Chapter 1 Globalization and the Multinational Enterprise ( Questions 1-1. Globalization and the MNE. The term globalization has become very widely used in recent years. How would you define it? Narayana Murthy’s quote is a good place to start any discussion of globalization: “I define globalization as producing where it is most cost-effective, selling where it is most profitable, and sourcing capital where it is cheapest, without worrying about national boundaries.” Narayana
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INTERNATIONAL MARKETING Question: Discuss the following two theories of international trade. a. International trade product life cycle theory. b. The theory of Absolute Advantage. INTERNATIONAL TRADE PRODUCT LIFE CYCLE: The international trade product life cycle is basically a theory that can be described as a process whereby, for instance, a local manufacturer in an advanced country begins selling a new, technologically advanced product to high income consumers in its home market. As
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Chapter 1 Multinational Financial Management: An Overview Specific Objectives • Identify the main goal of the MNC and conflicts with that goal • Describe the key theories that justify international business • Explain the common methods used to conduct international business Outline Goals of the MNC Maximize shareholder wealth Problems encountered in meeting goals: 1) Agency problems larger for MNCs than purely domestic firms because: a) monitoring more
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A Direct Test of the Theory of Comparative Advantage: The Case of Japan Author(s): Daniel M. Bernhofen and John C. Brown Reviewed work(s): Source: Journal of Political Economy, Vol. 112, No. 1 (February 2004), pp. 48-67 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/10.1086/379944 . Accessed: 10/02/2012 10:27 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms
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1. What is the major benefit of trade identified in the theories of international trade? 2. What do theories of international trade teach us about the pattern of trade in the world economy? 3. 6 4. What are the main differences among mercantilism, Adam Smith’s theory of absolute advantage, and David Ricardo’s theory of comparative advantage? 5. Why is the theory of comparative advantage so important in today’s world? 6. According to the theory of comparative advantage, what is
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MULTINATIONAL FIRM SUGGESTED ANSWERS TO END-OF-CHAPTER QUESTIONS QUESTIONS 1. Why is it important to study international financial management? Answer: We are now living in a world where all the major economic functions, i.e., consumption, production, and investment, are highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a situation that existed when the authors
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International Trade and Competition What constitutes the basis for trade? Also what are the gains from trade in terms of production and consumption? The purpose of this report is to survey what constitutes the basis for trade in an international perspective and to discuss the gains in relation to production and consumption. By examining a range of recently published journal articles, magazine articles and internet sites on the topic of international trade this paper will describes the main
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world economy (Hill, 2009). Due to falling barriers to cross-border trade and investment companies are able to move goods, services, and investments faster and more consistent to consumers located in many parts of the world. International Trade Theories Some of the traditional international theories that support the concept of globalization are the Absolute Advantage Theory and the Comparative Theory. The Absolute Advantage Theory was created by Adam Smith in 1776 (Hill, 2009) and stated that a country
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INTERNATIONAL BUSINESS Definition of international business International business involves commercial activities that cross national frontiers. It concerns the international movement of goods, capital, services, employees and technology; importing and exporting; cross-border transactions in intellectual property (patents, trademarks, know-how, copyright materials, etc.) via licensing and franchising; investments in physical and financial assets in foreign countries; contract manufacture or
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Chapter Outline I. Introduction II. International Trade Versus Interregional Trade ( international trade occurs for the same reasons as interregional trade ( gains from technology and gains from trade III. Trade in an Individual Product ( trade in cloth (U.S./India) — Figure 2.1 ( supply and demand ( the effects on India and the U.S. IV. Trade Based on Absolute Advantage A. Absolute Advantage ( PASSPORT:
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