Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

C211 Economics For Managers > Competency 1 > Flashcards

Competency 1 Flashcards

1
Q

What is global business?

A

Business around the globe.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the two views on global business?

A

Resource-Based View: Internal resources and capabilities determine success.

Institution-Based View: External formal (laws, rules, and regulations) /informal (cultural, norms, and ethics) institutions determine success.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is globalization?

A

Close integration of countries and people worldwide.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the 3 views on globalization?

A

New Force: Sweeping through Recent times; exploiting the world through MNEs (keyword: exploiting)

Long Run Historical Evolution: since the dawn of human history (keywords: human history, One Directional)

Pendulum: Swings between extremes over time (keywords: not recent nor One Directional)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Foreign Direct Investment (FDI)?

A

Investing in, controlling, and managing value-added activities in another country.

Keyword: Controlling & Ownership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is Horizontal FDI?

A

Duplicating the same value-chain stage abroad (e.g., producing & selling in multiple countries).

Example: GM builds produces & sells cars/truck in the U.S. Later produces & Sells cars/trucks in Mexico

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Vertical FDI?

A

Upstream or downstream operations in different countries (e.g., producing vs. selling).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the political views on FDI?

A

Radical View, Free Market View, & Pragmatic Nationalism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is Radical View on FDI?

A

FDI is hostile—used for imperialism and exploitation. (Opponent of FDI)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is Free Market View on FDI?

A

FDI has unrestricted government intervention; allows countries to benefit from specialization (proponent)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is Pragmatic Nationalism on FDI?

A

FDI is accepted only when benefits outweigh costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are OLI advantages in FDI?

A

Ownership: Internal assets (e.g., technology)

Location: Place-based benefits (e.g., resources, markets, costs)

Internalization: Keeping operations within the firm (buying & selling technology through licensing)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the home country costs of FDI?

A

Capital outflow and job losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the home country benefits of FDI?

A

Repatriated earnings, export increase to host country, and learning opportunities via FDI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the host country costs of FDI?

A

Loss of sovereignty, adverse effects on competition, and capital outflow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the host country benefits of FDI?

A

Capital inflow, job creation, tech spillover, and management know-how

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is collusion?

A

Collective attempts between firms to reduce competition; are illegal in the US

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What market characteristics make collusion easier?

A

Few firms, price leader, homogenious (similar) products, high barriers to entry, high market commonality.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What market characteristics make collusion difficult (competition likely)?

A

Too many firms, no price leader, heterogeneous (different) products, low barriers to entry, no mutual forbearance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How do resources affect competition?

A

Firms with VRIO (value, rarity, inimitability, organization) are more competitive.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is resource similarity?

A

When two firms have the same strengths and resources.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the market commonality?

A

Overlap between two rivals’ market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What happens when both resource similarity and market commonality are high?

A

Higher Resources Similarity leads to higher competition, higher Market Commonality leads to lower competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are 2 factors that makes 2 firms/rivals compete with each other?

A

Resources Similarity and Market Commonality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is the theory of attack and counterattack?
Firms make moves to gain a competitive advantage (attack), and rivals respond or gain back advantage (counterattack).
26
What is it when firms show Cooperation?
Firms choose to cooperate to reduce competitive intensity
27
What are 4 strategies local firms use to compete with MNEs?
1. Contender: Firms learns fast and expands globally to compete w/ MNEs (Compete) 2. Defender: Firms focus on local assets with weak MNEs (Protect) 3. Dodger: Firm cooperate with Joint Ventures (JVs) with MNEs (Partnership) 4. Extender: Firm uses homegrown competencies abroad (Expand)
28
What is Signaling?
Firms resort to signaling because collusion is illegal
29
What are the 4 means to Signaling?
1. Firms may enter new markets, not to challenge but to seek mutual forbearance. 2. Firms can send and open signal for truce. 3. Firms can send a signal to rivals by enlisting the help of the government. 4. Firms organize strategic alliances with rivals for cost reduction.
30
Why do nations trade?
Nations benefit from exporting & importing, to gain economically—both sides benefit.
31
What are 3 classical (Static) International trade theories?
Mercentalism, Absolute Advantage, Comparative Advantage
32
What is Mercentalism?
Export more, import less to build wealth; zero-sum game (winners & losers)
33
What is Absolute Advantage?
Adam Smith: Nations should produce what they’re most efficient at; (keywords: productive and efficient)
34
What is Comparative Advantage?
David Ricardo: Nations should specialize in what they do at the lowest opportunity cost (keywords, lower opportunity cost) Keywords: lower opportunity cost
35
What is Opportunity Cost?
The value of the next best alternative that you give up when making a choice.
36
What are the modern (dynamic) international trade theories?
Product Life Cycle, Strategic Trade, & National Competitive Advantage of Industries
37
What is the Product Life Cycle?
Trade patterns change over time as products go from new → mature → standardized.
38
What is Strategic Trade?
With strategic Government intervention can help industries (high cost) succeed (i.e., Airbus).
39
What is the National Competitive Advantage?
Explain how certain industries succeed, which Depends on the Four factors that drive industry success (Diamond Theory): 1. Strategy, structure & rivalry 2. Factor endowments 3. Demand conditions 4. Relating & Supporting industries
40
What is a trade deficit?
Importing more than Exporting
41
What is a trade surplus?
Exporting more than Importing
42
What is the Balance of Trade?
Aggregation of importing and exporting that leads to country-level trade surplus or deficit
43
What is an exchange rate?
The price of one currency in terms of another.
44
What determines exchange rates?
Supply/demand, PPP, interest rates, exchange rate policy, trade balance, and investor psychology.
45
What is currency hedging?
Using a financial tool to Protects Traders & Investors against exchange rate changes using spot rate.
46
What is strategic hedging?
Spread business activities in countries with different currencies. (also called currency diversification)
47
What is purchasing power parity (PPP)?
“Law of one price” Same product, same price—no matter the place
48
What is currency appreciation?
An increase in the value of the currency
49
What is currency depreciation?
A decrease in the value of the currency
50
What is the Fixed Exchange Rate Policy?
The government determines the currency’s value.
51
What is a Floating Exchange Rate?
The supply and demand conditions determine the exchange rate.
52
What is a pegged exchange rate?
Linking (pegging) a developing country’s currency to a strong currency
53
What is a managed (dirty) float?
Floating policy with selective government intervention.
54
What are the 3 types of exchange rate (currency) transactions?
Spot Rate, Forward Transaction, & Currency Swap
55
What is Spot Rate?
Spot transaction – Single Shot (immediate) exchange of 1 currency to another.
56
What is a Forward Transaction?
Buy & Sell currencies for a future date; also used for hedging
57
What is Currency Swap
Currency swap – at time 1 convert currency to another with an agreement revert back in time 2 in the future. (to reduce risk in the future)
58
How do interest rates affect exchange rates?
Higher interest attracts foreign funds (demand increases, currency appreciate)
59
How does inflation affect exchange rates?
Higher inflation rates, weak currency (currency depreciates)
60
What is transaction risk?
Rate changes before payment is complete = risk
61
What are the 4 reasons firms enter foreign markets? (Where)
Location: 1. Natural resources 2. Market seeking 3. Efficiency seeking 4. Innovation seeking
62
How to Enter Foreign Markets?
Equity Mode: ownership, large scale, more risk (e.g., Wholly Ownership Subsidiary, JVs, Greenfield, Acquisition, Strategic Alliance Non-Equity Mode: no ownership, small scale, less risk (e.g., Exporting, Licensing/franchising, turnkey projects, R&D Contracts, co-marketing
63
When to enter the foreign markets?
First Mover or Later Mover
64
First Mover Advantages:
1. barriers to entry for late entrants/mover 2. avoidance of home clash 3. proprietary, technological leadership 3. resources (scarce) secured 4. relationship with key stakeholders & governments
65
First Movers Disadvantages:
1. costly development 2. High uncertainty (market/technology) 3. Imitation risk (leapfrogged) 4. lock-in early choices
66
Late Movers Advantages:
1. Free ride on first mover 2. resolve market/technology uncertainty 3. Early (first) firms struggle to adapt
67
Late Movers Disadvantages:
1. Brand struggle 2. Limited access to key stakeholders 3. high barrier to entry 4. Missed market opportunities 5.

C211 Economics For Managers (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions