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Summary docx C211 C211 Study Guide Questions The following questions are developed as a study aid for the C211 COS. They cover important concepts in each competency. The questions are not comprehensive but are only designed to serve as an indicator of you$3.50
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Summary docx C211 C211 Study Guide Questions The following questions are developed as a study aid for the C211 COS. They cover important concepts in each competency. The questions are not comprehensive but are only designed to serve as an indicator of you
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Summary docx C211 C211 Study Guide Questions The f
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University Of South Africa
C211 Study Guide Questions
The following questions are developed as a study aid for the C211 COS. They cover important concepts in
each competency. The questions are not comprehensive but are only designed to serve as an indicator of
your preparedness to take the C211 assessment. After reading t...
summary docx c211 c211 study guide questions the following questions are developed as a study aid for the c211 cos they cover important concepts in each competency the questions are not comprehensiv
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C211 Study Guide Questions
The following questions are developed as a study aid for the C211 COS. They cover important concepts in
each competency. The questions are not comprehensive but are only designed to serve as an indicator of
your preparedness to take the C211 assessment. After reading the material for each competency, use
these questions to reinforce your understanding and review further as necessary.
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?
● a new force sweeping through the world in recent times
● a long-run historical evolution since the dawn of human history
● a pendulum that swings from one extreme to another from time to time.
2- What is Foreign Direct Investment?
● Investment in, controlling, and managing value-added activities in other countries
3- What different political views exist on FDI?
1. Radical View - hostile to FDI, tracing its roots to Marxism, the radical view treats FDI as
an instrument of imperialism and as a vehicle for exploitation of domestic resources by
foreign capitalists and firms. Typically ban inbound MNEs. This view is in decline because
of economic development in these countries is poor in the absence of FDI, and the few
developing countries (such as Singapore) that embraced FDI attained enviable growth.
2. Free Market View - suggests that FDI, unrestricted by government intervention, will
enable countries to tap into their absolute or comparative advantages by specializing in
the production of certain goods and services. This should lead to win0win situation for
both home and host countries. This view does not really exist.
3. Pragmatic Nationalism - Most countries practice pragmatic nationalism - viewing FDI as
having both pros and cons and only approving FDI when its benefits outweigh costs.
4- What benefits exist to a country receiving FDI? Elaborate.
● capital inflow can help improve a host country’s balance of payments.
● Technology, especially more advanced technology from abroad, can create technology
spillovers that benefit domestic firms and industries. Local rivals, after observing such
technology, may recognize its feasibility and strive to imitate it. This is known as the
demonstration effect - sometimes also called the contagion (or imitation) effect. It
underscores the important role that MNEs play in stimulating competition in host
countries.
● Advanced management know- how may be highly valued. It is often difficult for
indigenous development of management know-how to reach a world-class level in the
absence of FDI.
● FDI creates jobs, both directly and indirectly. Direct benefits arise when MNEs employ
individuals locally.
5- What costs exist to a country receiving FDI? Elaborate.
● Loss of sovereignty - the first concern is the loss of some (but not all) economic
sovereignty associated with FDI. There is views that foreigners and foreign firms are
likely to maximize their own profits by exploiting people and resources in host countries.
● Negative effects on local competition. MNEs may drive some domestic firms out of
business. Having driven domestic firms out of business, MNEs, in theory, may be able to
monopolize local markets. This is a legitimate concern for less developed economies,
, where MNEs are of such a magnitude in size and strength and local firms tend to be
significantly weaker.
● Capital outflow -when MNEs make profits in host countries and repatriate (send back)
such earnings to headquarters in home countries, host countries expereince a net
outflow in the capital account in their balance of payments. As a result, some countires
have restricted MNEs’ ability to repatriate funds. Another issue arises when MNE
subsidiaries spend a lot of money to import components and services abroad, which also
results in capital outflow.
6- How do resources and capabilities influence the competitive dynamics of a business?
● Value - firm resources must create value when engaging rivals.
● Rarity - Either by nature or nurture (or both), certain assets are very rare, thus
generating significant advantage in competitive dynamics. Combination of both
geographic advantage and organizational advantage.
● Imitability - Most rivals watch each other and probably have a fairly comprehensive
picture of how their rivals compete. However, the next hurdle lies in how to imitate
successful rivals.
● Organization - Some firms are better organized for competitive actions, such as stealth
attacks and answering challenges “tit-for-tat.” An intense “warrior-like” culture requires
not only top management commitment, but also employee involvement down to the
“soldiers in the trenches.”
7- What is resource similarity and how does this impact competitive dynamics?
● Resource similarity is defined as “the extent to which a given competitor posses strategic
endowment comparable, in terms of both type and amount, to those of the focal firm.”
● It effects competitive dynamics when compared with market commonality. High MC and
Low RS equals the lowest intensity of rivalry. Low MC and High RS equals the highest
intensity of rivalry.
COMPETENCY: International Trade and Foreign Exchange Market (Peng Chapters 5, 7, 10)
1- Give a description of the classical theory of international trade.
● Mercantilism - viewed international trade as a zero-sum game.
● absolute advantage - is the economic advantage one nation enjoys that is absolutely
superior to other nations.
● comparative advantage - suggests that even though a country may have absolute
advantage over another , as long as the other country is not equally less efficient in the
production of both goods, they can still choose to specialize in the production of one
good where it has comparative advantage. defined as the relative advantage in one
economic activity that one nation enjoys in comparison with other nations.
2- How would the modern theory compare to the classical theory?
● The classical theory rely on a highly simplistic assumption that one resource remover
from production can be moved to make another resource. The modern theory does not
rely on simple factor analysis. It is more realistic taking into account outside variables.
3- Compare absolute advantage to comparative advantage. What differences exist?
● absolute advantage - the economic advantage one nation enjoys that is absolutely
superior to other natioins.
● comparitive advantage - the relative (not absolute) advantage in one economic activity
that one nation enjoys in comparison with other nations.
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