MGT 302 Ch. 1 Quiz

allow firms to move manufacturing activities to countries with lower wage rates One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. Critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.

creating manufacturing units in developing countries The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital). By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.

IMF The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.

World Bank The International Monetary Fund and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. The IMF was established to maintain order in the international monetary system; the World Bank was set up to promote economic development.

Countries progressively raised trade barriers against each other The "beggar thy neighbor" retaliatory trade policies involved countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.

Establishment of WTO The Uruguay Round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the international trading system.

Phase out subsidies to agricultural producers In late 2001, the WTO launched a new round of talks aimed at further liberalizing the global trade and investment framework. The Doha agenda includes cutting tariffs on industrial goods, services, and agricultural products; phasing out subsidies to agricultural producers; reducing barriers to cross-border investment; and limiting the use of antidumping laws.

An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system. Managing an international business is different from managing a purely domestic business for at least four reasons: (1) countries are different, (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business, (3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, and (4) international transactions involve converting money into different currencies.

the total cumulative value of foreign investments The stock of foreign direct investment refers to the total cumulative value of foreign investments.

The world is moving toward an economic system that is more favorable for international business. Current trends indicate the world is moving toward an economic system that is more favorable for international business.

migration of low-wage manufacturing jobs offshore. Globalization critics argue that the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.

This goal was reached five years ahead of schedule. One of the Millennium goals was to cut in half the number of people living in extreme poverty, defined as less than $1.25 a day, between 1995 and 2015. This goal was actually achieved in 2010, five years ahead of schedule. This represents the greatest reduction in extreme poverty in human history

is any firm that exports or imports. A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses. All a firm has to do is export or import products from other countries. Differences among countries require that an international business vary its practices country by country. An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system.

T The World Bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments (such as building dams or roads).

T If the Doha talks are ever completed, the biggest gain may come from discussion on agricultural products. The world's poorer nations have the most to gain from any reduction in agricultural tariffs and subsidies; such reforms would give them access to the markets of the developed world.

F As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders.

F Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of mini-multinationals.

T One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe. The critics argue that falling trade barriers allow firms to move manufacturing activities to countries were wage rates are much lower.

T An international business is any firm that engages in international trade or investment.

F Differences among countries require that an international business vary its practices country by country.