Rocky Mountain Chocolate Factory Preparing Financial Statements Essay Sample
* The first post-war period ( 1945-1975 ) witnessed strong economic growing and gradual addition in globalisation under the Bretton Woods establishments. What do we intend by “the Bretton Woods institutions” ( Background Brief: Bretton Woods Institutions ) ? What function did the US drama in puting up these establishments and what were its motivations? The Bretton Woods Institutions take their name from a many-sided conference held in July 1944 at the Bretton Woods resort in New Hampshire. The narrow definition of Bretton Woods Institutions refer to the International Monetary Fund ( IMF ) and the International Bank for Reconstruction and Development ( IBRD ) . while they were lone portion of a much broader moving ridge of international institutional invention. including the World Bank Group. GATT. other many-sided development Bankss. UN. and other many-sided international organisations. Bretton Woods System was to make a many-sided institutional model to avoid the inter-states struggles of the interwar old ages.
It was besides to help in the Reconstruction of a new international economic order after WWII. It was a collectively goods. a bulk of which was provided by the US. to reconstruct and procure a new universe order. US played nucleus function in the constitution. care and development of the whole system. The primary motivations include: 1. US believed the Bretton Woods System could assist widen its Alliess front. and assist reconstruct the old Europe under monolithic devastation of WWII. 2. Bretton Woods System. as it took multilateralism as nucleus rule. would be idealistic to settle down inter-states differences and avoid a new universe war. 3. Bretton Woods System would assist organize corporate action of member parties and prevent monolithic world-wide economic depression.
* Since the Global Financial Crisis ( 2008-2009 ) . what are the most of import alterations that have occurred to the planetary system? By and large talking. the universe economic system in the foreseeable hereafter is traveling to be much more dependent on the developing universe than the past. Convergence in income degrees is likely to go on since the crisis. reflecting both the just public presentation of developing economic systems and the hapless public presentation of industrial states. The reform on international macroeconomic and fiscal architecture requires active function of developing states. Yet some inquiries remain. The first is whether major developing states peculiarly China can go an alternate engine of the universe economic system. The 2nd is the kineticss of universe trading system and the transmutation of center-periphery character.
* Review Background Brief No. 2. so you are familiar with the chief periods of globalisation. In what manner does the Bretton Woods system ( Period 3 ) develop as a reaction to the jobs of the Interwar Period ( Period 2 ) ? During Period 3. the US shouldered the duty of international establishment. coordinated the trade and fiscal issues and facilitated interstate cooperation. It is reaction to the deficiency of a hegemon and ruling force that fail to prolong the stableness of international order in the Interwar Period. And gradual but steady liberalisation of trade and fiscal controls besides took topographic point. when Keynesianism was exultant to battle the depressions. In amount. a tightened international tie was constructed as US clearly assumed the leading and more binding international organisations were established.
* What do we intend by GDP and how does it associate to the construct of economic growing? GDP means the entire “value-added” . the amount of all the value-adding activity carried out in a given geographic district in a certain clip period. It is equal to the amount of the value of all concluding goods and services produced in a given economic system. GDP is a utile step of the entire economic system size in a state at given period. Therefore by mentioning to the altering rate of GDP we might besides get the growing rate of overall economic system.
* Be comfy speaking about factor gifts. factor copiousness and factor strength ; be able to explicate the overall ( sum ) production map that shows the relation between factors of production and end product. What does the AK growing theoretical account lead you to anticipate about the comparative growing of rich and hapless states? The factor gift is the entire stock of factors of production available to an economic system at a given clip. The factor copiousness is decided by the supply comparative to other factors ( largely to the population. human-capital copiousness. land copiousness. etc. ) . The factor strength refers to the comparative importance of one factor versus other factors in production of a given industry ( labour-intensive. capital-intensive. etc. ) . The AK growing theoretical account can be defined as the map:
Y=A*K. Y is the end product. A is the productiveness ( chiefly dependant on engineering ) . K is the capital. From the definition we know the map represents changeless return to graduated tables. Therefore there would be no convergence between the growings of developed states and developing states. with different get downing capital and productiveness.
* What are these winging geese. anyhow?
The “flying geese” theoretical account: One economic system. like the first goose in a V-shaped formation. can take other economic systems toward industrialisation. go throughing older engineerings down to the followings as its ain incomes rise and it moves into newer engineerings. The comparative advantage of different states is dynamic.
* Why is Justin Lin optimistic about the growing potency of the lower income states? What policies does he rede? Mr. Lin’s optimism depends on the winging goose theoretical account and later-comer advantage. As he suggests. economic development is a dynamic procedure as states strive to mount up the industrial ladder. The comparative advantage is therefore transferred to late-comers. which can emulate predecessors with similar gift construction and work the comparatively abundant gifts. Now. China and some other states are to upgrade their industrial construction. which leaves other developing states an chance to make full in. particularly labour intensive industries. He advised the developing state to follow comparative advantage in its industrial development and to tap into the potency of advantages of retardation in industrial upgrading. Besides. the dynamic growing in China and other big emerging markets provide an unprecedented chance for the industrialisation and dynamic growing in Africa and other low income states.
* What is a “growth miracle” ? What is a “middle income trap” ? What is a “poverty trap” ? Growth Miracle occurs when a state has a enormous high GDP growing rate in a certain period. In-between Income Trap is an economic development state of affairs. where a state which attains a certain income ( due to given comparative advantages ) will acquire stuck at that degree. As rewards rise. makers frequently find themselves unable to vie in export markets with lower-cost manufacturers elsewhere. Yet. they still find themselves behind the advanced economic systems in higher-value merchandises. Poverty Trap means the poorness in a state is relentless and there is small economic growing over old ages. The state of affairs is by and large attributed to limited entree to recognition and capital markets. utmost environmental debasement ( which depletes agricultural production potency ) . corrupt administration. capital flight. hapless instruction systems. disease ecology. deficiency of public wellness attention. war and hapless substructure.
Trade and Commercial Policy
* What are factors of productions. factor copiousness and factor strength? How does the advancement of the T-shirt through foreign trade. as described by Rivoli. tantrum in with an analysis of trade based on factor copiousness and factor strength? A factor of production is a basic resource that is used. but non used up. in the production procedure. It can be capital ( physical capital/human capital ) . labour. and land. Answered above.
The procedure of doing the T shirt:
1 The production of cotton
True. subsidizes. duty and barriers did assist maintain comparative advantage of US cotton industry. But turning cotton is non precisely labour-intensive ; it is going increasing engineering intensive and calls for investing on R & A ; D ( e. g. genetically modified seeds ) . US is comparatively abundant in capital. engineering and cultivable land. 2 The production of cotton fabric
The production procedure is extremely labour-intensive. Labor force is comparative abundant in China. necessitating lower rewards than the United States. It is a race to the underside. In recent old ages. the industrial transformation/ new labour jurisprudence and other ordinances lift the cost of labour force. Other more factor abundant states. Vietnam and Pakistan took the topographic point of China. 3 The recycle procedure and export to Africa
The recycle of cotton fabrics is skill-intensive. It requires peculiar accomplishment to separate the value of second-hand vesture accurately. Therefore US companies conduct the concern.
* What is the relationship between underlying factor gifts and comparative monetary values within a state? Abundant factor gifts have comparatively cheaper monetary values within a state. However. in a extremely incorporate planetary market. the difference in monetary values tends to meet.
* Trade enables economic systems to take advantage of differences in factor gift by trading and specialising in line with their factor gifts. Additions from trade come from increased chances for exchange. and from the ability to specialise ( Rivoli. chapters 4-6 ) .
* Can factor gifts alter over clip? What are the deductions? See the assorted ways in which the United States has managed to keep its comparative advantage in the export of cotton ( Rivoli. chapters 1-3 ) . The Flying Geese Paradigm helps explicate the kineticss of factor gifts. The factor gifts can alter over clip when industry is upgraded. capital/technology is accumulated. demographic characteristic is changed. etc. The nucleus rule in keeping comparative advantage of exporting cotton is to maintain high productiveness at low cost. US manufacturers utilized the abundant gift in skilled-labor and land. invested big capita in machinery and other equipment and improved engineering ( e. g. GM seeds ) . It is true that US manufacturers bit by bit lost the advantage on some abundant factor gifts. as bondage is non allowed and the labour cost is progressively high. but they still managed to maintain other abundant factor gifts to stay competitory.
* Trade alterations comparative monetary values in the domestic economic system. so there are needfully victors and also-rans from increased or decreased trade chances. Who are the victors and also-rans from trade? ( Hint: the reply depends on initial factor gifts ; it is non the same in capital- and labor-abundant economic systems ) . The victors are industry of abundant factors while the also-rans are industry of scarce factors. The trade would raise factor returns of abundant-factor industry and likely lower the costs. as cheaper imports are now available. The industry of scarce factors. nevertheless. must confront foreign rivals whose factor gift is comparatively abundant. and the factor returns would be lower.
* The chief instruments of trade policy are duties. quotas. subsidies. and non-tariff barriers. All of these have similar effects. in that they create differences between domestic monetary values and universe monetary values. ( Krugman and Obstfeld )
* The most common signifier of trade policy in the development universe has been “Import Substituting Industrialization ( ISI ) . ” What are the jobs associated with this scheme? ( Krugman and Obstfeld ) The statements back uping ISI are:
1. Infant Industry. Developing states have possible comparative advantage in given industry but as new-comer it can non vie with well-established industry in developing states. So impermanent support is needed. However. first it is non good to seek to travel today into the industries that will hold a comparative advantage in the hereafter. Second. protecting does no good unless it truly helps do industry competitory ; there is the danger of “pseudoinfant” industry. At last. unless there is domestic market failure. authorities intercession should be avoided. Two statements should be considered: the appropriability statement ( the innovators might make intangible/other societal benefits that can non be compensated ) and the imperfect capital markets argument. 2. Promoting fabrication industry.
First people before 1970s believed industrialisation was needfully based on a permutation of domestic industry for imports instead than on a growing of manufactured exports. Second import permutation straight benefited powerful established involvement groups. Third the universe economic system was rigged against new entrants. Problems of the scheme:
1. Empirical survey shows the spread is non narrowed.
2. The cost is high. Resources are extracted from factor-abundant industry to factor-scarce industry. Inefficient production graduated tables. The unemployment and income divergency.
The Political Economy of Trade
* Interest group theoretical accounts of trade see trade policy as an exchange between politicians and components. What resources do components convey to bear on politicians? 1 Fiscal Contributions ( Legal: Campaign contributions/ Illegal: Bribery. Corruption ) 2 Lobbying. persuasion/biased information
3 Votes. as extremely organized in deprived industry
* Which groups are likely to be pro- and anti-free trade? ( Hint: once more. the reply depends on initial factor gifts ; it is non the same in capital- and labor-abundant economic systems ) . Interest groups related to frighten factor endowment industry/ import-competing sector would anti free trade. Interest groups related to abundant factor gift industry/ exporters would pro free trade.
* Why might legislators depute trade policymaking to the executive? What are the effects of such deputation? How do legislators command the president? WHY: it is a procedural mechanism to heighten the president’s credibleness in negociating complex many-sided trade understandings by streamlining the congressional blessing procedure in return for enhanced congressional inadvertence. President is therefore granted with more power in managing understanding of complexness and makes his promise to other negotiants. It is besides a conditional grant of authorization to President with certain restraints and inadvertence imposed. How to command:
1. Oversight processs
2. Withdrawing the authorization delegated to the President
3. Power of Ratification
* Destler provides a instance survey of trade policymaking in the US. Partisanship affairs ; Democrats have different concerns than Republicans. What issues do Democrats raise in these dialogues. and how are they influenced by the involvements of their components? Democrats raised issues like international labour criterions. execution of many-sided environmental understandings. protections on pharmaceutical invention. national security concern on ports and FDI that lead to “unfair” competition in free trade. The issues are linked with pay stagnancy and turning income inequality in US ; they are related to the involvements of components. who are damaged in competition with aliens.
* What are the chief rules of the GATT/WTO system? What is non-discrimination? Does regionalism go against this rule ( see Background Brief on regionalism ) ? The chief rules of GATT/WTO are liberalisation. reciprocality & A ; bargaining and non-discrimination. Liberalization is a procedure of negotiated decrease of at-the-border barriers. Reciprocity & A ; bargaining indicates the exchange of grants that benefit all the affecting parties ; advanced provinces are non allowed to determine the nature of the trade docket. Reciprocity is that any negotiated grants should use to all members every bit on a most favorite state footing. Critics argue regionalism is inherently prejudiced: 1 they are deviating trade from the remainder of the universe toward favorite regional spouses ( merchandise deviating ) . 2 complex international trade environment governed by tonss of separate understandings. each with different and frequently conflicting regulations ( Accommodating overlapping understandings ) . However advocates recognize at that place will ever be trade recreation but it could be minimized after subscribing regional understandings. as puting docket and moving as inducement for farther many-sided trade negotiations ( merchandise making ) .
* The Uruguay and Doha rounds sought to make “grand bargains” between advanced and developing states. What are the issues of involvement to each group of states. and how do they reflect comparative advantage? The Southern Agenda: 1 continued liberalisation of trade in goods of involvement to developing states. ( Textiles and Apparel. Natural Resources. Tropical Products and Other Agricultural Products ) 2 subsidies and dumping: fasten the regulations on enforcing restraints on trade. 3 betterments on difference colony through quasi-judicial procedures that protect little states. The Northern Agenda: 1 market entree in goods but besides trade in services. including non-discrimination and national intervention. ( telecomm. air conveyance. and fiscal services ) 2 trade-related facets of rational belongings rights ( transcript rights. patents. hallmarks. bit design ) . The comparative advantage of developing states is natural stuff. labour-intensive export and other non-high value added goods. The comparative advantage of developed states is services. capital/skill-intensive industry. high value added goods ( high-tech. etc. )
* From your reading of the two imperativeness cuttings. what were the factors that led to the dislocation of the WTO dialogues in 2008? The North and the South can non make consensus on take downing the barriers. cutting the subsidies and decreasing support on domestic incipient. non-competitive industries. Particularly. some issues are the protection on husbandmans of developing states and the cardinal nutrient merchandises. Foreign Direct Investment
* What is FDI? What are M and A’s? What is greenfield investing? How is FDI measured? FDI is the foreign direct investing. M & A ; A represents Investment through Merging and Acquisition. where transnational corporations invest and own a concern antecedently started/run by others. Greenfield investing is a signifier of foreign direct investing where a parent company starts a new venture in a foreign state by building new operational installations from the land up ( frequently occurred in developing states ) . FDI can be measured as the per centum of GDP. per centum of Gross Fixed Capital Formation. per centum of entire universe. per centum of entire trade in ware and services. per centum of entire ware trade. US Dollars or US dollars per capita.
* FDI occurs when there are competitory advantages that the investment house has vis-a-vis local rivals. What are these firm-specific advantages? The nucleus competence. including assorted touchable or intangible firm-specific assets. Say professional direction. engineering and patents. trade name. selling channels. logistics. stock list and supply concatenation direction.
* Many planetary houses have late picked a “core competence” within the value concatenation and “out-sourced” other activities. frequently to foreign locations. The value-chain can be disaggregated non merely within states. but across them. giving rise to international production webs. What are these webs? The webs are created via a division of labour guided by perpendicular schemes. The company recognizes the nucleus competency and outsources other constituents of the merchandise value concatenation to providers and other histrions. in which contracts and minutess are needed. It seeks to work factors of production and resources at different locations holding comparative advantage. And the excess cost of operating across boundary lines should be compensated by the benefits provided by the webs. including market entree. resources entree and other low factor costs. The nexus of webs is to keep sustainable competitory advantage and planetary fight. A paradigm of web is:
Research= & gt ; ProductDesign= & gt ; CoreComponents= & gt ; Sourcing= & gt ; Assembly= & gt ; Distribution= & gt ; Marketing= & gt ; Retailing= & gt ; Service= & gt ; FinalMarket
* Lazonick thinks we were better off before corporations started outsourcing and “financializing. ” Why does he state this? Do you hold? By contrast. the McKinsey Institute sees a universe of win-win solutions based on outsourcing. Lazonick referred to financialization. as the public presentation of a company is evaluated by fiscal steps ( e. g. net incomes per portion ) . The manifestation of the financialization of the U. S. economic system is the compulsion of corporate executives with administering value to stockholders. clairvoyance. in the signifier of stock redemptions. at the disbursal of investing in invention and creative activity of employment chances. And the unfastened systems of outsourcing undermined the old-economy “rationale” and calling employment within one company.
Lazonick believed. in amount. the new theoretical account exacerbated unfairness and instability of US economic system. and restricted the potency for economic growing. I partially agree with Lazonick’s remark on fiscal market. Indeed. the new model’s high dependance on perspective stock-market additions would likely do monolithic venture capital and bring on great fluctuation. which distorted the demand and supply of capital. However. outsourcing and specialisation on nucleus competence might be good. as corporations could concentrate on what is competitory and allocate adequate resources. The fluidness of capital and labour would optimise the concatenation of production. And it besides helps to cover with the instability in universe economic system and provides inducement for corporations in developing states to turn. As MKI pointed out. outsourcing would cut down the cost and increase grosss of the concern. and the flexibleness of labour market besides ensures re-employment.
* Note that much trade is non merely “intra-industry” but “intra-firm. ’ What does this mean? The T-shirt book has some interesting illustrations of how intra-firm trade and the creative activity of international production webs in fabrics affected trade policy penchants of the industry. Explain. Intra-firm trade is the trade between two subordinates of a company in different locations. The company might hold an international supply concatenation of merchandises and each subordinate use local comparative advantage. For illustration. the T-shirt book mentioned the American Apparel Manufacturers Association one time supported limitations on foreign exports and was portion of seed-to-shirt alliance. But as industries bit by bit give up fabrication in the United States and construct up concern abroad. AAMA emerged with American Footwear Association to go AAFA. which is chiefly pro-trade. Merely by take downing limitations could they to the full utilize the advantage of intra-firm trade and the international production webs.
* Location-specific advantages include market size. labour costs. resources. policy environment. institutional environment. denationalization and liberalisation. From the point of view of the house. it might be looking for different sorts of location-specific advantages. depending on whether it is following a horizontal or a perpendicular investing scheme. Which kinds of location-specific advantages are likely to be more of import for a horizontal-type investing scheme? For a vertical-type scheme? What explains these differences? For Horizontal-type: Most horizontal schemes are market-seeking in which goods or services are produced and sold in the host state. So the location-specific advantages are: 1 size of market ( high per capita income. big population. rapid growing. etc. ) 2 the function of policy ( trade barriers might actuate horizontal scheme ) For Vertical-type: Vertical Schemes seek to split up the production procedure within the house and displacement parts of it to different locations. based on the comparative advantage and factor gift.
The market can be anyplace. 1. Factor of production ( e. g. . labour ) 2. Policy Environment 3. Political Environment The difference can be explained by the characteristics of different concern. Horizontal schemes apply appropriately for the concern that must be near to the market and the concluding market for concern using perpendicular schemes can be everyplace. Furthermore. the computations of costs and benefits might besides act upon the scheme chose ; if reproduction of a concern is formidably dearly-won so the company might take perpendicular schemes alternatively. Finally. different policies are important ; sometimes barriers are incentive for horizontal alternatively of vertical-type investing.
* Is the Latin American concern service instance depicting a horizontal or perpendicular scheme? How would you depict the international production web in a sector such as concern services? It chiefly describes perpendicular scheme. The corporations outsourced the service to Latin America where there is a comparative advantage in low-cost skilled workers. Business Services require proficient support such as call/contact centres. legal services. etc. By outsourcing the concern services the company can specialise on nucleus competency. lower the cost of concern and remain competitory.
* “Who Captures Value in a Global Innovation System? The instance of Apple’s iPod. ” And the reply is… ? The largest gainers: Apple ( its employees and stockholders ) To a lesser extent: Nipponese and Korean makers of high value-added constituents. Least: the assembly ( e. g. China ) and other lower value-added constituents
