434 Chapter 10-MC
MNEs pursuing a _______ ocean strategy tend to also pursue a transnational strategy.
Blue
The oldest form of internationalization is __________, which involves producing goods in one country to sell in another country.
Exporting
Multinational enterprises are the driving force behind globalization.
TRUE
The benefits to be accrued from locating value chain activities in the world's optimal geographies for a specific activity are known as:
location economies
A company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries is a:
multinational enterprise
When companies face a highly competitive environment at home, they are more likely to:
outperform global competition that lacks such intense domestic competition
A company should expand abroad if:
the benefits outweigh the costs
A company should only expand abroad if:
the benefits outweigh the costs
The belief that the importance of location is diminishing as an explanation of firm-level compt. advntg. is called:
the death-of-distance hypothesis
integration-responsiveness framework suggests that companies facing high pressure for both local responsiveness and cost reduction should follow a:
transnational strategy
National culture, according to Geert Hofstede, can be defined as different groups' distinctive __________:
"programming of the mind"
When a country's demand conditions include high-density urban living and high energy costs, consumers can be expected to prefer air conditioners that are:
-energy-efficient -quiet -small
True about the CAGE distance framework:
-it is designed to aid MNEs in deciding where to compete in the world
Reasons firms expand Internationally?
-to gain access to low-cost input factors -to develop new competencies -to gain access to a larger market
The benefits of local responsiveness always outweigh the costs
FALSE
The following statement about pursuing international expansion is true:
It can enhance a firm's compt. advtg.
Despite a growing belief in the death-of-distance hypothesis, there remains evidence that certain countries remain leaders in specific industries and maintain a kind of ____________ advtng.
National competitive
When a company has difficult coordinating operations across geographic distance and b/w distinct culture environments, it experiences:
a liability of foreignness
The strategic foundations of the globalization hypothesis are based primarily on:
cost reduction
The specific characteristics of a needs in a firm's domestic market, such as customers who hold companies to a high standard of value creation and cost containment, are also called:
demand conditions
Before World War II, business strategy, implementation, and knowledge typically moved
from domestic headquarters to outposts abroad
During globalization 1.0 all important business functions were located in the home country, whereas during globalization 2.0 multinationals began to copy themselves
in a few key countries
Due to globalization, the world's market economies are becoming more:
integrated and interdependent
Dream Donuts is a very successful business in the UK. it is contemplating global expansion. Which strategy is Dream Donuts most likely to pursue at these beginning stages of expansion?
international
If a firm's goal is to leverage home-based core competencies in foreign markets, it should pursue an:
international strategy
One notable advtg. of a multi-domestic strategy is
lower exchange-rate exposure
The Japanese market is very particular, and MNE's tend to have a challenging time to breaking into the market successfully. To provide the most local responsiveness and to influence Japanese consumers in believing that the products are local, an MNE should follow a:
multidomestic strategy
When companies face a highly comptv. environment at home, they are more likely to:
outperform global competition that lacks such intense domestic competition
In a global economy, according to Porter, compt. advtgs. increasingly exist in _____________, such as Silicon Valley
regional geographic clusters
Stats regarding MNEs
-They account for 11% of the private sector employment growth since 1990 -They make up 74% of the private sector R&D spending since 2000 -They pay 25% of wages in the US
Calculating cultural distance involves comparing the cultures of:
-a firm's home country -a targeted host country
Part of culture:
-beliefs -social norms -social mores
As MNE's compete internationally, a focus on local responsiveness allows them to:
-increase product differentiation -appeal to local consumers more effectively
Benefits of Transnational Strategy
-it promotes global learning and the diffusion of best practices and innovations -It harnesses economies of scale
A benefit of an international strategy is:
-leveraging core competencies
These are among the primary considerations when determing the mode in which a firm enters a foreign market:
-the degree of investment -the desired level of control over foreign operations
Risks that companies face when expanding internationally:
-the liability of foreignness -loss of reputation -loss of intellectual property
True about economic distance:
-wealthy countries tend to trade w/ other wealthy countries -wealthy companies benefit from trade when their comp. advntg. is based on economies of experience, scale and scope.
Porter's diamond framework to explain national compt. advtg. includes four interrelated factors: demand conditions, comptv. intensity in a focal industry, related and supporting industries/complementors, and
-factor conditions
These conditions suggest a that a multi-domestic strategy might be the appropriate strategy for MNEs:
-high demand for local responsiveness -little need for cost reductions -host countries with idiosyncratic domestic markets
Though many benefits exist, which are among the drawbacks of a transnational strategy?
-it requires organizational complexity -it's difficult to implement
These characteristics help make an MNE's international strategy successful:
-large domestic markets -prominent brand names -strong reputation
The following factors helped make Germany, which was a tough environment for a car company, conducive to successful car companies?
-no speed-limit autobahn -fierce domestic competition -demanding customers
If the economic value creation of international expansion is negative, a firm should:
-not expand internationally
Global-collaboration networks freely locate business functions anywhere in the world based on an optimal mix of which factors:
-capabilities -costs -PESTEL factors
These factors often combine to lead to tragic outcomes for domestic workers of MNEs:
-failure to enforce safety standards -govt. corruption -MNEs search for low-cost labor
The decision framework that is based on the relative distance b/w home and a foreign target country is the:
CAGE distance framework
Though low-skilled laborers make much less in developing countries, no such difference in wages exist for high-skilled workers.
FALSE
A company's ________ is the part of a corporate strategy that addresses how to gain and sustain a compt. advtg. when competing against other foreign and domestic companies around the world:
global strategy
The extent to which members of a society feel anxious when faced w an unknown situation is known as:
uncertainty avoidance
Common reasons for companies to make foreign direct investments:
-to reduce labor costs -to avoid import restrictions -to reduce tax burdens
distinctive features of globalization 3.0?
-Tech. helps reduce communication distances -firms create global networks of local expertise -MNEs reorganize into a more seamless global enterprise
Leading biotech, software, and internet companies and leading computer manufacturers are concentrated in which countries/states?
-The US -China -Taiwan
The 4 quadrants of the integration-responsiveness framework:
-global standardization strategy -multidomestic strategy -transnational strategy -international strategy
Disadvantages of the multi-domestic strategy:
-it is costly -it is inefficient
Help shrink the administrative and political distance b/w countries:
-shared currency -trade agreements -a history of colonization
Reasons firms expand internationally:
-to gain access to low-cost input factors -to gain access to a larger market -to develop new competencies
Examples of local responsiveness:
-the sale of metal chopsticks in South Korea -the sale of toads for preparation in China -the sale of teriyaki burgers in Japan
Dimensions considered in the CAGE distance framework:
-geographical distance -cultural distance -economic distance
Factors that help define administrative and political distance:
-political hostilities -shared monetary associations -the strength of financial institutions
The following have helped make globalization possible:
-reductions in transportation costs -reduced investment barriers -advances in telecommunications
What are the factors in Michael Porter's model of national competitiveness?
-related industries/complementors -demand conditions -factor conditions -comptv. intensity in a focal industry
A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to:
-take advtg. of location economies -take advtg. of economies of scale
Companies seek to access international markets as a means of:
increasing their economic value creation