7.8.18
WGU C211 COMPLETE & VERIFIED STUDY GUIDE WITH 100% COMPLETED
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COMPETENCY: Globalization (Peng Chapters 1, 5, 6, 11)
1- Explain the New, Evolutionary, and Pendulum views of Globalization. How do these differ from one another?
Depending on what sources you read, globalization could be
• opponents of globalization suggest that it is a new phenomenon beginning in the late 20th century,
driven by recent technological innovations and a Western ideology focused on exploiting and dominating
the world through MNEs
• a long-run historical evolution since the dawn of human history
• A pendulum that swings from one extreme to another from time to time. A third view suggests that
globalization is the “closer integration of the countries and peoples of the world which has been brought
about by the enormous reduction of the costs of transportation and communication, and the breaking
down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent)
people across borders.” Globalization is neither recent nor one-directional. It is, more accurately, a
process similar to the swing of a pendulum.
2- What is Foreign Direct Investment?
Investments in, controlling, and managing value added activities in other countries
Horizontal FDI – Producing the same products or offering the same services in a host country as firms do at
home
Vertical FDI - Firm moves upstream or downstream in different value chain stages in a host country through FDI
3- What different political views exist on FDI?
An institution-based view suggests that the success and failure of firms are enabled and constrained by
institutions. By institutions, we mean the rules of the game. Doing business around the globe requires intimate
knowledge about both formal rules (such as laws) and informal rules (such as values) that govern competition in
various countries. If you establish a firm in a given country, you will work within that country’s institutional
framework, which consists of the formal and informal institutions that govern individual and firm behavior. Firms
that do not do their homework and thus remain ignorant of the rules of the game in a certain country are not
likely to emerge as winners.
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
The resource-based view helps overcome this drawback. While the institution based view primarily deals with
the external environment, the resource-based view focuses on a firm’s internal resources and capabilities.
A resource-based view suggests that the success and failure of firms are determined by their environments
Liability of Foreignness - inherent disadvantage that foreign firms experience in host countries because of their
nonnative status
Radical View - view of FDI - treats FDI as an instrument of imperialism and a vehicle for exploiting domestic
resources, industries, and people by foreign capitalists and firms
Page 1 of 29
, Free Market View - view of FDI - unrestricted by government intervention FDI will enable countries to tap into
their absolute or comparative advantages by specializing in the production of certain goods and services
Pragmatic Nationalism - view of FDI - considering both the pros and cons of FDI and approving FDI only when its
benefits outweigh its costs
4- What benefits and costs exist to a country receiving FDI? Elaborate.
6- How do resources and capabilities influence the competitive dynamics of a business?
Resource similarity - Extent to which a given competitor possesses strategic endowment comparable, in terms of
both type and amount, to those of the focal firm
Price leader - Firm that has dominant market share and sets “acceptable” prices and margins in the industry
Capacity to punish - Price leader has sufficient resources to deter and combat defection
Factor endowment - Extent to which different countries possess various factors of production such as labor,
land, and technology
Factor endowment theory (Heckscher-Ohlin theory) - Nations will develop comparative advantages based on
their locally abundant factors
7- What is resource similarity and how does this impact competitive dynamics?
Extent to which a given competitor possesses strategic endowment comparable, in terms of both type and
amount, to those of the focal firm
COMPETENCY: International Trade and Foreign Exchange Market (Peng Chapters 5, 7, 10)
1- Give a description of the classical theory of international trade.
Page 2 of 29
, 2- How would the modern theory compare to the classical theory?
3- Compare absolute advantage to comparative advantage. What differences exist?
Absolute advantage - to be more efficient than anyone else in the production of any good or service. Nation
gains by specializing in economic activities in which that nation has an absolute advantage
Comparative advantage - relative advantage in one economic activity that one nation enjoys in comparison with
other nations
4- What is mercantilism and why is this an important term?
Mercantilism - wealth of the world is fixed and that a nation that exports more and imports less would enjoy the
net inflows of gold and silver and thus become richer
international trade is viewed as a zero sum game
5- What are the critical features of the product life cycle?
Dynamic theory that accounts for changes in the patterns of trade over time
6- How would you describe strategic trade?
Strategic intervention by governments in certain industries can enhance their odds for international success
Tariff barrier - Means of discouraging imports by placing a tariff (tax) on imported goods
Import tariff - Tax imposed a good brought in from another country
Import quota - Restriction on the quantity of a good that can be brought into a country
Voluntary export restraint (VER) - Exporting countries voluntarily agree to restrict their exports
Local content requirement - Rules stipulating that a certain proportion of the value of the goods made in one
country must originate from that country
7- How are supply and demand related to the exchange rate of a country?
Exchange rate price of one currency in terms of another
Foreign exchange rate - Price of one currency in terms of another
Purchasing power parity (PPP) - Conversion that determines the equivalent amount of goods and services
different currencies can purchase
Conversion is usually used to capture differences in cost of living between countries
Page 3 of 29
WGU C211 COMPLETE & VERIFIED STUDY GUIDE WITH 100% COMPLETED
TIPS |GUARANTEED A (2025 LATEST EDITION)
COMPETENCY: Globalization (Peng Chapters 1, 5, 6, 11)
1- Explain the New, Evolutionary, and Pendulum views of Globalization. How do these differ from one another?
Depending on what sources you read, globalization could be
• opponents of globalization suggest that it is a new phenomenon beginning in the late 20th century,
driven by recent technological innovations and a Western ideology focused on exploiting and dominating
the world through MNEs
• a long-run historical evolution since the dawn of human history
• A pendulum that swings from one extreme to another from time to time. A third view suggests that
globalization is the “closer integration of the countries and peoples of the world which has been brought
about by the enormous reduction of the costs of transportation and communication, and the breaking
down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent)
people across borders.” Globalization is neither recent nor one-directional. It is, more accurately, a
process similar to the swing of a pendulum.
2- What is Foreign Direct Investment?
Investments in, controlling, and managing value added activities in other countries
Horizontal FDI – Producing the same products or offering the same services in a host country as firms do at
home
Vertical FDI - Firm moves upstream or downstream in different value chain stages in a host country through FDI
3- What different political views exist on FDI?
An institution-based view suggests that the success and failure of firms are enabled and constrained by
institutions. By institutions, we mean the rules of the game. Doing business around the globe requires intimate
knowledge about both formal rules (such as laws) and informal rules (such as values) that govern competition in
various countries. If you establish a firm in a given country, you will work within that country’s institutional
framework, which consists of the formal and informal institutions that govern individual and firm behavior. Firms
that do not do their homework and thus remain ignorant of the rules of the game in a certain country are not
likely to emerge as winners.
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
The resource-based view helps overcome this drawback. While the institution based view primarily deals with
the external environment, the resource-based view focuses on a firm’s internal resources and capabilities.
A resource-based view suggests that the success and failure of firms are determined by their environments
Liability of Foreignness - inherent disadvantage that foreign firms experience in host countries because of their
nonnative status
Radical View - view of FDI - treats FDI as an instrument of imperialism and a vehicle for exploiting domestic
resources, industries, and people by foreign capitalists and firms
Page 1 of 29
, Free Market View - view of FDI - unrestricted by government intervention FDI will enable countries to tap into
their absolute or comparative advantages by specializing in the production of certain goods and services
Pragmatic Nationalism - view of FDI - considering both the pros and cons of FDI and approving FDI only when its
benefits outweigh its costs
4- What benefits and costs exist to a country receiving FDI? Elaborate.
6- How do resources and capabilities influence the competitive dynamics of a business?
Resource similarity - Extent to which a given competitor possesses strategic endowment comparable, in terms of
both type and amount, to those of the focal firm
Price leader - Firm that has dominant market share and sets “acceptable” prices and margins in the industry
Capacity to punish - Price leader has sufficient resources to deter and combat defection
Factor endowment - Extent to which different countries possess various factors of production such as labor,
land, and technology
Factor endowment theory (Heckscher-Ohlin theory) - Nations will develop comparative advantages based on
their locally abundant factors
7- What is resource similarity and how does this impact competitive dynamics?
Extent to which a given competitor possesses strategic endowment comparable, in terms of both type and
amount, to those of the focal firm
COMPETENCY: International Trade and Foreign Exchange Market (Peng Chapters 5, 7, 10)
1- Give a description of the classical theory of international trade.
Page 2 of 29
, 2- How would the modern theory compare to the classical theory?
3- Compare absolute advantage to comparative advantage. What differences exist?
Absolute advantage - to be more efficient than anyone else in the production of any good or service. Nation
gains by specializing in economic activities in which that nation has an absolute advantage
Comparative advantage - relative advantage in one economic activity that one nation enjoys in comparison with
other nations
4- What is mercantilism and why is this an important term?
Mercantilism - wealth of the world is fixed and that a nation that exports more and imports less would enjoy the
net inflows of gold and silver and thus become richer
international trade is viewed as a zero sum game
5- What are the critical features of the product life cycle?
Dynamic theory that accounts for changes in the patterns of trade over time
6- How would you describe strategic trade?
Strategic intervention by governments in certain industries can enhance their odds for international success
Tariff barrier - Means of discouraging imports by placing a tariff (tax) on imported goods
Import tariff - Tax imposed a good brought in from another country
Import quota - Restriction on the quantity of a good that can be brought into a country
Voluntary export restraint (VER) - Exporting countries voluntarily agree to restrict their exports
Local content requirement - Rules stipulating that a certain proportion of the value of the goods made in one
country must originate from that country
7- How are supply and demand related to the exchange rate of a country?
Exchange rate price of one currency in terms of another
Foreign exchange rate - Price of one currency in terms of another
Purchasing power parity (PPP) - Conversion that determines the equivalent amount of goods and services
different currencies can purchase
Conversion is usually used to capture differences in cost of living between countries
Page 3 of 29
