Mgt 8 Pointers for review – Final Examinations (19
It
December 2020)
1. Definition of Globalization
 Globalization refers to the widening set of
interdependent relationships among people from
different parts of a world that happens to be
divided into nations. The term sometimes refers
to the elimination of barriers to international
movements of goods, services, capital,
technology, and people that influence the
integration of world economies.
2. Merchandise Import vs Merchandise Export
 Merchandise exports are tangible products
—goods—that are sent out of a country;
merchandise imports are goods brought into
a country.
 Merchandise exports and Imports are
usually a country’s most common
international economic transactions.
3. Reasons why Governments are involved in
Globalization
4. Ascribed vs acquired group membership
 Those determined by birth are ascribed
group memberships, including gender,
family, age, caste, and ethnic, racial, or
national origin.
 Acquired group memberships include those
based on religion, political affiliation,
educational place and achievement, and
profession.
 Group affiliations can be
 • Ascribed or acquired
• A reflection of class and status
5. What is a deal-focus culture?
 Deal-focus (DF) culture: A culture where
people are primarily task-oriented rather
than relationship-oriented
6. Organizations with cultural diversity experiences these
type of problems
7. Types of stakeholders whose concern is product
quality
8. Utilitarian vs deontological approach
 Utilitarianism, a consequences- based
theory of moral reasoning, means that “an
action is right if it produces, or if it tends to
produce, the greatest amount of good for
the greatest number of people affected by
the action
 An action if right if it produces the greatest
amount of good.
 Deontological approach, asserts that we
make moral judgments or engage in moral
reasoning independent of consequences.
implies that actions are right or wrong per
se. In other words, ethics teaches that
“people have a responsibility to do what is
right and to avoid doing what is wrong.”
 Moral judgments are made and moral
reasoning occurs independent of
consequences.
9. What is great by choice outlook?
 Great by choice: The principle that
managers’ choices are the basis of building
and sustaining a high-performance
enterprise in unpredictable, tumultuous, and
fast moving times.
 Can help managers make the transition from
confusion to clarity

10. What are the primary and support activities within the
value chain?
 Primary activities define the core business
functions: from developing a product and
building the operations that make it onward
through logistics, marketing, distributing,
and servicing.
 Support activities that apply to each primary
activity.
 Support activities, besides defining the
infrastructure of the firm, anchor the day-to-
day performance of the primary activities.
 A value chain disaggregates a firm into
• Primary activities that design, make,
sell, and deliver the product.
• Support activities that implement the
primary activities.
11. Cost leadership vs product differentiation strategy
 Cost leadership strategy aims to be the
industry’s low-cost producer for a given level
of quality
 Aims to make a product at a given level of
quality for a cost below those of competitors.
 Differentiation, creating value by generating
insights into consumer behavior, developing
cutting-edge products, designing high-profile
marketing programs, and quickly moving
products to market.
 Calls for continual innovation, whereas cost
leadership champions sustainable
efficiency.
12. Types of Risks - Political risks, foreign exchange risks,
competitive and economic risks pg 539
 Political risks - Changes in political leaders’ opinions
and policies, civil disorder, and animosity between the
host and other countries
Foreign exchange risks - Changes in exchange rates
or the ability to move funds out of a country may also
affect an MNE
Competitive Risk - The comparison of likely success
among countries is largely contingent on competitors’
actions.
Economic risks –
13. It refers to the advantage of being first in the market
pg544
By being first into a market, a firm may more easily
gain the best partners, best locations, and best
suppliers—a strategy to gain first-mover advantage.
14. What is the business of freight forwarding? Pg597
 Freight forwarders act as agents for
international traders in supervising the
movement of goods to foreign buyers.
 Third Party Logistics (3PL)
15. Internalization vs Appropriability Theory pg 622
 Internalization: Control through self-handling
of foreign operations, primarily because
such control is less expensive to deal with in
the same corporate family than to contract
with an external organization.
 Appropriability theory: The theory that
companies will favor foreign direct
investment over such nonequity operating
forms as licensing arrangements so that
potential competitors will be less likely to
gain access to proprietary information.
 The idea of denying rivals access to
resources
16. General motives for collaborative arrangements
Collaborative arrangement: A formal, long-term
contractual agreement among companies.
 Spread and reduce costs
 Specialize in competencies
 Avoid or counter competition
 Secure vertical and horizontal links
 Learn from other companies
17. Where should decision-making take place in an
organization?
18. Different types of organizational structure pg663
 Functional Structure - Group people based
on common expertise and resources. Fit the
organizational demands of MNEs
 International Division Structure - Creates a
critical mass of international expertise.
Competes with powerful domestic divisions
for resources.
 Product Division Structure - most popular
type of structure among MNEs worldwide
 Geographic (area) Division Structure - when
it has significant international sales that are
not dominated by a single country or region
(including the home country)
 Matrix Division Structure - Institutes
overlaps among functional and divisional
forms.
19. Characteristics of a matrix organization
 A matrix organization:
• Institutes overlaps among functional and
divisional forms.
• Gives functional, product, and geographic
groups a common focus.
• Has dual-reporting relationships rather than
a single line of command.
• Fits the demands of MNEs that cannot
easily reconcile competing market
pressures.
20. Types of marketing orientation pg702
 Five common marketing orientations can be
applied around the world: production, sales,
customer, strategic marketing, and social
marketing. Each is discussed below.
 Product orientation
 Sales orientation
 Customer Orientation
 Strategic Marketing Orientation
 Social Marketing Orientation
21. Why do companies have to alter their products in
terms of labeling, etc? pg705
 Legal Considerations
 Cultural Considerations
 Economic Considerations
22. Types of pricing strategies under a diverse market
Market Diversity Although a company can segment the
domestic market and charge different prices in each
segment, country-to-country variations create even more
natural segments. A seafood company would sell few sea
urchins or tuna eyeballs in the United States at any price,
but it can export them to Japan, where they are considered
delicacies.
Pricing Tactics In some places, a company may have many
competitors and thus little discretion in setting its prices.
Elsewhere, a near-monopoly situation may allow it to
exercise considerable pricing discretion by using any of the
following tactics:
A skimming strategy—charging a high price for a new
product by aiming first at consumers willing to pay that
much, then progressively lowering the price to sell to other
consumers
A penetration strategy—introducing a product at a low
price to induce a maximum number of consumers to try it a
cost-plus strategy—pricing at a desired margin over cost
Country-of-origin stereotypes also limit pricing possibilities.
For example, exporters in developing economies must
often compete primarily through low prices because of
negative perceptions about their products’ quality. The
danger is that a lower price may weaken the product image
even further.
23. Advantages of standardized advertising
Advantages of standardized
Advertising include
• Some cost savings,
• Better quality at the local level,
• A common image globally,
• Rapid entry into different countries
24. What is a supply chain?
 Supply chain—the coordination of materials,
information, and funds from the initial raw-
material supplier to the ultimate customer.
 network that links together the different
aspects of the value chain
 Supply chain: The coordination of materials,
information, and funds from the initial raw
material supplier to the ultimate customer.
25. Success of global operations strategies depend on
these factors. Pg743
The success of a global operations strategy depends
on compatibility, configuration, coordination, and
control.
 Compatibility - is the degree of consistency
between the foreign investment decision
and the company’s competitive strategy
 Configuration – (Centralized manufacturing
in one country, Manufacturing facilities in
specific regions to service those regions,
Multidomestic facilities in each country)
 Coordination - is the linking or integrating of
activities into a unified system.
 Control - can be the measuring of
performance so a firm can respond
appropriately to changing conditions.
26. Offshore vs onshore manufacturing
 Offshore manufacturing—any investment
that takes place in a country other than the
home country.
 This is a major reason why many MNEs
have established operations in lower-cost
emerging markets—a type of FDI known as
offshore manufacturing or simply
“offshoring” (which, again, includes services
as well as manufacturing).
 Any investment that takes place in a country
other than the home country.
27. Why do companies pursue global sourcing?
 Companies outsource abroad to lower costs
and improve quality, among other reasons.
 Why Global Sourcing? Companies pursue
global sourcing strategies for a number of
reasons:
• To reduce costs through cheaper
labor, laxer work rules, and lower land and
facilities costs
• To improve quality
• To increase exposure to worldwide
technology
• To improve the delivery-of-supplies
process
To strengthen the reliability of supply by
supplementing domestic suppliers with
foreign ones
To gain access to materials those are only
available abroad, possibly because of
technical specifications or product
capabilities
To establish a presence in a foreign market
To satisfy offset requirements
To react to competitors’offshore sourcing
practices
28. Activities other than accounting in which the
controllers of today are involved with pg806
Today’s controller is engaged in a variety of activities
outside the typical accounting and reporting functions
that support the firm’s general strategy. (These can
include managing the supply chain, evaluating
potential acquisitions abroad, disposing of a
subsidiary or a division, managing cash flow, hedging
 currency and interest-rate risks, tax planning, internal
auditing, and helping to plan corporate strategy)
A company’s accounting or controllership function is
responsible for collecting and analyzing data for
internal and external users.
29. Who are the critical users of accounting information?
 Critical users of accounting information are
investors, employees, lenders, suppliers,
other trade creditors, customers,
governments and their agencies, and the
public.
30. Different types of budgeting in an organization
31. Operating vs liquidity exposures
 Economic (or Operating) Exposure
Economic exposure, also known as
operating exposure, is the potential for
change in expected cash flows that arises
from the pricing of products, the sourcing
and cost of inputs, and the location of
investments.
 Economic, or operating, exposure arises
from the effects of exchange-rate changes
on
 • Future cash flows,
 • The sourcing of parts and components,
 • The location of investments,
 • The competitive position of the company in
different markets.
32. Polycentric, ethnocentric and geocentric frameworks.
 Polycentrism is the principle of organizing
around different political, social, or economic
centers. A polycentric framework
acknowledges the business practices of
foreign centers as philosophically and
practically equivalent to those at home.
 The polycentric framework uses host-
country nationals to manage local
subsidiaries.
 Geocentrism is a world-oriented set of
attitudes and values that regards humanity
as a single entity sharing universal outlooks
and orientations. Hence, the geocentric
framework does not heed national
boundaries.
 The geocentric framework posts the most-
qualified executives, regardless of
nationality, to expatriate slots.
 Ethnocentrism occurs when one group
places itself at the top of an imagined
hierarchy of relevant groups, thereby
regarding others as inferior. Hence, the
ethnocentric framework signifies the belief
that the management principles and
business practices used by headquarters
are superior to those used by rivals in other
countries.
 The ethnocentric framework fills key
management positions with home-country
nationals.
33. The most common approach in determining
expatriates pay?
 The most common approach to expatriate
pay is the balance sheet approach.
34. Considered as the least of concerns among
expatriates moving to their foreign assignments
 The Weather
35. Most important expected key competencies among
expatriates
 Global Mindset
36. What is individualism?
 Individualism: An emphasis on the
importance of guaranteeing individual
freedom and self-expression encourages
fulfilling leisure time and improving skills
outside the organization.
 The doctrine of individualism emphasizes
the primacy of individual freedom, self-
expression, and personal independence
(think of the declaration that we all have
“certain inalienable Rights, that among
these are Life, Liberty and the pursuit of
Happiness”)
 Champions the primacy of the rights and
role of the individual.
37. Roles of economic forces pg64
- Economics explains country differences in costs,
currency values, and market size.
- Economics explains why countries exchange
goods and services, why capital and people
travel among countries in the course of business,
and why one country’s currency has a certain
value compared to another’s.
38. Individualist vs collectivist societies
 “Safe” work environments motivate
collectivists. Challenges motivate
individualists.
 Individualists in a family-oriented
collectivists country may be less motivated
to receive material rewards from their work
 because of dividing the rewards among
more family members.
 Cultural attitudes influence the protection of
intellectual property rights. Individualist
societies are more vigilant than collectivist
societies.
 High individualism describes an employee’s
preference to fulfill leisure time and improve
skills outside the organization, receive direct
monetary compensation as opposed to
fringe benefits, and engage in personal
decision making and on-the-job challenges.
 High collectivism, in contrast, typifies an
employee’s penchant for dependence on the
organization through training, satisfactory
workplace conditions, and good benefits. In
countries with high individualism, a self-
actualization opportunity is a prime
motivator because employees want
challenges
39. Market vs command economies
MARKET ECONOMY
 An economic system whereby individuals,
rather than the government, make most
decisions is a market economy.
 A market economy of the sort seen in Hong
Kong, Singapore, Australia, Switzerland,
Canada, and the United States, for instance,
grants people the economic freedom to
decide where to work, what to do and for
how long, how to spend or save money, and
whether to consume now or later.
 The market economy recognizes the
supremacy of consumer sovereignty.
 The market economy champions the
doctrine of laissez-faire, which can be
literally translated as “Let do,” and more
broadly advises “Let it be” or “Leave it
alone.”
 A market economy is anchored in
capitalism, a command economy is
anchored in communism, and a mixed
economy is anchored in socialism.
COMMAND ECONOMY
 in which the government owns and controls
resources, taking on the authority to decide
what products to make, in what quantity, at
what price, and in what way.
 In a command economy, the visible hand of
the state supersedes the invisible hand of
the market.
 Command economies have included the
Soviet Union (which, at its height, was the
world’s second-largest economy), China
during its Great Leap Forward era beginning
in 1958, India prior to its economic reforms
in 1991, and Afghanistan during the rule by
Soviet occupation and the Taliban.
 In a command economy, the government
plans what goods and services a country
produces, the quantity in which they are
produced, and the price at which they are
sold.
 A command economy endorses the doctrine
of communism, its principle of an activist
government that commands and controls
most if not all factors of production, and the
goal of constraining economic freedom.
 An economic system in which the political
authorities make major decisions regarding
the production and distribution of goods and
services.
40. What does free trade bring? Pg238
 Specialization.
 Greater efficiency.
 Higher global output
41. What is an infant industry?
Infant-industry argument presumes that the initial
operating costs for an industry in a given country may
be so high as to make its output noncompetitive in
world markets
42. Purposes of Tariffs?
43. What are the major challenges of the NAFTA? Pg320
 Illegal immigration
44. Where is the biggest market for foreign exchange?
The biggest market for foreign exchange is London,
followed by New York, Tokyo, and Singapore
45. What is a soft currency?
Soft currency is one that is usually not fully convertible
and is so called a weak currency.
46. Sight drafts vs Global bonds?
If the exporter requests payment to be made
immediately, the draft is called a sight draft. (A sight
draft requires payment to be made when it is
presented. A time draft permits payment to be made
after the date when it is presented)
47. What is leveraging? pg 414
Leverage - is the degree to which a firm funds the
growth of business by debt.
48. Uses of foreign exchange transactions
49. Reasons why US bonds markets are influential pg419
One reason the bond (and stock) markets in the
United States are so influential is because the
companies of continental Europe still rely
disproportionately on banks for finance.
50. Effects of import restrictions on domestic employment
pg277
 May lead to retaliation by other countries
 Are less likely retaliated against effectively
by small economies.
 Are less likely to be met with retaliation if
implemented by small economies.
 May decrease export jobs because of price
increases for components.
 May decrease export jobs because of lower
incomes abroad