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small scale entries

-less costly -focus on organizational learning -limit downside risk -lack of strong commitment may lead to difficulties and market share and capturing advantages

60) The ________ promotes free trade among Bolivia, Chile, Colombia, Ecuador, and Peru. A) Mercosur Accord B) Andean Community C) Central America Common Market D) Southern Cone Customs Union

Answer: B

62) Ernest, a federal government employee, attended a session of the final GATT Round. Ernest attended the ________ Round. A) Kennedy B) Uruguay C) Geneva D) Tokyo

Answer: B

7) What organization replaced the GATT? A) World Bank B) World Trade Organization C) International Trade Commission D) NAFTA

Answer: B

10) The cumulative effect of GATT in developed countries was a ________. A) substantial reduction in tariffs B) small increase in tariffs C) substantial increase in tariffs D) reduction in world trade

Answer: A

11) Which of the following is the result of GATT? A) dramatic growth in world trade B) slight increase in world trade C) creation of the EU D) ITO formation

Answer: A

Indirect exports refer to

exporting through domestically based export intermediaries.

15) Under GATT, tariffs fell from about ________ in 1948 to about ________ in 2005. A) 20 percent, 4 percent B) 28 percent, 5 percent C) 40 percent, 3 percent D) 60 percent, 10 percent

Answer: C

A high degree of _____ suggests that if a firm attacks in one market, its rivals may engage in cross-market retaliation. a.explicit collusion b.predatory pricing c.multimarket competition d.market commonality

market commonality

Intermediaries, for example

may repackage the products under their own brand and insist on monopolizing the communication with overseas customers. These are indirect exports' major drawbacks.

The wind energy company Cloud Sail and the solar energy company Sun Burst recently formed a new legal entity called Cloud Burst. This action is known as a _____ between the two companies.

merge

joint venture types

minority, 50/50 JVs, majority JVs

Leader

motivating and coaching individuals and teams, building and maintaining corporate culture

58) Which country initiated the Caribbean Basin Initiative? A) Venezuela B) the United States C) the Caribbean islands D) Bermuda

Answer: B

Global Product Structure

1. Divides worldwide operations according to a company's product areas. Suitable when a firm has a diverse set of products. 2. Because the primary focus is on the product, domestic and international managers for each product division must coordinate their activities so they do not conflict.

European Monetary System

1979, to stabilize exchange rates. It was ended in 1999 when the EU adopted a single currency.

joint venture (JV)

A new corporate entity created and jointly owned by two or more parent companies. hree principal forms: minority JV (less than 50% equity), 50/50 JV (equal equity), and majority JV (more than 50% equity)

Build-operate-transfer (BOT) agreement

A nonequity entry mode used to build a longer-term presence by first constructing and then operating a facility for a period of time before transferring operations to a domestic agency or firm

build-operate-transfer (BOT) agreement

A nonequity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm.

Turnkey project

A project in which clients pay contractors to design and construct new facilities and train personnel

Home replication strategy

A strategy that emphasizes duplicating home country based competencies in foreign countries.

Transnational strategy

A strategy that endeavors to be simultaneously cost efficient, locally responsive, and learning driven around the world.

Built-In Flexibility

Allowed devaluation only in extreme circumstances called fundamental disequilibrium—when a trade deficit causes a permanent negative shift in the balance of payments.

When screening potential markets and sites, there are four steps. 1) identify basic appeal 2) assess the national business environment 3) measure market or site potential. 4) select the market for site. We now define 4)select the market for site. Of the two methods the first is field trips and competitor analysis what is field trips?

Allows managers to see what they've seen on paper in real life. 2) competitor analysis:

With the methods of conducting primary International Research there are four components tradeshows and trades missions, interviews and focus groups's, surveys, and environmental scanning Second our interviews and focus groups.

Although industry data are useful to companies early in the screening process for potential markets, subsequent steps must assess buyers emotions attitudes and cultural beliefs.

Integration-responsiveness framework

An MNE management framework for simultaneously dealing with the pressures for both global integration and local responsiveness.

JVs, such as Shanghai Volkswagen, have three advantages

An MNE shares costs, risks, and profits with a local partner, so the MNE possesses a certain degree of control but limits risk exposure.The MNE gains access to knowledge about the host country, and the local firm, in turn, benefits from the MNE's technology, capital, and management. JVs may be politically more acceptable in host countries.

Center of excellence

An MNE subsidiary explicitly recognized as a source of important capabilities that can be leveraged by and/or disseminated to other subsidiaries.

Reciprocity

An informal agreement based on mutual exchange of gratifications

reciprocity

An informal agreement based on mutual exchange of gratifications.

35) The 12 member countries became known as the European Union when the ________ was signed in 1993. A) Treaty of Rome B) Treaty of Geneva C) Genoa Agreement D) Treaty of Maastricht

Answer: D Diff: 2 Skill: Concept Objective: 3

24) The integration of the 13 separate colonies operating under separate Articles of Confederation into a new country, the United States of America, is an example of ________. A) free trade area B) customs union C) common market D) economic union E) political union

Answer: E

When conducting International Research there are two factors the first are difficulties of conducting International Research. what are the three main difficulties associated?

Availability of data, comparability of data, 3) cultural differences

A(n) _____ is a non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm. a.BOT agreement b.R&D contract c.JV d.WOS

BOT agreement

Brazil, Russia, India, China

Bric Nations

In India, activists singled out both

Coca-Cola and Pepsi products as containing pesticides higher than permitted levels, and did not test any Indian soft drinks that might contain even higher pesticide levels.

"People of the same trade seldom meet together, even for merriment and diversion, but their conversation often ends in a conspiracy against the public." This quote from Adam Smith is referring to which of the following business relationship terms? a.Combination b.Collaboration c.Collusion d.Cooperation

Collusion

global mindset

Combines an openness to and an awareness of diversity across markets and cultures with a propensity and ability to synthesize across this diversity.

Sources of secondary international data come from five sources. First international organization, government agencies, industry and trade associations, service organizations and Internet. First international organizations, government agencies, industry and trade associations, Service organizations and now Internet.

Companies engaged in international business will quickly realizing the wealth secondary research information available on the Internet and World Wide Web

Companies trying to break into new markets doing such as some sessions in order to make contact with others in their field

SKILLS that are required for GLOBAL LEADERS

Competency in interacting with local political interests

Cross-functional teams

Composed of employees who work at similar levels in different functional departments. Such teams can help improve interdepartmental coordination and help boost product quality.

When screening potential markets and sites, there are four steps. The second step assesses the national business environment. The two domestic forces are cultural forces, political forces and now economic and financial forces.

Currency and liquidity problems pose special challenges for international companies ex bad current see fluctuation.

From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm heterogeneity. _____ virtually guarantees that there will be persistent heterogeneity in the solutions generated.

Decentralized R&D work performed by different teams around the world

In the context of acquisitions, which of the following is a resource-based issue faced by synergistic motives? a.Herd behavior b.Enhancement of market power and scale economies c.Self-interested actions d.Chasing fads of M&As

Enhancement of market power and scale economies

An MNE enters foreign markets via equity modes through foreign direct investment (FDI) which is an example of

Equity mode

In the context of real options, which of the following is a disadvantage of entering into alliances?

Firms are most likely to choose the wrong partners.

COMPANY ANALYSIS

Firms must determine what products to produce, where to produce them, and where and how to market them. Whether a site for operations or potential market, each international location has a rich mixture of cultural, political, legal, and economic traditions and processes.

Screening Potential Markets and Sites Two important issues concern managers during the market- and site- screening process.

First, they want to keep search costs as low as possible. Second, they want to examine every potential market and every possible location.

SKILLS that are required for GLOBAL LEADERS

Global strategic thinking

International Monetary Fund

IMF was created to regulate fixed exchange rates and enforce the rules of the international monetary system.

Smithsonian Agreement

In 1971, the U.S. government held less than one-fourth of the amount of gold needed to redeem all U.S. dollars in circulation; restructure and strengthen the international monetary system: (1) lowered the value of the dollar in terms of gold to $38/oz. of gold, (2) required that other countries increase the value of their currencies against the dollar, and (3) increased the 1 percent floatation band to 2.25 percent

Which of the following statements is true of a geographic area structure?

It encourages the fragmentation of the multinational enterprises into fiefdoms.

Which of the following is true of a localization strategy?

It is effective when pressures for cost reductions are low.

Which of the following statements is true of a global product division structure?

It is highly responsive to cost reduction pressures.

Which of the following is an advantage of adopting a home replication strategy?

It is relatively easy to implement.

It is the process of obtaining information that already exists within the company or that can be obtained from outside sources.

Which of the following is a disadvantage of adopting a home replication strategy?

It often lacks local responsiveness.

Which of the following is a disadvantage of a global product division structure?

It results in the suffering of local responsiveness.

2 resources in determining availibility

Labor and financing.

late mover adv example

Late movers can free-ride on first movers' pioneering investments, not as much technological and market uncertainties, As incumbents, first movers may be locked into a given set of fixed assets or reluctant to cannibalize existing product lines in favor of new ones. can take advantage of the inflexibility of first movers by leapfrogging them.

nonequity CONTRACTUAL AGREEMENTS

Licesing/franchising, turnkey projects, r and d projects, co-marketing

_____ means reacting to different consumer preferences and host-country demands.

Local responsiveness

equity modes

Mode of entry (JV and WOS) that indicates a relatively larger, harder-to-reverse commitment.

Review the different types of Strategies.

Multinational strategy Global strategy Growth strategy Retrenchment strategy Stability strategy Combination strategy Low cost leadership strategy Differentiation strategy Focus strategy

To develop the skills necessary to be a good global leader

REQUIRES MORE THAN A UNIVERSITY DEGREE WHERE COURSES WERE TAKEN IN "INTERNATIONAL BUSINESS

Department-Level Strategies

Reaching corporate- and business-level objectives depends on effective departmental strategies that focus on activities that transform resources into products; rely on capabilities—primary and support activities that create value for customers.

Research in which an interview asks current or potential buyers to answer written or verbal questions in order to obtain facts, opinions, or attitudes is called a survey. For example if sauce and he wants to learn about consumer attitudes towards its latest women's running shoe, it could ask a sample of women about their attitudes towards the shoe. Written surveys can also be hampered by other problems some countries postal services are unreliable to the point that parcels are delivered weeks or months after arriving at post offices.

What is a survey?

Research in which an interviewer asks current or potential buyers to answer written or verbal questions in order to obtain facts, opinions, or attitudes.

What is a consumer panel?

Research in which people record and personal diaries information on their attitudes aviators or purchasing habits.

Unfavorable movements in exchange rates can be costly for business, so managers prefer that exchange rates be what?.

Stable exchange rates improve the accuracy of financial planning, including cash flow forecasts. Predictable exchange rates reduce the likelihood that companies will be caught off-guard by sudden and unexpected rate changes. This reduces the need for costly insurance (usually by currency hedging) against possible adverse movements in exchange rates.

At which stage in the formation of alliance must a firm decide whether to take a contract or an equity approach? a.Stage 2 b.Stage 4 c.Stage 1 d.Stage 3

Stage 2

WHAT FACTORS DETERMINE EXCHANGE RATES?

To understand what determines rates, must know: (1) the law of one price and (2) purchasing power parity. Each tells the level at which an exchange rate should be.

Implications for Action

Understand the rules of the game—both formal and informal—governing competition in foreign markets. Develop overwhelming resources and capabilities to offset the liability of foreignness. Match efforts in market entry and geographic diversification with strategic goals.

What's are focus groups?

Unstructured but in-depth interview of a small group of individuals by moderator in order to learn the groups attitude about a company or its product

Technical analysis

Using statistical models and past data trends, analysts estimate the conditions prevailing during changes in exchange rates and estimate the timing, magnitude, and direction of future changes.

Pre-acquisition analysis often focuses on strategic fit, which is the effective matching of ____ strategic capabilities. a.relational b.competitive c.collaborative d.complementary

complementary

Debate 4- Contractual versus Noncontractual Approaches of Entry

When a contractual approach is infeasible, a noncontractual approach may emerge.

Which of the following is a disadvantage of a global product division structure?

Which of the following is an effect of adopting a local responsiveness strategy?

A thrust on rivals' core markets likely to result in a bloody price war is referred to as _____. a.a red ocean b.cross-market retaliation c.a blue ocean d.mutual forbearance

a red ocean

exchange rate mechanism (ERM)

a. limited fluctuations of EU member currencies within a trading range (or target zone). b. ERM II introduced in 1999 to link the euro to the currencies of nations applying for membership in the EU.

Interdependence

although dispersed geographically, the different units of the company are systematically linked to each other rather than being isolated and are increasingly dependent on external organizations

Laws that make it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals are called _____ laws. a.collusion b.antitrust c.antidumping d.anticartel

antidumping

There isn't a universal one

approach to selecting and developing GLOBAL LEADERS

Which of the following is a first-mover advantage?

avoid clashing with dominant firms in their home market

location specific advantages

benefits from features specific to a place

Corporate-Level Strategies

by identifying the markets and industries in which to operate. Overall objectives for different business units are developed and the role of each unit in reaching those objectives is determined.

Retrenchment strategy

by identifying the markets and industries in which to operate. Overall objectives for different business units are developed and the role of each unit in reaching those objectives is determined.

The price leader's _____ is defined as sufficient resources possessed to deter and combat defection. a.capacity to collude b.capacity to punish c.capacity to imitate d.capacity to compete

capacity to punish

Informal institutions affect the formation of alliances and acquisitions by:

centering on collective norms, supported by a normative pillar.

The two sets of pressures that multinational enterprises (MNEs) confront are _____.

cost reduction and local responsiveness

In the context of equity-based alliances, _____ involves both firms investing in each other. a.acquisition premium b.strategic investment c.strategic fit d.cross-shareholding

cross-shareholding

What does the Triad region include?

d. North America, Asia, and Europe

global managers

definitely appreciate why certain things cannot be done a certain way in a different culture, but are incisive

cultural distance

difference between two cultures along identifiable dimensions

nonequity EXPORT TYPES-

direct exports, indirect exports, others

The act of investigating prior to signing contracts is called _____. a.hubristic motive b.relational capability c.due diligence d.strategic fit

due diligence

Efficiency-seeking firms go to countries that have _____. a.an abundance of natural resources and related transport and communication infrastructure b.a strong demand for their products and services c.world-class innovations (innovative individuals, firms, and universities) d.economies of scale and abundance of low-cost factors

economies of scale and abundance of low-cost factors

strategic goals of efficiency seeking

economy is a scale and abundance and low-cost factors

Co-marketing refers to _____. a.outsourcing agreements in marketing between firms b.a project in which clients pay contractors to market and distribute the product/service c.efforts among a number of firms to jointly market their products and services d.selling the rights to intellectual property to another firm for a royalty fee

efforts among a number of firms to jointly market their products and services

Leverage refers to

emerging multinationals' ability to take advantage of their unique resources and capabilities.

Rues and West Bros. manufactures firearms. Since it lacks the skills and high-end technology needed to manufacture silencers for its firearms, it enters into an alliance with Porben Inc., a company that specializes in manufacturing silencers. In order to ensure the optimal utilization of Porben's technological capabilities, Rues and West Bros. is most likely to follow the _____ approach.

equity

Widget Corp., a manufacturing firm in Lithuania, exports its manufactured tools to Wales. To protect its domestic firms, the Government of Wales imposes a 20 percent tax on the tools imported from Widget Corp. Therefore, Widget Corp. is subject to:

formal institutional frameworks erected by the host-country government.

World Bank

fund national economic development. a. immediate purpose was to finance European reconstruction after the Second World War. It later shifted its focus to the general financial needs of developing countries. b. finances economic development projects in Africa, South America, and Southeast Asia, and offers funds to countries unable to obtain capital for projects considered too risky. It often undertakes projects to develop transportation networks, power facilities, and agricultural and educational programs.

Market-seeking firms

go to countries that have a strong demand for their products and services.

degree of difference in the level of demands on skills and their application in international

great

Wholly owned subsidiaries are

greenfields, acquisitions, other?

The party who begins the process of ending an alliance is labeled the _____.

initiator

two components of global mindset

intellectual intelligence and global emotional intelligence

Gold standard

international monetary system in which nations linked the value of their paper currencies to a specific value of gold. The gold standard operated from the early 1700s until 1939

Equity (FDI) modes

joint ventures, whole owned subsidiaries

Small-scale entries are

less costly.

overall liability of foreignness

liability of nonnative, liability of newness, liability of emerginess

nonequity modes involves the following types of contractual agreement

licensing/franchising, turnkey projects,research-and-development contracts, and co-marketing.

In the LLL framework, _____ refers to an emerging MNE's ability to identify and bridge gaps in its market. a.learning b.leverage c.linkage d.location

linkage

(LLL)

linkage, leverage, and learning, framework advocated by John Mathews. Linkage refers to emerging MNEs' ability to identify and bridge gaps.These advantages are typically associated with multinationals from emerging economies.uld most MNEs further "globalize" (expanding geographic scope) or "deglobalize"

_____ means reacting to different consumer preferences and host-country demands.

local responsiveness

Centralized decision making

occurs at a high level in one location such as headquarters; a. helps coordinate international subsidiaries; important when one subsidiary's output is another's input. b. Companies maintain strong central control over financial resources by channeling all subsidiary profits back to the parent for redistribution to subsidiaries. c. Other companies centrally design policies, procedures, and standards to stimulate a single global organizational culture. .

Decentralized decision making

occurs at lower levels, such as in international subsidiaries; a. beneficial when fast changing business environments require local responsiveness. b. Because subsidiary managers are in contact with local culture, politics, laws, and economies, decentralized decisions result in products suited to the needs and preferences of local buyers. c. Delayed response and misinterpreted events result in lost orders, stalled production, and weakened competitiveness. d. Participative management and accountability

Efficient Market View

prices of financial instruments quickly reflect new public information made available to traders; says prices of financial instruments reflect all publicly available information at any given time. Forward exchange rates are the best possible predictors of exchange rates and worthless to seek out information that may affect future rates

What is the impact on purchasing power when growing demand for products outstrips a stagnant supply?

prices will rise and devour any increase in the amount of money the consumers have to spend.

The American antitrust policy is considered to be _____. a.pro-incumbent b.pro-collusion c.pro-consumer d.pro-producer

pro-consumer

A _____ antirust policy would protect established firms that have already invested and nurtured an industry from new entrants. a.pro-incumbent b.pro-competition c.pro-consumer d.pro-imitability

pro-incumbent

First-mover advantage examples

proprietary technology, preemptive investments, erect high switching costs due to brand loyalty, Intense domestic competition may drive some nondominant firms abroad to avoid clashing with dominant firms head-on in their home market, build relationships with key stakeholders such as customers and governments.

nonequity-based contractual agreements and equity-based JVs can be broadly considered as

strategic alliances

Two sets of considerations drive the location of foreign entries

strategic goals and, cultural and institutional distances.

In the context of the motives for acquisition, from a resource-based view, the most important _____ rationale is to leverage superior resources. a.managerial b.collusive c.hubristic d.synergistic

synergistic

Over a period of ten years, Laelle Corp., a technological firm, has acquired 15 companies. All the acquired companies were high-end technology providers. The company's intention was to leverage superior resources through these acquisitions. In this scenario, Laelle Corp.'s acquisitions are driven by a(n) _____.

synergistic motive

Mutual forbearance is a type of _____. a.tacit collusion b.explicit collusion c.multimarket competition d.cross-market retaliation

tacit collusion

Change agent

taking action, developing and implementing change plans for the company

An advantage of joint ventures is _____. a.the ease of global coordination b.the complete equity and operational control c.the access to partners' assets d.the protection of know-how

the access to partners' assets

Ambiguity

the challenge of dealing with information that lacks clarity and incorporates both quantitative and qualitative dimensions, hindering the understanding of cause-and-effect relationships

the leader innovates

the manager administrates

The leader inspires

the manager controls

The leader has a long-range perspective

the manager has a short-term perspective

The leader develops

the manager maintains

Quality-improvement teams

the most common type of self-managed team in many manufacturing companies because they reduce production waste and cut costs.

Learning is probably

the most unusual and refreshing aspect among the motives behind the internationalization push of many emerging multinationals

The country-of-origin effect refers to _____. a.the inherent advantages domestic firms experience in their home countries b.the inherent disadvantages foreign firms experience in home countries c.only the negative perception of firms and products from a certain country d.the positive or negative perception of firms and products from a certain country

the positive or negative perception of firms and products from a certain country

international Fisher effect

the principle that a difference in nominal interest rates supported by two countries' currencies will cause an equal but opposite change in their spot exchange rates; Because real interest rates are theoretically equal across countries, any difference in interest rates in two countries is due to inflation.

In the context of acquisition, the only identifiable group of winners is:

the shareholders of target firms.

Natural resource-seeking firms have compelling reasons to enter culturally and institutionally distant countries. This is a counter example of _____. a.the equity mode of entry b.large-scale entry c.the stage model d.the country-of-origin effect

the stage model

Decision maker

troubleshooting and making decisions often

A hallmark of transnational multinational enterprises is a high degree of interdependence and extensive and bi-directional flows of knowledge.

true

right stuff model

what represents what is bestfor a global leader will vary among organizations

Plaza Accord

(1985) was an agreement among the largest industrialized economies known as the G5 (Britain, France, Germany, Japan, and the United States) to act together in forcing down the value of the U.S. dollar.

Louvre Accord

(1987) was an agreement among the G7 nations (the G5 plus Italy and Canada) that affirmed the dollar was appropriately valued and that they would intervene in currency markets to maintain its current market value.

Nonequity modes A mode of entry

(exports and contractual agreements) that tends to reflect relatively smaller commitments to overseas markets.

Describe the main methods used to conduct primary international research.

first mover advantages

- Proprietary, technological leadership - Preemption of scarce resources - Establishment of entry barriers for late entrants - Avoidance of clash with dominant firms at home - Relationships and connections with key stakeholders

Step 1: Identify Basic Appeal The first step in identifying potential markets is to Example: No one would market snow boards in Sri Lanka because there is no snow fall. Example: Islam countries ban importation of alcohol.

-Determine basic demand .suitable climate .materials labor and financint .bans -Determine availability of resources .Many companies choose to relocate to countries where workers' wages are lower than they are in the home country.

Step 2: Assess the National Business Environment

-Language, attitudes, religious beliefs, tradition, work ethic Cultural elements like Coca Cola having to rework the image they were identified with in China Cough syrup. Nokia is able to market at any of its locations world wide within 24 hrs. -Gov regulation, Gov bureaucracy,

Large scale entry

-demonstrate strategic commitment to certain markets -deter potential entrants -hard to reverse strategic commitments -limits strategic flexibility and possible huge losses

two types of non-equity modes

-exports -contractual agreements

types of equity (FDI) modes

-joint ventures (JV) -wholly owned subsidiaries

late-mover advantage

-opportunity to free ride on first mover investments -resolution of tech and market uncertainty -first movers difficulty to adapt to market changes

Identify the main sources of secondary international data and explain their usefulness.

Describe the three primary difficulties of conducting international market research.

...

When conducting International Research you deal with difficulties of conducting International Research, sources of secondary international data.

...

When screening potential markets and sites, there are four steps. 1) identify basic appeal 2) assess the national business environment 3) measure market or site potential. 4) select the market for site. We now measure 3)market or site potential with three factors that influence potential suitability of markets and sites for operations. The first factor is measuring market potential and a special tool for analyzing emerging markets is industrialized markets now we focus on emerging markets. There are eight variables commonly included in market analysis

1) market size 2) market growth rate 3) market intensity 4) market consumption capacity 5) commercial infrastructure 6) economic freedom 7) market receptivity 8) Country risk

1)Cost of transporting materials and goods ex US HWY gridlock. 2) Country image. "made in China" effects of the view of the product.

Despite The availability of resources certain sites may be unable to supply a given company with the level of resources needs what are the factors that further influence the potential suitability of markets and sites for operations?

1)Industrialized markets 2)emerging markets 3) measuring site potential

What are two cultural elements and cultural forces to assess the national business environment.

1)What kinds of products are sold like the Coca-Cola example. China thinks of Coke tasting like medicine. 2) selection based on target market

International Division Structure

1. An international division with its own manager keeps domestic and international activities separate. 2. Concentrates international expertise in one division where the manager becomes a specialist in foreign exchange, exporting, and so on. Firm reduces costs, increases efficiency, and prevents international activities from disrupting home operations. 3. Potential problems with this structure are: (1) poor coordination between the international division and the rest of the company can hurt performance; and (2) destructive rivalries may arise between different country managers within the division.

Global Matrix Structure

1. Brings together geographic area managers and product area managers in joint decision making. 2. Bringing specialists together creates a team-type organization. Increases local responsiveness, reduces costs, coordinates worldwide operations, and can increase coordination while improving agility and local responsiveness. 3. Two major shortcomings: (1) The matrix form can be quite cumbersome as the need for complex coordination tends to make decision making time consuming and slows the reaction time. (2) Individual responsibility and accountability are blurred in the matrix organization structure; because of shared responsibility, managers may attribute poor performance to the other manager.

Law of One Price

1. Exchange rates do not guarantee or stabilize the buying power of a currency; purchasing power fluctuates. 2. The Economist publishes its "Big Mac Index" using the law of one price to determine the exchange rate between the U.S. dollar and other currencies. Fair predictor of the "direction" rates should move.

Screening Potential Markets and Sites To accomplish these two goals, managers can segment the screening of markets and sites into the following four- step process

1. Identify basic appeal. 2. Assess the national business environment. 3. Measure market or site potential. 4. Select the market or site.

International Area Structure

1. Organizes a company's global operations into countries or regions. The more countries in which a company operates, the greater the likelihood it will organize into regions, not countries. 2. decision making decentralized to country or regional managers. 3. Useful structure when there are vast cultural, political, or economic differences among nations or regions. 4. But because units act independently, resources may overlap, and cross-fertilization of knowledge across units can be limited

Future of the International Monetary System

1. Recurring crises are raising calls for a new system designed to meet the challenges of a global economy. 2. Revision of the IMF and its policy prescriptions are likely; transparency on the part of the IMF is being increased to instill greater accountability. 3. Ways must be found to integrate international financial markets to manage risks. The private sector must become involved in the prevention and resolution of financial crises.

Desire for Stability and Predictability

1. Stability makes for accurate financial planning and cash flow forecasts. 2. Predictability reduces odds that a company will be caught off-guard by unexpected rate changes. Reduces the need for costly insurance (currency hedging) against possible adverse exchange rates.

inefficient market view

1. prices of financial instruments do not reflect all publicly available information. Proponents believe that companies can search for information to improve forecasting. 2. This view is more compelling considering private information (e.g., if a currency trader holds privileged information, the trader can act on this information to make a profit).

Bretton Woods Agreement

1944 accord among nations to create a new international monetary system based on the value of the U.S. dollar. 1. Fixed Exchange Rates 2. Built-In Flexibility 3. World Bank 4. International Monetary Fund

Brady Plan

1989; called for large-scale reduction of poor nations' debt, exchange of high-interest loans for low-interest loans, and debt instruments tradable on world financial markets.

When screening potential markets and sites, there are four steps. The second step assesses the national business environment. The two domestic forces are cultural forces and now political forces. There are three political and legal forces the second is government bureaucracy.

A bloated and cumbersome system of obtaining approvals and licenses from government agencies can make it less appealing

Worldwide (or global) mandate

A charter to be responsible for one MNE function throughout the world.

Business-Level Strategies

A company may need only one strategy for its one line of business or others may need many strategies; a general competitive strategy in the marketplace.

Linkage, leverage, and learning (LLL) advantages

A firm's quest of linkage (L) advantages, leverage (L) advantages, and learning (L) advantages, which are typically associated with multinationals from emerging economies

Entry mode

A form of operation that a firm employs to enter foreign markets

What do we call the arrangement whereby a nation lets its currency float within a margin around the value of another more stable currency?

A free float system

An exchange rate system in which currencies float against one another with governments intervening to stabilize currencies at target rates is called what?

A managed float system

Nonequity mode

A mode of entry (exports and contractual agreements) that reflects relatively smaller commitments to overseas markets

Equity mode

A mode of entry (joint ventures and wholly owned subsidiaries) that indicates relatively larger commitments to overseas markets

Joint venture (JV)

A new corporate entity created and jointly owned by two or more parent companies

Localization (or multidomestic) strategy

A strategy that focuses on a number of foreign countries/regions, each of which is regarded as a standalone local (domestic) market worthy of significant attention and adaptation.

Global standardization strategy

A strategy that relies on the development and distribution of standardized products worldwide to reap the maximum benefits from low-cost advantages.

Wholly owned subsidiary (WOS)

A subsidiary located in a foreign country that is entirely owned by the parent multinational

wholly owned subsidiary (WOS)

A subsidiary located in a foreign country that is entirely owned by the parent multinational.

Structure and flexibility

A. Organizational structure is not permanent, but is modified to suit changes within a company and in its external environment. b. Changes in strategy and in the business environment force modifications in organizational structure; some countries are characterized by rapidly shifting business environments.

Value-chain analysis involves separating a company's activities into what two categories of activities?

A: Value-chain analysis is the process of dividing a company's activities into primary and support activities and identifying those that create value for customers. Primary activities include inbound and outbound logistics, manufacturing (or operations), marketing and sales, and customer service. Support activities include firm infrastructure, human resource management, technology development, and procurement. Each primary and support activity is a source of strength or weakness for a company.

SKILLS that are required for GLOBAL LEADERS

Ability to establish business in new markets

SKILLS that are required for GLOBAL LEADERS

Adaptability across cultures

An exhibition at which members of an industry or group of industry showcase the latest products standing activities of rivals and examine recent trends and opportunities are called tradeshows

1111111111111111111111111111111111111111What type of organizational structure tends to concentrate all international expertise in one division?

An international division structure separates domestic from international business activities by creating a separate international division with its own manager.

Global matrix

An organizational structure often used to alleviate the disadvantages associated with both geographic area and global product division structures, particularly when adopting a transnational strategy.

Global product division structure

An organizational structure that assigns global responsibilities to each product division.

International division

An organizational structure that is typically set up when a firm initially expands abroad, often engaging in a home replication strategy.

Geographic area structure

An organizational structure that organizes the MNE according to different countries and regions.

Research-and-development (R&D) contract

An outsourcing agreement in R&D between firms

Research-and-development (R&D) contracts

An outsourcing agreement in R&D between firms. hard to negotiate entrace cultivate competitors may lose core r and d in long run

16) The U.S., a GATT member, lowers its tariffs to Country X, a developing country, but requires the normal tariff for all other countries. The U.S. is most likely using a ________. A) generalized system of preferences B) normal trade relations system C) staggered system of taxation D) cumulative tariff system

Answer: A

17) Both GATT and the WTO seek to promote ________. A) trade in goods B) trade in services C) intellectual property protection D) trade-related investment

Answer: A

19) What do many labor unions believe to be missing in the WTO's objectives? A) job security B) technical training C) increased service trade D) foreign agricultural subsidies

Answer: A

20) A(n) ________ eliminates trade barriers among member countries. A) free trade area B) customs union C) common market D) economic union

Answer: A

29) An economic union ________. A) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, abolish restrictions on the movement of the factors of production, and coordinate economic policies B) eliminates trade barriers among member countries C) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production D) involves the elimination of internal trade barriers among member countries and the adoption of common external trade policies toward nonmembers

Answer: A

30) A political union ________. A) is complete political and economic integration of two or more countries B) eliminates trade barriers among member countries and reduces trade deflection C) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production D) involves the elimination of internal trade barriers among member countries and the adoption of common external trade policies toward nonmembers

Answer: A

31) ________ is an example of a free trade agreement. A) NAFTA B) Mercosur C) European Union D) APEC

Answer: A

34) Which of the following signed the Treaty of Rome? A) France B) East Germany C) the United Kingdom D) Spain

Answer: A

38) Which EU organization is considered the most powerful? A) Council of the European Union B) European Commission C) European Parliament D) European Court of Justice

Answer: A

39) Which round created the WTO? A) the Uruguay Round B) the Doha Round C) the Geneva Round D) the Tokyo Round

Answer: A

42) The EU uses a(n) ________ in areas such as health, consumer policy, and free movement of workers. A) co-decision procedure B) unanimous vote C) qualified majority D) consensus

Answer: A

47) Which organization is responsible for controlling the Eurozone's money supply, interest rates, and inflation? A) European Central Bank B) European Commission C) European Parliament D) European Court of Justice

Answer: A

48) Eurozone participants have agreed to limit their annual government deficits to no more than ________ of their GDPs. A) 3 percent B) 5 percent C) 7 percent D) 9 percent

Answer: A

50) Which of the following was a component of the Treaty of Amsterdam? A) a strong commitment to address high unemployment in the EU B) a plan to limit the role of the European Parliament C) termination of a two-track system D) enforcement of GATT policies

Answer: A

52) Which country listed below remains a non-member of the European Free Trade Association? A) Denmark B) Liechtenstein C) Norway D) Switzerland

Answer: A

59) Which of the following countries is part of the Mercosur Accord? A) Argentina B) Guatemala C) Columbia D) Mexico

Answer: A

61) The ________ is an agreement to create a customs union among the governments of Argentina, Brazil, Paraguay, and Uruguay. A) Mercosur Accord B) ASEAN Free Trade Area C) Andean Pact D) Central America Common Market

Answer: A

64) As a participant at the Doha Round, you would experience the most negotiation difficulties in the area of ________. A) agricultural goods B) tariff reductions C) foreign exchange D) service trade

Answer: A

67) A ________ is the third step along the path to total economic integration. A) commercial market B) economic union C) customs union D) free trade area

Answer: A

68) CVR Enterprises is based in the EU country that has the greatest number of votes in Parliament. CVR Enterprises is most likely a ________ firm. A) German B) French C) British D) Italian

Answer: A

What is the best means of promoting economic development in Mexico? A) trade B) mercantilism C) protectionism D) export substitutions

Answer: A

12) The GATT rounds focused on decreasing ________. A) dumping B) trade tariffs C) preferential treatment D) domestic industry subsidies

Answer: B

14) What countries are granted the most-favored-nation status under the GATT? A) less-developed nations B) GATT member countries C) any country that requests it D) only members of the WTO

Answer: B

18) Country X treats foreign firms the same way it treats domestic firms. Country X most likely engages in ________. A) trade balancing B) national treatment C) mercantilism D) foreign treatment

Answer: B

22) A(n) ________ combines the elimination of internal trade barriers among member countries with the adoption of common external trade policies toward nonmembers. A) free trade area B) customs union C) common market D) economic union

Answer: B

26) A free trade area ________. A) is complete political and economic integration of two or more countries B) eliminates trade barriers among member countries C) allows workers to move freely among trade nations D) avoids problems stemming from trade deflections

Answer: B

33) What agreement triggered the establishment of the European Economic Community A) GATT B) Treaty of Rome C) WTO D) Uruguay Round

Answer: B

40) What function is served by the European Commission? A) executive B) administrative C) legislative D) judicial

Answer: B

44) How did the EU initially eliminate conflicts among member countries? A) mandatory arbitration B) harmonization C) negotiation D) legislation

Answer: B

57) Which regional trade association includes the Bahamas, Grenada, and Jamaica? A) ASEAN B) CARICOM C) ANCOM D) ECOWAS

Answer: B

6) GATT is an acronym for ________. A) General Argument for Taxes and Tariffs B) General Agreement on Tariffs and Trade C) Group Accord on Trade Tendencies D) Grace, Action, Trust, and Trade

Answer: B

69) Natalie is employed by the governing organization of the EU that is responsible for proposing legislation, administering the EU's permanent bureaucracy, and implementing the provisions of the Treaty of Rome. Natalie most likely works for the ________. A) European Court of Justice B) European Commission C) European Parliament D) Council of the European Union

Answer: B

8) The Smoot-Hawley Act ________. A) lowered tariffs to encourage trade B) raised tariffs to protect domestic industries C) designated the International Trade Organization as an independent party in trade negotiations D) required that countries treat each other on a nondiscriminatory basis and outlawed unfair trading practices

Answer: B

2) Mexico relied on which of the following trade activities between 1917 and 1982? A) low import tariffs B) foreign direct investment restrictions C) privatization of key industries D) membership in GATT and the WTO

Answer: B 1

21) Parson's Pet Products, an Australian firm, ships many products to Canada. In order to take advantage of low trade barriers in the U.S., Parson's Pet Products ships its items first to the U.S. and then reexports the goods to Canada. Parson's Pet Products is most likely using ________. A) trade circumvention B) origination manipulation C) trade deflection D) external circumvention

Answer: C

23) In a(n) ________, members eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production. A) free trade area B) customs union C) common market D) economic union

Answer: C

3) The average hourly manufacturing wage in Mexico is estimated to be ________. A) $0.90 B) $1.50 C) $3.00 D) $4.50

Answer: C

37) Which of the following is not an organization that governs the European Union? A) Council of the European Union B) European Commission C) European Trade Council D) European Court of Justice

Answer: C

43) What function is performed by the European Court of Justice? A) administrative B) executive oversight C) interpretation of law D) managerial

Answer: C

45) The Cassis de Dijon case brought about the concept of ________ among member nations in the EU. A) harmonization B) arbitration C) mutual recognition D) free movement of goods

Answer: C

46) The ________ concept states that if one EU member state determines that a product is appropriate for sale, then all other EU members are also obliged to do so under the provisions of the Treaty of Rome. A) harmonization B) arbitration C) mutual recognition D) free movement of goods

Answer: C

49) The Treaty for Europe is also known as the ________. A) Treaty of Rome B) Maastricht Treaty C) Treaty of Amsterdam D) Paris Treaty

Answer: C

5) Which country represents the biggest threat to Mexico's trade-driven economy? A) Taiwan B) Vietnam C) China D) Brazil

Answer: C

63) Which GATT Round led to the creation of the WTO? A) Doha B) Geneva C) Uruguay D) Kennedy

Answer: C

65) Salvo Software develops computer games and business software systems that are popular throughout the world. Like many software firms, Salvo has experienced problems with illegal counterfeiting of its products. Given this concern, which of the following would be of most interest to Salvo? A) TRIMS B) BARS C) TRIPS D) GATS

Answer: C

13) The ________ requires that any preferential treatment granted to one country must be extended to all countries. A) GATT B) WTO C) export promotion system D) most favored nation principle

Answer: D

25) Country X and Country Z have established a complete political and economic integration. The countries are most likely engaged in a(n) ________. A) customs union B) common market C) economic union D) political union

Answer: D

27) A customs union ________. A) is complete political and economic integration of two or more countries B) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, eliminate barriers to the movement of the factors of production, and coordinate economic policies C) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production D) involves the elimination of internal trade barriers among member countries and the adoption of common external trade policies toward nonmembers

Answer: D

28) A common market ________. A) is complete political and economic integration of two or more countries B) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, eliminate barriers to the movement of the factors of production, and coordinate economic policies C) eliminates trade barriers among member countries D) requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production

Answer: D

32) How many countries are part of the European Union? A) 10 B) 12 C) 20 D) 28

Answer: D

36) Which of the following is a member of the European Union? A) Kosovo B) Switzerland C) Norway D) Latvia

Answer: D

4) Mexico does not have a trade agreement with ________. A) Japan B) Chile C) Israel D) India

Answer: D

41) The ________ is responsible for proposing legislation, implementing the provisions of the Treaty of Rome, protecting EU interests in political debates, and administering the EU's permanent bureaucracy. A) European Parliament B) European Court of Justice C) European Council D) European Commission

Answer: D

51) Which of the following was an element of the Treaty of Lisbon ________. A) permitting the European Commission to increase in size B) limiting the powers of the European Parliament C) establishing a full-time President of the European Council D) prohibiting national legislatures to voice formal concerns about EU laws

Answer: D

66) Country X wants to encourage trade by eliminating trade barriers with the three countries along its borders. However, Country X wants each of the countries to be able to establish their own trade policies even though this may lead to problems with trade deflection. Which form of economic integration is Country X most likely considering? A) economic union B) common market C) customs union D) free trade area

Answer: D

70) Executives at TVR Enterprises, an MNE based in Germany, feel threatened by a pending EU regulation that will require the MNE to reduce its production capacity. Which of the following actions is the most appropriate for TVR? A) complying with the EU's mutual recognition laws B) apply for a harmonization regulation with the EU C) appealing to the European Court of Justice D) lobbying the European Commission

Answer: D

9) The primary goal of the ________ was to promote a free and competitive international trading environment. A) Smoot-Hawley Act B) International Trade Organization C) World Trade Organization D) General Agreement on Tariffs and Trade

Answer: D

When conducting International Research there are two factors, the first are difficulties of conducting International Research. Of the three main difficulties, The first being availability of data. And now comparability of data.

Because terms like poverty consumption and literacy differ greatly from country to country data must be accompanied by precise definitions monetary value defined, or in terms of number of investment projects.

First-mover advantage

Benefits that accrue to firms that enter the market first and that late entrants do not enjoy

Late-mover advantage

Benefits that accrue to firms that enter the market later and that early entrants do not enjoy

Difficulties of Forecasting

Beyond problems with data used, failings can be traced to human error (e.g., people might miscalculate the importance of certain economic events, placing too much emphasis on some elements and ignoring others).

Greenfield operation

Building factories and offices from scratch (on a proverbial piece of "green field" formerly used for agricultural purposes)

greenfield operations

Building factories and offices from scratch (on a proverbial piece of "greenfield" formerly used for agricultural purposes).

How does a country develop a Trade Imbalance?.

By importing more than it exports creating a trade deficit. Or by exporting more than it imports crating a trade surplus

Developing Nations' Debt Crisis

By the early 1980s, developing countries (especially in Latin America) had amassed huge debts payable to large international commercial banks, the IMF, and the World Bank. To prevent a meltdown of the entire financial system, international agencies revised repayment schedules.

SKILLS that are required for GLOBAL LEADERS

Capability for building global teams

SKILLS that are required for GLOBAL LEADERS

Capability to develop individuals from and across diverse cultures

What type of decision making helps coordinate the operations of international subsidiaries?

Centralized decision making is the degree to which decision making is centralized at a high level in one location such as headquarters. Decentralized decision making is the degree to which decisions are made at lower levels, such as in international subsidiaries.

Which of the following is an effect of adopting a local responsiveness strategy?

Costs of products and services are increased.

Ocan Foods Inc., a food and beverage retailer, invests ten percent of its annual revenue in Bright Diaries Inc., a diary manufacturer. Bright Diaries, on the other hand, invests 15 percent of its annual revenue in Ocan Foods. Which of the following equity-based alliances is shown in the given scenario?

Cross-shareholding

_____ refers to a business strategy in which each partner in an alliance holds stock in the other firm.

Cross-shareholding

How to domestic forces in the business environment actually affect the local selection process

Cultural forces and political forces

Strategy

Developing an effective strategy requires a clear definition of objectives (or goals) and a plan to achieve them.

Review the names of Recent Financial Downturns.

Developing nations Debt crisis Mexico's peso crisis Southeast Asia's currency crisis Russia's ruble crisis Argentina's peso crisis

If a firm is operating in an environment that is customized to home market, which of the following is the most preferred strategy? a.Collusion strategy b.Extender strategy c.Dodger strategy d.Contender strategy

Dodger strategy

If a firm is operating in an environment with a high pressure for globalization, which of the following is the most preferred strategy? a.Dodger strategy b.Defender strategy c.Collusion strategy d.Extender strategy

Dodger strategy

Fundamental Analysis

Economic variables in these models include inflation, interest rates, the money supply, tax rates, government spending, the nation's balance-of-payments situation, and government intervention in foreign exchange markets.

Know the some of the different ways we forecast the market.

Efficient market view Inefficient market view Fundamental analysis Technical analysis

Co-marketing

Efforts among a number of firms to jointly market their products and services. co-marketing campaigns with fast-food chains such as McDonald's to package toys based on movie characters in kids' meals.

When screening potential markets and sites, there are four steps. 1) identify basic appeal 2) assess the national business environment 3) measure market or site potential. 4) select the market for site. We now measure 3)market or site potential with three factors that influence potential suitability of markets and sites for operations. The first factor is measuring market potential and a special tool for analyzing emerging markets is industrialized markets now we focus on emerging markets.

Emerging markets face special problems related to lack of information but there are ways companies can assess potential in emerging markets. They use so-called market potential indicators for each. Is only useful to companies considering exporting There are 8

Self-managed teams

Employees from a single department accept responsibilities of former supervisors. In production settings, self-managed teams reduce the need for direct supervisors and increase productivity, product quality, customer satisfaction, employee morale, and company loyalty.

Information Revolution

Enables diverse and geographically dispersed groups of employees to collaborate in their work and to learn from and with each other

Environmental scanning is an ongoing process of gathering and analyzing and dispensing information for tactical or strategic purposes which is called environmental scanning

_____ are based on ownership or financial interest between firms.

Equity-based alliances

When screening potential markets and sites, there are four steps. The first factor is measuring market potential and a special tool for analyzing emerging markets is industrialized markets

Example of Euromonitor with a company that sells reports and does company specific studies for many international corporations and entrepreneurs.

Example of how researchers might need to serve a potential buyers through questionnaires local language.

If globalization pressures for a firm are relatively low, and if the firm has skills and assets that are transferable overseas, which of the following is the best strategy for the firm to use? a.Dodger strategy b.Contender strategy c.Defender strategy d.Extender strategy

Extender strategy

Fly Wagons Inc. and Esca Motors Inc. are competing to acquire Charge Tool Inc., a spark plug manufacturing company, which is worth $5 million. Esca Motors quotes a bid of $10 million to acquire the company, and Fly Wagons quotes a bid of $20 million. In this scenario, which of the following approaches should be adopted by Fly Wagons for the acquisition?

Fly Wagons should drop the deal.

Free and inexpensive information about product demand in particular countries ex: like international trade statistics your book

In the pre-acquisition phase, which of the following must be avoided by an acquirer to reduce the possibility of acquisition failure?

Giving importance to executive hubris

TrinkCan Inc., a soft drink company in Wales, establishes new branches in England, Australia, and the United States. To minimize its costs, the company uses similar packaging, distribution, and promotion across all the countries. According to the integration-responsiveness framework, which of the following strategies is used by TrinkCan?

Global standardization strategy

When the screening potential markets and sites. Step two assesses the national business environment. There are cultural forces and now political and legal forces. What are three political and legal forces?

Government regulation, government bureaucracy and political stability

Governments typically try to present their countries in the best possible light, it might be one sided, The world fact book this example of this. The trade information center is another also governments open the research libraries to business people from all countries

Global teams

Group of top managers from both headquarters and subsidiaries who meet to develop solutions to company-wide problems.

High change friendliness

High ambiguity tolerance and low uncertainty avoidance

Characteristics of global teams

High diversity, geographic dispersion, virtual interaction rather than face-to-face

Frolik Foods Inc., a fast food franchise in the United States, opens a new outlet in Germany. The franchise develops recipes in the U.S. and then transfers them to its outlets in Germany. Which of the following strategies is being used by Frolik Foods?

Home replication strategy

When screening potential markets and sites, there are four steps. The first factor is measuring market potential and a special tool for analyzing emerging markets is industrialized markets industrialized countries have a great deal of data available on the market one way the forecasting market demand is by determining a product's income elasticity.

Income elasticity is the sensitivity of demand for a product relative to changes in income. 1)There is the income elasticity coefficient 2) A coefficient greater than 1.0 conveys an income elastic product 3) The cushioned less then 1.0 conveys an income inelastic product.

Role of Inflation

Inflation erodes purchasing power. If money is injected into an economy not producing greater output, a greater amount of money is spent on a static amount of products. Demand soon outstrips supply and prices rise.

institutional voids

Institutional conditions of a country lacking market-supporting infrastructure.

What is Devaluation?

Intentionally lowering the value of a nation's currency

What are trade missions

International trip by government officials and business people that is organized by agencies of national provincial governments for the purpose of exploring international business opportunities

What causes Inflation?

Is the result of the supply and demand for a currency. It erodes people's purchasing power.

In the context of organizational cultures, which of the following is true of a wolf culture?

It centers on relentless pursuit with highly motivated employees working overtime.

Which of the following is a leading problem with the international division organizational structure?

It does not give sufficient voice to foreign subsidiary managers relative to the heads of domestic divisions.

Which of the following is a disadvantage of adopting a global standardization strategy?

It sacrifices local responsiveness.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a localization strategy?

Knowledge is developed and retained within each subsidiary.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a home replication strategy?

Knowledge is developed at the center and transferred to subsidiaries.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a transnational strategy?

Knowledge is developed jointly and shared worldwide.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a global standardization strategy?

Knowledge is mostly developed and retained at the center and key locations.

_____ can be defined as the structures, processes, and systems that actively develop, leverage, and transfer knowledge.

Knowledge management

Explicit knowledge

Knowledge that is codifiable (that is, can be written down and transferred with little loss of richness).

Tacit knowledge

Knowledge that is non-codifiable, whose acquisition and transfer require hands-on practice.

When screening potential markets and sites, there are four steps. The second step assesses the national business environment. The 5 domestic forces are cultural forces, political forces economic and financial forces and finally "other forces." What are logistics when we talk about other forces in the cost of transporting materials and goods?

Logistics for management of the physical flow of products from the point of origin origin as raw material to end users as finished products

Many international service organizations infields such a banking insurance management consulting an accounting offer information to their clients on cultural regulatory and financial conditions in the market

Pegged Exchange-Rate Arrangement

Many small countries peg their currencies to the dollar, euro, the special drawing right of the IMF, or other individual currency. Others peg their currencies to "baskets" of currencies.

In conducting International Research with this market research?

Market research is a collection and analysis of information used to the system managers in making informed decisions. What works in one place me not work in another

When conducting International Research there are two factors, the first are difficulties of conducting International Research. Of the three main difficulties, The first being availability of data.

Marketing managers require highly detailed information fortunately companies are often spared the time money and effort of collecting firsthand data for the simple reason that it has already been gathered.

Combination strategy

Mixes growth, retrenchment, and stability strategies across a corporation's business units.

impact of EMOTIONAL STABILITY, ABILITY TO LEARN, AND DECISION-MAKING AND NEGOTIATING ROLES

More significant for global leaders than is the case for domestic business leaders

A written statement of why a company exists and what it plans to accomplish is called a what?

Most companies have a general purpose for why they exist that they express in a mission statement—a written statement of why a company exists and what it plans to accomplish.

Four overlapping dimensions of complexity that are relevant to globalization and the challenges confronting global leaders

Multiplicity, Ambiguity, Interdependence, Dynamism

In the post-acquisition phase, which of the following problems is specific to cross-border mergers and acquisitions?

Nationalistic firm-level concerns over foreign takeovers

_____ are associations between firms that are based on contracts and do not involve the sharing of ownership.

Non-equity-based alliances

Globalization

Not only creating many business opportunities, creating opportunities for a new breed of leaders that have the right stuff for operating in an increasingly globalized world

Evaluating PPP

PPP is better at predicting long-term exchange rates than short-term rates. Short-term forecasts, however, are most beneficial to managers. a. assumes no transportation costs, and thus overstates the threat of arbitrage. b.assumes no trade barriers. But a high tariff or outright ban on a product can impair price leveling. c. Impact of Business Confidence and Psychology

Purchasing Power Parity

PPP is the relative ability of two countries' currencies to buy the same "basket" of goods in those two countries. Tells how much of currency "A" a person in nation "A" needs to buy the same amount of products that someone in nation "B" can buy with currency "B."

Political risk can threaten the market of an exporter. The key element of political risk than concerns companies is unforeseen political change

In a non-equity-based alliance, which of the following should be high for possible upgrading to equity-based relationships? a.Degree of tacitness b.Importance of direct organizational monitoring and control c.Potential as real option d.Influence of formal institutions

Potential as real option

What does the Fisher Effect explain?

Principle that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period Normal interest rate=real interest rate +inflation rate.

In which type of equity-based alliance does one firm invest in another? a.Hubristic investment b.Cross-shareholding c.Licensing d.Strategic investment

Strategic investment

Ziff Tech Inc., a technological firm, funds Tictoe Corp., a computer processor designing company, with five percent of its annual revenue. Which of the following best describes the alliance between Ziff Tech and Tictoe Corp.?

Strategic investment

What are the differences between Strategy and Planning?

Strategy is set of planned actions taken by managers to help a company meet its objectives Planning is the process of identifying and selecting an organization's objectives and deciding how the organization will achieve those objectives

In the three-stage model of alliance formation, which of the following is the first stage?

Taking a decision on the mode of growth

Scale of entry

The amount of resources committed to entering a foreign market

scale of entry

The amount of resources committed to entering a foreign market.

Location-specific advantage

The benefits a firm reaps from the features specific to a place

location-specific advantages

The benefits a firm reaps from the features specific to a place.

Country (or regional) manager

The business leader of a specific country (or geographic region).

Organizational culture

The collective programming of the mind that distinguishes members of one organization from another.

Which of the following approaches does not allow control over joint activities in an alliance?

The contractual approach

Arc Corp., a consumer goods manufacturer in Lumeria, proposed to merge with Borton Inc., a consumer goods manufacturer in Arkadas. Arc Corp. cleared the antitrust scrutiny in Lumeria but failed to anticipate a rigorous antitrust scrutiny in Arkadas. As a result, the merger never took place. In this scenario, which of the following is most likely the reason for the failure of the merger?

The firms neglected the influence of formal institutions on the merger.

Debate 3- Global versus Regional Geographic Diversification

The majority of the largest MNEs are not necessarily very "global" in their geographic scope.

The leader challenges the status quo

The manager accepts it

The leader asks "what?" and "why?"

The manager asks "how?" and "when?"

The leader originates

The manager imitates

When screening potential markets and sites, there are four steps. 1) identify basic appeal 2) assess the national business environment 3) measure market or site potential. 4) select the market for site. We now measure 3)market or site potential with three factors that influence potential suitability of markets and sites for operations. The first factor is industrialized markets, emerging markets and now measuring site potential.

The most important of these will be human resources both labor and management. 2) training local managers also requires a substantial investment of time and money. 3) efficiency with local infrastructure for example roads bridges airport seaports and telecommunication systems.

Local responsiveness

The need to be responsive to different customer preferences around the world.

Country-of-origin effect

The positive or negative perception of firms and products from a certain country, A contrasting view to liability of foreignness argues that under certain circumstances, being foreign can be an asset (comparative advantage)

country-of-origin effect

The positive or negative perception of firms and products from a certain country.

Subsidiary initiative

The proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of responsibility.

Knowledge management

The structures, processes, and systems that actively develop, leverage, and transfer knowledge.

Par Value

The value of a currency expressed in terms of gold. All nations fixing their currencies to gold also indirectly linked their currencies to one another.

In the context of cross-border mergers and acquisitions (M&As), which of the following statements is true?

There are integration difficulties due to clashes of organizational and national cultures.

What factors influence the power of purchasing power parity to accurately predict exchange rates?

There are limitations to the PPP concept. First, purchasing power parity is better at predicting long-term exchange rates than short-term rates. Unfortunately, short-term forecasts are often more beneficial to managers. Second, although PPP assumes a world of no transportation costs, this is clearly unrealistic. If adding transportation costs to the cost of a product makes the product equally or more expensive in the otherwise cheaper market, trade will not occur. Thus, because of the absence of an arbitrage opportunity after transaction costs, no leveling of prices between the two markets will occur. Third, although PPP assumes no trade barriers, we know this to be false in reality. Trade might not occur if a high tariff on an import increases the cost of the product significantly. Of course, the same is true if importing the product is made illegal. Fourth, PPP overlooks business confidence and human psychology. The confidence of businesspeople and consumers impacts the value of a nation's currency. Confidence in a nation's economic outlook encourages companies to invest and consumers to increase their spending. Currency traders can also influence the exchange rate of a nation's currency. If traders believe a currency is overvalued, they can sell the currency on currency markets—thereby causing its value to fall and the exchange rate to adjust accordingly.

BRIC Nations

These are emerging market countries with very rapid economic growth. Large markets and business opportunities are being created in these (and other developing nations) countries.

According to an institution-based view, which of the following is true of synergistic motives that drive acquisitions?

They are a response to formal institutional constraints and transitions.

Which of the following is true of relational capabilities while managing interfirm relationships?

They are rarely found in managers involved in alliances.

They create investment barriers to ensure domestic control of the company and industry. Pg 302 ex. 2) by restricting international companies from freely removing profits earned in the nation. 3) impose strict environmental regulations. 4) forced to divulge information. For example Coca-Cola's recipe

In the context of an institution-based view, which of the following is true of managerial motives that drive acquisitions?

They do not benefit a company overall in the long run.

In the context of an institution-based view, which of the following is true of hubristic motives driving acquisitions?

They involve the display of herd behavior by chasing fads of acquisitions.

This step involves the most intensive efforts to assess the remaining potential markets and sites😜: Field trips and competitor analysis

A greenfield operation refers to _____. a.a new corporate entity created and jointly owned by two or more parent companies b.a wholly owned subsidiary created by building a new factory and offices from scratch c.an outsourcing agreement in R&D between firms d.a wholly owned subsidiary created by acquisition

a wholly owned subsidiary created by building a new factory and offices from scratch

WEBULL?

a young firm from China, can overcome such a "triple whammy" of liability in the United States by deploying overwhelming resources and capabilities

Multinational strategy

a. Adapts products and marketing strategies in each national market to suit local preferences. b. Benefit: monitor buyer preferences in each local market and respond quickly and effectively to new buyer preferences. Drawback: cannot exploit scale economies in product development, manufacturing, or marketing.

Argentina's Peso Crisis

a. By late 2001, Argentina had been in recession for nearly 4 years. Argentina's goods remained expensive because its currency was linked to a strong U.S. dollar through a currency board. b. The country finally defaulted on its $155 billion of public debt in early 2002, the largest default by any country ever. c. The government scrapped its currency board that linked the peso to the U.S. dollar and the peso quickly lost about 70 percent of its value on currency markets. d. Argentina has in many respects recovered. It has registered growth of around 9 percent a year and unemployment around 8 percent in 2008, down from a high of 25 percent in 2002. e. Argentina's plan of boosting wages, imposing price controls, keeping the peso low, and increasing public spending seems to be working. Growth was expected to be around 4 percent to 5 percent but inflation was at 9 percent a year and reducing purchasing power. f. As of 2012, another economic collapse was unlikely although Argentina was experiencing 26 percent inflation.

Low-cost leadership strategy

a. Companies contain administrative costs and the costs of its various primary activities, including marketing, advertising, and distribution. b. based on efficient production in large quantities guards against attack by competitors because of the large start-up costs. c. A negative aspect: low customer loyalty—buyers will purchase from the low-cost leader if everything else is equal.

Focus strategy

a. Competition forces more products to be distinguished by price, quality, or design. Greater product range leads to refinement of market segments; firms serve the needs of one ethnic or racial group

Global strategy

a. Firms take advantage of scale and location economies by producing entire inventories or components in a few optimal locations. They perform product R&D in one or a few locations and design promotional campaigns and advertising strategies at headquarters. b. Benefit: cost savings from standardized products and marketing; lessons learned in a market are shared. c. Drawback: may overlook differences in buyer preferences. Competitors can step in and satisfy unmet local needs creating a niche market.

Collapse of the Gold Standard

a. Gold standard was violated when nations in the First World War financed the war by printing paper currency. This caused rapid inflation and caused nations to abandon the gold standard. b. Britain returned to the gold standard in the early 1930s at the same par value that existed before the war. The United States returned to the gold standard at a new, lower par value that reflected the inflation of previous years. c. The U.S. decision in 1934 to devalue its currency and Britain's decision not to do so lowered the price of U.S. exports and increased the price of British goods imported. It now took $8.24 to buy a pound ($35.00 ÷ £4.2474). d. Countries retaliated against one another through "competitive devaluations" to improve their own trade balances. Faith in the gold standard vanished, as it was no longer an accurate indicator of a currency's true value.

Stability strategy

a. Guards against change and used to avoid either growth or retrenchment. b. Corporations have met objectives, are satisfied with accomplishments, and see no opportunities or threats.

Fixed Exchange Rates

a. Incorporated fixed exchange rates by tying the value of the U.S. dollar directly to gold, and the value of other currencies to the value of the dollar. b. Fixed U.S. dollar par value at $35/oz of gold; other currencies had par values against the U.S. dollar, not gold. c. Members were to keep their currencies from deviating more than 1.0 percent above or below their par values.

Southeast Asia's Currency Crisis

a. On July 11, 1997, the speculators sold off Thailand's baht on world currency markets; the baht plunged and every other economy in the region was in a slump. b. The shock waves of Asia's crisis could be felt throughout the global economy. Indonesia, South Korea, and Thailand needed IMF and World Bank funding. As incentives to begin economic restructuring, IMF loan packages came with strings attached. c. Crisis likely caused by a combination of: (1) Asian style capitalism (lax regulation, loans to friends and relatives, lack of financial transparency); (2) currency speculators and panicking investors; and (3) persistent current account deficits.

Mexico's Peso Crisis

a. Rebellion and political assassination shook investors' faith in Mexico's financial system in 1993-1994. Mexico's government responded slowly to the flight of portfolio investment capital. b. In late 1994, the Mexican peso was devalued, forcing a large loss of purchasing power on ordinary Mexican people. The IMF and private commercial banks in the United States provided about $50 billion in loans to shore up Mexico's economy. c. Mexico repaid the loans ahead of schedule and once again has a sizable reserve of foreign exchange.

Advantages of the Gold Standard

a. Reduced the risk in exchange rates because it locked exchange rates between currencies. Fixed exchange rates reduced the risks and costs of trade and grew as a result. b. Imposed strict monetary policies that required nations to convert paper currency into gold if demanded by holders of the currency. This forced nations to keep adequate gold reserves on hand. A nation could not let paper currency grow faster than the value of its gold reserves, which controlled inflation. c. Helped correct a nation's trade imbalance. rade is in balance.

Russia's Ruble Crisis

a. Russia's problems in the 1990s included: (1) spillover from the Southeast Asia crisis; (2) depressed oil prices; (3) falling hard currency reserves; (4) unworkable tax system; and (4) inflation. b. In 1996 as currency traders dumped the ruble, the Russian government attempted to defend the ruble on currency markets. The government received a $10 billion aid package from the IMF and promised to reduce debt, collect taxes, cease printing sums of currency, and peg its currency to the dollar. c. Things improved for a while, but then in mid-1998 the government found itself once again trying to defend the ruble. By late 1998, the IMF had lent Russia more than $22 billion.

Differentiation strategy

a. the perception of exclusivity or meeting the needs of a certain group. b. Companies develop loyal customer bases to offset smaller market shares and higher costs of producing and marketing a unique product. c. Products basis of quality, brand image, and product design. Special features differentiate goods and services in the minds of consumers.

Core competency

ability of a company that competitors find extremely difficult or impossible to equal. Refers to multiple skills coordinated to form a single technological outcome.

strategic goals of innovation seeking

abundance of innovative individuals firms universities

Companies with market-seeking strategic goals search for _____. a.abundance of strong market demand and customers willing to pay b.economies of scale and abundance of low cost factors c.abundance of innovative individuals, firms, and universities d.particular foreign locations where the required resources are found

abundance of strong market demand and customers willing to pay

Jamaica Agreement

accord (1976) formalized the present system of floating exchange rates. Three main provisions included: (1) endorsement of a managed float system of exchange rates; (2) elimination of gold as the primary reserve asset of the IMF; and (3) expansion of the IMF to act as a "lender of last resort" for nations with balance-of-payments difficulties.

A(n) ____ is the transfer of the control of operations and management from one firm to another with the former becoming a unit of the latter. a.joint venture b.contractual alliance c.acquisition d.merger

acquisition

A(n) _____ is a transfer of the control of operations and management from one firm to another.

acquisition

Genra Technologies, a computer manufacturer that specializes in custom-built computers, recently entered into an agreement with Fronton Corp., a computer hardware manufacturer. According to the agreement, the operations and management control of Fronton Corp. will be transferred to Genra Technologies. In addition, Fronton Corp. will be a unit of Genra Technologies. The given scenario is an example of a(n) _____.

acquisition

establish a WOS

acquisition and greenfield

Acquisition shares all the benefits of greenfield WOS and enjoys two additional advantages

adding no new capacity and faster entry speed.

Spokesperson

advocating and representing the company through communications, etc.

The alliance between Nilesmith Corp. and Pentrall Inc. is set to dissolve. Both the companies are engaged in extensive negotiations with new alliance partners. Which of the following stages of alliance dissolution is shown in the given scenario?

aftermath

Assume that a firm is looking to expand into a foreign market, but it needs an opportunity that has low development costs and little risk. What would the best option be?

contractual agreement

A non-equity based alliance is also called a _____. a.cross-border alliance b.synergistic alliance c.hubristic alliance d.contractual alliance

contractual alliance

At stage 1 in the formation of an alliance, a firm must _____. a.choose between a contract or an equity approach b.check the degree of tacitness c.decide whether growth can be achieved through market transactions d.evaluate institutional constraints

decide whether growth can be achieved through market transactions

large-scale entries are a

demonstration of strategic commitment to certain markets. The drawbacks are limited strategic flexibility elsewhere huge losses if large-scale "bets" turn out to be wrong.

Growth strategy

designed to increase the scale or scope of a corporation's operations. Scale refers to the size of a corporation's activities; scope to the kinds of activities it performs.

Companies following a localization strategy differ from companies following a home replication strategy in that the companies following a localization strategy:

develop and retain knowledge within each subsidiary.

In the context of strategizing, structuring, and learning around the world, an implication for savvy managers will be to:

develop learning and innovative capabilities to leverage multinational presence as an asset.

Blue ocean strategy focuses on _____. a.leading a price war b.attacking core markets defended by rivals c.developing new markets d.attacking new markets explored by rivals

developing new markets

The distinction between _____ is what defines an MNE from a firm that merely exports or imports. a.licensing and franchising b.small- and large-scale of entry c.equity and non-equity modes of entry d.direct and indirect exports

equity and non-equity modes of entry

An MNE enters foreign markets via ______ through foreign direct investment (FDI).

equity mode

Creating a wholly owned subsidiary as a means of entering a foreign market is an example of which type of entry mode?

equity mode

Dumping is defined as a(n) _____. a.domestic company selling above cost b.firm engaging its rival in multiple markets c.company reducing prices after eliminating rivals d.exporter selling below cost abroad

exporter selling below cost abroad

dumping exporter

exporter who -sells abroad below cost -planning to raise prices after dominating local rivals

Expanded geographic scope of operations

exposing companies to different regulatory environments, a more diverse set of suppliers and competitors, and exposure to a variety of unfamiliar risks

According to the text, Walmart's failure in India could be attributed to which of the following factors?

failure to understand the rules of the game

An acquisition is the combination of operations and management of two firms to establish a new legal entity.

false

Antitrust authorities are more likely to approve acquisitions as opposed to alliances.

false

Centralized research and development guarantees persistent heterogeneity in the solutions generated by a company.

false

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

false

From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm homogeneity.

false

Global product division structure, which is the opposite of the geographic area structure, supports the transnational strategy.

false

Relational capabilities are insignificant in making or breaking alliances.

false

The global standardization strategy maximizes local responsiveness.

false

While managing alliances, managers should keep in mind that soft-relationship aspects are secondary to strategic and organizational fit.

false

From an institution-based view, imitability affects a firm's ability to enter a foreign market.

false! resource based view

Collapse of the Bretton Woods Agreement

faltered in the 1960s because of U.S. trade and budget deficits. Demand for gold in exchange for dollars caused a large global sell-off of dollars.

strategic goals of market seeking

finding large strong markets with customers willing to pay

Which of the following is considered an equity mode of foreign market entry?

greenfield projects

Multinational enterprises appoint home-country nationals as the head of a foreign subsidiary because the home-country nationals:

have an understanding of the informal workings of multinational enterprises.

Developments in logistics and shipping

heightening pressure on companies to reconfigure their value chains in order to maintain competitiveness

A disadvantage of acquisitions is _____. a.the inability to add new capacity to industry b.the inability to coordinate globally c.high development costs d.the slow entry speed

high development costs

Burger Mart, a fast food franchise in the U.S. is famous for its unique recipes that are a combination of a variety of spices. Their products are very popular in the U.S. They open a new outlet in Germany. They do not change their menu or their recipes as their menu and products are already popular in the U.S. Based on the integration-responsiveness framework, the strategy used by Burger Mart is a(n) _____.

home replication strategy

Impact of Unemployment and Interest Rates

i. Threat of a company moving abroad for lower wages holds down wages at home. Companies then need not raise prices to pay higher wages, lowering inflationary pressures. ii. Low unemployment puts upward pressure on wages. To maintain profit margins with higher labor costs, producers pass the cost of higher wages on to consumers in higher prices, causing inflationary pressure. iii. Low interest rates encourage consumers and businesses to borrow and spend, causing inflationary

Support activities

include firm infrastructure, human resource management, technology development, and procurement.

Primary activities

include inbound and outbound logistics, manufacturing, marketing and sales, and customer service; managers look for areas in which the company can increase customer value.

intellectual intelligence

includes "business acumen"

global emotional intelligence

includes self-awareness, cross-cultural understanding, cultural adjustment, and cross-cultural effectiveness

Asset Sports, a sports equipment manufacturing company based in India, specializes in cricket equipment. It establishes a new manufacturing plant in Brazil that specializes in soccer equipment. Based on the integration-responsiveness framework, the strategy adopted by Asset Sports is called a(n) _____.

localization strategy

Some people believe that anything made in a certain country is poorly made and therefore not worth much money. This bias may have a negative impact on those firms when they attempt to sell well-made, quality, valuable products in foreign markets. What would these firms be facing in this situation?

location-specific advantage, suffering from the liability of foreignness

The global matrix structure supports the goal of the transnational strategy, but in practice it is often difficult to deliver because:

managers have to deal with two bosses who are often in conflict.

currency board

monetary regime based on a commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate. The government is legally bound to hold an amount of foreign currency equal to the amount of domestic currency; this helps cap inflation.

Should most MNEs further "globalize" (expanding geographic scope) or "deglobalize"?

most MNEs know what they are doing, and their current geographic scope is the maximum they can manage. while these data only capture a snapshot (in the 2000s), more recent data do not show major changes.

Liason

networking, coordinating, spanning boundaries within and across organizations

A firm that merely exports or imports with no FDI is usually not regarded as an MNE. which is an example of

non equity mode

two main types of entry modes

non-equity and equity (FDI)

important first step to developing GLOBAL LEADERS

obtaining a strong grasp of the business fundamentals that underlie international business

Efficiency-seeking firms

often single out the most efficient locations featuring a combination of scale economies and cost factors. In manufacturing industries, many US and Canadian firms go to Mexico, and many Western European firms go to Eastern Europe, Morocco, and Turkey.

In an alliance, keeping critical skills and technologies not meant to be shared a secret helps prevent _____. a.corporate raider b.proxy fight c.opportunism d.hostile takeover

opportunism

In the context of acquisitions, the similarity in cultures, systems, and structures between firms is called _____. a.acquisition premium b.relational capability c.organizational fit d.strategic fit

organizational fit

In the context of organizing acquisitions, _____ is the similarity in culture, systems, and structures between two or more firms.

organizational fit

examples of location specific advantages

pool of talented people, knowledge spillover, customers will go where there's many opportunities

strategic goal of natural resource seeking

possession of natural resources and communication infrastructure

The act of setting prices below cost to eliminate rivals while intending to raise them in the long run to make up for the initial losses is known as _____. a.dumping b.counterattack c.collusive price setting d.predatory pricing

predatory pricing

A _____ is an investment in real operations as opposed to financial capital.

real option

A(n) ____ is an investment in real operations as opposed to financial capital. a.real option b.foreign direct investment c.hubris d.real account

real option

Monetary policy

refers to activities that directly affect a nation's interest rates or money supply. Governments buy or sell government securities on the open market to influence the money supply.

The ability to successfully manage interfirm relationships is called _____. a.hubristic capability b.synergistic capability c.contractual capability d.relational capability

relational capability

Leading teams

requires training, coaching the team leadership, proper rewarding of team members

Formal institutions influence alliances and acquisitions by:

requiring firms to conform to the entry mode requirements.

leadership competencies associated with leadership

same required in "domestic" settings than those in "global" situations

Monitoring

scanning environments, seeking information, etc.

Innovator

seizing opportunities, generating new ideas, promoting a vision for the company

In most of the cases, alliances have emerged as great instruments of real options because they help companies to:

sequentially scale up or scale down their investments.

A price leader is a firm that ____ in the industry. a.sets the lowest prices b.sets acceptable prices and has a dominant market share c.sets the highest prices and has a low market share d.sets the globally consistent price

sets acceptable prices and has a dominant market share

Global Leadership Triad

shows that an international business leader needs Business acumen, Relationship management skills, and Personal effectiveness

institutional distance

similarity or dissimilarity between regulatory normative cognitive institutions

A recent survey revealed that more than nine out of ten people prefer a watch made by firms in Switzerland to one made in India or U.S.A or any other country. This is an example of _____. a.benchmarking b.the liability of foreignness c.the country-of-origin effect d.agglomeration

the country-of-origin effect

Unlike a transnational strategy, a global standardization strategy involves:

the development and retention of knowledge at the center and key locations.

Additional challenges for companies brought upon by globalization

the development of managers who have the ability to understand and operate in the worldwide business environment and to provide a global perspective on leadership of their organizations

Multiplicity

the geometric growth in the volume and nature of issues that must be dealt with

What determines the relevant lessons a company has a global leader needs to learn

the individual company's global business strategy

Altonland Inc., a pharmaceutical company based in the United States, generally appoints a U.S. national as the head of its foreign subsidiaries for the first few years after a subsidiary is established. The company has been following this practice from the time it started its overseas operations. The given scenario illustrates:

the informal rules of the game.

Liability of foreignness is _____. a.the positive perception of firms and products of the host country b.the negative perception of firms and products of the home country c.the inherent disadvantage foreign firms experience in host countries d.the inherent advantage foreign firms experience in home countries

the inherent disadvantage foreign firms experience in host countries

Revaluation

the intentional raising of the value of a nation's currency. Increases the price of exports and reduces the price of imports.

Dynamism

the international system itself is constantly changing

Organizational structure

the way in which a company divides its activities among separate units and coordinates activities among those units.

According to the hubristic motive, a winning acquirer may suffer from what is called the ''winner's curse'' when:

the winner has overpaid during an acquisition.

incisive

they push the limits of the culture, and just do not say it cannot be done.....rather, they try to sift through the culture and find opportunities to innovate

greenfield adv

three advantages:A greenfield WOS gives an MNE complete equity and management control, thus eliminating the headaches associated with JVs.This undivided control leads to better protection of proprietary technology.A WOS allows for centrally-coordinated global actions.

Multinational enterprises that engage in a _____ strategy promote global learning and diffusion of innovations in multiple ways.

transnational

An acquisition is likely to be the largest capital expenditure of a firm, as well as one of its most poorly planned and executed activities.

true

Formal structures are easier to observe and imitate than informal structures.

true

Formally, organizational charts specify the scope of responsibilities for various parties.

true

If a manager is fueled by hubristic motives for acquisition, she may knowingly overpay for targets.

true

In the context of organizing acquisitions, strategic fit refers to the effective matching of complementary strategic capabilities.

true

Inadequate screening is a problem which occurs during the pre-acquisition phase of the merger and acquisitions (M&A) process.

true

Managers need to actively develop learning and innovation capabilities to leverage multinational presence.

true

Strategic alliances are voluntary agreements of cooperation between firms.

true

Tacit knowledge is non-codifiable, and its acquisition and transfer require hands-on practice.

true

The second phase in the dissolution of alliances is going public.

true

Transnational strategy aims to capture the best of both worlds by endeavoring to be both cost efficient and locally responsive.

true

In _____, clients pay contractors to design and construct new facilities and train personnel. a.franchising b.licensing c.turnkey projects d.co-marketing

turnkey projects

certainly a first step to developing GLOBAL LEADERS.

understanding "international business" fundamentals

Work Teams

useful in improving responsiveness by cutting across functional boundaries (between production and marketing) that slow decision making in an organization. Work teams coordinate their efforts to arrive at solutions and implement corrective action. 1. Cultural differences can cause resistance to the concept of self-management and the use of teams. Experts suggest that international managers use caution when implementing them. 2. Certain cultures are less individualistic and more collectivist; some harbor greater respect for differences in status. In cultures in which people are hard working, teams will be productive if given greater autonomy.

Greenfield operations are similar to acquisitions in that they are both examples of _____. a.non-equity mode of entry into foreign markets b.partially owned subsidiaries c.equity mode of entry into foreign markets limited to a contractual agreement d.wholly owned subsidiaries

wholly owned subsidiaries

Mission statement

written statement of why a company exists and what it plans to accomplish (e.g., supply the highest level of service in a market segment).

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