IB 2013 - Answers to Final Paper

8/13/2019 IB 2013 - Answers to Final Paper

1/77


2/77


3/77


4/77


5/77


6/77


7/77


8/77


9/77

Cocoa Rice

Ghana 10 13.33

South Korea 40 20


10/77

20

Production Possibility

Frontier

5 10O

T

2.5

5.0

10

15

20

3.75

15

7.5

Rice

Cocoa

G

C

A

GK

B

K

Ghana can produce 20 tons of cocoa and no

rice OR 15 tons of rice and no cocoa, or any

combination in between its PPF (GG)

South Korea can produce 5 tons of cocoa

and no rice OR 10 tons of rice and no

cocoa, or any combination in between its

PPF (KK)

Ghana will produce 10 tons of cocoa and

7.5 tons of rice (point A)

South Korea will produce 2.5 tons of cocoa

and 5 tons of rice (point B)

Ghana has an absolute advantage in

the production of both the goods, why

should it trade with South Korea?


11/77

Ghana has absolute advantage in

the production of both cocoa andrice, but comparative advantage

only in the production of cocoa.

HOW?

Ghana can produce 20 tons of cocoa and no

rice OR 15 tons of rice and no cocoa, or any

combination in between its PPF (GG)

South Korea can produce 5 tons of cocoa

and no rice OR 10 tons of rice and no

cocoa, or any combination in between its

PPF (KK)

Ghana will produce 10 tons of cocoa and

7.5 tons of rice (point A)

South Korea will produce 2.5 tons of cocoa

and 5 tons of rice (point B)

Ghana has an absolute advantage in

the production of both the goods, why

should it trade with South Korea?

Ghana can producethan South

Korea:

4 times as much as cocoa

1.5 times as much as rice

Ghana is comparativelymore efficientat producing cocoa than it is at

producing rice


12/77

Cocoa Rice

Ghana 10 7.5

South Korea 2.5 5.0

Total Production 12.5 12.5


13/77

Cocoa Rice

Ghana 15 3.75

South Korea 0 10.0

Total Production 15 13.75


14/77

Cocoa Rice

Ghana 11 7.75

South Korea 4.0 6.0


15/77

Cocoa Rice

Ghana 1.0 0.25

South Korea 1.5 1.0


16/77


17/77


18/77


19/77


20/77


21/77


22/77


23/77


24/77


25/77


26/77


27/77


28/77


29/77


30/77


31/77


32/77


33/77


34/77

34

I. MEASURING POLITICAL RISKA. Country-specific perspective


35/77

35

B. Political Stability1. Measured by:

a. Frequency of governmentchanges

b. Level of violencec. Number of armed

insurrectionsd. Conflict with other states


36/77

36

C. Economic Factors1. Indicators of politicalunrest

a. Rampant inflation

b. Balance of paymentdeficitsc. Slowed growth of percapita GDP


37/77


38/77

38

3. Capital Flighta. Definition:

the export of savings by a

nations citizens because of

safety-of-capital fears.

b. Measurement: use the

balance-of- payment account


39/77

39

c. Causes of capital flight1.) Inappropriate economic

policies

2.) Expectation of devaluation

3.) High political risk


40/77


41/77

41

D. Resource Base-lack of strong work ethic

E. Country Risk and Adjustment toExternal Shocks

1. What are the impacts ofexternal shocks:-how well a nation responds

varies


42/77


43/77


44/77

44

Key indicators of economic healtha. Structural incentives

b. Legal structure

c. Clear incentives to save

d. Open economy

e. Stable macroeconomicpolicies


45/77


46/77

Gl b li ti d B i


47/77

Definition: Globalization is the growing integration of the worlds economy. It is

suggested that economic decision taken in one part of the world willaffect other parts of the worlds so businesses need to base theirbusiness decision-making on what is happening in the world marketrather than the national market.

There are three important features or aspects ofglobalization, which can be seen as follows:

1. The increasing importance o f international trade2. More and more multinational companies3. More and more businesses thinking globally about their strategy.

Globalization and Business

-What Is Globalization?


48/77

The increasing reliance of

economies on each other

The opportunities to be able to

buy and sell in any country in the

world

The opportunities for labour and

capital to locate anywhere in the

world

The growth of global markets in

finance

Stock Markets are now accessible from anywhere in the world!
http://www.sxc.hu/browse.phtml?f=download&id=45339


49/77

Stages of Development of a Transnational

Corporation

Stage one - domestic

Stage two - International

Stage three - multinationalStage four - global

Stage five transnational


50/77

Domestic in focus, visions and operationsfocus on domestic markets

environment scanning is local

if its not happening in the home country, its nothappening

often conscious decision

can develop to be stage two company


51/77

Extends marketing, manufacturing and otheractivities outside the main country

remains ethnocentric (home country orientated)

groups people together in an internationaldivision

strategy of extension


52/77

Global development always begins in stage two

it would be a mistake to simultaneously jump

into new customer and new

product/technology markets


53/77

Discover that different markets need some degree

of adaptatione.g Toyota first entered US in 1957 as Toyopet

overpriced, underpowered, built like tanks

no such thing as failure, only learning

multi-domestic focus

Polycentric orientation

adapts domestic marketing mix to suit the differinginternational markets


54/77


55/77

Major strategic departure

global marketing and/or sourcing strategyfocus globally and supply from domestic market

e.g Harley Davidson

supply domestic market from global sources e.g.

GAP

Must understand the limitations of competitive

advantage (not too ambitious!)


56/77


57/77


58/77


59/77


60/77

Internationalexploits the parent companys knowledge and capabilities

through worldwide diffusion of products

Multinationalflexible ability to respond to national differences

Globalcost advantage through centralised operations

Transnationalcombines above in an integrated network, which leverages

worldwide learning and experience


61/77


62/77


63/77


64/77


65/77


66/77


67/77


68/77


69/77


70/77


71/77


72/77


73/77


74/77


75/77


76/77


77/77

Documents

IB 2013 - Answers to Final Paper