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Chapter 1 Expanding overseas: Motivations, means, and mentalities True/False
1 . The largest MNEs are comparable in their financial importance to less created economies such as Tanzania, Estonia or Sri Lanka. Answer: Fake (Sales with the largest MNEs exceed the GDPs of less developed countries.
) Difficulty: Convenient Page: 5 and Stand 1-1 on page 3 Topic: MNE range and affect
2 . The internationalization accompanied by most firms is usually well-thought out in enhance and commonly builds over a combination of rational analysis, organizing and execution.
Answer: Phony (It is likely a combination of logical analysis, opportunism, and fortune. In regards to opportunism, several research have found that most organizations begin transferring due to a great unsolicited foreign trade order. ) Difficulty: Moderate Page: 9 Topic: Internationalization process
three or more. A partnership is a contractual mode of foreign entry involving a high level of reference commitment by simply all lovers. Answer: Bogus (A JV will not commonly require because high one commitment as we would discover in wholly owned subsidiaries. In addition , there may be significant variability in the degree of resources led by partners. ) Difficulty: Moderate Web page: 10 Topic: Foreign entrance mode
some. Emerging motivations for internationalization include the desire to enhance the business’s competitive location and the wish to develop global scanning capabilities. Answer: Authentic Difficulty: Convenient Page: 6-7 and ppt slide 1-6 Topic: Motivations for internationalization
5. Pertaining to an MNE to are present, first international countries need to provide location-specific advantages to draw the company to take a position there, second the company should have ownership-specific advantages that deal with its responsibility of foreignness, third the business must have the organizational capacity to leverage it is strategic positive aspects more effectively internally than outwardly. Answer: Authentic Difficulty: Moderate Page: 7-8 Topic: Requirements for internationalization
6. An MNE having a ‘multinational perspective’ will typically be been able as a coordinated federation. Response: False (It will commonly be handled as a decentralized federation. ) Difficulty: Modest Page: 11-12 and ppt slide 1-13 Topic: The evolving attitude: international to transnational
7. An MNE with a ‘global perspective’ is going to typically control its operations centrally. Answer: True Difficulty: Moderate Page: 12-13 and ppt slip 1-13 Subject: The evolving mentality: international to transnational
8. A great MNE having a ‘transnational perspective’ will commonly be handled as a built-in network. Answer: True Problems: Moderate Webpage: 13-14 and ppt slide 1-13 Topic: The evolving mentality: foreign to transnational
Multiple Choice
9. Which in turn of the pursuing correctly details the continuous evolution a manager thinking according to strategic part of international operations in emerging MNEs? a. global mentality, multinational mentality, foreign mentality, transnational mentality. w. international attitude, global attitude, transnational mentality, multinational attitude. c. international mentality, global mentality, worldwide mentality, transnational mentality. deb. international attitude, multinational mentality, global mindset, transnational attitude.
Answer: d (a, b, and c are inappropriate because, whilst they describe the different ways of administration thinking about the strategic role of overseas operations in emerging MNEs, they do not illustrate the progression of this considering in the correct sequence. ) Difficulty: Modest Page: 11-14 Topic: Innovating mentality toward strategic role of foreign operations
twelve. A operation, such as McDonald’s, is a _________ mode of foreign entry. a. low commitment, low control b. low determination, moderate control c. low commitment, substantial control m. moderate commitment, moderate control
Answer: n (a, c, and d would describe indirect foreign trade, contract developing, and joint venture foreign ways of access respectively. ) Difficulty: Modest Page: 12 (figure 1-2) Topic: Foreign entry mode
11. A joint venture is actually a _________ setting of international entry. a. low dedication, low control b. low commitment, moderate control c. low dedication, high control d. modest commitment, average control Answer: d (a, b, and c could describe indirect export, operation, and agreement manufacturing foreign modes of entry respectively. ) Difficulty: Moderate Page: 10 (figure 1-2)
Subject: Foreign entry mode
doze. Pashpa Company. is a new manufacturer of home appliances. Pashpa wants to move international. A number of the traditional motivations for chasing internationalization include: a. securing key supplies, seeking fresh markets, and raising global scanning and learning capacities b. obtaining key materials, seeking new markets, and improving competitive positioning c. securing key supplies, seeking new marketplaces and accessing low-cost factors of development d. protecting key items, improving competitive positioning, and accessing cheap factors of production
Solution: c (a, b, and d are incorrect since ‘raising global scanning and learning capabilities’ and ‘improving competitive positioning’ are not traditional motivations intended for pursuing internationalization, they are appearing motivations. ) Difficulty: Modest Page: 4-6 Topic: Motives for internationalization
13. 1 motivation at the rear of internationalization is always to sustain the firm’s competitive position. To pursue a sustainable competitive position relative to its competitors in the athletic clothing sector, Nike efforts to: a. reempt markets, capture global scale, and secure unprocessed trash b. catch global scale, access scarce knowledge, and match rivals c. match competitors, catch global level, and preempt markets deb. exploit component cost dissimilarities, preempt market segments, and match competitors Answer: c (a, b, and d will be incorrect mainly because ‘securing uncooked materials’, ‘accessing scarce knowledge’, and ‘exploiting factor expense differences’ can provide a company a temporary competitive edge but not a sustainable competitive advantage. ) Difficulty: Hard Page: 4-7
Topic: Motivations for internationalization
14. _________ suggests that in the first level innovations have been in the home produced country, inside the second stage they are exported to different similarly designed countries, in the third level, they commence being produced in these produced countries, in the fourth stage they begin being manufactured in low-wage developing countries. a. Vernon’s item cycle theory b. Johanson and Vahlne’s stages theory c. Dunning’s eclectic theory d. Levitt’s globalization theory Answer: problems: Moderate Webpage: 5-6, eight Topic: Inspirations for internationalization
15. Which in turn of the following constitutes a set of foreign access modes that involve the MNE to produce a foreign investment a. Greenfield, acquisition, joint venture and capital participation n. Greenfield, obtain, joint venture and license c. Franchising, purchase, joint venture and capital participation d. Greenfield, acquisition, cooperation agreements and capital contribution Answer: a (Licensing, franchising, and many types of cooperation may well not entail a great MNE investing.
16. OfficeWare Corp. is an MNE that produces and sells office equipment. In the event the company’s CEO employs a ‘global mentality’ toward the strategic position of the business foreign procedures, then we would expect that OfficeWare: a. regards their overseas market segments as a stock portfolio of neighborhood opportunities. b. leverages its domestic features worldwide. c. regards the world as a single unit of analysis. d. concurrently responds to local requirements, global needs and cross-border learning options.
Answer: c (a, n, and m would symbolize multinational, worldwide, and transnational mentalities respectively. ) Difficulty: Moderate Web page: 11-14 Subject: The changing mentality: foreign to transnational Essay
seventeen. The CEO of Paragon Ltd. desires to take his company intercontinental. What are three big concerns he must response before growing abroad? Answer: The three concerns this CEO must response before broadening abroad are: a. What market chances, sourcing positive aspects or strategic imperatives is going to drive you’re able to send international growth?. How will the organization expand their foreign existence ” through exports, license, joint endeavors, wholly owned or operated subsidiaries or any other means? c. How will the perceptions, assumptions and beliefs of Paragon’s personnel impact the probability from the company making it in its efforts to internationalize? Difficulty: Moderate Page: you (box insert) Topic: Internationalization
18. Rana manages a great Italian fashion design company. What would encourage Rana’s business to internationalize? Answer: i) Traditional motivations might include: securing important supplies, in search of new marketplaces and accessing low-cost factors of production (e. g. labor, capital, etc . ), (ii) Growing motivations may well include: increasing scale economies to counteract significant R&D investments, reducing product life periods, improving a company’s competitive position and enhancing a company’s global scanning and learning features. Difficulty: Easy Page: 4-7 Topic: Motivations behind internationalization
19. Briefly explain the item cycle of personal computers applying Raymond Vernon’s product circuit theory. Response:
This theory suggests that early on in a product’s life-cycle, every one of the parts and labor had to manufacture the product will be sourced from the locale in which the product was made. As the product is increasingly adopted and distributed in global markets, production gradually shifts away from point of origin. In some instances, the product ultimately becomes a very good that is brought in into the country in which it was originally invented. For example , in the case of pcs, during the cool product stage, the computer was made and purchased by buyers in the United States and little foreign trade trade occurred.
During the maturation product level, mass-production techniques were developed and overseas demand (in developed countries) expanded. At this moment, the U. S. began to export the item to other developed countries. In the standardised product stage, production relocated to developing countries, which then export the product to developed countries. Difficulty: Modest Page: 5-6 Topic: Item cycle theory
20. In brief compare and contrast the Uppsala Internationalization Model and the Born Global Model. Under what instances is every model most applicable?
Provide examples to support your quarrels. Answer: Based on the Uppsala Unit, companies internationalize in an pregressive fashion. Commonly, they begin by utilizing foreign entry settings that require lower levels of useful resource commitment and low levels of control over overseas activities (e. g. exporting). The unit conceptualizes following stages inside the internationalization process as needing higher amounts of resource determination and providing higher levels of control over international activities (e. g. totally owned subsidiary). The experience of Toyota is like Uppsala Unit.
According to the Delivered Global Unit, some businesses are born global, establishing significant international businesses immediately or shortly after the company is introduced. These businesses do not employ an gradual approach. Rather, these businesses aggressively go after internationalization because of their internal alignment or the have to move quickly due to the mother nature of their products or services. The experience of various internet corporations is consistent with the Born Global Model. Problems: Moderate Webpage: 9-10 Matter: Process of internationalization
21. Roy is the CEO of a international apparel organization. How might he conceptualize the strategic role of his firm’s foreign procedures if this individual possessed a ‘global mentality’? If this individual possessed a ‘multinational mentality’? Answer: In the event that Roy possessed a global attitude, he would view the world as being a single unit of analysis and he would centralize the managing of the business foreign functions. Thus, he would drive the firm to create products to get a world marketplace and production them on the global level in a few very efficient plants, often located at the corporate center.
Nevertheless , if Roy possessed a multinational attitude, he would view foreign market segments as a profile of neighborhood opportunities and manage his company as a decentralized federation. Thus, he’d recognize and emphasize the differences between national markets and operating surroundings and change his goods, strategies and management practices on a country-by-country basis. Problems: Moderate Page: 11-13 Theme: Mentalities toward internationalization
twenty two. What is an MNE? Offer examples to explain the difference among companies that are considered MNEs and those that are not. Answer:
A great MNE is a company that partcipates in the effective management of substantial immediate investment in one or more overseas countries and this considers those investments/operations since integral elements of the company, equally strategically and organizationally. Therefore, companies that solely count on import-export business are not regarded MNEs. They may be considered international companies however, not multi-national companies (MNEs). Moreover, companies that passively control an investment portfolio (as in opposition to those that definitely manage international assets) aren’t considered MNEs. Difficulty: Convenient Page: two Topic: MNE definition
twenty three. Briefly compare the 4 mentalities toward internationalization. Response: Companies that have an international attitude produce products for the domestic market and only therefore sell the products overseas. That they transfer development and understanding from the mother or father company for the foreign providers. These companies perspective themselves essentially as home-based with some foreign appendages. Corporations that have a multinational attitude modify their products, strategies, and management methods country by country. These companies watch themselves as nationally delicate and reactive, thus the word multinational.
Businesses that have a worldwide mentality generate products for a world industry and make them on a global level in a few extremely efficient vegetation. These companies view the world, not just individual nationwide markets, his or her unit of analysis. Companies that contain a transnational mentality happen to be responsive to country-level operations, nevertheless , they coordinate these functions to preserve competitive effectiveness and monetary efficiency. These companies view themselves as a built-in network. Difficulty: Moderate Webpage: 11-14 Matter: Mentalities toward internationalization
