WGU C211 Global Economics for Managers
Question and Answer | 100% Correct
Answers | Exam Review Pack
• Views on Globalization . Answer: New, Evolutionary, and Pendulum
• "New" view on globalization . Answer: A force sweeping through the world in recent
times.
• "Evolutionary" view on globalization . Answer: A long-run historical evolution since the
dawn of human history
• "Pendulum" view on globalization . Answer: One that swings from one extreme to
another from time to time
• Foreign Direct Investment . Answer: Direct investment in, control, and management of
value-added activities in other countries
• Political views on FDI . Answer: Radical View, Free Market View, Pragmatic
Nationalism
• Benefits to a country receiving FDI . Answer: Capital Inflow, Technology Spillover,
Advanced Management Know-How, Job creation
• Costs to a country receiving FDI . Answer: Loss of Sovereignty, Adverse effects on
competition,
Capital outflow.
• How do resources and capabilities influence the competitive dynamics of a business? .
Answer: Resource similarity and market commonality can yield a powerful framework
for competitor analysis.
• Resource similarity . Answer: The extent to which a given competitor possesses
strategic endowment comparable, in terms of both type and amount, to those of the
focal firm.
• How does resource similarity impact competitive dynamics? . Answer: Firms with a
high degree are likely to have similar competitive actions. (Starbuck's instant coffee &
McDonald's iced coffee)
• Classical theories of international trade . Answer: Mercantilism, Absolute advantage,
and Comparative advantage
• Modern theory view . Answer: Dynamic
, • Classical theory view . Answer: Static
• Absolute advantage . Answer: The economic advantage one nation enjoys that is
superior to other nations
• Comparative advantage . Answer: The advantage one economic activity nation enjoys
in comparison with other nations (relative, not absolute)
• Mercantilism . Answer: A theory that suggests that the wealth of the world is fixed and
that a nation that exports more and imports less will be richer.
• Features of the product life cycle? . Answer: New, Maturing, and Standardized
• Strategic trade . Answer: Intervention by governments in certain industries can
enhance their odds for international success.
• How are supply and demand related to the exchange rate of a country? . Answer: The
price of a commodity, a country's currency, is fundamentally determined by this. Strong
demand leads to price hikes; oversupply results in price drops.
• Which theory came first? . Answer: Mercantilism (although both are of the idea that
governments should actively protect domestic industries from imports and vigorously
promote exports)
• If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? . Answer: Forward transactions, an act know
as currency hedging.
• Transaction risk . Answer: The exchange rate risk associated with the time delay
between entering into a contract and settling it.
• Hedging . Answer: A transaction, such as forward transactions, that protects traders
and investors from exposure to the fluctuations of the spot rate.
• Currency hedging . Answer: A way to protect traders and investors from being
exposed to the fluctuations of the spot rate
• Strategic hedging . Answer: A means of spreading out activities in different currency
zones in order to offset the currency losses in certain regions through gains in other
regions (currency diversification)
• First mover advantages . Answer: Proprietary, technological leadership, pre-emption of
scarce resources, establishment of entry barriers to late entrants, avoidance of clash
with dominant firms at home, relationships with key stakeholders, (such as
governments.)
Question and Answer | 100% Correct
Answers | Exam Review Pack
• Views on Globalization . Answer: New, Evolutionary, and Pendulum
• "New" view on globalization . Answer: A force sweeping through the world in recent
times.
• "Evolutionary" view on globalization . Answer: A long-run historical evolution since the
dawn of human history
• "Pendulum" view on globalization . Answer: One that swings from one extreme to
another from time to time
• Foreign Direct Investment . Answer: Direct investment in, control, and management of
value-added activities in other countries
• Political views on FDI . Answer: Radical View, Free Market View, Pragmatic
Nationalism
• Benefits to a country receiving FDI . Answer: Capital Inflow, Technology Spillover,
Advanced Management Know-How, Job creation
• Costs to a country receiving FDI . Answer: Loss of Sovereignty, Adverse effects on
competition,
Capital outflow.
• How do resources and capabilities influence the competitive dynamics of a business? .
Answer: Resource similarity and market commonality can yield a powerful framework
for competitor analysis.
• Resource similarity . Answer: The extent to which a given competitor possesses
strategic endowment comparable, in terms of both type and amount, to those of the
focal firm.
• How does resource similarity impact competitive dynamics? . Answer: Firms with a
high degree are likely to have similar competitive actions. (Starbuck's instant coffee &
McDonald's iced coffee)
• Classical theories of international trade . Answer: Mercantilism, Absolute advantage,
and Comparative advantage
• Modern theory view . Answer: Dynamic
, • Classical theory view . Answer: Static
• Absolute advantage . Answer: The economic advantage one nation enjoys that is
superior to other nations
• Comparative advantage . Answer: The advantage one economic activity nation enjoys
in comparison with other nations (relative, not absolute)
• Mercantilism . Answer: A theory that suggests that the wealth of the world is fixed and
that a nation that exports more and imports less will be richer.
• Features of the product life cycle? . Answer: New, Maturing, and Standardized
• Strategic trade . Answer: Intervention by governments in certain industries can
enhance their odds for international success.
• How are supply and demand related to the exchange rate of a country? . Answer: The
price of a commodity, a country's currency, is fundamentally determined by this. Strong
demand leads to price hikes; oversupply results in price drops.
• Which theory came first? . Answer: Mercantilism (although both are of the idea that
governments should actively protect domestic industries from imports and vigorously
promote exports)
• If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? . Answer: Forward transactions, an act know
as currency hedging.
• Transaction risk . Answer: The exchange rate risk associated with the time delay
between entering into a contract and settling it.
• Hedging . Answer: A transaction, such as forward transactions, that protects traders
and investors from exposure to the fluctuations of the spot rate.
• Currency hedging . Answer: A way to protect traders and investors from being
exposed to the fluctuations of the spot rate
• Strategic hedging . Answer: A means of spreading out activities in different currency
zones in order to offset the currency losses in certain regions through gains in other
regions (currency diversification)
• First mover advantages . Answer: Proprietary, technological leadership, pre-emption of
scarce resources, establishment of entry barriers to late entrants, avoidance of clash
with dominant firms at home, relationships with key stakeholders, (such as
governments.)
