MGT 491 Ch. 10

Provide an example of a company following a multidomestic strategy.

A multidomestic strategy is common in the consumer products and food industries. For example, Swiss-based Nestlé, the largest food company in the world is well known for customizing its product offerings to suit local preferences, tastes, and requirements. Given the strong brand names and core competencies in R&D, and the quality in their consumer products and food industries, it is not surprising that these multinational companies generally pursue a differentiation strategy at the business level. Other companies following a multidomestic strategy include Bridgestone and Philips.

Using the automotive industry in Germany as an example, explain how competitive intensity in a focal industry affects national competitive advantage.

Companies that face a highly competitive environment at home tend to outperform global competitors that lack such intense domestic competition. Fierce domestic competition in Germany, for example, combined with demanding customers and the no-speed-limit Autobahn make a tough environment for any car company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. This extremely tough home environment amply prepared German car companies such as Volkswagen (which also owns Audi and Porsche), BMW, and Daimler for global competition.

Which of the following statements is true of a multidomestic strategy? Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets. The multidomestic strategy is one of the main strategies companies pursued in the Globalization 1.0 stage. Companies pursuing a multidomestic strategy generally follow a cost-leadership strategy at the business level. The multidomestic strategy effectively protects firms from the risk of intellectual property appropriation.

Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets

Which of the following is a feature of a multinational company pursuing a global-standardization strategy? Its key business functions are located at the home country headquarters. Its business-level strategy tends to be cost leadership. Its competitive advantage lies in its high local responsiveness. Its core competency lies in its strong product differentiation.

Its business-level strategy tends to be cost leadership

What is meant by local responsiveness?

Local responsiveness is the need to tailor product and service offerings to fit local consumer preferences and host-country requirements. It generally entails higher cost, and sometimes even outweighs cost advantages from economies of scale and lower-cost input factors

Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones? The competitive intensity in the cell phone industry of Finland The huge demand for high-quality wireless services in Finland The abundance of natural resources in Finland The related and supporting industries present in Finland

The huge demand for high-quality wireless services in Finland

Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally? International strategy Global-standardization strategy Transnational strategy Focused-differentiation strategy

Transnational strategy

During the period of globalization 1.0, the mode of entry into foreign markets primarily involved: exporting goods. making foreign direct investments. making foreign institutional investments. licensing production and distribution.

exporting goods

Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) _____. international strategy multidomestic strategy global-standardization strategy localization strategy

global-standardization strategy

Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? Exporting Franchise agreement Acquisition Licensing

Acquisition

For which of the following products is an international strategy most suitable? For luxury goods that can be shipped across the globe For products with low value-to-weight ratios such as steel For food products that are specific to certain cultures For products with high linguistic content

For luxury goods that can be shipped across the globe

What are the two opposing forces that multinational companies have to face when competing around the globe?

Multinational companies face two opposing forces when competing around the globe: cost reductions versus local responsiveness. One of the core drivers for globalization is to expand the total market of firms in order to achieve economies of scale and drive down costs. Cost reductions achieved through a global-standardization strategy often reinforce a cost-leadership strategy at the business level. Similarly, local responsiveness increases the differentiation of products and services, reinforcing a differentiation strategy at the business level. Although there seems to be some convergence of consumer preferences across the globe, national differences remain, due to distinct institutions and cultures.

When should multinational enterprises (MNEs) use a transnational strategy?

The transnational strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A transnational strategy is generally used by MNEs that pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost.

How will an increase in coordinated economic and political integration between countries affect the world economy? The world's market economies will become self-sufficient and independent. There will be gains in social welfare and living standards across the globe. The cost of labor will further decline in emerging economies. There will be a movement away from global-collaboration networks among multinational enterprises (MNEs).

There will be gains in social welfare and living standards across the globe

GearOne Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, GearOne Autos Inc. is reaping the benefits of _____. economies of scope location economies resource immobility resource ambiguity

location economies

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because: they pursue a cost-leadership strategy in their respective industries. they are highly responsive to the local needs and preferences of customers in the host countries. they offer the same products or services in all their stores throughout the world. they attempt to combine benefits of localization and standardization strategies simultaneously.

they offer the same products or services in all their stores throughout the world

European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy? To take advantage of the high labor costs in the southern United States To take advantage of the high cost of living in the southern United States To take advantage of the low impact of globalization in the United States To take advantage of lower taxes in the southern United States

To take advantage of lower taxes in the southern United States

A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. international strategy transnational strategy global standardization strategy multidomestic strategy

multidomestic strategy

What are the factors that capture administrative and political distance in the CAGE framework?

Administrative and political distances are captured in factors such as the absence or presence of shared monetary or political associations, political hostilities, and weak legal and financial institutions.

GM entered China in 1997 through a joint venture with Shanghai Automotive Industrial Corp. (SAIC). Which of the following factors best contributes to the fact that the Chinese market already accounts for 25 percent of GM's total revenues? Chinese workers cost only a fraction of what U.S. workers do. The company operates a larger number of assembly plants in China than the U.S. The China operation sells more vehicles while employing twice the number of employees. GM's China operation has never been cost-competitive.

Chinese workers cost only a fraction of what U.S. workers do

Today, Hollywood movies are banking more on foreign sales for their overall revenues. Hollywood studios have been adapting scripts to appeal to global audiences, and casting foreign actors in leading roles. Which of the following statements most accurately explains the reason for this change? The purchasing power of the U.S. audience has reduced drastically. Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States. Hollywood actors and actresses are no longer willing to participate in domestic productions since there is no money in this industry. The movie industries of other countries are not doing so well.

Hollywood is not a truly global enterprise with the vast majority of revenues coming from outside the United States

Which of the following is one of the features of an international strategy? It is characterized by limited local responsiveness. It is one of the newest types of global strategies. It is characterized by cost-leadership as a preferred business strategy. It is often used successfully by firms with relatively small domestic markets.

It is characterized by limited local responsiveness

Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance? Olax, which has the same wealth and per capita income as Zeda Jordax, which has a very profitable economy and where people speak Jordaxian Segar, where people speak English and have a low standard of living Terra, which is located close to Zeda and is easily accessible by road

Segar, where people speak English and have a low standard of living

Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario? While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. Torque Inc. focuses more on cost reductions when compared to Marc Works Inc. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. Torque Inc. is exposed to greater risks of exchange rate fluctuations.

Torque Inc. focuses more on cost reductions when compared to Marc Works Inc.

A greater cultural distance between two trading countries: increases linguistic similarities between the two countries. increases the liability of foreignness. reduces the uncertainty of doing business. reduces the transaction costs associated with business.

increases the liability of foreignness

A firm is said to be pursuing a polycentric innovation strategy when: its research facility is situated in the headquarters and all other business activities are located around the world. it draws from multiple, equally important research facilities located throughout the world. it restricts its innovation to Western economies and production to developing markets. its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.

it draws from multiple, equally important research facilities located throughout the world

Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because: it overestimates its need to protect its intellectual property. it underestimates its liability of foreignness when entering the Zevar market. it underestimates its dwindling reputation before it enters the Zevar market. it overestimates the geographic and cultural distance between Pelo and Zevar.

it underestimates its liability of foreignness when entering the Zevar market

For a multinational enterprise (MNE), applying the globalization hypothesis would mean: being highly responsive to the heterogeneous needs and preferences of consumers globally, without focusing on cost reduction. customizing each product sold by an enterprise to differentiate it from its competitors. manufacturing products on international platforms and slightly modifying them to meet local tastes and standards. pursuing a focused differentiation strategy instead of a cost-leadership strategy to gain a competitive advantage.

manufacturing products on international platforms and slightly modifying them to meet local tastes and standards

The administrative and political distance between two trading countries reduces when: there are FDI restrictions in the host country. there is no independent central bank in the host country. there are tariffs and trade quotas in the host country. there is a well-functioning capital market in the host country.

there is a well-functioning capital market in the host country

What is a global strategy?

A global strategy is part of a multinational company's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.

When should a firm choose acquisition or greenfield operation as a foreign entry mode?

Acquisitions and greenfield operations are foreign entry modes that require a high level of investments in terms of capital and other resources, but also allow for a high level of control. In some instances, companies are required by the host country to form joint ventures in order to conduct business there, while some firms prefer greenfield operations (building new plants and facilities from scratch).

Onico Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Onico Inc. most likely pursue? A multidomestic strategy A transnational strategy A global-standardization strategy An international strategy

An international strategy

When should a multinational company pursue an international strategy?

An international strategy is essentially a strategy in which a company sells the same products or services in both domestic and foreign markets. It enables multinational enterprises (MNEs) to leverage their home-based core competencies in foreign markets. An international strategy is one of the oldest types of global strategies (Globalization 1.0) and is frequently the first step companies take when beginning to conduct business abroad. It is advantageous when the MNEs face low pressures for both local responsiveness and cost reductions. An international strategy is often used successfully by MNEs with relatively large domestic markets, and strong reputations and brand names. These MNEs, capitalizing on the fact that foreign customers want to buy the original product, tend to use differentiation as their preferred business strategy. Given increasing globalization, however, fewer and fewer markets correspond to this situation—low pressures for local responsiveness and cost reductions—that gives rise to the international strategy.

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? Because of the political differences between India and U.S. Because NAFTA prohibits Walmart from investing in countries outside North America Because of the large economic distance between U.S. and India Because Walmart's low-cost strategy has not been accepted by Indian consumers

Because of the large economic distance between U.S. and India

Which of the following has been a key driver for firms to expand globally during the globalization 3.0 stage? Benefits from lower labor costs in manufacturing and services Access to low-cost raw materials such as lumber and iron ore Low levels of economic growth in emerging economies Inefficient infrastructure in countries like China, which have brought down setting-up costs

Benefits from lower labor costs in manufacturing and services

Gamma Foods Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. RiverGem Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? While RiverGem Inc.'s competitive advantage will lie in its high local responsiveness, Gamma Foods Inc. will lack such competencies. Gamma Foods Inc. will face greater pressure for cost reductions than RiverGem Inc. due to its strategy choice. Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries. While Gamma Foods Inc. will require a global matrix structure, RiverGem Inc. will require a traditional headquarters model.

Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries

What are the implications of continued economic development across the globe for multinational enterprises (MNEs)? Explain using China as an example.

Continued economic development across the globe has two consequences for MNEs. First, rising wages and other costs are likely to negate any benefits of access to low-cost input factors. Second, as the standard of living rises in emerging economies, MNEs are hoping that increased purchasing power will enable workers to purchase the products they used to make for export only. China's labor costs, for example, are steadily rising in tandem with an improved standard of living, especially in the coastal regions. Rising wages, fewer workers due to the effects of China's one-child-per-family policy, and appreciation of the Chinese currency now combine to lessen the country's advantage in low-cost manufacturing. This shift is in alignment with the Chinese government's economic policy, which wants to see a move from "Made in China" to "Designed in China," to capture more of the value added.

What is meant by cultural distance? How does it affect a firm?

Cultural distance is the cultural disparity between the internationally expanding firm's home country and its targeted host country. A firm's decision to enter certain international markets is influenced by cultural differences. A greater cultural distance can increase the cost and uncertainty of conducting business abroad. In short, greater cultural distance increases the liability of foreignness.

Discuss how demand conditions within Porter's diamond framework affect national competitive advantage.

Demand conditions are the specific characteristics of demand in a firm's domestic market. A home market made up of sophisticated customers who hold companies to a high standard of value creation, where cost containment contributes to national competitive advantage. Moreover, demanding customers may also clue firms in to the latest developments in specific fields and may push firms to move research from basic findings to commercial applications for the marketplace.

What factors enabled Japanese companies to build energy-efficient air conditioners?

Due to dense urban living conditions, hot and humid summers, and high energy costs, Japanese customers demand small, quiet, and energy-efficient air conditioners. A home market made up of sophisticated customers who hold companies to a high standard of value creation, where cost containment contributes to national competitive advantage. Moreover, demanding customers may also clue firms in to the latest developments in specific fields and may push firms to move research from basic findings to commercial applications for the marketplace.

Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? Greenfield operations Brownfield operations Exporting Crowdsourcing

Exporting

For which of the following types of industries is a multidomestic strategy most common? Machine-tool industries Genetic industries Food industries Capital goods industries

Food industries

In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy? Globalization 1.0 Globalization 2.0 Globalization 3.0 Globalization 4.0

Globalization 3.0

What is meant by globalization? How has it affected the economies around the world?

Globalization is a process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs. Combined, these factors reduce the costs of doing business around the world, opening the doors to a much larger market than any one home country. Globalization also allows companies to source supplies at lower costs and to further differentiate products. Consequently, the world's market economies are becoming more integrated and interdependent. Globalization has led to significant increases in living standards in many economies around the world.

Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? Greenfield operation Export Joint venture Acquisition

Greenfield operation

Which of the following is a benefit of the transnational strategy? It facilitates global learning and harnesses economies of location. It completely eliminates a firm's risk of intellectual property expropriation. It helps to create a matrix global structure, which is cost effective and easy to implement. It helps a firm pursue a cost-leadership strategy by minimizing the need for local responsiveness.

It facilitates global learning and harnesses economies of location

Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business? It weakens the national competitive advantage enjoyed by the focal firm. It improves the factor conditions in the focal firm's domestic market. It increases the value of the focal firm's offering from a customer's perspective. It reduces the economic contribution created by the focal firm.

It increases the value of the focal firm's offering from a customer perspective

Zenovia Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Marva, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Zenovia Inc.? It will be able to benefit from economic arbitrage. It will be able to successfully leverage its competitive advantage from economies of standardization. It will be able to replicate its existing business model easily. It will be able to easily sell products for which demand varies by income.

It will be able to benefit from economic arbitrage

How does Lenovo pursue a global-standardization strategy? How has the company benefited from it?

Lenovo, the Chinese computer manufacturer, is now the maker of the ThinkPad line of laptops, which it acquired from IBM in 2005. To keep track of the latest developments in computing, Lenovo's research centers are located in Beijing and Shanghai in China, in Raleigh, North Carolina (in the Research Triangle Park), and in Japan. To benefit from low-cost labor and to be close to its main markets in order to reduce shipping costs, Lenovo's manufacturing facilities are in Mexico, India, and China. The company organizes its worldwide operations with the view that a truly global company must be able to quickly capitalize on new ideas and opportunities from anywhere. By forgoing a traditional headquarters model and focusing on centers of excellence around the world, Lenovo makes the maximum use of its resources to create the best products in the most efficient and effective way possible.

McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast food chain pursuing? Multidomestic strategy Focused differentiation strategy Global-standardization strategy International strategy

Multidomestic strategy

Define a transnational strategy using the German multimedia conglomerate Bertelsmann as an example.

Multinational companies pursuing a transnational strategy attempt to combine the benefits of a localization strategy (high local-responsiveness) with those of a global-standardization strategy (lowest cost position attainable). The German multimedia conglomerate Bertelsmann attempts to follow a transnational strategy. Bertelsmann's employs over 100,000 people, with two-thirds of that work force outside its home country. In particular, Bertelsmann operates in more than 60 countries throughout the world, and owns many regional leaders in their specific product categories, including Random House Publishing in the U.S. and RTL Group, Europe's second-largest TV, radio, and production company (after the BBC). Bertelsmann operates its over 500 regional media divisions as more or less autonomous profit-and-loss centers; global learning and human resource strategies for executives are coordinated at the network level.

For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? Product differentiation Superior customer service Local responsiveness Price

Price

How can expanding globally become a threat to a multinational enterprises (MNEs) reputation? Explain with the help of a real-world example.

Student answers will vary. One of the most valuable resources that a firm may possess is its reputation. A firm's reputation can have several dimensions, including a reputation for innovation, customer service, or brand reputation. Globalizing a supply chain can have unintended side effects. These in turn can lead to a loss of reputation and diminish the MNE's competitiveness. A possible loss in reputation can be a considerable risk and cost for doing business abroad. The textile industry is notorious for sweat-shop conditions, and many Western companies such as the Gap (U.S.), H&M (UK), and Carrefour (France) have taken a big hit to their reputation in recent factory accidents in Bangladesh and elsewhere in Southeast Asia. Hundreds of factory workers were killed when a textile factory collapsed on the outskirts of Dhaka, Bangladesh. Although much of the blame lies with the often corrupt host governments not enforcing laws, regulations, and building codes, the MNEs that source their textiles in these factories also receive much of the blame with negative consequences for their reputation. The MNEs are accused of exploiting workers and being indifferent to their working conditions and safety, all in an unending quest to drive down costs.

After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company? The company's operations will become more cost efficient. The company's exposure to exchange rate fluctuations will reduce. The company will be able to reap greater benefits from economies of scale. The company will be exposed to a lower risk of intellectual property appropriation.

The company's exposure to exchange rate fluctuations will reduce

What is the engine behind globalization? Provide a real-world example.

The engine behind globalization is the multinational enterprise (MNE)—a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries. By making investments in value chain activities abroad, MNEs engage in foreign direct investment (FDI). For example, the European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. MNEs need an effective global strategy that enables them to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.

The risk of intellectual property appropriation increases when companies follow a multidomestic strategy. Elaborate on this statement.

The risk of intellectual property appropriation increases when companies follow a multidomestic strategy. Besides exposing codified knowledge embedded in products, as is the case with an international strategy, a multidomestic strategy also requires exposing tacit knowledge because products are manufactured locally. Tacit knowledge that is at risk of appropriation may include, for example, the process of how to create consumer products of higher perceived quality.

Disney's "Wedding Banned," a romantic comedy about a divorced couple trying to prevent their daughter from getting married, was axed in the advanced production stage despite several marquee stars (Robin Williams, Anna Faris, and Diane Keaton). Which of the following statements best explains why this happened? The purchasing power of the U.S. audience had reduced drastically. There was a feeling that the movie was against traditional American values regarding marriage. The movie was a copy of an already existing French movie. There were perceptions that this movie would not succeed outside of the American market.

There were perceptions that this movie would not succeed outside of the American market

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? They are easy to initiate and terminate. They require low amounts of investments in terms of capital. They reduce a firm's exposure to loss of reputation. They are based on contracts rather than ownership.

They reduce a firm's exposure to loss of reputation

One Stop Inc., a supermarket chain, is implementing a multidomestic strategy. Solar Com Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? One Stop Inc. will focus more on cost-reduction than Solar Com Inc. One Stop Inc. will have its business functions spread across the world; Solar Com Inc.'s business functions will be highly centralized. Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level. Unlike Solar Com Inc., One Stop Inc. will be able to reap significant economies of scale and location economies.

Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level

In which of the following situations is pursuing an international strategy advisable? When a firm manufactures products related to national and religious identity When a firm operates in an industry where the pressure to keep the costs low is extremely high When a firm wants to be perceived as a domestic company by the host country consumers When a firm enjoys a large domestic market, strong reputation, and brand name

When a firm enjoys a large domestic market, strong reputation and brand name

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A multidomestic strategy An international strategy A global-standardization strategy A one-product strategy

a multidomestic strategy

Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Shine Enterprises Inc. most likely use? An international strategy A focused-differentiation strategy A multidomestic strategy A transnational strategy

a transnational strategy

A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it: is pursued in response to low pressure for local responsiveness and low pressure for cost reduction. attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost. attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company. operates on the assumptions made in the globalization hypothesis in order to lower costs.

attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company

A firm pursuing a transnational strategy would believe that: key business functions should be located in its home country headquarters. local responsiveness is more important than cost reductions for competitive advantage. best practices, ideas, and innovations should be diffused throughout the world. the majority of the value creation should take place in the home country.

best practices, ideas, and innovations should be diffused throughout the world

The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally. death-of-distance hypothesis local responsiveness hypothesis real option framework dynamic capabilities framework

death-of-distance hypothesis

Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the: globalization hypothesis. upper echelons theory. real options perspective. global scaling theory.

globalization hypothesis

When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets. domestic strategy international strategy differentiation strategy localization strategy

international strategy

A trend observed during the globalization 3.0 stage involves: countries around the globe becoming more self-sufficient and independent. multinational companies organizing as global-collaboration networks. privately-owned firms getting nationalized. world's market economies becoming less integrated.

multinational companies organizing as global-collaboration networks

Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry. capital gain trade surplus national competitive advantage liability of foreignness

national competitive advantage

Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to: reduce its geographical distance from the other countries. increase its administrative distance from the other countries. increase its economic distance from the other countries. reduce its cultural distance from the other countries.

reduce its cultural differences from the other countries