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1. what is_comparative_cost_theory_why_i


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1. what is_comparative_cost_theory_why_i

  1. 1. Sikkim Manipal University - DDE Master of Business Administration MB0053 –International Business management- 4 Credits- 4th semester (Book ID: B1724) Model Question Paper Duration: 3 hours Total marks: 140 Section A ESSAY TYPE QUESTIONS (10 Marks each) [Please answer Any Four essay type questions in a separate page answer sheet especially provided for the purpose] 1. What is Comparative Cost Theory? Why is it considered as an improvement on Absolute cost Advantage Theory? 2. Write a short note on two of the following: a. Joint ventuers. b. Licensing. c. Wholly owned subsidiary. d. Direct exporting. 3. Why do firms pay so much attention for economic factors while entering particular markets? Justify your answer by quoting practical examples. 4. Explain in brief about letter of credit. Case study BATA – An International Company Bata Shoe Company, founded in 1894 in the former Czechoslovakia (presently headquartered in Lausanne, Switzerland), is one of the world's leading footwear retailers and manufacturers, with operations across five continents managed by three regional meaningful business units (MBUs). The MBU approach provides quality resources and support in key areas to the companies operating in similar markets such as product development, sourcing, or marketing support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the market place and seize potential growth opportunities. Bata’s three MBUs are Bata Europe, Lausanne, Switzerland; Bata Emerging Markets, Singapore; and Bata Branded Business, Best, Holland.
  2. 2. Bata's strength lies in its worldwide presence. While local companies are self-governing, each one benefits from its link to the international organisation for back-office systems, product innovations, and sourcing. Research and development – Bata operates six Shoe Innovation Centres (SICs). Research is conducted in applying new technologies, materials, and designs for shoe comfort features. Each SIC has a product focus – to supply complete packages of services for the manufacturing and marketing of innovative shoes. Shoe making expertise – Apart from being one of the world's leading footwear retailers, Bata is also an expert in making shoes, with over 110 years of experience in manufacturing. Currently, they operate 33 production facilities across 22 countries. While most modern day manufacturers outsource to Asia, Bata manufactures predominantly in their own manufacturing facilities across the world, guaranteeing quality and expertise. Approximately half their factory outputs are destined for sale through Bata-owned retail stores, and the balance is manufactured to the specifications of wholesale customers or under contract to other footwear brands. Bata innovations in footwear production techniques are being used by other competitors in the industry even today. In 2010, Bata served 1 million customers a day; employed more than 50,000 people; operated more than 5,000 retail stores; and managed retail presence in more than 70 countries. Discussion Questions 5. Identify the strategy that Bata uses for entry into new markets. (Hint: Own showrooms) 6. What are the factors that help Bata retain its global leadership position? Section B Multiple Choice Questions (MCQ) [Please answer all the following questions] 1. Geographic distance is shrinking because of the _______________, as the ambitious companies aim for global leadership. a. E-commerce b. Internet c. Cultural diversity d. Industries 2. The well-known ______________ Road and Spice Routes were the epitome of international business. a. Silk b. IT
  3. 3. c. Cultural d. Tourism 3. The tendency of companies to move beyond national borders gained momentum in 1940s and was expedited with the establishment of ________________ in 1995. a. Standards and Trade development facility (STDF) b. E-business c. World Trade Organisation d. Fairtrade Labelling Organisations International (FLO) 4. Companies adopt this strategy when each country’s market needs to be treated as self contained. What strategy is it? a. Product-line b. National c. Global companies d. Multinational 5. What can be defined as any business that crosses the national borders of a country? a. Organised b. Domestic c. Multicultural d. International 6. Any company can dilute its business risk by spreading its operations to a number of different and _____________ countries. a. Underdeveloped b. Diverse c. Homogeneous d. Developing 7. Which country is rich in labour pool will specialise in rendering of information technology services? a. India b. US c. Thailand d. Saudi Arabia 8. Who argued that national wealth and prosperity will increase with more and more inflow of gold and silver? a. Adam Smith
  4. 4. b. Profounder of mercantilism theory c. David Ricardo d. Raymond Vernon 9. Who pointed out the flaws and inconsistencies in mercantilism theory in the year 1752? a. Heckscher-Ohlin b. Thomas Mun c. David Hume d. Raymond Vernon 10. Which country has absolute cost advantage in cutting and polishing of diamond? a. England b. France c. Switzerland d. India 11. Which theory is based on the hypotheses that countries trade with each other as they differ with respect to the availability of the factors of production i.e. land, labour and capital? a. Product lifecycle theory b. Heckscher-Ohlin Trade Theory c. Michael Porter d. Mercantilism theory 12. In which book/theory, Adam Smith attacked the mercantilism and argued that countries differ in their ability to produce goods and services efficiently due to variety of reasons. a. The Heckscher-Ohlin Trade Theory b. ’Wealth of Nations' c. 'Principles of Political Economy’
  5. 5. d. Product lifecycle theory 13. One of the factors that determines the degree of urbanisation includes _______________. a. Ratio of a country's imports and exports to its Gross National Product. b. Local currency c. Number of competing firms d. Nature of goods bought 14. Which demographic aspect are we talking about when we say, 'Firm can do generalisations after cross comparing its product with similar products in the markets and devise corrective actions on time'? a. Branding and strategy b. Market trending c. Segment selection d. Assumption of country culture 15. As per which law, interest payments on financial dealings are forbidden since it is seen as improper to reward those with excess funds while penalising those who need to borrow. ? a. Common Law b. Islamic Law c. Code Law d. Domestic Law 16. ______________ refers to the process of settlement of disputes by having independent referees, who are agreeable to both sides, adjudicate the matter. a. Arbitration b. Litigation c. Adjudication
  6. 6. d. Negotiation 17. Which one out of these arbitration bodies is located in Paris? a. International Court of Justice b. International Center for the Settlement of Investment Disputes c. London Court of Arbitration d. American Arbitration Association 18. What do you call the power of state over its citizens and land? a. Nationalisation b. Litigation c. Sovereignty d. Accretion 19. The most important aspect to qualify as a manager for positions of international responsibility is _________________ skills. a. Training b. Communication c. Controlling d. Motivation 20. The ability to demonstrate a series of behaviour is called ____________. a. Skill b. Management c. Diversity d. Creativity 21. From the following, which is the highest Hofstede dimension for culture in India? a. Long-Term Orientation b. Uncertainty Avoidance Index c. Power Distance Index d. Masculinity
  7. 7. 22. According to Japan's management style: a. Decisions, once taken at senior levels, are delivered down the chain. b. A manager’s personal style is considered to be of importance. c. Information flows from the bottom of the company to the top. d. Subordinates are not allowed to question the decisions of superiors. 23. In which of the following countries, while communicating, the use of body language is very minimal and hence it is difficult for an untrained observer? a. Japan b. India c. Brazil d. USA 24. A country with low ____________ ranking shows that the country has fewer concerns about ambiguity and has high tolerance for a variety of opinions. a. Masculinity b. Individualism c. Power distance d. Uncertainty avoidance 25. __________________help the company in accessing new markets, exploring new marketing channels, exploring cheaper production facilities in low cost destinations, accessing new and advanced technology. a. Foreign Investment b. Foreign Direct Investment c. Foreign Portfolio Investment d. Green Field Investment 26. __________________ is an investment by foreign investor in the country’s/region’s financial instrument, such as investment in bond market or stock investing. Which of them is True? a. Foreign Investment b. Foreign Direct Investment c. Foreign Portfolio Investment d. Green Field Investment 27. Communist/social model of economic development has questioned the need of foreign investment for speeding up the _____________ and country’s overall economic development. Which of them is True? a. Population growth b. Economic growth c. Cultural growth d. Social Growth
  8. 8. 28. An investment by a foreign investor in sick industrial unit which needs complete restructuring known as _____________. a. Green field investment b. Foreign Direct investment c. Brown field investment d. Foreign portfolio investment 29. ___________ are negotiable certificates and are issued by a country’s bank against a certain number of shares held in its custody. a. Joint ventures b. Depository receipts c. Mergers d. Acquisition 30. Countries, usually do not allow foreign investment mainly because of __________. a. Competitive Motives b. Power motives c. Economic Motives d. Political Motives 31. _________ is a type of trade bloc which can be considered as the second stage of economic integration. a. Custom union b. Economic union c. Single market d. Free trade area 32. Which of the regional trading arrangements is an economic and political union established in 1993? a. The European Union (EU) b. European Free Trade Association (EFTA) c. North American Free Trade Agreement (NAFTA) d. Southern Common Market (MERCOSUR) 33. ___________is a trade pact between Argentina, Brazil, Paraguay and Uruguay. a. North American Free Trade Agreement (NAFTA) b. Southern Common Market (MERCOSUR) c. ASEAN Free Trade Area (AFTA) d. Asia-Pacific Economic Cooperation (APEC) 34. Which of the following agreement was also known as Bangkok Agreement ? a. ASEAN Free Trade Area (AFTA) agreement b. South Asian Free Trade Area (SAFTA) agreement c. India-MERCOSUR Preferential Trade Agreement (PTA) d. Asia-Pacific Trade Agreement (APTA) 35. The objective of _________ agreement is to encourage economic development gradually through trade expansion among the developing member countries of ESCAP. a. Gulf Cooperation Council (GCC)
  9. 9. b. Asia-Pacific Economic Cooperation (APEC) c. India-MERCOSUR Preferential Trade Agreement (PTA) d. APTA/ Bangkok agreement 36. The initiative of regional integration should_____________. a. Not develop strong public sector institutions and good governance. b. Increase social disparities. c. Reduce the region’s interaction with other regions of the world. d. Build environmental programmes at the regional level. 37. The support system institutions for international business include WTO (World Trade Organisation), ___________________ and International Monetary Fund (IMF). a. International Labour Code b. GATT c. World Bank d. Trade-Related Aspects of Intellectual Property Rights (TRIPS) 38. What is the main objective of IMF? a. To promote and ensure international trade in developing countries. b. To provide a forum for intergovernmental discussions. c. Provide leveraged loans to developing countries for major projects. d. To facilitate the expansion and balanced growth of international trade and provide exchange stability. 39. WTO dispute settlement system helps to: a. Provide a forum for intergovernmental discussions b. Preserve the rights and responsibilities of the members c. Ensure that developing countries secure a better share of growth in world trade d. Undertake research, data collection and policy analysis for debates of government representatives and experts. 40. On behalf of the __________________ the General Council administers as the Dispute Settlement Body to handle the dispute settlement procedures.
  10. 10. a. Most Favoured Nation (MFN) b. Ministerial Conference c. General Agreement on Tariffs and Trade (GATT) d. Governing Body 41. In ILO, 'Recommendations' are issued when the subject is: a. Resolves trade disputes b. Providing forum for trade negotiations c. Ensuring that developing countries secure a better share of growth in world trade d. Already covered by a convention but needs to be addressed in more detail. 42. The _______________________ of 15th April 1994 was formed to strengthen the world economy that would lead to better investment, trade, income growth and employment throughout the world. a. International Labour Organisation (ILO) b. Marrakesh Declaration c. WTO d. International Labour Code 43. The ____________________ provides links among the capital markets of individual countries. a. International capital markets b. International security markets c. International money markets d. Foreign currency markets 44. The principle of _______________ states that all equally positioned tax payers should contribute in the cost of operating the government according to the equal rules.
  11. 11. a. Taxation b. Tax equity c. Tax neutrality d. Avoidance of double taxation 45. __________________ focuses on the differences in legal rules, particularly variation in the legal protection of creditors and shareholders affecting investment and reforming decisions. a. International monetary systems b. Cross-border valuation and financing c. Institutions and finance d. Multinational financial decision making 46. ______________________ is considered to be the leading financial market in the world. a. International financial markets b. International monetary systems c. Foreign currency derivatives d. Foreign exchange market 47. In ______________, the value of the currency is fixed by the nations with respect to some foreign currency but not with respect to gold. a. International monetary systems b. Gold-exchange system c. Gold and gold bullion standards d. Floating exchange rates 48. In which policy, the manager can increase the amount of liquidity in order to reduce the risk of business.
  12. 12. a. Working capital policy b. Liquidity policy c. Profitability policy d. Financial policy 49. ____________ is a present requirement of the enterprise that is rising from past procedures, the closure of which is likely to result in an outflow from the enterprise' possessions. a. An asset b. A liability c. An equity d. Revenue 50. Which underlying assumption in IFRS gets stated when we say, 'An entity for the predictable future'? a. Accrual basis b. Going concern c. Stable measuring unit assumption d. Units of constant purchasing power 51. Consider the below mentioned statements with respect to joint ventures as a mode of entering into foreign markets. 1. It is a good means for market entry in those markets where there are no entry barriers like capital limit requirement. 2. In joint ventures, both the parties are supposed to provide capital and resources in the agreed proportion. State True or False: a. 1-True, 2-True b. 1-False, 2-False c. 1-False, 2-True
  13. 13. d. 1-True, 2-False 52 . "Consider the following statements with respect to reasons for global sourcing: 1) If political or economic problems occur in any region, the company will be able to continue its operations without disruption by fulfilling their needs from other global sourcing location. 2) Companies want to evade their political and business risks by restricting their business operations at various parts of the world." State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 53. Consider the below mentioned statements with respect to segmentation. 1. Psychographic segmentation considers factors like age, culture, income, education and gender. 2. The process of selecting or choosing the potential market segment is known as targeting. State True or False: a. 1-False, 2-True b. 1-True, 2-True c. 1-True, 2-False d. 1-False, 2-False 54. Consider the below mentioned statements with respect to International advertising. 1. The purpose of international advertising is to reach and communicate to target audiences in more than one country. 2. International advertising is not a part of business activity, it is merely a communication process. 1. State True or False: a. 1-False, 2-True b. 1-True, 2-False c. 1-True, 2-True
  14. 14. d. 1-False, 2-False 55. Consider the below mentioned statements with respect to branding for international markets. 1. Brand value can be defined as the branding efforts that build customer confidence and loyalty by adding unique advantages to the firm’s product or service. 2. In international branding, brand ideas, values and concepts have to vary to make them familiar to customers. 2. State True or False: a. 1-True, 2-False b. 1-True, 2-True c. 1-False, 2-True d. 1-False, 2-False 56. "Consider the following statements with respect to Strategic Management: 1. Strategic management identifies and comprehends the environmental factors to control the plans accordingly. 2. Most strategic alliances focus on generating greater profits and returns for the business owners." 3. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 57. "Consider the following statements with respect to strategic planning: 1. Strategic planning is an important element in all kinds of organisations and is applied by governments, non-profit agencies, individuals and businesses. 2. Intermediate planning involves detailing out the functioning of a strategic plan on a daily basis." 4. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 58. "Consider the following statements with respect to strategic planning: 1. Senior-level managers have to be very specific when laying out expectations because the people following the plan are not involved in the planning process.
  15. 15. 2. The benefit of talented employees with prior experience on definite aspects of the project are not utilised based on the assumption that the management can plan and perform a project better without the inputs from these employees." 5. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 59. "Consider the following statements with respect to strategy formulation: 1. Functional strategy is concerned with the broad’s decisions about the total organisation's scope and direction. 2. Portfolio strategic activity plans the organisation’s portfolio in line with those businesses, which needs reconsidering and, if so, how much concentration or diversification the organisation should have." State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 60. a) __________is the basic system of ethics followed by a business in a free market scenario. It covers the entire spectrum of business including sales, pricing, and competitor issues. b) ___________consider ideology as an important factor along with the moral aspects in a capitalist scenario. a. Market ethics and The protestant ethics b. Market ethics and Liberty ethics c. Liberty ethics and Market ethics d. Liberty ethics and The protestant ethics 61. 11. a) The principle of _________ states that there are basic moral principles that are valid across all cultural and political boundaries. b) __________is defined as the practice of a uniform system of ethical codes in different countries that are culturally and socially different. a. Ethical relativism and Ethical universalism b. Ethical universalism and Ethical convergence c. Ethical convergence and Ethical universalism d. Ethical relativism and Ethical convergence 62. 12. Consider the below mentioned statements with respect to corporate ethical programmes and social responsibility and ethics. 1. Organisations that adhere to corporate social strategies are better equipped to react to global challenges and corporate responsibilities.
  16. 16. 2. As multinational firms face a wide array of ethical challenges because of increased competition due to globalisation, a formal corporate ethical programme is important to any organisation. State True or False: a. 1-True, 2-False b. 1-True, 2-True c. 1-False, 2-True d. 1-False, 2-False 63. 13. a) _______refers to a set of values and standards that defines acceptable behaviour passed on to generations. b)________refers to the rules of conduct, approved by the legal system of a country or state that guides human behaviour. a. Religion and Culture b. Culture and Law c. Law and Religion d. Law and Culture 64. 14. ___________ and _____________ are the major factors that influence organisational structure. a. Inflation, Unemployment b. Environment and Inflation c. Environment and Technology d. Inflation and Technology 65. Consider the following statements with respect to the management approaches affecting organisational structure: 1. In ethnocentric management approaches affecting organisational structure, decision making is controlled by the head office and most of the managers are from the parent company. 2. In geocentric management approaches affecting organisational structure, decisions are largely decentralised and managers in the subsidiaries are mostly from the host country. State True or False: a. 1- True, 2- True b. 1- False, 2- False c. 1- False, 2- True d. 1- True, 2- False 66. a) In which organisation structure, international operations are organised by dividing the entire globe into different geographic regions. b) Which is the most complex organisational structure and is suitable where several functional divisions from across the globe performing related duties are grouped together into an international product division ? a. Regional structure and International matrix structure b. International matrix structure and Regional structure c. Functional structure and Regional structure
  17. 17. d. Regional structure and Functional structure 67. 17. Consider the following statements with respect to the three main dimensions of international human resources management. 1. The countries of operation in an IHRM perspective includes the host country in which the overseas operation is located, the home country that houses the headquarters of the company, and other countries that supply labour and finance. 2. The origin of the workforce of an international business can be classified into three types: parent country nationals, host country nationals, and third country nationals. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 68. 18. 1. ________________ are concerned about the quality/quantity and delivery of the goods that are not sent if the payment is made in advance. 2. ___________ transaction involves the shipping and delivery of goods in advance. a. Exporters, Open account b. Importers, Documentary collections c. Buyers, Documentary collections d. Buyers, Open account 69. 19. Consider the following statements with respect to Strategic Management Process: 1. Letter of credit is a document that is issued by the bank that guarantees payment to a beneficiary. 2. Packing List is the document that is given to the seller from the buyer. State True or False: a. 1- True, 2- True b. 1- False, 2- False c. 1- False, 2- True d. 1- True, 2- False 70. 20. 1. If the document is submitted under the __________, the insured amount should be in the currency as mentioned in the credit. 2. The ___________ is signed by the representatives of the carrying vessel and it contains the details of type, quantity and destination of the goods. a. Letter of credit, Packing List b. Bill of lading, Letter of credit c. Letter of credit, Bill of lading d. Packing List, Bill of lading
  18. 18. 71. 21. Consider the following statements with respect to alliances: 1. Forfaiting is the financing technique that is used for financing the sale of capital goods. 2. A banker's acceptance, is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 72. Consider the following statements with respect to global sourcing: 1) Globalisation of the world economy under the IMF and World Bank has opened abundant opportunities of cost cutting, gaining competitive advantage and saving time for industries worldwide. 2) Global sourcing strategy is aimed at exploiting ‘global efficiencie’ in all areas of manufacturing, trading and services. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False 73. Consider the following statements with respect to global sourcing: 1) In a globalised set up, trade and commerce of skilled services such as IT enabled services and knowledge process outsourcing is growing much faster than trade in merchandise. 2) Brand India is widely recognised in the ‘silicon valley’ but its emergence as a low cost supplier has lead to its exploitation. State True or False: a. 1- True, 2- False. b. 1- False, 2- True. c. 1- True, 2- True. d. 1- False, 2- False. 74. 24. Consider the following statements with respect to reasons for global sourcing: 1) In times of economic recession, political environment encourages to outsource as the country's employment remains unaffected. 2) The global sourcing industry is on a growth run as there are sound business reasons in global sourcing. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False
  19. 19. 75. 25. Consider the following statements with respect to reasons for global outsourcing: 1) Layoff expenditure in US are far higher than in India, thus, companies outsource their business operations to countries like India and China. 2) There is improved performance in developing countries as bottom of the pyramid offers specialisation and dedicated expertise for the work. State True or False: a. 1- True, 2- False b. 1- False, 2- True c. 1- True, 2- True d. 1- False, 2- False