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introduction global business

Questions and Answers of Introduction Global Business

2. Compare and contrast these explanations of FDI: internalization theory, Vernon’s product life-cycle theory, and Knickerbocker’s theory of FDI. Which theory do you think offers the best
1. In the 1980s, Japanese FDI in the United States grew more rapidly than Japanese FDI in Canada.Why do you think this is the case? What are the implications of this trend?
6. Internalization theories identify the profitability of FDI, exporting, and licensing. A host government’s attitude to FDI is an important variable to consider in making the “go global”
5. Home countries can adopt policies designed to both encourage and restrict FDI. Host countries try to attract FDI by offering incentives and try to restrict FDI by dictating ownership restraints
4. Benefits of FDI to a host country arise from resource-transfer effects, employment effects, and balance-of-payments effects. The costs of FDI to a host country include adverse effects on
3. Political ideology is an important determinant of government policy toward FDI. Ideology ranges from a radical stance that is hostile to FDI to a noninterventionist, free market stance. Between
2. High transportation costs or tariffs imposed on imports help explain why many firms prefer FDI or licensing over exporting. Firms often prefer FDI to licensing when: (a) a firm has valuable
1. The past few decades have seen a large increase in both the flow and stock of FDI in the world economy. Any theory seeking to explain FDI must explain why firms go to the trouble of acquiring or
2. How susceptible do you think a luxury brand like Four Seasons is to the recent global economic slowdown which began in 2008, or to economic recessions generally?
1. How can a company maintain its image, quality, and reputation when it is so widely spread out around the globe?
2. What indicators (political, economic, and others) would a company look at to decide whether or not to invest in China?
1. Do you see a continued trend of foreign investment into China? What would speed up and what would delay such investment?
6. Identify the implications for managers of the theory and government policies associated with FDI.
5. Explain the range of policy instruments that governments use to influence FDI.
4. Describe the benefits and costs of FDI to home and host countries.
3. Understand how political ideology shapes a government’s attitudes toward FDI.
2. Explain the different theories of FDI.
1. Recognize current trends regarding foreign direct investment (FDI) in the world economy.
3. The restrictions imposed by China on rare earth metals has resulted in some companies (e.g., Toyota, Renault, Tesla) starting to look for alternatives. They plan to use parts that do not include
2. Given that 97 percent of rare earth metal production is now done in China, an increase from 27 percent to 97 percent between 1990 and 2010, do you think Canada should reconsider their
1. Which groups benefitted the most from China imposing an export quota on rare earth metals? Did it give the Chinese domestic manufacturers a significant cost advantage? Did it result in
3. Given the arguments relating to the new trade theory and strategic trade policy, what kind of trade policy should business be pressuring government to adopt?
2. Whose interests should be the paramount concern of government trade policy—the interests of producers (businesses and their employees) or of consumers?
1. Do you think governments should take human rights considerations into account when granting preferential trading rights to countries? What are the arguments for and against taking such a position?
2. How can a company serving a global marketplace keep track of changing consumer preferences, which is particularly the case in the food industry?
1. Are there other industries, either in Canada or other countries, that have quota systems applied to their industry in a similar fashion as the fishing industry?
2. How easy is it to define what would be a “Chinese company”? Is this easier or more difficult in the case of the auto industry?
1. What types of government actions might be interpreted as subsidies? Give examples.
5. Explain the implications for managers of developments in the world trading system.
4. Describe the development of the world trading system and the current trade issue.
3. Summarize and explain the arguments against strategic trade policy.
2. Understand why governments sometimes intervene in international trade.
1. Identify the policy instruments used by governments to influence international trade flows.
4. What international trade theory (or theories) best explain the rise of India as a major exporter of pharmaceuticals?
3. Do the benefits from trade with the Indian pharmaceutical sector outweigh the losses?
2. Who might have lost out as a result of the recent rise of the Indian pharmaceutical industry?
1. How might (a) North American pharmaceutical companies and (b) Western consumers benefit from the rise of the Indian pharmaceutical industry?
9. Is free trade fair? Discuss.
8. “In general, policies designed to limit competition from low-cost foreign competitors do not help a country to achieve greater economic growth.” Evaluate this statement.
7. “The world’s poorest countries are at a competitive disadvantage in every sector of their economies.They have nothing to export. They have no capital; their land is of poor quality; they often
6. Using the new trade theory and Porter’s theory of national competitive advantage, outline the case for government policies that would build national competitive advantage in a particular
5. What are the potential costs of adopting a free trade regime? Do you think governments should do anything to reduce these costs? What?
4. Drawing on the theory of comparative advantage to support your arguments, outline the case for free trade.
3. Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition. Is such
2. “China is a neomercantilist nation. It protects industries where it has no competitive advantage in the world economy, while demanding that other countries open up those markets where Chinese
1. “Mercantilism is a bankrupt theory that has no place in the modern world.” Evaluate this statement.
2. Are all white-collar jobs the same? Is there any differentiation in the types of white-collar jobs that are moving offshore?
1. Do you see this trend continuing in the future. Can you think of any Canadian examples?
6. We have assumed that each country has a fixed stock of resources and that free trade does not change the efficiency with which a country uses its resources.
5. We have assumed constant returns to scale; that is, that specialization by Ghana or South Korea has no effect on the amount of resources required to produce one tonne of cocoa or rice. In reality,
4. We have assumed that resources can move freely from the production of one good to another within a country. In reality, this is not always the case.
3. We have assumed away differences in the prices of resources in different countries. We have said nothing about exchange rates, simply assuming that cocoa and rice could be swapped on a one-to-one
2. We have assumed away transportation costs between countries.
1. We have assumed a simple world in which there are only two countries and two goods. In the real world, there are many countries and many goods.
2. Who is affected if China is deliberately discouraging imports?
1. Are there other countries you can think of that might be pursuing such a policy?
5. Demonstrate the important implications that international trade theory holds for business practice.
4. Summarize the arguments of those who maintain that government can play a proactive role in promoting national competitive advantage in certain industries.
3. Express why many economists believe that unrestricted (free) trade between nations will raise the economic welfare of all countries that participate in a free trade system.
2. Distinguish the different theories that explain trade flows between nations.
1. Explain why nations trade with each other.
4. What steps can executives at the Ohio Art Company take to make sure they do not find the company profiled in The New York Times again as an enterprise that benefits from sweatshop labour?
3. Is it possible, as Mr. Killgallon claims, that the Ohio Art Company had no knowledge of labour problems at Kin Ki? Do you think company executives had any knowledge of the working conditions?
2. Assuming that the description of working conditions given in The New York Times is correct, is it ethical for the Ohio Art Company to continue using Kin Ki to manufacture Etch-A-Sketch toys?
1. Was it ethical of the Ohio Art Company to move production to China? What were the economic and social costs and benefits of this decision? What would have happened if production had not been moved?
5. Are facilitating payments ethical?
4. Under what conditions is it ethically defensible to outsource production to the developing world where labour costs are lower when such actions also involve laying off long-term employees in the
3. Drawing upon John Rawls’ concept of the veil of ignorance, develop an ethical code that will (a) guide the decisions of a large oil multinational toward environmental protection, and (b)
3. The Canadian federal government and the provincial governments all have Web sites on which ethics, ethical codes, and ethical compliance are discussed. Find the ones for the federal agencies in
2. The Corruption Perceptions Index (CPI) is a comparative assessment of a country’s integrity performance, along with related academic research on corruption. Provide a description of this index
1. Promoting respect for universal human rights is a central dimension of all countries’ foreign policy. As history has repeatedly shown, human rights abuses are everybody’s concern.Begun in
2. A visiting North American executive finds that a foreign subsidiary in a poor nation has hired a 12-year-old girl to work on a factory floor, in violation of the company’s prohibition on child
1. Review the Management Focus on testing drugs in the developing world and discuss the following questions:a. Did Pfizer behave unethically by rushing to take advantage of a Nigerian epidemic to
5. To make sure that ethical issues are considered in international business decisions, managers should(i) favour hiring and promoting people with a well-grounded sense of personal ethics; (ii) build
4. Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.Moral philosophers contend that approaches to business ethics such as the Friedman doctrine,
3. Ethical issues and dilemmas in international business are rooted in the variations among political systems, law, economic development, and culture from country to country. Unethical behaviour is
2. The question of managers behaving ethically on behalf of their company is understood to be something that cannot be divorced from personal ethics. Home-country managers working abroad in
1. The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization. Business ethics are the
3. Would the people with whom I have a significant personal relationship, such as family members, friends, or even managers in other businesses, approve of the decision?
2. Am I willing to see the decision communicated to all stakeholders affected by it—for example, by having it reported in newspapers or on television?
1. Does my decision fall within the accepted values or standards that typically apply in the organizational environment (as articulated in a code of ethics or some other corporate statement)?
6. How are senior managers perceived by subordinates in terms of their integrity? How do such leaders model ethical behaviour?
5. Is integrity emphasized to new employees?
4. Is misconduct disciplined swiftly and justly within the organization?
3. Do employees have formal channels available to make their concerns known confidentially?Is there a formal committee high in the organization that considers ethical issues?
2. Are workers at all levels trained in ethical decision making? Are they also encouraged to take responsibility for their behaviour or to question authority when asked to do something they consider
1. Is there a formal code of ethics? How widely is it distributed? Is it reinforced in other formal ways such as through decision-making systems?
2. If the Nigerian government replaced child workers in the mine with adult workers, would they also be able to provide health and safety equipment to reduce exposure to lead poisoning and other
1. If the Nigerian government was pressured to eliminate child workers in the mining industry(a) would the Nigerian government have enough money to put those displaced child miners in school? and (b)
2. If it is true that between 80 and 90 percent of drug candidates fail in clinical trials, should we wait until advances in the “technological environment” remove the need for human testing
1. The FDA requires that patient (or parent) consent be given before patients are enrolled in clinical trials, no matter where in the world the trials are conducted. Sometimes such consent cannot be
■ Do they get away with bypassing pollution and environmental considerations?
■ Are they cutting safety standards and processes?
■ Are they employing cheaper labour? Is this just because they pay a low wage, or do they also cut out any benefits, which are a costly part of North American and European businesses?
■ Are the materials cheaper because the process to access the materials cut some safety or regulatory process?
■ Are they using cheaper materials than what you would have used?
2. The federal government in Canada is now making more stringent efforts to collect tax from companies paying late, or not paying the full amount. Can you find out through an online search what the
1. Tax avoidance has been a hot topic in the United States. Has it become a topic in Canada as well? Research some news stories to see if you can find some Canadian companies criticized for avoiding
5. Discuss the steps that managers can take to promote an awareness of ethical issues throughout the organization and to make sure that ethical considerations enter into strategic and operational
4. Describe the different approaches to business ethics that can be derived from moral philosophy, and show how these approaches can help managers make international business decisions that do not

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