WGU C211 - Global Economics for
Managers
Views on Globalization Ans- New, Evolutionary, and Pendulum
"New" view on globalization Ans- A force sweeping through the world in recent times.
"Evolutionary" view on globali
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WGU C211 - Global Economics for
Managers
Views on Globalization Ans- New, Evolutionary, and Pendulum
"New" view on globalization Ans- A force sweeping through the world in recent times.
"Evolutionary" view on globalization Ans- A long-run historical evolution since the dawn of
human history
"Pendulum" view on globalization Ans- One that swings from one extreme to another from time
to time
Foreign Direct Investment Ans- Direct investment in, control, and management of value-added
activities in other countries
Political views on FDI Ans- Radical View, Free Market View, Pragmatic Nationalism
Benefits to a country receiving FDI Ans- Capital Inflow, Technology Spillover, Advanced
Management Know-How, Job creation
Costs to a country receiving FDI Ans- Loss of Sovereignty, Adverse effects on competition,
Capital outflow.
How do resources and capabilities influence the competitive dynamics of a business? AnsResource similarity and market commonality can yield a powerful framework for competitor
analysis.
Resource similarity Ans- 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? Ans- 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 Ans- Mercantilism, Absolute advantage, and
Comparative advantage
Modern theory view Ans- Dynamic
Classical theory view Ans- Static
Absolute advantage Ans- The economic advantage one nation enjoys that is superior to other
nations
Comparative advantage Ans- The advantage one economic activity nation enjoys in comparison
with other nations (relative, not absolute)
Mercantilism Ans- 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? Ans- New, Maturing, and Standardized
Strategic trade Ans- 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? Ans- 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? Ans- 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? Ans- Forward transactions, an act know as currency hedging.
Transaction risk Ans- The exchange rate risk associated with the time delay between entering
into a contract and settling it.
Hedging Ans- A transaction, such as forward transactions, that protects traders and investors
from exposure to the fluctuations of the spot rate.
Currency hedging Ans- A way to protect traders and investors from being exposed to the
fluctuations of the spot rate
Strategic hedging Ans- 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 Ans- Proprie
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