International Trade and Investments Final Exam

January 12, 2021

Be concise but complete in your responses to the following. Attempt FIVE (5) questions below, including the sub-questions. Select ONE question from each alternate (i.e. select e.g. Q1A OR Q1B, but NOT both).

As above, type in your responses using as much space as necessary. However, be as concise as possible (Limit your responses to no more than one page for each major question, including all sub-questions such as a) b), c)

Q1A. a) State two reasons to convince someone that globalization is not such a bad idea

b) State two reasons to convince another person that globalization is a terrible idea

OR:

Q1B. Present opposing arguments for outsourcing of jobs from the U.S to other parts of the world.

a) Two Arguments in favor of outsourcing:

b) Two Arguments against outsourcing:

Q2A. Describe how a firm’s managers can use one trade theory to help their company expand its operations around the world. Begin your response by first stating the theory below.

State the trade theory:

Using the theory to expand worldwide:

Describe briefly two other reasons a firm or any other organization will consider in its expansion into foreign markets, besides your selected theory?

OR:

International Trade and Investments Final Exam

Q2B. In drawing plans to locate your company’s business operations in a country outside the United States, the company hired consultants who presented different country profiles based on their levels of economic and political openness as shown below in a 2-dimensional chart:

Select two of the nine profiles in the chart below. Then assign one country to each cell. (Type in the name of the country in the profile box)
Describe briefly the determinant or source of political risk you would anticipate within the two economic and political profiles you select. (You may make any assumption about the countries, based on your knowledge or information to help describe the sources of political risk).

(Q2B Continued)

In your opinion, in which of the two countries would you recommend a company establish an FDI? Why? (Make assumptions, where necessary, e.g. about the company’s industry or product/service, given the economic and political environment profile above)

International Trade and Investments Final Exam

Q3A. Describe how a manager can use two cultural dimensions to a company’s advantage in a foreign market/country (identify the specific cultural dimensions and the foreign market/country):

ii)

OR:

Q3B. Give two examples of how a high uncertainty-avoidance society can affect a firm that comes from a low uncertainty-avoidance society, based on Hostede’s cultural classification?

Q4A. a) Why are countries forming regional blocs around the world? Present below both economic and political reasons.

a) One economic reason:

b) One political reason:

c) What is the difference between a free trade area and a customs union?

As a manager of a company searching for new markets, given a choice, which would you prefer to invest in: a free trade area or a customs union? (Assume all things being equal, e.g. market size and purchasing power)? Why? Discuss briefly below.

OR:

Q4B. a) In spite of the benefits free trade provides nations, according to trade theory, governments continue to intervene or interfere in the free flow of trade.

(a)State below briefly four reasons why governments continue to use trade policy to intervene in free trade.

b) List and describe briefly four (4) ways (other than a subsidy) by which governments interfere in free trade.

Q5A. a) Assume that in Denmark it takes 16 hours to build a Ford minivan and 23 hours in Russia to build a comparable vehicle. Assume also that it takes 6 hours to produce a mobile phone in Denmark and 8 hours to build a similar phone in Russia. According to trade theory, is there a basis for trade between Denmark and Russia? Explain below:

b) Why might Russia refuse to trade with Denmark, in spite of what trade theory suggests?

Give two reasons.

OR:

Q5B. a) Identify four skills you believe are critical to be an effective manager in a global firm. Why do you believe these skills to be critical?

b) Describe briefly four lessons (not just listing of topics) you have personally learned about managing in a global economy in this course, so far? You may cite concepts, cases you may have read in the text, or other material encountered in the course).

International Trade and Investments Final Exam

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