Question 1

The global standardization strategy, despite its complexity, is still the best option at being cost effective and locally responsive.

Accepted Answer

The global standardization strategy focuses on achieving economies of scale by producing a standardized product for all markets, which may not always be the best option for being locally responsive due to varying consumer preferences and market conditions across different regions.

Question 2

The global product division structure seeks to balance local responsiveness with efficiency while an MNE using a global matrix aims to provide the world with standardized products to reach their full market potential.

Accepted Answer

The statement is incorrect. The global product division structure aims to provide standardized products worldwide while balancing local responsiveness with efficiency. On the other hand, the global matrix structure seeks to balance local responsiveness with global integration to achieve the full market potential. The statement is incorrect. The global product division structure is designed to focus on standardized products for global efficiency, while the global matrix structure balances both local responsiveness and efficiency.

Question 3

One of the disadvantages of the geographic area structure is that country and regional managers are not given sufficient voice relative to the heads of the domestic divisions.

Accepted Answer

In a geographic area structure, country and regional managers typically have significant authority and autonomy to make decisions relevant to their specific areas, often having a strong voice in the organization.

Question 4

Transnational strategy is usually the easiest strategy for an MNE to implement and the first one adopted when the firm ventures abroad.

Accepted Answer

The statement is false. Transnational strategy is actually the most difficult strategy to implement as it requires balancing global integration and local responsiveness. Typically, MNEs will start with simpler and more straightforward strategies such as exporting or licensing before moving on to more complex strategies like transnational. The statement is false. The transnational strategy is the most complex and difficult strategy to implement, and it is usually adopted after the MNE has gained experience in operating in international markets through other strategies such as exporting and franchising.

Question 5

From a resource perspective, tacit knowledge is ultimately more valuable than explicit knowledge.

Accepted Answer

Tacit knowledge refers to knowledge that cannot be easily codified or written down, such as abilities, expertise, and experience. This type of knowledge is often deeply ingrained in individuals or organizational cultures and can be difficult to transfer. However, it is often more valuable than explicit knowledge, which refers to knowledge that can be documented or transferred in a clear and organized manner. Tacit knowledge can be a source of competitive advantage for organizations since it can be difficult for competitors to replicate. Thus, from a resource perspective, tacit knowledge is ultimately more valuable than explicit knowledge. Tacit knowledge is knowledge that is difficult to articulate and is gained through experience, intuition, and insight. It is often internalized and personal, making it highly valuable but also difficult to transfer or replicate. Conversely, explicit knowledge is codified and can be easily captured, transferred, and shared. While both types of knowledge are important, tacit knowledge is ultimately more valuable as it provides a deeper understanding and insight into a particular topic or area.

Question 6

All firms evolve in the same direction from relatively simple international division, through either geographic area or global product division structures, and may finally reach the more complex global matrix stage.

Accepted Answer

Firms evolve in different ways based on their strategy, industry, scale, and competitive environment. There is no single evolutionary path for all firms' organizational structures. Some may adopt a matrix structure early on, while others may never use it, depending on what best suits their operational needs and strategic goals.

Question 7

In home replication strategy, knowledge flow is multidirectional, while in transnational strategy, it is one-way.

Accepted Answer

In transnational strategy, knowledge flow is multidirectional, whereas in home replication strategy, it is typically one-way from the headquarters to the subsidiaries. In home replication strategy, knowledge flow is typically one-way, with knowledge being transferred from headquarters to subsidiaries. In contrast, transnational strategy emphasizes the need for knowledge exchange and collaboration across borders, resulting in multidirectional knowledge flow.

Question 8

A disadvantage to the global standardization strategy is that often one size does not fit all, and MNEs who adopt this strategy tend to experience a lack of local responsiveness.

Accepted Answer

The global standardization strategy emphasizes standardizing products and services across different markets, but this can overlook important differences in local customer preferences, cultures, regulations, and business environments. As a result, MNEs may struggle to adapt to local demands and miss out on potential opportunities or face resistance from local competitors. The statement is true. Global standardization strategy can lead to a lack of local responsiveness because it assumes that a standardized approach will work well in all markets, which may not always be the case. Different markets may have unique cultural, legal, and economic factors that require a tailored approach.

Question 9

Explicit knowledge is codifiable and can be transmitted by IT. Tacit knowledge is non-codifiable and requires hands-on communication.

Accepted Answer

This statement is true. Explicit knowledge can be easily documented and shared using IT tools such as databases, manuals, and e-learning systems, whereas tacit knowledge is subjective, experience-based, and context-specific, and requires personal interactions, observation, and on-the-job training to be transferred. This statement is true. Explicit knowledge can be captured and shared through technology, while tacit knowledge is based on personal experience and expertise and is more difficult to transfer electronically.

Question 10

Because of the popularity of the global standardization strategy, many firms have changed their organization to the global product division.

Accepted Answer

The popularity of the global standardization strategy has indeed led many firms to adopt the global product division organizational structure. The popularity of the global standardization strategy has led many firms to adopt the global product division organizational structure.

Question 11

In the eyes of stakeholders, a top echelon consisting of largely one nationality bodes well for an MNE aspiring to globalize everything it does.

Accepted Answer

A top echelon consisting of largely one nationality may be viewed as a lack of diversity and inclusivity, which can negatively impact the MNE's ability to effectively operate in different cultures and markets. To truly globalize, it is important to have a diverse leadership team that can bring different perspectives and experiences to the table. In the eyes of stakeholders, a diverse top echelon consisting of individuals from different nationalities is usually perceived positively, as it demonstrates the MNE's commitment to global perspectives and inclusivity. A top echelon that is largely consisting of one nationality may be perceived as a lack of diversity and potential bias.

Question 12

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

Accepted Answer

A localization strategy requires significant investment in researching and adapting to foreign markets, and may involve higher costs than other strategies such as global or standardization. Therefore, this strategy is most effective when cost considerations are not the primary concern for the MNE.

Question 13

International division structure is an organizational structure typically set up when a firm first engages in a home replication strategy.

Accepted Answer

This is because the international division structure allows the firm to replicate its home office functions in foreign markets. It is often used as a starting point for firms that are pursuing a global strategy. This statement is true. The international division structure is often used to facilitate a home replication strategy, where the company seeks to replicate its domestic business model in international markets. The structure involves setting up a separate division or department that is responsible for managing international operations, with dedicated resources, personnel, and budgets. This helps the company focus on its international expansion and can lead to faster decision-making and greater efficiency in the international market.

Question 14

Regarding knowledge flow in MNEs, firms adopting the transnational strategy experience the highest knowledge interdependence while firms adopting the localization strategy experience the lowest.

Accepted Answer

This statement is true as firms adopting the transnational strategy aim to balance global integration and local responsiveness, leading to a high level of knowledge interdependence among different units and locations of the MNE. In contrast, firms adopting the localization strategy tend to focus on serving only local markets and may not have a strong need for cross-border knowledge sharing, resulting in lower knowledge interdependence. The transnational strategy involves a high level of coordination and knowledge sharing between different subsidiaries and headquarters, leading to a high degree of knowledge interdependence. In contrast, the localization strategy focuses on adapting to local markets and may limit knowledge sharing between subsidiaries, resulting in lower knowledge interdependence.

Question 15

The framework that addresses the pressures MNEs confront is commonly referred to as the integration-responsiveness framework.

Accepted Answer

The integration-responsiveness framework is commonly used to address the pressures that MNEs confront, with integration referring to the standardization of operations across different countries and responsiveness referring to adapting to local market differences. This is true, the integration-responsiveness framework is used to address the pressures that multinational enterprises face.

Question 16

Strategy usually drives structure, but structure does not usually drive strategy.

Accepted Answer

Structure can also influence or drive strategy, as organizational structure can determine the flexibility, adaptability, and strategic options available to a company. Changes in structure can lead to shifts in strategy.

Question 17

The top executives at the highest level of an MNE are usually host-country nationals.

Accepted Answer

The top executives at the highest level of an MNE are usually parent-country nationals or third-country nationals instead of host-country nationals. The top executives at the highest level of an MNE are usually expatriates or parent-country nationals. However, there is a growing trend to promote host-country nationals to these positions due to their knowledge of local markets and culture.

Question 18

The phrase think global, act local is a winning formula when it comes to leveraging multinational presence.

Accepted Answer

This phrase encourages companies to have a global perspective while taking action at a local level, which is a successful approach for multinational companies to effectively use their presence in different markets. Thinking globally allows a company to leverage its multinational presence, while acting locally allows it to adapt to the specific needs and preferences of each local market. This combination can lead to success in international business.

Question 19

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

Accepted Answer

A localization strategy requires a company to adapt its products and services to meet local market demands, which may involve significant investments in research and development, marketing, and distribution. This approach is most effective when a company is willing to commit substantial resources to foreign market adaptation and is not overly concerned with cost minimization. A localization strategy involves adapting products or services to meet the specific needs and preferences of local markets. This can involve higher costs due to the need for research and development and customization, but can lead to higher customer satisfaction and market share. Therefore, it is best adopted when the MNE is willing to invest in foreign market adaptation without being constrained by cost pressures.

Question 20

The unique part of international competition is the pressure for cost reduction.

Accepted Answer

The unique part of international competition is not only the pressure for cost reduction but also the need to adapt products and services to local markets, navigate different regulatory environments, and manage cultural differences, among other challenges.

Quiz 12: Making Alliances and Acquisitions Work

The global standardization strategy, despite its complexity, is still the best option at being cost effective and locally responsive.

The global product division structure seeks to balance local responsiveness with efficiency while an MNE using a global matrix aims to provide the world with standardized products to reach their full market potential.

One of the disadvantages of the geographic area structure is that country and regional managers are not given sufficient voice relative to the heads of the domestic divisions.

Transnational strategy is usually the easiest strategy for an MNE to implement and the first one adopted when the firm ventures abroad.

From a resource perspective, tacit knowledge is ultimately more valuable than explicit knowledge.

All firms evolve in the same direction from relatively simple international division, through either geographic area or global product division structures, and may finally reach the more complex global matrix stage.

In home replication strategy, knowledge flow is multidirectional, while in transnational strategy, it is one-way.

A disadvantage to the global standardization strategy is that often one size does not fit all, and MNEs who adopt this strategy tend to experience a lack of local responsiveness.

Explicit knowledge is codifiable and can be transmitted by IT. Tacit knowledge is non-codifiable and requires hands-on communication.

Because of the popularity of the global standardization strategy, many firms have changed their organization to the global product division.

In the eyes of stakeholders, a top echelon consisting of largely one nationality bodes well for an MNE aspiring to globalize everything it does.

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

International division structure is an organizational structure typically set up when a firm first engages in a home replication strategy.

Regarding knowledge flow in MNEs, firms adopting the transnational strategy experience the highest knowledge interdependence while firms adopting the localization strategy experience the lowest.

The framework that addresses the pressures MNEs confront is commonly referred to as the integration-responsiveness framework.

Strategy usually drives structure, but structure does not usually drive strategy.

The top executives at the highest level of an MNE are usually host-country nationals.

The phrase think global, act local is a winning formula when it comes to leveraging multinational presence.

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

The unique part of international competition is the pressure for cost reduction.