TGEOG 349: Review for second test

University of Washington Tacoma
GEOG 349: Geography of International Trade
Winter 2014

REVIEW QUESTIONS FOR SECOND TEST

1. Refer to the instructor's objectives for the course. For each objective:

Assess how well you've mastered that capability .
Identify what has helped you get to your current level of capability.

Identify one objective on which you'd like to work after the course is over. How might you go about that?

2. Assets are what an organization "owns" or at least invests in and manages (like key employees). Environment is what an organization can't control -- except by choosing in which environments it operates. What are ways for an organization to change the environment in which it operates?

3. Though this section of the course is not as theoretically oriented as the first section of the course, the overarching framework is that of making organizational decisions that will maximize returns to key organizational assets, and that will strengthen those assets. These are the essential goals of corporate strategy, business (or competitive) strategy, and functional strategies. These are also important to determining the appropriate form of international business: you have to know what your core asset is before you can determine whether licensing or contracting production are reasonable alternatives to exporting or FDI. (Of course, regulations and barriers you face from your home country or a host country will play a role in this decision, as well). Finally, identifying unique assets is the first step in applying the OLI (or "eclectic") model to decisions whether to engage in FDI. [You should be able to apply the OLI model to "explain" a firm's choice of international business form.]

4. Identification of an organization's unique or key assets is an important part in determining the location and organization of procurement and production. Organizations generally want to own operations that are part of their core assets, but may contract other operations -- sometimes within a stable network of providers, sometimes by selecting the best deal in the open market. International differences in trade barriers and feasibility of FDI will also affect these decisions, and affect the decisions where to engage in what sorts of operations. Use the examples in this moderately complex table to help you understand some of these contingencies.

5. Using the online materials linked in (3) and (4) above:

What circumstances might lead a US-based company to import from Mexico on an arm's length basis? What circumstances might lead that company to establish a wholly or jointly owned manufacturing operation in Mexico?
What circumstances might lead a US-based company to export to distributors in Europe?
What circumstances might lead that company to export to end-users in Europe?
What circumstances might lead that company to license a European company to produce its trademarked and patented products in Europe, for the European market?
What circumstances might lead that company to establish a production facility in Europe?

6. What determines the level of profit made by companies at each stage in a supply chain? (Part of the answer can be gotten from Fallows [2007]; this was elaborated in class.)

7. Interpret this NYTimes article, using the strategic management framework for US-based clothing manufacturers.

8. What’s different about the US-China trade relationship and the US-Japan trade relationship, that makes the former more mutually beneficial than the latter, according to Fallows [2007]?

9. International marketing is an important example of a functional strategy in the international arena. What are the six components of an international marketing plan? I've emphasized that the decisions for each component must support the decisions for all the other components, and must be a function of the roles that international marketing play in the organization's overall business strategy -- which is based in part on the nature of the organization's strategic assets (a.k.a. organization-specific advantage). Be able to play with these components: if I provide a basic scenario (sector, size of organization, and its key assets or advantages), you should be able to create a quick-and-dirty marketing plan in which all the elements work together.

10. Be able to define key export documents.

What are the four uses of a bill of lading (B/L)?
What is a letter of credit (L/C); what parties are named in a confirmed, irrevocable L/C?
What are the key variables and choices in payment for exports? Which are more advantageous for the exporter? What determines which choices are made in a given export arrangement?

11. What are the additional costs that an exporter faces (beyond the costs of design, procurement, production and its domestic marketing) -- i.e., the costs that need to be considered when it establishes its export price? If adding these costs raise a company's export price beyond competitive levels in a foreign country, suggest two reasons why a company might decide to absorb some of these costs to win an export contract.

12. Be able to apply the principles of strategic management to a hypothetical case: given a set of assets and capabilities that distinguish a particular firm from its (real and potential) competitors, suggest how, and where it should engage in exporting and/or FDI, and how it should manage key aspects of its supply chain: from where should it obtain key inputs, should it own or contract for those inputs, should it own downstream (closer to the final user) activities (where?). Think about the impact of import barriers and differential tax rates.

13. How has the product life cycle changed in recent years, according to Fishman? What's led to those changes? What do you think creates limits to the "insourcing" trend?

14. What are "core labor standards"? How do these differ from "cash labor standards"? Explain three ways in which core labor standards could be enforced internationally, even though national governments are sovereign.

15. What can (a) national governments, (b) international agreements, and (c) labor organizations do to mitigate the negative impacts of trade liberalization on particular groups of labor? Think about this from the perspective of "your" country and from the perspective of the US.

16. Why did Davis & Caldeira [2010] estimate CO₂ emissions embodied in trade? What countries were shown to be the largest exporters and importers of embodied CO₂ emissions?

17. What considerations influence the amount of energy embodied in a country's exports?

18. What are the major points in The Economist's article on national sovereignty under trade liberalization? Do you agree with the major points?

19. Identify three reasons why a company might engage in FDI. Identify three reasons why a government might make concessions to attract inward FDI. Suggest six points of negotiation between MNCs and national or provincial governments regarding proposed inward FDI. What characteristics would strengthen each side in negotiations? How might outward FDI benefit a country (i.e.,the country of the parent company)?