Question 1

The success of the rose industry in Ecuador is a good example of the economic benefits of free trade

Accepted Answer

The rose industry in Ecuador has flourished due to the country's ability to take advantage of free trade agreements with other countries, particularly the United States. This has brought significant economic benefits to Ecuador, including increased employment opportunities and higher wages for workers, as well as increased foreign investment and revenue.

Question 2

The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.

Accepted Answer

The theory of national competitive advantage, developed by Michael Porter, emphasizes the importance of domestic factors, such as domestic demand and domestic rivalry, in shaping a nation's competitive advantage in certain industries. The theory suggests that a nation's ability to create and sustain competitive advantage depends on four key factors: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.

Question 3

Unlike the naturally endowed basic factors, advanced factors are a product of investment by all of the following except

Accepted Answer

Demographics refer to the characteristics of the population, such as age, gender, income, etc. They are not an entity that invests in advanced factors like companies or governments.

Question 4

Domestic rivalry creates pressure to do all of the following except:

Accepted Answer

Domestic rivalry creates pressure to improve performance in order to stay competitive, but improving employee relations may not directly contribute to increasing competitiveness or profitability. However, improving employee relations can lead to a more positive work environment and increased employee satisfaction and productivity.

Question 5

Which of the following two theories justify some limited and selective government intervention to support the development of certain export-oriented industries?

Accepted Answer

The new trade theory and the theory of national competitive advantage both justify limited and selective government intervention to support the development of certain export-oriented industries. The new trade theory suggests that through economies of scale and network effects, governments can help firms achieve a competitive advantage in the global market. The theory of national competitive advantage, proposed by Michael Porter, argues that governments can enhance the competitiveness of industries by fostering innovation, investing in specialized factors of production, and stimulating domestic competition.

Question 6

Which theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments but because in certain industries the world market can support only a limited number of firms?

Accepted Answer

The theory of "new trade" stresses that countries specialize in certain industries not just because of differences in factor endowments but also due to economies of scale, network effects, and first-mover advantages. In certain industries, only a limited number of firms can survive and compete in the world market, and these firms often locate in countries where they have a competitive advantage.

Question 7

Who argued that successful industries within a country tend to be grouped into "clusters" of related industries?

Accepted Answer

Michael Porter, in his book "The Competitive Advantage of Nations," argued that successful industries within a country tend to be grouped into "clusters" of related industries.

Question 8

Porter argues that the presence of all components is usually required for the "diamond" to boost:

Accepted Answer

Porter's diamond model is used to explain the competitive advantage of nations. It argues that the four components of factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry are all necessary for a nation to achieve and sustain a competitive advantage in a particular industry. Therefore, the presence of all components is required for the "diamond" to boost competitive performance.

Question 9

In his study, Porter observed that there are a disproportionate number of people with finance backgrounds on the top management teams of many __________ industries.

Accepted Answer

The passage mentions that Porter observed a disproportionate number of people with finance backgrounds on the top management teams of many United States industries. No other country is mentioned in relation to this observation.

Question 10

_______, by its choice of policies, can detract from or improve national advantage.

Accepted Answer

Only governments have the power to implement policies that affect national advantage. Companies, markets, individuals, and shareholders can only influence national advantage to a certain extent, but overall it is the government that plays the most important role in shaping the direction of a country's economy and policies.

Question 11

Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage.All of the following is/are attributes except:

Accepted Answer

Customs is not one of the four broad attributes of a nation that Porter identified as shaping the environment in which local firms compete. The four attributes are factor endowments, firm strategy, structure, and rivalry, related and supporting industries, and demand conditions.

Question 12

_______ occurs(s) when employees move between firms within a region and when national industry associations bring employees from different companies together for regular conferences or workshops.

Accepted Answer

Knowledge flows refer to the movement of knowledge and information across different entities, such as employees moving between firms or industry associations. Therefore, option C is the best choice as it accurately states this concept. Option E, industrial espionage, is similar but implies a negative connotation of stealing information, while this question implies a more cooperative exchange of knowledge. Choices A and D are unrelated to the concept described in the question, and option B implies a more malicious intent than is suggested.

Question 13

In his study dealing with the competitive advantage of nations, Porter argued that in regard to demand conditions, a nation's firms' gain competitive advantage if their domestic consumers are __________ and __________.

Accepted Answer

Porter argued that a nation's firms gain competitive advantage if their domestic consumers are sophisticated and demanding, which will push firms to innovate and improve in order to meet their high expectations.

Question 14

_______, according to Michael Porter, are a nation's position in factors of production such as skilled labour or the infrastructure necessary to compete in a given industry.

Accepted Answer

Michael Porter introduced the concept of factor endowments in his theory of competitive advantage. Factor endowments refer to the nation's position in terms of factors of production, such as skilled labor, natural resources, capital, technology, and infrastructure necessary to compete in a given industry. The availability and quality of factor endowments influence a nation's ability to create and sustain competitive advantage in certain industries.

Question 15

Porter argued that in regard to factor endowments, __________ factors are the most significant for competitive advantage in his study dealing with the competitive advantage of nations.

Accepted Answer

According to Porter, advanced factors such as a highly educated workforce, sophisticated technology, and superior infrastructure are the most significant for competitive advantage in his study dealing with the competitive advantage of nations. These advanced factors are not easily replicable by other countries, leading to sustained competitive advantage for those nations that possess them.

Question 16

In 1990, who published the results of an intensive research effort that attempted to determine why some nations succeed and others fail in international competition?

Accepted Answer

Michael Porter published the results of his research effort in his book "The Competitive Advantage of Nations" in 1990.

Question 17

According to the new trade theory, the reason Boeing was the first mover in commercial jet aircraft manufacture was that Boeing was

Accepted Answer

The new trade theory suggests that being a first mover in an industry can be due to innovation and sometimes luck, as these factors allow a company to establish a dominant position in a new market. Boeing's early success in commercial jet aircraft manufacture can be attributed to its innovative approach to aircraft design and production, as well as being at the right place at the right time, which could be considered luck.

Question 18

The New Trade Theory began to emerge in the ______

Accepted Answer

The answer of The New Trade Theory began to emerge...

Question 19

The conditions governing how companies are created, organized, and managed and the nature of domestic rivalry is referred to as

Accepted Answer

The conditions governing how companies are created, organized, and managed and the nature of domestic rivalry is referred to as firm strategy, structure, and rivalry.

Question 20

We would expect Porter's model to predict _______, if he is correct.

Accepted Answer

Porter's model, also known as the diamond model, predicts the pattern of international trade based on four factors: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. Therefore, choice C, which directly relates to the pattern of international trade, is the most appropriate answer. The other choices, including currency exchange rates, membership in the World Trade Organization, factor endowments, and trade costs, may be important variables that affect international trade, but they are not explicitly included in Porter's model.

Quiz 5: International Trade Theories