WGU C211 - Global Economics for
Managers
Views on Globalization -
✔ New, Evolutionary, and Pendulum
"New" view on globalization -
✔ A force sweeping through the world in recent times.
"Evolutionary" view on globalization -
✔ A long-run historical evolution since the dawn of human history
"Pendulum" view on globalization -
✔ One that swings from one extreme to another from time to 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 receiving FDI -
✔ Capital Inflow, Technology Spillover, Advanced Management Know-How, Job
creation
Costs to a country receiving FDI -
✔ Loss of Sovereignty, Adverse effects on competition,
Capital outflow.
How do resources and capabilities influence the competitive dynamics of a business? -
✔ Resource similarity and market commonality can yield a powerful framework for
competitor analysis.
Resource similarity -
✔ 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? -
✔ 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 -
✔ Mercantilism, Absolute advantage, and Comparative advantage
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 cycle? -
✔ New, Maturing, and Standardized
Strategic trade -
✔ 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? -
✔ 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? -
✔ 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? -
✔ Forward transactions, an act know as currency hedging.
Transaction risk -
✔ The exchange rate risk associated with the time delay between entering into a
contract and settling it.
Hedging -
Managers
Views on Globalization -
✔ New, Evolutionary, and Pendulum
"New" view on globalization -
✔ A force sweeping through the world in recent times.
"Evolutionary" view on globalization -
✔ A long-run historical evolution since the dawn of human history
"Pendulum" view on globalization -
✔ One that swings from one extreme to another from time to 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 receiving FDI -
✔ Capital Inflow, Technology Spillover, Advanced Management Know-How, Job
creation
Costs to a country receiving FDI -
✔ Loss of Sovereignty, Adverse effects on competition,
Capital outflow.
How do resources and capabilities influence the competitive dynamics of a business? -
✔ Resource similarity and market commonality can yield a powerful framework for
competitor analysis.
Resource similarity -
✔ 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? -
✔ 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 -
✔ Mercantilism, Absolute advantage, and Comparative advantage
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 cycle? -
✔ New, Maturing, and Standardized
Strategic trade -
✔ 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? -
✔ 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? -
✔ 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? -
✔ Forward transactions, an act know as currency hedging.
Transaction risk -
✔ The exchange rate risk associated with the time delay between entering into a
contract and settling it.
Hedging -
