WGU C211 - Global Economics for Managers

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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. "Evolution ... ary" 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 [Show More]

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