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IB final
final exam
Undergraduate 3

Additional Business Flashcards




Quality and Cost Management
  • Total Quality Management (TQM)
    • Technique to improve products and services quality
  • Six Sigma: Statistically based cost cutting system
    • Reduces defects, boosts productivity, eliminates waste and cuts costs
    • very high rating and gives a strong competition advantage because people believe and assume that the quality is there
  • International Organization for Standards-ISO 9000: certification process that requires certain quality standards must be met
    • systematically look at their checks and balances
    • certification gives people confidence for quality approach gains from this
    • European Unions standards for quality
    • Set by code
    • Firm must be certified ISO 9000 before it may access the EU market
    • somewhat bureaucratic and costly
Just in Time (JIT)
  • What?
    • inventory system that provides inventory right before it is needed
    • uses technologies to achieve very low costs
  • Benefits
    • Reduce holding and warehousing costs
    • better manage transportation costs as demand can be used inform shipment locations and levels - company is less likely to have excess unsold inventory that is has to write off against earnings or price low to sell.
    • reduce depreciation of products with short life cycles (i.e. high tech products)
    • can help improve product quality
  • Issues
    • rests on management of uncertainty
      • example: Fed Ex, UPS
      • There is an uncertainty that you are not going to get the inventory that you want. some industries are better at managing this risk than others
      • need to be able to deal with accidents (trucking accidents) may not be able to get inventory on time
Considerations for modes of transportation
  • value to volume and/or value to weight ratio (cost)
    • high value to weight (pharmaceuticals) ship by most secure and fastest
  • Perishability
  • stresses of mode
Ocean Freight
  • over 90% of international trade by weight
  • Malcolm McLean
    • invented container
      • specialization (roll on roll off)
      • intermodal idea took off
    • costs changed from $5 to 8 cents per ton
    • 30 x cheaper to load cargo now
    • these cost cuts are transferred to the customer
  • london to Singapore in 28 days now
  • Costs low because of
    • standardization (all containers the same)
    • better logistics
    • technology
    • growing size of ships
    • fewer crew members
  • Issues:
    • types of vessels
    • port technology
      • Automated customs screening
        • need to screen imports to secure ports
        • helps prevent loss of merchandis
      • RFID tags (smart dust)
        • Raido Frequency Identification Tags
        • Set up "gates" in order to track where merchandise is
        • Very cheap, very easy to track
      • Specialized receiving stations
    • Panamanian referendum: expand the canal


Transport: Rail
changes in marketing placement based on:
retail system: concentrated, fragmented
concentrated = a few retailers supply most of the market
fragmented = many retailers supply a market with no one having a major share

Channel length: long, short
fragmented channels are longer

channel exclusivity: Japan very exclusive. It is very hard to get a new product on the shelves in japan because most of the time the relationship between the wholesaler and the retailer is very established

Channel Quality: the expertise competencies and skill of established retailers in a nation, and their ability to sell and support the products of international business
push strategy
emphasizes personal selling rather than mass media advertising in the promotional mix. Although effective as a promotional tool, personal selling requires intensive use of a sales force and is relatively costly

industrial products; complex new products, or new to consumers (or just new consumers)
short distribution channels
few print or electronic media outlet
pull strategy
depends more on mass media advertising to communicate the marketing message to potential consumers

consumer goods
long distribution channels
few print or electronic media outlet
determinants of exchange rates (12)
1) balance of payments
2) interest rates
3) Inflation
4) Monetary and Fiscal Policy
5) International Competitiveness
6) Monetary Reserves
7) Governement Controles and Incentive
8) Importance of currency in world
9) political party and leader Philosophies
10) proximity of Elections or change in leadership
11) Expectations
12) forward exchange Market Prices
trading at a premium
when a currency's forward rate is stronger than spot (versus the other country)
trading at a discount
when a currency's forward rate is weaker than spot (cersus the other country)
fisher effect
i = R + i

Nominal interest = real rate of interest + inflation
inflation is the differing factor
lead strategey
pay bills due in foreign currency sooner when home currency is expected to depreciate (foreign currency is expected to appreciate)

encourage payment on foreign currency receivables sooner when the foreign currency is expected to depreciate (home currency expected to appreciate)
lag strategy
delay payments due in foreign currency when hoe currency is expected to appreciate (foreign currency is expected to depreciate)

try to delay incoming foreign receipts when the currency is expected to appreciate (home currency is expected to depreciate)
types of foreign exchange exposure (3)
1) transaction: the extent to which income from individual transaction is affected by fluctuations in foreign exchange

2) translation: the extent to which the reported consolidated results and balance sheets of a corporations are affected by fluctuations in foreign exchange values

3) the extent to which a firm's future international earning power (or costs) affected by changes in exchange rates
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