Deck 1: Expanding abroad: Motivations, means, and mentalities

Question 1

An MNE is a(n):

A) import-export company that actively trades in foreign markets.
B) company that passively manages its substantial foreign direct investment.
C) import-export company that actively manages its foreign investment portfolio.
D) company that actively manages substantial foreign direct investment.

Answer 1

D
A true MNE is a company that has substantial direct investment in foreign countries,and that actively manages and regards its foreign operations as integral parts of the company,both strategically and organizationally.Companies that either do not hold equity positions or hold minor equity positions in overseas ventures without or with very low management involvement may be viewed as "international" companies but would not be regarded as multinational enterprises.

Question 2

An MNE with an 'international mentality' will typically be managed as a coordinated federation.

Answer 2

True

Question 3

All companies internationalize in an incremental manner.First,they make an initial commitment of resources to the foreign market in order to secure local market knowledge.Building on this knowledge,they make subsequent resource commitments,eventually leading to higher levels of investment in the foreign market.

Answer 3

False
There are many exceptions to the incremental approach.Some firms are "born globals".Other firms retain the same mode,including level of subsidiary involvement,in all foreign markets.

Question 4

HomeAppliances Co.is a new manufacturer of home appliances.HomeAppliances wants to go international.Some of its traditional motivations for pursuing internationalization include:

A) securing key supplies, seeking new markets, 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 low-cost factors of production
D) securing key supplies, improving competitive positioning, and accessing low-cost factors of production

Question 5

The process of internationalization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis,planning and implementation.

Question 6

The main advantage multinational mentality has over global mentality is more efficient manufacturing.

Question 7

A joint venture is a contractual mode of foreign entry involving a high level of resource commitment by all partners.

Question 8

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

Question 9

Emerging motivations for internationalization include the desire to enhance the firm's competitive position and the desire to develop global scanning capabilities.

Question 10

Raymond Vernon's article "Gone are the cash cows of yesteryear" highlights a company's global scanning and learning capability.

Question 11

One motivation behind internationalization is to sustain the firm's competitive position.To pursue a sustainable competitive position relative to its rivals in the athletic clothing industry,Nike attempts to:

A) preempt markets, capture global scale, and secure raw materials
B) capture global scale, access scarce knowledge, and match competitors
C) match competitors, capture global scale, and preempt markets
D) exploit factor cost differences, preempt markets, and match competitors

Question 12

An MNE with a 'multinational mentality' will typically be managed as a coordinated federation.

Question 13

An MNE with a 'transnational mentality' will typically be managed as an integrated network.

Question 14

An MNE with a 'global mentality' will typically manage its operations centrally.

Question 15

Three prerequisites that must be satisfied before a national firm can transform itself into a multinational firm include:

A) scale-based advantages, ownership-specific advantages, and contractual capabilities.
B) location-specific advantages, ownership-specific advantages, and organizational capabilities.
C) scale-based advantages, ownership-specific advantages, and organizational capabilities.
D) location-specific advantages, knowledge advantages, and organizational capabilities.

Question 16

Only one article further develops the idea that "the process of developing these strategic and organizational attributes lies at the heart of the internationalization process through which a company builds its position in world markets.

Question 17

For an MNE to exist,first foreign countries must provide location-specific advantages to attract the company to invest there,second the company must have ownership-specific advantages that counteract its liability of foreignness,third the company must have the organizational capability to leverage its strategic advantages more effectively internally than externally.

Question 18

The largest MNEs are equivalent in their economic importance to less developed economies such as Nigeria,Moldova,or Jamaica.

Question 19

A franchise,such as McDonald's,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

Question 20

Which of the following correctly describes the sequential evolution in management 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.

Question 21

The 100 largest TNCs from developing and transition economies shows:

A) The importance of developing and transition economies is declining.
B) The status quo of developing and transition economies.
C) The importance of developing and transition economies is increasing.
D) None of the above

Question 22

If you had been the founder of Dunkin Donuts,would you have chosen to heavily rely on franchising,the strategy used by Rosenberg,as your entry mode to foreign countries? Or would you have chosen to rely on wholly owned subsidiaries as your foreign entry mode? Why?

Question 23

Rana manages a French fashion design company.What would motivate Rana's company to internationalize?

Question 24

Briefly compare and contrast the Uppsala Internationalization Model and the Born Global Model. Under what circumstances is each model most applicable? Give examples to support your arguments.

Question 25

What is an MNE? Give examples to explain the difference between companies that are considered MNEs and those that are not.

Question 26

In 2015,MNEs' foreign affiliates generated value added of more than _____ of global GDP and ____ of world exports.

A) 1/5, 50%
B) 1/10, 30%
C) 1/15, 20%
D) 1/8, 25%

Question 27

Briefly compare and contrast the four mentalities toward internationalization.

Question 28

Which of the following constitutes a list of foreign entry modes that involve the MNE to make a foreign investment

A) Wholly owned, joint venture
B) Wholly owned, license
C) Franchising, joint venture
D) Franchising, license

Question 29

_________ suggests that in the first stage innovations are produced in the home developed country; in the second stage they are exported to other similarly developed countries; in the third stage,they start being produced in these developed countries; in the fourth stage they start being produced in low-wage developing countries.

A) Vernon's product cycle theory
B) Johanson and Vahlne's stages theory
C) Dunning's eclectic theory
D) Levitt's globalization theory

Question 30

The demand for the Italy-based Sparkly Fashion Manufacturing's unisex pants has been continually increasing.Sparkos,the CEO of the company,intends to take his company international by producing these unisex pants mainly in Italy and selling them in the same way all over the world.Sparkos is operating with a(n):

A) multinational mentality
B) global mentality
C) international mentality
D) transnational mentality

Question 31

Roy is the CEO of a multinational apparel company.How would he conceptualize the strategic role of his firm's foreign operations if he embraced a 'global mentality'? If he embraced a 'multinational mentality'?

Question 32

The CEO of Paragon Ltd.wants to take his company international.What are the three big questions he must answer before expanding abroad?

Question 33

Briefly explain the product cycle of smart phones using Raymond Vernon's product cycle theory.

Question 34

OfficeWare Corp.is an MNE that produces and sells office equipment.If the company's CEO employs a 'global mentality' toward the strategic role of the company's 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.