MNC Strategy Exam 1 Questions and Answers 100% correct
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Module
MNC
Institution
MNC
MNC Strategy Exam 1 Questions and Answers 100% correct
MNE
Must have "substantial direct investment" in foreign countries.
Must have "active management" of overseas operations
Influence | Statistics according to the UN:
Over 130 million firms.
Foreign affiliates of MNEs generated approx...
MNC Strategy Exam 1 Questions and
Answers 100% correct
MNE - answer Must have "substantial direct investment" in foreign countries.
Must have "active management" of overseas operations
Influence | Statistics according to the UN: - answer Over 130 million firms.
Foreign affiliates of MNEs generated approx. $8trillion in value.
Traditional Motivations - answer Secure key supplies (tangible products, services)
Market-seeking behavior (unique skill, core competence)
Access low-cost factors of production
Prior to the 1980s: - answer The product life cycle(PLC) theory could explain much
of a company's motivation to internationalize.
After the 1980s the PLC does not explain much about the reasoning for
internationalization today.
Emerging Motivations - answer Increasing scale economies, R&D investments, and
a shortened PLC.
The MNE's global scanning and learning capabilities-alternatives regarding labor,
technology, etc.
Increased competitive positioning allowing cross-subsidization of markets
Cross-subsidization of markets - answer Using profits of a subsidiary in one market
to subsidize an unprofitable subsidiary in another.
Prerequisites for Becoming an MNE: - answer Must have motivation to invest
overseas.
Must have strategic competencies/ownership-specific advantages. (finances)
Must have internal organizational capabilities. (ability to coordinate, distribution)
Process of Internationalization - answer The Learning Process of foreign market
entry:
0. Company did research, ready to commit.
i.Firm makes initial commitment of resources.
ii. Gains knowledge of local market, customers, etc.
iii. Improved ability to evaluate current operations and opportunities.
iv. Able to make additional investments thus increasing effectiveness.
, Four evolutionary stages (mentalities) of internationalization: - answer 1.
International Mentality
2. Multinational Mentality
3. Global Mentality
4. Transnational Mentality
International Mentality - answer Overseas operations seen as "outposts."
Heavily influenced by the PLC.
Multinational Mentality - answer Overseas operations increase in importance as
sales/profits increase.
Products/technology modified to suit specific foreign mkt.
Global Mentality - answer Reduce inefficiency in multinational mentality by producing
for a "world market".
Assumes national tastes are somewhat similar.
Requires increase levels of coordination.
Transnational Mentality - answer Emerged due to the need to be locally responsive
while developing global products.
Forces for Global Integration and Coordination | Statement - answer Globalization is
the continuation of a trend that began over 100 years ago.
Forces Leading to Change - answer Economies of Scale
Economies of Scope
Factor Costs
Liberalization of World Trade Agreements
Economies of Scale (volume) - answer Achieved through high-volume production.
Use of large-batch or continuous-process technologies.
Production levels exceed domestic sales.
Economies of Scope (variety) - answer Possible due to improved communications
and transportation networks.
Rise in use of large trading companies (e.g.,Panasonic).
Factor Costs - answer Need to find cheaper sources of factors (i.e.,raw materials,
labor, capital).
Finding cheap labor - a constant challenge. Labor cost/wage rates increase as labor
force becomes educated.
Liberalization of World Trade Agreements - answer Agreements facilitate of global
expansion (i.e.,through WTO, EU, NAFTA/USMCA).
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