D080 Managing in a Global Business Environment - Set 5 - Part 1

Correct Answer: Crowdsourcing

Crowdsourcing allows entrepreneurs and businesses to gather small amounts of capital from many investors, often through online platforms, making it easier to fund projects without relying on traditional funding sources.

Correct Answer: To hedge against exchange rate risk

A forward contract allows businesses to lock in a specific exchange rate for future transactions, protecting them from potential losses due to fluctuations in currency values.

Correct Answer: Customs union

A customs union eliminates trade barriers between member countries and imposes a common external tariff on imports from non-member countries.

Correct Answer: TRIPS

The TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) establishes international standards for the protection of intellectual property, helping businesses safeguard their inventions, trademarks, and copyrights across borders.

Correct Answer: Greenfield investment

Greenfield investment refers to when a company builds new facilities and operations in a foreign country from the ground up, often creating new jobs and infrastructure.

Correct Answer: Offering unique products tailored to each market

A multidomestic strategy focuses on adapting products and services to meet the specific needs and preferences of each local market, allowing businesses to better cater to cultural and consumer differences.

Correct Answer: To minimize potential losses from adverse price movements

Hedging involves using financial instruments to protect against potential losses from price fluctuations in assets such as currencies, commodities, or interest rates.

Correct Answer: Power distance

Power distance refers to the degree to which less powerful members of a society accept and expect power to be distributed unequally. In high power distance cultures, hierarchy and authority are more accepted.

Correct Answer: To protect personal data of individuals within the EU

The GDPR is a comprehensive data protection regulation in the European Union that requires companies to obtain explicit consent from individuals before collecting and processing their personal data.

Correct Answer: Common market

A common market allows for the free movement of goods, services, capital, and labor among member countries, facilitating greater economic cooperation and integration.

Correct Answer: Seeks high returns by investing in early-stage startups

Venture capitalists provide capital to early-stage companies with high growth potential, typically in exchange for equity. They seek significant returns on their investments as the company grows.

Correct Answer: Initial public offering (IPO)

An IPO is when a company offers its shares to the public for the first time, allowing it to raise capital from a broader range of investors in the stock market.

Correct Answer: Entering new markets without establishing operations abroad

Exporting allows businesses to expand into new markets without the need to set up physical operations in foreign countries, making it a cost-effective and lower-risk strategy for global expansion.

Correct Answer: To resolve trade disputes between member nations

The WTO oversees international trade agreements and resolves trade disputes between member countries to ensure fair and smooth global trade practices.

Correct Answer: To promote ethical business practices and contribute to societal goals

Corporate social responsibility (CSR) focuses on ethical business practices that benefit society, such as sustainability, environmental protection, and community engagement.

Correct Answer: World Bank

The World Bank provides financial and technical assistance to developing countries for infrastructure projects such as transportation, education, and healthcare, aiming to reduce poverty and promote economic development.

Correct Answer: Relying on home-country nationals for key management positions

An ethnocentric approach to HR management involves filling key managerial positions in foreign subsidiaries with employees from the home country, often to maintain consistency with the parent company’s culture and practices.

Correct Answer: Skimming pricing

Skimming pricing is a strategy where a company sets a high price for a new product at launch to maximize short-term profits before gradually lowering the price to attract more price-sensitive customers.

Correct Answer: To reduce taxes by shifting profits to low-tax jurisdictions

Transfer pricing is used by multinational corporations to allocate profits between subsidiaries in different countries, often to take advantage of lower tax rates in certain jurisdictions.

Correct Answer: Producing goods in advance based on forecasted demand

A push supply chain strategy involves producing goods based on anticipated demand, with the goal of having products readily available for consumers before actual demand arises.