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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 $20 million to construct and

requires a moderately skilled workforce. The total value of the world market

for this product over the next 10 years is estimated to be between $20 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)

Eae 203 Question Paper

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