What different political views exist on Foreign Direct Investment FDI?
Radical View, Free Market View, Pragmatic Nationalism
*answer includes radicalis... [Show More] m*
What is resource similarity and how does this impact competitive dynamics?
Extent to which a given competitor possesses strategic endowment comparable, in terms of both type & amount to those of the focal firm.
*Firms with a high degree are likely to have similar competitive actions. (Starbuck's instant coffee & McDonald's iced coffee)
What are the critical features of the product life cycle?
1. New stage: prod. of a new product (ex. TV) that commands a price premium will concentrate in the USA, which exports to other developed nations.
2. Maturing stage: demand & ability to prod.; grow in other dev. nations (ex. Australia & Italy), it is now worthwhile to produce there.
3. Standardized stage: the prev. new prod. is standardized (or commoditized).
Prod. will now move to low-cost dev. nations, which export to dev. nations. In other words, comparative advantage may change over time.
How are supply and demand related to the exchange rate of a country?
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.
What advantages exist with first mover?
1. Proprietary, technological leadership
2. Pre-emption of scarce resources
3. Establishment of entry barriers for late entrants
4. Avoidance of clash with dominant firms at home
5. Relationships with key stakeholders such as governments
Discuss and compare the three pillars (regulatory, normative, and cognitive)
*Answer contains: laws, regulations, rules*
regulatory - The coercive power of governments
normative - Values, beliefs, and actions of other relevant players (norms, cultures, ethics)
cognitive - The internalized, taken-for-granted values & beliefs that guide behavior. (between right/wrong)
How is global business affected by democracy?
An individual's right to freedom of expression & organization. Ex. starting up a firm is an act of economic expression
How is global business affected by totalitarianism?
These countries often experience wars, riots, protests, chaos, & breakdowns, resulting in higher political risk.
What are the differences between democracy and totalitarianism?
democracy - Citizens elect representatives to govern the country on their behalf.
totalitarianism - One person or party exercises absolute political control over the population.
What is a property right? In what way are property rights essential?
The legal rights to use an economic resource and to derive income and benefits from it.
*Can be used as collateral for starting a firm; not as common in developing countries, therefore hindering economic growth.
What is an intellectual property right?
Rights associated with the ownership. They primarily include rights associated with patents, copyrights, & trademarks.
Contrast the market, command, and mixed economy types.
market - characterized by the "invisible hand" of market forces-all factors of prod. should be privately owned.
command - defined by a gvrnmnt taking all factors of prod. to be gvrnmnt-owned or state-owned, & all supply, demand, & pricing are planned by the gvrnmnt.
mixed economy - elements of both a mrkt economy & a command economy. It boils down to the relative distribution of market forces versus command forces.
What is an indifference curve?
A curve that shows consumption bundles that give the consumer the same level of satisfaction
(ex. combo of pizza & Pepsi with which the consumer is equally satisfied.)
How is the demand curve for a perfectly competitive firm distinct from the demand curve for a monopolistic market?
competitive demand curve - Horizontal line
monopolist demand curve - downward sloping demand curve
Describe the basic distinctions between the market models with respect to:
1. number of market participants
2. type of product being marketed, ease of entry/exit into the market and the prevalence of advertising/marketing.
1. Monopoly and Oligopoly have one to few firms, with limited products (cable TV), entry is difficult, and advertising is a natural feature.
2. Monopolistic competition/perfect competition have many firms,
What fundamental truth is realized when studying the behavior of an oligopolistic firm within the context/model called "prisoner's dilemma"?
*look for cooperative in the answer*
the outcome is to confess -ON THE TEST-confess because they look out for themselves - it is in their self interest to confess
How might an oligopolistic firm behave like a monopoly? What forces may prevent this?
*look for competition in the answer*
Forming a cartel and acting like a monopolist, but self-interest drives them towards competition.
What tools does the Federal Reserve have with regards to monetary control?
FOMC - Federal Open Market Committee and the open market operation, the purchase and sale of U.S. government bonds.
When the Fed buys bonds, what impact does this have on the money supply & aggregate demand?
The dollars are in the hands of the public.
Thus, an open-market purchase of bonds by the Fed increases the money supply.
When the Fed sells bonds, what impact does this have on the money supply & aggregate demand?
The dollars the Fed receives for the bonds are out of the hands of the public.
Thus, an open-market sale of bonds by the Fed decreases the money supply.
What is a discount rate?
The interest rate banks pay when borrowing from the Federal Reserve.
What is a reserve ratio?
What is one way the federal reserve influences the reserve rations?
The fraction of total deposits that a bank holds as [Show Less]
