Potential Final Exam Questions – INMT 3039 – Summer 2018
NOTE THAT THE EXAM WILL BE HELD AT 6:00 P.M. on Thursday July12, 2018.
INSTRUCTIONS: You will have one week to read the questions listed below and decide how you will respond to them. During that time, you may consult your textbook, class notes, materials posted on Canvas and any other sources except classmates. Once you have decided how to respond to the questions, you must commit your responses to memory. Your responses must reflect your own thoughts and words. They may not be the same or similar to words used in the textbook or written by another student. You are expected to develop your responses alone and are not to work with anyone else.
In the class after these questions became available, I will select questions worth 80 pointsand you will have an hour and a half to write the responses you developed to the questions. During the final exam, you will not be permitted to refer to any textbook, notes, handouts, other students, or any other written, audio, or visual resources. Cell phones and other electronic devices are not permitted in class during the exam and could result in an “F” grade for the exam. Make certain that I can read your hand writing.
Question 1 (15 points)a. Describe the role a letter of credit plays in an international commercial transaction.
b. List and describe three other documents that are critical to complete a commercial transaction where a letter of credit is used to complete payment to the seller.
Question 2 (25 points) A firm based in India agrees to buy 10 million Euros worth of goods from a firm based in Italy. The Indianfirm agrees to pay in Euros in 60 days. You are the CFO of the Indian firm. You know that the Euro has been weakening against the Rupee and expect this trend to continue for at least the next 60 days.
a. Describe in detail three hedging strategies you would consider using to ensure that when your firm makes the payment in 60 days, it minimizes its risk of loss converting Rupees to Euros. (15 points)
b. Does this problem illustrate translation or transaction risk? (5 points)
c. Briefly describe the difference between hedging and speculation. (5 points)
Question 3 (20 points)
Describe the importance of a functional legal system to foreign investors. Provide three examples of how a functional legal system is important to foreign investors.
Describe the importance of political stability to foreign investors. Provide two examples of how political stability is important to foreign investors.
Question 4 (20 points)
If necessary, refer to the articles posted on Blackboard that were part of the International Trade History and Trade Rules vs. Trade Balance exercises.
Explain why the World Trade Organization (and its predecessor) exists. In your opinion, is the economic growth since the end of World War II attributable to the WTO and have the benefits of that economic growth outweighed the subsequent economic disruption (industry relocations and job losses) to some?
In your opinion, what might be the future consequences of the nationalistic and protectionist policies of the current U.S. president?
Explain your responses.
Question 5 (20 points)
a. List and briefly describe the four types of economic integration agreements between nations.
b. Describe their similarities and differences.
c. In your opinion, should the NAFTA countries (Canada, Mexico, and the United States)consider becoming a customs union? Explain your response and how it would be beneficial or detrimental.
Question 6 (25 points) Imagine you have been hired on the social media staff at Unilever an Anglo-Dutch global consumer goods firm. One of your responsibilities is to develop a strategy to enhance Unilever’s presence and use of social networking tools (blogs, QR Codes, Instagram, Google, YouTube, Face Book, Linked In, Twitter, etc.) to promote its businesses. You are also accountable for defending the firm and its products using these tools. Finally, you contribute to the firm’s strategy for gathering customer data and utilizing that data to perform data analytics to help develop and sell advertising tailored to specific users.
a. List and describe two ways you would use these tools to promote Unilever and its products (positive advertising).
b. List and describe two ways you would use these tools to protect Unilever and its products (defensive advertising).
c. In your opinion, is it ethical for social media and other Internet based businesses to profit from the use of the data they gather on users without compensating those users for the data they gather? Explain your opinion.