WGU C211 - Global Economics for Managers Final Exam - All Reading (Answered Fall 2022)

WGU C211 - Global Economics for Managers Final Exam - All Reading (Answered Fall 2022) Base of the pyramid (BOP) Economies where people make less than $2,000 per capita per year. BRICA Brazil, Russia, India, and China. Emerging economies term that has gradually replaced the term "developing countries" since the 1990s. Emerging markets A term that is often used interchangeably with "emerging economies." Expatriate manager A manager who works abroad, or "expat" for short. Foreign direct investment (FDI) Investment in, controlling, and managing value-added activities in other countries. Global Business Business around the globe. Gross national income (GNI) GDP plus income from non-resident sources abroad. The term used by the World Bank and other international organizations to supersede the term GNP. Gross national product (GNP) GDP plus income from non-resident sources abroad International business (IB) (1) A business (or firm) that engages in international (cross-border) economic activities and/or (2) the action of doing business abroad. International premium A significant pay raise when working overseas. Liability of foreignness The inherent disadvantage that foreign firms experience in host countries because of their non-native status. Multinational enterprise (MNE) A firm that engages in foreign direct investment (FDI). Reverse innovation An innovation that is adopted first in emerging economies and is then diffused around the world. Risk management The identification and assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events. Scenario planning A technique to prepare and plan for multiple scenarios (either high or low risk). Purchasing power parity (PPP) adjustment made to the GDP to reflect differences in the cost of living The bottom billion Concentrated in Africa and Central Asia - 58 small countries, stuck at the bottom in terms of growth, incomes and human development Enhance employability & advance career, better preparation to be expat, competence in interacting with foreign suppliers/partners/competitors/employees Why study global business? Formal rules requirements that treat domestic and foreign firms as equals enhance the potential odds for foreign firms' success or those that discriminate against foreign firms, would undermine the chances for foreign entrants Informal rules cultures, ethics, and norms play an important part in shaping the success and failure of firms around the globe Resource-based view A core perspective. Success and failure of firms is determined by their environment New force in recent times, a long-running historical evolution, a pendulum swinging between extremes What are the three views of globalization? "Four Tigers" Hong Kong, Singapore, South Korea and Taiwan Administrative policy Bureaucratic rules that make it harder to import foreign goods. antidumping duty Tariffs levied on imports that have been "dumped" (selling below costs to "unfairly" drive domestic firms out of business). Balance of Trade The aggregation of importing and exporting that leads to the country-level trade surplus or deficit. Classical trade theories The major theories of international trade that were advanced before the 20th century, which consist of (1) mercantilism, (2) absolute advantage, and (3) comparative advantage. Factor endowment theory A theory that suggests that nations will develop comparative advantages based on their locally abundant factors. Heckscher-Ohlin theory Another name for factor endowment theory First-mover advantage Advantage that first movers enjoy and do not share with late entrants. Free trade The idea that free market forces should determine how much to trade with little or no government intervention. Import Buying from abroad. Import tariff A tax imposed on imports. Infant industry argument The argument that if domestic firms are as young as "infants," in the absence of government intervention, they stand no chances of surviving and will be crushed by mature foreign rivals. Modern trade theories The major theories of international trade that were advanced in the 20th century, which consist of (1) product life cycle, (2) strategic trade, and (3) national competitive advantage of industries. Opportunity cost Cost of pursuing one activity at the expense of another activity, given the alternatives (other opportunities). Product life cycle theory A theory that accounts for changes in the patterns of trade over time by focusing on product life cycles. Protectionism The idea that governments should actively protect domestic industries from imports and vigorously promote exports. Resource mobility Assumption that a resource used in producing a product for one industry can be shifted and put to use in another industry. Strategic trade policy Government policy that provides companies a strategic advantage in international trade through subsidies and other supports. Strategic trade theory A theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success. Subsidy Government payment to domestic firms. Tariff barrier Trade barrier that relies on tariffs to discourage imports. Theory of absolute advantage A theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage. Theory of comparative advantage A theory that focuses on the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations. Theory of 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. Trade deficit An economic condition in which a nation imports more than it exports. Trade surplus An economic condition in which a nation exports more than it imports. Agglomeration Clustering of economic activities in certain locations. Bargaining power Ability to extract favorable outcome from negotiations due to one party's strengths. Demonstration (contagion or imitation) effect The reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation. Downstream vertical FDI A type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country. Foreign portfolio investment (FPI) Investment in a portfolio of foreign securities such as stocks and bonds. Free market view on FDI A political view that suggests that FDI unrestricted by government intervention is the best. 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. Intrafirm trade International transactions between two subsidiaries in two countries controlled by the same MNE. Management control rights The rights to appoint key managers and establish control mechanisms. Obsolescing bargain The deal struck by MNEs and host governments, which change their requirements after the initial FDI entry. Pragmatic nationalism on FDI A political view that only approves FDI when its benefits outweigh its costs. Radical view on FDI A political view that is hostile to FDI. Sunk cost Cost that a firm has to endure even when its investment turns out to be unsatisfactory Upstream vertical FDI A type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country. Vertical FDI A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country. Antitrust law Law that outlaws cartels (trusts). Antitrust policy Government policy designed to combat monopolies and cartels. Attack An initial set of actions to gain competitive advantage. Blue ocean strategy Strategy that focuses on developing new markets ("blue ocean") and avoids attacking core markets defended by rivals, which is likely to result in a bloody price war or a "red ocean." Capacity to punish