WGU C211 - Global Economics for Managers Key
Questions with Correct Answers.
Terms in this set (136)
Views on Globalization New, Evolutionary, and Pendulum
"New" view on globalization A force sweeping through the world in recent times.
"Evolutionary" view onA long- run historical evolution since the dawn of
globalizationhuman history
"Pendulum" view on One that swings from one extreme to another from time to
globalization time
Foreign Direct Investment Direct investment in, control, and management of value-added
activities in other countries
Political views on FDI Radical View, Free Market View, Pragmatic
Nationalism
Benefits to a country Capital Inflow, Technology Spillover, Advanced
receiving FDI Management Know-How, Job creation
Costs to a country receiving Loss of Sovereignty, Adverse effects on competition, Capital
FDI outflow.
How do resources and Resource similarity and market commonality can yield a
capabilities influence the powerful framework for competitor analysis.
competitive dynamics of a
business?
The extent to which a given competitor possesses strategic
Resource similarity endowment comparable, in terms of both type and amount,
to those of the focal firm.
,How does resource Firms with a high degree are likely to have similar competitive
similarity impact actions. (Starbuck's instant coffee &
competitive dynamics?
McDonald's iced coffee)
Classical theories of Mercantilism, Absolute advantage, and Comparative advantage
international trade
Modern theory view Dynamic
Classical theory view Static
Absolute advantage The economic advantage one nation enjoys that is superior to
other nations
Comparative advantage The advantage one economic activity nation enjoys in comparison
with other nations (relative, not absolute)
Mercantilism 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 New, Maturing, and Standardized
cycle?
Strategic trade Intervention by governments in certain industries can enhance their
odds for international success.
How are supply and demand The price of a commodity, a country's currency, is
related to the exchange rate fundamentally determined by this. Strong demand leads to
of a country? price hikes; oversupply results in price drops.
Which theory came first? Mercantilism (although both are of the idea that governments
should actively protect domestic industries from imports and
vigorously promote exports)
Forward transactions, an act know as currency hedging.
If a company seeks to limit
foreign exchange rate
exposure in the forward
direction, what is the most
effective way to do this?
, Transaction risk The exchange rate risk associated with the time delay between
entering into a contract and settling it.
Hedging A transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the
spot rate.
Currency hedging A way to protect traders and investors from being exposed to
the fluctuations of the spot rate
Strategic hedging 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 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 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 Non-equity and equity
types
Non-equity Reflects relatively smaller commitments to overseas markets.
Determines firms MNE status.
Equity indicative of relatively larger, harder-to-reverse commitments.
Determines firms MNE status.
How do institutions Establish "rules of the game" that economic players play by. A
reduce uncertainty? 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 The coercive power of governments (laws, regs, rules)
Questions with Correct Answers.
Terms in this set (136)
Views on Globalization New, Evolutionary, and Pendulum
"New" view on globalization A force sweeping through the world in recent times.
"Evolutionary" view onA long- run historical evolution since the dawn of
globalizationhuman history
"Pendulum" view on One that swings from one extreme to another from time to
globalization time
Foreign Direct Investment Direct investment in, control, and management of value-added
activities in other countries
Political views on FDI Radical View, Free Market View, Pragmatic
Nationalism
Benefits to a country Capital Inflow, Technology Spillover, Advanced
receiving FDI Management Know-How, Job creation
Costs to a country receiving Loss of Sovereignty, Adverse effects on competition, Capital
FDI outflow.
How do resources and Resource similarity and market commonality can yield a
capabilities influence the powerful framework for competitor analysis.
competitive dynamics of a
business?
The extent to which a given competitor possesses strategic
Resource similarity endowment comparable, in terms of both type and amount,
to those of the focal firm.
,How does resource Firms with a high degree are likely to have similar competitive
similarity impact actions. (Starbuck's instant coffee &
competitive dynamics?
McDonald's iced coffee)
Classical theories of Mercantilism, Absolute advantage, and Comparative advantage
international trade
Modern theory view Dynamic
Classical theory view Static
Absolute advantage The economic advantage one nation enjoys that is superior to
other nations
Comparative advantage The advantage one economic activity nation enjoys in comparison
with other nations (relative, not absolute)
Mercantilism 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 New, Maturing, and Standardized
cycle?
Strategic trade Intervention by governments in certain industries can enhance their
odds for international success.
How are supply and demand The price of a commodity, a country's currency, is
related to the exchange rate fundamentally determined by this. Strong demand leads to
of a country? price hikes; oversupply results in price drops.
Which theory came first? Mercantilism (although both are of the idea that governments
should actively protect domestic industries from imports and
vigorously promote exports)
Forward transactions, an act know as currency hedging.
If a company seeks to limit
foreign exchange rate
exposure in the forward
direction, what is the most
effective way to do this?
, Transaction risk The exchange rate risk associated with the time delay between
entering into a contract and settling it.
Hedging A transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the
spot rate.
Currency hedging A way to protect traders and investors from being exposed to
the fluctuations of the spot rate
Strategic hedging 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 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 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 Non-equity and equity
types
Non-equity Reflects relatively smaller commitments to overseas markets.
Determines firms MNE status.
Equity indicative of relatively larger, harder-to-reverse commitments.
Determines firms MNE status.
How do institutions Establish "rules of the game" that economic players play by. A
reduce uncertainty? 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 The coercive power of governments (laws, regs, rules)
