MNE Management Review Questions with Complete Solutions Rated 100%
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Module
MNE Management
Institution
MNE Management
MNE Management Review Questions with Complete Solutions Rated 100%
Global Multinational Enterprises (MNE) - Answers a.Must have "substantial direct investment" in foreign countries.
b.Must have "active management" of overseas operations.
MNE Influence, Some statistics according to the UN: - Ans...
MNE Management Review Questions with Complete Solutions Rated 100%
Global Multinational Enterprises (MNE) - Answers a.Must have "substantial direct investment" in foreign
countries.
b.Must have "active management" of overseas operations.
MNE Influence, Some statistics according to the UN: - Answers Over 65,000 MNEs, Approx. $16 trillion in
revenues
why companies are motivated to expand overseas? - Answers Secure key supplies - e.g. Aluminum
companies seeking bauxite
Traditional Motivations - Answers 1. Secure key supplies
2. Market-seeking behavior
3. Access low-cost factors of production.
Prior to the 1980s, the product life cycle (PLC) theory could explain much of a company's motivation to
internationalize. - Answers True
Factors influencing a company's motivation to internationalize (i.e. why overseas operations became
more important): - Answers 1. Increasing scale economies, R&D investments, and a shortened PLC.
2. The MNE's global scanning and learning capabilities - alternatives regarding labor, technology, etc.
3. Increased competitive positioning allowing cross-subsidization of markets
Cross-subsidization of markets - Answers using profits of a subsidiary in one market to subsidize an
unprofitable subsidiary in another.
Prerequisites for Becoming an MNE - Answers a. Must have motivation to invest overseas
b. Must have strategic competencies/ownership-specific advantages
c. Must have internal organizational capabilities
Process of Internationalization, The Learning Process of foreign market entry (1977) - Answers 1. Firm
makes initial commitment of resources.
2. Gains knowledge of local mkt, customers, etc
3. Improved ability to evaluate current operations and opportunities
, 4. Able to make add'l investments thus increasing effectiveness
Four evolutionary stages (mentalities) of internationalization: IMGT - Answers 1. International Mentality
2. Multinational Mentality
3. Global Mentality
4. Transnational Mentality
International Mentality - Answers 1. Overseas operations seen as "outposts."
2. Heavily influenced by the PLC
Multinational Mentality - Answers 1. Overseas operations increase in importance as sales/profits
increase.
2. Products/technology modified to suit specific foreign mkt.
Global Mentality - Answers 1. Reduce inefficiency in multinational mentality by producing for a "world
market"
2. Assumes national tastes are somewhat similar
3. Requires increase levels of coordination
Transnational Mentality - Answers Emerged due to the need to be locally responsive while developing
global products
Globalization is the continuation of a trend that began over 100 years ago. - Answers True
Forces Leading to Change - Answers 1. Economies of Scale
2. Economies of Scope
3. Factor Costs
4. Liberalization of World Trade Agreements
Economies of Scale - Answers Use of large-batch or continuous-process technologies
2. Achieved through high volume production
3. Production levels exceed domestic sales.
Economies of Scope - Answers 1. Possible due to improved communications and transportation
networks
2. Rise in use of large trading companies (e.g. Panasonic)
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