WGU C211 Study Guide UPDATED Exam
Questions and CORECT Answers
Globalization - CORRECT ANSWER - Is the close integration of countries and peoples of the
world which has been brought about by the enormous reduction of the cost of transportation and
communication, and the breaking down of artificial barriers to the flows of goods, services,
capital, knowledge, and (to a lesser extent) people across borders.
New view of Globalization - CORRECT ANSWER - A new force sweeping through the
world in recent times that it is a new phenomenon beginning in the late 20th century, driven by
recent technological innovations and a Western ideology focused on exploiting and dominating
the world through a Multinational enterprises.
Evolutionary view of globalization - CORRECT ANSWER - A long run historical evolution
since the down of human history. Historians are debating whether globalization started 2,000 or
8,000 years ago. Earliest traces of globalization goes back to the Assyrian, Phoenician, and
Roman times.
Pendulum view of globalization - CORRECT ANSWER - A pendulum that swings from one
extreme to another from time to time. Globalization is neither recent or one-directional. Risk
management and scenario planning is needed.
What is Foreign Direct Investment (FDI)? - CORRECT ANSWER - Investment in,
controlling and managing value-added activities in other countries. In other words, investment
made by a firm or individual in one country into business interest located in another country.
Most discussed foreign entrance is MNE.
MNE: Multinational Enterprise - CORRECT ANSWER - Is a firm that engages in FDI when
doing business abroad. FDI sets apart MNEs and non-MNEs.
What different political views exists on FDI? - CORRECT ANSWER - -in developed
economies, backlash against inbound FDI from certain countries is not unusual. Example, in the
1980s, Americans were alarmed by the significant Japanese inroads into the United States.
,-in some parts of the developing world, tension over foreign ownership can heat up. There were
numerous incidents of nationalization and expropriation against MNE assets throughout the
developing world.
What 4 benefits exist to a country receiving FDI? - CORRECT ANSWER - 1. Capital inflow
improve the host country balance of payment. More technology, management, and more jobs in
their countries.
2. Technology, especially more advanced technology from abroad, can create technology
spillovers that benefits domestic firms and industries. Local rivals can learn and imitate such
technology resulting in what's called demonstration effect (contagion effect).
3. Advanced management know how may be highly valued. It's often difficult for indigenous
development of management to know how to reach a world-class level in absence of FDI.
4. FDI creates jobs, both directly and indirectly. Direct benefits arise when MNEs employ
individuals locally.
What costs exist to a country receiving FDI? - CORRECT ANSWER - 1. Loss of sovereignty
2. Adverse effects on competition
3. capital outlfow
How do resources and capabilities influence the competitive dynamics of a business? -
CORRECT ANSWER - Firm resources must create value when engaging rivals. The ability to
respond rapidly to challenges also adds value.
Competitive Dynamics - CORRECT ANSWER - Actions and responses undertaken by
competing firms.
What is resource similarity? - CORRECT ANSWER - Extent to which a given competitor
possesses strategic endowment comparable in terms of both type and amount to those of the local
firm. In order words, extent to which firm's tangible/intangible resources are comparable to
competitors in type and amount.
How does resource similarity impact competitive dynamics? - CORRECT ANSWER - Firms
with a high degree of resources similarity are likely to have similar competitive actions. For
, example, Apple and IBM used to have a lot of resource similarity in the 1990s that they fought a
lot.
Classical theory of international trade. - CORRECT ANSWER - 1. Mercantilism
2. Absolute advantage
3. Comparative advantage
Mercantilism - CORRECT ANSWER - Theory that suggests that the wealth of the world is
fixed and that a nation that exports more and imports less will be richer. On the other hand, a
nation experiencing a trade deficit would see its gold and silver flowing out and, consequently,
would become poorer. International trade is a zero-sum game.
Absolute advantage - CORRECT ANSWER - Theory that suggests that under free trade, a
nation gains by specializing in economic activities in which it has an absolute advantage with
free trade market forces are determined with little to no government intervention. The economic
advantage one nation enjoys that is absolutely superior to other nations. International trade is a
win-win game. There are net gains from trade.
Comparative advantage - CORRECT ANSWER - Theory that focuses on the relative (not
absolute) advantage in one economic activity that one nation enjoys in comparison with other
nations. It suggests that the U.S. has an absolute advantage over China in both wheat and aircraft,
but as longs as China is not equally less efficient in production of both goods, China can still
choose to specialize in the production of one good. There are net gains from trade.
-opportunity cost is a crucial concept here.
Opportunity cost - CORRECT ANSWER - The cost of pursuing one activity at the expense of
another activity.
Factor endowments - CORRECT ANSWER - The extent to which different countries possess
various factors of production such as labor, land, and technology.
Questions and CORECT Answers
Globalization - CORRECT ANSWER - Is the close integration of countries and peoples of the
world which has been brought about by the enormous reduction of the cost of transportation and
communication, and the breaking down of artificial barriers to the flows of goods, services,
capital, knowledge, and (to a lesser extent) people across borders.
New view of Globalization - CORRECT ANSWER - A new force sweeping through the
world in recent times that it is a new phenomenon beginning in the late 20th century, driven by
recent technological innovations and a Western ideology focused on exploiting and dominating
the world through a Multinational enterprises.
Evolutionary view of globalization - CORRECT ANSWER - A long run historical evolution
since the down of human history. Historians are debating whether globalization started 2,000 or
8,000 years ago. Earliest traces of globalization goes back to the Assyrian, Phoenician, and
Roman times.
Pendulum view of globalization - CORRECT ANSWER - A pendulum that swings from one
extreme to another from time to time. Globalization is neither recent or one-directional. Risk
management and scenario planning is needed.
What is Foreign Direct Investment (FDI)? - CORRECT ANSWER - Investment in,
controlling and managing value-added activities in other countries. In other words, investment
made by a firm or individual in one country into business interest located in another country.
Most discussed foreign entrance is MNE.
MNE: Multinational Enterprise - CORRECT ANSWER - Is a firm that engages in FDI when
doing business abroad. FDI sets apart MNEs and non-MNEs.
What different political views exists on FDI? - CORRECT ANSWER - -in developed
economies, backlash against inbound FDI from certain countries is not unusual. Example, in the
1980s, Americans were alarmed by the significant Japanese inroads into the United States.
,-in some parts of the developing world, tension over foreign ownership can heat up. There were
numerous incidents of nationalization and expropriation against MNE assets throughout the
developing world.
What 4 benefits exist to a country receiving FDI? - CORRECT ANSWER - 1. Capital inflow
improve the host country balance of payment. More technology, management, and more jobs in
their countries.
2. Technology, especially more advanced technology from abroad, can create technology
spillovers that benefits domestic firms and industries. Local rivals can learn and imitate such
technology resulting in what's called demonstration effect (contagion effect).
3. Advanced management know how may be highly valued. It's often difficult for indigenous
development of management to know how to reach a world-class level in absence of FDI.
4. FDI creates jobs, both directly and indirectly. Direct benefits arise when MNEs employ
individuals locally.
What costs exist to a country receiving FDI? - CORRECT ANSWER - 1. Loss of sovereignty
2. Adverse effects on competition
3. capital outlfow
How do resources and capabilities influence the competitive dynamics of a business? -
CORRECT ANSWER - Firm resources must create value when engaging rivals. The ability to
respond rapidly to challenges also adds value.
Competitive Dynamics - CORRECT ANSWER - Actions and responses undertaken by
competing firms.
What is resource similarity? - CORRECT ANSWER - Extent to which a given competitor
possesses strategic endowment comparable in terms of both type and amount to those of the local
firm. In order words, extent to which firm's tangible/intangible resources are comparable to
competitors in type and amount.
How does resource similarity impact competitive dynamics? - CORRECT ANSWER - Firms
with a high degree of resources similarity are likely to have similar competitive actions. For
, example, Apple and IBM used to have a lot of resource similarity in the 1990s that they fought a
lot.
Classical theory of international trade. - CORRECT ANSWER - 1. Mercantilism
2. Absolute advantage
3. Comparative advantage
Mercantilism - CORRECT ANSWER - Theory that suggests that the wealth of the world is
fixed and that a nation that exports more and imports less will be richer. On the other hand, a
nation experiencing a trade deficit would see its gold and silver flowing out and, consequently,
would become poorer. International trade is a zero-sum game.
Absolute advantage - CORRECT ANSWER - Theory that suggests that under free trade, a
nation gains by specializing in economic activities in which it has an absolute advantage with
free trade market forces are determined with little to no government intervention. The economic
advantage one nation enjoys that is absolutely superior to other nations. International trade is a
win-win game. There are net gains from trade.
Comparative advantage - CORRECT ANSWER - Theory that focuses on the relative (not
absolute) advantage in one economic activity that one nation enjoys in comparison with other
nations. It suggests that the U.S. has an absolute advantage over China in both wheat and aircraft,
but as longs as China is not equally less efficient in production of both goods, China can still
choose to specialize in the production of one good. There are net gains from trade.
-opportunity cost is a crucial concept here.
Opportunity cost - CORRECT ANSWER - The cost of pursuing one activity at the expense of
another activity.
Factor endowments - CORRECT ANSWER - The extent to which different countries possess
various factors of production such as labor, land, and technology.
