WGU C211 - Global Economics for
Managers
Views on Globalization - Answer New, Evolutionary, and Pendulum
"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.)
Managers
Views on Globalization - Answer New, Evolutionary, and Pendulum
"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.)
