Managing in a global economy

QUESTION 1

1. Why is it difficult for companies to succeed in foreign markets?

QUESTION 2

1. Compare and contrast acquisitions and alliances.

QUESTION 3

1. Compare the two primary strategies companies use to cope with the currency risks.

QUESTION 4 (True/False)

Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods and services different currencies can purchase. 

Product life cycle theory is the first dynamic theory to account for changes in the patterns of trade over time.

 Government payments to domestic firms to produce a competitive advantage are subsidies. 

 The benefit of ownership lies in the combination of equity ownership rights and management control rights.

Government tactics include removing incentives, demanding a higher share of profits and taxes, and confiscating foreign assets.

 Fixed exchange rate policy fixes the exchange rate of a country relative to other currencies. 

 Forward transaction is a type of spot transaction. 

Internationalization is one of the strategies to grow international entrepreneurial firms.

 A letter of credit is used when the exporter needs greater assurance that the importer is going to pay for the goods or services received. 

Overall, alliances have emerged as great instruments of real options because of their flexibility to sequentially scale up or scale down the investment.

 Regarding motives for acquisitions, synergistic motives add value while hubris and managerial motives reduce value. 

Localization strategy requires a polycentric approach in staffing.

 Repatriation is the process of facilitating the expatriate's return.

 The CSR approach draws upon Adam Smith's idea that the pursuit of economic self-interest within legal and ethical bounds leads to efficient markets. 

 A good management strategy in the modern global world is to always outperform components in areas of CSR because the tangible and intangible profits soon follow. 

 Direct export is a type of equity mode entry 

 A first mover advantage is preemption of scarce resources.