434 Chapter 10-MC

MNEs pursuing a _______ ocean strategy tend to also pursue a transnational strategy.

Blue

The oldest form of internationalization is __________, which involves producing goods in one country to sell in another country.

Exporting

Multinational enterprises are the driving force behind globalization.

TRUE

The benefits to be accrued from locating value chain activities in the world's optimal geographies for a specific activity are known as:

location economies

A company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries is a:

multinational enterprise

When companies face a highly competitive environment at home, they are more likely to:

outperform global competition that lacks such intense domestic competition

A company should expand abroad if:

the benefits outweigh the costs

A company should only expand abroad if:

the benefits outweigh the costs

The belief that the importance of location is diminishing as an explanation of firm-level compt. advntg. is called:

the death-of-distance hypothesis

integration-responsiveness framework suggests that companies facing high pressure for both local responsiveness and cost reduction should follow a:

transnational strategy

National culture, according to Geert Hofstede, can be defined as different groups' distinctive __________:

"programming of the mind"

When a country's demand conditions include high-density urban living and high energy costs, consumers can be expected to prefer air conditioners that are:

-energy-efficient -quiet -small

True about the CAGE distance framework:

-it is designed to aid MNEs in deciding where to compete in the world

Reasons firms expand Internationally?

-to gain access to low-cost input factors -to develop new competencies -to gain access to a larger market

The benefits of local responsiveness always outweigh the costs

FALSE

The following statement about pursuing international expansion is true:

It can enhance a firm's compt. advtg.

Despite a growing belief in the death-of-distance hypothesis, there remains evidence that certain countries remain leaders in specific industries and maintain a kind of ____________ advtng.

National competitive

When a company has difficult coordinating operations across geographic distance and b/w distinct culture environments, it experiences:

a liability of foreignness

The strategic foundations of the globalization hypothesis are based primarily on:

cost reduction

The specific characteristics of a needs in a firm's domestic market, such as customers who hold companies to a high standard of value creation and cost containment, are also called:

demand conditions

Before World War II, business strategy, implementation, and knowledge typically moved

from domestic headquarters to outposts abroad

During globalization 1.0 all important business functions were located in the home country, whereas during globalization 2.0 multinationals began to copy themselves

in a few key countries

Due to globalization, the world's market economies are becoming more:

integrated and interdependent

Dream Donuts is a very successful business in the UK. it is contemplating global expansion. Which strategy is Dream Donuts most likely to pursue at these beginning stages of expansion?

international

If a firm's goal is to leverage home-based core competencies in foreign markets, it should pursue an:

international strategy

One notable advtg. of a multi-domestic strategy is

lower exchange-rate exposure

The Japanese market is very particular, and MNE's tend to have a challenging time to breaking into the market successfully. To provide the most local responsiveness and to influence Japanese consumers in believing that the products are local, an MNE should follow a:

multidomestic strategy

When companies face a highly comptv. environment at home, they are more likely to:

outperform global competition that lacks such intense domestic competition

In a global economy, according to Porter, compt. advtgs. increasingly exist in _____________, such as Silicon Valley

regional geographic clusters

Stats regarding MNEs

-They account for 11% of the private sector employment growth since 1990 -They make up 74% of the private sector R&D spending since 2000 -They pay 25% of wages in the US

Calculating cultural distance involves comparing the cultures of:

-a firm's home country -a targeted host country

Part of culture:

-beliefs -social norms -social mores

As MNE's compete internationally, a focus on local responsiveness allows them to:

-increase product differentiation -appeal to local consumers more effectively

Benefits of Transnational Strategy

-it promotes global learning and the diffusion of best practices and innovations -It harnesses economies of scale

A benefit of an international strategy is:

-leveraging core competencies

These are among the primary considerations when determing the mode in which a firm enters a foreign market:

-the degree of investment -the desired level of control over foreign operations

Risks that companies face when expanding internationally:

-the liability of foreignness -loss of reputation -loss of intellectual property

True about economic distance:

-wealthy countries tend to trade w/ other wealthy countries -wealthy companies benefit from trade when their comp. advntg. is based on economies of experience, scale and scope.

Porter's diamond framework to explain national compt. advtg. includes four interrelated factors: demand conditions, comptv. intensity in a focal industry, related and supporting industries/complementors, and

-factor conditions

These conditions suggest a that a multi-domestic strategy might be the appropriate strategy for MNEs:

-high demand for local responsiveness -little need for cost reductions -host countries with idiosyncratic domestic markets

Though many benefits exist, which are among the drawbacks of a transnational strategy?

-it requires organizational complexity -it's difficult to implement

These characteristics help make an MNE's international strategy successful:

-large domestic markets -prominent brand names -strong reputation

The following factors helped make Germany, which was a tough environment for a car company, conducive to successful car companies?

-no speed-limit autobahn -fierce domestic competition -demanding customers

If the economic value creation of international expansion is negative, a firm should:

-not expand internationally

Global-collaboration networks freely locate business functions anywhere in the world based on an optimal mix of which factors:

-capabilities -costs -PESTEL factors

These factors often combine to lead to tragic outcomes for domestic workers of MNEs:

-failure to enforce safety standards -govt. corruption -MNEs search for low-cost labor

The decision framework that is based on the relative distance b/w home and a foreign target country is the:

CAGE distance framework

Though low-skilled laborers make much less in developing countries, no such difference in wages exist for high-skilled workers.

FALSE

A company's ________ is the part of a corporate strategy that addresses how to gain and sustain a compt. advtg. when competing against other foreign and domestic companies around the world:

global strategy

The extent to which members of a society feel anxious when faced w an unknown situation is known as:

uncertainty avoidance

Common reasons for companies to make foreign direct investments:

-to reduce labor costs -to avoid import restrictions -to reduce tax burdens

distinctive features of globalization 3.0?

-Tech. helps reduce communication distances -firms create global networks of local expertise -MNEs reorganize into a more seamless global enterprise

Leading biotech, software, and internet companies and leading computer manufacturers are concentrated in which countries/states?

-The US -China -Taiwan

The 4 quadrants of the integration-responsiveness framework:

-global standardization strategy -multidomestic strategy -transnational strategy -international strategy

Disadvantages of the multi-domestic strategy:

-it is costly -it is inefficient

Help shrink the administrative and political distance b/w countries:

-shared currency -trade agreements -a history of colonization

Reasons firms expand internationally:

-to gain access to low-cost input factors -to gain access to a larger market -to develop new competencies

Examples of local responsiveness:

-the sale of metal chopsticks in South Korea -the sale of toads for preparation in China -the sale of teriyaki burgers in Japan

Dimensions considered in the CAGE distance framework:

-geographical distance -cultural distance -economic distance

Factors that help define administrative and political distance:

-political hostilities -shared monetary associations -the strength of financial institutions

The following have helped make globalization possible:

-reductions in transportation costs -reduced investment barriers -advances in telecommunications

What are the factors in Michael Porter's model of national competitiveness?

-related industries/complementors -demand conditions -factor conditions -comptv. intensity in a focal industry

A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to:

-take advtg. of location economies -take advtg. of economies of scale

Companies seek to access international markets as a means of:

increasing their economic value creation