EXAMINATION FOR

MASTER OF BUSINESS ADMINISTRATION

INTERNATIONAL BUSINESS

DATE:
VENUE:
TIME:
(Time allowed: 3 hours only with an additional 30 minutes of reading time)

INSTRUCTIONS:

1. The examination accounts for 75% of your final assessment for this subject.

2. Answer only FOUR of the SIX questions.

3. All questions are worth equal marks. Multi-part questions are allocated equal marks
for each part, unless otherwise stated.

4. You have 3 hours to answer the examination questions plus 30 minutes of reading
time.

5. Please PRINT your name on the top right hand corner of every sheet of your answer
booklet.

6. Immediately check that no pages are missing from this exam question paper.

7. It is understood that you have read and agreed to the Examiner’s Ruling as part of
your application to sit for this exam.

8. You are not permitted to bring into the examination any material other than the
prescribed text book.

Page 1 of 4
Question 1

Political economy can affect international trade, says your textbook.

a) How do the political, economic and legal systems in your own country affect the level
of economic well-being in your country?
(`10 marks)

b) Compare how those three systems affect the well-being of the United States or one
EU country.
(10 marks)

Question 2

Regional economic integration (within blocs such as ASEAN, NAFTA and the EU) has been a
growing influence on international business. You have been asked to give a presentation to
MBA students at a local university in your country or region, about how regional economic
integration can affect both your country’s economy in general and one manufacturing
industry in particular. Your audience will be practical-minded MBA students interested in
advancing their career and they want to know your position about the issues, that is, about
regional economic integration in particular, from the point of view of practical managers in
the one manufacturing industry that you discuss. Provide an outline of your presentation
covering these three aspects of regional economic integration:

a) What regional economic bloc or blocs does your country belong to? Why regional
economic integration may benefit (for example, through lower tariffs) or may not
benefit (for example, through trade diversion instead of trade creation) your country's
economy as a whole. You will of course have to display knowledge of the regional
trading blocs that your country belongs to and that you referred to in part (a).
(10 marks)

b) The opportunities and threats for firms in one manufacturing industry within your
country, of being in your own region's bloc(s); and then discuss the effect on firms in
that industry of the existence of other regional blocs elsewhere in the world. You have
to identify the industry and some of the characteristics of that industry so that the
marker can judge the appropriateness of your answer, and refer to it throughout your
answers to this part of the question.
(10 marks)

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Question 3

Foreign exchange risk is one of the more important risks of doing international business.
Consider these two issues about that risk:

a) What is your judgement of whether your own country's exchange rate with the United
States will go up or down, over the next six to twelve months, and why?

(5 marks)

b) What are some of the ways that a firm in your country or region that exports its
finished product to the United States and imports some raw materials from the United
States, can handle the risk of that currency change in part (a), if and when it happens?
For example, should it hedge its contracts and/or adjust the price and payment terms
it is charging, and why? Identify the firm that you are writing about so that the marker
can assess the appropriateness of your answer; and cover both imports and exports.
The firm could be either a real one or a composite of several relevant firms that you
have heard about, read about or been involved in.

(15 marks)

Question 4

a) You have been asked to explain how a firm in your country or region can enter the
Chinese market or a market in a country in the European Union, by exporting. Using
one particular firm in your country or region that you know about from reading or from
your experience as the foundation of your explanation, show the steps that the firm
can take to enter that foreign market and improve export performance, including a
brief description of the information sources that the firm can access. The firm could be
either a real one or a composite of several relevant firms that you have heard about,
read about or been involved in. Please do not include how to finance exporting in your
answer, and do not include counter trade in your answer.
(15 marks)

b) Would you recommend a standardisation or an adaptation approach to exporting in

part (a)?
5 marks)

Page 3 of 4
Question 5

There are several methods of entering a foreign market, ranging from exporting to setting up
a wholly owned subsidiary in the host country. This question is about two of those entry
strategies: turnkey projects and joint ventures.

Describe an example of a business in your own country or region that has used each one of
these methods to enter a foreign market. That is, you should describe one firm for one entry
mode, and another firm for the other entry mode. Identify the firms by name and product.
The two businesses could be either real ones or composites of relevant firms that you have
heard about, read about or been involved in. Ensure you cover all or most of the
characteristics of each entry method while you are describing the examples, that is, use
some principles of market entry to structure your answer.

Do you think the above two firms were wise to use the method of entry that they did?
Which of the other six entry methods could have been considered? Why?
(20 marks)

Question 6

Strategic alliances between firms from different countries are an increasingly important part
of international business.

a) Firstly, why do you think they are so important? Use examples to illustrate your points.
(5 marks)

b) Use two examples of strategic alliances that businesses in your country or region
belong to, as the basis of your answer, to develop a set of guidelines about how to
make a strategic alliance work. In your answer, consider that one of the disadvantages
of strategic alliances is that a firm can lose its own know-how to the partner, so include
a discussion of what can be done to reduce the risk of this occurring.
(15 marks)

END

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