTO:** - **WTO is not a member of the IMF:** The WTO and IMF are separate organizations with different objectives. **Functions of Economic Integration:** - **Encouraging trade between neighbors:** Economic integration often focuses on fostering trade between geographically close nations. **Economic Integration Consideration:** - **Geographical location:** Location is crucial in regional economic integration to reduce trade costs and increase efficiency. **Eliminating Internal Tariffs:** - **Free trade area:** This type of economic integration removes tariffs between member countries, allowing for free movement of goods. **Assistance for Balance of Payment Deficit:** - **IMF:** The International Monetary Fund provides financial assistance to countries facing balance of payment crises. **Misconception about the IMF:** - **IMF loans money to all countries:** The IMF primarily assists countries facing financial crises, not all nations equally. **World Bank Assistance:** - **Financial and Technical:** The World Bank provides both financial loans and technical expertise to support development. **Main Function of the World Bank:** - **Assisting in development:** The World Bank's primary goal is to help countries achieve economic development and reduce poverty. **Foreign Direct Investment Example:** - **A store setup in another country:** When a company from one country invests in physical assets like stores in another country. **Global Strategic Rivalry:** - **Competitive advantage:** In global competition, firms focus on leveraging their competitive advantages over absolute or comparative advantages. **Business Responsibility in Trade:** - **CSR:** Companies have a moral duty to act responsibly toward their trading partners and broader society. **Role of Top Management in Culture:** - **Establishing norms:** Management shapes corporate culture by creating norms and values followed by the organization. **Cultural Disorientation:** - **Culture shock:** A psychological response to unfamiliar cultural behaviors and customs encountered in a foreign country. **UN System Components:** - **IMF and World Bank (WB):** Both organizations are part of the broader United Nations system, focusing on economic stability and development. **Role of the WTO:** - **Policing trade rules:** The WTO ensures countries adhere to international trade agreements and resolves trade disputes. **NAFTA's Major Interest:** - **Elimination of tariffs:** NAFTA sought to remove tariffs on goods traded between the U.S., Mexico, and Canada. **Regional Economic Integration:** - **Group of countries:** Integration typically involves agreements between a group of nations to facilitate trade and cooperation. **Impact of International Trade:** - **Increases economic efficiency:** International trade promotes optimal use of resources, leading to higher efficiency and economic growth. I. ***TRUE OR FALSE*** II. ***MULTIPLE CHOICE***