MAN3600 Chapter 6
Earth-rite executives are considering internalizing operations in Brazil. Which of the following, if true, best supports this plan?
By internalizing operations, earth-rite will retain control of product quality
Comparative Advantage includes inherited resources, such as labor, climate, arable land, and petroleum reserves
True
Early trade theories failed to consider the fact that the primary participants in international trade are individual firms that differ in significant ways from each other
True
According to porter, competitive advantage, results from firms strategy, structure, and rivalry refer to the presence of clusters of suppliers, competitors, and complementary firms that excel in particular industries
false
According to the absolute advantage principle, national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports
false
According to the factor proportions theory, differences in the quantity of factors of production held by countries do not determine international trade patterns
false
According to the internalization theory, firms must reduce control over foreign operations in order to enhance overall effectiveness
false
According to the internationalization process model, a firm is unlikely to receive unsolicited product orders from abroad before advancing to the pre-export stage
false
According to the internationalization process model, a firm starts out in a pre-export phase and is preoccupied with business in its home market
false
In the internationalization process of a firm, the active involvement stage follows the committed involvement stage
false
In today's world, the most important source of national advantage is a country's natural resources
false
Modern business executives use the term comparative advantage when referring to the assets of individual firms
false
Monopolistic advantage theory is a framework for determining the extent and pattern of foreign-based value-chain operations
false
National industrial policies designed to build new capabilities and encourage the emergence of new industries typically exclude rigorous educational systems at the precollege and university levels
false
Relative efficiency of production refers to the total value of assets that MNEs own abroad via their investment activities
false
Which of the following statements strengthens the proposition that free trade is beneficial to nations?
free trade increases the standard of living by reducing consumer expenses
______ theory suggest that firms using FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors
monopolistic advantage
According to Michael Porter, a nation's factor endowments help determine its ______
national competitive advantage
A proactive economic development plan initiated by the government, often in collaboration with the private sector, that aims to develop or support particular within the country is referred to as
national industrial policy
The _______ is one of the 3 key modern perspectives that helps explain the development of national competitive advantage
national industrial principle
Which of the following is true about networks
networks are neither formal organizations with clearly defined hierarchical structures nor impersonal, decentralized markets
In the _______ phase of international product life cycle theory, knowledge about how produce the product is widespread and manufacturing becomes straightforward
standardization
Which of the following is the last stage of evolution in the international product life cycle theory
standarization
Which of the following is a benefit of internalizing foreign-based value-chain activities
the MNE oversees control of foreign operations and ensures product quality
Low-cost labor and inexpensive capital are examples of a firm's competitive advantage
false
Which of the following explains how firms can use FDI to gain sustain competitive advantage
monopolistic advantage theory
Born global firms are
young companies that internationalize early in their evolution
Which of the following is an element of the comparative advantage principle?
relative efficiency of production
Which of the following is an example of an industrial cluster?
the consumer electronics industry in japan
Corruption is a common source of market failure
true
Industrial cluster refers to a concentration of businesses, suppliers, and supporting firms in the same industry at a particular geographic location, characterized by a critical mass of human talent, capital, or other factors endowments
true
According to Porter, Kazmia can attain economic prosperity by systematically cultivating new and superior factor endowments through
proactive national industrial policy
Countries cannot create or acquire comparative advantage
False
Mercantilism benefits consumers because restricting imports increases the choice of domestic products they can buy
False
The innovativeness of a nation's firms has no significant impact on the national competitive advantage
False
Which of the following is true with regard to firm-level theories
Firm-level explanations address the question "How can internationalizing firms gain and sustain competitive advantage?"
Which of the following refers to an important monopolistic advantage for firms?
proprietary knowledge
______ refers to the superior features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national policies
comparative advantage
The ______ states that it can be beneficial for two countries to trade without barriers as long as one is relatively more efficient at producing goods or services needed by the other
comparative advantage principle
In recent years, business executives and scholars have used _____ to refer to the advantages posessed by nations and individual firms in international trade and investment
competitive advantage
In the context of national industrial policy, which of the following actions by the government of Kazmia would be the most beneficial for the long-term economic security of the country?
devoting resources to improve national infrastructure
Competitive advantage refers to
distinctive assets or competencies of a firm that are difficult for competitors to imitate and are typically derived from specific knowledge, capabilities, skills, or superior strategies
In which of the following stages of the internationalization process is a firm preoccupied with business in its home market?
domestic focus
Which of the following benefits would Earth-rite most likely accrue if it entered into a joint venture with the Brazilian grocery store chain
earth rite would have access to the foreign partners' know-how
______ describes the total value of assets of MNEs own abroad via their investment activities
FDI stock
_______ is the belief that national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports
Mercantilism
_________ argues that increasing returns to scale, especially economics of scale, are important for superior international performance in industries that succeed best as their production volume increases
New trade theory
Which of the following is true about absolute advantage principle?
This approach allows the nation to consume more than it otherwise could, generally at lower cost
A benefit of the monopolistic theory is that firms can operate foreign subsidiaries more profitably than the local firms that compete in their own markets
True
Which of the following would be the most important for Earth-rite executives to determine when deciding whether to collaborate with the Brazilian grocery store chain
Would a collaborative venture allow Earth-rite to internationalize rapidly
According to comparative advantage principle, what matters most is the absolute cost of production of the product and not the relative efficiency with which a country can produce the product
false
Which of the following is true with regard to competitive advantage
a competitive advantage is difficult for competitors to imitate
According to the _______, a country benefits by producing only those products in which it has complete advantage or that it can produce using fewer resources than other country
absolute advantage principle
Which of the following is true with regard to new trade theory
according to new trade theory, trade is beneficial even for countries that produce only a limited variety of products
International entrepreneurship is a new field of scholarly inquiry that is a result of the _______ phenomenon
born global
In the _____ stage of the internationalization process, a firm targets numerous foreign markets via various entry modes, especially FDI
committed involvement
The gulf nations benefit economically from rich petroleum reserves in the region. This is an example of
comparative advantage
According to porter's competitive advantage of nations, ______ refers to the nature of home-market demand for specific products and services
demand conditions
Which of the following is a comparative advantage
entrepreneurial orientation
Which of the following refer to collaborative venture which results in a new legal entity
equity-based joint ventures
According to the internationalization process model, a firm advances to the ______ stage by initiating limited international activity, typically in the form of basic exporting
experimental involvement
Nations running a trade surplus
export more goods than they import
The _______ rests on the premise that countries differ in the type and quantity of production factors they possess
factor proportions theory
Current trends suggest that early internationalizing firms will
gradually become the norm in international business
Which of the following comparative advantages is acquired over time
innovative capacity
______ is an explanation of the process by which firms acquire and retain one or more value-chain activities inside the firm, minimizing the disadvantages of dealing with external partners and allowing for greater control over foreign operations
internationalization theory
Which of the following is true about national industrial policy
it is designed to create monetary and fiscal policies, such as low-interest loans, that provide a stable supply of capital for company investment needs
The eclectic paradigm specifies three conditions that determine whether a company will internationalize via FDI. Which of the following refers to one of these conditions
location-specific advantages
Which of the following is true with regard to mercantilism
mercantilism tends to harm firms that import
A _______ is one or more resources or capabilities a company possesses that few other firms have and that it leverages to generate profits and other returns
monopolistic advanatage
Maxdime INC is an international automobile manufacturer that has decided to work on low-cost fuel efficient motorbikes. Foray INC a domestic automobile company based in China, is willing to partner temporarily with the R&D team of Maxdime to design and launch motorbikes specially for the Chinese Market. This is an example of
non-equity-based strategic alliance
Azure Inc. has established a domestic market in clothing and apparels in Thailand and has received orders from abroad. Currently, the firm is investigating the feasibility of undertaking international business. Azure is the _____ stage of internationalization
pre-export
Which of the following, if true, weakens Daniel's proposition?
restricting imports reduces the choice of products consumers can by
Which of the following statements would be supported by Michael porter
rivalry among industry competitors spurs innovation
Which of the following is an example of a location-specific advantage
skilled labor
In his International Product Life Cycle theory, Raymond Vernon observed that each product and its manufacturing technologies go through three stages of evolution: intro, maturity and,
standardization
Which of the following explains the expansion of born global firms despite the scarcity of financial human and tangible resources
the integration of world economics under globalization
Which of the following is an example of an ownership-specific advantage
the physical assets owned by a firm
Which of the following is true about the first stage of evolution in the international product life cycle?
the product enjoys a temp monopoly at this stage
Which of the following is true about the determinants of national competitive advantage
the strength and sophistication of buyer demand facilitates the development of competitive advantage in particular industries
Which of the following was the analysis revealed by the "Leontief paradox?"
the the US often exported labor-intensive goods and imported more capital-intensive goods
According to Dunning's eclectic paradigm, proprietary technology, managerial skills, trademarks, or brand names, and economics of scale are examples of ownership-specific advantages
true
According to porter, the comparative advantage of a nation depends on the collective competitive advantages of the nation's firms
true
According to the internationalization process model, internationalization takes place in incremental stages over a long time
true
Adam Smith attacked the mercantilism view by suggesting that nations benefit most from fee trade
true
Born global firms are young companies that internationalize early in their evolution
true
Developing new product design and new ways of organizing or training are some of the ways in which companies innovate
true
Free trade produces lower-cost imports that help consumers save money, thereby increasing their living standards
true
Growing intensity of international competition and the integration of world economies under globalization have reduced the cost of venturing abroad, making it easier for firms to internationalize
true
Which of the following is a typical outcome of free trade?
unrestricted international trade generally increases the overall prosperity of poor countries
