WGU C211 Global Economics for Managers test questions with 100% correct answers.

WGU C211 Chapter 1 questions and answersGlobalization The process by which businesses or other organizations develop international influence or start operating on an international scale Import quota A limit on the number of products in certain categories that a nation can import Emerging economy Nations with social or business activity in the process of rapid growth and industrialization Global economic pyramid Pyramid that consists of all of the world's economies, comprised of three parts New view of Globalization New force of globalization that started in the 20th Century, viewing Western expansion of MNE's as vital to growth Reverse innovation Innovations created for or by emerging-economy markets and then imported to developed-economy markets Evolutionary view of globalization Long-run view of globalization that states it has been with mankind since the beginning Pendulum view of globalization View of globalization which states it is neither recent or one-directional and is constantly changing Trade deficit A situation in which a country imports more than it exports Export restraints Limitations on the quantity of exports—usually imposed by the exporting country at the importing country's request Antidumping Policies Designed to punish foreign firms that engage in dumping and thus protect domestic producers from unfair foreign competition Trade embargo A government order that forbids trade with a specified nation Bargaining power The power of labor and management to achieve their goals through economic, social, or political influence Horizontal FDI A type of FDI in which a firm duplicates its home country-based activities at the same value chain stage in a host country Agglomeration Grouping together of many firms from the same industry in a single area for collective or cooperative use of infrastructure and sharing of labor resources Collusion Secret agreement or cooperation used to restrict competition Vertical FDI A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country Trade surplus A situation in which a country exports more than it imports Foreign Direct Investment (FDI) Investment made by a firm or individual in one country into business interest located in another country; MNE's use this Multinational Enterprise (MNE) A firm that engages in foreign direct investment (FDI) when doing business abroad Benefits received when receiving Foreign Direct Investment (FDI) 1. Capital inflow improve the host country balance of payment. 2. Technology, especially more advanced technology from abroad, can create technology spillovers that benefits domestic firms and industries. (Contagion effect) 3. Advanced management know how may be highly valued. 4. FDI creates jobs, both directly and indirectly. Costs incurred when receiving Foreign Direct Investment (FDI) 1. Loss of sovereignty 2. Adverse effects on competition 3. Capital outflow Competitive dynamics Actions and responses undertaken by competing firms Resource similarity Extent to which the firm's intangible resources are comparable to a competitor's in terms of both type and amount How resource similarity impacts competitive dynamics Firms with a high degree of resource similarity are likely to have similar competitive actions Classic theory of international trade Theory that states that goods are exchanged against one another according to the relative amounts of labor embodied in them; Goods which have equal prices embody equal amounts of labor Theory of Mercantilism Theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer Absolute advantage The ability to produce a good using fewer inputs than another producer Comparative advantage Theory that focuses on the relative advantage in one economic activity that one nation enjoys in comparison with other nations Opportunity cost The cost of pursuing one activity at the expense of another activity Factor endowments The extent to which different countries possess various factors of production such as labor, land, and technology Market intervention A method by which the government modifies prices that are, or would be, established by the market Product life cycle A theory that accounts for changes in the patterns of trade over time by focusing on products' livelihood and span Strategic trade policy Government policy that provides companies a strategic advantage in international trade through subsidies and other supports First-mover advantages Advantages that first entrants enjoy and do not share with late entrants National competitive advantage Theory that suggest that the competitive advantage of certain industries in different nations depends on four aspects that form a "diamond." Theory focuses on why certain industries within a nation are competitive internationally. Protectionism The idea that governments should actively protect domestic industries from imports and vigorously promote exports. Strategic trade theory Theory which states strategic intervention by governments in certain industries can enhance their odds for international success Spot transaction The classic single-shot exchange of one currency for another Transition risk The potential for loss associated with fluctuations in the foreign exchange market; currency risk is another term for it Forward transactions Exchanges which allow participants to buy and sell currencies now for future delivery (30, 90, or 180 days); also known as hedging Currency hedging A transaction that protects traders and investors from exposure to the fluctuations of the spot rate. Spot rate The price quoted for immediate settlement on a commodity, a security or a currency Strategic hedging Geographically dispersing operations through sourcing or FDI in multiple currency zones (Involves production, marketing, and sourcing). First-mover advantage Benefits that accrue to firms that enter the market first and that late entrants do not enjoy such as proprietary, technological leadership. Late-mover advantage Benefits that accrue to firms that enter the market later and that early entrants do not enjoy. Opportunity to free ride on first-mover investments. Three pillars of institutions 1. Regulatory pillar: (formal institutions) is the coercive power of governments. 2. Normative pillar: (informal institutions) refers to how values, beliefs, and actions of other relevant players (norms) influence the behavior of local individuals and firms. 3. Cognitive pillar: (informal institutions) refers to the internalization, of values and beliefs that guide behavior. Formal institution Institution represented by laws, regulations, and rules; primary support pillar is the regulatory pillar Risk management All efforts designed to preserve assets and earning power associated with a business Informal institution Institution represented by cultures, ethics, and norms; two main supportive pillars are normative and cognitive. Institution-based view A leading perspective in global business that suggests that the success and failure of firms are enabled and constrained by institutions. How global business is affected by democracy In most modern democracies, the rights to organize economically has not only been extended to domestic individuals to firms, but also to foreign individuals and firms that come to do business Totalitarianism A political system in which one person or party exercises absolute political control over the population Communist totalitarianism A form of government which centers on a communist party through authoritarian means Right-wing totalitarianism A political system in which political power is monopolized by a party group or individual that generally permits individual economic freedom but restricts individual political freedom for fear of the rise of communism Theocratic totalitarianism The monopolization of political power in the hands on one religious party or group Tribal totalitarianism One tribe or ethnic group monopolizing political power and oppressing other tribes or ethnic groups Civil law A means of law comprised of statutes and codes as a primary means to form legal judgements; derived from Roman law