Global Business Final T&F

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During the first stage of alliance formation, a firm decides whether growth can be achieved strictly through market transactions, acquisitions, or alliances.

T

Emerging MNEs primarily lack proprietary ownership of technology compared to MNEs from developed economies.

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Entrepreneurial firms can internationalize while staying in domestic markets through indirect exports.

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Entrepreneurial opportunities exist to lower transaction costs and bring distant groups of people, firms, and countries together.

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Entrepreneurs need to cultivate strong informal norms granting legitimacy to entrepreneurs.

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Equity, learning and experience, relational capabilities, and nationality are four factors that may influence alliance performance

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Ethnocentrism continues to characterize many MNEs: knowledge transfer is typically one way—from headquarters to subsidiaries via expatriates.

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Expatriates act as daily managers to run operations and to build local capabilities.

T

Explicit knowledge is codifiable.

T

Externally, HRM is shaped by national and industry contexts.

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Externally, MNEs are subject to the formal institutional frameworks erected by various home-country and hostcountry governments.

T

Family background and educational attainment correlate with entrepreneurship.

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Family ownership and control may lead to the selection of less-qualified managers.

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Firms are allowed to organize strategic alliances with rivals for cost reduction.

T

Firms that are first to introduce new goods or services are likely to earn "monopoly profits" until competitors emerge

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Firms with a high degree of resource similarity are likely to have similar competitive actions.

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Firms with fewer than 500 employees in the United States are considered small- and medium-sized enterprises.

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Foreign acquisitions are an example of an FDI entry into foreign markets.

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Foreign firms interested in becoming licensees or franchisees have to put their own capital up front.

T

Formal institutions governing domestic competition are broadly guided by competition policy.

T

Franchising enables SMEs to enter foreign markets.

T

Greenfield operations and acquisitions have complete equity and operational control.

T

In MNEs adopting the home replication strategy, knowledge is developed at the center and transferred to subsidiaries.

T

In a broad sense, every supply chain is a strategic alliance involving a variety of players, each of which is a profitmaximizing, stand-alone firm.

T

In entrepreneurial firms, an innovation strategy allows a potentially more sustainable basis for competitive advantage.

T

In international marketing, the country-of-origin effect refers to the positive or negative perception of firms and products from a certain country.

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In order to win a predation case in the US, "an attempt to monopolize" must be proved against the accused.

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In the context of achieving alignment, if a recognized leader in a supply chain exercises power, it facilitates legitimacy and efficiency of the whole supply chain.

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In the context of alliance formation, shared capabilities is one of the driving forces in deciding whether to take a contract or an equity approach.

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In the context of market orientation vs. relationship orientation, for truly outstanding performance, relationships are necessary but not sufficient.

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Indirect export is one of the strategies used by entrepreneurial SMEs to internationalize without leaving their home country.

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Individuals who discover, evaluate, and exploit previously unexplored opportunities are referred to as entrepreneurs.

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Information asymmetries exist between principals and agents.

T

Inpatriation is sometimes used for filling skill shortages at headquarters.

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International entrepreneurship is defined as "a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations."

T

Introducing third-party logistics (3PL) providers may more effectively align the interests in the supply chain.

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Knowledge inflow faces the common problem of "Not invented here" syndrome.

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Learning aquatic zumba is an example of tacit knowledge.

T

Localization is appealing, but expensive.

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Low barriers to entry into an industry make collusion between firms difficult.

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Low-level host-country nationals, especially those in developing countries, have little bargaining power when negotiating compensation

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MNEs that engage in a transnational strategy promote global learning.

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Management of MNE structure, learning, and innovation needs to take into account VRIO

T

Managerial human capital refers to some of the most valuable, rare, and hard-to-imitate skills and abilities acquired by top managers and directors.

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Managers involved in alliances require collaborative relationship skills.

T

Managers need to develop firm-specific capabilities to differentiate a firm on governance dimensions and corporate finance

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Many firms phase out the international division structure after their initial stage of overseas expansion

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Market-seeking firms go to countries that have a strong demand for their products and services.

T

Marketing and supply chain management activities can be evaluated based on the VRIO criteria.

T

Mergers and acquisitions represent the largest proportion of foreign direct investment (FDI) flows.

T

Microfinance emerged in response to the lack of financing for entrepreneurial opportunities in many developing countries.

T

Middle-aged expatriates are the most expensive, because the employer often has to provide a heavy allowance for children's education

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Minimizing an opponent's awareness, motivation, and capabilities is more likely to result in successful attacks.

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Most inpatriates are expected to eventually return to their home country to replace expatriates.

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Non-equity modes do not require the establishment of independent organizations overseas.

T

One hallmark of entrepreneurial growth is a dynamic, flexible, guerrilla strategy.

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One of the disadvantages of having strategic alliances is potential partner opportunism.

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One of the late-mover disadvantages is the establishment of entry barriers by the first-mover.

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One of the leading indicators of concentrated family ownership and control is the appointment of family members as board chairman, CEO, and other TMT members

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One way of combating opportunism in an alliance is to wall off critical capabilities.

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Owners, managers, and boards of directors are collectively known as the "tripod" of corporate governance.

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Patenting adds value to a firm's resources when engaging with rivals.

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Price elasticity refers to the changes in demand when price changes.

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Principal-agent conflicts result in agency costs.

T

Prisoners' dilemma is a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

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Ranging from entrepreneurial start-ups to multinational enterprises (MNEs), all firms need to raise capital.

T

Returning expatriates may experience a loss of status.

T

Shareholders purchase stock both for dividends and for the growth potential of the stock.

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Since the 1980s, American managers have become much more focused on stock prices, resulting in "shareholder capitalism."

T

Staffing, training and development, compensation and performance appraisal, and labor relations are main areas of HRM.

T

Strategic goals and cultural and institutional distances influence the location of foreign entries.

T

Strategic investments in an equity-based alliance involve one partner investing in another.

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The "best fit" school argues that a firm needs to search for the best external and internal fit.

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The "imitability" of an alliance is based on the trust and understanding between the partners.

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The "leverage" in the LLL framework focuses on an MNE's deep understanding of its customer needs and wants.

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The Anglo-American and the continental European-Japanese systems are the two primary corporate governance families in the world.

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The International Trade Administration investigates antidumping cases in the United States.

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The New York Stock Exchange (NYSE) and NASDAQ have a lot of non-US firms listed. This is an example of crosslisting.

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The United States has the world's oldest antitrust frameworks dating back to the 1890 Sherman Act.

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The alliance dissolution is a four-step process

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The antitrust policies in the United States make it difficult for incumbents to raise entry barriers for new entrants.

T

The best way to reduce expatriate turnover is a career development plan

T

The board of directors oversees and ratifies strategic decisions and evaluates, rewards, and, if necessary, penalizes top managers

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The board of directors' effectiveness in serving the control function stems from their independence, deterrence, and norms

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The defender strategy centers on local assets in areas in which MNEs are weak.

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The degree of tacitness is low in non-equity-based alliances.

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The global standardization strategy lacks local responsiveness.

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The growth of an entrepreneurial firm can be viewed as an attempt to more fully use currently underutilized resources and capabilities

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The home replication strategy duplicates home country-based competencies in foreign countries.

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The informal institution-based view that stresses the cognitive pillar is centered on the internalized taken-for-granted values and beliefs that guide firm behavior

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The integration-responsiveness framework allows managers to deal with the pressures for both global integration and local responsiveness.

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The international division structure is an organizational structure typically set up when a firm first engages in a home replication strategy.

T

The market for corporate control enables the "wholesale" removal of entrenched managers.

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The minimization of principal-agent conflicts through concentration of ownership and control, unfortunately, introduces more principal-principal conflicts

T

The more tacit the capabilities of a firm in an alliance, the greater the preference for equity involvement.

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The preemption of scarce resources is a first-mover advantage.

T

The price leader in a market possesses the capacity to punish.

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The relationship between strategy and structure is reciprocal.

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The resource-based view argues that foreign firms need to deploy overwhelming resources and capabilities to offset their liability of foreignness.

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The scale of entry refers to the amount of resources committed to entering a foreign market.

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The term "HRM" indicates that people are key resources of the firm to be actively managed and developed.

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The term "supply chain" is almost synonymous with "value chain," encompassing both inbound and outbound logistics.

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The vast majority of large firms throughout continental Europe, Asia, Latin America, and Africa feature concentrated family ownership and control.

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The word "entrepreneurs" mostly refers to founders and owners of new businesses or managers of existing firms.

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Total cost of ownership is often explicitly evaluated prior to purchase decisions

T

Whether entrepreneurship is facilitated or retarded significantly depends on formal institutions governing how entrepreneurs start up new firms.

T

. In state-owned enterprises, citizens have the rights to enjoy dividends generated from SOE

F

A build-operate-transfer (BOT) agreement is an equity mode of entry

F

A disadvantage of licensing is high development costs.

F

A firm that exports or imports, with or without FDI, is regarded as an MNE.

F

A letter of credit increases transaction costs by increasing transaction risks.

F

A low degree of market commonality suggests that if a firm attacks in one market, its rivals may engage in crossmarket retaliation.

F

A psychological contract is a written contract signed by the employer and the expatriation candidate.

F

A supply chain can't be changed after it is established.

F

A voice-based mechanism indicates that shareholders no longer have patience and are willing to "exit" by selling their shares.

F

Absorptive capacity refers to the informal benefits that individuals and organizations derive from their social structures and networks.

F

According to the stage model, firms will enter culturally distant countries for their first internationalization.

F

Accurately measuring the inflows and outflows of tacit and explicit knowledge is process oriented and easy to achieve.

F

Acquisition premium is the difference between the acquisition price and the market value of the acquiring firm.

F

Adaptability in supply chain management refers to the ability to quickly react to unexpected shifts in supply and demand

F

Agency relationship refers to the relationship between different shareholders.

F

Agility refers to the ability to change supply chain configurations in response to longer-term changes in the environment and technology

F

Alliances preclude acquisitions.

F

An MNE with transnational strategy typically staffs host-country nationals

F

An industry with heterogeneous products, in which rivals are forced to compete on price, is likely to lead to collusion

F

An industry without a price leader makes it easier for firms in that industry to form collusions.

F

An institution-based view suggests that firm-specific resources and capabilities largely determine entrepreneurial success and failure

F

Antitrust authorities provide easy approvals for both alliances and acquisitions with less intervention.

F

Antitrust laws are only applicable to foreign firms.

F

Becoming a licensee or franchisee of a foreign brand does not internationalize the licensee or franchisee firm.

F

Blue ocean strategy focuses on attacking core markets defended by rivals.

F

Collusion is more difficult between firms with high market commonality than firms with low market commonality.

F

Collusive price setting refers to price setting by monopolists or collusion parties at a level lower than the competitive level.

F

Compared to large firms, innovators at SMEs have limited ability to personally profit from their innovations because property rights usually belong to the corporation

F

Contractual alliances involve sharing of ownership.

F

Cost pressures often push MNEs to adapt locally.

F

Cross-border mergers are more common than acquisitions.

F

Direct exports are the sale of products made through export intermediaries.

F

Domestic transaction costs are qualitatively higher than international transaction costs.

F

During the Industrial Revolution, residual service activities was often the secondary sector for organized economic activities.

F

Enhancing agility often entails making a series of make-or-buy decisions.

F

Equity alliance relationships tend to have less direct control over joint activities on a continual basis than contractual relationships.

F

Equity modes tend to reflect relatively smaller commitments to overseas markets, whereas non-equity modes are indicative of relatively larger, harder-to-reverse commitments.

F

Equity-based alliances include co-marketing, research and development, contracts, turnkey products, strategic suppliers, and strategic distributors.

F

Ethnocentrism should be encouraged in international marketing.

F

European MNEs are more likely to appoint PCNs to lead subsidiaries.

F

Every alliance or acquisition decision is driven by imitation.

F

Firms dealing with global agnostics can leverage global brands and their relatively more standardized products and services

F

Firms with strong patents can challenge rivals for infringements, making mutual forbearance impossible.

F

Fitnit and Fittin' are firms engaging in explicit collusion when they indirectly coordinate actions by signaling their intention to reduce output and maintain pricing above competitive levels.

F

Flow of knowledge is limited in the home replication strategy.

F

For equity, the cost of capital is the interest.

F

Foreign direct investment is the only way in which SMEs can enter foreign markets.

F

Formal government policies regarding entry mode requirements are generally becoming more conservative.

F

Franchising is typically used in manufacturing industries.

F

From a corporate governance perspective, the market for corporate control complements product market competition and the market for private equity

F

From a resource-based view, explicit knowledge is strategically more important than tacit knowledge.

F

Global standardization or transnational strategies often necessitate an ethnocentric approach, resulting in a mix of HCNs, PCNs, and TCNs.

F

Greenfield operations are a type of wholly owned subsidiary that does not require any FDI.

F

Importance of direct organizational monitoring and control is low in equity-based alliances.

F

In a transnational strategy, the flow of knowledge is unidirectional.

F

In developed economies, a firm's key concern is to enhance competitiveness to fight off low-cost rivals from emerging economies.

F

In firms with separation of ownership and control, ownership is concentrated with a few owners.

F

In general, governments in developed economies impose more procedures to start a company than those in poorer countries.

F

In general, the failure rates of expatriates are very low

F

In the United States, unionized employees earn less than non-unionized employees.

F

In the context of achieving alignment, supply chain members of less standing exercise greater bargaining power.

F

In the context of acquisitions, synergistic motives destroy value while hubris and managerial motives add value

F

In the context of internal governance mechanisms, if accounting-based measures are adopted, stock prices are subject to too many forces for a manager to manipulate the price

F

In the context of market orientation vs. relationship orientation, relationship orientation capabilities contribute more toward performance.

F

In the context of segmentation based on customer categories, global citizens are always skeptical about whether global brands deliver high quality goods.

F

In the context of segmentation based on customer categories, global dreamers are most likely to lead antiglobalization demonstrations.

F

In the first half of the 20th century, the services sector was more important than manufacturing.

F

In the principal-agent relationship, agents are owners who delegate authority.

F

In the principal-agent relationship, principals are managers to whom authority is delegated.

F

In this age of globalization, customers don't discriminate against foreign firms

F

Indirect exports are the most basic mode of entry, capitalizing on economies of scale in production concentrated in the home country.

F

Industrial parks refer to the clustering of economic activities in certain locations.

F

Influence of formal institutions is low in both equity- and non-equity-based alliances.

F

Informal social capital hinders knowledge management.

F

Innovation-seeking firms often single out the most efficient locations featuring a combination of scale of economies and low cost factors.

F

Innovations flow only from the host countries to the home country in a transnational strategy.

F

Inside directors are more independent and can better safeguard shareholder interests.

F

Integrating individuals from two (parent and host) countries is a lot more complex than molding managers from a variety of nationalities.

F

It is impossible to internationalize without venturing abroad.

F

Knowledge retention faces the common problem of absorptive capacity.

F

Late movers face greater technological and market uncertainties.

F

Liability of foreignness is the inherent disadvantage firms experience in home countries.

F

Licensing and franchising are examples of equity modes of entry.

F

Licensing is a form of equity-based alliance.

F

Licensing is mostly used in the service industries.

F

Local responsiveness makes local customers and governments happy and helps decrease costs.

F

Location-specific advantages never change and only tend to grow.

F

MNEs dealing with global dreamers can market localized products and services under local brands.

F

MNEs hire only host-country nationals to work at a local subsidiary.

F

MNEs intend to eventually replace even top-level expatriates with TCNs, in part to save cost.

F

Making a rival aware of an attack makes it easier for the attacker to achieve its objective.

F

Market commonality refers to the degree of similarity between two rival's products.

F

Market for private equity is also known as the takeover market.

F

Market orientation is the effort to establish, maintain, and enhance relationships with customers.

F

Mutual forbearance refers to retaliatory attacks on a competitor's other markets if this competitor attacks a firm's original market.

F

Non-equity modes of entry include acquisitions and wholly-owned subsidiaries.

F

One of the advantages of being a first-mover is the opportunity to free ride on late-mover investments.

F

One of the disadvantages of the geographic area structure is that the country and regional managers are not given sufficient voice relative to the heads of the domestic divisions.

F

Owners, managers, and employees at large firms tend to be more innovative and take more risks than those at entrepreneurial firms.

F

PCNs generally stay in their positions longer and thus provide more continuity of management.

F

Performance appraisals are given only when an employee is not performing well.

F

Price leader is a firm that sets the highest price in the industry

F

Private equity utilizes the stock market, as opposed to the bond market, to discipline managers.

F

Proponents of the "best practices" school argue that firms should adopt "best practices" with respect to certain contexts

F

Repatriation, if not managed well, can be traumatic for expatriates and their families, but not for the firm

F

SMEs are the exclusive domain of entrepreneurship.

F

SMEs tend to be less entrepreneurial than large firms.

F

Social capital is the ability to recognize the value of new information, assimilate it, and apply it.

F

Standardized promotion helps project a globally consistent message, but is expensive.

F

Subsidiary initiatives are new opportunities pursued by a subsidiary based on headquarters' demands.

F

Sweden has the lowest venture capitalist investment in the world.

F

Tacit collusions typically lead to a cartel or trust.

F

The "O" in the VRIO framework indicates opportunity.

F

The American antitrust policy is pro-incumbent and pro-producer.

F

The advantage of hiring employees who are host-country nationals is that it facilitates control by headquarters.

F

The advantage of hiring employees who are parent-country nationals is that they bridge the gap between headquarters and the subsidiary.

F

The amount of dividend a firm pays its shareholders is always fixed.

F

The existence of multiple currencies and the resultant currency risks can be viewed as informal trade and investment barriers.

F

The first phase in an alliance dissolution is mediation by third parties.

F

The formal institution-based view that drives mergers and alliances is based on the normative and cognitive pillars.

F

The four Ps of marketing are: product, price, positioning, and place.

F

The geographic area structure is appropriate for a transnational strategy.

F

The global product division structure organizes the MNE according to different geographic areas.

F

The global standardization strategy, despite its complexity, is still the best option at being cost effective, locally responsive, and learning-driven.

F

The going rate approach is the most widely used method in expatriate compensation.

F

The initial compensation of an expatriate is determined by performance appraisal.

F

The institution-based view argues that among a number of firms governed by the same set of rules, some excel more than others because of differences in firm-specific capabilities that leverage advantage in corporate governance

F

The leading US union, the AFL-CIO, expanded into Mexico in the 1990s.

F

The lowest intensity of rivalry between competitors is the result of high resource similarity and low market commonality.

F

The majority of an MNE's employees are typically parent-country nationals.

F

The non-equity mode of indirect exports has better control over distribution than direct exports.

F

The resource-based view suggests that firms need to take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries.

F

The staffing choices in an MNE are always random.

F

The strategy that centers on a firm expanding overseas is called the dodger strategy.

F

The terms knowledge management and information management can be used interchangeably.

F

The three potential motives for alliances are synergistic, hubristic, and managerial motives.

F

The transnational strategy is usually the easiest strategy for an MNE to implement and the first one adopted when the firm ventures abroad.

F

The triple As underpinning supply chain management are agility, adaptability, and aggregation.

F

To reach the top at most MNEs today, international experience is considered optional.

F

Tunneling is a legal method of solving principal-principal conflicts.

F

Turnkey projects cannot be established without FDI.

F

Voice-based governance mechanisms are external mechanisms.

F

When MNEs adopt a localization strategy, the interdependence on knowledge management is high

F

Within a single product category, product attributes are standardized.

F

Cultural distance is the difference between two cultures along some identifiable dimensions

T

Cultural values and norms are examples of informal institutions.

T

. Other than families, the state is another major owner of firms around the world.

T

. The global account structure and solutions-based structure are two of the primary customer-focused dimensions of an MNE.

T

A firm can internationalize by becoming a supplier for a foreign firm that is doing business in the domestic market

T

A global matrix structure alleviates the disadvantages associated with both geographic area and global product division structures.

T

A joint venture (JV) is a form of equity-based alliance.

T

A localization strategy is effective when differences among national and regional markets are clear, and pressures for cost reductions are low

T

A real option enables the investor to buy an option for a small initial investment, hold it until a decision point arrives, and then exercise or abandon the option.

T

According to the economic theory of supply and demand, a drop in price generates stronger demand.

T

According to the resource-based view, holding institutions constant, firms that develop the best capabilities in marketing and supply chain management will emerge as winners.

T

According to the resource-based view, the entrepreneurial resources must have inimitable resources to be successful.

T

Agglomeration explains why certain cities and regions can attract businesses even in the absence of obvious geographic advantages.

T

Agility focuses on flexibility that can overcome short-term fluctuation in the supply chain.

T

Alignment refers to the grouping of interests of various players involved in the supply chain.

T

Alliances have emerged as great instruments of real options because of their flexibility to sequentially scale up or scale down investment.

T

Alliances permit firms to sequentially increase their investment should they decide to pursue acquisitions.

T

Although the word "product" originally referred to a physical product, its modern use has included services.

T

An acquisition is an example of a wholly owned subsidiary.

T

An advantage of joint ventures is the shared costs, risks, and profits.

T

An ethnocentric approach emphasizes the norms and practices of the parent company and the parent country of the MNE

T

Antitrust policies aim to balance efficiency and fairness in trade.

T

As a key element in achieving alignment, trust stems from perceived fairness and justice from all supply chain members.

T

As one of the Ps in the marketing mix, place is also often referred to as the distribution channel.

T

Both formal and informal institutional constraints, as rules of the game, affect entrepreneurship.

T

Brazil has the lowest level of informal investment in the world.

T

Cartel is an output- and price-fixing entity involving multiple competitors.

T

Cartels are often labeled as anticompetitive and outlawed by antitrust laws.

T

Co-marketing has the ability to reach more customers but with limited control and coordination.

T

Combining resource similarity and market commonality helps yield a framework of competitor analysis for any pair of rivals

T

Companies with diffused ownership have a separation of ownership and control.

T

Competitive dynamics are the actions and responses undertaken by competing firms.

T

Cross-shareholding is based on financial interest between the firms.

T


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