WGU C211 - Global Economics for Managers
EXAM QUESTIONS AND ANSWERS LATEST
UPDATE
Value - Resources must create value when engaging rivals
Rarity - Certain assets are rare, giving an advantage in competitive dynamics
Imitability - The inability to have your company imitated would give you a clear
advantage in the market
Organization - Some firms are better organized for competitive actions than others; it is
challenging for slow-moving firms to wake up and become more aggressive
What does VRIO stand for?
Ownership - Refers to multinational firm possession and leveraging of certain valuable,
rare, or hard to imitate or organizational embedded assets overseas (ex. VRIO)
Location - refers to doing business in a certain place, such as natural or labor resources
or its location near particular markets provide certain advantages to firms doing
business
Internalization - Refers to replacement of cross-border markets, such as exporting or
importing, with one firm locating in two or more countries
,What is the OLI advantage?
Benefits to Host Country:
Capital inflow
Technology spillover
Advanced management know-how
Job creation
Costs to Host Country:
Loss of sovereignty
Adverse effects on competition
Capital outflow
List benefits and costs to host countries engaging in Foreign-Direct Investment:
Benefits to Home Country:
Repatriated earnings from FDI
Increased exports of components and services to host countries
Learning via FDI from operations abroad
Costs to Home Country:
Capital outflow
Job loss
List benefits and costs to home countries engaging in Foreign-Direct Investment:
,Few firms
Existence of price leader
Homogenous products
High barriers to entry
Market commonality
Collusion is collective attempts between competing firms to reduce competition. What
characteristics of a market make collusion difficult?
Resource similarity is the extent to which a given competitor possesses strategic
endowment comparable, in terms of both type and amount, to those of the local firm.
When resource similarity is higher, higher competition exists.
What is resource similarity? Is competition higher or lower when resource similarity
between two firms is high?
Market commonality is the overlap between the markets of two rivals.
When market commonality is higher, lower competition exists.
What is market commonality? Is competition higher or lower when market commonality
between two firms is high?
Contender: Firm engaging in rapid learning and then expand overseas (ex. a local
company whose assets are transferable, allowing it to compete head-on with
established global players worldwide)
, Defender: Centers on local assets in areas in which MNEs are weak (ex. a local
company that has assets that give it a competitive advantage only in its home market)
Dodger: Cooperating through joint ventures with MNEs (ex. a local company sells out to
a global player or becomes part of an alliance)
Extender: Leveraging homegrown competencies abroad (ex. a local company whose
assets are transferable, allowing it to compete head-on with established global players)
Explain the four strategies that local firms can take to fight MNEs (multinational
enterprises, whose business activities occur in at least two countries).
When a country's imports exceed its exports during a given time period
What is a trade deficit?
When a country's exports are greater than its imports
What is a trade surplus?
Resources are firm-specific assets useful for creating cost or differentiation advantage
and that few competitors can acquire easily.
i. Patents and trademarks
ii. Proprietary know-how
iii. Installed customer base
iv. Reputation of the firm
v. Brand equity
What Are Resources? What Are Some Examples Of Resources?
EXAM QUESTIONS AND ANSWERS LATEST
UPDATE
Value - Resources must create value when engaging rivals
Rarity - Certain assets are rare, giving an advantage in competitive dynamics
Imitability - The inability to have your company imitated would give you a clear
advantage in the market
Organization - Some firms are better organized for competitive actions than others; it is
challenging for slow-moving firms to wake up and become more aggressive
What does VRIO stand for?
Ownership - Refers to multinational firm possession and leveraging of certain valuable,
rare, or hard to imitate or organizational embedded assets overseas (ex. VRIO)
Location - refers to doing business in a certain place, such as natural or labor resources
or its location near particular markets provide certain advantages to firms doing
business
Internalization - Refers to replacement of cross-border markets, such as exporting or
importing, with one firm locating in two or more countries
,What is the OLI advantage?
Benefits to Host Country:
Capital inflow
Technology spillover
Advanced management know-how
Job creation
Costs to Host Country:
Loss of sovereignty
Adverse effects on competition
Capital outflow
List benefits and costs to host countries engaging in Foreign-Direct Investment:
Benefits to Home Country:
Repatriated earnings from FDI
Increased exports of components and services to host countries
Learning via FDI from operations abroad
Costs to Home Country:
Capital outflow
Job loss
List benefits and costs to home countries engaging in Foreign-Direct Investment:
,Few firms
Existence of price leader
Homogenous products
High barriers to entry
Market commonality
Collusion is collective attempts between competing firms to reduce competition. What
characteristics of a market make collusion difficult?
Resource similarity is the extent to which a given competitor possesses strategic
endowment comparable, in terms of both type and amount, to those of the local firm.
When resource similarity is higher, higher competition exists.
What is resource similarity? Is competition higher or lower when resource similarity
between two firms is high?
Market commonality is the overlap between the markets of two rivals.
When market commonality is higher, lower competition exists.
What is market commonality? Is competition higher or lower when market commonality
between two firms is high?
Contender: Firm engaging in rapid learning and then expand overseas (ex. a local
company whose assets are transferable, allowing it to compete head-on with
established global players worldwide)
, Defender: Centers on local assets in areas in which MNEs are weak (ex. a local
company that has assets that give it a competitive advantage only in its home market)
Dodger: Cooperating through joint ventures with MNEs (ex. a local company sells out to
a global player or becomes part of an alliance)
Extender: Leveraging homegrown competencies abroad (ex. a local company whose
assets are transferable, allowing it to compete head-on with established global players)
Explain the four strategies that local firms can take to fight MNEs (multinational
enterprises, whose business activities occur in at least two countries).
When a country's imports exceed its exports during a given time period
What is a trade deficit?
When a country's exports are greater than its imports
What is a trade surplus?
Resources are firm-specific assets useful for creating cost or differentiation advantage
and that few competitors can acquire easily.
i. Patents and trademarks
ii. Proprietary know-how
iii. Installed customer base
iv. Reputation of the firm
v. Brand equity
What Are Resources? What Are Some Examples Of Resources?
