Globalization Test Questions

Chapter 1 Expanding abroad Motivations, means, and mentalities True/False1. The largest MNEs are equivalent in their economical importance to less genuine economies such(prenominal) as Tanzania, Estonia or Sri Lanka. Answer False (Sales of the largest MNEs exceed the GDPs of less developed countries. ) encumbrance Easy varlet 4 and Table 1-1 on rapsc everyion 3 Topic MNE scope and influence2. The carry out of world-wideization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis, planning and implementation.Answer False (It is more likely a combination of rational analysis, opportunism, and luck. In regards to opportunism, several studies have found that most firms go about exporting due to an unsolicited export order. ) Difficulty Moderate rapscallion 9 Topic Inter issueization process3. A joint gamble is a contractual mode of hostile entry involving a spirited level of resource commitment by all partner s. Answer False (A JV leave alone non typically require as high a resource commitment as we would see in wholly owned subsidiaries. In addition, there is important variability in the level of resources contributed by partners. ) Difficulty Moderate Page 10 Topic conflicting entry mode4. appear motivations for internationalization include the go for to enhance the firms competitory position and the desire to develop spheric scanning capabilities. Answer True Difficulty Easy Page 6-7 and ppt veer 1-6 Topic Motivations for internationalization5. For an MNE to exist, first outside(prenominal) countries must provide location-specific advantages to attract the community to invest there, second the political party must have ownership-specific advantages that counteract its liability of foreignness, leash the troupe must have the organizational capability to leverage its strategical advantages more effectively internally than externally. Answer True Difficulty Moderate Page 7 -8 Topic Prerequisites for internationalization6. An MNE with a multinational perspective will typically be managed as a coordinated federation. Answer False (It will typically be managed as a decentralized federation. ) Difficulty Moderate Page 11-12 and ppt slide 1-13 Topic The evolving humour international to transnational7. An MNE with a global perspective will typically manage its operations centrally. Answer True Difficulty Moderate Page 12-13 and ppt slide 1-13 Topic The evolving mentality international to transnational8. An MNE with a transnational perspective will typically be managed as an integrated network. Answer True Difficulty Moderate Page 13-14 and ppt slide 1-13 Topic The evolving mentality international to transnationalMultiple Choice9. Which of the side by side(p) justly describes the sequential evolution in oversight thinking with respect to the strategic role of foreign operations in emerging MNEs? a. global mentality, multinational mentality, international mentality, transnational mentality. b. international mentality, global mentality, transnational mentality, multinational mentality. c. multinational mentality, global mentality, international mentality, transnational mentality. d. international mentality, multinational mentality, global mentality, transnational mentality.Answer d (a, b, and c are incorrect because, although they describe the different ways of management thinking regarding the strategic role of foreign operations in emerging MNEs, they do not describe the evolution of this thinking in the correct sequence. ) Difficulty Moderate Page 11-14 Topic Evolving mentality toward strategic role of foreign operations10. A franchise, such as McDonalds, is a _________ mode of foreign entry. a. low commitment, low control b. low commitment, gibe control c. low commitment, high control d. moderate commitment, moderate controlAnswer b (a, c, and d would describe indirect export, contract manufacturing, and joint venture foreign mo des of entry respectively. ) Difficulty Moderate Page 10 (figure 1-2) Topic Foreign entry mode11. A joint venture is a _________ mode of foreign entry. a. low commitment, low control b. low commitment, moderate control c. low commitment, high control d. moderate commitment, moderate control Answer d (a, b, and c would describe indirect export, franchise, and contract manufacturing foreign modes of entry respectively. ) Difficulty Moderate Page 10 (figure 1-2)Topic Foreign entry mode12. Pashpa Co. is a new manufacturer of home appliances. Pashpa wants to go international. Some of the traditional motivations for pursuing internationalization include a. securing key supplies, desire new trades, and raising global scanning and learning capabilities b. securing key supplies, seeking new markets, and improving competitive positioning c. securing key supplies, seeking new markets and accessing cheap factors of production d. securing key supplies, improving competitive positioning, and a ccessing low-cost factors of productionAnswer c (a, b, and d are incorrect because raising global scanning and learning capabilities and improving competitive positioning are not traditional motivations for pursuing internationalization, they are emerging motivations. ) Difficulty Moderate Page 4-6 Topic Motivations for internationalization13. One motivation behind internationalization is to sustain the firms competitive position. To pursue a sustainable competitive position relative to its rivals in the athletic clothing industry, Nike attempts to a. reempt markets, capture global scale of measurement, and secure raw materials b. capture global scale, access scarce knowledge, and match competitors c. match competitors, capture global scale, and displace markets d. exploit factor cost differences, preempt markets, and match competitors Answer c (a, b, and d are incorrect because securing raw materials, accessing scarce knowledge, and exploiting factor cost differences may give a c ompany a temporary competitive advantage but not a sustainable competitive advantage. ) Difficulty Hard Page 4-7Topic Motivations for internationalization14. _________ suggests that in the first format innovations are produced in the home developed countrified in the second stage they are exported to other similarly developed countries in the third stage, they vary being produced in these developed countries in the fourth stage they start being produced in low-wage developing countries. a. Vernons product cycle theory b. Johanson and Vahlnes stages theory c. Dunnings eclectic theory d. Levitts globalization theory Answer a Difficulty Moderate Page 5-6, 8 Topic Motivations for internationalization15. Which of the following constitutes a list of foreign entry modes that involve the MNE to make a foreign investment a. Greenfield, acquisition, joint venture and capital participation b. Greenfield, acquisition, joint venture and license c. Franchising, acquisition, joint venture and c apital participation d. Greenfield, acquisition, cooperation agreements and capital participation Answer a (Licensing, franchising, and many forms of cooperation may not entail an MNE making an investment. Difficulty Easy Page 9-10 Topic Foreign entry modes16. OfficeWare Corp. is an MNE that produces and sells office equipment. If the companys chief executive officer employs a global mentality toward the strategic role of the companys foreign operations, then we would expect that OfficeWare a. regards its overseas markets as a portfolio of local opportunities. b. leverages its domestic capabilities worldwide. c. regards the world as a single unit of analysis. d. simultaneously responds to local needs, global demands and cross-border learning opportunities.Answer c (a, b, and d would represent multinational, international, and transnational mentalities respectively. ) Difficulty Moderate Page 11-14 Topic The evolving mentality international to transnational Essay17. The CEO of Parag on Ltd. wants to take his company international. What are the three big questions he must answer before expanding abroad? Answer The three questions this CEO must answer before expanding abroad are a. What market opportunities, sourcing advantages or strategic imperatives will drive the companys international expansion? . How will the company expand its foreign presence through exports, licensing, joint ventures, wholly owned subsidiaries or about other means? c. How will the attitudes, assumptions and beliefs of Paragons employees continue the probability of the company succeeding in its efforts to internationalize? Difficulty Moderate Page 1 (box insert) Topic Internationalization18. Rana manages an Italian fashion design company. What would touch off Ranas company to internationalize? Answer i) Traditional motivations might include securing key supplies, seeking new markets and accessing low-cost factors of production (e. g. labor, capital, etc. ) (ii) Emerging motivations mi ght include increasing scale economies to offset significant R&D investments, shortening product life cycles, improving a companys competitive position and enhancing a companys global scanning and learning capabilities. Difficulty Easy Page 4-7 Topic Motivations behind internationalization19. Briefly justify the product cycle of personal computers using Raymond Vernons product cycle theory. AnswerThis theory suggests that early in a products life-cycle, all the parts and labor needed to manufacture the product will be sourced from the locale in which the product was invented. As the product is increasingly adopted and distributed in global markets, production gradually shifts away from the point of origin. In some cases, the product ultimately becomes a good that is imported into the country in which it was in the beginning invented. For example, in the case of personal computers, during the new product stage, the computer was produced and purchased by consumers in the United Stat es and little export trade occurred.During the maturing product stage, mass-production techniques were developed and foreign demand (in developed countries) expanded. At this point, the U. S. began to export the product to other developed countries. In the standardized product stage, production moved to developing countries, which then export the product to developed countries. Difficulty Moderate Page 5-6 Topic Product cycle theory20. Briefly compare and occupation the Uppsala Internationalization Model and the Born global Model. Under what circumstances is each model most applicable?Give examples to support your arguments. Answer According to the Uppsala Model, companies internationalize in an incremental fashion. Typically, they start by utilizing foreign entry modes that require low levels of resource commitment and low levels of control over foreign activities (e. g. exporting). The model conceptualizes subsequent stages in the internationalization process as requiring higher levels of resource commitment and providing higher levels of control over foreign activities (e. g. wholly owned subsidiary). The experience of Toyota is consistent with the Uppsala Model.According to the Born Global Model, some companies are born global, establishing significant international operations immediately or shortly after the company is launched. These firms do not employ an incremental approach. Instead, these firms sharply pursue internationalization due to their internal orientation or the need to move quickly due to the nature of their products or services. The experience of many meshwork companies is consistent with the Born Global Model. Difficulty Moderate Page 9-10 Topic Process of internationalization21.Roy is the CEO of a multinational apparel company. How would he conceptualize the strategic role of his firms foreign operations if he possessed a global mentality? If he possessed a multinational mentality? Answer If Roy possessed a global mentality, he would view the world as a single unit of analysis and he would centralize the management of the firms foreign operations. Thus, he would drive the firm to create products for a world market and manufacture them on a global scale in a few highly efficient plants, often located at the corporate center.However, if Roy possessed a multinational mentality, he would regard foreign markets as a portfolio of local opportunities and manage his company as a decentralized federation. Thus, he would recognize and emphasize the differences between national markets and operating environments and qualify his products, strategies and management practices on a country-by-country basis. Difficulty Moderate Page 11-13 Topic Mentalities toward internationalization22. What is an MNE? Give examples to explain the difference between companies that are considered MNEs and those that are not. AnswerAn MNE is a company that engages in the active management of substantial direct investment in one or more foreign c ountries and that considers those investments/operations as constituent(a) parts of the company, both strategically and organizationally. Thus, companies that solely rely on import-export business are not considered MNEs. They may be considered international companies but not multi-national enterprises (MNEs). Moreover, companies that passively manage an investment portfolio (as opposed to those that actively manage foreign assets) are not considered MNEs. Difficulty Easy Page 2 Topic MNE definition23.Briefly compare and contrast the four mentalities toward internationalization. Answer Companies that have an international mentality produce products for the domestic market and only subsequently sell these products overseas. They transfer innovation and knowledge from the recruit company to the foreign operators. These companies view themselves essentially as domestic with some foreign appendages. Companies that have a multinational mentality modify their products, strategies, and m anagement practices country by country. These companies view themselves as nationally sensitive and responsive, thus the term multinational.Companies that have a global mentality create products for a world market and manufacture them on a global level in a few highly efficient plants. These companies view the world, not just individual national markets, as their unit of analysis. Companies that have a transnational mentality are responsive to country-level operations however, they coordinate these operations to sustain competitive effectiveness and economic efficiency. These companies view themselves as an integrated network. Difficulty Moderate Page 11-14 Topic Mentalities toward internationalization