Question 1

Internationalization among New York-based law firms is the result of:
A)The US possessing a comparative advantage in legal services
B)US law firms following the opportunity to provide global service to their multinational clients
C)US law firms seeking to benefit from knowledge transfer between different legal systems
D)US law firms seeking to exploit economies of scale in human capital and IT systems.

Accepted Answer

New York-based law firms are seeking to provide global service to their multinational clients by expanding their services globally. As businesses increasingly operate on a global scale, they require legal support that can also operate on a global scale. US law firms have responded to this demand by expanding internationally and establishing offices in major business centers around the world.

Question 2

A global strategy involves supplying globally-standardized products.

Accepted Answer

A global strategy involves standardizing products for a global market in order to achieve economies of scale and reduce costs. This approach provides consistency and efficiency but can also lead to challenges in adapting to local customs and preferences.

Question 3

Large countries have an advantage over small countries in technology-intensive and capital-intensive industries,because:
A)They can influence the rest of the world's technical standards
B)Small markets discourage ambition among the firms that serve them
C)A large home market facilitates exploitation of scale economies
D)Large countries tend to have superior educational systems

Accepted Answer

A large home market facilitates exploitation of scale economies, which means that companies can produce a larger quantity of their product at a lower cost per unit, making them more competitive in the international market. Small markets may not provide enough demand to justify the high costs of research and development, which can lead to a lack of investment and development in technology-intensive and capital-intensive industries. While the other options (A, B, and D) are also potential advantages for large countries, they do not directly relate to technology and capital-intensive industries.

Question 4

According to Porter's "national diamond" analysis,the competitive advantage of Swiss firms in watches,German firms in luxury cars,and Japanese firms in cameras is a result of:
A)The availability of highly skilled workers in each of these countries
B)The lack of natural resources in each of these countries
C)The characteristics of local demand in each of these countries
D)High levels of domestic competition

Accepted Answer

Porter's "national diamond" analysis explains that a nation's competitive advantage in a particular industry is influenced by various factors, including the characteristics of local demand. The demand for watches in Switzerland, luxury cars in Germany, and cameras in Japan has created a unique and specific market that has allowed companies in these countries to develop a competitive edge.

Question 5

A key difference between Bartlett and Ghoshal's "transnational corporation" and the conventional US multinational corporation (described by Bartlett and Ghoshal as a "coordinated federation")is that communication and coordination occurs between national units rather than exclusively between each national unit and the corporate HQ

Accepted Answer

Bartlett and Ghoshal differentiate between two types of multinational corporations: the conventional US multinational corporation, which they describe as a "coordinated federation" with communication and coordination primarily occurring between each national unit and the corporate HQ, and the "transnational corporation," which operates across borders with much greater integration and coordination between national units. In a transnational corporation, communication and coordination occurs between national units as well as with the corporate HQ. Therefore, the statement that communication and coordination occurs between national units rather than exclusively between each national unit and the corporate HQ is true for the transnational corporation as described by Bartlett and Ghoshal.

Question 6

Global industries are those where:
A)International trade (imports and exports)are high in relation to industry sales
B)Technology transfers are high
C)Foreign direct investment is high
D)Both trade and direct investment are high

Accepted Answer

Global industries are those where both international trade and foreign direct investment are high. This indicates a high level of interconnectedness and interdependence between countries in the production, distribution, and consumption of goods and services within the industry. Technology transfers may also occur in global industries, but they are not a defining characteristic.

Question 7

With internationalization,the threat of new entry into domestic industries are increases because:
A)Customers prefer imported products to domestically-produced products
B)The World Trade Organization (WTO)prevents governments protecting their domestic industries through subsidies and import restrictions
C)Barriers to entry that would deter domestic firms may be easily overcome by large firms from other countries
D)Foreign-based,state-owned enterprises are not deterred by losses earned in overseas markets

Accepted Answer

Internationalization may diminish barriers to entry, allowing foreign firms to easily enter domestic markets. These foreign firms may have advantages such as economies of scale, greater access to resources, or lower costs of production that domestic firms do not possess, making it easier for them to enter and compete. This increases the threat of new entry into domestic industries.

Question 8

A firm would be unwise to pursue a global strategy if global scale does not confer cost advantage,

Accepted Answer

The answer of A firm would be unwise to pursue...

Question 9

Firms internationalize through two mechanisms:
A)Exports and imports
B)Trade in goods (visible trade)and trade in services (invisible trade)
C)Direct and indirect investment
D)Trade and direct investment.

Accepted Answer

The two primary mechanisms through which firms internationalize are trade (which includes both exports and imports of goods and services) and direct investment (which involves establishing operations or acquiring business assets in foreign countries).

Question 10

The theory of comparative advantage is concerned with:
A)The sources of real income differentials among countries
B)The impact of resource availability on national competitiveness in particular industries
C)The competitive advantages of low-wage countries
D)The determinants of purchasing power parity (PPP)exchange rates between countries

Accepted Answer

The theory of comparative advantage explains how countries can gain from trade by specializing in the production of goods for which they have a lower opportunity cost, regardless of their absolute advantage or resource availability. It is directly related to the impact of resource availability on national competitiveness in particular industries.

Question 11

A common approach to reconciling the benefits of global scale with the need for national differentiation is to:
A)Develop a global brand but rely on local promotional activities
B)Create standard product platforms in terms of design and components,then adapt product features,complementary services,and marketing approaches to national market conditions.
C)Allow major national subsidiaries to the freedom to develop new products,then encourage other national subsidiaries to adopt them
D)Develop globally standardized products but sell them under local brand names

Accepted Answer

This approach combines the benefits of global scale through standard product platforms with the need for national differentiation by adapting product features, complementary services, and marketing approaches to national market conditions. This allows companies to achieve economies of scale while also catering to the unique needs and preferences of each local market. Option A and D focus too much on either global or local approaches, while option C may create inconsistencies in brand messaging and product offerings across different national subsidiaries.

Question 12

The declining performance of multinational corporations (MNCs)relative to nationally-focused firms suggests that,for many MNCs,the costs of reconciling the benefits of aggregation,arbitrage,and adaptation may exceed the benefits.

Accepted Answer

The statement suggests that the costs of balancing the benefits of aggregation, arbitrage, and adaptation for MNCs are becoming higher than the benefits, which is leading to their declining performance. Therefore, the statement is true.

Question 13

In Ghemawat's "Aggregation,Adaptation,Arbitrage" framework,the potential for a multinational enterprise to exploit arbitrage benefits are likely to be greater in a capital-intensive industry than in a labor-intensive industry

Accepted Answer

Arbitrage opportunities typically involve exploiting differences in factors such as labor costs, regulatory environments, and tax regimes across countries. In a labor-intensive industry, differences in labor costs can be significant, offering greater potential for arbitrage than in capital-intensive industries where machinery and technology play a larger role and labor cost differences are less impactful.

Question 14

The value chain for a product will tend to be dispersed across different countries when:
A)Different stages of the value chain require different types of resources and capabilities
B)The product is subject to import tariffs and quotas
C)The product is knowledge-intensive
D)The different stages of the value chain need to be closely coordinated.

Accepted Answer

When different stages of the value chain require different types of resources and capabilities, it is often more efficient for each stage to be located in a country where those resources and capabilities are readily available. This results in the dispersion of the value chain across different countries.

Question 15

Many retailers that have been outstandingly successful in their how markets have experienced much poorer performance when they have entered overseas markets.These include: Tesco,Marks & Spencer,Laura Ashley,and Body Shop in the UK);Best Buy,Sears,Macy's,and Walmart in the US.This reflects:
A)The lack of major efficiency benefits from international scope in retailing
B)The lack of scale economies in retailing
C)Limited opportunities for exploiting learning benefits in retailing (e.g.by transferring best practices)
D)The lack of major efficiency benefits from international scope combined with the need for national differentiation.

Accepted Answer

The statement mentions that retailers have experienced much poorer performance when entering overseas markets due to the lack of major efficiency benefits from international scope combined with the need for national differentiation. This suggests that the answer is D - the lack of major efficiency benefits from international scope combined with the need for national differentiation.

Question 16

Traditionally,European-based multinational companies such as Unilever,Shell,and Philips have been highly centralized;Japanese multinationals such as Honda,Sony,and Hitachi have been highly decentralized.

Accepted Answer

Traditionally, European-based multinational companies like Unilever, Shell, and Philips have been more decentralized, allowing for local adaptation, while Japanese multinationals such as Honda, Sony, and Hitachi have often been more centralized, focusing on coordination and control from the headquarters.

Question 17

Saudi Aramco and Statoil are both major oil producers.Saudi Aramco's competitive advantage is based on its access to low-cost domestic oil reserves;Statoil's competitive advantage is its capability in offshore exploration and production.The implications for the internationalization strategies of the two companies are:
A)Both companies should focus on exporting from their own countries
B)Saudi Aramco should focus on exporting;Statoil should pursue direct foreign investment
C)Saudi Aramco should pursue direct foreign investment;Statoil should focus on exporting
D)Both companies should use a mixture of exporting and direct investment depending upon the nature of the foreign opportunity

Accepted Answer

Saudi Aramco's competitive advantage in low-cost domestic reserves makes exporting a natural strategy, while Statoil's expertise in offshore exploration and production suggests it should leverage this capability through direct foreign investments in regions requiring such specialized skills.

Question 18

Pankaj Ghemawat's "CAGE framework," which analyzes the cultural,administrative and political,geographical,and economic differences between countries,can help firms adapt their strategies to the particular characteristics of a foreign market .

Accepted Answer

The statement correctly describes the CAGE framework and its ability to assist firms in tailoring their strategies to the unique features of foreign markets.

Question 19

A start-up company based in Canada and led by an academic microbiologist has patented genetically-modified,drought-resistant maize particularly suitable to arid regions of Africa.The firm has been unable to attract significant venture capital investment.How should the firm exploit commercial opportunities for its product in Africa?
A)It should form a joint venture with a multinational agricultural seed company
B)It should establish seed production in Canada and set up sales offices in African countries
C)It should establish seed production in Canada and appoint sales agents in different African countries
D)It should license its patent to a multinational agricultural seed company and continue research on other projects for the genetic modification of agricultural crops

Accepted Answer

The answer of A start-up company based in Canada and...

Question 20

The rise of Shenzhen to become one of the world's most important industrial centers is evidence of:
A)The superiority of the Chinese economic model over western market
B)The transformative potential of internationalization
C)The spillover benefits from being close to a dynamic business hub such as Hong Kong.

Accepted Answer

The rise of Shenzhen demonstrates the transformative potential of internationalization as the city leveraged its strategic location and access to global markets to become a leading industrial center. While the Chinese economic model and proximity to Hong Kong are important factors, they are not the sole drivers of Shenzhen's success.

Quiz 11: Global Strategy and the Multinational Corporation

Internationalization among New York-based law firms is the result of:

A global strategy involves supplying globally-standardized products.

Large countries have an advantage over small countries in technology-intensive and capital-intensive industries,because:

According to Porter's "national diamond" analysis,the competitive advantage of Swiss firms in watches,German firms in luxury cars,and Japanese firms in cameras is a result of:

Global industries are those where:

With internationalization,the threat of new entry into domestic industries are increases because:

A firm would be unwise to pursue a global strategy if global scale does not confer cost advantage,

Firms internationalize through two mechanisms:

The theory of comparative advantage is concerned with:

A common approach to reconciling the benefits of global scale with the need for national differentiation is to:

The declining performance of multinational corporations (MNCs)relative to nationally-focused firms suggests that,for many MNCs,the costs of reconciling the benefits of aggregation,arbitrage,and adaptation may exceed the benefits.

In Ghemawat's "Aggregation,Adaptation,Arbitrage" framework,the potential for a multinational enterprise to exploit arbitrage benefits are likely to be greater in a capital-intensive industry than in a labor-intensive industry

The value chain for a product will tend to be dispersed across different countries when:

Many retailers that have been outstandingly successful in their how markets have experienced much poorer performance when they have entered overseas markets.These include: Tesco,Marks & Spencer,Laura Ashley,and Body Shop in the UK) ;Best Buy,Sears,Macy's,and Walmart in the US.This reflects:

Traditionally,European-based multinational companies such as Unilever,Shell,and Philips have been highly centralized;Japanese multinationals such as Honda,Sony,and Hitachi have been highly decentralized.

Pankaj Ghemawat's "CAGE framework," which analyzes the cultural,administrative and political,geographical,and economic differences between countries,can help firms adapt their strategies to the particular characteristics of a foreign market .

The rise of Shenzhen to become one of the world's most important industrial centers is evidence of: