nAml BIA UniVERSITY OF SCIEnCE AnD TECHnOLOGY

13 Storch Street Private Bag 13388 Windhoek NAMIBIA

Faculty of Management Sciences

Department of Management

QUALIFICATION: Bachelor of Business Administration

QUALIFICATION CODE: 22BBAD LEVEL:

COURSE: International Business Management: Analysis COURSE CODE: IBM422S

DATE: January 2016 SESSION: PAPER 1

DURATION: 3 Hours MARKS: 100

SECOND OPPORTUNITY EXAMINATION PAPER

EXAMINER: Ms. A Mapanga

Mr. M Shaama

Mr. Hengari

MODERATOR: Mr. F Dangarembezi

THIS EXAMINATION PAPER CONSISTS OF 7 PAGES

(INCLUDING THIS FRONT PAGE)

INSTRUCTIONS

1. Answer all questions.

2. Read all the questions carefully before answering.

3. Section A and B should be answered in the examination book provided.

4. Choose only one option when answering the multiple choice questions.

T: +264 61 207 2220 F: +264 61 207 9220 E: dml@nust.na W: www.nust.na

.SECTION A ANSWER ALL QUESTIONS (30) Marks

.1. Which view ofFDI traces its roots to classical economics and the international trade rtheories of Adam Smith and David Ricardo? A. Imperialist

B. Conservative

C. Free market

D. Radical 2 .. Which political view allows FDI so long as the benefits outweigh the costs?

A. The traditional view

B. The pragmatic nationalist view

C. The radical view

D. The free market view

3. A country rejects FDI proposals in certain industries. It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being. However, it aggressively pursues inviting foreign investments in sectors like infrastructure, education, and healthcare because of the benefits that accrue with them. Which political view ofFDI is discussed in this example? A. The pure market view

B. The free market view

C. The radical view

D. The pragmatic nationalist view

4. Which term refers to the rate at which one currency is converted into another?

A. Basis point

B. Spread

C. Exchange rate

D. Interchange rate

5. What are the two main functions of the foreign exchange market?

A. Trading of equities of foreign companies and cuiTency conversion

B. Reducing currency volatility and setting interest rates

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C. Insuring companies against interest rate risk and enabling imports and exports

D. Currency conversion and providing some insurance against foreign exchange risk

6. A pair of shoes costs £40 in Britain. An identical pair costs $50 in the United States when the exchange rate is £1 = $1.50. Which of the following is correct?

A. The U.S. offers a better deal.

B. The deal is the same in both countries.

C. Britain offers a better deal.

D. A trader can make money by buying the shoes in Britain and selling it in the U.S. at $50.

7. Which of the following is a function of World Bank?

A. Implementing a rigid fixed exchange rate regime

B. Promoting gold standard across the world

C. Lending money to governments for development

D. Implementing a flexible fixed exchange rate regime

8. Which of the following is a factor that initiated the collapse of the fixed exchange rate system?

A. Worsening of Great Britain's balance of trade

B. Recession in third world countries

C. Price inflation in Europe

D. Worsening of U.S. foreign trade position

9. Which of the following changes were made to IMF's A1iicles of Agreement in the Jamaica agreement?

A. IMF members were permitted to use Dollar as the convertible cuiTency.

B. Gold was declared as a formal reserve asset for IMF members.

C. IMF members were permitted to sell their gold reserves at the market price.

D. IMF members were restricted from entering the foreign exchange market.

10 Which of the following is a factor that makes Eurobonds more attractive than most major domestic bonds?

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A Presence of a regulatory interference

B. Strong disclosure requirements

C. Favorable tax status

D. Protection from exchange risks

11. __ separated national equity markets from each other historically.

A. Substantial regulatory barTiers

B. Fixed exchange rates

C. Financial similarities

D. Desire for high levels of profit

12.When value of U.S. dollars goes down, __ .

A. bonds that are denominated in dollar will produce more returns

B. foreign depositors in the U.S will benefit

C. foreign borrowers will garner benefits

D. investors tend to favour bonds that are denominated in dollar

13. When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create:

A a differentiated organization.

B. a location economy curve.

C. economies of scale.

D. a global web of value creation activities.

14.Lenovo's ThinkPad laptop computers is designed in the United States, the case, keyboar·d, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United States. In each case, these components are manufactured and sourced from the optimal location given cutTent factor costs. In this example, Lenovo has:

A. vertical integration advantages.

B. a global web of value creation activities.

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C. learning effects.

D. high local responsiveness.

15. __ refer( s) to systematic reductions in production costs that have been observed to occur over the life of a product.

A. Experience curve

B. Economies of scale

C. Location economies

D. Production possibility

16. Which of the following is NOT true of a strong corporate culture?

A. Almost all managers share a relatively consistent set of values and norms that have a clear impact on the way work is performed.

B. A strong culture leads to high performance.

C. Outsiders see firms with a strong culture as having a certain way of doing things.

D. A strong culture can be a bad culture.

17. Firms pursuing a(n) attempt to create value by transferring core competencies from home to foreign subsidiaries.

A. localization strategy

B. international strategy

C. transnational strategy

D. global strategy

18. Firms pursuing a global standardization strategy:

A. have low performance ambiguity.

B. attempt to create value by transferring core competencies from home to foreign subsidiaries.

C. are less centralized than enterprises pursuing a localization or international strategy.

D. have a high need for coordination and cultural controls.

19 Which of the following statements about franchising is true?

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A. It guarantees consistent product quality.

B. It tends to involve more short-term commitments than licensing.

C. It is a specialized form of licensing.

D . It is employed primarily by manufacturing firms.

120. Which of the following is an advantage of franchising?

A. A firm takes profits out of one country to support competitive attacks in another.

B. A firm is relieved of many of the costs and risks of opening a foreign market on its own.

C. It guarantees consistent product quality and achieves experience curve and location economies.

D. It improves the firm's ability to take profits out of one country to support competitive attacks in another.

21. Firms engaging in a __ with a local company can benefit from a local pm1ner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems.

A. turnkey project

B. joint venture

C. greenfield investment

licensing arrangement

22.As a receipt, the bill of lading indicates that the carrier __ .

A. provides a written promise of payment before releasing the merchandise

B. has obtained the merchandise described on the face ofthe document

C. receives payment from a third-party such as a bank or trading house

D. is obligated to provide a transportation service in return for a certain charge

23. In a typical international trade transaction, the __ .

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A. exporter should obtain a letter of credit to initiate transactions

B. importer and exporter maintain an account with the same bank

C. importer's bank sends a letter of credit to the exporter's bank

D. impm1er's bank sends the draft and bill of lading to the exporter's bank

24.The Export-Import Bank __ . A. is an international financial institution that provides loans for capital

programs

B. provides finance to facilitate trade between United States and other countries

C. is an independent agency of the United Nations

D. focuses on policies that have an impact on the exchange rate and the ｢｡ｬｾ＠payments

25. The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as __ .

A. market segmentation

B. market penetration

C. diversification strategy

D. differentiation

26. If market segments transcend national borders:

A. the company should develop unique products for each national market.

B. the company can view the global market as a single entity and pursue a global strategy.

C. a localization strategy would be appropriate.

D. consumers will have differing purchasing behavior in different nations.

27. The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages, is the impact of __ .

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A. values

B. traditions

C. norms

D. attitudes

28.Cultural myopia refers to a firm's failure to:

A. adapt to certain ethnocentric cultures.

B. act confidently in host-countries.

C. understand host-country cultural differences.

D. prevent gender discrimination within the firm. 29. What is the difference between an ethnocentric and a polycentric staffing approach?

A. An etlmocentric staffing approach alleviates cultural myopia, while a polycentric staffing approach can lead to cultural myopia.

B. An etlmocentric staffing approach is more expensive compared to a polycentric staffing approach.

C. An ethnocentric staffing approach seeks host-country nationals for all key positions, while a polycentric staffing approach seeks the best people for key jobs regardless of nationality.

D. An ethnocentric staffing approach is now used in most international businesses, while the polycentric staffing approach is on the wane.

30. If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquatiers, the firm is following a(n):

A. polycentric staffing policy

B. ethnocentric staffing policy

C. geocentric staffing policy

D. internal staffing policy

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SECTION B ANSWER ALL QUESTIONS 70 Marks

:31. Identify and discuss some of the methods which govermnents use to restrict inward foreign direct investment (FDI). ( 1 0)

:32. Explain the problem of trust that persists in international business. (10)

:33. Discuss how international companies can reduce their economic exposure in a world :of constantly fluctuating exchange rates. (1 0)

34. Explain the reasons why a firm should decentralize its decision-making. (1 0)

35. Discuss the factors that lead to pressure for local responsiveness for firms doing 1business in internationally. (1 0)

:36. Identify and discuss the advantages of licencing as a mode of international 'expansion? (1 0)

'3 7. Discuss some of the factors that affect the rate of new product development in countries.

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(1 0)