WGU C211 Study Guide Questions and Answers 100% Pass

C211 Study Guide Questions and Answers 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? New: a new for ...

C211 Study Guide Questions and Answers 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? New: a new force sweeping through the world in recent times Globalization is a new phenomenon that comes from western ideology, technology and the want to dominate the world through MNE’s. Evolutionary: a long-run historical evolution since the dawn of human history States that globalization has been a natural part of history and that traces of globalization have existed within roman, Assyrian, Phoenician times. Some examples of this were importing silks or the East India Company importing goods in the colonial times. Pendulum: a pendulum that swings from one extreme to another from time to time The flows of goods, capital, knowledge, and people across borders. Neither recent or one directional, it moves back and forth with the flow of the worlds needs and events. 2. What is Foreign Direct Investment? Investing in, controlling, and managing value-added activities in other countries. 3. What different political views exist on FDI? Radical: Hostile to FDI – tracing roots to Marxism. Treats FDI as an instrument for imperialism and a vehicle for exploitation of the domestic resources a foreign economy can offer. Free Market View: Suggests that FDI, unrestricted by government, will enable countries to tap into their advantages for specializing in the production of certain goods and services. Win Win Logic. Pragmatic Nationalism: Views FDI to have both pros and cons and only approves FDI if the benefits outweigh costs. 4. What benefits exist to a country receiving FDI? Elaborate. Host (recipient) Country Benefits: Capital inflow, technology, management, job creation. Home (source) Country Benefits: Earnings, exports, learning FDI from operations abroad 5. What costs exist to a country receiving FDI? Elaborate. Host Country Costs: Loss of sovereignty, competition, capital outflow Home country Costs: Capital outflow, job loss 6. How do resources and capabilities influence the competitive dynamics of a business? Value: Firm resources must create value when engaging rivals. The ability to attack in multiple markets. Samsung and Apple are good examples because new smartphone launches in various countries simultaneously will throw off rivals, adding value. The ability to respond rapidly to challenges also adds value. Another way of adding value is patenting. The proliferation of patents makes it very easy for one firm to unwittingly infringe on rival’s patents. Downloaded by merchant billy ([email protected]) lOMoARcPSD|15946012 Rarity: rare assets. Emirates has on of the best locations as a home base and is a well-run organization supported by government. They also have the advantage to fly overnight from Dubai, when other airlines cannot. Imitability: How well competition can be imitated by others. Organization: Firms better organized for competitive actions, such as stealth attacks and answering challenges. 7. What is resource similarity and how does this impact competitive dynamics? 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. Apple vs. Samsung, McDonalds vs. Starbucks. McDonalds attacking Starbucks with its iced coffee drinks, Starbucks seeing the need to introduce more cost-effective drinks into their menu. COMPETENCY: International Trade and Foreign Exchange Market (Peng Chapters 5, 7, 10)  mercantilism,  absolute advantage,  comparative advantage,  product life cycle,  strategic trade, and  national competitive advantage. 1. Give a description of the classical theory of international trade. 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. 2. How would the modern theory compare to the classical theory? The major theory 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. 3. Compare absolute advantage to comparative advantage. What differences exist? With free trade, each nation gains by specializing in economic activities in which it has absolute advantage. Downloaded by merchant billy ([email protected]) lOMoARcPSD|15946012 Absolute advantage is an advantage that influences countries to trade with one another based on their strengths: England should specialize in sheep and wool, Portugal should specialize in grapes and wines, and They should trade with each other. Comparative advantage: suggests that even though the United States has an absolute advantage over China in both wheat and aircraft, as long as China is not equally less efficient in the production of both goods, China can still choose to specialize in the production of one good (such as wheat) where it has comparative advantage—defined as the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations. If China devotes all resources to wheat, it can produce 10,000 tons, which is four-fifths of the 12,500 tons the United States can produce. However, at a maximum, China can only produce 20 aircraft, which is merely half of the 40 aircraft the United States can make. By letting China specialize in the production of wheat and importing some wheat from China, the United States is able to leverage its strengths by devoting its resources to aircraft 4. What is mercantilism and why is this an important term? Mercantilism: Views international trade as a zero-sum game. Believed that the wealth of the world was fixed on the wealth of silver and gold. A nation that exported more and imported less would enjoy the net flows of gold and silver, and thus become richer. Self-sufficiency was the best way to combat this issue. Promotes each nation to be self-sufficient, but also engage in trade to enhance their economic growth. 5. What are the critical features of the product life cycle? The first dynamic theory to account for changes in the patterns of trade over time. 1. lead innovation nation (which, according to him, is typically the United States), 2. other developed nations, and 3. developing nations. Further, every product has three life cycle stages: new, maturing, and standardized 6. How would you describe strategic trade? Strategic trade theory sugge