FINAL EXAMINATION

BUMA20043:
INTERNATIONAL BUSINESS AND TRADE
2nd Semester 2020-2021
Name: Christian Dave Herce Tadifa Section: BSA 3-1

TEST I ( Nos. 1- 15 ) POOL OF ANSWERS

Labor Relations 1. Refers to the system in which employers, workers and their representatives
and, directly or indirectly, the government interact to set the ground rules for the governance of
work relationships.
Collective Bargaining 2. The process used to make agreements between management and
labor unions.
Internationalization 3. Refers to designing a product in a way that it may be readily consumed
across multiple countries. This process is used by companies looking to expand their global
footprint beyond their own domestic market, understanding consumers abroad may have
different tastes or habits.
Credit card 4. Is a thin rectangular plastic card issued by financial institutions, which lets you
borrow funds from a pre-approved limit to pay for your purchases?
Productivity 5. Defined as a ratio between the output volume and the volume of inputs. In
other words, it measures how efficiently production inputs, such as labour and capital, are being
used in an economy to produce a given level of output
Manufacturing 6. The process of creating goods by transforming raw materials and component
parts in combination with capital, labor, and technology.
Fair trade 7. Refers to a kind of trade that, suggests that the national government should
actively intervene to ensure that domestic firms’ exports receive an equitable share of foreign
markets and that imports are controlled to minimize losses of domestic jobs and market share in
specific industries
Tariff 8. A tax placed on a good that is traded internationally
Capacity Planning 9. The process of determining the production capacity needed by an
organization to meet changing demands for its products.
Efficiency 10. Performing activities at the lowest possible cost
Forecasting 11. The process of predicting future events, including product demand
Operation Management 12. The business function that refers to the transformation process of
converting raw materials into finished goods and services; OM used to be called production and
operations management (P&OM) or just production
Production design 13. The process of deciding on the unique and specific features of a
product
Quality management 14. The process used to ensure the quality of a product, including
measuring quality and identifying quality problems
Total Quality management 15. A philosophy that seeks to improve quality by eliminating
causes of product defects by making quality the responsibility of everyone in the organization.

TEST II ESSAYS (Nos. 16- 50 )

16 - 20 Explain some of the forces leading companies to pursue international Operation.

Companies are increasingly pursuing international operations for a variety of reasons,

including market expansion and growth opportunities, economies of scale and cost efficiency,
competitive pressures, resource availability, risk diversification, strategic alliances and
partnerships, talent and skill acquisition, and government incentives. These forces, which can
differ among industries but are generally prevalent, include government incentives, economies
of scale, competitive pressures, raw material and resource access, risk diversification, strategic
alliances and partnerships, access to talent and skills, knowledge transfer, and market
saturation in home markets.

First, market saturation in domestic markets allows companies to explore new customer
bases and tap into new customer bases. Emerging economies often present untapped markets
with growing middle-class populations, providing opportunities for expansion and increased
sales. While, economies of scale allow companies to reduce production costs by increasing
production volumes and spreading fixed costs over a larger output.

Furthermore, competitive pressures include global competition and technological

advancements, which have made it easier for companies to operate internationally and reach
consumers worldwide. And also, access to resources, such as raw materials and technology, is
also crucial for companies to secure a stable supply. On the other hand, risk diversification helps
mitigate political and regulatory risks by reducing dependence on a single market or currency.
Meanwhile, strategic alliances and partnerships provide collaboration opportunities, access to a
broader talent pool, and knowledge transfer across different markets. Government incentives
and trade agreements can facilitate smoother international operations by reducing trade barriers
and tariffs.

In summary, a wide range of factors, including market possibilities, financial concerns,

competitive dynamics, risk management, and strategic goals, all combine to push businesses to
pursue foreign operations.

21 - 30 To gain competitiveness advantage a firm must have an organizational ability to

exploit their resources . Explain whether the statement is true or false.

The statement mentioned above is True. Because a firm's competitive advantage in the
business environment is not just about having valuable resources, but also about its
organizational ability to effectively exploit and leverage those resources. With that, this will
support the notion that is based on the Resource-Based View (RBV), which emphasizes that a
firm's unique and valuable resources can lead to a sustained competitive advantage. However,
merely having resources is not sufficient; the firm must also possess the organizational
capability to deploy and utilize these resources strategically. Additionally, Dynamic capabilities
contribute to the advantage of the firm to exploit resources. This dynamic capability is a firm's
ability to adapt, integrate, and reconfigure its resources to respond to changes in the business
environment. Also, successful strategic management involves aligning a firm's resources with its
strategic goals and creating a competitive advantage. Incorporating resources into a coherent
strategy and effectively executing it is crucial for gaining and sustaining competitiveness.

Also , having innovation and technology are also essential for a firm's competitive
advantage. A supportive organizational structure and culture are crucial for incorporating
technological advancements into operations. Thus, human capital, including skilled and
motivated employees, is a valuable resource that contributes to resource exploitation.

Lastly, efficient operations and processes are essential for exploiting resources
effectively. Firms with strong market intelligence and a responsive organizational structure can
better align their resources with changing customer needs. In general, a firm's ability to gain and
sustain a competitive advantage relies on its organizational capabilities, including dynamic
resource management, strategic alignment, innovation, human capital, and efficient operational
processes.

31 - 40 Describe the different approaches the company may use when it decide To go
international

● Global sourcing- acquiring labor or supplies from anywhere in the world where it is
most affordable.
● Exporting- producing goods in the country and exporting them overseas.
● Importing- purchasing goods manufactured outside the country and reselling them
domestically.
● Licensing- organization grants permission to another organization to use its technology
or product specifications in the manufacture or sale of its product.
● Franchising- a firm that grants permission to another firm to use its name and
operational techniques.
● Strategic Alliance- partnership between an organization and a foreign company
partners in which both share resources and knowledge in developing new products or
building production facilities.
● Foreign subsidiary- Directly investing in a foreign country by setting up a separate and
independent production facility or office.

41 - 50 What are the risks that a company face when operating in a foreign country ?

There are several dangers associated with operating in a foreign nation, and these risks
can impact a company's overall business operations, reputation, and financial success. Political
instability, difficulties with regulations and the law, currency exchange risks, economic risks,
risks related to culture and society, supply chain disruptions, infrastructure risks, security
concerns, risks with intellectual property, and tariffs and trade barriers are some of the major
hazards. Changes in politics, the administration, or policy can all lead to uncertainty and have a
negative impact on how businesses operate. The regulatory and legal environments might also
present difficulties due to unforeseen legal actions, requirements for compliance, or changes in
the legislation.

Furthermore, currency exchange rates have an impact on the value of revenues and
expenses when converted to the home currency of the business, which can have an impact on
the profitability of overseas operations. The demand for goods and services, consumer
spending, and general market conditions can all be impacted by economic instability. Risks
related to culture and society can impact the acceptability of goods and services, which can
result in unsuccessful marketing campaigns or reputational harm for a business. Production and
distribution can be impacted by supply chain interruptions brought on by cargo delays,
transportation problems, or geopolitical events. Operational difficulties may arise from
infrastructure hazards related to communication, electricity, or transportation. Risks to security
include political unpredictability and high crime rates, which can compromise the security of
personnel, property, and company operations. Weak protection in some nations might also give
rise to hazards related to intellectual property. Therefore, building strong relationships with local
partners and governments can help mitigate these risks.