C211 OA Exam with Verified Answers Graded A+
1. new: view that claims phenomenon of globalization was initially driven by the
desire of Western economies to exploit their power through MNE's
2. evolutionary: view that claims globalization is a long-run historical evolution
since the dawn of hum...
1. new: view that claims phenomenon of globalization was initially driven by the
desire of Western economies to exploit their power through MNE's
2. evolutionary: view that claims globalization is a long-run historical evolution
since the dawn of humanity. Says it is nothing new and that it will always exist
3. pendulum: view that claims globalization is swinging from one extreme to another
from time to time
4. foreign direct investment: investment in, controlling, and managing val-
ue-added activities in other countries
5. radical: political view hostile to FDI. believes it is an instrument of imperialism and
vehicle for exploitation of domestic resources by foreign capitalists and firms
6. free market: 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
7. pragmatic nationalis: views FDI as having pros and cons and only approving
FDI when its benefits outweigh costs
8. capital inflow, technology spillovers, advanced management know-how,
creates jobs: what benefits exist to a country receiving FDI?
9. loss of sovereignty, adverse effects on competition, net outflow in the
capital account: what costs exist to a country receiving FDI?
10. balance of trade: The aggregation of importing and exporting that leads to the
country-level trade surplus or deficit.
11. high: firms with a degree of resource similarity are likely to have similar
competitive actions
12. highest: a high degree of resource similarity but low market commonality =
intensity of rivalry
13. lowest: little resource similarity but high market commonality = intensity
of rivalry
14. classical: mercantilism, absolute advantage and comparative advantage be-
long to what theory of international trade
15. modern: theory of international trade that relies on more realistic product life
cycles and first mover advantages
16. absolute: under free trade, a nation gains by specializing in economic activities
in which it has advantage
17. comparative: focuses on the idea that if a country does not have absolute
advantage, they can still choose to specialize in the production of one good where
it has advantage
18. factor endowments: comparative advantage and absolute advantage stem
from
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, C211 OA Exam with Verified Answers Graded A+
19. mercantilism: theory that the wealth of the world is fixed and that a nation that
imports more and exports less will be richer
20. new: stage of the product life cycle where production of a new product that
commands a price premium will concentrate in the US
21. maturing: stage of the product life cycle where demand and ability to produce
grow in other developed nations
22. standardized: stage of the product life cycle where the previously new product
is commoditized and production will now move to low-cost developing nations
23. trade: comparative advantage may change over time because patterns of
change over time
24. strategic trade: theory that suggests that intervention by governments in certain
industries can enhance their odds for international success
25. currency hedging: if a company seeks to limit foreign exchange rate exposure
in the forward direction, what is the most effective way to do this?
26. transaction risk: exchange rate risk associating with the time delay between
entering a contract and settling it
27. hedging: forward transaction that protects traders and investors from exposure
to fluctuations of the spot rate
28. strategic heding: 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
29. scale of entry: amount of resources committed to entering a foreign market
30. by signaling which conduct is legit and which is not: how do institutions
reduce uncertainty?
31. regulatory: pillar of formal institution, coercive power of government
32. normative: pillar of informal institution, the mechanism through which norms
influence individual and firm behavior
33. cognitive: pillar of informal institution, taken for granted values and beliefs that
guide behavior
34. formal: institutions represented by laws, regulations and rules
35. informal: institutions represented by norms, culture and ethics
36. bounded rationality: the necessity of making rational decisions in the absence
of complete information
37. institution: bounded rationality is a position in which view of global business
38. democracy: political system that affects global business with an individuals right
to freedom of expression and organization
39. totalitarianism: political system that affects global business with hostility to-
wards business, higher political risk such as nationalism
40. democracy: political system where citizens elect representatives to govern the
country on their behalf
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