POLYTECHNIC OF NAMIBIA SCHOOL OF MANAGEMENT SCIENCES DEPARTMENT OF MANAGEMENT

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1 POLYTECHNIC OF NAMIBIA SCHOOL OF MANAGEMENT SCIENCES DEPARTMENT OF MANAGEMENT BACHELOR OF BUSINESS ADMINISTRATION (22BBAD) 1 8 T OPPORTUNITY EXAMINATION QUESTION PAPER SUBJECT: SUBJECT CODE: INTERNATIONAL BUSINESS MANAGEMENT ANALYSIS IBM422S DATE: NOVEMBER 2015 DURATION: 3 HOURS MARKS: 100 EXAMINERS: Ms A. Mapanga MrM. Shaama Mr Hengari MODERATOR: Mr. F. Dangarembizi This paper consists of 7 pages (including this page). INSTRUCTIONS: ANSWER ALL QUESTIONS Section A Multiple Choice questions (30) marks Section B Essay questions (70) marks GOOD LUCK! 1

2 SECTION A (30) Marks ANSWER All QUESTIONS 1. When a company brings capital and/or technology to a host country, the host country benefits from the: A. political effect of FDI. B. resource-transfer effect of FDI. C. balance-of-payments effect of FDI. D. bandwagon effect of FDI. 2. A country's keeps track of its payments to and its receipts from other countries. A. federal payments ledgers B. concurrent accounts C. checks-and-balances accounts D. balance-of-payments accounts 3. Which of the following arises when a country is importing more goods and services than it is exporting? A. Current account surplus B. Trade deficit C. Trade surplus D. Trade balance 4. International businesses use foreign exchange markets for all of the following reasons except: A. to receive payments from foreign investments that may be in foreign currencies. B. to pay a foreign company for its products or services in its country's currency. C. to invest for short terms in money markets when they have spare cash. D. to cover themselves from all risks involved in currency speculation. 5. The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as: A. currency arbitrage. B. currency speculation. C. currency hedging. D. currency risk mitigation. 2

3 6. Which of the following involves borrowing in one currency where interest rates are low, and then using the proceeds to invest in another currency where interest rates are high? A. Carry trade B. Swing trade C. Channel trade D. Price action trade 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 Articles of Agreement in the Jamaica agreement? A. IMF members were permitted to use Dollar as the convertible currency. 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? 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 barriers B. Fixed exchange rates C. Financial similarities D. Desire for high levels of profit 3

4 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 favor bonds that are denominated in dollar 13. The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, EXCEPT: A. choose, according to strategy, any position on the efficiency frontier as all positions are viable. B. pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice. C. configure its internal operations so that they support the position on the efficiency frontier. D. make sure that the right organization structure is in place to execute the strategy. 14. activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service. A. Support B. Subordinate C. Ancillary D. Primary 15. Which of the following is an example of a primary activity in a firm's value chain? A. Information systems B. Research and development C. Logistics D. Human relations 16. In which of the following organizational structures are the domestic operations and foreign operations isolated from each other leading to coordination problems? A. Global matrix structure B. International division structure C. Worldwide product division structure D. Worldwide area structure 17. Which of the following is NOT true regarding a worldwide area structure? A. It tends to be favored by firms with a low degree of diversification. B. It facilitates local responsiveness. C. It tends to be favored by firms with a domestic structure based on functions. D. Decision-making responsibilities are centralized. 18. A structure encourages fragmentation of the organization into highly autonomous entities. A. worldwide area B. global matrix 4

5 C. worldwide product D. global network 19. Cross-licensing agreements are increasingly common in the industries. A. transportation B. high-technology C. construction D. consumer durables 20. is pursued primarily by manufacturing firms and is employed primarily by service firms. A. Licensing; franchising B. Franchising; licensing C. Franchising; exporting D. Exporting; licensing 21. If a service firm wants to build a global presence quickly and at a relatively low cost and risk, it must employ. A. chartering B. exporting C. a turnkey strategy D. franchising 22. A allows for a delay in payment. A. bill of lading B. time draft C. sight draft D. letter of credit 23. A banker's acceptance. A. is payable to the drawee immediately on presentation in a bank B. is a time draft that has been drawn on and accepted by a bank C. is a sight draft that can be used as a negotiable instrument in banks D. allows a buyer possession of the merchandise without signing any formal documents 24. A is issued to the exporter by the common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title. A. bill of lading B. sight draft C. time draft D. letter of credit 5

6 25. Research has long maintained that a major factor of success for new products is the closeness of the relationship between: A. finance and marketing. B. marketing and R&D. C. finance and materials management. D. finance and R&D. 26. According to Levitt, which of the following statements is true? A. Technology drives the world toward a converging commonalty. B. There are accustomed differences in national preferences. C. The multinational corporation operates in a number of countries at low relative costs. D. The global corporation operates with resolute consistency at high relative costs. 27. The continuing persistence of differences between nations acts as a major brake on any trend toward global consumer tastes and preferences. A. technological and industrial B. institutional and political C. cultural and economic D. GNP level and growth rate 28. Which of the following is mainly concerned with the selection of employees for particular jobs? A. Retention policy B. Staffing policy C. Incentive policy D. Appraisal policy 29 A Japanese firm prefers expatriate Japanese managers to head its foreign operations because these managers have been socialized into the firm while employed in Japan. This indicates that the firm: A. believes that such managers cannot progress beyond middle-manager positions in their parent company. B. follows an ethnocentric staffing policy to maintain a unified corporate culture. C. is trying to create value by transferring core competencies to a foreign operation. D. requires host-country nationals to be recruited to manage subsidiaries. An ethnocentric staffing policy is one in which: 30 A. all key management positions are filled by host-country nationals.. B. host-country nationals are recruited to manage subsidiaries. C. all key management positions are filled by parent-country nationals. D. The best people are recruited for key jobs throughout the orgarnisation, regardless of nationality. 6

7 SECTION B 70 Marks ANSWER ALL QUESTIONS 1. Describe the possible adverse effects of FDI on a host country's balance-of-payments position. (1 0) 2. Explain the main uses of foreign exchange markets for international business. (1 0) 3.Describe the benefits of global expansion for firms. (1 0) 4. Discuss the formal integrating mechanisms used to integrate subunits of a firm. (1 0) 5. Describe a typical international trade transaction. (1 0) 6. Briefly explain the regulatory factors that influence pricing in firms operating in international and global markets. (10) 7. Discuss the benefits of using a geocentric staffing policy. (10) 7