Name Chris Jachimowicz

BUS/SOS 116
MID-TERM EXAM Spring

You must type all answers to questions. Answer all questions on this sheet in space provided with the question. Place your
answers in BOLD print and UNDERLINED. Please be as concise as possible while fully answering each question. Please submit
answers to instructor in order presented below on this sheet only. Make sure to specifically address each question asked, showing
knowledge derived from text, lecture, readings, and other sources.
Complete all questions from GROUP ONE.
Complete all questions from GROUP TWO (A , B, and C).
Point values GROUP ONE 1-8 equal 6-8 points each .
Group Two A=16 pts. B=12 C= 8 D=8 (will not add up to 100- built in curve)

Exams submitted late will be subject to penalty as I must be fair to all students in the class

Group ONE

1. From the textbook, list the key factors that account for the rise of the globalization of economic activity
over the last number of decades?

Improved trade, improved technology, capital mobility and increased labor

2. List the key points of the Management Focus from Chapter 13, page 361, “Tesco Global Growth
Strategy”

Tesco is the largest grocery retailer in the UK, coming second worldwide after Walmart. Tesco had
great marketing due to their strategies, store site selection, and its own label product offerings, amongst
other things. In the early 90’s Tesco was generating a strong cash flow and one way they decided to use
the cash was on overseas expansion. By 2019 Tesco was the market leader in many other European
countries. Throughout the late 90’s Tesco continues to buy out local food retailers in many Asian
countries. In 2019 They have generated $25 Billion in sales outside the UK and 52 billion in the UK. I
conclusion there are a couple key points to Tesco’s Global growth strategy. Firstly, Tesco does not send
managers to run overseas operations they instead hire the locals to help them and support them with
experts from the UK. Secondly Tesco has teamed up with good companies that have a great
understanding of global marketing. Lastly, Tescos ability to adapt and succeed in the global market has
been there biggest aid to their success.

.
 3. A country puts in a quota limitation on the importation of cherries into their country. Cherries imported
are reduced by 90% because of this quota. This is welcomed by cherry growers in this country.
Indicate the consequence for each category/group a-e listed below within the country that imposed the
quota on imports.
(Indicate the effect with an I for increase, D for decrease, and U for un/ indeterminate from
information provided)

a. ___I___ Price of imported gourmet/special cherries

b. ___D____Domestic produced cherry prices for consumers

c. ____D___ Input costs for cherry filing and cherry pie producers

d. ___U____ Prices for consumers that purchase cherry filling and/or cherry pies

e. ____I____ Profits of cherry farmers

4. List the key points of the Closing Case from Chapter 8 “Foreign Direct Investment in the Indian Retail
Sector” particularly as it relates to changes in FDI opportunities.

Historically the structure of retailing in India consisted of a large number of various small stores serving
the general population. Until 2011 many foreign multi brand retailers like Costco and Walmart, were
forbidden from owning retail outlets in India. These huge retailers are forced to partner with local
retailers and their ownership is limited.

5. Working through the stages of the International Product Life-Cycle Theory we find that production
and sales changes for the product over the life cycle of the product in the international arena. What
is the major finding of this international theory in regards to production and sales over time for the
various players.
Note: It is not the same as the general marketing product life-cycle. (Answer in one compound sentence
only)
Answer: In theory as the size of the market expands, individual firms may be able to bring down the cost
of production, aiding mutually to all parties involved.

6. Tariffs as trade policy always involve economic costs to the trading countries; less trade, higher
prices, and winners and losers, and so on. For import tariffs, the answer as to which country incurs
the specific cost of the tariff fees is indisputable. In 2019 the then- president of the U.S. claimed
about 108 times that China was paying for the import tariffs placed on some Chinese goods coming
into the U.S. Given how import tariffs work, would Chinese exporters be paying for these tariffs or
was it the U.S. importers? Chose yes it was true the Chinese were paying or no it was not true the
Chinese were paying.

No, here’s why (one-two sentences max) No based on this theory the country that is
importing the goods is the one that pays the tariffs.

7. Would you say the Krugman’s New Trade Theory is supported by Hechscher and Ohlin’s theory? Explain
your analysis leading to the answer.
The Hechsher and Ohlin’s theory agrees that free trade is beneficial. Although this theory argues
that patterns of international trade are determined by differences in factor endowments rather than
differences in productivity.

No
Answer: Yes or No and why:

8. Hofstede isolated certain dimensions that he claimed characterized the cultures of different countries and
influenced business culture. From the text material only, List the limitations/weaknesses (critique of) of his
theory as a useful tool used by managers overseas. (this question asks basically what is the criticism of his
research, not what his dimensions are)

One major flaw of Hofestede’s model is based on inconclusive research, Hofestede’s findings did not
provide valid information regarding culture of an entire country. Simply put his model on culture in
trade is too broad to have a universal model. For example, even in America we have multiple cultures
amongst societal groups.

Group Two questions A, B, C,& D

A. The Italian Ceramic Tile Case- place answers below for the case that is at the
end of this exam. Do not send a copy of the case to me with your answers to
this exam, only your answer below.

A. Use Michael Porter’s Competitive Advantage:Diamond theory from the text to analyze the rise of
the Italian Ceramic Tile Industry. List each part of the theory and explain whether Porter’s Theory fits or does
not fit in this case. Then clearly explain why it would or would not according to the theory. (Why: should be
one sentence) Clear analysis/understanding of Porter’s Theory from text is essential.

1. Firm Strategy, structure, and rivalry fits

Why: The competition of the tile market led to businesses finding ways to increase production and
develop technological innovations

2. Demand Conditions fits

 Why: There was a huge boom in reconstruction after the world war, IM sure some people needed it but
most people just wanted a fresh start Im sure.

3. Related and supporting industries Fits

4. Why: Throughout the tile industry, there was constantly people changing and improving things to help
sell tiles

5. Factor Endowments fits

Why: The labor that was in Italy allowed for the fine craftsmanship of the tiles

B. Here is a model of the production possibilities curve. The two countries producing are Country A and
Country B. The only goods they produce and might trade are oranges and zucchini. Each country has the same
amount of inputs (factor resources and technology). The level of output for each product if each country was to fully
specialize in producing only one good is shown below. (the data shows how much output could be produced through
specialization by each country: example for oranges country A can produce 60 units when only producing oranges
with its inputs and thus zero zucchini and B could produce 40 units oranges and zero zucchini if it specialized in
only producing oranges. Same logic when specializing in zucchini)
Specialization output outcomes=
Country A Country B

Oranges 0 60 0 40
Zucchini 240 0 80 0

B1. Which country has an absolute advantage in Orange production? Country A.

B2. Which country has an absolute advantage in Zucchini production? Country A

3. Which country has a comparative advantage in Orange production? And why? (one sentence)

Country A has a better comparative advantage because they are able to produce more oranges

B4. Which country has a comparative advantage in Zucchini production?

Country A has a better comparative advantage because they are able to produce more zuchini

C. The United Kingdom is the only sovereign country to have left the European Union. It joined
the European Community (EU predecessor) in January 1973 and left through what became
called BREXIT 47 years later.
Please read the three paragraphs in the text on Brexit on page 256. It gives you an overview of what
was occurring over the last few years. Next read the attached articles that brings us to the actual exit
from the European Union by the United Kingdom.
.
https://www.thebalance.com/brexit-consequences-4062999

https://www.reuters.com/article/us-britain-eu-factbox/factbox-the-brexit-impact-so-far-paperwork-process-and-
higher-prices-idUSKBN29W1OJ

The next article read up to but not including What happened to the economy in January.

https://www.bbc.com/news/business-56370690#:~:text=UK%20goods%20exports%20to%20the,%2C
%20while%20imports%20tumbled%2028.8%25.

Please list some of the identifiable areas of negative results from the breakup as highlighted in the articles..
Focus not only on monetary losses but also on supply chain and other ramifications for the United Kingdom.

There are some negative results from the breakup of Britain and the EU, One of the problems for the EU
is that Britain is its second largest national economy. For Britain they are less likely to attract inward
investments from foreign multinationals. Some of those multinationals may move operations to other EU
 countries. Britain’s exit from Brexit has left companies struggling with export documents, longer delivery
times, and the need to re-engineer supply chains. Food producers of cheese and beef have stopped
exporting to Europe. Also about 1/5 of small and medium size businesses that export to the Eu havce
halted sales.Unexpected costs for customs fee, that will make some sales not possible. Logistic groups
have said the cost of hiring European drivers to bring goods in have skyrocketed due to covid. Covid tests
are required to leave, the city of London has financially been affected due to the trade deal. In Ireland,
E-commerce has been badly hit due to Irish customers who shop at UK stores online. UK goods exports
to the EU fell over 40% in January, while imports dropped below 30%.

D.

. WTO Dispute resolution

Go to: https://youtu.be/oIX6jurnogM View only the first case study of the two shown. (Case regarding imported
gasoline)

1. What is the core dispute/complaint? (General summary 1-2 sentence maximum)

The oil being produced is not clean enough for the environment

2. What is the Brazilian/Venezuelan argument?

The regulations on the oil were unfair, They were regulations on the Venezeuelan oil that were much
more harsh compared to the oil produced in the U.S. If the U.S wanted the oil to be the same then they should
have placed the same quality tests for both domestic and foreign gas

3. What is the U.S. argument?

They wanted to better the quality of oil to help the environment, the air coming off the gas was hurting
the environment. This was not due to discrimination but due to the articles that protect the natural environment
and health of the general public
 4. What was the WTO ruling and appeal ruling?

The discrimination was not justified under the article. The appeal did not go through

5. What was the agreed implementation process?

They changed the article to match up better