Eae 203 Question Paper
Eae 203
Course:Bachelor Of Economics
Institution: Kenyatta University question papers
Exam Year:2012
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2011/2012
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
ECONOMICS
EAE 203: MANAGEMENT IN THE CONTEMPORARY GLOBAL ECONOMY
DATE: TUESDAY, 3RD APRIL 2012 TIME: 11.00 A.M. – 1.00 P.M.
INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS.
1.
(a)
With the help of specific examples justify the need for strategic cost management
system for a business contemplating a global business strategy.
(10 marks)
(b)
State and explain the five steps involved in strategic cost management programme.
(10 marks)
(c)
Discuss how strategic cost management system is incorporated in the three core
components of value chain of a product.
(6 marks)
(d)
Distinguish between traditional costing and target costing of products.
(4 marks)
2.
(a)
How have changes in technology contributed to globalization of markets and
production?
(10 marks)
(b)
Explain how the internet and the associated world wide web might affect
international business activity and the globalization of the world economy?
(10 marks)
3.
(I)
A chemical firm is considering how best to supply the world market for
sulfuric acid. A manufacturing plant cost about 20milliontoconstructandrequiresamoderatelyskilledworkforce.Thetotalvalueoftheworldmarketforthisproductoverthenext10yearsisestimatedtobebetween20 billion
and $30 billion. The tariffs prevailing in this industry are moderated.
Page 1 of 2
Required
(a)
Should the firm favour concentrated manufacturing or decentralized
manufacturing? Explain.
(7 marks)
(b)
What kind of location(s) should the firm seek for its product?
Explain.
(7 marks)
(II)
Explain how an efficient logistics function can help an international business
compete more effectively in the global market place.
(10 marks)
4.
(a)
Discuss the ways in which expanding globally allows firms to increase their
profitability and the rate of profit growth.
(10 marks)
(b)
“In a world of zero transportation costs, no trade barriers, and nontrivial
differences between nations with regard to factor conditions, firms must expand
globally if they are to survive”. Discuss giving examples.
(10 marks)
5.
(a)
Explain the six steps followed during cost estimation practices.
(12 marks)
(b)
Given the data below for the various cost and output use the regression
method to answer the questions that follow:
Activity
120
150
160
140
200
250
600
800
700
Level (000)
Cost (000)
100
40
80
280
150
200
230
300
400
(i)
Estimate the cost function of the firm.
(6 marks)
(ii)
Using the estimated cost function, estimate the cost when activity
level is 500,000 units.
(2 marks)
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