WGU C211 – Concepts for Global Business Exam Key
Questions | Questions and Answers | 2026/27 Updates |
100% Pass Guarantee
C211 Study Guide Questions V3
Competency 1: Business Decision-Making in the Global Environment
Globalization (Peng Chapters 1, 5, 6, 11)
1. List and explain the two views (core perspectives) for global business in detail with
examples for each.
a. Institution-Based View- the success and failure of firms are enabled and
constrained by institutions (environment). By institutions, we mean the rules of
the game.
b. A Resource-Based View- focuses on a firm’s internal resources and capabilities.
2. What is globalization? Explain the three views on globalization. The close integration of
countries and peoples of the world.
a. a new force sweeping through the world in recent times
b. a long-run historical evolution since the dawn of human history
c. a pendulum that swings from one extreme to another from time to time
3. What is FDI? What are horizontal and vertical FDI?
a. Foreign Direct Investment- Investing in, controlling, and managing value-added
activities in other countries.
b. Horizontal FDI- A type of FDI in which a firm duplicates its home country-based
activities at the same value chain stage in a host country.
c. Vertical FDI- A type of FDI in which a firm moves upstream or downstream at
different value chain stages in a host country.
4. What is the OLI advantage? Explain, providing an example of each. A firm’s quest for
ownership (O) advantages, location (L) advantages, and internalization (I) advantages via
FDI.
a. Ownership - An MNE’s possession and leveraging of certain valuable, rare, hard-
to-imitate, and organizationally embedded (VRIO) assets overseas in the context
of FDI.
b. Location advantages- are those enjoyed by firms because they do business in a
certain place. Features unique to a place, such as its natural or labor resources or
its location near particular markets, provide certain advantages to firms doing
business there.
c. Internalization- refers to the replacement of cross-border markets (such as
exporting and importing) with one firm (the MNE) locating in two or more
, countries. For example, instead of selling its technology to a Indonesian firm for
a fee (which is a non-FDI-based market entry mode technically called licensing),
BMW assembles cars in Indonesia via FDI.
5. What are the political views on FDI? (Explain)
a. Radical view is hostile to FDI. Tracing its roots to Marxism, the radical view treats
FDI as an instrument of imperialism and as a vehicle for exploitation of domestic
resources by foreign capitalists and firms.
, b. Free market view suggests that FDI, unrestricted by government intervention,
will enable countries to tap into their absolute or comparative advantages by
specializing in the production of certain goods and services.
c. Pragmatic nationalism- A political view that only approves FDI when its benefits
outweigh its costs.
6. Carrier (HVAC company) decided to close its manufacturing plant in Ohio and move it to
Mexico.
a. Which country is the host, and which is the home? Mexico is the Host country
and U.S. (Ohio) is the home country
b. What are the costs and benefits of FDI to the host country?
i. Capital inflow will improve balance of payments
ii. Technology spillovers improve host country
iii. Advance in management techniques
iv. Creates Jobs
v. Loss of sovereignty-decisions about closures/layoffs
vi. Adverse effects on competition- monopolize markets.
vii. Capital outflow- earnings/profit are sent to home country
c. What are the costs and benefits of FDI to the home country?
i. Repatriated earnings from profits from FDI.
ii. Increased exports of components and services to host countries.
iii. Learning via FDI from operations abroad.
iv. capital outflow
v. job loss.
7. What is collusion, and what characteristics of a market make collusion difficult?
a. Collusion - Collective attempts between competing firms to reduce competition.
Collusion can be tacit or explicit. Firms engage in tacit collusion when they
indirectly coordinate actions by signaling their intention to reduce output and
maintain pricing above competitive levels. Explicit collusion exists when firms
directly negotiate output and pricing and divide markets. Antitrust laws make
collusion more difficult.
b. First is the concentration ratio, defined as the percentage of total industry sales
accounted for by the top four, eight, or 20 firms. In general, the higher the
concentration, the easier it is to organize collusion.
c. Second, the existence of a price leader—a firm that has a dominant market share
and sets “acceptable” prices and margins in the industry—helps maintain order
and stability needed for tacit collusion. Capacity to punish-Sufficient resources
possessed by a price leader to deter and combat defection.
d. Third, an industry with homogeneous products, in which rivals are forced to
compete on price (rather than differentiation), is likely to lead to collusion.
e. Finally, market commonality—the degree of overlap between two rivals’
markets—also has a significant bearing on the intensity of rivalry. A high degree
of market commonality may restrain firms from aggressively going after each
other.
Questions | Questions and Answers | 2026/27 Updates |
100% Pass Guarantee
C211 Study Guide Questions V3
Competency 1: Business Decision-Making in the Global Environment
Globalization (Peng Chapters 1, 5, 6, 11)
1. List and explain the two views (core perspectives) for global business in detail with
examples for each.
a. Institution-Based View- the success and failure of firms are enabled and
constrained by institutions (environment). By institutions, we mean the rules of
the game.
b. A Resource-Based View- focuses on a firm’s internal resources and capabilities.
2. What is globalization? Explain the three views on globalization. The close integration of
countries and peoples of the world.
a. a new force sweeping through the world in recent times
b. a long-run historical evolution since the dawn of human history
c. a pendulum that swings from one extreme to another from time to time
3. What is FDI? What are horizontal and vertical FDI?
a. Foreign Direct Investment- Investing in, controlling, and managing value-added
activities in other countries.
b. Horizontal FDI- A type of FDI in which a firm duplicates its home country-based
activities at the same value chain stage in a host country.
c. Vertical FDI- A type of FDI in which a firm moves upstream or downstream at
different value chain stages in a host country.
4. What is the OLI advantage? Explain, providing an example of each. A firm’s quest for
ownership (O) advantages, location (L) advantages, and internalization (I) advantages via
FDI.
a. Ownership - An MNE’s possession and leveraging of certain valuable, rare, hard-
to-imitate, and organizationally embedded (VRIO) assets overseas in the context
of FDI.
b. Location advantages- are those enjoyed by firms because they do business in a
certain place. Features unique to a place, such as its natural or labor resources or
its location near particular markets, provide certain advantages to firms doing
business there.
c. Internalization- refers to the replacement of cross-border markets (such as
exporting and importing) with one firm (the MNE) locating in two or more
, countries. For example, instead of selling its technology to a Indonesian firm for
a fee (which is a non-FDI-based market entry mode technically called licensing),
BMW assembles cars in Indonesia via FDI.
5. What are the political views on FDI? (Explain)
a. Radical view is hostile to FDI. Tracing its roots to Marxism, the radical view treats
FDI as an instrument of imperialism and as a vehicle for exploitation of domestic
resources by foreign capitalists and firms.
, b. Free market view suggests that FDI, unrestricted by government intervention,
will enable countries to tap into their absolute or comparative advantages by
specializing in the production of certain goods and services.
c. Pragmatic nationalism- A political view that only approves FDI when its benefits
outweigh its costs.
6. Carrier (HVAC company) decided to close its manufacturing plant in Ohio and move it to
Mexico.
a. Which country is the host, and which is the home? Mexico is the Host country
and U.S. (Ohio) is the home country
b. What are the costs and benefits of FDI to the host country?
i. Capital inflow will improve balance of payments
ii. Technology spillovers improve host country
iii. Advance in management techniques
iv. Creates Jobs
v. Loss of sovereignty-decisions about closures/layoffs
vi. Adverse effects on competition- monopolize markets.
vii. Capital outflow- earnings/profit are sent to home country
c. What are the costs and benefits of FDI to the home country?
i. Repatriated earnings from profits from FDI.
ii. Increased exports of components and services to host countries.
iii. Learning via FDI from operations abroad.
iv. capital outflow
v. job loss.
7. What is collusion, and what characteristics of a market make collusion difficult?
a. Collusion - Collective attempts between competing firms to reduce competition.
Collusion can be tacit or explicit. Firms engage in tacit collusion when they
indirectly coordinate actions by signaling their intention to reduce output and
maintain pricing above competitive levels. Explicit collusion exists when firms
directly negotiate output and pricing and divide markets. Antitrust laws make
collusion more difficult.
b. First is the concentration ratio, defined as the percentage of total industry sales
accounted for by the top four, eight, or 20 firms. In general, the higher the
concentration, the easier it is to organize collusion.
c. Second, the existence of a price leader—a firm that has a dominant market share
and sets “acceptable” prices and margins in the industry—helps maintain order
and stability needed for tacit collusion. Capacity to punish-Sufficient resources
possessed by a price leader to deter and combat defection.
d. Third, an industry with homogeneous products, in which rivals are forced to
compete on price (rather than differentiation), is likely to lead to collusion.
e. Finally, market commonality—the degree of overlap between two rivals’
markets—also has a significant bearing on the intensity of rivalry. A high degree
of market commonality may restrain firms from aggressively going after each
other.
