C211 - Global Economics for Managers Final Exam Questions With 100% Verified Answers

C211 - Global Economics for Managers Final Exam Questions With 100% Verified Answers Base of the pyramid (BOP) - answerEconomies where people make less than $2,000 per capita per year. BRICA - answerBrazil, Russia, India, and China. Emerging economies - answerterm that has gradually replaced the term "developing countries" since the 1990s. Emerging markets - answerA term that is often used interchangeably with "emerging economies." Expatriate manager - answerA manager who works abroad, or "expat" for short. Foreign direct investment (FDI) - answerInvestment in, controlling, and managing value- added activities in other countries. Global Business - answerBusiness around the globe. Gross national income (GNI) - answerGDP plus income from non-resident sources abroad. The term used by the World Bank and other international organizations to supersede the term GNP. Gross national product (GNP) - answerGDP plus income from non-resident sources abroad International business (IB) - answer(1) A business (or firm) that engages in international (cross-border) economic activities and/or (2) the action of doing business abroad. International premium - answerA significant pay raise when working overseas. Liability of foreignness - answerThe inherent disadvantage that foreign firms experience in host countries because of their non-native status. Multinational enterprise (MNE) - answerA firm that engages in foreign direct investment (FDI). Reverse innovation - answerAn innovation that is adopted first in emerging economies and is then diffused around the world. Risk management - answerThe identification and assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events. Scenario planning - answerA technique to prepare and plan for multiple scenarios (either high or low risk). Purchasing power parity (PPP) - answeradjustment made to the GDP to reflect differences in the cost of living The bottom billion - answerConcentrated in Africa and Central Asia - 58 small countries, stuck at the bottom in terms of growth, incomes and human development Enhance employability & advance career, better preparation to be expat, competence in interacting with foreign suppliers/partners/competitors/employees - answerWhy study global business? Formal rules - answerrequirements that treat domestic and foreign firms as equals enhance the potential odds for foreign firms' success or those that discriminate against foreign firms, would undermine the chances for foreign entrants Informal rules - answercultures, ethics, and norms play an important part in shaping the success and failure of firms around the globe Resource-based view - answerA core perspective. Success and failure of firms is determined by their environment New force in recent times, a long-running historical evolution, a pendulum swinging between extremes - answerWhat are the three views of globalization? "Four Tigers" - answerHong Kong, Singapore, South Korea and Taiwan Administrative policy - answerBureaucratic rules that make it harder to import foreign goods. antidumping duty - answerTariffs levied on imports that have been "dumped" (selling below costs to "unfairly" drive domestic firms out of business). Balance of Trade - answerThe aggregation of importing and exporting that leads to the country-level trade surplus or deficit. Classical trade theories - answerThe major theories of international trade that were advanced before the 20th century, which consist of (1) mercantilism, (2) absolute advantage, and (3) comparative advantage. Factor endowment theory - answerA theory that suggests that nations will develop comparative advantages based on their locally abundant factors. Heckscher-Ohlin theory - answerAnother name for factor endowment theory First-mover advantage - answerAdvantage that first movers enjoy and do not share with late entrants. Free trade - answerThe idea that free market forces should determine how much to trade with little or no government intervention. Import - answerBuying from abroad. Import tariff - answerA tax imposed on imports. Infant industry argument - answerThe argument that if domestic firms are as young as "infants," in the absence of government intervention, they stand no chances of surviving and will be crushed by mature foreign rivals. Modern trade theories - answerThe major theories 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. Opportunity cost - answerCost of pursuing one activity at the expense of another activity, given the alternatives (other opportunities). Product life cycle theory - answerA theory that accounts for changes in the patterns of trade over time by focusing on product life cycles. Protectionism - answerThe idea that governments should actively protect domestic industries from imports and vigorously promote exports. Resource mobility - answerAssumption that a resource used in producing a product for one industry can be shifted and put to use in another industry. Strategic trade policy - answerGovernment policy that provides companies a strategic advantage in international trade through subsidies and other supports. Strategic trade theory - answerA theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success. Subsidy - answerGovernment payment to domestic firms. Tariff barrier - answerTrade barrier that relies on tariffs to discourage imports. Theory of absolute advantage - answerA theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage. Theory of comparative advantage - answerA theory that focuses on the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations. Theory of mercantilism - answerA theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer. Trade deficit - answerAn economic condition in which a nation imports more than it exports. Trade surplus - answerAn economic condition in which a nation exports more than it imports. Agglomeration - answerClustering of economic activities in certain locations. Bargaining power - answerAbility to extract favorable outcome from negotiations due to one party's strengths. Demonstration (contagion or imitation) effect - answerThe reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation. Downstream vertical FDI - answerA type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country. Foreign portfolio investment (FPI) - answerInvestment in a portfolio of foreign securities such as stocks and bonds. Free market view on FDI - answerA political view that suggests that FDI unrestricted by government intervention is the best. Horizontal FDI - answerA type of FDI in which a firm duplicates its home country-based activities at the same value chain stage in a host country. Intrafirm trade - answerInternational transactions between two subsidiaries in two countries controlled by the same MNE. Management control rights - answerThe rights to appoint key managers and establish control mechanisms. Obsolescing bargain - answerThe deal struck by MNEs and host governments, which change their requirements after the initial FDI entry. Pragmatic nationalism on FDI - answerA political view that only approves FDI when its benefits outweigh its costs. Radical view on FDI - answerA political view that is hostile to FDI. Sunk cost - answerCost that a firm has to endure even when its investment turns out to be unsatisfactory Upstream vertical FDI - answerA type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country.