International business chapter 6

Young companies that internationalize early in their evolution

Born global firms are ____________.

True

Born global firms are you companies that internationalize early in their evolution.

Comparative advantage principle

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

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.

True

A benefit of the monopolistic advantage theory is that firms can operate foreign subsidiaries more profitably than the local firms that compete in their own markets.

National industrial policy

A proactive economic development plan initiated by the government, often in collaboration with the private sector, that aims to develop or support particular industries within the country is referred to as _________.

True

According to Dunnings eclectic paradigm, proprietary technology, managerial skills, trademarks or brand names, and economies of scale are examples of ownership-specific advantages.

National competitive advantage

According to porter, a nations factor endowments help determine its _________.

False

According to porter, competitive advantage, resulting from firm strategy, structure, and rivalry refer to the presence of clusters of suppliers, competitors, and complementary firms that excel in particular industries.

True

According to porter, the competitive advantage of a nation depends on the collective competitive advantages of the nations firms.

Demand conditions

According to porters competitive advantage of nations, ______ refer to the nature of home-market demand for specific products and services.

Absolute advantage principle

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 another country.

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 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

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 industrialization process of a firm, the active involvement stage follows the committed involvement stage.

Experimental involvement

According to the internationalization process model, a firm advances to the _______ stage by initiating limited international activity, typically in the form of basic exporting.

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

According to the internationalization theory, firms must reduce control over foreign operations in order to enhance overall effectiveness.

True

Adam smith attacked the mercantilist view by suggesting that nations benefit most from free trade.

___________ 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

True

Comparative advantage includes inherited resources, such as labor, climate, arable land, and petroleum reserves.

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.

Competitive advantage refers to the ______________.

True

Corruption is a common source of market failure.

False

Countries cannot create or acquire comparative advantage.

Gradually become the norm in international business

Current trends suggest that early internationalizing firms will _________.

True

Developing new product designs and new ways of organizing or training are some of the ways in which companies innovate.

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

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.

Competitive advantage

In recent years, business executives and scholars have used __________ to refer to the advantages possessed by nations and individual firms in international trade and investment.

Standardization

In the _______ phase of international product life cycle theory, knowledge about how to produce the product is widespread and manufacturing becomes straightforward.

Committed involvement

In the ________ stage of the internationalization process, a firm targets numerous foreign markets via various entry modes, especially FDI.

False

In today's world, the most important source of national advantage is a country's natural resources.

Domestic focus

In which of the following stages of the internationalization process is a firm preoccupied with business in its home market?

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 factor endowments.

Born global

International entrepreneurship is a new field of scholarly inquiry that is a result of the __________ phenomenon.

False

Low cost labor and inexpensive capital are examples of a firms competitive advantage.

False

Mercantilism benefits consumers because restricting imports increases the choice of domestic products they can buy.

False

Modern business executives use the term comparative advantae 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 pre college and university levels.

Export more goods than they import

Nations running a trade surplus ___________.

False

Relative efficiency of production refers to the total value of assets that MNEs own abroad via their investment activities.

National industrial policy

The ________ is one of three key modern perspectives that helps explain the development of national competitive advantage.

Factor proportions theory

The _________ rests on the premise that countries differ in the type and quantity of production factors they possess.

Comparative advantage

The gulf of nations benefit economically from rich petroleum reserves in the region. This is an example of _______.

False

The innovative mess of a nations firms has no significant impact on the national competitive advantage.

Innovative capacity

Which of the following comparative advantages is acquired over time?

Entrepreneurial orientation

Which of the following is a comparative advantage?

Unrestricted international trade generally increases the overall prosperity of poor countries.

Which of the following is a typical outcome of free trade?

Relative efficiency of production

Which of the following is an element of the comparative advantage principle?

Standardization

Which of the following is the last stage of evolution in the international product life cycle theory?

The product enjoys a temporary monopoly at this stage

Which of the following is true about the first stage of evolution in the international product life cycle theory?

A competitive advantage is difficult for competitors to imitate.

Which of the following is true with regard to competitive advantage?

Firm-level explanations address the question "how can internationalizing firms gain and sustain competitive advantage?"

Which of the following is true with regard to firm-level theories?

Mercantilism tends to harm firms that import

Which of the following is true with regard to mercantilism?

New trade theory

_______ argues that increasing returns to scale, especially in economies of scale, are important for superior international performance in industries that succeed best as their production volume increases.

Monopolistic advantage

________ 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.

Mercantilism

________ is the belief that national prosperity is the result of a positive balance of trade, achieved by maximizing exports and minimizing imports.

FDI stock

__________ describes the total value of assets that MNEs own abroad via their investment activities.