Question 1

McKinsey & Company's finding that found that successful MNCs are underperforming successful "national Champions" is evidence of:
A)The benefits of exploiting the benefits of multinationality being outweighed by the cost imposed by the complexity
B)The rise of economic nationalism and the governments' waning commitment to free trade
C)The declining importance of global scale economies
D)The increasing difficulties of managing business activities across national borders

Accepted Answer

McKinsey's finding suggests that successful MNCs are not performing as well as successful "national champions." This could be due to the costs associated with operating across national borders, which may outweigh the benefits of multinationality. This indicates that managing business activities across national borders is becoming more difficult, and that global scale economies may be declining in importance.

Question 2

The costs of national differentiation can be low if:
A)A firm does not differentiate its products very much
B)The firm has a strong brand
C)A "global customer" exists
D)A common basic design and common components are used

Accepted Answer

If a common basic design and common components are used, the costs of national differentiation can be minimized as these will only involve minor adjustments to meet local requirements. This is referred to as "global standardization" or "global integration."

Question 3

The Dutch-based electrical and consumer electronics multinational,Philips,has transferred the headquarters for several of its global business away from the Netherlands.In terms of Bartlett and Ghoshal's typology of multinational strategies,this represents a transition from:
A)A "centralized hub" to a "decentralized federation"
B)A "centralized hub" to a "transnational"
C)A "decentralized federation" to a "transnational"
D)A "coordinated federation" to a "decentralized federation"

Accepted Answer

The transition from the headquarters being in the Netherlands (a decentralized federation) to being spread out globally (several business headquarters) represents a move towards a transnational strategy according to Bartlett and Ghoshal's typology. A transnational strategy seeks to balance global integration with local responsiveness, which is achieved through a decentralized network of business units operating in different regions.

Question 4

McDonald's introduction of a greater number of local products on its menus,then transferring these items across national borders points to:
A)The tendency for global products to lose their appeal
B)The versatility of the McDonald's business system
C)The potential for localized adaptation within the multinational enterprise to be a source of innovation and strategic renewal
D)Growing competition in the fast food industry as the McDonald's system is increasingly imitated by local rivals.

Accepted Answer

McDonald's introduction of localized products on their menus and transferring them across borders indicates the potential for localized adaptation to be a source of innovation and strategic renewal within the multinational enterprise. It shows that McDonald's takes into account local preferences and adapts their menu accordingly, which can be seen as a strategic advantage over competitors who may offer a more standardized menu. This approach allows McDonald's to cater to the unique tastes of each market and remain relevant in a dynamic and competitive fast food industry.

Question 5

The "centralized hub" strategy that Japanese multinationals pursued during the 1970s and 1980s is likely to be most successful in industries with:
A)Innovation as the primary source of competitive advantage
B)Large economies of scale and limited need for national differentiation
C)Substantial opportunities for transfer of learning among countries
D)Rapid rates of technological change

Accepted Answer

The "centralized hub" strategy is most effective in industries where large economies of scale can be achieved and there is limited need for adapting products to different national markets, allowing for centralized production and decision-making.

Quiz 11: Global Strategy and the Multinational Corporation

McKinsey & Company's finding that found that successful MNCs are underperforming successful "national Champions" is evidence of:

The costs of national differentiation can be low if:

The Dutch-based electrical and consumer electronics multinational,Philips,has transferred the headquarters for several of its global business away from the Netherlands.In terms of Bartlett and Ghoshal's typology of multinational strategies,this represents a transition from:

McDonald's introduction of a greater number of local products on its menus,then transferring these items across national borders points to:

The "centralized hub" strategy that Japanese multinationals pursued during the 1970s and 1980s is likely to be most successful in industries with: