WGU C211 - GLOBAL ECONOMICS FOR MANAGERS. 100% VERRIFIED

"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.) Late mover advantages -ANSWER- Opportunity to free ride on first-mover investments, Resolution of technological and market uncertainty, First mover's difficulty to adapt to market changes.) Foreign market entries types -ANSWER- Non-equity and equity Non-equity -ANSWER- Reflects relatively smaller commitments to overseas markets. Determines firms MNE status. Equity -ANSWER- indicative of relatively larger, harder-to-reverse commitments. Determines firms MNE status. How do institutions reduce uncertainty? -ANSWER- Establish "rules of the game" that economic players play by. A standard to follow in order to survive and prosper. By signaling which conduct is legitimate and which is not, institutions constrain the range of acceptable actions. Regulatory pillar -ANSWER- The coercive power of governments (laws, regs, rules) Normative pillar -ANSWER- Values, beliefs, and actions of other relevant players (norms, cultures, ethics) Cognitive pillar -ANSWER- The internalized, taken-for-granted values and beliefs that guide behavior. (beliefs between right/wrong) Formal institution -ANSWER- One that include laws, regulations and rules Informal institution -ANSWER- One that includes norms, cultures and ethics What core propositions lie at the root of the institution based view on global business? -ANSWER- (1) managers and firms rationally pursue their interests and make choices within institutional constraints (bounded rationality) (2) in situations where formal constraints are unclear or fail, informal constraints play a larger role in reducing uncertainty and providing constancy to managers and firms (personal relationships and connections) The institution based view global business is grounded upon -ANSWER- The dynamic interaction between institutions and firms, and considers firm behaviors as the outcome of such an interaction. How is global business affected by democracy? -ANSWER- An individual's right to freedom of expression and organization. For example, starting up a firm is an act of economic expression