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BUSI 3312 (01) International Business Management
December 9, 2016
You have three hours to complete this examination which will account for 30% of your final
grade. Judge the time spent on each question by the value given to it. The exam contains
eleven (11) questions. You must answer any seven (7) questions; each answer will be worth
fourteen (14) points toward your grade in the exam, a total of ninety-eight (98) points. I will
award the other two points as bonus points for a particularly good answer. The questions on
the exam do not presume you have any specific knowledge of particular countries, products or
companies. When answering the questions make as many logical assumptions as you wish.
State clearly what your assumptions are. The questions are based on principles, theory and
current events we discussed in class and that appear in your book. Use this background when
answering the questions. Use appropriate terminology relevant to international business.
If you are having trouble understanding a question or one or more of the words used in it, raise
your hand and I will try to help you.
Answer any seven (7) of the following questions
1. In general, why do countries control the import of goods and services from other nations? What
are some of the methods governments use to control the import of good and services?
2. You are the President of Cuba, a relatively poor Caribbean country whose economy is heavily
dependent on tourism and the export of sugar, alcohol (mainly rum) and tobacco products
(mainly cigars). You have entered into discussions with Canada on a free trade agreement that
you hope will help grow your economy and help Cuban businesses. In your negotiations with
Canada what would you be asking to have included in the agreement? Why? Make any
assumptions about Cuba and Canada you wish in answering this question.
3. As discussed in class, the Volvo Group, a Swedish based manufacturer of heavy trucks, recently
signed an agreement with the Chinese Dongfeng Motor Group to set up a joint venture
company in China to manufacture heavy trucks for the Chinese and other Asian markets.
Describe what you feel the advantages of this joint venture agreement are for both Volvo and
Dongfeng. What does each company stand to gain from the joint venture?
4. When a company makes its very first sale to an unfamiliar foreign buyer they should offer
payment terms that include “open account”, a Delivered Duty Paid (DDP) Incoterm and the price
should be in the buyer’s home currency. Do you believe this would be the correct export pricing
strategy for a company dealing with a new overseas customer? Why or why not? If you do not
agree with this strategy, what terms would you offer?
5. Elections recently took place in the USA. The election resulted in a Republican President, Donald
Trump, as well as control of both the Senate and House of Representatives by the Republican
Party. The Republicans are against government funded health care and bailouts of the financial
system and want to pursue “smaller” government. They also push for a much more aggressive
“America First” foreign and trade policy and an end to what they consider unfair trade
agreements . What do you think the impact of the election will be on foreign companies doing
business in the USA?
6. In class we discussed the idea of the “stateless corporation”. What does it mean to be a
stateless corporation and describe why many large companies today organize themselves in this
7. Describe some of the positive and negative benefits of Foreign Direct Investment (FDI) on
countries that allow foreign companies to invest in businesses in their territory? Do you think
FDI has a positive net benefit on the economy of your home country? Why or why not? Be
8. Your company manufactures sneakers in the poor, south Asian country of Bangladesh. You have
invested CAD$25 million in the factory which supplies sneakers to retailers around the world.
While you are a Canadian company this is your only manufacturing plant anywhere in the world.
You have just learned that the Bangladesh government has applied to the International
Monetary Fund (IMF) for a loan because it can no longer meet its payments on money
borrowed from local and international commercial banks. What might be the impact of an IMF
loan to Bangladesh on your company? Should you be concerned about this? Be specific.
9. Given the many difficulties of being successful in international business, why do companies
internationalize? What benefits do they achieve? Be specific.
10. SNC-Lavalin is a large Canadian consulting engineering company. Recently they were asked to
bid on a contract to design a hydro-electric dam in Brazil. The contract would be worth several
hundred million dollars and could be important for the company’s profitability over the next five
years. One of the company’s executives pointed out, however, that the new dam would flood
large areas of the Amazon rain forest, destroy the habitat of several endangered species and
contribute to global warming. She warned that the company would face severe criticism from
environmentalists here in Canada and other parts of the world. She wondered if it would be
ethical for the company to try to win the contract. Do you think SNC should pursue the
contract? Why or why not? Be detailed in your answer.
11. “If a product sells in Toronto it will sell in Tokyo or Dubai.” Discuss this statement in light of
your knowledge of international business. Do you agree with it? Why or why not?